Introduction and composition of the City of Jackson’ MS:
Table of Content
A city of Jackson “Mississippi” followed the local government law for reporting. The MS is required to publish the audited financial statements annually. The state government of the city is elected based on votes and the state government serves the city for four-year terms.
In the MS, its governor has the maximum power as he is head of the Executive Branch. Also, he serves the city and ensures its protection by playing his role as a commander in chief of the state’s military forces.
The governor is responsible to enforce the state laws, and the power to either approve or veto bills passed by the Mississippi legislation, to convene the legislation and any time. There are also other bodies and government personnel that keep the city safe.
These include Lt. Governor, secretary of the state, state auditor, and powerful court system. Today the MS is operated under the mayor-council form of government. The mayor and the appointed seven council members make the policy and have the legislative authority.
In CAFR, the various individual fund, propriety funds, and other unit’s related information are included. The government of Mississippi is using several types of funds such as general fund, federal fund, improvement fund, and non-governmental funds. General funds and federal funds are major.
Financial Analysis of MS
Ratio analysis is considered an important tool in the assessment of the company or city’s financial performance or position. The city is generating revenue per capita is approximately $ 897.15 in the financial year 2014.
As compared to the previous years the revenue per capita is increasing which indicates the governing body can maintain the existing services levels. But according to the 2014 CAFR, a city of Jackson, MS relies heavily on the two sources which are property taxes and the revenue from the utilities.
If any downturn occurs in home sales and the owners become careless then the resale of the property will decrease. So the city is required to generate additional revenue sources. The employee per capita ratio is 1.53 approximately that is slightly lower than the previous year.
The rate of increasing population is higher than the employment rate. The operating position about the general fund in generating revenue is unsatisfactory.
The statistic shows that the MS city does not have a diversified revue base as the city cannot reply to these two major sources of revenues solely. The utility cost in the city is also very high therefore many citizens of the MS city are preferred to live outside.
According to the CAFR report, the Jackson city of MS heavily relies on the intergovernmental revenues, (Pg. 17, 2014). The MS is incurring high expenditure on Federal programs and awards as well as on another state financial assistance, (pg. 142). In the financial year 2014, a total of $ 1,832,273 is expensed out.
According to the figures that are presented in the CAFR report of 2014, the MS city is generating revenue from its business activities at a low level which is not sufficient to cover the expenses, (Wilson & Kattellus, 2007).
There is budget deficient if the city’s revenue is subtracted from the city’s expenses. The MS must find out the other financial sources.
According to the CAFR report, the statistics indicate that in the 2014 financial year, the statement of activities shows a budget deficient, (pg. 17). It is an important point and needs attention as revenues are not covering the expenses and to cover the expenses the money is moved out of an “other fund”.
The liquidity position of the city MS is also suspicious as in the CAFR report, there is a shortage of liquid asset and current liabilities are high. The liquidity ratio also shows that the city has cash deficient. In financial 2014, the cash over the liabilities is reduced to 2.892 which is lower than the previous year.
Analysis of Reserves:
The city of Jackson, MS, according to the CAFR report, from 2014, is healthy and earning a good return. But there are fewer investments in capital projects. The city needs to invest more in profitable projects instead of only relying on the property tax and utility earrings.
The rate of debt is also increasing as the city has less access to other sources of finance. It may be proved dangerous for the city. Overall, the city can maintain its position but need to have an adequate financial reserve to cover the emergencies, lawsuits, and property damage, etc. The levered position is satisfactory due to less involvement in debt financing.
Analysis of Expenditure and Expense:
The Jackson city, MS, according to the 2014 CAFR report, has been excessively incurred the money on the area of “public safety” and “public work”. A total of $ 54,236,106 and $ 10,229,691 money is being spent on public safety and public work respectively.
According to the CAFR 2014 report, the MS has spent higher money on public safety than in any other area. But it needs to be accessed as to whether this money is spent or not.
Additionally, the city of Jackson, MS, budget from 2014 CAFR indicated that MS spends most of the amount of money annually in the category of government activities, on public safety. It is needed that the money should also more spend on other areas like human and cultural services, and employee benefits.
Analysis of a Debt burden:
According to the CAFR report, the debt burden is increasing year by year and also generating a good return. The statement of outstanding debt indicates that the city is more relying on debt in business-type activities for growth, (pg. 160).
The Long term debt ratio also indicates the increasing trend. The level of debt overpopulation increased greatly, (149.26). The city should rely on more financing resources as the risk of return in high borrowing becomes difficult to earn.
The Jackson city, MS, is supported by the other components units such as the Jackson Redevelopment Authority and Capital city Convention Centre Commission.
Opinion and Recommendations
According to the City of Jackson, MS, information available in 2014, CAFR, the MS has satisfactory budgetary control. The “statement of activities” indicates that the city has the potential to grow and able to maintain its position.
The city has a strong financial position in the USA as it is less depending on debt financing and utilizing the assets efficiently. The primary source of revenue from governmental activities are currently is deficient but it seems temporary.
Through debt financing, the city can cover its expenses easily but overspending is a serious detriment to the U.S economy. The city also achieved the GFOA Certificate of achievement and its audit report presents an unmodified opinion.
Its financial performance and position are also indicating that it can sustain itself for a longer period. Overall the financial performance and condition of the city are satisfactory.
Wilson, E. R., & Kattellus, S. C. (2007). Accounting for governmental and nonprofit entities: Irwin Professional Publishing.