FINANCE DEPARTMENT
GOALS / PURPOSE
The staff of the Finance Department continually strives to render its services to both City management and the citizens of Morgantown in a professional manner. The Finance Department serves City management, along with its various departments and agencies, by performing the many financial and accounting functions required in an proficient and timely manner and in compliance with Federal, State, and City laws and regulations. However, the Department’s ultimate goal is to provide efficient, courteous and equitable service to the citizens and taxpayers of Morgantown.
Financial administration in a city of Morgantown’s size and complexity encompasses numerous areas of expertise and requires the efficient performance of many, varied duties and activities by the Finance Department staff. In addition to the General Fund, which is the operating fund of city government, the Finance Department also performs all accounting functions for seven special revenue funds, the capital improvement fund, three enterprise funds – Airport, Parking Authority, and Building Commission, the Life and Health Fund, and three pension trust funds. The accounting functions of the Board of Parks and Recreation Commissioners Fund (BOPARC) are also under the supervision of the Finance Director.
The Finance Department is responsible for revenue collection, business licensing, procurement, accounts payable and disbursement processing, payroll, budgeting and budget compliance, investment and cash management, insurance and risk management, general accounting and financial reporting. The following sections detail the operation of some the Department’s main activities.
Cities in West Virginia are restricted by State Code as to the types of taxes and fees they may utilize to support City government. Consequently, every effort must be made to maximize the available revenue sources, while maintaining fairness and equity in revenue administration. Total General Fund revenue has grown approximately 23% since the fiscal year ended June 30, 1999, from $11.3 million to $13.9 million received in the fiscal year ended June 30, 2002.
As depicted by the following graph, Business and Occupation (B&O) Tax accounted for more than 55% of General Fund revenue in the fiscal year ended June 30, 2002. Property taxes and service fees, of which most is fire service fees, made up slightly more than 27% of total revenue. The remaining 18% of revenue is comprised of various other taxes, fees, fines, grants, and interest income.
The growth in total general fund revenue can be directly attributed to the growth in Business & Occupation Tax, as depicted in the following graph, and much of the growth in B&O taxes is due to contracting B&O Taxes resulting from several major construction projects in Morgantown over the past three years. However, other revenue sources have maintained steady, though far less dramatic, increases.
Procurement, Accounts Payable, and Disbursement Processing
Finance Department staff is responsible for processing all purchase orders and issuing all disbursements checks for all funds of the City of Morgantown. Disbursement checks are issued bi-weekly utilizing a central paying account, with transfers made from each fund to cover the expenditures from that fund. During the last fiscal year, approximately 1,938 purchase orders were processed and 4,077 checks were issued. The following chart illustrates total expenditures for the General Fund by function.
Total general fund expenditures have grown approximately 22% since the fiscal year ended June 30, 1999, but regular operating expenditures have only grown by 12%. The balance of the growth in expenditures represents increased contributions to the Capital Escrow Fund for major capital improvements and acquisitions.
As a service provider, the largest expense incurred by the City of Morgantown and its affiliated agencies is expected to be, and is, for personnel. The following chart depicts the relative size of total expenditures for personnel compared to other types of expenditures. Personnel costs include salaries and wages, payroll taxes, and fringe benefits including retirement and health insurance. In recent years, skyrocketing medical and prescription drug costs have greatly impacted the cost of providing health care benefits to employees.
The Finance Department processes payroll disbursements bi-weekly for approximately 204 full-time employees and 26 part-time employees. In addition, monthly pension disbursements are also processed for approximately 190 retirees and/or survivors of the City’s three pension funds. Finance Department staff also assists City management in monitoring and controlling health care costs, analyzing pension funding, dealing with Workers’ Compensation issues, and other related functions.
The most valuable resource in the Finance Depart is its dedicated and experienced staff. In addition to the staff of seven, which includes the Finance Director, Assistant Finance Director, and five accounting clerks each responsible for a specific functional area, the accounting clerk for BOPARC is also located in the Finance Department. During the most recent year, the Finance Department has also utilized the services of two interns from West Virginia University. This experience has proven to be very worthwhile and is one that the Department expects to continue.
During the past year, the Finance Department replaced its IBM AS/400 computer system with the upgraded IBM iSeries 820. This system has greatly enhanced features and has improved processing speed tremendously. Payrolls that formerly required 2 to 3 hours of processing time are now completed in a matter of minutes. All “dumb terminals” have been replaced by PC workstations, which facilitate the downloading of information from the main database into PC applications such as Excel. In addition, all workstations are networked to the main computer network installed this year in City Hall, and all now have Internet access and email capability.
Internship Program
One of the highlights of the past year has been the two internships that have been utilized to supplement Finance Department staffing needs, while providing a worthwhile training experience to accounting and public administration students. The accounting intern was responsible for continuing progress on the City’s fixed asset system in preparation for the implementation of GASB 34, but also assisted with other accounting and clerical duties as needed. This was a great benefit to the Finance Department staff during the very busy months of June and July, especially in light of the resignation of the collection clerk during that time.
The public administration intern’s project was to analyze the Department’s B&O collection system for businesses engaged in contracting, to make recommendations to improve the system, and to assist in the implementation of those recommendations. One of the major deficiencies in the existing system was in communicating the tax regulations and requirements for reporting to the various construction contractors doing business in Morgantown, many of which are out-of-state companies. A contractor information sheet was developed and is being distributed to all contracting firms in a proactive effort to eliminate noncompliance due to ignorance of the applicable laws and regulations. Another major deficiency was in the lack of follow-up on known construction projects by comparing City building permits and purchase order lists received from West Virginia University with actual B&O tax filings. During the months of April through July, approximately $217,000 was collected through the efforts of the intern in developing and implementing new follow-up procedures.
With the upgrade of its hardware discussed previously, the Department also made the commitment to continue utilizing New World Systems software for general ledger, payroll, revenue accounting, business licensing, accounts receivable and fixed assets. This decision was reached after thoroughly researching alternative systems.
The fire fee billing system was migrated from the New World System’s utility billing module to the accounts receivable module. As a result, the Department has been able to discontinue paying the maintenance of approximately $4,500 per year on the utility billing system, a comprehensive system designed for water and sewer billing of which the Finance Department was a using only a very small portion of its capabilities. Fire fees were billed on time using the new system, although there are still some minor “bugs” to be worked out.
Services to City Agencies and Affiliates
The Finance Department provides a variety of accounting and consulting services to City agencies and affiliates. During the past year, the Department assisted the Airport in setting up the accounting for the temporary takeover of the restaurant operation and continued the accounting and financial reporting for the FBO operations. Department staff assisted the management of the Parking Authority in compiling the financial projections required to secure the financing for its proposed new Wharf garage. The Finance Director also attends all BOPARC board meetings to advise the Board of the agency’s financial condition and to answer related questions and concerns. In addition, Main Street Morgantown continues to utilize the services of the Finance Department for accounts payable and payroll processing, general accounting, and tax reporting.
Training and Staff Development
The Finance Director attended New World System’s annual user conference, which focused on developments in both technology, including eGovernment issues, and in governmental accounting and reporting. Staff members continue to be involved in the activities of the Government Finance Officers Association, both on the state and national levels, and in the activities of the West Virginia Municipal League that deal with
municipal finance and taxation. The Finance Director also served as a guest lecturer in an undergraduate journalism class and in a graduate public finance class.
The City of Morgantown received an unqualified opinion on its financial statements from its auditors, Tetrick & Bartlett, PLLC, for the fiscal year ended June 30, 2001. In addition, there were no reportable conditions pertaining the system of internal controls nor any instances of noncompliance that were required to be reported. Due to a recent change in State law, all municipalities in West Virginia are required to have their audits performed every three years by the State Auditor’s Office. The City has been informed that the State Auditor’s Office will be performing the audit of its financial statements for the latest fiscal year, to commence in December, 2002.
The coming year will certainly bring some important new challenges and opportunities to the Finance Department.
As a “Phase II” government, one with total revenues of $10 million to $100 million, the City of Morgantown must implement the new financial reporting model required by GASB 34 for the fiscal year ending June 30, 2003.
One of the most significant features of the new financial reporting model is the government-wide financial statement, presented on a full accrual basis. Current reporting of governmental activities is done on a modified accrual basis, with a short-term focus based on near-term inflows and outflows. However, the government-wide financial statements will provide a long-term prospective and will include fixed assets, related depreciation, and long-term debt, making the government-wide financial statement more comparable to those of a private-sector business enterprise
A major outcome of this new long-term focus is the requirement for infrastructure reporting. In addition to its regular capital assets, the City will be required to capitalize and depreciate infrastructure assets such as roads, bridges, sidewalks, etc. This is also a requirement for retroactive reporting, but this can be limited to infrastructure assets acquired after June 30, 1980. The retroactive reporting of infrastructure is not required for Morgantown until the fiscal year ending June 30, 2007, but prospective reporting of infrastructure will be required when the City implements GASB 34 in the current year.
Other Plans for the Coming Year
· Continue internship opportunities with WVU and other schools to assist in various projects and to supplement staffing needs
· Implement on-line accounting and budgetary inquiry functions for City departments and agencies
· In conjunction with preparing the annual financial statements using the new reporting model of GASB 34, issue the first comprehensive annual financial report (CAFR)
· Fully implement recommended changes in the B&O collection and assessment process
· Improve staff proficiency in various computer applications
· Utilize the City’s web site to distribute tax information and forms
· Implement the acceptance of credit and check cards for various taxes and fees collected by the Finance Department
· Implement the acceptance of payments for certain taxes and fees via the Internet
SUMMARY
It is clear that the role of the Finance Department in City administration goes beyond that of merely accounting for and reporting on City funds. The Finance Department staff continually strives to be of assistance to City management and other City departments and agencies in reaching their goals through proper financial management and planning. Furthermore, the Finance Department is committed to making all citizens’ experience with City government a positive one by continually emphasizing professionalism and customer service. Finally, Finance Department staff recognizes that Morgantown City government does not operate in isolation and will, therefore, continually strive to enhance its networking with other local governments, State officials, local organizations, and various professional organizations.