Farmington's audit reports an overspent equipment fund and a General Fund over the cap

Farmington's independent auditor reported two instances of noncompliance with state law in the city's fiscal 2025 finances: one fund spent more than its budget, and the General Fund kept a larger unrestricted balance than state law allows. ^[1]

Gilbert & Stewart listed the findings, numbered 25-1 and 25-2, in a Dec. 17, 2025 letter to the mayor and City Council that is printed in the city's annual comprehensive financial report. In its report on state compliance, the firm said its opinion was not modified with respect to them. ^[1][3]

The equipment fund

The auditor wrote that state law requires a city's actual spending in each fund to stay within that fund's budget, and that the Capital Equipment Capital Projects Fund's spending exceeded its budget by $76,623. ^[1]

The fund's budget-to-actual schedule shows capital outlay budgeted at $401,000 originally and $794,500 in the final budget. Actual spending was $871,123. ^[2]

The fund started the year with a balance of $1,175,640, received a $450,000 transfer from the General Fund and ended the year with $903,326. ^[2]

According to the report's management discussion, the transfer and existing fund balance paid for vehicle replacements for police, fire and parks and recreation, which cost about $782,000 in fiscal 2025. ^[4]

The auditor recommended that near year-end the city compare year-to-date spending by fund against the budget to decide whether an amended budget should be proposed. The city responded: "The City will make the necessary changes to ensure actual expenditures by fund do not exceed budgeted amounts." ^[1]

The General Fund balance

The auditor wrote that state law caps a city's unrestricted General Fund balance at 35% of the fund's revenue for the year, and that Farmington's exceeded that limit by $16,156. It recommended that the city bring the balance into line with state law. ^[1]

The General Fund ended fiscal 2025 with $6,218,366 unassigned, on revenue of $17,720,599. The management discussion puts the unassigned balance at 35.09% of revenue. Thirty-five percent of the fund's revenue is $6,202,210, which is $16,156 less than the unassigned balance. ^[5][4]

The city's printed response to this finding repeats, word for word, its response to the spending finding: "The City will make the necessary changes to ensure actual expenditures by fund do not exceed budgeted amounts." ^[1]

Last year's findings

Both rules were also the subject of findings for fiscal 2024. That year, the Fire Protection Capital Projects Fund spent $118,706 more than its budget, and the unrestricted General Fund balance exceeded the limit by $444,793. For both, the fiscal 2025 report refers readers to the current findings. ^[1]

A third fiscal 2024 finding, that the city treasurer was under-bonded or under-insured by $219,476, is now listed as resolved: "Farmington City is in compliance with state law." ^[1]

Department budgets in the General Fund

The city's transmittal letter says the legal level of budgetary control is the department within the General Fund and the fund for all other funds, and that by law spending cannot exceed appropriations at each level. ^[6]

The General Fund's budget-to-actual statement shows the parks and cemetery department spent $1,572,291 against a final budget of $1,509,540, or $62,751 more, and the administration department spent $1,258,107 against $1,256,249, or $1,858 more. The auditor's state compliance findings do not mention either department. ^[7][1]

Federal money

The city's schedule of federal awards lists $2,998,886 in American Rescue Plan Act money for water projects in fiscal 2025. The management discussion says the city received the money in two equal payments in fiscal 2022 and 2023 and spent all of it in fiscal 2025 on water projects, along with bond proceeds. ^[8][9]

The auditor's opinion on compliance for that program was unmodified, and it reported no federal findings. ^[10]