(Nov. 22, 2019) Ocean City officials can take a step back and breathe following a financial report that showed the city is in good economic shape.
“Fiscal Year 18 was a good year for the town, and I’ll say the same thing for Fiscal Year 19,” Ocean City Finance Director Chuck Bireley said Monday during his presentation to the council.
The city’s final general fund budget for the fiscal year, which ended on June 30, was $85,721,168, but the actual budget amount the city ended with was $87,048,529 — a positive variance, or difference, of $1.3 million.
In addition, the city’s expenses were budgeted at $80,544,387, but the actual expenses for Fiscal Year 19 were $77,632,430.
In total, the city saw a variance of almost $4.3 million, which resulted in a roughly $1 million surplus in fund balance.
“We anticipated reducing fund balance by $3.1 million, but ended up increasing fund balance by $1,147,252,” Ocean City Budget Manager Jennie Knapp said. “There was unanticipated revenue on the revenue side and unanticipated savings on the expense side.”
Bireley also told city officials that its Other Post Employment Benefit (OPEB) trust fund is also well on its way of being funded.
The city created its trust fund, which pays for retiree health benefits, in 2009 with a 30-year funding plan.
Fiscal Year 19 marks 10 years of payments for the city and as of June 30, the city had an unfunded liability of $21.6 million.
“So even though we are only 33 percent in to the timing of the plan, we are 62 percent funded, that is a good ratio,” Bireley said.
Another key success for the city is its unassigned fund balance, which jumped from $20.3 million last year to $21.3 million this year.
As a percentage of expenditures, the general fund increased from 25.8 percent to 27.5 percent.
This means the city has a double-A bond rating based on Moody’s credit rating system, which implies the city has very strong creditworthiness.
Moody’s credit rating agency is nationally recognized as one of the “Big Three” agencies.
Moody’s median level for double-A bond rated organization is an unassigned fund balance of 24.5 percent, so the town is now three full percentage points above the double-A median, and is less than two percentage points away from a triple-A rating.
“I look at this as something that’s very positive for the town, and the town is in a very good, strong financial position,” Bireley said.