City auditor says Muskegon’s 2024 financial statements present fairly; general fund posts small deficit

The City of Muskegon’s independent auditors told the City Commission Jan. 14 that the city’s 2024 financial statements “present fairly in all material respects” and provided a summary of results and follow-up items.

The auditor’s report, delivered by Eric Van Dodd of Brickley DeLong, said the city’s total general fund revenues rose to about $40.8 million—up roughly $1.3 million from the prior year—largely driven by increases in income, property and state excise tax distributions. Total general fund expenditures increased to about $40.3 million, driven in part by inflationary and wage pressures; the result left the general fund with a slight decrease in fund balance for the fiscal year and an ending fund balance reported at $9,589,228 (this total includes the city’s budget-stabilization reserve of about $1.8 million).

Why it matters: The auditor’s unmodified opinion is the strongest routine assurance an entity can receive from an external audit. Commissioners also heard that although the general fund posted revenues roughly on par with expenditures, spending increases and transfers to other funds produced a modest year-over-year decrease in fund balance.

Key details from the presentation included: the general fund revenue increase of roughly $1.3 million (tax revenues up about $1 million), a decline in licenses and permits compared with an exceptional 2023 year, and higher investment earnings tied to elevated interest rates. The auditor reported $471,320 in “excess revenues over expenditures” before transfers, and approximately $900,000 transferred to other funds, leaving the reported net decrease in fund balance for the year.

The commission also received detailed briefings on enterprise funds. The sewer fund showed a positive change in net position (about $3.4 million) with an ending net position in the tens of millions—reflecting long-lived capital assets such as underground pipes—while the water fund also reported a gain in net position but continued to show a modestly negative unrestricted net position (about a negative $332,672), a point the auditor flagged as improved from prior years but still a funding focus.

The auditor reviewed pension and retiree-health obligations. The city’s defined-benefit pension liability (reported on the MERS schedule) remained large relative to assets; Van Dodd said the city is roughly in the mid-60s percent funded on that pension plan and noted the city has been making required contributions. In contrast, the city’s retiree-health (OPEB) plan was reported as overfunded in the most recent valuation (about 110% funded), the auditor said, a change tied to updated valuation timing and recent contributions.

Federal grant activity and compliance testing were also discussed. Van Dodd noted the city continues to spend federal funds that trigger a single-audit (the federal threshold is $750,000); areas such as CDBG, HOME and ARPA drew auditor attention and the single-audit procedures. The auditor said a small number of recommendations about year-end closing procedures and documentation were included in the back of the report but described none as material weaknesses.

Commissioner questions focused on presentation timing for pension numbers (some schedules use a Dec. 31 actuarial date and therefore trail the fiscal year) and on how restricted versus unrestricted net position is presented for enterprise funds. Finance Director Kenneth Grant told commissioners the audit packet and a shorter management discussion and analysis are available on the city finance web page.

The auditor closed by thanking city finance and treasury staff for their cooperation during the multi-month audit process and by noting that detailed notes and schedules (including pension and OPEB footnotes) are available in the full annual comprehensive financial report online.

The presentation did not include a commission action item; the auditor and finance director invited commissioners or citizens to review the full report posted on the city website.