Auditors for the city of Poplar Bluff identified three problems with financial statements for 2017, which officials say they are working this month to correct.
Capital improvement tax money is being deposited into a pooled bank account and the city appears to be using this money for other purposes, auditors with Kraft, Miles and Tatum reported in documents reviewed Monday by the city council. Auditors also raised issue with the lack of a prepared budget for a fund that holds dollars paid to developers of the Eight Points retail area, and for failure to provide a report related to health insurance for retirees.
A corrective action plan has been identified, according to city manager Mark Massingham.
"These are fairly easy things to take care of," he said.
Capital money
Massingham said funds generated by the capital improvement tax, which are restricted to certain building and equipment projects, have been held in a pooled bank account with other city money for 30 years.
The city tracks the money spent on capital projects separately from other money, but has never held it in a separate bank account, he said.
"It sounded like we were using capital improvement money for other things, which wasn't true," Massingham said.
The city will set up a separate bank account for the capital tax dollars, he said. The process will start immediately, but could take up to two months to coordinate with the Missouri Department of Revenue, Massingham explained.
The city reported a balance of just under $1.2 million in the capital account in December 2017, when preparing the 2018 budget. Another approximately $1.2 million was reported in a money market account and used by the general fund, which pays for the majority of city expenses, including police, fire and street departments.
Auditors raised questions during last year's report about a dropping cash balance, noting that operating deficits appeared to have quickly eaten away at reserves.
The city owed itself approximately $4.8 million at the end of 2017 due to overdrafts by the health insurance, Black River Coliseum, airport, golf course, park and pool/fitness funds, according to the audit.
This is a drop from $5.3 million in overdrafts reported in the 2016 audit.
Deficits changes are (approximate):
2017-2016
* Health/dental insurance
$2.7 -- $3.4 million
* Coliseum
$1.1 -- $1.2 million
* Airport
$400,900 -- $380,200
* Pool/fitness
$337,100 -- $329,700
* Park
$126,800 -- $32,200
* Golf course
$53,800 -- $12,600
Eight Points budget
The fund in question was set up for the Eight Points tax increment financing district, which reimburses developers for allowed expenses, Massingham said.
A budget revision will be made at the July 16 council meeting, he said.
The city had expected all of the money in that account to be used by the time budgets were prepared, which is why no budget was approved, he said.
"If that money wasn't there, we wouldn't have had to do anything," Massingham said.
Retirees
A current report that helps show money that will be spent by the city on retiree health insurance was not turned in with audit documents, according to auditors.
The city has been working on this and expects to have it in the next 60 days, Massingham said.
The city's current broker, Jeff Qualls, was unable to complete the document and had difficulty getting information from the former broker, Covenant, according to Massingham.
A city employee will continue to work on compiling a current actuarial report, he said. The report looks at the age of employees, when they will retire and what the cost to the city will be, Massingham explained. It helps the city know what costs could be five and 10 years from now.