Coconino County reports FY24 unaudited finances; audit delayed and ARPA dollars nearly spent

Siri Malini, a county finance staff member who presented the report, told the Board of Supervisors on Dec. 10 that Coconino County’s fiscal year 2024 (year ended June 30, 2024) financial statements are unaudited and that a change in auditors has pushed the audit timetable back roughly six to seven months.

“That puts us about 7 months behind where we would typically be on our audit right now,” Malini said, noting the Auditor General’s office stopped conducting the county audit because of a conflict and a new firm was identified in November. She said county staff met the new audit team recently and will work to shorten the delay once fieldwork begins.

The presentation broke down major funds and one-time federal funding that supported capital projects and temporary programs in FY24. The general fund showed 2.4% revenue growth and 6.3% expenditure growth; the county planned a $10,000,000 use of fund balance that was consistent with the adopted budget. Malini said pandemic-era federal programs — including the American Rescue Plan Act (ARPA) and the Local Assistance and Tribal Consistency Fund — created one-time resources that funded capital projects and other initiatives.

“We had about $27,850,000” received under the ARPA state and local fiscal recovery fund, Malini said. “Through Q1 of 2025, we had expended $27,560,000 of those dollars, and we will be fully expended by the December 31st deadline.” She said the county expects to report a full closeout of ARPA-funded projects and outcomes during FY26 budget discussions.

Malini also described major items in other funds: the jail district recorded 4.6% revenue growth and 17.6% expenditure growth driven by a shift to contracted medical services and a $3,000,000 intake-area capital project; transportation funds showed planned capital investment and a $12,500,000 use of fund balance tied to a capital plan; and the Flood Control District spent about $42,000,000 in FY24, of which roughly $34,600,000 came from federal and state grants for mitigation work.

On capital financing, county staff said Coconino issued principal to fund an aggressive capital plan but later returned $18,500,000 of principal after adjusting the program. Malini reported the county placed $53,000,000 with the Arizona State Retirement System’s prepaidment program to address its ASRS unfunded liability and that investment earnings to date were strong: “To date we have had $9,500,000 of investment earnings on that $53,000,000,” she said, and the timing of participation generated what the county terms roughly $4,650,000 in excess investment earnings so far. Malini said the strategy is expected to produce long-term savings for taxpayers.

Supervisors pressed staff for additional detail in several areas. Vice Chair Patrice Horstman (Supervisor, District 1) asked for a fuller breakdown of remaining Flood Control District federal and state grant balances and project costs so the board can track outstanding work. “It would be good to know what we’ve got left in terms of our federal and state grant funding,” Horstman said; county staff and Flood Control staff said they are working on reconciliations and expect to present more detail in January or February.

Supervisor Lena Fowler (District 5) and others flagged the longer-term budget risk from expenditure growth outpacing revenue growth, noting many programs that expanded with temporary federal funds will end. “It is concerning what the expenditure growth (is) doing, growing revenue,” Fowler said. Malini highlighted mandated costs as a major driver, naming Title 36 payments for mental health services as a high-growth, state-imposed cost the county must absorb.

Board members also praised staff for the county’s budget documents and recognition: earlier in the meeting officials announced that Coconino County received the Government Finance Officers Association Distinguished Budget Presentation Award. Malini said the county aims to release audited financial statements as promptly as possible but that the audit schedule depends on the new firm’s start date and workplan; historically the county has sought audited financials by March 31.

Looking ahead, staff said they will provide a mid-year FY25 status update in January with six months of performance data, a fuller reconciliation of Flood Control project costs and grant draws, and the county’s plan for closeout reporting for ARPA-funded projects. Malini and other presenters emphasized that many FY24 differences reflected planned, one-time investments that do not indicate routine overspending but said inflation and mandated costs remain central fiscal pressures.

The board did not take formal action on the financial update; the session was recorded as a discussion item with follow-up reports promised in January and February.