Chesapeake receives clean FY25 audit; city adds $55.2 million to General Fund

Logan Booth, an audit partner with Cherry Bekaert, told the Chesapeake City Council on Dec. 9 that the city's financial statements for the year ended June 30, 2025, received an unmodified opinion — the highest level of assurance auditors can issue. "That is a clean audit," Booth said, and he reported no fraud, illegal acts, or disagreements with management discovered during the audit. He noted one nonmaterial noncompliance (item number 20250001) listed in the schedule of findings and that management is addressing it. Booth also said the single audit of federal grants remained open because the federal compliance supplement was delayed; auditors expect to issue that report in the new year.

Kristen Bailey, the city's finance director, summarized the budget results and key trends. "We ended the year better than expected," Bailey said, reporting the city finished $90.6 million ahead of budget versus a planned use of fund balance of $35.4 million. The net effect was a $55.2 million addition to the General Fund balance. Bailey said 61% of that variance is already appropriated in the FY26 operating and capital budgets, 24% is set aside for schools, revenue sharing and capital projects, and 3% for smaller commitments, leaving about $10.8 million available for one-time high-priority projects.

Bailey highlighted two revenue drivers: exceptionally strong investment income (about $21.1 million over budget in the General Fund) and higher collections of delinquent personal property taxes (about $14.2 million over budget). She said payroll and benefits savings accounted for the largest share of expenditure savings (roughly $19.3 million, driven by vacancies) and that the city's average vacancy rate for the year was about 10.7%.

The presentation covered fund-level results as well: public utilities and transportation funds added to net position, stormwater ended the year under budget, and the city's OPEB (Other Post Employment Benefits) plan moved to a net asset position valued at about $42.8 million and was roughly 150.9% funded at year-end. Bailey also noted the city's pension position remains strong relative to benchmarks.

The audit team told council there were no going concern issues and that the city followed government auditing standards and applicable state audit specifications. The single-audit work will continue; auditors expect to present those results when the compliance supplement is available.

Next steps: management will continue to address the single nonmaterial finding and auditors will complete the single-audit report in the new year.