Erin building up financial reserves

ERIN – The Town of Erin has received high praise from its auditor for financial management, but a question remains about potential risk to the town, mentioned in confidential material provided previously to town councillors.

Council received draft financial statements for 2018 from Sally Slumskie of BDO Canada and a report from finance director Ursula D’Angelo at a meeting on Aug. 13, with the financial statements scheduled for final approval on Sept. 3.

Slumskie noted the town did not take on any new debt in 2018. Long-term debt had more than doubled in 2016 to $4.6 million, but with regular payments declined to $3.9 million in 2018.

She said money held in investments increased by about $2 million compared to 2017, to a total of $7.8 million, primarily due to more being set aside for future needs. Total reserves were $8.2 million for 2018. 

The town has been able to improve infrastructure sufficiently to at least compensate for the depreciation of its assets, she said.

After Slumskie’s presentation, councillor Mike Robins asked her about risks mentioned in a briefing given to councillors prior to the audit.

He said there was a section on risk assessment that referred to “staff turnover of 75 per cent and proper reporting of severance costs.”

Before Slumskie could answer, clerk Lisa Campion informed the mayor that councillors are not allowed to ask questions about material not presented to the public.

Mayor Allan Alls ruled the question out of order and said some of the material provided to councillors was confidential.

Robins said he has no detailed information and was simply asking about the nature of the risk.

The audit report itself contains no mention of the issue, and Robins said later, “To the best of my knowledge there were no findings to support that concern.”

The Advertiser later asked staff for clarification on how staff turnover or the reporting of severance costs could be considered a risk.

Communications officer Jessica Spina said only, “Without breaching confidentiality, the town can confirm that the facts stated through the councillor’s question were not correct.”

With financial assets (not including capital infrastructure) of $13.5 million and liabilities totaling $9.5 million, the net financial assets are about $4 million, up $2.25 million from 2017.

Net financial assets had been declining slightly from 2015 to 2017, but are up substantially for 2018.

When tangible capital assets of $49 million are included (land, buildings, vehicles, furniture, roads, bridges, etc.), the town’s accumulated surplus is $53.1 million.

Total town revenue in 2018 was $13.2 million, with about $7 million from taxation, $2.4 million from fees and user charges, $1.4 million from grants, and $2.4 million from other income.

The income includes about $1 million from the sale of the town’s Shamrock Road property, helping push revenue over budget estimates by almost $1.4 million.

With 2018 expenses at $11.3 million, down slightly from $11.7 million in the budget, the town had ended up with an annual surplus of $1.9 million.

That compares to a $1 million deficit in 2017.

As part of the final wrap-up of 2018 finances, council approved two changes recommended by D’Angelo.

She said council had previously approved a transfer of $41,000 to a reserve, to fund the economic development strategy. 

It was later discovered the amount was already included in the operating budget, so the money is now being split between the tax stabilization and infrastructure reserves.

Also, the town has had a liability of $340,900 recorded on its books since 2010, for shared costs with the Upper Grand District School Board for the sewage treatment system that serves Centre 2000 and the high school.

The town has been contributing $20,000 annually towards operations of the plant, and this will continue through 2025 under a joint operations agreement.

D’Angelo said the $340,900 liability no longer exists, so she recommended the amount be transferred to the Erin Community Centre Reserve “to pay for renovations and improvements in the near future.”