Audit review, closed sessions topics for City Council

McCOOK, Neb. — A detailed explanation of the city’s annual audit and three executive sessions highlighted Monday’s meeting of the McCook City Council.

Marcy Luth, a representative of AMGL CPA’s and Advisors spoke with city officials via zoom, indicating the city was in good financial shape, with a perennial caveat that the small staff required extra vigilance to ensure proper segregation of accountability.

It was also noted that comparison of the purchase price of capital assets with their appreciated value indicated some major expenditures may be on the horizon as those items are replaced.

There was no update on the municipal pool project, because bad weather prevented a meeting to review progress.

Executive sessions included one for potential litigation against Manitex International Inc. regarding equipment purchased by the city, potential litigation over property at 1111 East H, owned by Cindy and Ron Sabin, and a strategy session regarding purchase of real estate for the Sports Complex.

No items were pulled from the consent agenda, which was approved in one motion.

Among them:

• bids and specifications for the 2024 Armor Coating Project with bids open 2:30 p.m. Feb 6

• Ballpark Concessions at Felling Field for calendar years 2024-26, with bids open 2 p.m. Feb. 6.

• Adapt the Disadvantaged Business Enterprise Program for McCook Ben Nelson Regional Airport for 2022-24.

• Forward a property damage claim from Larry Fields to the city’s insurance carrier.

• Set a meeting of the Comprehensive Plan & Zoning Regulations Steering Committee for 6 p.m. Feb. 20.

• Approve plans and specifications for the McCook Business Park Phase II grading and paving project with bids opened 2:30 p.m. Feb. 6.

• Reject one bid received for the 2024 Crack Sealing Project with new bids to be opened 2:30 p.m. Jan. 30.

In the lone Council Comment, Mayor Linda Taylor lauded the city’s crews for the extra effort to keep the streets open and the city operating during the brutal weather.

Addressing the audit, City Manager Nate Schneider noted that the city undergoes a comprehensive review, comparing itself to a peer group, and consistently performs well. Although he expressed curiosity about the specific entities in their peer group, he highlighted the city’s pride in maintaining low property taxes while delivering quality services. The property tax request is 34 cents, lower than the typical 37 cents for a community of McCook’s size.

Schneider emphasized the city’s ability to generate more sales tax than most similar-sized towns, attributing it to their location and available amenities. He discussed the per capita assessment, indicating that McCook consistently fares well compared to peer groups and sets benchmarks for improvement.

The City Manager acknowledged challenges in building up the reserve account, currently at just over $1 million, while best practices recommend around $4 million. Despite having various needs, the city aims to balance financial responsibility with meeting community expectations for services and amenities.

Schneider highlighted the city’s success in obtaining grant proceeds, effectively utilizing highway allocation dollars for projects, and maintaining a favorable debt ratio. He noted the impact of a $5.6 million recreational bond issued in November 2022 for a swimming pool ballpark project, which altered some

financial figures.

In terms of the audit process, Schneider mentioned the lack of specific recommendations for improvement, aside from the standard challenge of limited personnel for transaction reviews. He commended the City Council for their diligence in reviewing claims during the budget season. Schneider concluded by praising the audit team’s efficiency in compiling and delivering the audit report within a short timeframe. Overall, he expressed satisfaction with the audit results and affirmed the city’s commitment to responsible financial management.

Luth’s analysis of the audit indicated a clean bill of financial health for the city. The benchmarking spreadsheet, a crucial tool utilized for simplifying the 90-page audited financial statement, was discussed. Despite a momentary hiccup in locating the benchmarking sheet, the auditors emphasized its significance in presenting a concise overview of the city’s financial performance over the years.

The document can be viewed here.

Key points from the audit report included a detailed management discussion and analysis of significant events and trends for the city. The comparison of assets, liabilities, and net positions showcased positive growth, with notable increases in sales and use tax.

The auditors delved into the city’s major capital investments during the fiscal year, emphasizing a slight surplus in capital asset investments compared to depreciation. The outstanding debt, totaling $12.2 million, reflected an increase, mainly attributed to the issuance of $5.6 million in Municipal Improvement Bonds for a swimming pool project.

Detailed breakdowns of governmental and business-type activities, along with a focus on the Community Development Agency, were presented. The governmental column revealed a deficit of $8.3 million, with property tax, sales tax, state allocation, and utility fund transfers supporting government expenditures.

The general fund’s financials showed a cash balance of $3.1 million, representing approximately five months of operating expenditures. The utility funds highlighted the water fund’s operating loss, underscoring the need to maintain a 15% operating ratio for future capital replacements.

The statement of cash flows outlined positive net cash provided by operating activities, with transfers between governmental and utility funds for various purposes.

A detailed examination of cash reserves, governmental capital assets, utilities, debt issuance, and contractual commitments followed. The auditors also addressed the single audit report, emphasizing compliance with the Coronavirus state and local recovery funds.

The report concluded with a mention of a significant deficiency related to the limited size of the organization, highlighting the importance of vigilance in monitoring roles to ensure proper segregation of duties.

Despite challenges in locating the benchmarking spreadsheet during the meeting, the overall tone of the audit report suggests a positive financial outlook for the City of McCook, with an emphasis on maintaining financial discipline and addressing areas for improvement.