Year-end audit certifies a $3.68 million operating surplus in FY21, increasing Providence’s net Rainy-Day Fund Balance to over 5% of budget for first time since 2008
Monday, February 14, 2022
PROVIDENCE, RI – Mayor Jorge O. Elorza today announced that the City of Providence reported a year-end operating surplus for Fiscal Year 2021 (FY21) of $3.68 million. This is the sixth consecutive year the capital city is realizing an operating surplus, improving net Rainy-Day Fund balance to $28.8 million. This is the first time since 2008 that the City of Providence has achieved its goal of securing 5% of total expenditures or revenues in reserves. The City of Providence fiscal year runs from July 1st to June 30th each year, with FY21 ending on June 30, 2021.
“Since 2015, my administration has been managing our finances by budgeting responsibly, finding savings whenever possible, and eliminating redundancy and waste,” said Mayor Jorge O. Elorza. “Despite the unpredictability of each year’s budget, our entire City team has continued to find innovative ways to balance our check book and put Providence on a strong financial footing. These strategies have helped the City to eliminate its deficit, improve its credit rating, and achieve the 5% Rainy Day fund goal. I am proud of our team’s strong financial stewardship to ensure that Providence is in the best financial position.”
In addition to a budgeted Rainy-Day Fund allocation of $100,000, in FY21, Providence saw a $3.58 million surplus for a total of $3.68 million, that will be applied directly to the City’s reserves. The surplus is a result of several factors including realistic budgeting practices over the past several years, careful management of each department’s budget, an expansion of the tax base, and finding efficiencies whenever possible.
The surplus was certified by CliftonAllenLarson, LLP, the City’s independent auditors, in the Annual Comprehensive Financial Report (ACFR) dated February 3, 2022. The report will be filed with the State Auditor General, as required under state statute.
The FY21 surplus continues a trend of multiple years of balanced operations for Providence under Mayor Elorza. At the end of FY15, the City faced a cumulative deficit of $13.45 million in addition to a liability of roughly $7 million. The total liability of over $20 million is now a cumulative surplus of almost $28.8 million.
Additionally, the City’s Self-Insured Medical Funds reserve balance is $17.8 million. Reserve balances have been set aside to assist the City should catastrophic claims occur and now represent 16% of the annual self-insured medical budgets of approximately $108 million, which is within the range of reserve safety recommended by government standards.
According to information in the ACFR, the City also completed the tenth consecutive year of 100% funding of its Actuarial Determined Contribution (ADC) to its pension fund.