State releases Milo financial audit report

MILO--A state audit of Milo has found that from 2017-2020 the Milo town board "did not effectively manage the town's financial condition and more real property taxes and user fees were levied than needed to fund operations." According to the report performed by the Office of the State Comptroller, as of December 31, 2020, the general, highway and water funds' unrestricted fund balances were excessive, ranging from as much as 97 percent to 178 percent of actual 2020 expenditures.
"The board adopted unrealistic budgets for each of its funds from 2017 through 2020," the report states. "Revenues were underestimated each year in the town-wide (TW) general fund, and both TW and town-outside village (TOV) highway funds, while revenues in the water fund and sewer district were overestimated."
It continues, "Appropriations were overestimated in all funds. As a result, more real property taxes and user fees than necessary were raised and operating surpluses occurred, increasing unrestricted fund balance to excessive levels." The report explains when officials have available surplus funds equal to an entire year's expenditures at year-end, the unrestricted fund balance is excessive.
"Officials told us that there have been discussions about establishing a fund balance policy and reserves for the operating funds, but no action has yet been taken," the report says.
The state recommends the board should:
1. Establish written policies and procedures governing the budgeting process, which include defining the amounts of fund balance that the town should reasonably maintain.
2. Adopt budget estimates that are based on available current data and historical trends.
3. Develop a plan to reduce the amounts of fund balance in a manner that benefits town taxpayers. Surplus funds can be used as a financing source for:
-Funding one-time expenditures
-Funding needed reserves
-Paying off debt
-Reducing property taxes and user fees
4. Develop comprehensive multiyear financial and capital plans that set long-term objectives and goals. These plans should be monitored and updated on an ongoing basis.
Included in the report of the audit is a response from Milo Town Supervisor Leslie Church who said while the town has agreed to craft an action plan to respond to the state, town officials disagree with the findings of the state audit.
"While we agree that you raise some good points, we disagree with your opinion that the board has not effectively managed the financial condition of the town," wrote Church. "We are a fiscally conservative board that takes the town's financial affairs seriously. We work and consult with a certified accounting firm to develop and manage a conservative budget."
A review of the adopted budget for 2021 found similar issues as years prior.
"The 2021 adopted budget (was evaluated) and determined that the board did not address prior years' budgeting inaccuracies," the report states.
Despite disagreeing with aspects of the report, Milo has agreed to formalize guiding principles that will be used to craft the town's budget going forward and will develop and implement a fund balance policy for the 2022 budget process. The town will also further detail the equipment replacement schedule.