By Christine Bolaños
The Williamson County Emergency Services District #4 received an opinion of unqualified on its annual audit from Medack & Oltmann, LLP. The report covers the financial year ending on Sept. 30, 2015.
“Which is the highest opinion,” CPA James Medack told commissioners during their March 21 meeting at the fire station.
The report shows the ESD’s assets exceeded its liabilities by $1,858,550. General Fund total expenses were $256,867 less than the $1,772,007 generated in revenues, primarily from taxes. This means the ESD spent less than it received.
Total assets, which include current and capital assets, are reported at $2,653,628 for the year ending on Sept. 30, 2015. This is higher than the total assets for the year ending on Sept. 30, 2014, which was $2,570,451.
Liabilities, including current and long-term, have dropped from $915,366 in 2014 to $795,078 in 2015. Total net is $1,858,550 for 2015 compared to $1,655,085 in 2014.
The analysis states tax revenue for 2015 increased 17.9 percent over 2014 and operating expenses increased $97,618 or 6.8 percent. The accountants report the general fund increased $256,867 due to increase in tax revenue.
“Actual revenues exceed the budget revenues by $139,700, while actual expenses including capital outlay and debt service were less than budgeted amounts by $93,376,” the report states.
The ESD’s long-term debt includes capital leases used for emergency equipment purchases and the new building addition. The district did not have bonded indebtedness, which are monies received and used for corporate purposes.
Total outstanding lease obligations for 2015 totaled $751,718. Total debt payments include a principal of $114,844 and interest expense of $33,553.
The report mentions the ESD is in the planning stages of construction for a new fire station with an anticipated completion date late in fiscal year 2017. It also notes the district’s expectation that it will need more equipment, facilities and staff amid rapid growth and that it was looking at avenues of additional revenue such as sales tax, which was approved by voters in November 2015.
The analysis makes note of misappropriation of funds during the fiscal year ending Sept. 30, 2014 and into a part of the 2015 fiscal year, as a result of a reported theft by a former employee.
“Additional misappropriations for the year ending Sept. 30, 2015, totaled $14,969,” the report states.
“The cumulative effect of this occurrence was approximately $41,832.”
If restitution is received, a gain will be reported in future financial periods. The report does state, for the record, the ESD received reimbursement from its insurance company of $25,000, which is included in miscellaneous revenues.
“So you’ve gotten roughly half back,” Medack said.
Finally, the report notes, the ESD made an agreement with the City of Liberty Hill for accounting services. During the fiscal year ending Sept. 30, 2015, the district paid $26,000 for these services.
The full audit is available to taxpayers upon open records request through the ESD.
The accountants advised ESD commissioners to be mindful of the district’s financial records to ensure all is running smoothly and not rely solely on audit reports, ESD staff and accounting services through the City.
“The monitoring is always an ongoing process with management,” Medack said. “These are your financial statements; it’s your responsibility.”
If the ESD, for example, spends money on an item that wasn’t in the budget that should serve as a red flag to commissioners.
“‘What did we budget? What did we spend?’” Medack said, are questions commissioners need to be able to answer.
“If you spent a bunch of money on something that wasn’t budgeted, why are we spending the money when there’s nothing budgeted,” Medack cited as an example. “We actually encountered this several years ago when people didn’t have anything budgeted but they’d spent quite a deal of money. Why was it never really resolved. That’s why you need to look at that to make sure there’s not anything out of line.”
ESD President Sandra Taylor agreed that keeping finances in order is still commissioners’ responsibility.
“That’s true,” she said. Medack recommended a general ledger, a budget comparison and balance sheet showing profit and loss.
“Because you’ll need those not only for the upcoming audit but also need those in case anyone ever comes in and submits an open records request,” Medack said.
He said in preparing the audit, his staff noticed several purchases from Amazon.com. He emphasized that commissioners should ensure an invoice always accompanies these online purchases to keep a financial record that all purchases made were for ESD purposes.
“We appreciate you guys being diligent here,” Taylor told the firm representatives.
Commissioners authorized a letter of agreement for general counsel for legal services with The Carlton Law Firm, P.L.L.C. This is the law firm that serviced the ESD during the sales tax election. After the successful election, staff thought it would be a good idea to continue working with the firm. Commissioners agreed in a 4-0 vote with board member Dan Clark absent from the meeting.
“They’re very involved with the Texas State Association of Fire and Emergency Districts (SAFE-D) organization so they understand ESDs, their environment and political ramifications,” Fire Chief Anthony Lincoln said. “We were using Ms. (Ann) Holliday for basically looking at our contracts and stuff like that, but this is for legal — now we’re looking for someone who can make sure we’re on the right track internally for our organization. Having meetings posted the right way, certain things we need to do.”
Taylor said John Carlton helped establish ESDs, which strengthens the firm’s qualifications.
“I was very pleased with the work he did for us during our sales tax deal,” Lincoln said. “He was pretty responsible in getting information back to us. He would think of things that we didn’t think of and making sure he was keeping us on track on stuff.”
The services are on-call with no commitment from the ESD for a certain amount of time. The firm did request Carlton attend two ESD meetings at the commissioners’ discretion.
“I’m all for that to make sure we’re in compliance,” Taylor said.
The rest of the board agreed. Carlton’s services are $295 an hour while his partner’s services are $275 an hour. The agreement can be terminated with a 15-day written notice. Lincoln later told The Independent that the ESD will continue using Holliday’s services, but her focus is “contracts and small stuff.”
“I think that’s a good idea to make sure he can answer questions that we have,” Taylor said.
Commissioner Kirk Lowe suggested having Carlton come in during a summer meeting when the first sales tax report makes it on the agenda. He said commissioners will likely have questions at that time.
First Texas Bank signature cards
Commissioners decided to add all commissioners to the signature cards with First Texas Bank. There have been a couple of instances when the ESD has had issues getting two signatures when needed.
For example, the ESD recently met Commissioner James Crabtree at his job in Austin, to get his signature to be able to process payroll for staff. Having all board members authorized as signers will lower the possibility of this type of inconvenience. If any similar issue arises in the future commissioners will consider adding Lincoln as an additional signee.
Fire Chief’s Report
Lincoln reported that the fire department responded to 91 incidents in February. Sixty-eight percent of those incidents were rescue and medical. The department responded to 1,248 incidents in 2015. This is a 10 percent increase in call volume from the previous year.
Average response time for 2014 was 8 minutes and 26 seconds compared to 9 minutes and 18 seconds in 2015. By contract, average district response time in January 2016 was 7 minutes and 35 seconds. Response time in February was 7 minutes and 36 seconds.
Relocation of district funds to improve revenues
Commissioners approved relocating district funds to improve revenues. The item was discussed in executive session, and once the Board returned to open session, approved the item in a 4-0 vote.
Specifically, the Board approved investing up to $500,000 in a certificate of deposit with Union State Bank as well as a new building fund of up to $500,000. The certificate of deposit is considered a Rainy Day Fund. The new building is Money Market.
“That was trying to be diligent in making sure we’re getting the most for the money that we have as far as interest rates,” Taylor told The Independent immediately following the meeting. “And making sure that we as commissioners are doing our best to make sure we get the best rates we can on the money that we have.
“We have a new money market account that is going to be for the new building fund,” Taylor added. “We’ll be spending as it comes up. We’ve got architectural fees and stuff on that. The Rainy Day Fund, which is the operating fund, and that’s 90 days. They have a better return investment. We wanted to stay within the district and within the town and we had quotes from all the banks here and we picked Union State because it had the best interest rates for us.”
The next board meeting is scheduled for Monday, April 18, at 6:30 p.m. at the fire station.