Savings vs. service
City’s 2014 audit shows millions sent to rainy day fund despite critical needs
Jeremy M. Lazarus | 10/9/2015, 9:16 p.m.
Is Mayor Dwight C. Jones saving too much money while starving City Hall of the monetary resources needed to provide services to Richmond residents?
That question is starting to emerge as City Council members review the long delayed and finally completed audit of city finances for fiscal year 2014. That’s the period that began July 1, 2013, and ended June 30, 2014.
Richmond’s No. 2 person in charge, Chief Administrative Officer Selena Cuffee-Glenn, presented to City Council on Monday the audit report — known as the Comprehensive Annual Financial Report (CAFR) — that was due Nov. 30, 2014, for completion.
While the city’s 2015 CAFR is awaiting completion, Ms. Cuffee-Glenn credits her new chief financial officer, Lenora Reid, and her financial team for overcoming previous hurdles and getting the 2014 report finished.
One item sure to attract City Council’s attention is the amount shifted to a rainy day fund, particularly after council received a tongue-lashing from the administration for shifting $9 million from city departments to support academic improvement in Richmond Public Schools for the current 2016 fiscal year.
According to a separate report that Ms. Cuffee-Glenn sent to council several weeks ago, the city is reducing the number of potholes it can fill and eliminating alley maintenance because of lack of money. The CAO also advised that Richmond Police could have less money to hire new recruits to fill vacancies and the Department of Public Works might have to cut back on leaf collection in areas of the city because of a funding shortfall due to council’s action.
However, in that report on the impact of council’s budget on services, Ms. Cuffee-Glenn did not mention that the city might have millions of dollars more — possibly up to $14 million — in the rainy day fund than the city requires.
Council apparently was unaware of the fact when it was wrestling with the 2016 budget in late April and early May because the 2014 CAFR report had not been completed.
The report provides evidence that money might not be as tight as the administration has stated.
According to the report, the administration ended the 2014 fiscal year with $80.4 million in the unassigned fund balance, also known as the rainy day and emergency fund.
The $80.4 million represents “12.1 percent of budgeted expenditures and transfers,” the CAFR reported, or $14 million more than required by city policy.
The city only requires a minimum of 10 percent of expenditures and transfers to be placed in the rainy day fund, which in fiscal year 2014 would have been $66.4 million.
The push to keep the rainy day fund balance high shows up in other areas of the CAFR. The report shows that despite the fattened account, then-CAO Byron C. Marshall kept putting the squeeze on departments during 2014 to reduce spending.
With revenues falling short of projections, he quietly imposed limits on departmental hiring and spending in seeking to prevent a deficit in the operating budget, the money used to pay for parks, recreation, tree-trimming, the courts, the jail and a host of other services and operations.