I am pleased to share good news on two fronts regarding the health of village finances.
The first concerns our efforts to “rehabilitate” the village’s fund balance to an optimal level as explained in the village’s financial statements for the fiscal year ended May 31, 2011. Our audit was prepared by O’Connor Davies Munns & Dobbins of Harrison, N.Y., and is available for inspection at village hall.
The second piece of “good news” came from Moody’s Investor Services, which after careful review, has certified the Village of Bronxville as a Aaa rated entity, the highest we can attain. Neighboring Scarsdale comes to mind as one of the few other villages with this distinction.
Much of our good fortune is thanks to the dedication of our treasurer’s staff with the collaboration of our volunteer Village Finance Committee chaired by Deputy Mayor Bob Underhill. Other members of this august body include Don Gogel, Louis Parks, Leighton Welch, Ed Forst and Trustee Donald Gray. Resident Mary Hoch was just recently appointed to round out the committee.
At the Finance Committee’s recent meeting, the auditor led a line-by-line discussion of the financial performance of village government for the financial year ended May 31, 2011.
The trustees and I believe it is imperative to have fresh, astute and impartial eyes review our fiscal decision making. Outside resident experts bring a perspective that is often different from that of the elected officials and staff who are immersed in it at a micro level.
As an overview, the trustees and I completed two consecutive years of producing a budget that did not raise property tax levies. Due to the very precarious financial times, in addition to the back- to- back zero percent tax levy increases, we also chose to suspend financing on a capital improvement program.
Though we believed this austerity program to be both prudent and necessary, it did put a strain on our fund balance. In order to reach the zero percent tax levy increases, while at the same time absorbing state unfunded mandates equating to an approximately 4 percent tax increase, we had to dip deeply into reserves.
Though both the Finance Committee and the auditors appreciated the frugality, they urged us going forward to concentrate on finding additional revenue sources and cost savings to shore up our fund balance as the amount in fund balance is a major driver in bond rating determination.
We heeded their advice and took a hard look at every budget line item and village service levels.
Our single largest initiative was a decision to change health care providers for both village employees and retirees. The switch from our self-insurance POMCO plan to the New York State Empire Health Program helped bring our fund balance back from $1,626,263 to the current level of $2,147,178 or 15.8 percent of our current total budget. As a guidepost to maintaining our Aaa bond rating, fund balance should remain in the range of 14 to 24 percent of a yearly total budget. Unfortunately, the aggregate savings of approximately $520,915 last year was the result of finding several “one shot” infusions of cash that will not be repeated. It was by no means a surplus, rather a replenishment of a depleted fund balance to prove to our rating agencies that the village is run well.
The healthy fund balance dovetails with our second piece of positive financial news.
After several years of funding a meager or no capital improvement plan, the trustees and I thought it advantageous to create a capital fund for infrastructure repairs, given the unusually inexpensive cost of borrowing money at this juncture. We also need to pave more streets, upgrade the Department of Public Works equipment and rotate police cars. We are also designating a significant amount of capital funding for a flood mitigation program. As a result, at the October 2011 Board of Trustees meeting we approved a capital improvement program totaling $2,450,000. This amount was added to our current outstanding debt of $1,225,000 and rolled together to be put up for a bond sale.
Prior to any bond sale, the village is interviewed by a prominent rating agency to determine a rate. Obviously, the better the rating and the less indication of risk results in a lower interest rate for borrowing. After a thorough scrutiny of our finances, Moody’s awarded us the coveted triple A bond rating, allowing us to take advantage of the lowest possible interest rates.
Due to the economic climate coupled with crushing New York State unfunded mandates, villages have become fragile financial entities that required careful stewardship to remain afloat. I thank my fellow trustees, the Village Finance Committee and our professional staff for their constant vigilance. Prudence, frugality and careful planning will continue to be our guideposts as we begin to tackle the 2012-2013 village budget.