Once again, the Oxford Township Board received praise from its auditor.
‘This board has always been very fiscally conservative,? said Rana Emmons, a partner with the Plymouth-based PSLZ LLP Certified Public Accountants.
‘You save up for things like the big capital projects. You don’t just go out and do things without putting some forethought (in)to it and budgeting for it . . . We don’t come out with a lot of surprises at the end of the year ? that would be the goal.?
Emmons presented officials with the audit report for the 2014 fiscal year at last week’s meeting.
It showed the township’s general fund has an unrestricted fund balance of $1.9 million as of Dec. 31, 2014. This money can be spent or saved at the township’s discretion.
The big news among the highlights was the savings the township received from refunding (or refinancing) its water bond.
Prior to the refunding, the township had been paying an interest rate of 4 to 4.5 percent on its water bond debt, which was incurred in 2005 for major system improvements such as construction of two water treatment plants and a 1-million-gallon elevated storage tank on N. Oxford Rd.
‘And now it’s more like 2 percent,? Emmons said. ‘That savings warrants some notice here because the calculated present value of the savings over the rest of the bond is $734,000.?
‘That’s pretty incredible,? she noted. ‘I must tell you, in the last 20-some years that I’ve seen bond refundings, the savings are usually somewhere in the $50,000 to $150,000 (range)?
Emmons called the refunding ‘a great fiscal move? by the township board.
‘This will definitely pay off (for) the residents of the township,? she said.
The water bond debt is scheduled to be paid off in October 2030.
Emmons was also pleased to report the township experienced a 2 percent increase in property tax revenue.
‘That is not (the result of) any increase in any millages, that’s purely taxable value,? she explained. ‘We’re happy to see a consistent increase, even if it’s 2 percent. That is really in keeping with the area communities and probably that’s even on the better end . . . The better communities, that’s what they’re seeing is about 2 percent.?
The only area of concern was the township’s funding of retirement benefits for its full-time firefighters through the Municipal Employees? Retirement System (MERS).
According to Emmons, the township had 64 percent of its pension obligations funded as of Dec. 31, 2014. The township had accrued $4.66 million in liability and $2.99 million in assets, leaving $1.67 million unfunded.
That’s down from 67 percent in the 2013 audit report.
In fact, the township’s pension funding level has been declining since 2005 when it was at 77 percent.
‘The township’s paying in everything you’re supposed to be paying in,? Emmons explained to officials. ‘It’s not like you’ve held back on any contributions. What the actuaries tell you to pay in is what you are paying in. Even the firefighters contribute part of that now as well.?
Last year, the township contributed $181,601 to the pension fund, while fire employees contributed $25,616.
The problem is the investments that are helping to fund the pension plan are not receiving the rate of return that had been projected by the actuaries.
‘It’s not a bad thing to be at 64 percent funded,? Emmons noted. ‘I’m not ready to sound the alarms.?
However, she wanted the township board to be aware of the downward trend because that’s not something an auditor likes to see.
Trustee Buck Cryderman inquired as to what the funding level should be.
‘Eighty percent is what we like to see,? Emmons said.
While 100 percent is ideal, very few municipalities are able to achieve that.
Supervisor Bill Dunn recommended Emmons meet with himself, Treasurer Joe Ferrari, Clerk Curtis Wright and fire department representatives to figure out how to increase the pension funding. ‘I’d like to do it sooner (rather) than later,? Dunn said.
Emmons agreed. ‘That would be a great conversation to have,? she said. ‘I think you’ve all thought about it, but actually putting pen to paper might be a good idea.?
‘It would be good to look at the cash flow situation for, let’s say, the next 10 years (and figure out) how to whittle away the actual legacy costs that are facing us right now and not wait 10, 20 years to address it,? Emmons noted. ‘This is the time. Throwing some money at it right now is better than trying to dig ourselves out in 15-20 years.?