Somerset receives clean audit

Carla Slavey i cj

Kevin Fisher, a CPA with Lexington auditing firm RFH, delivered the good news of Somerset's clean audit to council on Monday night. The only concerns raised were in the sewer and EMS departments, the only two departments in which revenues do not cover the costs of running the departments.

The city of Somerset got good news Monday night in the form of a clean audit, but a couple of points raised by the auditors led Somerset Mayor Alan Keck to stress to the council the need to focus on the revenues of two departments - the sewer and EMS.

The audit was conducted by RFH CPAs.

Kevin Fisher, going over the report, told city officials there were two noteworthy items he felt need to be pointed out, saying that those items could be seen in the statements of cash flowing into and out of each department.

"The statement of cash flows is an indicator to us as far as whether rates are sufficient or if the utility funds are generating sufficient revenues," Fisher said. "… For the sewer fund, the cash generated from operations was $597,000 and the cash needed for debt was $707,000."

That means the money brought in by bill collection or other revenues was not covering the debt of the department, much less that debt plus capital needs.

Fisher said he saw a similar trend within EMS, with revenue not covering expenditures.

"The result of that, to operate EMS, has been the General Fund covering that difference, and the General Fund ultimately having as an amount due from EMS for that difference, that the general fund's covering, to be repaid in the future," Fisher said.

Somerset Chief Financial Officer Mike Broyles said the city was looking at ways to improve EMS revenues.

"We're looking to check to see if we're billing for everything that we can bill for, if we're billing the most that we can bill, and getting the most that we can get. … Unfortunately, with EMS your biggest expenditure is personnel and personnel-related expenses," Broyles.

Mayor Keck explained that EMS's personnel-related expenses couldn't be fixed in the same way that expenses in other departments have been handled since he took office.

"You can't allow attrition to take care of EMS employees, because you need people in those ambulances. If you don't have anyone in the back of the ambulance, it doesn't help to have someone driving it.

"So, we are looking at pretty much everything, from billing to our internal infrastructure to rates study. We want to make sure we can operate lean and efficient, but the reality is we're subsidizing ambulance service for the entire county," Keck said.

As for the sewer department, Keck called it "the elephant in the room" because it can't pay its own bills.

He offered two reasons for that, the first being running utilities out to residences and businesses that don't then come into the city.

"But also because it was politically expedient to keep rates low in spite of growing costs," Keck said.

That segued into one of the talking points that Keck has been pushing since he came into office - Cost of Living Adjustments (COLAs).

"I would ask that you all consider over the next couple of weeks that, do we want to get our fiscal house in order with our sewer department? We're leaner than we've ever been. We've absorbed positions. People are doing more with less, and I'm proud of that, but at some point we've got to move the needle just a little bit to pay for these rising costs."

Overall, however, Keck said he was proud of the audit report.

"Our debt is down. Our cash is flat. And yet, we've invested a record amount of money in all three of our emergency service personnel. We've had the festivals. We're fixing problems that haven't been addressed for a long, long time and we're still getting ahead."

Keck also said he was proud of reducing the costs associated with the audit itself, saying that in years past it had been conducted "in excess of $100,000."

This year, it was completed for half that amount, and earlier than usual.

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