Auditor gives Rochester a clean opinion; city reports $3.1 million general-fund surplus

The city auditor told the council on June 23 that Smith Schafer issued an unmodified opinion on Rochester—ity—inancial statements for 2024, commonly described as a clean audit opinion.

Jason Boynton, the lead auditor from Smith Schafer, said the audit is a group audit that depends on other firms uditing component units and utilities but that the firm concluded the statements are fairly stated under generally accepted accounting principles. "Based on the work, we issue an unmodified opinion," Boynton said.

The presentation reviewed the high-level financial results for 2024. Boynton said the city recorded about $120 million in general-fund revenues, with property taxes the largest source (about $69 million), payments in lieu of taxes near $15 million and other revenues roughly $36 million. Total expenditures and transfers out were about $117 million, leaving a reported surplus of roughly $3.1 million that increased the city—und—alance.

Council members pressed staff on where the surplus is recorded and on the composition of revenues. "That goes into your general fund unassigned fund balance," Boynton replied when asked where the surplus was held. Council Member Palmer asked whether the payments-in-lieu figures were typical for comparable cities; Boynton said he had not conducted a benchmarking analysis but noted larger cities with municipal utilities are more likely to have such payments.

Boynton also walked through major reserve and fund metrics. The city ends 2024 above its policy target: the general fund was about 48% of 2024 expenditures (and about 43% of the 2025 budgeted expenditures), above the city policy minimum of 42%.

The audit presentation covered enterprise funds as well. Rochester Public Utilities showed substantial unrestricted cash and investments (Boynton cited roughly $130 million for electric, $16 million for water) as utilities prepare for large capital needs and the end of a supply contract. The airport fund benefited from CARES Act support; Boynton said roughly $1 million of CARES funding materially increased the airport—und surplus in 2024.

Mayor and council questions focused on sustainability of funding sources, how payment-in-lieu formulas are calculated, and whether the city should adjust fees or levies. An administrator reminded the council the audit looks backward and that staffing changes or anticipated expenses can change the picture for forward budgets.

The auditor said the single-audit work on federal programs will be performed in July with a report issued by September. Council members and staff said they would follow up with requests for benchmarking information and more detail on payment-in-lieu formulas and utility cost drivers.