Albany committee receives unmodified FY2023–24 audit, forwards audit and midyear finances to council

The Albany City Audit and Fiscal Sustainability Committee on Tuesday reviewed the city's FY2023–24 Annual Comprehensive Financial Report and heard the outside auditor issue an unmodified opinion and report no material weaknesses.

Finance Director Raina Schwartz told the committee that Shavona and Associates prepared the ACFAR for fiscal year 2023'24 and that the firm issued an "unmodified ... opinion letter," meaning the auditors found the financial statements free of material misstatement. Auditor Sheldon Chavon echoed that assessment, saying, "No material weakness and and no significant deficiencies."

The audit presentation said the government-wide net position and the general fund were essentially stable at year end. Key figures discussed included a general fund balance of about $11,700,000 and an unassigned fund balance of about $10.4 million after council designations. The auditors reported increases in long-term liabilities: other post-employment benefits rose by about $150,000 (from $4.83 million to $4.98 million), and net pension liabilities rose roughly $2.8 million (from about $45.9 million to about $48.7 million), figures the auditor highlighted in the required supplementary information.

Committee members used the audit briefing to review the midyear FY2024'25 financial update. Finance staff told the committee the council-adopted budget assumed a potential deficit of about $2.2 million; midyear projections now show the deficit likely to be closer to $1 million or less if current trends hold. Staff cautioned that sales tax receipts are softer than expected and remain a key variable for year-end projections. The finance director noted that routine operating expenses are tracking near 50% of budget at midyear, but one-time costs will affect final results.

Members and members of the public also discussed several items that appear in or alongside the audit: the impact of pension actuarial changes on the government-wide statements and the timing differences between budgetary (modified accrual) and audited (accrual) presentations; the sewer enterprise fund running reserves ahead of planned capital work; and that the audit included a single-audit scope this year because ARPA grant expenditures exceeded the federal threshold.

The committee also heard that the city recorded an unanticipated settlement related to the Lions Club that increased expenditures by roughly $1 million beyond an existing set-aside; staff said they are monitoring how that expense will fit into year-end projections and are not yet proposing a budget amendment.

Votes at a glance: The committee voted to forward the FY2023'24 ACFAR and the second-quarter financial report to the full City Council for information. Council Member Jordan moved the motion; Council Member Mickey seconded. The motion passed by committee concurrence (yes: 2; no: 0).

The committee asked staff to post the ACFAR and the auditor's schedules on the city website and to provide the pension and actuarial schedules referenced in the notes on request. Auditor Sheldon Chavon and finance staff said the CalPERS actuarial reports and the audit's ten-year pension schedules are available in the report and on CalPERS' site.

The committee will forward the audit and midyear projections to the City Council for its information; staff said they expect to produce a third-quarter projection before the fiscal year end and will return to the committee with any recommended budget amendments if needed.