City of Alexandria, Virginia
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MEMORANDUM
DATE: NOVEMBER 18, 2025
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER
FROM: KEVIN C. GREENLIEF, DIRECTOR OF FINANCE
DOCKET TITLE:
TITLE
Receipt of the Fiscal Year 2025 Annual Comprehensive Financial Report.
BODY
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ISSUE: Consideration is requested of the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025.
RECOMMENDATION: That City Council receive the Fiscal Year 2025 Annual Comprehensive Financial Report (Attachment 1).
DISCUSSION: Code of Virginia §15.2-2511 requires all local governments to have their accounting books and records audited by an independent certified public accountant as of June 30 of each year. The Code further requires that the independent certified public accountant present a written report to the local governing body at a public session by the following December 31.
The City's Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025 follows a format prescribed by the Governmental Accounting Standards Board (GASB) and includes a description of the significant financial events of the fiscal year, the City's audited financial statements, and selected financial and demographic information. The City’s ACFR is in its final stages of review and completion with the City’s external auditors, and the final report will be posted on the City's website at <https://www.alexandriava.gov/FinancialReports>. There may be immaterial changes from the numbers reflected in this memorandum and in the attached draft ACFR once the report is finalized.
The City expects to again receive a positive "clean opinion" from its independent certified public accountant firm, CliftonLarsonAllen, LLP, of its financial statements for the fiscal year ended June 30, 2025. The auditors are in the final stages of review and the City expects to receive their opinion prior to the City Council meeting on November 25. Such an unmodified opinion, if received, would indicate that the auditors find the City's financial statements to fairly present the City’s financial position and results of operations and that the City complied with applicable laws and regulations related to federal grants.
The ACFR includes a Management's Discussion and Analysis section that provides an overview of the City's financial performance. It should be noted that the City’s total Net Position, excluding component units, on a government wide basis, decreased approximately $18.9 million from $627.5 million to $608.6 million on June 30, 2025 (ACFR, Exhibit I). Significant changes in assets include a $69.5 million decrease in Cash and Investments with Fiscal Agents (the City’s bond proceeds) and an increase of $114.4 million in Land and Construction in Progress, as the City continued to construct significant capital projects including the new Minnie Howard Campus of the Alexandria High School, the Landmark Mall redevelopment project, and improvements to the Schools’ 1703 North Beauregard property for use as a swing space as of June 30, 2025. The government-wide activities had an unrestricted net position of $274.3 million as of June 30, 2025, a slight increase of $12.8 million from FY 2024. Long-term liabilities due in more than one year increased more modestly than in the prior year from $1.25 billion to $1.32 billion, due in large part to the issuance of $143.4 million in general obligation bonds as compared to $246.6 million in the prior year.
Over the last several years, the City has maintained its fiscal strength as the result of the City Council's adoption of, and staff’s subsequent adherence to, the series of financial policies aimed at (1) limiting debt and annual debt service requirements and (2) maintaining an appropriate General Fund balance to retain the City’s AAA/Aaa bond ratings and to keep the City on firm financial footing. Both rating agencies recently reaffirmed the City’s bond ratings, noting available reserves and a culture of long-term planning.
Revenues and Expenditures
General Fund revenues in FY 2025 totaled $918.9 million (ACFR, Exhibit IV). Final General Fund expenditures and transfers totaled $919.1 million, with expenditures alone totaling $784.0 million. (ACFR, Exhibit IV). Including Other Financing Sources (Transfers to the General Fund from other funds), Leases Issued, and Reserve for Inventory for a combined $24.7 million, the Net Change in General Fund fund balance is $24.5 million. It should be noted that $13.7 million of this amount is due to a change in the timing treatment of debt service payments. For the past several years, the City has “prepaid” the July 1 debt service payment on June 30 and recorded a reservation of Unspendable fund balance. In FY 2024, the City’s external auditors required that the July 1, 2025 debt service (paid on June 30, 2024) be treated as an expense in FY 2024, resulting in an overall net zero change in fund balance (a reduction of $13.7 million in FY 2024 and an increase of $13.7 million in FY 2025).
The City appropriated Commitments and Assignments of Fund Balance during FY 2025, totaling $32.9 million. These appropriations included $14.0 million to balance the FY 2025 Approved Operating Budget, $13.0 million to fund projects in the Capital Improvement Program, and $5.9 million in incomplete projects from the prior year. Also contributing to the increase in fund balance as of June 30, 2025 was the one-time usage of unanticipated interest on bond proceeds to supplant the use of planned fund balance in support of capital projects ($12.1 million). Vacancy savings, revenues that performed higher than anticipated, and other operational savings generated sufficient surpluses across the organization to reduce the necessary use of Spendable fund balance to zero.
General Fund Fund Balance
General Fund fund balance, which includes all General Fund spendable and non-spendable resources, was $227.0 million at the end of FY 2025 (ACFR, Exhibit IV). This compares to the total General Fund fund balance of $202.5 million at the end of FY 2024. These accumulated resources have been assigned to fund the capital program and operating budgets in future fiscal years, as well as departmental incomplete projects and future unknown costs.
The Spendable fund balance of $217.6 million available at the conclusion of FY 2025, which consists of $78.1 million in Committed and Assigned and $139.5 in Unassigned fund balance, represents 23.7 percent of General Fund revenues. Spendable fund balance is the portion of fund balance which represents the accumulated total of all prior years' actual General Fund revenues in excess of expenditures that is available for appropriation by City Council.
The Unassigned General Fund fund balance of $139.5 million at the conclusion of FY 2025 is the accumulated total of all prior years’ actual General Fund revenues in excess of expenditures, less non-spendable balances (such as inventory), and amounts committed or assigned for specific uses such as operating and capital budgets, self-insurance, ongoing projects, and extraordinary events such as natural disasters or other emergencies.
Single Audit
The City’s federal funded programs are reported on the Schedule of Expenditures of Federal Awards (SEFA) and are subject to be audited in accordance with the Single Audit Act. Federal pandemic relief funds including those from the American Rescue Plan Act (ARPA) are considered federal awards and are subject to be audited in accordance with the Single Audit Act if the expenditures exceed a materiality threshold. The Single Audit will be completed in accordance with the March 31, 2026 deadline.
ACFR
To comply with Government Finance Officers Association (GFOA) guidelines, the ACFR also includes statistical and indicator sections. These sections provide key information regarding the state of the City. The City received GFOA’s Certificate of Achievement for Excellence in Financial Reporting for its FY 2024 ACFR and staff is confident that the City will also receive this award its FY 2025 ACFR. The City has received this award for more than 40 years. Attachment 1 contains a complete draft ACFR.
PAFR
Attachment 2 contains the Popular Annual Financial Report (PAFR). A PAFR is a condensed and more user-friendly version of the City’s financial position with graphics and information from the Basic Financial Statements. This document as well as the ACFR will be available on the City’s website. The City also expects to receive GFOA’s award for its FY 2024 and FY 2025 PAFRs.
FISCAL IMPACT: None beyond that explained in this memorandum.
ATTACHMENT:
ATTACHMENT 1: FY 2025 Draft Annual Comprehensive Financial Report (ACFR)
ATTACHMENT 2: FY 2025 Popular Annual Financial Report (PAFR)
STAFF:
Laura Gates, Deputy Director
Davidia Thompson, Comptroller