During her quarterly financial report at the 11/16 City Council business meeting, Finance Director Alison Chan brought up the improper practice Ashland has employed of spending grant money before it is authorized by council in a supplemental budget. She is in favor of changing that in the interest of transparency, and because it’s the proper way to handle our finances.
And thanks to Mayor Akins for picking up on that and urging Ms. Chan to follow up and begin to implement that new improved procedure. Interesting that none of the councilors had anything to say about it.
In addition, it certainly was a breath of fresh air to hear her go through the fund reports and point out and explain the several anomalies that she spotted. Thanks to her for that.
Speaking of grants and the budget, have you ever noticed that anticipated grants are often included in the budget? I think of them as aspirational revenues, because they’re just something someone would LIKE to have to spend.
For instance, the APR CIP fund is budgeted for $6,985,000 capital outlay for FY 23. It appears to be funded by $7,500,000 “Intergovernmental Revenue”. (Can you spell P.O.O.L.?) I don’t believe this funding exists at this time. But APR sure would like to find it somewhere.
The result of this is that the total budget is inflated by $7,500,000 by a wish and a whim. It is a fantasy. It doesn’t belong in the budget. The total budget might look considerably lower if these offsetting aspirational line items were eliminated from the budget.
Is this the way Ashland likes to do it so that IF a grant was realized, APR would be able to begin their project without specific approval by council? It would already be approved in the budget and the CIP. Once a project is started, it hard to stop it.
So once again, thanks to Ms. Chan for bringing this practice out into the open and proposing to change it. And thanks to the Mayor for encouraging her to implement it. It’s a small but important step toward open and proper accounting practices in Ashland.
I emailed Ms. Chan to thank her personally, and she kindly offered some clarification. Those who are interested in the details should find this enlightening. Here in her own words:
“It is the City of Ashland’s practice to not place grant revenue in the budget unless Finance has a copy of the signed award. The large expenditure in the Parks CIP fund is for the pool. The intent was for the project to be funded by issuing debt. As such, the line item of revenue is incorrect in the budget. The revenue should be listed as Debt Revenue.”
“Budgeting future debt issuance is an accepted practice. The entity controls whether or not debt is issued. We can’t control if we get a grant. I believe that is the distinction. Additionally there are rules that limit what can be approved in a supplemental budget. If the new expenditures exceed a percentage of the funds currently approved expenditures, (I believe it is 10%). The Budget Committee would need to be reconvened. That is another reason the debt issuances should be budgeted. You want the information to be presented to the Budget Committee.”