Oswego trustees hear clean audit, midyear finances show operating surpluses; bond proceeds transferred

Martha Trotter, the lead principal on the Village of Oswego's annual financial statement audit engagement with Sikich, told the Board of Trustees that auditors issued a clean, unmodified opinion on the village's stub fiscal year ended Dec. 31, 2024.

The audit covered the short period created when the village changed its fiscal year end from April 30 to Dec. 31. "I am pleased to report a clean, unmodified opinion on the village's financial statements for the stub fiscal year ended 12/31/2024," Trotter said, and noted auditors also issued a management letter, a TIF compliance report and a single-audit report required by uniform grant guidance because of grant activity during the stub year.

The audit implemented new Governmental Accounting Standards Board (GASB) guidance affecting compensated-absence reporting. "There was a change to accounting required for compensated absences," Trotter said, and the financial statements include a restatement to record beginning balances as of May 1, 2024, to reflect that change.

Trotter also highlighted the village's Annual Comprehensive Financial Report (ACFR) and said Oswego submitted the ACFR to the Government Finance Officers Association (GFOA). The village received a certificate of achievement for excellence in financial reporting for the 2024 ACFR, a trustee said during discussion, and a trustee later praised staff for their responsiveness during the accelerated audit transition.

In a separate presentation, Andrea (finance staff) gave the quarterly financial update for the six months ending June 30. She reported general fund year-to-date revenue of $16,400,000 and expenses of $11,000,000, leaving a general fund surplus of $5,360,000 at midyear. Andrea cautioned that timing matters: some transfers and capital fund moves occur later in the year and will reduce that surplus when executed.

The water and sewer operating fund showed revenue of $4,600,000 and expenses of $3,400,000, for a year-to-date surplus of $1,120,000. Andrea noted the water and sewer operating budget expects a larger annual surplus to help prepare for planned connection to Lake Michigan and related debt service.

Andrea also reported two bond transactions closed in July: a $20,000,000 bond sale (water and sewer) and a $3,000,000 TIF-related bond reimbursement that was paid out. She said those proceeds have been transferred to the village and related activity is closed.

Staff highlighted other midyear details: sales tax and local shared revenue were running above target (sales tax reported at roughly 58% of the annual target at midyear), interest earnings were above estimates, and plan-review fees were higher than budgeted. Parking fund revenues and ordinance-violation receipts trailed budget expectations, with staff attributing part of that to a transition to a new collections vendor and forecasting recovery once new processes take effect.

Trustees asked about GASB pronouncements, asset-management reporting and whether any audit findings rose to the level of material weakness. Trotter and staff said the auditors found no reportable internal-control deficiencies or instances of noncompliance to disclose.

Andrea said the village's real-estate transfer tax was $714,000 at midyear on a budget of $780,000 and explained that a prior projection of $400,000 annually had been increased because of large, one-time development activity. On the TIF district, staff explained that the TIF has a finite term and that the village has loaned funds to support downtown redevelopment that the TIF increment is expected to repay once development produces sufficient increment.

The committee adjourned after the finance presentations and a short question-and-answer period.