Financial Report

 

Dear Fellow St. Louisan:

Over the years we have posted information on the office’s finances on this site.  We are again providing you with this type of information, now for Fiscal Year 2010 (FY10) and Fiscal Year 2011 (FY11). 

 

General Overview

Our operating expenses are funded for the most part by your city tax dollars, and all of our permanent employees are state paid.  There are some expenses which are paid for by interest earned on private funds (court costs and deposits) held by the office. 

 

Historical Background

In 1999, when I began serving as Circuit Clerk, the office held over $11 million in private funds accumulated over the years by three former Circuit Clerks.  Most of the interest is generated from this money.  A State Audit, conducted at my request in 1998, issued in 2000, determined that past administrations’ financial records are alone unreliable to determine ownership of that money.  To see this audit and all other audits of the office go to www.auditor.mo.gov.  Note: We were the only elected office in the city to receive a “clean” audit, no findings, in the State Auditor’s recent audit of the entire city government.

Over the past ten years we have used “forensic” accounting methods to determine the true ownership of $5 million of the $11+ million held, paying out approximately $1 million to private citizens as refunds, and the balance to the state and city for their share of court costs.  As such, we have drastically reduced the balance on which we earn interest.  Additionally, over the past few years we have had record low interest rates, resulting in a drastically reduced interest income.

Nevertheless, we continue to send interest payments to the city’s General Revenue Fund to be used to provide essential city services.  In FY10 we paid $250,000 in interest to the city.  From January 1999 to present we have given $2.59 million in interest to the city’s General Revenue Fund (over 11 years). 

Note: In Fiscal Year 2003, our city budget was drastically reduced for one year, requiring over $600,000 of that fiscal year’s expenses to be paid with interest earnings.  The “savings” in that budget has not been included in the total of interest paid to the city.  If it were to be included, the total interest paid would be over $3.19 million.

By comparison, prior Circuit Clerks, who maintained larger balances of funds at much higher interest rates, paid $2.95 million in interest (over 15 years), of which $725,000 was paid in 1998, an election year.

FY10 and FY11 Information

Since 2002 the office has lost over 35 state paid positions, which created a need for per performance employees.  By state law, the interest earned on deposits can be used for office needs and we have used some of the interest to meet those needs.  The following is a general description of our use of these funds for FY10: personnel, $103,083.08, at an average hourly rate of $11 an hour with no benefits of any kind, $58,520.00 for computer software maintenance, which we need to maintain to determine the ownership of the money accounted for in the data contained in that software system, and $1,128.29 for miscellaneous expenses.

We anticipate the following interest paid expenses for FY11: approximately $85,000 for personnel at an average hourly rate of $12.50 an hour (to comply with the Living Wage ordinance) and $54,000 for computer software maintenance for the reasons previously stated.  We will hold approximately $100,000 in reserve, and pay $25,000 to the city’s General Revenue Fund.

We have consistently reduced our request from the city’s General Revenue Fund.  For example in Fiscal Year 1998 the office’s city funded budget was approximately $1.72 million, our budget for FY11 is under $950,000.  Approximately $112,000 of the office’s city budget is reimbursed to the city by the state; as such the net budget is $838,000.  In reducing the budget, we leave no allowance for a large unanticipated expense, and there is a possibility of further reduction of state paid employees, thus we have a need to reserve $100,000 of interest funds as a contingency fund.

 

Conclusion

Even though we have used interest funds to pay some office expenses, and despite a drastic reduction in interest income, we have consistently paid interest to the city in an amount greater than the past two administrations.  At the same time, we have, excluding Fiscal Year 2003, cumulatively reduced our city tax funded budget by over 30%.

If you have any questions, you can reach me by email:mariano.favazza@courts.mo.gov., or by phone 622-3728.

                                                                        Mariano Favazza,
Circuit Clerk, City of St. Louis