Description
July 15, 2025
ln accordance with Section 12720.209(£)(1) of the Pennsylvania Intergovernmental Cooperation Authority Act, my office conducted an examination of the Forecasted General Fund Statements of Operations (the forecast) for each of the fiscal years ending June 30, 2026 through June 30, 2030, also known as the “Five Year Plan” (Plan). The Plan was prepared by management of the City of Philadelphia ‘s Office of the Director of Finance (City) and submitted to the Pennsylvania Intergovernmental Cooperation Authority (PICA) on July 15, 2025.
My staff conducted its examination of the Plan in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we evaluate the presentation of the Plan and whether the assumptions used by management are reasonable. Attached is the independent accountant’s report signed by my deputy who is a Certified Public Accountant.
I am recommending that PICA accept the Plan that in our opinion presents a forecast that in all material respects is in accordance with the guidelines established by the American Institute of Certified Public Accountants, and the underlying assumptions are suitably supported and provide a reasonable basis for management ‘s forecast.
With the recommendation to accept this plan, we would like to note that projected operating deficits significantly erode the fund balance through Fiscal Year 2029. Since the Covid-19 pandemic, the city has maintained fiscal stability and improved its credit rating throughmanagement of $1.3 billion in revenue replacement funds received through the American Rescue Plan Act (ARPA). However, escalating expenditures, and the end of ARPA funding in December 2024 results in a projected $479 million operating deficit for fiscal year 2026, reducing the fund balance to $471 million. Operating deficits are projected to continue through FY2029 with the fund balance falling to $45 million, the lowest year-end balance over the life of the plan. Sustained budget discipline over the five-year plan is essential for reversing the fund balance decline, rebuilding reserves, and securing the city’s financial future by FY2030.
In closing, my office would like to express our thanks to the management and staff of the City’s Office of Budget and Program Evaluation within the Office of the Director of Finance for their courtesy and cooperation in the conduct of our examination.
Read the full examination by clicking “Download Full Report” above.
Read the accompanying press release here.