It was a good news, bad news scenario when Ken Pun of the Pun Group, LLP gave a presentation on the city's Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2017. The presentation took place at the Ridgecrest City Council meeting on Feb. 7.

No 'rainy day fund'

According to Pun, as of June 30, 2017, the city did not have an unassigned fund balance. This is not great news, because Pun said he recommends having at least a couple of months funds in reserve.

“It's nice to have a two month rainy day fund reserve in your unassigned fund balance,” he said, making the point clear. “Unfortunately as of June 30, 2017, you still don't have any unassigned fund balance reserved for any rainy day fund purposes.”

However, the news is not all bad. Even a zero balance represents an improvement over previous deficits, according to Pun.

“This has come a long way because in the last couple years these numbers were always in the deficit position . . . at least the fund balance of the general fund [unassigned funds] is not in the deficit,” Pun said.

Net position

According to the report, the city assets exceeded liabilities by $87.5 million at the end of the reporting period. (Note numbers are rounded.)

“Within your net position, this is the net equity of the city,” Pun said. “As of June 30, 2017, you have  [roughly] $65 million in net investment in capital assets, $11 million restricted by third party, $11.3 million in unrestricted.” This totals roughly $87.5 million in total assets, but Pun noted that the majority of $65 million is in non-liquid assets.
City expenses were $18.9 million, program revenues $11.8 million for a net cost of services of $7.1 million.

As for the general fund, Pun said assets were $5.8 million, liabilities were $4.3 million for a total fund balance of $1.4 million.

He also reported on current year operations of the general fund for the year ending June 30, 2017. This showed $12.5 million in revenues, $11.6 million in expenditures and a balance of $938,000 for revenues over expenditures.
After $164,000 was transferred out for other uses, this resulted in a change in net position of $774,441.

Pun said the result of his company’s audit was an unmodified opinion issued to all opinion units. This finds that financial statements were fairly presented in all material respects, acocunting policies have been consistently applied, estimates are reasonable and disclosures are properly reflected in the financial statements.

Pun also noted that a recently passed measure, presumably Measure V, stands to impact the city positively in terms of building up the rainy day balance.

“I think you guys are on the right track,” he said.

Council members questioned some of the data about property tax given in the report. Pun said it was furnished by an outside source.

In response to a question from Mayor Peggy Breeden, Pun said that potentially inaccurate statistics in the one portion of the report would not impact the results of the quality audit as a whole.

Stan Rajtora also spoke up, noting what he called budgetary discrepancies due to lack of internal controls.

Pun also discussed issues regarding the CALPERS retirement system and the city budget. For more on this topic, see an upcoming edition of the Daily Independent.