Hoover auditors give FY2024 an unmodified opinion; net position falls $5.1 million

At a July meeting of the Hoover City Council, external auditors and city finance staff presented the City of Hoover's fiscal year 2024 Annual Comprehensive Financial Report and said the audit received an unmodified opinion. Steven Von Hagel of auditing firm BMSS told the council the report showed an "unmodified opinion," the highest level of assurance available for the city's financial statements. Jennifer Cornett, the city's finance official who presented the report, said the city's total net position for the year was $325,600,000, a decrease of $5,100,000, or 1.6 percent, compared with the prior year.

The audit and presentation matter because they summarize the city's financial health, long-term liabilities and available resources. Cornett told the council the government-wide statement shows $391 million in capital assets (net of depreciation) and $385 million in total liabilities, including about $183 million in bonds payable. She said the general fund ended the year with $81.3 million and total governmental fund balance was $224.8 million.

Cornett described the composition of liabilities and fund balances: "Including pension liability, other post-employment benefits liability, compensated absence liabilities...at the end of the year, we had $183,000,000 in bonds payable," she said. She said $240.9 million of the city's $267.7 million in current assets was held in pooled cash and investments, which contributes to the city's liquidity profile.

Von Hagel thanked city staff and noted there were "no disagreements with city management related to the audit." Cornett also told the council the city submitted its 2024 report for the Government Finance Officers Association Certificate of Achievement in Financial Reporting (the GFOA award) and was hopeful of receiving recognition again based on the FY2024 ACFR.

Council members asked about the city's debt and potential ways to reduce it. Cornett explained callable bonds and said certain prior bond issues include call provisions while others are not callable for years. She noted two bond issues that could be considered for early retirement would not necessarily be cost-effective because of the current investment returns and low incremental borrowing rates on the callable portion. She said notes payable could be extinguished for "a little under $5,000,000" if the council chose to do so. When asked about sewer debt if it were paid off now, Cornett said the sewer-related debt on the report was $16,300,000.

Cornett summarized the city's ratings and long-term outlook: she said the city maintained a triple-A rating from Standard & Poor's and an A1 from Moody's. She also reviewed the constitutional debt limit calculation used when issuing new bonds and described the city's margin from that limit, which she characterized as healthy.

The full ACFR and the presentation are available on the city's website, Cornett said.

The council did not take legislative action on the audit presentation; the report was presented for review and discussion.