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St. James receives unmodified 2025 audit; council told city reserves and enterprise funds are strong
Summary
The city’s external auditor delivered an unmodified (clean) opinion for the 2025 fiscal year and highlighted robust general-fund reserves and healthy enterprise fund cash flows while noting two recurring internal-control items for improvement.
Greg Burkhart, lead auditor for the firm that conducted the city’s 2025 financial audit, told the St. James City Council on July 7 that the firm issued an unmodified opinion, meaning the city’s financial statements were fairly presented and can be relied on for decision-making.
Burkhart said the audit evaluates three areas—financial statements, internal controls and compliance—and that the firm found no instances that led it to conclude the city failed to comply with Minnesota law. “We issued the city an unmodified audit opinion,” he said, calling it “a clean audit report” and noting that achieving a clean compliance review requires substantial effort by city staff.
The auditor reviewed five-year trends, saying the city ended 2025 with about $6.3 million in total general-fund balance and roughly $5.0 million in unassigned fund balance—resources the city can appropriate. Burkhart said the unassigned balance represents about 107% of next year’s budget, exceeding both the state auditor’s recommendation and the city’s policy and representing a significant improvement since 2023.
Burkhart also reviewed business-type (enterprise) funds. He reported roughly $840,000 cash from operations for water (with annual debt service near $575,000), about $1.1 million cash from operations for wastewater (with roughly $830,000 in annual debt service), and about $1.5 million in electric fund cash from operations with minimal debt service. The electric fund’s reserves were described as notably strong. He said some enterprise fund cash was transferred to the general fund in 2025 to support debt service and capital work.
The auditor noted two recurring internal-control items that have appeared in prior years and recommended the council review a separate management letter the firm prepared for suggested improvements. He praised the helpfulness and preparedness of city management and staff in providing records during the audit.
The council offered thanks and had no further questions; the presentation closed with Burkhart offering the audit team as an ongoing resource.
