Hopkinsville audit: independent auditor gives unmodified opinion; pension liabilities drive $3 million net deficit

Kelly Webb, a certified public accountant and partner at York, Neal and Associates, told the Hopkinsville City Council on March 4 that the firm issued an unmodified opinion on the city's financial statements for the year ended June 30, 2024. "In our opinion, the financial statements referred to above present fairly in all material respects the financial position of the city as of 06/30/2024 and the respective changes in financial position for the year then ended in accordance with generally accepted accounting principles," Webb said.

The audit presentation summarized government-wide and fund financial statements, component-unit reporting, and notes. Webb said the city's government-wide statement of net position showed a roughly $3 million deficit at June 30, 2024, driven primarily by long-term pension and other post-employment benefit (OPEB) liabilities. "You have a $50,000,000 pension liability," Webb said, noting the requirement to present the full liability on the accrual-based statements.

Webb emphasized that the fund-level results looked stronger: total governmental fund assets (cash, investments and receivables) were reported at about $38 million with a total governmental fund balance of about $35 million. Of that fund balance, roughly $18 million was restricted, committed or encumbered and about $17 million was unassigned.

On operations and cash-flow indicators, Webb reported total governmental revenues of about $63 million and total expenditures near $61 million, leaving revenues over expenditures of nearly $2 million and a total change in fund balances of about $6 million for the year. She summarized program and general revenues: program revenues were about $24 million, program expenses about $48 million, and general revenues (taxes and licenses) covered about $39 million of the net program costs.

The audit included a single-audit review because the city spent more than the federal threshold for testing; Webb said Hopkinsville's federal expenditures totaled $824,000 for the year, with $241,000 of that passed through to HWA. The single-audit report contained no deficiencies and concluded the city complied in all material respects with compliance requirements for its major federal program (Community Development Block Grant, or CDBG).

Webb pointed council members to several notes for detail: capital assets (Note 4), debt (Note 5), pensions and OPEB (Notes 7 and 8), commitments (Note 13), related-party transactions (Note 15), and subsequent events through the report date (Note 16). She also said the city's annual comprehensive financial report (ACFR) will be submitted to the Government Finance Officers Association for a certificate of excellence; the city received that award for the prior year.

Webb closed by offering contact information for follow-up questions and thanking city staff for cooperation during the audit. "If anybody does want to contact me about anything specific or go into anything in more detail," she said, "you can contact me at York Neal or email me."