Comprehensive Review of Financial Position

Comprehensive Review of Financial Position
The City of Horseshoe Bend manages multiple funds, each designated for specific purposes such as general operations, street maintenance, fire services, reserves, sewer operations, and debt service. Below is a detailed analysis of each fund's financial position, focusing on assets, liabilities, fund equity, revenues, expenditures, and net results.
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by Amberly Martin-Jeffries, CIPP
 
General Fund Analysis
$369,451.09
Assets
$2,330.16
Liabilities
$967,120.93
Fund Equity
$20,984.96
Net Revenue
The General Fund, which supports core municipal operations, is in a robust financial state. Liabilities are minimal, and the positive net result indicates revenues slightly exceed expenditures, reflecting balanced financial management. The substantial fund equity suggests a history of fiscal responsibility.
Street Fund and Fire Department Operations Fund
Street Fund
Assets: $227,073.37
Liabilities: $2,450.21
Fund Equity: $224,623.16
Revenues: $195,063.35
Expenditures: $151,656.98
Net Revenue Over Expenditures: $43,406.37
The Street Fund, dedicated to road maintenance and improvements, shows a significant surplus. The low liability level and strong net revenue suggest efficient use of resources, providing flexibility for future street-related projects.
Fire Dept Operations Fund
Assets: $105,807.73
Liabilities: $546.18
Fund Equity: $105,261.55
Revenues: $53,374.22
Expenditures: $41,933.92
Net Revenue Over Expenditures: $11,440.30
This fund, supporting fire department operations, is financially sound with a modest surplus. The minimal liabilities and positive net result indicate effective cost control and adequate funding for fire services.
Reserve Funds
Municipal Reserve Fund
Assets: $323,415.36
Liabilities: $0.00
Fund Equity: $323,415.36
Revenues: $3,319.28
Expenditures: $0.00
Net Revenue Over Expenditures: $3,319.28
With no expenditures and a small revenue stream (likely from interest), this reserve fund serves as a financial buffer. Its lack of liabilities enhances the city's long-term stability.
Capital Reserve MM Fund
Assets: $693,137.89
Liabilities: $0.00
Fund Equity: $693,137.89
Revenues: $78,533.89
Expenditures: $15,000.00
Net Revenue Over Expenditures: $63,533.89
This fund, likely earmarked for capital projects, demonstrates strong financial health with a large surplus. The significant revenue and limited spending reflect strategic planning for future investments.
Sewer Fund and Related Funds
Sewer Fund
Assets: $1,970,397.71
Liabilities: $37,518.62
Fund Equity: $1,932,879.09
Revenues: $316,545.66
Expenditures: $344,354.58
Net Loss: ($27,808.92)
The Sewer Fund, which handles sewer system operations, is the only fund reporting a deficit in 2024. Despite substantial assets and fund equity, the net loss suggests operational costs exceed revenues, warranting further scrutiny.
Sewer Debt Service Fund
Assets: $690,244.15
Liabilities: $564,367.01 (primarily long-term debt)
Fund Equity: $125,877.14
Revenues: $33,010.00
Expenditures: $17,000.00
Net Revenue Over Expenditures: $16,010.00
This fund services sewer-related debt and maintains a positive net result despite significant liabilities. The surplus indicates sufficient revenue to meet debt obligations in 2024.
Other Funds
Street Capital Asset Fund
Assets: $87,379.17
Liabilities: $0.00
Fund Equity: $87,379.17
Revenues: $23,505.03
Expenditures: $17,000.00
Net Revenue Over Expenditures: $6,505.03
This fund, focused on street capital assets, shows a modest surplus with no liabilities. It appears well-managed and capable of supporting ongoing street improvements.
Library Maintenance Fund
Assets: $37,106.65
Liabilities: $0.00
Fund Equity: $37,106.65
Revenues: $362.20
Expenditures: $0.00
Net Revenue Over Expenditures: $362.20
With minimal revenue and no expenditures, this fund is being preserved for future library maintenance needs, contributing to the city's reserve strategy.
Revenue by Month (Estimated)
Since the financial statements do not provide monthly revenue data, the table below estimates monthly revenue by dividing each fund's total annual revenue by 12, assuming an even distribution across the year. Note that actual monthly revenues may vary due to seasonal or other factors.
Note: These estimates offer a simplified view of monthly revenue. For precise insights, monthly data would be required.
Key Observations and Analysis
Overall Financial Health
The majority of funds (e.g., General Fund, Street Fund, Fire Dept Operations Fund, and reserve funds) report positive net revenue over expenditures, signaling strong financial management. The Sewer Fund's deficit of $27,808.92 is an outlier and the only notable concern in an otherwise healthy financial profile.
Liquidity and Solvency
Operational funds like the General Fund and Street Fund have low liabilities relative to assets, indicating good liquidity. The Sewer Debt Service Fund carries a large liability ($564,367.01), but its surplus suggests it can meet debt obligations in the short term.
Revenue and Expenditure Management
The General Fund's expenditures ($936,322.08) closely match revenues ($957,307.04), yielding a small surplus that reflects disciplined budgeting. The Street Fund and Fire Dept Operations Fund surpluses ($43,406.37 and $11,440.30, respectively) provide opportunities for reinvestment or savings.
Reserve Funds
Funds like the Municipal Reserve Fund, Capital Reserve MM Fund, and Library Maintenance Fund have no expenditures, reinforcing the city's strategy to maintain reserves for future needs or emergencies.
Areas of Concern
The Sewer Fund's net loss ($27,808.92) could erode its equity if not addressed. This may stem from insufficient revenue or rising operational costs.
The Sewer Debt Service Fund's significant liability requires ongoing monitoring to ensure long-term debt sustainability.
Recommendations
Address the Sewer Fund Deficit: Investigate the causes of the Sewer Fund's loss (e.g., high maintenance costs, inadequate rates) and consider adjusting fees or reducing expenses to restore balance.
Utilize Surpluses: Allocate surpluses from the Street Fund and Fire Dept Operations Fund toward infrastructure upgrades or equipment to enhance service delivery.
Preserve Reserves: Maintain the growth of reserve funds to ensure financial resilience against unexpected challenges.
Monitor Debt: Regularly assess the Sewer Debt Service Fund's performance to confirm its ability to service debt, exploring refinancing if conditions improve.
Conclusion
The City of Horseshoe Bend's financial position in 2024 is predominantly strong, with most funds demonstrating surpluses and healthy equity levels. The General Fund, Street Fund, and Fire Dept Operations Fund exemplify effective resource management, while reserve funds bolster long-term stability. However, the Sewer Fund's deficit requires prompt attention to prevent future strain. The estimated monthly revenue table provides a broad overview, though actual figures may differ. Overall, the city is well-positioned financially, with minor adjustments needed to sustain its positive trajectory.