East Point manager flags audit backlog, reserve shortfalls and proposes using separate trust to balance FY2027 budget

City Manager Jones presented the City of East Point's draft FY2026—FY2027 budget, saying the plan centers on "balancing today while building tomorrow" and listing five council priorities: fiscal sustainability, public safety and sustainability, an innovative and high-performing organization, infrastructure and capital, and economic growth.

Jones told listeners the city has struggled with "overly optimistic revenue projections" for roughly a decade, accompanied by delayed financial audits and turnover in leadership that have made budget management inconsistent. He said those practices have led to repeated reliance on unassigned fund balance to close budget gaps and create uncertainty about the city's true reserves.

Illustrating the issue, Jones compared a multi-year budget projection that showed roughly $218 million in revenue with an actual fiscal-year intake near $189.8 million for that year, calling the gap "substantial" and noting that repeated shortfalls over a 10-year window account for about $14 million of unaccounted uses from unassigned funds, according to his presentation.

Because the city operates a pooled-cash accounting system, Jones said staff cannot yet be confident that every dollar is in its intended reserve or restricted account. "We are recommending using the MCT [Municipal Competitive Trust] to balance our operating budget going into 2027," he said, explaining the MCT is a separately held reserve used for power emergencies and therefore cleaner to draw from while pooled-cash reconciliation and overdue audits are completed.

Jones emphasized utility and power-fund pressures: years of suppressed seasonal utility rates and underfunded capital have stressed the electric fund, and he estimated a current-year electric deficit and a multi-year estimated shortfall that have to be addressed in the upcoming budget process. He said the city expects a near-term operating imbalance that staff intends to cover from the MCT rather than from uncertain pooled-cash reserves.

The presentation also outlined several budget-driven investments and operational changes: committing to a five-year capital improvement outlook, investing $1.1 million in mast-arm traffic signals at priority intersections, updating the stormwater management plan to address flash-flood risks, advancing a roughly two-mile PATH downtown public—private project, continuing storefront grant and workforce investments ($150,000 each), piloting AI analytics for event and foot-traffic data, and bolstering network security with a full-time network administrator after a prior cybersecurity incident.

Jones said the city remains behind on audits but aims to catch up (staff projected closing FY2024 audits by the end of May and becoming current by Jan. 1, 2027). To reduce near-term uncertainty, he said staff will recommend an emergency procurement to bring in a consultant to perform an accounting reconciliation of the pooled-cash system and provide working balances while formal audits continue.

On staffing, Jones said five positions previously funded by one-time ARPA dollars are being transitioned into ongoing operations where possible; he said the staff plan avoids layoffs and seeks to retain the employees. He also confirmed an explicit FY27 goal to recruit a permanent finance director; by ordinance the manager will present the top three candidates to council.

During the Q&A, the interim finance director said the budget book is being updated, the presentation will be posted online, catch-up audits are considered part of finance operations (likely charged to professional services in the general ledger unless itemized) and that staff will provide clarifications to slide figures flagged by participants.

Next steps: Jones urged public engagement and said the city will schedule another online meeting, two public hearings and a council vote on the budget currently targeted for June 1.