Mount Clemens accepts FY2024 audit showing improved reserves, flags water fund shortfall

The Mount Clemens City Commission voted to accept the city's fiscal year 2024 financial report and governance letter after a presentation by Jordan Smith of the audit team. Smith told commissioners the audit resulted in an unmodified, or "clean," opinion.

Smith summarized key results: general fund revenue of $14,753,581 and expenditures of $12,772,765, which produced a year-end fund-balance increase of $1,980,816. He said the water fund improved its net position by about $1,861,188 and the sewer fund by about $2,427,604, changes Smith attributed to recent utility-rate increases to fund upcoming capital projects.

"We received an unmodified opinion," Jordan Smith said, describing that as the best opinion an audit can provide and noting the auditors found no internal-control deficiencies this year. He added the city's reserve level means "you could operate for approximately 89% of the year" on current unrestricted resources, a positive trend for short-term liquidity.

Commissioners pressed auditors and staff about a negative unrestricted net position in the water fund. Smith explained the deficit largely reflects the allocation of long-term liabilities, including pension and other post-employment benefit (OPEB) obligations, to proprietary funds; he cited that the city's net OPEB liability declined from about $51.7 million to $28.2 million since 2017 and that roughly $3.8 million of that liability is allocated to the water fund.

The commission also asked about a roughly $30,000 receivable tied to the Grosse Pointe Clinton Refuse Disposal Authority; staff said the authority still files financial statements and agreed to follow up to determine collectability.

Commissioner (speaker 9) called the audit "a very good report," and the commission approved the motion to accept the report and governance letter by roll call vote.

Next steps: staff said it will follow up on the refuse-authority receivable and continue routine monitoring of utility fund reserves and fee schedules.