CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
title
Pass the ordinance approving an amendment to the City of Naperville 2025 Annual Budget in the amount of $3,074,800 (requires six positive votes)
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The City’s finances are audited annually by an external company according to local code and state statute. As part of the audit process, staff closely examine all City funds for compliance with the annual budget. After all year-end expenditures, transfers, and accounting entries are completed, each fund is reviewed to ensure actual expenses did not exceed the approved budget.
During the 2025 audit process, 10 of the City’s 35 funds were identified as being over budget. This is not an uncommon occurrence. Best practice and generally accepted accounting principles (GAAP) dictate that any fund exceeding budgeted expenses should be corrected through a budget amendment. This budget amendment is in compliance with GAAP and will allow for timely completion of the annual financial audit.
DISCUSSION:
The City’s budget is organized by funds. Each fund is comprised of numerous expenditure accounts, and each of those accounts is assigned an annual budget. While individual accounts may go over budget by year-end, those are typically offset by other accounts being under budget, and no action is required. However, strict budgetary compliance is maintained at the fund level. Should any fund exceed its budgeted expenditures, in total, the budget should be amended.
The following table details the 10 funds that are identified as being over budget for 2025 and the recommended amended budget:
|
Fund |
Increase/(Decrease) |
Amendment Budget |
|
Block 59 Business District Fund |
$38,200 |
$538,200 |
|
Debt Service Fund |
$1,692,300 |
$10,500,656 |
|
Downtown Parking Fund |
$257,800 |
$719,564 |
|
Foreign Fire Insurance Tax Fund |
$56,100 |
$532,200 |
|
Heinen’s Business District |
$5,500 |
$5,500 |
|
Library Special Revenue Fund |
$1,600 |
$26,100 |
|
Motor Fuel Tax Fund |
$730,400 |
$7,730,400 |
|
Renewable Energy Fund |
$3,800 |
$288,800 |
|
Self-Insurance Fund |
$285,000 |
$29,451,227 |
|
Solid Waste Fund |
$4,100 |
$8,083,405 |
|
Total |
$3,074,800 |
$644,185,199 |
Below are the reasons for each fund going over budget:
Block 59 Business District Fund: In 2025, the City issued the initial business district sales tax reimbursement to the developer, which included receipts from 2023 and 2024. As a result, the payment to the developer exceeded the budgeted amount. The ending cash balance in the fund remains positive despite the overage.
Debt Service Fund: As part of the 2025 bond issuance, the City Council authorized the defeasance, or early pay-off, of Series 2013 bonds in the amount of $1,920,000. This expense was not budgeted; however, the pay-off allowed the City to restructure new debt more effectively and reduce interest costs. The fund had sufficient reserves to cover the additional costs.
Downtown Parking Fund: The Van Buren LED Lighting Project carried over into 2025, which resulted in this fund exceeding its budget. As a result of the project’s timing, there were unused dollars in 2024, so the overall cash balance did not decrease.
Foreign Fire Insurance Tax Fund: This fund is managed directly by the Foreign Fire Insurance Tax Board and not the City. However, the revenues and expenses for the fund are included in the City’s budget. For that reason, expenditures are typically estimated during the budget process. Both revenues and expenditures exceeded budget estimates in 2025.
Heinen’s Business District: In 2025, the City issued the initial business district sales tax reimbursement to the developer, which included receipts from 2023 and 2024. As a result, the payment to the developer exceeded the budgeted amount. The ending cash balance in the fund remains positive despite the overage.
Library Special Revenue Fund: Expenditures in this fund exceeded budget; however, contributions to the fund were greater than anticipated. The City does not maintain direct control over Library expenditures.
Motor Fuel Tax Fund: In 2025, Rebuild Illinois funds were partially allocated to the Washington Street Bridge project. This allocation was not included in the MFT Fund’s original 2025 budget, which resulted in expenditures exceeding the budget. The fund’s cash balance supported the additional costs.
Renewable Energy Fund: The City issued nearly the same number of renewable energy grants in 2025, but the average grant amount was $1,670 compared to $1,580 in 2024, resulting in a slight budget overage. The additional costs were covered by the cash balance in the fund.
Self-Insurance Fund: Expenditures related to health insurance claims and pharmaceuticals exceeded estimates established during the budget development process. The fund’s cash balance was sufficient to support the budget overage.
Solid Waste Fund: In 2025, the City wrote off $29,000 in uncollectible debt in this fund, which resulted in expenses exceeding the budget. Revenue also exceeded projections, and as a result, the fund’s cash balance absorbed the additional costs.
FISCAL IMPACT:
This budget amendment will increase the 2025 Annual Budget by $3,074,800, from $641,648,599 to $644,185,199. While the amendment will adjust the budget to align with actual expenses in specific funds, total expenses across all funds remain under budget for the year.