The city of Exeter was ranked as a low risk city by the State Auditor’s Fiscal Health of CA Cities, which means their financial situation is in good shape
EXETER – Exeter has achieved a major financial milestone by being ranked as a low risk city for their financials. This is their first time breaking into the low risk classification in its history.
The city was rated “low risk” from the State Auditor’s Fiscal Health of CA Cities, where they ranked 271 out of 430 cities. The state of California ranks cities from high, moderate and low risk depending on their financial situations. Only half of the cities audited were in the low risk category, and among them was Exeter.
For the first time, they are primarily “in the green” in almost every category that the state looks at. City manager Adam Ennis said that this is because the city’s general fund ended up to be roughly 69% of reserves, and the state typically ranks a city as low risk once they get over 50%. However, the city is earning that green check mark next to many other financial successes as well.
“This is the first time since the state even started doing this evaluation that we’re in the low risk category,” Ennis said.
This rank was a jump up from last year, as the city had ranked 152 out of all cities included in the ranking system. Exeter outranked Woodlake, Lindsay, Visalia, Tulare, Hanford and many more surrounding cities. In the states criteria, the city ranked well in its general fund reserves, liquidity, pension funds, and other postemployment benefits (OPED). It ranked moderate in its debt burden, revenue trends and future pension costs. It did not rank poorly in any category.
The reason why the debt burden category ranked moderate was due to the water and sewer funds, which are still experiencing debt. According to Ennis, a lot of “one time” funding was awarded to the city via grants in the last few years, which has helped the city to where it’s at. This comes after years of cleaning up the city’s financial hardships.
“We had made some adjustments as the funds were getting in better shape, and we were able to adjust internal allocations to where they made more sense,” Ennis said. “When we did, we saw things line up better. It’s just given us the ability to get things lined out the way that they should be done.”
The city’s water woes have only improved, though. In fiscal-year 2017, the city saw the water fund at $976,461 with over 63% in reserves, to then being $36,474 in the hole with -1.75% reserves by fiscal-year 2019. Around this time, the city updated its water system master plan, which identified some serious shortcomings in Exeter’s water infrastructure.
Exeter identified about $15 million in short-term and long-term capital improvement projects, not only for themselves but for their neighbors in Tooleville. However, Ennis said that these projects are well on their way, primarily from increasing rates and refinancing their water and sewer debt with the US Department of Agriculture. A lot of funding will be given to the city as well by the Department of Water Resources.
Not only that, but the city put water shut offs on hold during the pandemic after Gov. Gavin Newsom signed an executive order on April 2, 2020, that placed a hold on shut offs for water services due to unpaid balances. However, without requiring residents to pay their dues, delinquencies went up significantly, according to Ennis. This further contributed to the city’s water fund struggles.
However, it is only looking up from here. According to Ennis, every area of the city’s finances were in the “black” this last fiscal year, meaning that the city’s revenues were more or at the same level as their expenditures. This is another first for the city in a very long time.
“With the revenues increasing, we’ve increased our spending in areas, such as taking care of equipment and the things that we haven’t done in a long time,” Ennis said. “We’re keeping it pretty tight on what we’re spending versus the revenue coming in, only increasing spending to do those things we need to do.”
