The Bottom Line Up Front
A review of the City of Somerset’s audits from FY 2021–FY 2024 shows a cumulative decline of approximately $17.2 million in combined net position, driven largely by long-term pension and retiree benefit accounting requirements, rising operating costs, and ongoing structural pressures, not by a single year of cash losses.
The audits also show shrinking liquidity in the City’s utility funds, large interfund transfers from utilities to support other operations, and emergency medical services continuing to require taxpayer support despite billing revenue.
These trends were identified using publicly available financial records by independent, non-credentialed analysts and do not indicate insolvency or wrongdoing. However, if these trends are accurate, they do raise important flags about long-term sustainability, rate pressures, and financial flexibility that voters need to be asking the candidates NOW. We encourage others to review to ensure the accuracy of our findings and ask officials to answer questions about why this is happening and what is being done to course correct.
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Definitions
Audits report what already happened under accounting rules; budgets show plans and assumptions going forward.
We primarily reviewed the City of Somerset's audits from FY 2021 to FY 2024. However, we did refer back to the FY2024-25 and FY2025-26 budget ordinances occasionally. All of these documents can be found on the City of Somerset’s website on the Accounting page.
What This Analysis Does NOT Claim
- This analysis does not allege fraud, mismanagement, or wrongdoing
- It does not mean the City lost this amount of cash
- It reflects audited financial reports prepared under required accounting standards
The Somerset Pulaski Advocate understands that human error and misunderstandings can occur and welcomes clarification or additional documentation regarding these trends.
info@somerset-pulaski-advocate.org
Audit Trends from FY 2021-FY 2024
Based on the City of Somerset’s independently audited financial statements, the following trends appear over the four most recent fiscal years:
| Fiscal Year | Combined Net Position Change |
|---|---|
| 2021 | Decreased by $5.98 Million |
| 2022 | Decreased by $2.91 Million |
| 2023 | Decreased by $6.47 Million |
| 2024 | Decreased by $1.86 Million |
Cumulative (FY 2021-FY 2024): approximately $17.22 Million decline in combined net position.
The audits repeatedly note that these changes are influenced by GASB pension and OPEB accounting requirements, which can create large swings in reported net position. These changes are not the same as operating cash losses, but they remain significant because they reflect long-term obligations and reduced financial flexibility.
Analysis Flags
Red Flag A: Governmental Financial Flexibility
By FY 2024, governmental activities show unrestricted net position of approximately –$46.6 million, with total governmental net position also negative.
What this means:
The City appears to have limited ability to absorb unexpected costs without raising revenues, reducing services, or relying on transfers from other funds.
Red Flag B: Shrinking Utility Liquidity
Business-type (utility) current and other assets have declined steadily:
- FY 2022: $25.19M
- FY 2023: $21.32M
- FY 2024: $17.57M
This represents a decline of approximately $7.62M in two years.
Why it matters:
Utilities are typically the most stable part of municipal finance. Declining liquidity can indicate tightening cash, reduced flexibility for emergencies, and increased pressure on rates.
Red Flag C: Large Interfund Transfers from Utilities
Enterprise fund cash flow statements show substantial transfers out:
- FY 2021: –$6.52M
- FY 2023: –$6.16M
- FY 2024: –$7.25M
FY 2024 also reflects interfund loan activity, another indicator of internal cash-flow management pressures.
Why it matters:
Large transfers may indicate that utility revenues are supporting broader governmental operations, a practice that can become difficult to sustain as utility cash tightens.
Red Flag D: Rising Operating Costs
FY 2023 and FY 2024 audits cite inflation and employee-related cost increases as contributors to declining net position.
Why it matters:
When costs rise faster than recurring revenues, municipalities often rely on fund balance drawdowns, interfund transfers, and rate or fee increases.
Red Flag E: EMS as a Net-Cost Service
- FY 2023 EMS total cost: $7.10M
Net cost to taxpayers: $1.75M - FY 2024 EMS remains a major expense category (~$6.62M)
Why it matters:
We all should know by now that even with billing, EMS often does not fully recover costs due to payer mix and reimbursement rates, making it structurally subsidy-dependent.
What people are asking:
Has it always been this way? Are collections done locally? Has anyone floated a business plan to move EMS closer to the black? How do other private sector services make money? Is there a better way than a cost-shifting and revenue-stacking model?
Note: Some fiscal years appear more prominently than others because audits do not present every data point the same way each year. The analysis uses the years where specific information is most clearly disclosed, focusing on consistent trends rather than forcing incomplete comparisons.