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The City of Detroit ended the 2016 fiscal year with its second consecutive balanced budget and a surplus of $62.9 million, according to its Comprehensive Annual Financial Report for the year ending June 30, 2016.

With its enhanced long-term financial condition, the City has implemented major reinvestments and improvements to public safety, neighborhoods, transportation, recreation and other public services that improve residents’ quality of life.

“This audit confirms that the administration is making good on its promise to manage Detroit’s finances responsibly,” said Mayor Mike Duggan. “With deficit-free budgets two years in a row, we have put the City on the path to exit Financial Review Commission oversight.”

Among other requirements, Detroit must have three consecutive years of deficit-free budgets to exit active oversight by the review commission, under terms of the City’s exit from municipal bankruptcy protection in 2014.

“The audit shows that the City has performed better than budget at the same time we have made investments that will improve our financial future,” said John W. Hill, the City’s Chief Financial Officer. “I want to thank the leadership and staff of the Office of the Chief Financial Officer for all of their hard work and dedication, as well as department directors for operating their budgets in a fiscally responsible manner.”

Surpluses used for blight removal, Retiree Protection Fund

The FY 2016 CAFR reports $143 million in accumulated unassigned fund balances that include this year’s surplus. Of that fund balance, the City has used $50 million in FY 2017 to help set up the Retiree Protection Fund and set aside $50 million in the FY 2018 budget for blight remediation and capital improvements, leaving a $43M unassigned fund balance that would carry over to the next fiscal year. This cushion will allow the city to manage risks associated with potential changes in the economy or federal funding.

The City is currently projecting a $51 million surplus in FY 2017 with about a month remaining in the year. As prescribed by the Plan of Adjustment, the City utilizes its surpluses for one-time spending that enhances its long-term position, such as blight remediation, capital improvements. It also has used a portion to fund legacy pension obligations. Examples include:

• $30 million to pay down debt in FY 2016, saving millions in interest expenses.

• $20 million in FY 2016 and $50 million in FY 2017 for the Retiree Protection Fund.

• $40 million in FY 2017 and $30 million in FY 2018 for blight remediation.

• $27.9 million in FY 2017 and $20 million in FY 2018 for capital improvements.

Improved Grant Management

In addition to Detroit’s General Fund gains, the City posted another year of substantial improvements in grants management. The FY 2016 Single Audit report covering over $157 million in federal grant spending has zero questioned costs — or dollars that could potentially be clawed back by the federal government — for the first time in more than a decade, while all major federal programs received clean audit opinions for the first time in years. There was also a 45% reduction in audit findings, part of a continual reduction trend since FY 2012.

“These results will help aid Detroit in its ability to compete for and secure grants that support critical services and opportunities for our residents and communities,” said Nichelle Hughley, the City’s Director of Grants Management. Please click the link to view the City of Detroit Comprehensive Annual Financial Report (CAFR).


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