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Finance committee accepts Middleton's 2025 financial report; auditors issue clean opinion
Summary
The Finance & Personnel Committee accepted the city's 2025 annual comprehensive financial report after auditors reported an unmodified opinion and highlighted a $1.6 million increase in the general fund balance, higher investment income and healthy utility reserves.
The Middleton Finance & Personnel Committee voted June 2 to accept the city's 2025 annual comprehensive financial report after auditors reported an unmodified (clean) opinion.
John Rder of the audit team told the committee the firm issued final reports the previous day and that Middleton's financial statements were prepared in accordance with accounting rules. "The last thing I'm going to mention before we talk about the numbers is that we issued a clean opinion, unmodified opinion, which means your financials are prepared according to all the accounting rules or GAP and that your numbers are materially correct and all the disclosures are in there that have to be in there," Rder said.
Rder highlighted that the city's total general fund balance rose by about $1.6 million year over year, driven primarily by revenues coming in above budget (roughly $2.6 million) and about $1.2 million in investment income above budget. Assigned portions of the fund balance include approximately $3.5 million set aside for compensated absences and other designated carries (e.g., carryovers, revaluation funds, fire and EMS designations). Unassigned fund balance was noted at about $9 million, which Rder calculated as roughly 33.2% of the city's 2026 budgeted expenditures and comfortably within the city's updated 25–40% policy.
On debt, the auditors said Middleton's general obligation debt ratio has trended downward to about 11% of equalized value, and the utilities were noted as having no outstanding debt. Rder said the water utility's authorized return is 4.9% but the actual 2025 rate of return was about 2.1%, driven by expense growth; unrestricted water reserves were reported at about $4.9 million (roughly 19 months of expenditures) and sewer reserves at about 9.3 months.
The committee moved to accept the ACFR and the auditor communications; Alder Madden made the motion and Alder Baines seconded. The motion passed by voice vote.
The audit report and accompanying reporting-and-insights memo noted no disagreements with management and no indications of fraud; auditors disclosed one internal control matter that the firm prepares the city's financial statements as a service and praised the city's review process.
The accepted documents will be part of the city's record and staff indicated they will submit the materials for any external awards or filings as appropriate.
