Oak Park auditors give city a clean opinion, flag grant-recording procedure

City Manager Eric Tungate and finance staff presented Oak Park’s fiscal year 2024 financial results at the Feb. 3 city council meeting, and outside auditors issued a clean audit opinion while noting one accounting-process finding.

The presentation showed a $504,000 surplus in the city’s general fund for the year ended June 30, 2024, and a general-fund beginning balance of about $4.9 million. Carl Johnson, a finance department representative, said the city set aside $683,000 during the year for a new parks and recreation fund, bringing general-fund contributions for parks to about $2.1 million to date.

Why it matters: the audit provides the council and the public with an independent review of the city’s finances, highlights ongoing obligations such as pension and OPEB liabilities, and identifies process changes the city needs to make to ensure its financial reporting follows grant terms.

Johnson and City Manager Eric Tungate reviewed fund balances across enterprise funds. Johnson said the water and sewer fund shows about $33 million in fund balance (with roughly $10.7 million in cash after accounting for in-progress construction), and the stormwater fund shows approximately $7 million in fund balance but very low cash on hand for operations. The state’s annual allocation for major and local streets to the city is about $3.4 million, Johnson said, an amount the city budgets fully each year for street work.

Johnson and Tungate also described the district court’s ongoing financial shortfall: court operating costs run about $1.8 million to $1.9 million while ticket revenues cover roughly $1.3 million, creating a general-fund subsidy in the range of $500,000 to $600,000 annually.

Pension and retiree health obligations were a major focus of the presentation. Johnson said the general employees retirement system had an approximate liability of $39 million and was about 55% funded; the city received a one-time State of Michigan pension grant (about $1.8 million) tied to 2021 valuations and recorded that money into pension assets. City staff and the auditor said the grant helped but that the general employee system remained near 55% funded. The public safety pension system was presented with about $91 million in liability and roughly 60–68% funding depending on the valuation year; public safety pension contributions have increased, Johnson said, from about $2.1 million annually to roughly $3.1 million.

Johnson and the auditor also discussed OPEB (retiree health) funding levels. The general-employee OPEB liability was presented as about $20 million with roughly $3 million set aside (approximately 15% funded); the public-safety OPEB balance was presented as approximately $2.826 million with about $400,000 set aside (again roughly 15% funded). The city is not required to prefund OPEB but has set pension funding as a higher near-term priority, Johnson said.

The auditors from Yo and Yo CPAs issued an unmodified (clean) opinion on the city’s financial statements. Michael (Mike) Rolka, a principal with Yo and Yo CPAs, told council that the audit relied on test procedures and that, in his view, the financial statements are materially correct and can be relied on.

The firm identified one reporting issue: the State of Michigan pension grant was recorded to the pension fund and the actuarial liability but had not been recorded through the general fund as the state’s guidance required. Rolka and staff said the underlying cash and contribution were made to the pension system as intended, so there was no net impact to the city’s financial position; however, auditors recommended—and the finance team said it had already updated—internal procedures to ensure future grant provisions are applied consistently across funds.

Johnson also reported capital spending of roughly $6.3 million in general-government capital assets (about $4.7 million for roads and roughly $1.4 million for vehicles and equipment) and about $3.1 million spent on water and sewer capital projects during the year. He said the city paid down nearly $1.9 million of outstanding debt and currently carries about $16 million in outstanding debt across several funds.

Council members asked clarifying questions about amortization schedules for pensions and the practical effect of reaching full amortization in future years; city staff explained that reaching the actuarial amortization target would reduce active contribution requirements over time but that projections are estimates and actuarial assumptions change.

Ending: The audit presentation concluded with council accepting the auditors' findings and staff noting the finance team had already implemented the recommended procedural change for grant recording.