Taylor Issues Phase One of Lakewood Performance Audit

Thursday, March 27, 2008

Cuyahoga County -

Auditor of State Mary Taylor today released phase one of the city of Lakewood performance audit.  The audit confirms a shortfall in the city’s 2008 budget which could lead to a $47.3 million deficit by 2013 if changes are not implemented.

“This performance audit provides valuable information for city of Lakewood leaders as they make decisions about their finances,” said Taylor.  “The audit is one tool to help address the fiscal situation as the city continues to provide essential services to its citizens.”

The city requested that the performance audit be conducted in two phases so that recommendations would be available for the annual budget process.  Phase one of the performance audit includes an analysis of the city’s 2008 budget and five year forecast.  It also includes an independent evaluation of the Structural Balance Task Force Report which was an internal study of city operations.  Phase two, which is currently in progress, will focus on health care costs and performance measurement, or comparing the city’s programs and services to other similar cities. It will also review the building and housing, police, fire and public works departments.

The analysis of the city’s budget and five-year forecast concluded that many of the projections appeared reasonable; however, the audit recommends that the city consider adjusting the estimates for estate taxes and service charges before the 2008 budget is adopted.  The audit also recommends that the city review salary and benefit projections because they varied significantly from the auditor’s estimates.  Additionally, the city should review the operating budgets for each division to determine whether budget increases are appropriate.

The evaluation of the city’s five-year forecast showed that some aspects of the budget projection methodology need improvement. The city should also include notes to explain the budget projection process.  Further, the audit outlines steps that the city of Lakewood should take before implementing some of the recommendations in the Structural Balance Task Force Report.

The audit notes that the city should be commended for receiving the Government Finance Officer Association’s Distinguished Budget Presentation award and the Certificate of Achievement for Excellence in Financial Reporting for its Comprehensive Annual Financial Report.  Only 16 Ohio municipalities received both honors.

A performance audit reports on the efficiency and effectiveness of government agency or program operations.  This is achieved through comparing and benchmarking similarly situated agencies to the agency under audit.  A performance audit can be used to improve operations, save taxpayer dollars and make better use of existing resources.

A full copy of the report is available online at http://www.auditor.state.oh.us/AuditSearch/Reports/2008/City_of_Lakewood_Phase_1_performance_08-Cuyahoga.pdf.