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Woodfin finances good, but getting tight

By Clint Parker

Woodfin – The Town of Woodfin is financially in good shape, says Mark Bumgarner with the Waynesville accounting firm of Ray, Bumgarner, Kingshill & Associates, but there were a couple of areas that Bumgarner pointed to that would need future attention.

Saying the report was representative of the town’s financial condition as of June 30, 2018, Bumgarner started going over the report to give aldermen the numbers (see chart 1).

Bumgarner said the town had a net position of $1.52 million, but that there was a new negative number of $547,732. “Now that’s a negative number, and that’s the first time you would have seen this particular number because that’s the result of the implementation of generally accepted standards number 75 requiring restatement at the beginning of the net position for other post employment benefit obligations,” he told the board. Bumgarner boiled down the reason for the negative number to a town policy that obligated the town to pay the health insurance of certain individuals until they retire at age 65.

According to Bumgarner, the town used to only have to take into account the current year’s cost, but new rules say, “Hey, wait a minute there’s a liability out there…so you need to show a liability on your books.” According to Young those persons who qualify for the payment of their health insurance until age 65 are town employees who retire before they are eligible for Medicare.

Bumgarner also said there was a decrease in the fund balance due to “increased public works and debt service spending.” He also told the board while tax revenues were up they “did not outpace spending.”

Bumgarner then compared what budget was passed by the board for 2017-2018 and what actually transpired. What actually transpired was that the town spent $235,000 more than what they had budgeted for during the year, because they took in $152,000 less than what they thought they would in revenue (see chart 2 for revenue and expense breakdowns). Bumgarner said the town was under budget in all departments and that Woodfin had “…a healthy fund balance of $2.746 million.”

Bumgarner pointed out that the town’s Tax Incremental Funding (TIF) payment might be an area of concern for the town. “That’s one that might be sneaking up on you,” he told the board. The TIF is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects.

Young later addressed the TIF payment issue in the administration report of the meeting saying that the payment is tied to the economic trend. “It [the state law that allowed TIFs] was a fundamentally flawed concept the way it was written as we discovered first hand because what it did was disincentivized, when the economy went down,…people from purchasing that property because there was no way of knowing…, with any degree of accuracy, what their tax bill will be year to year,” explained Young.

“Some of that, in order to move the project forward, was moved back into public control and there in, if there is a revenue shortfall Buncombe County and the Town of Woodfin share that cost,” said Young.

Bumgarner praised the town’s tax rate collection at 99.69 percent and 100 percent of motor vehicle taxes were collected. “You can’t get a whole lot better than that to be honest,” he said.

When it comes to following laws and regulations the town did get a deficiency. “We found a quote unquote significant deficiency,” Bumgarner told the board. “We have a lack of segregation of duties. We don’t have enough people to spread lots of responsibility around so it’s narrowed down to a handful of people. So you guys just need to be cognizant of that.” Bumgarner said he had this deficiency come up on pretty much every audit he does.

He also mentioned a control deficiency cited by the state when it came to the town’s Christmas gift card program for the less fortunate. “What we found is you’ve got that great program at Christmas time and whatnot and you collect money and distribute to put into the community and it’s a wonderful program. The only thing we found is that it’s a situation were we couldn’t tie into who got those cards,” explain Bumgarner.

In a letter included in the audit report the accounting firm told the town, “Charitable contributions were collected, and a check was issued to Walmart for almost $27,000. Our audit could not identify who was eligible, or who received these gift cards. Since there is no documentation or audit trail for the distribution of the cards, the program is open to abuse and fraud.”

At the meeting, Young added to Bumgarner’s comments about the charitable program saying, “We have instituted protocols, so the board will know, they [recipients] have to sign off on that and it makes it a little bit more cumbersome to distribute the gift cards, but it is important, especially with the funds. We need to be transparent as possible, so we now account for where every dollar went to, by signature and address.”

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