Bozeman City Commission approves FY2024 comprehensive financial report; auditors issue clean opinion

The Bozeman City Commission on Jan. 14 voted unanimously to accept the City of Bozemanfiscal year 2024 Annual Comprehensive Financial Report (ACFR) and the auditorsletter to governance.

Auditors from I. Bailey delivered an unmodified opinion, saying the city's financial statements "are presented fairly in all material respects in accordance with generally accepted accounting principles in the United States," and reported no material weaknesses or significant deficiencies in internal control and no instances of noncompliance for the federal program tested (ARPA), the audit partner said.

The ACFR, issued Dec. 20, 2024, shows the city's net position grew to $693,400,000 in 2024 from $636,200,000 the prior year, with approximately $568,700,000 invested in capital assets and $9,400,000 reported as unrestricted. Auditors and staff told commissioners that much of the apparent increase reflects capital investment and capital carryforwards rather than immediately spendable cash.

"Your financial statements are presented fairly in all material respects in accordance with generally accepted accounting principles in the United States," Janine Hathcock, audit partner at I. Bailey, said during the presentation. Melissa Hodnet, the city's finance director, noted the report's issuance date and explained carryforward, reserve, and budget timing considerations to commissioners.

Why it matters: the ACFR is the document bond raters, investors and agencies use to assess municipal credit and long-term fiscal health. A clean audit opinion supports market confidence and confirms compliance with auditing and federal uniform-guidance requirements for the citys federal awards.

Key details from the report and presentation: - Net position (equity) increased to $693,400,000 in 2024; unrestricted net position is $9,400,000. The auditors reported a $57.2 million net increase in total net position for the year. - The increase in revenues included an additional $5.6 million from property tax revenue (mill levy and assessed value changes) and increases in charges for services (about $5.9 million) tied partly to adopted utility rate increases in 2024 (12% for water and sewer, 8% for stormwater). - Governmental fund balances rose by $17.4 million, with $18.7 million unassigned (roughly 19% of total fund balance). - The single-audit review of federal awards tested ARPA funds and produced an unmodified compliance opinion; auditors said most ARPA funds are committed and spending must be completed by the federal deadline for commitments.

Commissioners asked clarifying questions about items auditors identified as "sensitive disclosures," capitalization of donated infrastructure, impact-fee calculations (a prior-year finding that staff addressed) and the distinction between fund balance shown in the ACFR and budget carryforwards that will be considered in the FY25 budget process. City staff said they will review carryforwards and related budget adjustments with departments through June and return to the commission with any recommendations.

The motion to approve the ACFR and the auditors' governance letter was moved by Commissioner Maczek and seconded by Commissioner Moby. The roll call vote recorded Aye from Commissioner Magick, Commissioner Boddy, Commissioner Fisher, Deputy Mayor Morrison and Mayor Cunningham; the motion passed unanimously.

The city manager and finance staff noted that the ACFR will feed into the upcoming biennial budget work and that collective-bargaining contracts and pending state legislative changes remain external variables for future budgeting.

Ending: The presentation and vote closed the audit item; staff and auditors remained available to follow up on technical questions as commissioners and departments incorporate the 2024 actuals into the FY25 and FY26 budget process.