Garland's fiscal 2025 audit reports sewer fund borrowing from restricted funds
The fiscal 2025 audit says Garland's sewer fund borrowed $685,990 from the water fund, the redevelopment agency fund and the general fund, including money restricted to other uses, without meeting state requirements for interfund loans.
Continuing story: Auditing Garland
Garland's sewer fund borrowed money from other city funds, including money restricted to other uses, without meeting state requirements for interfund loans, according to the city's fiscal 2025 audit. [1]
Finding 2025-06 cites Utah Code 10-6-132, which the auditors said requires interfund borrowing from enterprise funds to be in writing, to meet certain conditions and to follow a public hearing. [1]
What the auditors found
"The Sewer fund has incurred expenditures in excess of revenues in prior years, which has caused the Sewer fund to borrow money from other funds in order to meet ongoing obligations," the finding says. "The total net borrowing in the Sewer fund is $685,990." [1]
The auditors wrote that the money came from the water fund, the RDA fund and the general fund, and that "the Water fund money and the RDA fund money is restricted to their own uses." They added: "There is not enough unrestricted money in the City to loan these funds." [1]
They recommended budget changes in the sewer fund "to remedy the interfund borrowing." [1]
The balance sheet
The proprietary fund statement shows the sewer fund owing $1,027,517 to other funds at June 30, 2025, with no unrestricted cash and $341,927 in restricted cash. Its unrestricted net position was negative $971,617. [1]
On the other side, the water fund showed $420,000 due from other funds, the general fund $307,517 and the RDA #2 fund $300,000. [1]
For fiscal 2025, the sewer fund reported $802,165 in charges for services, operating income of $223,795 and $198,739 in interest expense, for a $127,636 increase in net position. [1]
The city's response
"The City has taken corrective measures to ensure the Sewer Fund operates sustainably and is able to support itself," the city's response says. "A repayment plan has been initiated to gradually repay outstanding interfund obligations." [1]
The fiscal 2027 budget report Garland filed with the State Auditor lists $900,000 in sewer sales and $383,750 in sewer debt service principal. [2]
The finding concerns state rules for interfund loans.
Sources
- Garland City · Annual financial statements for the year ended June 30, 2025 (Child Richards CPAs & Advisors, filed with the Utah State Auditor)
- Garland City · State Budget Report, fiscal 2027 (07/01/2026 to 06/30/2027), filed with the Utah State Auditor
Reporting by The Utah Ledger from the public records above. AI-assisted, checked against those records.