Description
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, 2027 through June 30, 2031, 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, 2026.
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.
As we have noted in prior years, projected deficit spending is expected to continue reducing the fund balance through Fiscal Year 2029. While spending has increased across all obligation classes, the largest increases have been Payroll, Employee Benefits, and Payments to Other Funds. Payroll and Employee Benefit costs have increased as the City has expanded its workforce by filling nearly 2,000 vacancies since staffing reached its low point in 2023, along with higher compensation costs.
In recent years, Payments to Other Funds have increased, in part, because the City has used “pay-as-you-go” (PAYGO) funding for Capital Programs. While using General Fund surplus instead of issuing additional General Obligation debt has avoided the related interest payments, this budgeting decision has contributed to the declining Fund Balance, reducing the City’s ability to meet the fund balance recommendations set by the Government Finance Officers Association.
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.