CHICKASHA - Chickasha city leaders received a “clean opinion” on their latest municipal audit, although a few problem areas were pointed out - one for at least the fourth time.
Nevertheless, “We’ve been behind but now we’re caught up,” Councilman Clark Southard noted.
“When we first started this journey, we were three audits behind,” Mayor Zach Grayson told auditor Andy Cromer, director of HSPG & Associates of Oklahoma City.
With completion of the Fiscal Year 2025 audit (July 1, 2024 - June 30, 2025), the next goal is to complete the city’s FY 2026 audit by the Dec. 31 deadline. Grayson indicated to Southwest Ledger he thinks that with the appointment of Richard Edwards as the city’s finance director last September, the target is achievable.
Chickasha’s total assets of $212,583,000 exceeded total liabilities of $67,446,000 by 3.15 times, or $145,136,905, Cromer reported on Sept. 8. Of that amount, $40.7 million “is available to meet the government’s ongoing needs,” he wrote.
Governmental activities capital grants and contributions decreased 73% in FY25, “primarily because the city received an American Rescue Plan Act grant” that helped pay for a brush truck for the Chickasha Fire Department the year before. No ARPA grant was received in FY25.
Governmental activities economic development expense grew 114% in FY25 “due to an increase in community development grants paid from the economic development sales tax to local businesses,” Cromer wrote.
Also in FY25, expenses associated with Lake Chickasha increased 84% because of miscellaneous lake improvements. That included the $49,500 contract for demolition of 13 docks on the southeast side of the lake last September and October; most of the docks were homemade and all of them were dilapidated and hazardous.
As the municipality completed its 2025 fiscal year, their governmental funds reported a combined fund balance of $29,886,413.
By the end of the fiscal year, the General Fund total balance increased by $613,347 to $9.24 million, HSPG found. That fund provides an indication of “how long you could survive on your reserves if you had no money coming in,” Cromer said. A good ‘rule of thumb’ is a General Fund balance of one to three months, he said. “You are sitting at approximately five months,” he told the Chickasha City Council.
Also by the end of FY25, the city had approximately $87 million invested in capital assets, net of depreciation, including land, buildings, improvements, machinery and equipment, vehicles, water and sanitary sewer systems, streets and bridges. That amounted to a net increase of approximately $7 million over FY24, Cromer said.
Long-term debt By the end of FY25, the city had $67 million in long-term outstanding debt, a decrease of a little over $1 million from the previous year. The net decrease was attributed to principal payments on the Chickasha Municipal Authority’s debt to the Oklahoma Water Resources Board for a loan that’s financing most of the cost of the new water treatment plant.
The CMA issued a promissory note for $67,660,000 to the OWRB on Aug. 10, 2023. The 30-year loan will mature no later than Sept. 15, 2023, and is payable from the proceeds of a 1.25% sales and use tax and net utility revenues.
Total principal and interest for the balance of the life of the note is $118,680,922, HSPG calculated.
City officials have indicated they intend to apply for an additional $5,000 loan from the OWRB to pay for “additional costs associated with the new water treatment plant,” HSPG reported.
Pledged sales and use taxes received in the current year were $5,249,574, and net utility revenues were $2,365,458, ledgers reflect. Debt service payments of $4,026,693 were “52.9% of pledged sales and use taxes and net utility revenues.”
In a related matter, recently the city made another $343,497 principal and interest payment on the Water Board loan; paid Wynn Construction Co. another $1,767,750 for its work on the treatment plant; and paid Freese and Nichols another $137,456.
Wynn Construction was awarded a $71,450,533 contract to build the new water plant, and has been paid $5.9 million to date. F&N is the construction manager and provides multiple phases of engineering services during the project.
Problem areas
The City of Chickasha maintains more than 50 separate bank accounts. “That’s an extremely high number of bank accounts,” Cromer told the council. “Each of those has to be reconciled each month, and there’s significant activity between the accounts. It’s ripe for getting things confused and messed up.”
HSPG recommended the city “reduce its number of bank accounts to an extent deemed appropriate.”
As far back as HSPG’s report on Chickasha’s FY 2022 audit, Cromer pointed out that City Hall utilized more than 50 separate bank accounts. “It’s inherently complicated,” he said. That many accounts “appears excessive and creates additional administrative burden to transfer and track payments between the accounts and to reconcile the accounts each month,” HSPG wrote.
“We’ve been working on this,” Edwards said. “Our goal is less than 10” bank accounts.
Another issue is “stale” checks. The City of Chickasha has outstanding checks totaling more than $120,000 “that are two years or more older,” Cromer said. The individuals and companies to whom those checks were written “have not been properly notified that their checks remain uncashed,” Cromer said. “You need to write them off” or persuade the recipients to cash them. “That amount keeps growing,” he added.
HSPG recommends the City of Chickasha “review its procedures to ensure expired checks are promptly addressed,” Cromer advised.
For example, federal government checks - such as those from the U.S. Treasury, Social Security, or other federal agencies - are generally valid for up to one year after they are issued.
However, after 180 days (six months), the check is considered “stale” under the Uniform Commercial Code and banks are not legally required to honor it. Some banks may still accept it, but the check recipient could face delays, holds, or rejection.
After a year a federal check is no longer valid, and a replacement may need to be requested from the issuing agency to recover the funds.
One other issue HSPG mentioned was purchasing cards. “There’s not a requirement that when a purchase is made, it first gets approved by someone other than the cardholder who says ‘yes, this purchase is necessary,”’ Cromer said.