Jackson City audit committee hears external auditors warn fund balance fell below policy and notes $3 million budget overrun

Unidentified Speaker 1 convened a special Jackson City Audit Committee meeting and invited public comment before the committee heard a detailed presentation from the city's external auditors on the 6/30/2024 financial statements.

A public commenter told the committee they had reviewed the audit report and related minutes and identified several errors in the published report, including incorrect officer listings on page 1 and an inaccurate component-unit address on page 29; the commenter also raised governance concerns about a 03/07/2023 ordinance that split the former budget-and-audit committee into separate budget and audit committees and questioned whether the audit committee's membership and election timing were being followed. "If you start on page 1 ... Johnny Dodd [is] listed as the secretary or as the vice mayor. He should be the treasurer," the commenter said. The chair said the committee would take those items into consideration and make corrections as needed.

The committee then moved and approved last month's minutes. An unidentified member moved to accept the minutes and another member seconded; the chair called for the question and the motion carried as recorded in the meeting.

James Vince, engagement partner for the audit engagement, presented the external-auditor's findings and described the firm's approach to governmental audits. He said the audit opinion is an assessment of whether the financial statements are materially correct, based on risk assessment and sampling rather than an examination of every transaction. He explained that component units such as Jackson Energy and the Jackson Community Development Agency contract for their own audits and that the city's consolidated opinion depends on receiving clean opinions from those entities.

Vince noted the city exceeded the federal single-audit threshold because it expended about $5.5 million in federal awards during the year, largely from coronavirus state fiscal recovery/ARPA funds; the auditors issued an unmodified opinion on the tested program but recorded findings related to that work.

On fund balance, the auditors showed a downward trend from 2021 through 2024. The city's unassigned fund balance was about 23% of annual expenditures at the end of fiscal 2024, below the city's stated minimum reserve policy of 25 percent. Based on the adopted 2025 budget, Vince said a simple projection would put year-end 2025 fund balance at about $19,000,000. The auditors recommended the audit committee communicate these facts to the council and to the budget committee and to develop a plan to restore reserves to policy levels.

The presentation also flagged that actual expenditures exceeded the adopted budget by roughly $3,000,000 for the year; auditors proposed several audit adjustments during the engagement, and management agreed to record the proposed entries in the 6/30/2024 financial statements.

Vince reviewed revenue trends, noting sales tax has provided growing receipts relied upon by the city while property-tax revenue has remained relatively flat because assessed-value increases were offset by tax-rate rollbacks. During questions, a committee member asked for clarification about a charted property-tax figure and the auditors offered to provide further breakdowns, including total tax revenue by source, on request.

The committee indicated it would take the auditors' findings and the public commenter's concerns under advisement and planned to place corrective items and follow-up tasks on the December agenda; no formal policy decisions were made at the meeting.

(For transparency: direct quotes and numerical figures in this report come from the committee meeting transcript and the auditors' presentation.)