• Red Oak Consulting and Clifton Larson Allen, the two firms hired by the city to conduct audits of development agreements and collection/processing of development impact fees, are working on their respective tasks. The audits are expect to be complete and a report and recommendations issued by the end of 2012 or early in 2013.
• On June 12, 1012, the Surprise City Council unanimously approved a $184.2 million budget for fiscal year 13 (FY13) that includes $4.3 million in expense reductions.
• The FY13 budget is an important step in the Council-directed two year plan to replenish the city's reserve funds. The budget includes an additional $15.8 million for interfund transfers and loans for FY13.
• On May 29, the Surprise City Council completed its review of city departmental budgets.
• On May 8, City Manager Chris Hillman proposed an FY13 budget that reduces expenditures by $4.3 million and eliminates 33 positions in Surprise. 19 other positions were reduced.
  • The reductions will have a minimal impact on city services, and no direct service impacts in Fire, Police, CRS or Public Works (Sanitation, Water, Wastewater).
  • The budget addresses the Council's directive to replenish the City’s reserve fund (2 months of operating expenses or approximately $13 million) by June 30, 2014.
  • FY13 budget development was influenced by the FY11 CliftonLarsonAllen audit raising concerns regarding impact fee dollars being misallocated over time (loaned between funds and the funds not rebalanced), a situation state law requires us to address.
• FY11 CliftonLarsonAllen audit, made publicly available June 7, 2012, is a called "qualified audit opinion"
  • This means the auditors need to thoroughly review additional financial information to be confident that everything is in order.
  • That requires further audits of development agreements and our impact fee management going back to the year 2000, which are now underway. 
  • These audits will take until roughly the end of the calendar year to complete and could require cuts from the General Fund in the FY13 budget, which starts July 1, 2012.
• The impacts of the FY11 “qualified opinion” audit have been significant:
  • More than $10 million from our General Fund, or main “checking account” was transferred to impact fee funds which are “owed money.”
  • This placed the FY12 budget $3 million in the red, requiring the city to cut millions from the FY13 budget. These cuts have now been and reviewed by Council, as indicated above.
  • The transfers drained our reserve fund, or “savings account” from an already-low $7 million to zero. Council policy requires the reserve fund to contain the equivalent of two months of operations, or roughly $13 million.
  • As indicated above, the City Manager’s FY13 budget addresses these issues and will have the reserve fund replenished by June 30, 2014, as directed by Council.
• The City is not “broke.” Our bills are being paid regularly and on time as the City collects revenue. In fact, revenues are exceeding FY12 forecasts, and are expected to rise further in FY13 and FY14.
• Surprise will proceed in an open, transparent way that will involve our citizens.
• Surprise is implementing a five point plan to move our city to a healthy, long term, stable and transparent financial state.

1. Step one, bring on board the independent accounting experts. COMPLETED APRIL 10, 2012
2. Step two, engage residents and maximize transparency during the audit and budget process through regular council meetings, a fully updated web site, and "Transparency Town Halls" UNDER WAY NOW
3. Step three, the public will see regular status reports on the ongoing audit until it is completed, with the first expected probably in late May or June
4. Step four, the final audit results will be available to everyone when it is complete in approximately eight months.
5. Step five, communicating the results with the residents of Surprise. The final results will be available through all our communication vehicles, and we will also be assertive in scheduling meetings with community stakeholders and residents to discuss the results of the audit.

• The good news: We are positioned to get our financial house in order once and for all.

Latest ~ Where We Stand ~ The Five Point Plan ~ Important Links

Engaging and communicating with residents is key to moving toward financial health

• The City of Surprise is taking decisive steps to assure that the City’s financial house is in order.
• The Mayor and Council are implementing a five-point plan to move our city to a healthy, long term, stable and transparent financial state.

1. Step one. Bring on board the independent accounting experts to handle the additional audits that are now required.
   COMPLETED APRIL 10, 2012
2. Step two. Engage residents and maximize transparency during the audit and budget process through regular council meetings, a fully updated web site, and “Transparency Town Halls” UNDER WAY NOW
3. Step three. The public will see regular status reports on the ongoing audit until it is completed, with the first expected probably in late May or June
4. Step four. The final audit results will be available to everyone when it is complete in approximately eight months.
5. Step five. Communicating the results with the residents of Surprise. The final results will be available through all our communication vehicles, and we will also be assertive in scheduling and meetings with community stakeholders and residents to discuss the results of the audit.

• The City will communicate openly and transparently as these fiscal challenges are met and managed. To stay informed, visit this site and be sure to view the "important links" for updates, watch City Council meetings on the web or Channel 11, and sign up for our “Notify Me” email alerts.

Latest ~ Where We Stand ~ The Five Point Plan ~ Important Links