Idaho Falls finance leaders report stronger cash balances, disclose audit restatement for power and fiber work

City finance officials told the Idaho Falls City Council on Monday that the city’s overall cash position improved in the first quarter, and that investment strategy remains focused on safety and liquidity even as yields shift. They also reported a forthcoming audit restatement that will add about $12.4 million in previously uncapitalized power work orders and about $7.7 million in fiber work orders to prior-year balances.

Director Alexander, the city finance director, opened the quarterly financial presentation and said the team would cover cash balances, investments, a citywide budget-to-actual review, an update on American Rescue Plan Act obligations and the status of the annual audit. "So, you know, it's hard to believe that we're already in the first quarter," Alexander said before turning the presentation to City Treasurer Mark Hagedorn and Brooks, the assistant finance manager.

Nut graf — why it matters: The reports matter for council budgeting and for transparency about projects that affect multiple enterprise funds. Finance staff flagged stronger cash in some enterprise areas (including power and streets), explained temporary timing effects tied to bond draws and an airport payment, and identified a material accounting restatement that the auditors will report as a finding.

On cash and investments

Mark Hagedorn, city treasurer, said overall cash is increasing and pointed to factors behind big monthly swings. He told council that a sizable airport payment and bond drawdowns drove an apparent September jump in cash last year. Hagedorn described the city’s investment priorities as safety first, then liquidity, then yield; he said the portfolio emphasizes short maturities (roughly 50% within one year) and a laddered approach so the city can meet cash needs without forced sales that could realize losses.

Hagedorn discussed specific fund movements cited in the slides: power cash rose because of capital project draw timing; streets cash climbed as state street‑funding programs arrived; recreation moved from negative to positive cash; and golf operations showed receipts requiring ledger tracing. He also said the police station bond is structured as a COP reimbursement (spend-first, reimburse-later) and the city has engaged an arbitrage specialist to calculate any federal rebate obligations tied to bond earnings.

On investment vehicles, staff explained the city uses a mix of U.S. treasuries, FDIC‑insured CDs or insured instruments, government-sponsored enterprises (Freddie/Fannie type) and corporate bonds with a stated policy preference for A-rated or better corporate holdings. Hagedorn said some holdings had migrated to lower ratings and are under review; staff noted a policy limit of keeping about 75% of investments within two years and 25% longer, and an internal 50% rule on concentration types that the city plans to review.

ARPA and budget-to-actuals

Finance staff reminded council that American Rescue Plan Act (ARPA) funds had an obligation deadline of Dec. 31, 2024 and an expenditure deadline of Dec. 31, 2026; staff said required obligations were made on time and the city is on track to meet expenditure deadlines. On citywide revenue, staff showed first-quarter revenues were modestly higher than a year earlier, driven in part by a $7 million bond draw for power and higher charges for services. General fund receipts were at about 12% of budget early in the year — consistent with prior first quarters, staff said — because property tax receipts are concentrated in January and July.

Audit restatement and status

Brooks, the assistant finance manager, and Pam (finance leadership) briefed council on the external audit. The auditors are in their second draft of the Comprehensive Annual Financial Report. During audit preparation staff identified prior-period capital work-in-progress in the power and fiber funds that had not been capitalized in earlier years. Brooks said the team found about $12,400,000 in power work orders and about $7,700,000 in fiber work orders that were expensed previously but should have been capitalized. Brooks characterized the item as a restatement that the auditors expect to report as a finding related to prior-year capitalization.

Brooks said auditors completed on-site testing in January with additional remote work and that the city expects to wrap audit work in March and present final results in April. Council members asked about causes; staff pointed to a combination of system behavior (work-order and capitalization logic), multiple staff and reviewers over several years, and the multi-year nature of some projects that delayed closure and capitalization. Staff said improvements in work-order procedures and the future ERP implementation are intended to reduce recurrence.

Clarifying details and council follow-up

Finance staff supplied several numeric clarifications: the power restatement amount (about $12.4 million) and fiber restatement amount (about $7.7 million); the airport payment last year that contributed to a cash spike (described in presentation as on the order of $12 million); budgeted MRF (major replacement fund) allocation of roughly $2.7 million with current MRF spending near $3.0 million; and that the city is monitoring golf receipts that need ledger reconciliation. Staff offered to add a quarterly schedule of internal interfund loans and to present more detail on internal transfers and outstanding internal due‑tos at the next quarterly update.

No formal council action was taken during the presentation. Council members asked for additional detail in future quarters on internal loans, the status of audit findings and the timeline for ERP and other process improvements. Staff said they would return with requested supplements at the next quarterly report.

Ending — next steps

City staff said they expect to deliver the finalized audit presentation in April and to include additional quarterly schedule details at the next council quarterly financial report. Treasurer Hagedorn and Brooks committed to continuing work to reconcile enterprise receipts and to present recommended investment‑policy tweaks for council review.