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Menlo Park receives clean audit, records $1.6M general‑fund adjustment after interest‑allocation change
Summary
The city received and filed its FY 2024–25 Annual Comprehensive Financial Report; auditors issued a clean opinion. A change in how investment earnings are allocated under GASB rules reduced general‑fund balances and produced a $1.6 million operating deficit for the year.
Menlo Park City Council unanimously voted to receive and file the City’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2025, after Assistant Administrative Services Director Finney Lai summarized the audited results.
The independent auditors from the Poon Group issued an unmodified ("clean") opinion, indicating the financial statements fairly present the city's fiscal position. Lai said government-wide net position increased by $16.1 million, driven in part by increases in the in-lieu payment for community amenities fund and the municipal water capital fund.
However, a change in the city's method for allocating investment earnings to funds led to a prior-period adjustment that reduced the general fund's beginning balance and contributed to a $1.6 million net operating deficit for FY24–25. Lai explained the city moved to a proportional allocation of interest income across funds to comply with GASB guidance, reversing an undocumented earlier practice that had allocated earnings to a limited set of funds and overstated general-fund investment income.
Council members asked clarifying questions; Councilmember Jeff Schmidt confirmed that while the general fund showed a deficit, government-wide net position remained positive because gains occurred in other funds.
Action: The council motion to receive and file the ACFR passed unanimously (motion by Vice Mayor Jennifer Wise, second by Councilmember Drew Combs). The ACFR is posted on the city's website for public review.
