Findings: Ann Arbor's Finances, FY2021–FY2026

The Number

The Context

Reported revenue hit a record $663.0M (+$26.3M) while reported expenses fell $40.3M to $503.3M. But the revenue record is not operating money: pension investment income jumped $39.8M and the city booked $34.9M in new bond proceeds. Strip those out and operating revenue actually FELL $12.0M — the first decline in six years.

The Data — material movers, FY2025 → FY2026

• Pension paper gains: +$39.8M to $128.9M — "Gain/Loss On Invest (Unrealized)" alone rose $40.0M to $62.9M. Unspendable on services.
• New borrowing: +$13.9M — fund 0119 (2026 Affordable Housing CI Bonds) issued $35.0M in FY2026 and spent $145,695 of it by June 30.
• One-time items: FY2025's $18.1M "Refund Prior Year Expense" did not recur; a new $6.3M PFAS Class Action Settlement arrived (one-time). Taxes +$8.2M to $157.2M — steady, real growth.
• Spending cuts: Contracted Services −$18.6M (reversing most of FY2025's near-doubling), Pass Throughs −$16.2M, Infrastructure −$13.8M, Retirement Payments −$7.0M. Meanwhile Construction hit a six-year high of $49.2M (+$14.4M).
• Accounting timing confirmed: the Capitalized Asset Credit stayed small ($5.6M vs $53.8M in FY2024) — the credits that made FY2024 expenses look low did not return.
• Fund movers: Pension Trust net +$40.1M (markets); 0119 bonds +$34.8M; Water CIP Bond +$22.7M as spending wound down; Fire Station 4 Bond −$19.7M ($8.4M of construction); Water Supply System −$12.2M (expenses up $10.7M).
• Vendor churn (payments data): the construction roster turned over — C.A. Hull −$9.1M and Major Contracting −$4.7M wound down as Granger Construction (+$7.9M, Fire Station 4), Fonson (+$7.7M to $15.0M — the city's #1 construction vendor in FY2026), and Michels Construction (+$5.0M) ramped up. Pass-through remittances jumped $13.3M (see the new pass-through finding below).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years, A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years, & Audited ACFRs

The Number

The Context

The city's ledger shows revenue exceeding expense by $701.1M over six years. But that figure counts pension-fund paper gains, money the city transfers to itself, and borrowed money as "revenue." None of those pay for ongoing services. Removing them shows operations ran $88.6M short.

The Data — the walk from reported to operating

Key Findings

• Operating revenue grew 40% FY2021→FY2026 while expenses grew 46% — the structural gap remains.
• The FY2026 deficit (($28.5M)) is ~5× the FY2021 deficit (($5.8M)), even after improving from FY2025's ($56.8M).
• Personnel costs passed $1.02 billion over six years — 31% of it for retirees (Finding 6). The city made $1.23 billion in vendor-system payments to 10,217 payees over the same span — a total that includes internal transfers and payroll remittances, not only outside purchases (Findings 9 and 10).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years & Audited ACFRs

The Number

The Context

The headline question: did FY2026 improve the trajectory? Partly. The annual deficit halved, from ($56.8M) to ($28.5M) — but entirely because expenses fell $40.3M. Operating revenue went the wrong way (−$12.0M), and the cumulative six-year hole deepened from ($60.1M) to ($88.6M). One year of spending restraint has not closed a structural gap.

The Data

Key Findings

• Four deficit years out of six; the only surplus year (FY2022) reflects pension losses shrinking the exclusion, not stronger operations.
• FY2026's improvement came from the expense side: −$40.3M, led by Contracted Services and Pass Throughs (Finding 5).
• Operating revenue fell $12.0M in FY2026 partly on one-time FY2025 items not recurring (e.g., an $18.1M prior-year expense refund).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years & Audited ACFRs

The Number

The Data

Key Findings

• By fund, six-year pension investment income: Pension Trust (0059) $378.4M, VEBA Trust (0052) $148.1M, 401(a)/457(b)/Dean Trust plans $2.6M combined.
• FY2026 was the second-biggest pension gain year ($128.9M) — it alone is 81% of the FY2026 reported "surplus" of $159.7M.
• Volatility is extreme: the swing from FY2021 (+$187.5M) to FY2022 (−$49.9M) was $237M.

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years & Audited ACFRs

The Number

The Data

Key Findings

• The collective ISF surplus grew from $20.3M (through FY2025) to $31.1M — FY2026 alone added ~$10.8M: departments were again billed well above ISF cost.
• Fleet Services holds the largest cumulative surplus ($19.0M on $67.9M of revenue).
• Risk Fund remains the biggest ISF: $196.6M in six-year internal charges.

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years & Audited ACFRs

The Number

The Data — expense change by category, FY2025 → FY2026

The Data — top account-level drivers

Key Findings — accounting timing vs real spending

• Real cuts: Contracted Services fell 43% (−$18.6M); vehicle purchases fell $2.6M; Pass Throughs fell $16.2M.
• Real growth where it counts: Construction hit a six-year high of $49.2M (+$14.4M) and payroll accounts kept rising (Permanent Time Worked +$2.7M; health claims/insurance +$4.9M combined).
• Timing verdict on FY2025: the Capitalized Asset Credit stayed small in FY2026 ($5.6M vs $53.8M in FY2024). Capital Outlay's $64.1M (second-highest ever, vs $12.1M in FY2021) reflects genuinely elevated capital spending, not bookkeeping.
• The vendor ledger agrees (payments data): the same story shows up vendor by vendor — C.A. Hull, DiPonio, Miller Bros., and Major Contracting wound down (−$22.3M combined) while Granger, Fonson, Michels, and Bailey ramped up (+$23.8M combined).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years, A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years, & Audited ACFRs

The Number

The Context

Budget presentations split personnel across Personnel Services, Payroll Fringes, and Employee Allowances — and bury retiree pension payments and retiree medical inside "Other Charges." This finding reassembles the full picture at the account level.

The Data

Key Findings

• Active vs retiree (6-yr): active employees $707.5M (69.2%); retirees $314.9M (30.8%) — roughly $1 to retirees for every $2 to active staff.
• Retiree Medical Insurance grew +153% FY2021→FY2026 ($5.2M → $13.1M), the fastest-growing personnel line. Total personnel grew +28% over the same span.
• FY2026 anomaly: Retirement Payments dropped $7.0M to $39.2M — the lowest since FY2021 — even as Retirement Contribution rose to $20.7M. Timing or actuarial change?
• Per-employee estimate (FY2026): Permanent Time Worked of $51.8M implies ~863 FTEs at an assumed $60K average base (same convention as prior years). Active cost per FTE ≈ $163K; ~$224K with retiree costs allocated.
• The payments data confirms the pressure: employee health-insurance withholdings remitted through the pass-through segment rose 17.5% in FY2026 alone (Finding 10).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years, A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years, & Audited ACFRs

The Number

The Data — six-year totals by dedicated fund

Key Findings

• Open Space & Park Acquisition: 79% of six years of spending left the fund as transfers; direct land purchases remain a small share.
• Mental Health millage: 62% of spending is transfers out; another $469,603 of "Equipment" in FY2026 ($1.54M cumulative since FY2024). What equipment does a mental-health millage buy?
• Climate Action millage: $10.2M — 42% of three years of collections — remained unspent at June 30, 2026.
• Affordable housing: the millage (0103) passes ~93% straight through to housing entities; the 2024 bond fund is nearly spent out; the new 2026 bonds (0119) added $35.0M of debt with spending yet to start. Fire Station 4 construction drew $8.4M in FY2026 — visible in the payments data as Granger Construction's +$7.9M year.
• Park Maint & Capital Millage remains in cumulative deficit (−$2.6M).

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years, A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years, & Audited ACFRs

The Number

The Data

Key Findings

• The 1.1% pension variance is attributable to investment management fees (~$750K/yr) deducted in the ACFR but not in budget-basis reporting.
• FY2025 and FY2026 ACFRs are pending — those years' figures are final ledger data but precede audit. This section will be extended when the FY2025 ACFR is published.

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years & Audited ACFRs (City of Ann Arbor FY2021–FY2024)

The Number

The Context

Now covering all six fiscal years. Before extending, the FY2021–FY2025 figures were recomputed and tie to the legacy pivot exactly: $988,579,818 total; top-10 $429,336,298 (43.4%) — matching the previously published $429.3M / 43.4%.

The Data

Key Findings

• Top 5 recipients (6-yr): City of Ann Arbor (Internal transfer — $107.7M), Blue Cross Blue Shield ($95.5M), EFT FED (Payroll remittance — $93.6M), Cadillac Asphalt ($46.7M), Fonson Inc ($41.1M). Concentration figures include internal transfers and payroll remittances — the two largest "payees" are not outside vendors.
• Fastest-growing (FY2021 ≥ $250K): Fonson Inc 27.1× ($553K → $15.0M — now the city's largest construction vendor), Wade Trim Associates 7.2×, Constellation NewEnergy 4.7×, E.T. MacKenzie 4.5×, OHM Advisors 4.1×.
• FY2026 churn: C.A. Hull −$9.1M, Major Contracting −$4.7M, DiPonio −$4.6M, Miller Bros. −$4.0M wound down; Granger +$7.9M, Fonson +$7.7M, Michels +$5.0M, Bailey +$3.1M ramped up — a near-complete turnover of the construction roster in one year.
• Name merges: 20 case/spacing merge groups were consolidated; 17 changed a previously published row. All are immaterial — the largest moved $18,888 (a lowercase "City of Ann Arbor" folding into the $86.0M five-year main entry). Full list in VENDOR-NAME-MERGES.md.

Sources: A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years

The Number

The Data — segment by year (ties exactly to the Vendor Payments report)

The Data — what it is (top expense types, 6-yr)

Key Findings

• Same labels as the report: the Vendor Payments report describes this segment's payees the same way — payroll remittances and internal transfers rather than discretionary purchases — and its Non-Service-Unit segment totals tie to the table above to the dollar ($338,007,885 six-year; $71,444,578 FY2026).
• Mostly payroll plumbing: the six biggest lines — health insurance, FICA, federal/state tax, deferred annuity, and pension withholdings — are $241.0M (71%) of the segment. Their growth tracks headcount and benefit costs, not purchasing decisions.
• What drove the FY2026 jump (+$13.3M): Contracted Services +$4.6M and Electricity +$1.8M — discretionary-looking expense types appearing WITHOUT a service unit — plus Health Insurance Withholding +$2.5M (+17.5%), Professional Services +$1.0M, Deferred Annuity +$0.7M, FICA +$0.6M.
• The benefits signal: employee health-insurance withholdings grew from $14.2M to $16.7M in one year — the same pressure visible on the employer side in Finding 6 (fringes +11%, Blue Cross claims +$2.5M). Payroll-tax remittances rose ~5%, consistent with payroll growth.

Sources: A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years

The Number

Key Findings

• 18 activity codes; the largest single item is $3.9M of General Fund spending under code 63400 (FY2021–FY2025), plus ARPA grant pass-throughs (code 60300: $1.8M in and $1.8M straight out).
• The trend and Follow the Money reports group these under "Non-Service Area Activities" so their dollars stay visible; per-code detail is in SERVICE-CODE-REVIEW.md, where descriptive labels are added as codes are identified.

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years

• Review period: July 1, 2020 – June 30, 2026 — six complete fiscal years. FY2026 is final ledger data and may precede the audited ACFR.
• Datasets: (1) the A2OpenBook revenue & expense ledger, cleaned by the same ETL as the interactive trend report (all control totals reconcile: FY2026 revenue $663,024,131 / expense $503,332,353); (2) the A2OpenBook vendor-payments export, cleaned by the vendor-report ETL (FY totals through the $1,230,114,254 grand and all Non-Service Unit segment totals reconcile to the dollar).
• Operating Revenue = reported revenue − Investment Income in pension/trust funds (0059, 0052, 0111, 0112, 0113, 0055) − Operating Transfers In − Sale of Bonds proceeds. Interest earned by non-pension funds stays in.
• Operating Expenses (personnel-share denominator) = total expenses − Capital Outlay − Pass Throughs.
• Internal Service Funds: ISF billings appear as both department expense and ISF revenue; eliminating them reduces both sides equally — no effect on the operating deficit.
• Personnel = Personnel Services + Payroll Fringes + Employee Allowances categories, plus the "Retirement Payments" and "Retiree Medical Insurance" accounts (carried in Other Charges).
• Vendor names: merged only when identical after trimming, whitespace collapse, and case-folding (20 groups; all immaterial — largest $18,888). No fuzzy matching. Full list: VENDOR-NAME-MERGES.md.
• Non-Service Unit / Non-Service Area: vendor payments with no service unit are the pass-through segment (Finding 10); ledger rows under numeric activity codes are grouped as "Non-Service Area Activities" (Finding 11). Neither is excluded from any total.
• Normalization: all figures are citywide dollar totals. Per-household and per-capita modes are deliberately not used, matching the Insights builder's normalization policy — the denominators are contested. (The historical 125,000 / 55,000 basis remains documented in the calc workpaper for anyone reproducing older published figures.)
• Reproduction gates (passed before FY2026 was added): FY2021–FY2025 operating deficit $60,067,743, pension investment income $400,143,250, transfers $165,238,196, bonds $36,080,271, all ISF totals — to the dollar; personnel components within ≤$47K/year (<0.03%, small ledger reclassifications since the December 2025 export). Vendor FY2021–FY2025 total $988,579,818 and top-10 concentration 43.4% — to the dollar against the legacy pivot. Full audit trail: FINDINGS-CALC-WORKPAPER.md at a2files.com/budget.

Sources: A2OpenBook Revenue & Expenses 2021 to 2026 Fiscal Years, A2OpenBook Vendor Payments 2021 to 2026 Fiscal Years, & Audited ACFRs