Cloverdale Council receives cityaudit for fiscal year 2023-24, staff urged to review deficits

The Cloverdale City Council on March 26 received the city—s independent financial audit for the fiscal year ending June 30, 2024, after a presentation by the contracted auditor and questions from council members about one-time revenue and ongoing operating deficits.

Management—s discussion and analysis presented to the council showed the city—s total net position increased by about $6.5 million in fiscal 2024, with roughly $2.1 million of that increase attributable to land and about $4.86 million attributable to one-time capital grants and contributions, staff said. Council members and staff warned those one-time amounts mask structural pressures in some enterprise funds.

The auditor, identified in the meeting as Terry, explained the primary financial statements and noted the difference between government-wide and fund-basis reporting. Susie, a city staff member who answered detailed questions during the hearing, told the council the waterfront funds ended fiscal 2024 with roughly $3.3 million in cash and investments and that the city—s general fund ended the year with an approximate $9 million fund balance, a year-over-year increase of around $1 million.

Council discussion focused on operating deficits in enterprise funds. Councilor Marquez pressed for clarity about wastewater, which was presented as showing about a $63,000 deficit on the fund basis, and the airport fund, which staff identified as running an operating deficit of about $14,000 for the year. Staff said those deficits reflect the way transfers and expenses are reported and noted the airport historically operates at a deficit unless rates are adjusted; a rate study was suggested as the remedy.

Council members also queried how much of the fiscal improvement was one-time versus recurring. Susie said roughly $4.86 million of the reported net increase came from one-time capital grants and contributions, and that the remainder included asset valuation adjustments such as land. Council members urged the administration to identify structurally imbalanced funds and to bring options for corrective action to budget and admin work sessions.

After public comment, the council voted to receive the audit report. A motion to receive the audit was made and seconded and was approved by voice vote, recorded as passing 5-0.

The council asked staff to: (1) present proposed transfers of surplus into restricted reserve accounts consistent with existing policies; (2) explore a rate study for the airport enterprise to address ongoing deficits; and (3) return to the council with recommended administrative steps to address structurally imbalanced funds ahead of the next budget cycle.

The audit presentation was affected by audio problems with the remote presenter; staff fielded most questions during the meeting and the council thanked staff for their work on the audit.