How to Prepare the Audit Analysis

Introduction 

This paper will discuss the financial plan of Community Development Corporation of Butler County. The aim here is to make preparations for a challenging City Council meeting where a ‘city of affairs’ presentations will be made to the mayor and other council members. The presentation will show areas where significant cuts can be made to facilitate the funding of other critical areas. The particular financial plan is assessed herein; using information from the CDC’s budgets. 

Fastest Growing Category of Expenditures 

The following table shows that park facility maintenance is the fastest growing category of expenditure. 

Expenditure	FY 2015-16 ($)	FY 2012-13 ($)	Change ($)	Percentage
Executive expenses	819,562	835,738	-16,176	-1.9%
Human resource expenses	334,021	285,635	48,386	14.4%
Information Technology expenses	75,055	67,589	7,466	9.9%
Finance expenses	440,238	372,744	67,494	15.3%
Communications expenses	249,173	207,410	41,763	16.7%
Debt service expenses	1,580,022	1,473,353	106,669	6.7%
Tax collection expenses	318,087	279,966	38,121	11.9%
Insurance	438,700	343,070	95,630	21.7%
Land development	356,710	294,301	62,409	17.4%
Code enforcement	572,348	442,982	129,366	22.6%
Planning	232,803	161,608	71,195	30.5%
Customer service	124,350	108,415	15,935	12.8%
Park facility maintenance	17,405	3,300	14,105	81.03%
Park community events	45,127	35,942	9,185	20.3%
Park operation	625,493	374,221	251,272	40.1%
PW Administration	492,968	437,727	55,241	11.2%
Grounds maintenance	861,875	823,161	38,714	4.4%
Fleet maintenance	293,304	233,339	59,965	20.4%
Road maintenance	1,211,390	1,245,809	-34,419	-2.8%
Police patrol	2,839,373	2,320,390	518,983	18.2%
This table presents budget data for different expenditure categories for the financial years shown in Cranberry Township, Retrieved from https://www.cranberrytownship.org/ArchiveCenter/ViewFile/Item/1271

Figure 1: Fastest Growing Category of Expenditures. 

General Property Tax 

The total revenue for Cranberry Township is $17,956,804, whereas the general property tax is $2,998,615 (Cranberrytownship.org, 2015). This tax represents 16.7% of the city’s revenue as shown below: 

Particulars	Amount
Total Revenue	$17,956,804
Revenue from General Property Tax (GPT)	$2,998,615
Percentage of revenue from GPT	16.7%

Figure 2: Percentage Revenue from GPT. Data retrieved from Retrieved from https://www.cranberrytownship.org/ArchiveCenter/ViewFile/Item/1271 

The following table shows how the GPT is growing in each year of the financial plan. 

FY	2012-13	2013-14	2014-15	2015-16
General property Tax	2,867,844	2,957,040	2,953,653	2,998,615
Percentage Growth		103.11%	-0.11%	101.52%

Figure 3: Growth of GPT for Each Year. Data retrieved from Retrieved from https://www.cranberrytownship.org/ArchiveCenter/ViewFile/Item/1271 

Capacity for Refunding/ Reorganizing Existing Debt Organizations 

The reorganizations of debt obligations in the CDC is an appropriate way of addressing the debt problems that face the city. In the financial year under study, this coporation has various debt obligations such as a Promissory Note from CTVFD Relief Association, and General Obligation Bonds for Series 2010, 2003, 2011, and 2012. These obligations stretch for a number of years ranging from ten to twenty years. According to the 2015 annual budget, the debt service expenses category has an allocation of $1,580,022 whereas the total whereas the total budgeted expenditure stands at $19,549,100 against the proposed general fund revenue of $17,956,804. These figures show a budget deficit that is sufficient to warrant a discussion about reorganization of debt obligations (Cranberrytownship.org, 2015). 

One of the strategies that can be utilized here is the reorganization of financial obligation in the corporation is to cover the budget deficit and enable the settling of the debts. Furthermore, the corporation can prioritize the debts that can obstruct the potential to perform fiscal obligations and council functions (Chen, Forsythe, Weikart & Williams, 2008). In addition to that, the corporation has an existing capacity to reduce the total fees, penalties, and rates brought about by the debts through a process of diligent debt repayment and prioritization. Similarly, the corporation can reduce the number of fees paid for other services and expense categories and use the saved funds for repayment of the debts (Weikart, Chen & Sermier, 2012). 

Funding Alternatives for Debt Obligations 

There is a need for Cranberry Township to prioritize on servicing the existing debt obligations to prevent an exponential rise of the city’s debt. There are various funding alternatives that are available for this city in the quest for debt management. For example, one of the most practical choices would be for the corporation can seek for grants from the federal government. Seeking one of the grant offers from the federal government, such as the project grants, would enable Cranberry Township to redirect some of its revenue to the servicing of debt obligations. The federal government gives close to twenty percent of its budget to states and local authorities to facilitate the funding of various services and projects (Dollery, Kortt & Grant, 2013).  

Another alternative that can be used in the endeavor to support debt obligations is to increase the rates of various revenue streams such as Real Estate Tax, Licenses and Permits, as well as Interests and Rent among others (United Nations, 2002). Striking a favorable balance between continuity of operations and increased revenue collection will enable the corporation to have the funds to service the existing debts. However, such an initiative should not be focused on crucial institutions or operations but instead to revenue categories that can sustain the increased taxation. For example, the corporation can seek to increase the rates for Park Programs in the recreation category or Snow Removal in the public works category. 

References 

Chen, G. G., Forsythe, D. W., Weikart, L. A., & Williams, D. W. (2008). Budget Tools: Financial Methods in the Public Sector. SAGE. 

Cranberrytownship.org, (2015). Cranberry Township 2015 Budget . Retrieved August 1, 2019, from https://www.cranberrytownship.org/Archive.aspx?AMID=60&Type=&ADID= 

Dollery, B., Kortt, M. A., & Grant, B. (2013).  Funding the future: Financial sustainability and infrastructure finance in Australian local government . Annandale, N.S.W: Federation Press. 

United Nations. (2002).  Financing for development: A critical global collaboration . New York: United Nations. 

Weikart, L. A., Chen, G. G., & Sermier, E. (2012). Budgeting and Financial Management for Nonprofit Organizations. CQ Press. 

Appendix 1 

Budget Summary 

General Fund Revenue 

Department	Budget ($)
Legislative	15,536,115
General Government	249,303
Community Development	1,171,600
Public Safety	158,500
Public Works	83,836
Recreation	757,450
Total	17,956,804

General Fund Expenditures 

Department	Budget ($)
Legislative	42,010
Miscellaneous	1,910,000
General Government	4,254,858
Community Development	1,161,861
Customer Service	124,350
Public Safety	5,519,610
Public Works	4,927,696
Engineering	510,166
Recreation	1,098,549
Total	19,549,100