Sunnyside finance director warns of fund shortfalls, seeks CPA review and procurement controls

Finance Director Monica Hofstadter told the Sunnyside City Council at a special budget workshop that multiple fund accounts require reconciliation, the 2025 budget will need formal amendment before year-end and that several enterprise funds are being subsidized by the general fund.

Hofstadter opened the presentation by saying, “there's just a lot of line items that were left blank, and they can't be blank,” and warned the council she planned “to revise the 2025 budget, and have it amended before the end of the year.”

Why it matters: Hofstadter presented account-level reconciliations back to 2022 and said some 2024 balances have not been closed. She recommended hiring a CPA firm to complete and certify 2024 accounting, produce a clean annual report for auditors and speed resolution of outstanding inconsistencies so the city can set reliable 2026 starting balances.

Key numbers and fund status

- Hofstadter said the enterprise funds’ estimated beginning balances and projected revenues total $17,614,210, with projected expenses of $15,903,128 and transfer activity leaving about $54,637 in reserves.

- The sewer fund was called out as deficient by $947,000 and identified as the largest drain on the general fund.

- Hofstadter said the city received $627,400 from a GEO/GEL inmate-housing contract; she noted the first commissary check was about $2,000 and that net revenue from the commissary is small but yields staff-time savings.

- The city’s contingency or “rainy day” fund has about $13,000, which Hofstadter and several council members said is insufficient for unplanned expenses.

Audit, reconciliation and outside help

Hofstadter told council she found large gaps in the 2024 accounting and that earlier contractors or consultants did not complete reconciliations as expected. She said Springbrook (the city’s accounting software vendor) had only assisted with some credit-card reconciling and recommended hiring a licensed CPA firm to (a) reconcile and close 2024, (b) certify the numbers for the state auditors and (c) recommend improvements.

“I wouldn't be able to get done with '24 and '25 until I was in the middle of the year '26,” Hofstadter said, arguing a multi-person CPA engagement would work faster than a single contractor.

Council response included support for a vetted CPA firm and an acknowledgment from Councilor Hancock that “the auditors are not our enemies. The auditors are our friends.” Hofstadter said she would solicit several firms and bring options to the finance committee.

Procurement, internal controls and policies

Hofstadter proposed several operational changes to reduce errors and improve accountability: begin a formal purchase-order (PO) procurement process in January with a single point of purchase authorization; restrict broad, uncontrolled purchasing (she said many staff had individual Amazon accounts and wide access to the cash vault); and adopt a set of financial policies including investment allocation rules, document retention and a gift/donation policy.

She read a legal reminder during the meeting that, as stated in the city’s guidance, “anyone knowingly makes [an] expenditure in excess of a budget appropriation shall be guilty of a misdemeanor and shall be fined not more than $500 for each separate violation.” That passage framed her request that departments receive regular, accessible budget reports.

Court billing and other revenue items

Hofstadter said she completed a reconciliation of municipal-court billing and found the court had been billed using budgeted, not actual, operating costs, producing undercollection. She told council, “we have not been collecting as much as we should, so we will be charging them a reconciliation amount.”

On contract revenue, she reported the city receives a notable amount from housing inmates under a GEO-style contract (the itemized amount she gave was $627,400) and is receiving small commissary payments (first check just over $2,000), while noting commissary operations have reduced staff time.

Enterprise funds, ILAs and rate studies

Hofstadter said water is “doing pretty good” and advised moving a percentage of water reserves to a capital account. EMS is roughly breaking even but needs capital planning because medical equipment is expensive. The sewer fund is the most problematic and is driving transfers from the general fund; she and councilors discussed prior stormwater fee changes and legal and policy history that disrupted the stormwater revenue model.

Hofstadter also described a roughly $170,000 annual cost the city currently bears under its garbage interlocal arrangement and said she would examine the ILA and pursue renegotiation or a contractual fix so the city is not effectively subsidizing the contractor’s administrative fees.

Next steps and board direction

Councilors and staff agreed on a set of near-term actions Hofstadter would pursue: solicit CPA firms to reconcile and certify 2024 accounts, implement a PO-based procurement process in January, tighten user access to budgets so department heads can monitor their line items, and present quarterly, department-level budget reports to council. Hofstadter said she will also bring proposed financial policies and recommend IT/document-control investments to speed records retrieval and improve open-records compliance.

The meeting concluded with no formal budget votes; Hofstadter said the numbers presented were working estimates and that final figures would be provided as reconciliations and vendor proposals are completed.

Ending note: An executive session was held at the start of the meeting under RCW 42.30.110(I) and the council returned to open session saying no action was taken.