With Council members Tracy Sanders and Chad Jones absent – said to be still at work – but all others present including Water Board members, Brent officials received their annual financial audit report Monday night.
According to the auditor, the most important part of the report is the auditor’s opinion letter which says the financial statements are fair and sound, and no modifications were done in the audit. Brent received “a clean bill of health.”
At the end of September, 2019, which is the fiscal year end for Brent, $3,211,713 in cash and equivalents were held on hand in total. Last year the total was around $3.4 million. The roughly $216,000 decrease was due primarily to purchase of capital assets and construction projects.
Revenues versus expenses revealed a combined net income for the year was a positive figure of $420,527. Expenses were lowered in 2019 versus 2018.
Two types of debt were discussed: General obligation debt held by the City and revenue bonds held by the utility board. General obligation debt sat at approximately $1,430,000 with utility bonds at $3,410,000. These mature in 2032 and 2036 respectively. Roughly $150,000 was paid in interest charges during 2019.
According to the auditor, Brent has very little debt compared to other cities of equivalent size. With a total of about $4,000,000 in debt, paying out a little over $411,000 to service this debt, compared to the revenues of about $3,800,000, means the city is very stable financially with positive cash flow.
One item showing particularly good was the pension fund for city employees. Unfunded portion of the pension fund must be reported, and according to the audit Brent is 96% funded, with roughly $3.2 million funded versus $3.3 million in obligation, leaving them only about $119,000 short. “This is pretty much unheard of,” the auditor said. He added that it is rare to see a municipality over 90% funded, and that many cities sit way lower, such as Birmingham at around 60% funded.
Regarding the retirement fund, the Council must decide if they will implement a new option introduced at the state level this year. To summarize briefly the situation: employees fall under two categories, Tier 1 – started work prior to January 1, 2013, and Tier 2 – started work after January 1, 2013. Previously, Tier 2 employees were not given the same payout as Tier 1 employees, and early retirement is not an option for Tier 2, requiring them to wait until 62 years of age to receive payouts. To adjust the payouts to be equivalent to the Tier 1 employees, there is an option presented that would raise the withholding percentage on employee paychecks.
If adopted, the new legislation would raise not only the employee withholding but also the city’s match rate. The City Council has the option to adopt the new system or not, and will vote on it in a future meeting. According to the City Clerk Rosalyn Adams, the majority of Brent employees are Tier 1.