WAYZATA — The City of Wayzata has once again earned top marks in its annual financial audit, with no compliance findings and strong performance across its operating and enterprise funds. The report was presented at the May 2025 City Council meeting by Bill Lauer of LB Carlson, the city’s independent auditor.
“This is about as good as it could possibly be,” said Council Member Alex Plechash, praising the report’s clean findings and thanking city staff for their preparation. Plechash’s remarks followed the formal presentation by Lauer, who delivered what is known as an “unmodified opinion”—the highest level of assurance available under government auditing standards.
Overview and Clean Report
The audit reviewed the city’s 2024 financial statements, internal controls, and legal compliance under both state and federal guidelines. According to Lauer, the city met or exceeded expectations in all areas.
The only recurring issue was a limited segregation of duties within the finance department—a common and longstanding challenge in smaller municipalities with lean administrative staff. For a brief period in 2024, the city had two finance employees working concurrently, which allowed for improved internal controls and true segregation of duties. However, following the midyear retirement of one staff member, the city returned to a single-person model. Although this deficiency has been downgraded over the years from a material weakness to a significant deficiency, it remains a routine note in the audit due to staffing limitations.
General Fund Outperforms Budget
Wayzata’s General Fund ended 2024 with a $515,000 surplus, outperforming a budget that projected break-even results. The fund’s balance totaled $4.9 million as of December 31, while cash reserves stood at $5.1 million.
Most of the favorable variance came from revenues, which were $618,000 (or 7.5%) above projections. Notable gains included $167,000 in building permits and $227,000 in investment earnings—thanks in part to conservative budgeting and market performance. Donations also exceeded expectations by roughly $150,000.
On the expense side, the city came in approximately $255,000 under budget, with savings in departments such as engineering, government building maintenance, and culture and recreation.
As a result of the strong year, the city reallocated $466,000 in excess General Fund balance to other capital and special purpose funds, including Parks & Trails and Street Improvements.
Citywide Fund Balances and Capital Spending
At year-end, the city’s total governmental fund balance stood at approximately $14.5 million—down $729,000 from the previous year, largely due to planned spending from restricted funds tied to the Lakefront Improvement Project. The city reported:
- $1.65 million in restricted balances (mostly for capital projects)
- $7.9 million in assigned balances (earmarked for equipment, streets, and parks)
- $4.6 million in unassigned balances
The General Fund’s reserve level represented approximately 61% of annual expenditures, well above the city’s 40% policy target.
Enterprise Funds Show Positive Operations
Wayzata’s enterprise operations—including water, sewer, stormwater, solid waste, liquor, and the marina—saw an overall increase of $759,000 in net position. Although the city recorded a reduction of $164,000 due to a newly required accounting change related to compensated absences, operating income remained strong across all departments.
The city’s Liquor Fund generated gross sales of $7.1 million, with bar and grill revenues making up about 53% and off-sale liquor accounting for the remainder. Gross profit came in at $3.6 million, with $295,000 in operating income before transfers. Roughly $545,000 was transferred from the fund to the General Fund and Parks & Trails.
Though the Licensing Fund showed a negative net position, city staff clarified that this was due to low asset balances and required accounting entries for staffing liabilities—not a reflection of operational losses.
Accounting Change Impacts Net Position
The 2024 audit included implementation of GASB 101, a new governmental accounting standard affecting how cities accrue unused employee sick leave. For Wayzata, this resulted in a $654,000 liability being added to the city’s government-wide balance sheet, reducing net position accordingly. The change aligns sick leave accounting with that of PTO and vacation time.
Strong Citywide Position and Fiscal Outlook
At the government-wide level, Wayzata’s total net position rose to $78.9 million—a $2 million increase. The city accomplished this while avoiding new debt issuance, instead using cash reserves and a refunding strategy to convert temporary bonds into long-term TIF bonds for capital projects.
The city’s Housing & Redevelopment Authority (HRA), reported separately under state law, held a net position of $2.2 million, nearly all of which is invested in capital assets. The HRA’s net position rose by $153,000 in 2024.
Staff Recognized for Fiscal Management
Council members publicly acknowledged the work of Finance Director Erin St. Cyr, whose efforts in payroll, payables, and audit coordination were credited as essential to the audit’s success.
“We can’t overstate how much goes into producing a clean audit like this,” said Plechash. “It reflects the quality of our team, our planning, and the trust we place in staff to manage taxpayer dollars.”
The audit results set the stage for reserve reallocations expected later this summer. The city’s strong fiscal footing will also inform future decisions related to capital improvements, parks, and long-range planning.
