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City staff reports audit delays, council weighs budget priorities, reserves and service cuts
Summary
City staff reported audit delays and proposed bringing check reconciliations in-house; councilmembers demanded regular year-to-date financial reports and discussed rebuilding reserves, prioritizing capital projects and possible service reductions.
City staff told the Crookston City Council on May 5 that the external auditor had not finished the check reconciliations needed for a timely audit, and staff proposed bringing reconciliations in-house to accelerate completion and reduce consulting costs.
Staff said the audit contractor, CLA, was still finishing January check reconciliations and had billed approximately $19,000 for reconciliations between Sept. 30 and the end of last month; staff reported CLA provided some bill credits and that city staff (Holly and others) plan to take reconciliation work in-house once January is complete. Council members repeatedly requested regular year-to-date financial reports at every other council meeting so they can monitor budget performance in-season rather than learning of overruns at year end.
Council members criticized the prior outsourced reconciliation process and expressed frustration that the city is behind on reconciliations and audit readiness. Staff said bringing the reconciliation in-house would be led by Kathy (current payroll/fiscal staff) and that the city believes it has the internal bandwidth to complete the work.
Beyond the audit timing, the council discussed rebuilding its unrestricted reserves. Staff reported that after accounting for $300,000 in restricted funds (radios for police and fire), the city’s unrestricted reserves were roughly $780,000 and that the city needs to rebuild to a target that could require roughly $400,000 per year for several years—a multi-year effort that may take about eight years depending on revenues, bonds and capital needs.
Council members and staff reviewed major capital needs presented by staff: an industrial park project (roughly $3.3 million) and anticipated roads and infrastructure work (~$2 million) that staff expect to bond. Staff said 10–12 million dollars of infrastructure work was identified by consultants over five years, and that maintaining all current amenities without revenue growth will strain the levy and reserves. Staff warned departments cannot absorb drastic cuts without impairing operations and urged council prioritization of services.
Council members discussed potential service reductions and operational changes to control costs. Suggestions included reducing the number of parks (Crookston currently maintains 22 parks), converting some park areas to lower-maintenance native plantings, charging or seeking reimbursement for mowing on certain properties, and evaluating underused mowing responsibilities. Staff said some donated parks may have deed restrictions that complicate removal and that donated park land may return to prior owners if no longer used as a park.
The council also debated the future of the municipal pool and child-care needs. Members proposed a resident survey or outreach to gauge community appetite for continued city funding of the pool, potential sales-tax options, or allowing community fundraising groups to raise funds; staff and council agreed to develop clearer cost estimates and capital assessments so community groups could pursue targeted fundraising. Councilmembers urged quarterly budget meetings or regular financial updates to avoid last-minute budgeting stress.
Staff said the city will request an extension for the audit timetable; the state deadline is September 30 for final filings. Staff’s goal is to produce a draft audit by August and to complete reconciliations to enable auditors to prepare reports on schedule.
