Broadmoor Police Protection District Financials

Overview of the Latest Audit Report for Broadmoor Police Protection District

The audit report for the Broadmoor Police Protection District (the "District") covers the fiscal year ending June 30, 2023. It was conducted by LAMORENA & CHANG, Certified Public Accountants, based in San Francisco, California. View the full report and a terms guide here.

Purpose of the Audit

• Objective: To provide an independent assessment of the District's financial statements, ensuring they present a fair and accurate picture of the District's financial position in accordance with accounting principles generally accepted in the United States of America (GAAP).

Auditor's Opinion

• Unmodified (Clean) Opinion: The auditors concluded that the financial statements fairly represent the District's financial position.
• Going Concern Emphasis: The auditors highlighted a significant concern about the District's ability to continue operating due to recurring financial losses and a net deficiency in assets.

Key Findings from the Audit

Financial Health of the District

Net Position (Financial Standing):

2. • Total Assets: $972,559
   • Total Liabilities: $4,672,304
   • Net Position: Liabilities exceed assets by $2,234,272.
   • Unrestricted Net Position: Negative $2,682,838 (indicates a deficit).

Operating Results:

1. 1. • Total Revenues: $3,309,952
      • Total Expenses: $4,282,213
      • Net Loss: $972,261 for the fiscal year.

Trends:

1. • Three Consecutive Years of Losses:
     • 2021: Loss of $258,072
     • 2022: Loss of $112,080
     • 2023: Loss of $972,261

Revenue Breakdown

• Property Taxes: $1,725,698 (increased by 7% from the previous year).
• Other Revenues: $1,584,254, including:
  • Special Assessments: $754,630
  • State Revenue: $518,749
  • Grants & Contributions: $165,300
  • Charges for Services and Miscellaneous: $134,423
  • Proceeds from Asset Sales: $4,325

Expense Breakdown

• Salaries and Wages: $1,407,316
• Employee Benefits: $760,247
• Materials and Supplies: $2,083,278
• Depreciation: $31,372
• Significant Increases:
  • Legal Fees: Exceeded the budget by $280,613 due to ongoing litigation.
  • Insurance Expenses: Increased significantly, impacting overall expenses.

Budgetary Highlights

• Revenues:
  • Actual: $3,309,952
  • Budgeted: $3,005,000
  • Over Budget: $304,952 (primarily due to higher property tax revenues).
• Expenses:
  • Actual: $3,669,996
  • Budgeted: $3,267,792
  • Over Budget: $402,204
  • Areas Over Budget:
    • Salaries and Benefits: Over by $306,489
    • Legal Fees: Over by $280,613
    • Utilities: Over by $57,023

Capital Assets

• Net Capital Assets: $349,005 (after depreciation).
• Capital Expenditures: Minimal, indicating limited investment in infrastructure or equipment.

Pension Liabilities

• Net Pension Liability: $3,891,546
• Impact: Represents future obligations to employees, contributing to the overall liabilities.

Going Concern Uncertainty

• Auditor's Note: There's substantial doubt about the District's ability to continue operating due to:
  • Recurring significant losses.
  • Net deficiency in assets.
  • Increased legal and insurance costs.
  • Ongoing litigation impacting financial stability.

Pending Litigation

• Two Lawsuits: Related to wrongful termination claims.
• Potential Liability: Estimated at $600,000 as of February 29, 2024.
• Insurance Coverage: The District's insurance may cover part of these costs, pending outcomes.

Explaining the Audit and Financials to the Community

Understanding the Challenges

Financial Deficit

• The District is spending more than it earns, leading to a significant net loss.
• Liabilities exceed assets, creating a net negative position.

Rising Expenses:

1. 1. • Legal Fees: High costs due to ongoing lawsuits.
      • Insurance Costs: Increased premiums impacting the budget.
      • Salaries and Benefits: Over budget, necessitating review.

Revenue Limitations:

1. • While property tax revenues have increased, they haven't kept pace with rising expenses.
   • Other revenue sources remain relatively flat or unpredictable.

Impact on Community Services

• Police Protection Services: The financial strain could affect the District's ability to provide consistent and effective police services.
• Staffing: Budget constraints may lead to staffing challenges, impacting response times and community safety.

Actions and Considerations

• Resource Allocation: The PD Optimizes the use of existing resources to improve efficiency.
• Expense Review: We look for and identify areas to reduce costs without compromising essential services.

Key Takeaways for the Community:

• Awareness: Understand the financial situation and its potential impact on police services.
• Involvement: Participate in community meetings and discussions to explore solutions.
• Support: Consider ways to support the District, whether through advocacy, volunteering, or other means.