Since the legislature referred the City of Winter Springs for oversight and investigation by the Governor’s Chief Inspector General, we have received a lot of questions about various issues and what we know. Here are a few pertinent things we have learned over the last week:
- Why It Happened: When asked under oath how much money the city has in reserves, Mayor McCann gave a number of $92 million. The city was given some time to validate that number, and conversations apparently occurred indicating the real number is nowhere close to $92 million. This ultimately prompted the decision to involve the governor’s office.
- Understanding “Reserves”: Municipal reserves are divided into two categories, restricted and unrestricted. Restricted reserves are funds which have been earmarked for a specific purpose and can only be spent on those purposes. Unrestricted reserves may be spent as needed. For example, if my wife tells me we have $10,000 in our checking account, this does not mean I can go spend $10,000 today. The money might be there, but a mortgage payment is coming up. That money is “restricted” and not truly in reserve.
- Most Current Numbers from 2021: The last audited financial statement we have from the city is for a fiscal year ending on September 30, 2021. At that point, the closing fund balances were $38.4 million, but due to various obligations, only $8.7 million were true, unrestricted reserves. You can read the 2021 report here and see the unrestricted reserve number on page 32 of the PDF file.
Where does this leave us? Depending on whether you take the restricted or unrestricted numbers, in the last audited financial statement, the city had $8.7 million or $38.4 million in 2021, nowhere near $92 million the mayor claims we currently have.
Right now, the city is feverishly working to complete the long-overdue audited financial statement from September 2022, which the auditor cited them for not submitting as required by law. When this statement is out, what will we see? Will the number grow from $8.7 million? We also know that a few months ago during a city budget meeting, it was stated the city had moved $18 million out of reserves. That recent transfer will not be reflected in the statements from last September when they are published.
One of two things is true: the money is either there or it is not there. Both of these scenarios present significant problems for city leadership:
- The money is there: If we are flush with cash as the mayor claims, there is no need to drastically raise rates for trash service and water as the city has recently done. Why would we raise rates if we have more than one year of funding already in reserve? We can afford most of the cost of the new water plants with the money the mayor claims we have in reserve.
- The money is not there: If the money is not there, and we have an unrestricted reserve amount closer to the $8.7 million of 2021, this begins to raise serious questions of our city’s financial solvency and recent decisions to transfer $18 million out of reserves, to spend penny sales tax money on things other than maintaining our bridges, and the remaining millions in Penny Sales Tax funds the city has yet to account for.
These are just a few of the major accounting questions facing our city, over which we hope the Governor’s Chief Inspector General will provide oversight and a much needed return to order.