Measure K audit gets clean opinion; oversight committee asks staff to note reserves and non‑enumerated projects

John Waller, a senior manager at auditing firm MGO, told the Measure K Oversight Committee on Feb. 28 that MGO issued an unmodified (clean) opinion on the Measure K fund financial statements for the year ending June 30, 2025. "We issued an unmodified opinion on the financial statements," Waller said, adding an emphasis-of-matter that the audit covers only the Measure K fund and not the city’s overall finances.

The presentation summarized key expenditures and transfers: roughly $470,000 for library maintenance and operations (including extended library hours), current-year expenditures near $3,000,000, and about $2.5 million in annual debt-service payments tied to the library loan. Waller said transfers out of the Measure K fund during the year totaled about $3,300,000 and that those transfers tied to council-authorized projects are shown in the city’s budgets and budget amendments.

Committee members used the audit briefing to press staff on how transfers and earmarks are handled. Paul Maxwell said he was concerned that some projects receiving Measure K dollars—specifically the pond/fountain and the police department roof—were not spelled out in the ballot language and urged clearer disclosure in the committee’s report to council. "Those two projects represent the first time the council has chosen to fund projects that were not specifically enumerated in the measure," Maxwell said.

City finance staff responded that transfers to project accounts are authorized by council (typically as part of the biennial budget) and that the timing of moving Measure K dollars into other funds often occurs near the end of the fiscal year if projects have not yet begun. Staff estimated the pond/fountain project at about $3.5 million and said the CIP lists multiple funding sources (gas tax, sidewalk, capital building funds, and Measure K) and that staff do not expect to return to council for additional Measure K dollars for that project.

The committee also addressed public concern about the appearance of a large ending fund balance. Staff noted the audited ending fund balance shown in the packet was $2,966,000, but that council had earmarked much of that total: roughly $2.5 million set as a reserve against sales-tax variability, about $225,000 set aside for library maintenance, and separate bond proceeds, leaving approximately $121,000 unassigned and available for immediate spending. Committee members agreed to include an asterisked table showing those earmarks so readers of the committee report to council would not mistake the full balance for uncommitted funds.

After discussing language and placement, the committee moved to approve the subcommittee’s report with the discussed edits (add the reserve/earmark table below the revenue/expenditure table and add a sentence under "program status" noting the council’s decision to fund projects not specifically enumerated in Measure K). The motion passed on a voice vote with committee members saying "Aye." The committee plans to review expenditures for the pond/fountain project during the next audit cycle once project spending is complete.

The meeting closed with staff noting a follow-up schedule tied to the city’s budget calendar; Anne James and other staff said a post‑budget CIP review will likely occur in late summer. The committee thanked staff for the audit coordination and for preparing the supplemental information for the council report.