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Audit: Schenectady ended '07 with another surplus
Police department also spent less on overtime; Mayor hopes for improvement in bond rating

By LAUREN STANFORTH, Staff writer
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Last updated: 11:31 p.m., Monday, May 5, 2008

SCHENECTADY -- The city ended 2007 with a surplus for the third straight year and the police department spent significantly less on overtime than in recent years, according to an annual audit presented to the City Council on Monday.

     
The city, which had a budget last year of $68.7 million, ended the year with an extra $3.2 million and an overall surplus of $10.4 million.

The police department still exceeded its $2.4 million overtime budget by $80,349 last year, but it had gone over budget by $373,359 in 2006 and by $815,938 in 2005.

Schenectady Public Safety Commissioner Wayne Bennett attributed much of the savings to changing the shifts of the former vice squad unit. When those officers worked later, they were often paid overtime for morning court appearances, he said.

Overall, the department budget of $14.9 million came in $111,076 under budget because of increased grant monies and tighter spending, he said.

Schenectady Mayor Brian U. Stratton said he hopes the city's bond rating will be positively affected by results of the independent audit which was done by Cusack and Company.

The city's bond rating was the lowest in the state in 2004. It has climbed out of that junk rating since then.

James Cusack, of Cusack and Company, said the city still has at least one year to go to increase its fund balance to at least 10 percent of the total budget. Currently, it's at 7.9 percent.

Another $2 million from 2007 was able to be saved to encourage another slight property tax decrease for 2009. And, $525,000 was moved from last year's budget to fund the demolition of 20 to 25 blighted properties. Stratton said he'll release the list of the first 10 to meet the wrecking ball soon.

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Overall, the department budget of $14.9 million came in $111,076 under budget because of increased grant monies and tighter spending, he said.

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SCHENECTADY
Audit: City has $8.3M surplus Spending of every department reined in
BY KATHLEEN MOORE Gazette Reporter

    It almost looks easy now.
    For the third year in a row, the city’s finances are in the black, according to the audit released Monday by Cusack & Company. Every fund finished with a surplus. Even the Police Department, once a major overspender, has been reined in.
    But city officials are still spending as if the city were in defi cit. Even when they have the money for it, they’re not buying frills like new computers if the old ones still work.
    “If we don’t need it, we live without it,” said Public Safety Commissioner Wayne Bennett. “And we live very well without it.”
    That strategy has given Mayor Brian U. Stratton his third straight surplus. The city finished 2007 with $8.3 million left in the bank.
    It’s an impressive achievement, particularly considering that prior to 2005, the last time every city fund was in the black was 1997. In 2004, when Stratton took office, the state comptroller’s offi ce warned him that he would run out of money by mid-year if he didn’t make drastic cuts immediately. His administration brought the city out of deficit in less than two years.
    This year’s surplus was partly due to conservative budgeting — Schenectady got $3.4 million more than expected in revenues, including a $1.2 million increase in state aid.
    But city officials also cut $4.9 million in budgeted expenses. The biggest savings came in health insurance, where the city saved $2.6 million by making its own health insurance plan more attractive than the two pricey HMOs offered to city employees. Many more workers switched to the city plan last year when they were offered free wellness programs and annual exams, among other benefits, Finance Commissioner Ismat Alam said.
    The rest of the savings came in pennies pinched in every department. The most notable: the police came in $111,000 under budget even though the department overspent its allotted overtime; also, the Fire Department finished with $115,000 left in the bank.
    “There’s better planning, better management,” Stratton said when he announced the $8.3 million surplus. “This allows us to do many more things.”
TAX RELIEF
    But don’t expect carefree spending now that the city is flush. Stratton is spending $6 million of the surplus, which sounds like a lot, but most of it is going to the tax relief program that gave residents a 1.2 percent tax cut this year.
    That cut was actually funded by the 2007 surplus — by September of last year, it was clear the city would have at least a $2.1 million surplus, so Stratton put it into the 2008 budget for tax relief. Since the surplus turned out to be much larger than $2.1 million, he has now set aside another $2 million for 2009.
    The rest of the surplus was spent much in the way that accountants recommend residents organize their savings. Stratton paid off the city’s biggest loan — a debt from 2004, when the city’s finances were in such poor shape that he agreed to an installment plan to pay off the annual retirement system bill — and put aside money for emergencies. The city now has $250,000 to dip into when an expensive nor’easter hits.
    Stratton also set aside more money for a big project that the city will start soon: the construction of the $20.4 million Foster Avenue public works complex.
DEMOLITION SAVINGS
    Only one new project will be funded with the surplus: Stratton’s “50 First” demolition program, which will fund the demolition of the 50 most-blighted buildings in the city.
    But even there, Stratton has found a way to save money. Rather than hiring contractors to knock down each building one by one, he is putting out bids for 10 houses at once. That will save enough money that he expects to knock down 20 to 25 houses this year for $525,000, not $875,000.
    The city had found that the average cost to demolish one house was $35,000. But contractors are willing to charge less for a larger project, and Stratton believes bids will come in at an average of $21,000 to $26,000 per house.
    Stratton put the rest of the 2007 surplus — $2.3 million — into a rainy-day savings account. That account now has $5.8 million — which is still far less than Cusack & Co. wants to see.
    They recommended that the city build an emergency savings account equal to at least 10 percent of its budget. So far, the city’s account is at 7.9 percent.
    “I think with another good year you’ll be able to do that 10 percent,” Certified Public Accountant James Cusack said. “Coming from a deficit [in 2004], it’s remarkable you’ve been able to do it in a quick fashion.”
    Stratton leaped on that, emphasizing that no one should plan to spend that money. City Council members have at times suggested using a small amount of the fund for various projects. Some residents have angrily said the city should use the entire fund to cut taxes.
    Stratton presented the audit to Moody’s Investors Service on Monday as well, hoping the agency would upgrade the city’s credit rating. The city saved $70,000 last year on its bond-sale premiums because of its improved credit rating, which fell to junk bond status in 2002 before rising in the past three years.
    Cusack said he thinks the city has a good chance at another rate increase.
    “I’d like to believe they’ll get an increased rating,” he said. “They’ve done exactly what they said they’d do.”
    Stratton said Moody’s seemed impressed, particularly by the fact that the city is paying off the 2004 retirement bill. That year was the only year in which the city did not pay the full bill immediately.
    If the credit rating is increased by one step, it will finally reach the point it was at nine years ago, before collapsing finances left the city with the lowest credit rating in the state.

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Mayor should be praised for budget surplus

    Kudos to Mayor Brian U. Stratton and his administration for producing a surplus in the city budget for the third year in a row!
    When Mayor Stratton took offi ce in 2004, the state comptroller’s office warned him that they would run out of money by mid-year if he didn’t make drastic cuts immediately. He and his administration were able to bring this city out of deficit in less than two years. What’s amazing is that this was done while making major improvements to Schenectady’s downtown and business districts.
    As a business owner and a current taxpayer in the city, I’m most impressed by the fact that even though the city has a surplus, they are still spending as if they didn’t. This is a wise economic choice that will help the city for any hard times to come.
JOHN R. MASSARONI
Schenectady

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State could benefit from Stratton guidance

First published: Wednesday, May 14, 2008

New York state could learn a lot from Schenectady Mayor Brian Stratton.
This year's audit revealed that the city has an $8.3 million surplus and for the second year in a row taxpayers are being rebated.
     
In 2004, when the mayor took office, the state comptroller informed the Stratton administration that the city would run out of money in six months. By 2005, Schenectady was in the black and running more efficiently with an improved credit rating, improved planning, and improved operations that allowed it to tackle long delayed projects.
These improved conditions led to a renaissance throughout the city. Kudos to Mayor Stratton, Sharon Jordan and their professional team that put Schenectady back on track. New York state should take notice.

DAN and MELINDA PERRIN
Scotia

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Schenectady surplus story left out best part

    The Gazette’s May 6 coverage of Schenectady’s 2007 financial audit unfortunately reported just one-third of the story.
    While Kathleen Moore’s article was a technically correct assessment of the budget surplus achieved in 2007, her story missed the real news; that is, the significance of Schenectady’s third consecutive budget surplus and its cumulative impact on city taxpayers.
    Schenectady now has an unreserved, cumulative fund balance of $10.4 million, and our financial situation is stronger today than it has been in decades. But that important and compelling fact was missed by the Gazette.
    Yes, as reported, the audited financial statements show the city finished 2007 with a total general fund surplus of $8.3 million. After setting aside funding reserves for tax stabilization, debt reduction, capital construction, employee retirement contributions and other future financial obligations, the unreserved surplus for the year nets out at $2.3 million.
    [But] the $2.3 million unreserved surplus for 2007 is on top of an $8.1 million unreserved surplus from 2005 and 2006. The result is nearly a $10.4 million unreserved fund balance. That is a more-than-$20-million swing from four years ago.
    With the news of the city’s doubledigit budget surplus, Schenectady’s credit rating — once the lowest in the state — has again been raised by the Moody’s and Standard & Poors’ rating agencies. A higher credit rating will further reduce the cost of borrowing, ensure the city’s continued financial stability and help to stabilize property taxes.
    BRIAN U. STRATTON
    Schenectady The writer is mayor of Schenectady.

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Main Entry: surplus value
Function: noun
Date: 1887
: the difference in Marxist theory between the value of work done or of commodities produced by labor and the usually subsistence wages paid by the employer