The City of Berkley’s Annual Comprehensive Financial Report (ACFR) was presented to the City Council at its regular meeting on January 27, 2025.

Our finance department prepares the annual report based on the previous fiscal year, so this ACFR is a snapshot from June 30, 2023 through June 30, 2024. The finance department then submits the report to an independent, third-party auditing firm who verifies that the numbers are materially correct and evaluates our processes and procedures, providing recommendations as needed.

Overall, the City of Berkley is in a strong financial position. Our unassigned fund balance is $4,724,607, which is within the 25-35% Fund Balance Policy set by the City Council. We saw an increase in our Solid Waste fund - due to larger-than-anticipated revenue from our yard waste tag program, property tax collection, and commercial waste fees - that allowed us to stop requiring yard waste tags for the 2025 season. Some additional highlights are shared below:

• The report notes an increase of just over one million dollars to the General Operating Fund. However, more than half of this was set aside for a rollover amendment in August 2024 to pay for budgeted trucks and a budgeted HVAC contract in this fiscal year. The remaining increase is largely due to the positive results of the City’s self-insurance program.
   
• The City has no outstanding general obligation debt, and is nearing the end of its fiscal obligation for the George Kuhn Drainage District debt that we share with our surrounding communities. This debt is paid from the Water & Sewer Fund on an annual basis of roughly $40,000.
   
• The Public Safety Operations Department was shown as under budget strictly due to the auditors’ creation of a capital outlay expenditures department. The City budgeted capital outlay within each department, not separately. We worked with new auditors this year and they pulled out the capital outlay costs into its own department. This resulted in the appearance of a deficit, when in reality, the department in total was under budget. Moving forward, the City will ensure the auditors do not create this department in future reports.
   
• The City’s Public Safety Pension fund is just over 60% funded, which is considered healthy as we continue to contribute to it and serve our retired Public Safety staff members. Our MERS (Michigan Employees’ Retirement System) fund is just under 60%. Finally, our OPEB fund is 55% funded, well over what is considered healthy (40% funded).
   
• The Inspections Department and Major Streets Capital Outlay Departments were both amended during the fourth quarter at the final Council meeting of the year where expenditure estimates were made for the end of the fiscal year. Moving forward, more accurate and conservative estimates will be made for final expenditures at the end of the year.

Due in part to staff turnover, vacant positions, and a subsequent loss of institutional knowledge within the department during the fiscal year, our auditors noted some findings related to our internal controls and documentation that needed to be addressed and corrected. Each of the below items had already been observed by our finance director and were in the process of being corrected with a new team of staff when the auditors confirmed these findings:

• During the period of time when there was only one employee in finance, there was not a second qualified person available to review and approve bank reconciliations. The City’s finance department is now fully staffed, and this procedure has already been updated to ensure bank reconciliations are prepared and reviewed appropriately.
   
• Our finance director identified misstatements in the prior year (Fiscal Year 2023) and noted them to our auditors. The audit report notes these misstatements, and processes and procedures have already been put in place to ensure this does not happen again.
   
• A procedure has now been put in place by our finance department to evaluate unclaimed property on an annual basis, but there were several outstanding checks that had never been cashed and were never voided, as they should have been, for the time period of June 30, 2023 through June 30, 2024.
   
• The City has a capital asset policy and a cash handling policy in place, but due to staff turnover, documentation could not be found for the auditors. Additionally, original documentation from Oakland County for the George W. Kuhn drain bonds could not be found for the auditors. This documentation has since been located, and in some cases updated, for each of these items.
   
• A Director of Human Resources was hired in early January, but before that, the HR function largely fell under the finance department. All “change-in-status” forms were not completed correctly for all pay rate changes during the past fiscal year, but an updated procedure has already been put in place to ensure compliance with City policy.
   

Click here to watch the recording of the January 27 meeting. The audit presentations, discussions, and public comments take place from 25:14-1:46:10. The entire ACFR document that includes the auditors’ findings is available here.

Questions? Please contact our finance department at finance@berkleymi.gov.