Year-end audit certifies a $4.7 million operating surplus in FY20, increasing Providence’s net Fund Balance to$25.1 million, with Rainy Day Fund Account at $13.7 million
January 5, 2021
PROVIDENCE, RI- Mayor Jorge O. Elorza announced today that the City of Providence reported a year-end operating surplus for Fiscal Year 2020 (FY20) of $4.7 million. This is the fifth consecutive year the capital city is realizing an operating surplus, increasing its net Fund Balance to $25.1 million and improving its Rainy-Day Fund Account to $13.7 million. The City of Providence fiscal year runs from July 1st to June 30th each year, with FY20 ending on June 30, 2020.
“Despite an unpredictable end to the fiscal year due to COVID-19, we were able to successfully stabilize our budget and navigate the City to a strong financial footing,” said Mayor Elorza. “This is certainly a credit to our Administration, in collaboration with our City Council, along with our department directors and managers, and our sound fiscal management during a financially challenging year. The investment the City has made in improving its finances will help us weather the economic storm this fiscal year and the years to come.”
In addition to a budgeted Rainy-Day Fund allocation of $3.7 million, in FY20, Providence saw a $1 million surplus for a total of $4.7 million, which will be applied directly to the City’s reserves. The surplus is a result of several factors including the adoption of stringent hiring and spending rules due to the fiscal impacts of COVID-19, more realistic budgeting practices over the past several years, careful management of each department’s budget, an expanded tax base, and budgeted attrition.
The surplus was certified by Blum Shapiro, the City’s independent auditors, in the Comprehensive Annual Financial Report (CAFR) dated December 30, 2020. The report is required to be filed with State Auditor General, under state statute, by December 31st, each year.
The FY20 surplus continues a trend of multiple years of balanced operations for Providence under Mayor Elorza. At the end of FY15, the City faced a total deficit of $13.45 million, which had accumulated over several years.
Additionally, for the fifth consecutive year, the FY20 budget resulted in a surplus of the City’s Self-Insured Medical Funds of $13.8 Million, bringing the reserve balances in these funds to $21.8 million. Reserve balances have been set aside to assist the City should catastrophic claims occur and now represent 20% of the annual self-insured medical budgets of approximately $108 million, which are well above the range of reserve safety, recommended by government standards.
According to information in the CAFR, the City also completed the eighth consecutive year of 100% funding of its Actuarial Determined Contribution (ADC) to its pension fund.