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John came to Shreveport in January of 1977 when he was transferred to Barksdale AFB.

He’s been active in Shreveport politics since deciding to make Shreveport his home.

John practiced law for 40 years and he now monitors local politics. He regularly attends Shreveport City Council and Caddo Parish Commission meetings.

John is published weekly in The Inquisitor, bi-monthly in The Forum News, and frequently in the Shreveport Times.

He enjoys addressing civic groups on local government issues and elections.

 

REVIEW OF RECENT SHREVEPORT AUDIT

The city internal auditor is funded by the city. Its operations and staff are totally independent of other city agencies and officials.

This is a summary of the audit report dated Mar. 29, 2019.

1. The Reserve

The so-called reserve is a major issue. Technically this is the unassigned fund balance (UFB).

The Government Finance Officers Association recommends a minimum fund balance of 2 months of the general fund revenues—16.67%. The International City/County Management Association recommends a minimum of 5% of the annual operating expenditures. The city budget sets a goal of at least 7% of expenditures.

The reserve (UFB) has declined steadily from 2009-2017. This despite transfers to the general fund from the Riverfront Development , Streets Special Revenues and other funds. In 2017 these transfers were $18.3 million.

The 2017 year-end reserve UFB was only $155 thousand. This was only 0.08% of the general fund expenditures.

2. Expenses Versus Income

The revenue sources for the city in years 2015-2018 have remained relatively stable.

Government taxes and fees have gone up and down from 2008-2017 with an average annual change of .27% or $541,800. These include sales, property and franchise taxes, occupational license fees and gaming revenue.

Property tax revenue declined by an average of $158 thousand per year from 2008-2017. Property millages have declined from 36.65 in 2015 to 35.81 in 2107. Additional mileages will expire this year.

Since 2013, expenditures per capita have steadily increased as the city’s population has decreased. In 2013 it was $960 per person. In 2017 is was $1048 per person.

The net direct debt per capita declined from $1448 in 2014 to $1132 in 2017. This debt does not include water and sewer bonds which are repaid from department revenues. This department is an enterprise fund.

The percentage of the general budget for employee salaries and benefits (67%) is comparable to similar size cities. Although the number of employees has declined the salary percentage has remained constant.

3. Unfunded Person Pcans

A major anchor on the city’s finances is the unfunded pension plans. At the end of 2017 this sum was $217 million. This represents a funding ratio of 47.5%.

Simply put, the employee retirement system contributions and investment returns have not kept pace with the amount needed for the current costs plus an additional amount to finance the unfunded actuarial accrued liability.

Contributions are set by state law for public safety—police and fire. Contributions for police have increased from 9.5% in 2008 to 31.75% in 2017. Contributions for firemen have increased from 12.5% in 2008 to 25% in 2017. Contributions for other city employees have increased from 13.5% in 2008 to 22% in 2017.

In 2014 the city council has addressed the underfunded pension plan liabilities. Changes were made in the retirement age thresholds, a decrease in the benefit multiplier, and increase in the vesting period from 10 to 15 years of service for new employees hired after the 2015 ordinance effective date.

This ordinance also scheduled staggered increases in employer contributions from 13.15% to 29%. A 2016 ordinance amended the schedule of employer contributions to 30% in 2021.

4. Capital Assets and Expenditures

The audit also noted that the city’s capital asset details were not centrally located nor maintained in a structured format in order to calculate and analyze expenditures per unit.

The International City County Manager Association advises that expenditures should remain relatively stable (in constant dollars), relative to the amount and nature of the assets. A declining ratio between maintenance expenditures and quality of assets may be a sign that the government’s assets are deteriorating . If this is the case, maintenance expenses will increase.

The audit recommended the city develop a centralized tracking system to maintain, manage, and analyze capital assets.

5. Conclusion

In 2017 , Moody’s Investors Services reported a negative outlook for the city. The city’s bond rating was downgraded due to increasing fixed costs and long-term liabilities.

The recently enacted garbage fee will reduce the subsidy of the sanitation department. It should also increase the city reserve.

With a possible city bond issue this year, the city’s bond rating will be reviewed. This audit sets a baseline for the Perkins administration and the current city council.

CPSB MEMBER JOHN ALBRITTON ON MAY 4 TAX RENEWAL

THE QUIET CADDO PARISH TAX RENEWAL VOTE