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Independent auditors report Beloit's 2024 financial statements fairly presented; sewer utility flagged for closer review
Summary
Baker Tilly LLP presented the city's 2024 audited financial statements, finding they were fairly presented in all material respects. Auditors highlighted a near-balanced general fund, stable fund balances, low general obligation debt usage and tightening margins in the sewer utility that warrant monitoring of rates.
An independent audit firm told the Beloit City Council on Tuesday that the city's 2024 financial statements are fairly presented in all material respects under generally accepted accounting principles.
Justin Hoagland, a principal at Baker Tilly LLP, presented the financial audit and a separate management letter highlighting trends, internal-control observations and industry topics for council consideration. The audit report was issued to the city on June 12, according to Hoagland.
Hoagland highlighted several municipal financial measures the audit examined. On the general fund, he said nonspendable balances totaled about $1.8 million, restricted balances about $91,000 and $431,000 was assigned for the 2025 budget. Unassigned fund balance provided the city with roughly 40.9% of the prior year’s expenditures, which Hoagland said equates to about five months of operating coverage. The audit showed a near-balanced general-fund budget for 2024, with a reported net loss of $8,952 on a roughly $40 million budget.
On debt, Hoagland said the city has used about 25% of its statutory general-obligation limit and that the city’s debt-management policy is more conservative than the statutory cap. “You have the capacity to borrow if you choose,” he said.
Hoagland reviewed operating results in the city’s utilities. Water operations showed a healthy operating margin and about 6.2 months of cash on hand. The sewer utility’s operating revenues and expenses were close in 2024 and unrestricted reserves dropped to roughly four months of cash on hand; Hoagland noted the drop likely reflected planned capital spending on wastewater treatment upgrades and recommended reviewing rates if the pattern continues. The stormwater utility showed about 16 months of cash on hand and high equity in capital assets. Transit operations remain heavily subsidized by federal and state funding — Hoagland said more than half of operating revenue comes from subsidies and only roughly 7% from passenger fares.
Hoagland also pointed council members to an audit insights document that highlights trending governance topics — funding pursuits, digital transformation and cybersecurity — and offered the firm’s consulting resources for follow-up.
The presentation was given as item 12(b), which the council had moved up earlier in the agenda; no formal council action was required at the meeting.
