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External auditor gives Waukesha water utility a clean opinion for 2024; staff discuss reserves and debt metrics
Summary
Baker Tilly delivered an unmodified (clean) audit opinion for the Waukesha Water Utility’s 2024 financial statements; auditors highlighted a 4.1% rate of return for 2024, strong cash reserves, and a debt-coverage ratio well above requirements.
Jody Dobson of Baker Tilly reported to the Waukesha City Water Utility Commission June 19 that the firm had issued an unmodified (clean) opinion on the utility’s 2024 financial statements.
Nut graf: The auditor described the opinion as consistent with prior years, noted one new GASB accounting standard on compensated absences that produced only a small change, and highlighted several financial benchmarks: a 4.1% rate of return for 2024, months of cash on hand that remain a strong position despite a decline from prior years, and an unusually high debt-financing share driven by the recent Great Water Alliance project.
Dobson briefed the commission on operational and fiscal highlights. For 2024 the utility’s actual rate of return ended at 4.1% (up from a low interim figure in 2023 and below the PSC benchmark in effect earlier), and operating revenues and expenses reflected timing and one-time transition items related to the Great Water Alliance work. The auditor noted that the government finance officers association recommends a bare minimum of three months of operating cash on hand and that rating agencies often prefer six to 12 months for stronger bond ratings; the utility’s cash balance remained “pretty stable” at year end.
On debt, Dobson said about 81% of the utility’s capital investment was financed with outstanding debt at year end, a level the auditor described as typical for a utility that has completed a major wastewater or water-supply project and expected to trend down over time. The revenue-debt coverage metric exceeded the requirement cited in bond documents: the minimum is 1.1 times debt service and the utility reported a 7.1 ratio for 2024.
Commissioners asked follow-up questions about how rating agencies weigh these metrics and whether high debt levels would affect future expectations; the auditor described agency scorecards as nuanced but said the metrics being reported were consistent with what one would expect after a large capital program.
No vote was required for the discussion; the auditor’s report will be incorporated into the city’s final financial statements following routine staff review.
