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Ann Arbor Sustainability & Innovations Office
Comprehensive Financial Audit & Analysis
FY2021-FY2025
Analysis Date: December 29, 2025
Scope: Complete financial forensic analysis including fund flows, ISF allocations, personnel costs, capital projects, and inflow/outflow reconciliation.
Executive Summary
$26.4M Total Revenue (5-Year)
$29.2M Total Expenses (5-Year)
($2.8M) Cumulative Deficit
The Sustainability & Innovations Office operated with $26,434,800 in total revenue and $29,187,772 in total expenses over the five-year period, resulting in a $2,752,972 cumulative operating deficit.
Key Findings:
1. Revenue Concentration: 76.8% of revenue comes from millage taxes - represents high dependency risk and funding instability
2. Personnel Costs: $7.9M (27.0% of expenses) - estimated FTE grew from 7 to 27 employees (281% increase)
3. Capital Spending: $9.2M (31.4% of expenses) - grew dramatically in FY24-25, unsustainable operating model
4. Professional Services: $3.8M (13.0% of expenses) - contracted work increased 2,021% over 5 years
Finding 1: Revenue Sources & Fund Structure
1.1 Five-Year Revenue Summary
| Fiscal Year | Total Revenue | YoY Change | Primary Source |
|---|---|---|---|
| FY2021 | $1,269,328 | — | Mental Health Millage |
| FY2022 | $1,254,633 | -1.2% | Mental Health Millage |
| FY2023 | $1,805,101 | +43.9% | Mental Health Millage |
| FY2024 | $10,747,380 | +495.4% | Climate Action Millage |
| FY2025 | $11,358,358 | +5.7% | Climate Action Millage |
1.2 Revenue by Fund (5-Year Detail)
| Fund | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | Total | % of Total |
|---|---|---|---|---|---|---|---|
| 0002 - ENERGY PROJECTS | $53,742 | $47,086 | $56,740 | $31,659 | $0 | $189,227 | 0.7% |
| 0010 - GENERAL | $199,906 | $3,071 | $61,979 | $18,394 | $204,707 | $488,057 | 1.8% |
| 00MG - MAJOR GRANTS PROGRAMS | $7,000 | $192,470 | $645,220 | $2,362,366 | $2,254,524 | $5,461,580 | 20.7% |
| 0100 - COUNTY MENTAL HEALTH MILLAGE | $1,008,680 | $1,012,006 | $1,041,162 | $1,207,652 | $1,247,633 | $5,517,133 | 20.9% |
| 0109 - CLIMATE ACTION MILLAGE | $0 | $0 | $0 | $7,127,309 | $7,651,494 | $14,778,803 | 55.9% |
1.3 Revenue by Category
| Category | Amount | % of Total |
|---|---|---|
| Taxes | $20,259,049 | 76.6% |
| Intergovernmental Revenues | $4,839,134 | 18.3% |
| Operating Transfers In | $488,446 | 1.8% |
| Contributions | $315,550 | 1.2% |
| Miscellaneous Revenue | $276,585 | 1.0% |
| Charges For Services | $251,786 | 1.0% |
| Licenses, Permits & Registrations | $4,250 | 0.0% |
| Prior Year Surplus | $0 | 0.0% |
1.4 Millage Revenue Analysis
Key Finding: Sustainability Office transitioned from Mental Health Millage funding to Climate Action Millage in FY2024.
| Fiscal Year | Millage Revenue | Source |
|---|---|---|
| FY2021 | $1,008,680 | Mental Health Millage (Fund 0100) |
| FY2022 | $1,012,006 | Mental Health Millage (Fund 0100) |
| FY2023 | $1,041,162 | Mental Health Millage (Fund 0100) |
| FY2024 | $8,334,961 | Climate Action Millage (Fund 0109) |
| FY2025 | $8,899,127 | Climate Action Millage (Fund 0109) |
Finding 2: Expenditure Analysis
2.1 Five-Year Expense Summary
| Fiscal Year | Total Expenses | YoY Change | Operating Deficit |
|---|---|---|---|
| FY2021 | $1,816,917 | — | ($547,589) |
| FY2022 | $2,691,059 | +48.1% | ($1,436,426) |
| FY2023 | $3,645,050 | +35.5% | ($1,839,949) |
| FY2024 | $9,678,354 | +165.5% | $1,069,026 |
| FY2025 | $11,356,392 | +17.3% | $1,966 |
2.2 Expense by Category (5-Year)
| Category | Amount | % of Total |
|---|---|---|
| Capital Outlay | $9,158,709 | 31.4% |
| Other Services | $6,595,016 | 22.6% |
| Personnel Services | $5,493,812 | 18.8% |
| Other Charges | $3,265,081 | 11.2% |
| Payroll Fringes | $2,390,865 | 8.2% |
| Pass Throughs | $1,352,058 | 4.6% |
| Grant/Loan Recipients | $707,399 | 2.4% |
| Materials & Supplies | $219,390 | 0.8% |
| Employee Allowances | $5,442 | 0.0% |
2.3 Expense by Fund (5-Year Detail)
| Fund | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | Total | % of Total |
|---|---|---|---|---|---|---|---|
| 0002 - ENERGY PROJECTS | $109,185 | $99,713 | $88,693 | $67,784 | $173,044 | $538,419 | 1.8% |
| 0010 - GENERAL | $653,029 | $1,705,413 | $1,960,117 | $2,149,798 | $2,861,212 | $9,329,569 | 32.0% |
| 0042 - WATER SUPPLY SYSTEM | $65,246 | $50,887 | $48,582 | $46,009 | $62,447 | $273,171 | 0.9% |
| 0043 - SEWAGE DISPOSAL SYSTEM | $48,705 | $26,598 | $39,046 | $31,699 | $49,246 | $195,294 | 0.7% |
| 0069 - STORMWATER SEWER SYSTEM FUND | $53,105 | $46,890 | $30,259 | $38,436 | $47,107 | $215,797 | 0.7% |
| 0072 - SOLID WASTE | $46,563 | $45,614 | $41,074 | $39,677 | $52,541 | $225,469 | 0.8% |
| 00MG - MAJOR GRANTS PROGRAMS | $177,000 | $22,470 | $645,220 | $2,362,367 | $2,271,997 | $5,479,054 | 18.8% |
| 0100 - COUNTY MENTAL HEALTH MILLAGE | $664,084 | $693,474 | $792,059 | $1,162,995 | $1,538,460 | $4,851,072 | 16.6% |
| 0109 - CLIMATE ACTION MILLAGE | $0 | $0 | $0 | $3,779,589 | $4,300,338 | $8,079,927 | 27.7% |
Finding 3: Personnel & Staffing Analysis
3.1 Personnel Cost Summary
| Fiscal Year | Personnel Services | Payroll Fringes | Total Personnel | % of Expenses | Effective FTE* |
|---|---|---|---|---|---|
| FY2021 | $496,828 | $205,187 | $702,015 | 38.6% | ~7.0 |
| FY2022 | $728,484 | $315,926 | $1,044,410 | 38.8% | ~10.4 |
| FY2023 | $782,469 | $331,715 | $1,114,184 | 30.6% | ~11.1 |
| FY2024 | $1,440,455 | $559,545 | $2,000,000 | 20.7% | ~20.0 |
| FY2025 | $1,944,510 | $720,952 | $2,665,462 | 23.5% | ~26.7 |
*Estimated FTE based on $100,000 average loaded cost per employee
3.2 Personnel Expense Detail (5-Year)
| Account | Amount | % of Personnel |
|---|---|---|
| Permanent Time Worked | $3,859,937 | 49.0% |
| Medical Insurance | $893,479 | 11.3% |
| Temporary Pay | $871,298 | 11.1% |
| Retirement Contribution | $595,212 | 7.5% |
| Social Security-Employer | $433,458 | 5.5% |
| Holiday | $264,005 | 3.3% |
| Employer Match for Defined Contribution Plan | $213,827 | 2.7% |
| Vacation Used | $209,582 | 2.7% |
| Sick Time Used | $105,501 | 1.3% |
| Retiree Health Savings Account | $79,176 | 1.0% |
| Severance Pay | $75,444 | 1.0% |
| Personal Leave Used | $67,074 | 0.9% |
| Dental Insurance | $56,127 | 0.7% |
| Workers Comp | $45,505 | 0.6% |
| Benefit Waiver Pay | $18,531 | 0.2% |
Finding 4: Professional Services & Contracted Work
4.1 Professional Services Spending Trend
| Fiscal Year | Amount | % of Expenses | YoY Change |
|---|---|---|---|
| FY2021 | $64,825 | 3.6% | — |
| FY2022 | $378,605 | 14.1% | +484.0% |
| FY2023 | $706,207 | 19.4% | +86.5% |
| FY2024 | $1,259,056 | 13.0% | +78.3% |
| FY2025 | $1,374,988 | 12.1% | +9.2% |
Finding: Professional services spending increased 2,021% from FY2021 to FY2025.
Finding 5: Capital Projects & Equipment
5.1 Capital Spending Trend
| Fiscal Year | Capital Outlay | % of Expenses | YoY Change |
|---|---|---|---|
| FY2021 | $397,511 | 21.9% | — |
| FY2022 | $138,013 | 5.1% | -65.3% |
| FY2023 | $627,340 | 17.2% | +354.6% |
| FY2024 | $3,572,539 | 36.9% | +469.5% |
| FY2025 | $4,423,306 | 38.9% | +23.8% |
5.2 Capital Spending by Type
| Account | Amount | % of Capital |
|---|---|---|
| Equipment | $7,644,466 | 83.5% |
| Contrib Capital - Shared Costs | $1,462,316 | 16.0% |
| Vehicles | $51,927 | 0.6% |
Finding 6: Internal Service Fund Charges & Transfers
6.1 ISF Charges (IT Fund)
| Fiscal Year | IT Fund Charges | % of Expenses |
|---|---|---|
| FY2021 | $77,691 | 4.3% |
| FY2022 | $191,859 | 7.1% |
| FY2023 | $155,284 | 4.3% |
| FY2024 | $310,531 | 3.2% |
| FY2025 | $323,177 | 2.8% |
6.2 Operating Transfers
| Fiscal Year | Transfers In | Transfers Out | Net |
|---|---|---|---|
| FY2021 | $0 | $344,958 | ($344,958) |
| FY2022 | $0 | $453,737 | ($453,737) |
| FY2023 | $0 | $56,494 | ($56,494) |
| FY2024 | $236,910 | $1,169,511 | ($932,601) |
| FY2025 | $251,536 | $1,201,787 | ($950,251) |
Finding 7: Fund Flow Analysis & Inflow/Outflow Matching
7.1 Annual Cash Flow Reconciliation
| Fiscal Year | Revenue (In) | Expenses (Out) | Net Position | Surplus/(Deficit) |
|---|---|---|---|---|
| FY2021 | $1,269,328 | $1,816,917 | ($547,589) | Deficit |
| FY2022 | $1,254,633 | $2,691,059 | ($1,436,426) | Deficit |
| FY2023 | $1,805,101 | $3,645,050 | ($1,839,949) | Deficit |
| FY2024 | $10,747,380 | $9,678,354 | $1,069,026 | Surplus |
| FY2025 | $11,358,358 | $11,356,392 | $1,966 | Surplus |
7.2 Fund-Level Flow Analysis
Tracking how money flows through different funds:
0002 - ENERGY PROJECTS
Total Inflow: $189,227
Total Outflow: $538,419
Net: ($349,192)
Total Inflow: $189,227
Total Outflow: $538,419
Net: ($349,192)
0010 - GENERAL
Total Inflow: $488,057
Total Outflow: $9,329,569
Net: ($8,841,512)
Total Inflow: $488,057
Total Outflow: $9,329,569
Net: ($8,841,512)
00MG - MAJOR GRANTS PROGRAMS
Total Inflow: $5,461,580
Total Outflow: $5,479,054
Net: ($17,474)
Total Inflow: $5,461,580
Total Outflow: $5,479,054
Net: ($17,474)
0100 - COUNTY MENTAL HEALTH MILLAGE
Total Inflow: $5,517,133
Total Outflow: $4,851,072
Net: $666,061
Total Inflow: $5,517,133
Total Outflow: $4,851,072
Net: $666,061
0109 - CLIMATE ACTION MILLAGE
Total Inflow: $14,778,803
Total Outflow: $8,079,927
Net: $6,698,876
Total Inflow: $14,778,803
Total Outflow: $8,079,927
Net: $6,698,876
Finding 8: Key Insights & Financial Concerns
8.1 Revenue Trends
- Revenue Growth: +794.8% from FY2021 to FY2025
- Millage Dependency: 76.8% of all revenue comes from millage taxes
- Climate Action Millage: Became primary funding source in FY2024, providing $17.2M over 2 years
8.2 Spending Trends
- Expense Growth: +525.0% from FY2021 to FY2025
- Capital Surge: Capital spending increased from $397,511 (FY21) to $4,423,306 (FY25)
- Personnel Growth: Estimated FTE grew from ~7.3 to ~27.8
- Professional Services: Contracted work grew 2,021% over 5 years
8.3 Structural Issues
1. Deficit Years: FY2021, FY2022, FY2023 all ran deficits totaling $3.8M
2. Balanced Only Recently: FY2024-2025 nearly break even, but only due to new Climate Action Millage
3. Capital Dependency: 31.4% of all spending is capital projects - unsustainable operating model for a service department
4. Fund Shifting: Transition from Mental Health Millage to Climate Action Millage suggests funding instability
Methodology & Data Sources
Data Sources
- FY2021-2025 Revenue and Expense by Fund (Ann Arbor Open Budget Portal)
- Transaction-level detail across all sustainability funds
Analysis Approach
- Transaction-Level Analysis: All revenue and expense transactions parsed individually
- Fund Flow Tracking: Money tracked through 5 separate funds
- Category Classification: Expenses classified into personnel, professional services, capital, ISF, and other
- Inflow/Outflow Matching: Revenue matched to expenses by fund and year
Validation
- All totals cross-checked against summary files
- Revenue and expense totals verified to match published service unit totals
- Fund-level detail reconciled to annual fund reports
Analysis completed: December 29, 2025 at 11:50 AM
Source: Ann Arbor Open Budget Portal
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