Ross: GRU’s claims of excess GFT are false

Letter to the editor

GRU BOARD claims the City owes it $68M for 2018-2021 – – this claim is false

Based on the details of GRU and City of Gainesville Audited Financial Statements (AFS) for 2018–2023 (1), I prepared an analysis of the Excess of General Funds Transfer over Income (EGFT) paid by GRU to the City and compared it to the info provided by Ed Bielarski. Both calculations use the General Accepted Accounting Principles (GAAP) method, except Bielarski ignores three important factors that would negatively impact his position. In checking Bielarski’s calculations, I followed his method, although I don’t necessarily agree with it. Bielarski calculated the EGFT to be $67.6M and rounded it up to $68M, and my analysis found his number should be no more than $34.6M, roughly half.

The GRU Board adopted Bielarski’s faulty calculations and is budgeting to recover an inflated sum from the City by resolution directly to reduce General Fund Transfers (GFT) from GRU to the City by $6.8M per year over the next 10 years.

I advised the GRU Board that their numbers are not correct and provided the Board with my analysis and supporting backup on more than one occasion. Most recently, at the GRU meeting on August 7, I concluded my public comment urging the Board to “Use the correct numbers.”

Thus far, the Board has not acknowledged that the numbers they rely on are erroneous. Rather, the GRU Board continues to use inflated numbers on the GRU website under the CEO corner to argue against the upcoming November ballot measure on GRU oversight.

My analysis is based on the GRU and City of Gainesville (AFS) from 2018 – 2023:

1. Bielarski/GRU Board amount for 2018 is wrong by $13M : One factor in the calculation, Net Income, originally reported at $17M, was restated in 2019, revised upwards by the auditors to $30M. The Bielarski worksheet incorrectly uses the original amount of $17M , ignoring the auditors’ corrected restatement of the 2018 AFS. There can be no dispute that the 2018 AFS restated Net Income is $30M .
2. Next, Bielarski/GRU Board numbers for 2018 – 2021 are wrong by $17M : Bielarski refuses to recognize revenues generated by capital contributions. GAAP and the AFS require that these revenues be recognized because they are offset by related expenses in the same period. The Auditors’ AFS Note (quoted below) is very clear. Bielarski’ s worksheets ignore the revenue while factoring in offsetting expenses and make GRU’s claim appear more substantial by $17M .

Direct quote from the most recent Notes to GRU AFS:

“Contributions in Aid of Construction GRU recognizes capital contributions to the electric and gas systems as revenues which are subsequently expensed in the same period . Depreciation on these assets is recorded on a straight-line basis over the estimated lives of the assets.

“ GRU recognizes capital contributions to the water, wastewater, and telecommunications systems as revenues in the period received. Depreciation on these assets is recorded on a straight-line basis over the estimated lives of the assets.”

3)  Further, Bielarski/GRU Board numbers are wrong by additional $3M :  Bielarski worksheets stop at 2021, ignoring AFS reported income for 2022 income after GFT of $20M , and 2023 that shows a loss after GFT of $17M – a net $3M excess income over GFT. The Bielarski worksheets disregard these years because they further decreased the claimed loss by $3M.

So that’s $13M +$17M +$3 = $33M , these factors ignored in the Bielarski worksheets reduce the GRU Board claim from $68M, actually $67.6M, to roughly $34.6M.

Bielarski/GRU Board deliberately ignore that the losses are overstated by $33M, currently a $68M claim against the city is listed on GRU’s web site under CEO corner as of this writing. (2)

To conclude, Bielarski has distorted the claim of excess losses as documented above, what else has he presented to the board that is distorted, including the info to terminate Tony Cunningham the former GRU GM. This action led directly to Bielarski being hired to replace Cunningham.

Charles Alan Ross, CPA, Gainesville
I have been licensed to practice Public Accounting in Florida for over 40 years. Recently retired and living in Gainesville, FL. My practice included Auditing Financials Statements, Income Tax advice and Preparation, and numerous Forensic Accounting Engagements over those years.

FOOTNOTES:

1. The Bielarski analysis uses info from the years 2018 to 2021, my analysis updates the numbers based on AFS through 2023.

1. Direct quote from the GRU web site–CEO Corner: “Why has GRU reduced the amount it pays to the city’s general fund through the Government Services Contribution? GRU paid $68 million more than what it made between 2018 and 2021 , ……..”

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