Purpose of Audit

The purpose of our audit was to evaluate the financial condition of the Town’s sewer and water districts for the period January 1, 2009, to May 31, 2012.

Background

The Town of Black Brook is located in Clinton County and has approximately 1,500 residents. The Board is responsible for overseeing the Town’s operations and finances The Town’s adopted budget for the 2012 fiscal year totaled approximately $1.71 million. The Town’s budgeted appropriations totaled approximately $44,850 for sewer district operations and $75,800 for water district operations.

Key Findings

• The sewer district’s total reported fund balance declined from $163,483 as of January 1, 2009 to $122,262 at December 31, 2011. The sewer fund balance includes a repair reserve which totaled $106,374 for 2009 and $107,609 in 2011 that is not related to the individual sewer district. As a result, the sewer fund’s remaining unexpended surplus fund balance was $14,653 at the end of 2011. The sewer district could experience another operating deficit in 2012 totaling $4,610, which will further reduce unexpended surplus fund balance to $10,043. The water district’s unexpended surplus fund balance declined from $73,754 as of January 1, 2009 to $21,923 on December 31, 2011, a total decrease of $51,831. We estimate the water district will incur another operating deficit in 2012 totaling $18,035, which will further reduce unexpended surplus fund balance to $3,888.
• The Board routinely budgeted revenue estimates that could not be realized based on the current rates. The Board has not increased sewer rates for over 10 years and consistently relied on one-time revenues to fund water operations.
• The Board has not adopted a long-term capital plan or a long-term financial plan to address the sewer and water districts’ corresponding costs, and future repairs and maintenance costs.

Key Recommendations

• Adopt realistic sewer and water budget estimates for revenues and expenditures based on historical data, current trends and take into consideration future repairs and improvements for each district.
• Review the sewer and water rates annually and revise them, if necessary, to generate sufficient revenue to cover appropriations.
• Develop a multi-year financial plan to establish clear goals and objectives for funding the Town’s long-term operating and capital needs. Frequently monitor and update the plan to ensure that decisions are based on the most accurate and up-to-date financial information.