Auditors present draft 'unmodified' opinion; city fund balance bolstered by one‑time federal aid
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Summary
Drescher & Malecki presented the draft 2024 audit to the Tonawanda Common Council, reporting a roughly $1.7 million increase in the general fund — about $1.2 million of which the firm said came from one‑time ARPA revenue — and recommended operational improvements in the treasurer's office.
Drescher & Malecki told the Tonawanda Common Council that they expect to issue an unmodified opinion on the city's 2024 financial statements while noting a qualification tied to the city’s component unit.
The auditors said the city’s general fund rose by about $1.7 million in 2024. “You brought in about 1,200,000.0 of federal revenue. That's one‑time,” the audit firm representative said, referring to American Rescue Plan Act (ARPA) reimbursements. The auditors said that, excluding the ARPA amount, the net operating increase in 2024 was closer to $500,000.
The auditors highlighted components of the fund balance: roughly $2.0 million classified as nonspendable (largely prepaid items), assigned amounts for workers’ compensation (about $1.7 million), and approximately $600,000 each set aside for health insurance and retirement. The unassigned portion — the funds the city can use for general operations — was reported at just over $10 million, about 34% of the budget.
In discussing longer‑term pressure on the budget, the auditors told council members that recurring revenue streams are flattening while expenses (salaries, benefits, contracts) continue to rise. The firm said the city had used one‑time revenues and a 2021 property tax increase to postpone what auditors called a potential “fiscal cliff.” The auditors noted New York State’s property‑tax cap (roughly 2% in most years) limits growth in property‑tax revenue without a local override. The presentation also flagged that an assumed $3.4 million appropriation in future budgets would materially reduce the currently available fund balance.
On internal controls the auditors recommended more staffing and cross‑training in the treasury office to speed month‑end and bank‑reconciliation work. The audit firm said final reports and required management letters should be issued within weeks.
Council members asked clarifying questions about the composition of one‑time revenues and the outlook for 2025–2027. City Treasurer Adam answered specific line‑item questions during the presentation. The council did not take any formal vote on the audit during the meeting.
An item the auditors flagged for follow up was a qualification in the audit related to the Tonawanda Housing Authority and whether it should be incorporated into the city’s financial statements; the auditors said that issue is separate from the unmodified opinion applied to governmental activities and major funds.
The presenters said they would deliver a formal management letter with recommended improvements and that independence from the city had been confirmed.
Council members and the mayor thanked the auditors for the presentation; no formal action was taken at the meeting beyond the informational presentation.