State Auditor David Yost’s Offices has released a performance audit for the City of Portsmouth that recognizes the City’s continued effort to improve fiscal operations. The audit was done based on Portsmouth’s fiscal watch designation and provides not only assessments of the City’s operations but also makes recommendations where needed.
“Portsmouth has already taken steps to improve its fiscal health,” the report stated, further adding that 12 of 16 fiscal distress and financial health indicators (FHI) had a positive outlook; whereas, only three were cautionary and one was critical. The audit considered five years of financial data up to 2015. “Overall, the City’s FHIs show that it has made steady improvement in many areas of its finances.”
The one indicator rated critical and needing immediate response shows budgetary noncompliance, which includes accounting practices and reporting, and is based on data from only the last four years. The three areas rated cautionary were condition of capital assets (measuring depreciation of capital assets), daily expenses and daily expenditures of the General Fund.
The audit provided City leaders with recommendations. which were estimated to be able to save the City a total of $1,012,500.
These recommendations include discontinuing the use of the Insurance Fund to pay for non-risk financing activities, adopting a more cost-effective health insurance plan (an annual saving of $312,000), increasing employee premium contribution rates for all employees (an annual saving of $47, 000), evaluating utility rates annually, collecting delinquent utility accounts (a one-time revenue of $614,000), developing standard operating procedures and implementing a work order system, evaluating the City Charter provisions regarding public safety staffing levels, implementing a workload-based staffing methodology, considering the discontinuing of the take-home patrol vehicle policy (an annual saving of $14,500 and one-time revenue of $25,000), and developing a preventive maintenance plan for all City vehicles.
The City of Portsmouth has long struggled with budget issues. Before being placed on fiscal watch status, Portsmouth was first placed into “fiscal caution” effective on November 22, 2011.
The decision was based on significant deficiencies, material weaknesses and direct and material noncompliance with Ohio law. The City’s financial audit included negative cash fund balances, the need to update a cost allocation plan used for allocating General Fund costs to other funds, appropriations exceeding both estimated and actual available resources in the General Fund, not certifying the availability of funds prior to making commitments, and the underfunding of the City’s insurance fund which, on a cash basis, created a significant deficit fund balance.
Additional issues from the year prior included deficit fund balances at December 31, 2010 consisted of $530,043 in the General Fund and $9,482 and $10,332 in the Municipal Court Grants and Rural AIDS State Grant Special Revenue Funds, respectively, as reported in the City’s financial statements prepared in accordance with generally accepted accounting principles.
In accordance with the aforementioned fiscal caution requirements, the city formally submitted a recovery plan in January of 2012. On November 30, 2012, the Auditor’s Office notified the city that inadequate progress had been made in correcting or eliminating the issues that precipitated the placement into fiscal caution. As a result, on April 9, 2013 the city’s fiscal caution status was terminated and a status of fiscal watch was initiated. Portsmouth has remained on fiscal watch since that time.
To view the audit, visit http://www.ohioauditor.gov/ and use the search option.
Reach Nikki Blankenship at 740-353-3101 ext. 1931.