Yesterday, just a day after initial findings of an independent financial analysis were released, Suffolk City Council members and city staff still were digesting the information.

City Treasurer Ron Williams said the review is important because it shows the city needs to change the way it has managed finances the past few years in order to safeguard taxpayers’ funds and restore the financial integrity of the city.

&uot;I have been very concerned about the amount of funds, cash, that has been expended over the last five years without a clear plan to restore the city’s cash reserves,&uot; he said yesterday.

David Rose, of Davenport and Co. LLC, the company responsible for the analysis, said it looked at the city’s compliance with its own policies and best practices of municipal government, the city’s debt, review of the Capital Program and its impact on cash flow, and the General Fund and Utility Funds including revenue, expenditure and fund balances, and more.

The analysis featured 31 initial observations, some of which were:

n The city is making loans from the General Fund with no stated source of timely repayment

n The city’s $9.4 million Capital Project Reserve has no cash funding

n The city has no cash to support its Undesignated Fund Balance

n The city has no cash available to fund &uot;designated for special projects&uot;

n The General Fund and Utility Fund have made mutual loans to each other in 2005 to compensate for inadequate fund balances in the same year

n The Fleet Internal Service Fund has $2.1 million deficit

n The Risk Management Fund has $3.7 million deficit

n The Debt Service Fund has $1.6 million deficit

n The city’s multi-year, published General Fund and Utility Fund CIPs appear to be different from the actual City Operating Plans.

n The CIP calls for $26 million of cash and equivalents, which does not appear to be available

n CIP funding approach has resulted in more &uot;pay-as-you-go&uot; contributions than prudent as reflected by overall fund balance deficiencies.

The analysis also notes that timing of debt payments add stress to limited city financial resources, and the city has been below its Fund Balance Policy since 2004. Loans from the General Fund to other funds amount to $27.1 million, yet those &uot;other funds&uot; have no source of revenue or repayment, leaving unrestricted cash at $576,000, or only two days of cash on hand.

No one in the city has yet to explain what all this means exactly, though Rose did note Wednesday that financial stability and credibility is key for good standing with rating agencies.

Dennis Craff, director of communications for the city, said Finance Department officials first laid eyes on the analysis during the council meeting along with the rest of Suffolk’s citizens, so they still were processing the information yesterday. Members of the finance department are willing to work with Davenport officials on the financial analysis process, he said.

Calls to Christine Ledford, director of finance, were not returned before press time yesterday.

Ledford, as well as the financial advisors, were not consulted in the review. However, Rose said all of the information used in the review came from publicly available city audits and financial documents posted on the city Web site.

Councilman Leroy Bennett said council members had a briefing on the analysis before Wednesday night’s meeting, but it still was an educational presentation for him. &uot;This is another set of eyes looking so we can correct what’s wrong, if there is anything wrong.&uot;

He said he hoped it would not affect the timeline of the budget and CIP processes.

Williams said in the past they have started the budget process as early as January and as late as March. A budget must be adopted by June 30. He remained optimistic, saying he hoped complete review of the financial analysis would take a matter of days and weeks, rather than weeks and months.