MISSISSIPPI – The city of Bogalusa must address its fiscal problems in a “detailed action plan” that must be turned over to Legislative Auditor Daryl Purpera’s office by May 16, according to a letter made public Monday (April 21). The letter from the state auditor’s office points out seven areas that must be addressed, including a $12.7 million unfunded actuarial accrued liability in the retirement system for city employees.
“This letter summarizes the results of our assessment which indicated that there are significant concerns about fiscal operations of the city,” Purpera wrote to Bogalusa Mayor Charles Mizell. “Because of the severity of the issues” the action plan must be submitted by May 16.
Mizell said the city appreciates the insight provided by the Legislative Auditor and that the problems that were cited are already beginning to be addressed.
Actuarial consultants told city officials that the financial condition of the retirement system “will continue to deteriorate if the recommended annual contributions are not timely made. . . . If the recommended contributions are not made, the retirement system will eventually become insolvent.”
The letter recommended the City Council and Mizell work together to develop a comprehensive plan to address the system’s problems, including devising a way to reform the pension plan and fund it adequately, according to a news release from Purpera’s office.
City officials must also address a $1.1 million negative fund balance in the general fund because the shortage is causing “operating cash shortages and fiscal stress,” the release says.
The letter said city officials do not have “an up-to-date plan to eliminate the deficit and begin operating on a fiscally sound basis.” The state auditor recommended that Mizell and the council update the city’s “cost savings and revenue enhancement plan” adopted in 2008 and “focus on the elimination of this significant deficit in fund balance” by cutting expenses, raising revenues, or both.
Purpera said Bogalusa officials should review all expenditures and focus “on the economic sustainability of continuing to pay existing salaries and benefits.” The letter said that approximately 75 percent of the city’s general fund goes to pay salaries and fringe benefits – including 100 percent city-paid health premiums for all full-time employees. The city budgeted $7.4 million for pay and benefits in 2013, according to the news release.
Mizell said the city has already engaged a company to study its staffing structure, salaries and benefits.
“We have been kicking this can down the road for years,” the mayor said. “We are a city with half the population that used to support this government. We can no longer accept the status quo. We are working very hard to make decisions and policies that will strengthen our economic status and right-size our government.”
http://www.nola.com/politics/index.ssf/2014/04/bogalusa_must_address_its_fisc.html