City’s unassigned surplus is on low end for cities
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Jamestown's audit is getting done more quickly each year – though the picture the audit paints is getting uglier.
The city's 2025 audit results are in from Drescher and Malecki about three and a half months earlier than last year. The results were presented this week to the City Council by Carl Widmer and Jared Picard from Drescher and Malecki.
Financial wise, Picard presented the city's revenue and expenditure trend back to 2021. There has been a general upward trend for both, with inflation having an influence on that. For 2025, Picard said the city has seen an increase in revenue from about $45.3 million to $49.2 million, for an increase of $3.9 million. Primarily, he said this was due to state aid increases of $2 million and some restructuring grants and DOT increases. Property tax also increased along with sales tax, which he said is an overall trend in the state
On the expenditure side there was not as much of an increase, with the city's expenditures increasing from $46.2 million to $48.7 million. Primarily, this was driven by employee benefits, including health insurance and pension costs. Community services also saw an increase, primarily ARPA projects focused on neighborhood improvements, along with an increase in transportation as well.
The overall fund balance increased by about $450,000, and Picard broke that out into three categories including the unassigned fund balance, which he said a popular way to judge a government's equity is to prepare that unassigned fund balance number to the total expenditures. Jamestown went from about 10.8% to 6.6% percent of the budget for the unassigned fund balance.
"So although your overall fund balance increased quite a bit because of the appropriations for next year's budget, the unassigned fund balance decreased by a little bit," Picard said. "The basis for this number is the Government Finance Offices Association, they suggest that you should have about two months of spending in your unassigned category. So, the standard is usually in the 16 to 17% range, as the recommended amount but that's really up to the council and how they want to manage their balance."
Observations from the audit were the same more or less from last year, including degradation of duties, meaning with limited staffing people in the city are often doing and reviewing their own work, which typically is done by other people in other roles. Another finding has to do with the federal board, as part of the ARPA testing there are specific items the federal government wants to be included, and a few of those were missing but it was noted that the city is in the process of cleaning those up.
"The takeaway, this is kind of the trend we are seeing across the state on the municipality side," Widmer said. "Costs are rising, and it's becoming more and more difficult to keep up with that on the revenue side, particularly in places that haven't been accustomed to raising property taxes to keep up with that same level of cost increase on your spending side. What that's leading to, as you saw on the last couple slides, is the depletion of available fund balance."
If the fund balance is a consistent ingredient in a municipality's operating budget, Widmer said they could eventually get to the place where they are working out of a deficit. Questions from the council included if similar things were being seen in other cities, which Widmer said it was, and at a city level these appear to be popular results. Smaller municipalities have had an easier time saving money over the past few years than cities, he added. It was also asked how they compare to other similar cities, and while Widmer said he did not know off the top of his head, he said evaluating the unassigned fund balance measurement as a percentage of the city's spending, the six percent would be on the lower tier.
The hiring of Comptroller Ericka Thomas has meant the audit is done much earlier in the year than it was the past two years.
"I wanted to mark the improvement," Widmer said. "We're here September, before Sept. 30, about three and a half months sooner than last year's audit. So, if you were here for last year's presentation we talked about making an effort to move every year a little bit earlier, and that is happening. The past two audits I think we've cut off about eight months from when the presentations have been."
Widmer noted the federal deadline for audit submissions is Sept. 30, about nine months after the year ends, and Drescher and Malecki anticipate getting everything wrapped up and submitted by that deadline for the first time in recent years.
For the audit, Widmer said the deliverables from the audit each year includes the financial statements for the city, a single audit which is a single compliance audit that the city is subject to as they receive and spend over $1 million in federal aid. The total federal dollars spent in 2025 was over $9 million, which Widmer said was spread across several different federal programs.
"Based on the dollar amounts and how often they're tested in the past, we have a rotation process that we follow," Widmer said. "The feds issue a compliance supplement that our firm follows, so we're really just performing this compliance audit as an extension of federal guidance."
Three federal programs were selected for testing this year; ARPA, CDBG, and the SAFER grant.
Deliverables also include a state transportation compliance audit, which tests the CHIPS funding, auditor communications, and a management letter. Widmer also noted that it is important for the auditors to remain independent from the city and that there are no conflicts of interest.