Wauwatosa, WI - File #: 26-0057

• File #: 26-0057
• Version: 1
• Type: Report
• Status: Agenda Ready
• File created: 12/29/2025
• In control: Financial Affairs Committee
• On agenda: 9/8/2026
• Title: Presentation of the audited 2025 Annual Comprehensive Financial Report

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Presentation of the audited 2025 Annual Comprehensive Financial Report

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Submitted by:

John Ruggini

Department:

Finance Department

A.                     Issue

As required by state law and governmental accounting rules, the City has compiled the 2025 financial statements.  Assembled as an Annual Comprehensive Financial Report based on the Governmental Finance Officers Association requirements, the statements have been audited by Clifton Larsen Allen LLP.  Representatives from Clifton Larsen Allen will review the financial results with the Committee and present any audit findings.  A copy of the report is attached.

B.                     Background/Options 

The Management Discussion and Analysis (MDA) section of the Annual Comprehensive Financial Report (ACFR) summarizes the 2024 financial results and will be presented in brief.  The ACFR and specifically the MDA should be referred to for more detail.

Highlights from the financial statements include:

Financial Highlights

¨                     Net position for governmental activities grew by $10.0 million (11.8%) with most of the growth occurring in the net investment in capital assets and unrestricted.

¨                     Net position also grew for Business Activities by $11.6 million similarly driven by investments in capital assets and unrestricted.

¨                     Noncurrent liabilities for the primary government fell as a percentage of total assets (a positive trend) as the pension liability increase was offset by a $2.1 million decrease in the Other Post Employment Benefit liability. 

¨                     The General Fund ended the fiscal year with a $2,778,170 surplus.  The City has 71 days of operating expenditures available in its Emergency and Working Capital assigned reserve which represents of 117% of its 60-day benchmark

¨                     The Parks Fund posted a $424,448 surplus despite Hart Park being the site of extensive flooding in August.   Flood related losses were offset by $453,370 in flood and other insurance proceeds and a $1,000,000 donation from the Tosa Foundation.  Repairs continued into 2026 and is anticipated that some amount of the $1.6 fund balance (net committed fund balances) will likely be spent.  Currently $653,626 is not reimbursed.

¨                     All three utilities enjoyed a 2025 surplus and have Adjusted Balances (current assets- current liabilities net of unspent bond proceeds) that are adequately funded.  In fact, they are over-funded as all 3 funds are building balances to be used to cash finance upcoming capital projects.

¨                     The City of Wauwatosa net investments in capital assets for its governmental and business-type activities as of December 31, 2025 increased $15.3 million to $250 million.

¨                     At the end of the current fiscal year, the City of Wauwatosa had total net general bonded debt outstanding of $144.4 million which equaled 1.4% of equalized value

¨                     The City’s Other Post-Employment Benefits is $37.1 million in 2025 representing 91% of covered payroll, the lowest amount since a peak of 238% of payroll in 2013

¨                     The City maintained an Aaa rating from Moody’s.

Government-wide Financial Analysis

Under the Governmental Accounting Standards Board (GASB), net position is the residual difference between all elements in a statement of financial position. It is calculated as: (Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources).  In every-day language, net position reflects government’s bottom line.  The Statement of Net Position and Statement of Activities present net position on a full-accrual basis for all governmental activities and all business-type activities.  

The largest portion of the City of Wauwatosa’s net position reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment, less any related debt used to acquire those assets that is still outstanding). Although the City of Wauwatosa’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since most of the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City of Wauwatosa’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position may be used to meet the city’s ongoing obligations to citizens and creditors.

Governmental Activities

In 2025, the net position grew by $10.0 million (11.8%) with most of the growth occurring in the net investment in capital assets as shown in the figure below.  This investment is discussed in more detail under the” Significant Capital Asset and Long-term Financing Activity” section later in this analysis.  The “Unrestricted Net Position” is negative due to the City issuing taxable general obligation bonds used to finance private economic development activity (demolition of privately-owned structures for example) as economic development incentives.   This totaled $18.2 million.   In addition, the City issues Municipal Revenue Obligations as another economic development tool through which developers receive a long-term cash flow based on a percentage of their annual property tax bill.  Since there is no corresponding asset, this also contributes to the negative unrestricted net position.  The outstanding Municipal Revenue Obligation liability as of year-end decreased $2.6 million to $25.4 million.

The figure below shows how the City’s activities contributed to this increase in net position.  Year over year, governmental expenditures increased $19.8 million. This was driven largely by increased net expenditures including a $10.0 million property tax settlement with Froedtert Hospital that caused General Government expenditures to increase from $9.1 to $19.4 million.  Public Safety expenditures also grew $5.1 million due mostly to a $3.0 change in the pension expense from 2024

The City experienced a 500-year flood in August 2025 that caused an estimated $4.0 million of damage to public infrastructure with the majority of the damage occurring in Hart Park which lies in the flood plain along the Menomonee River.   Only $1.1 million of expenses were incurred in 2025, with the majority of the repairs planned for 2026.  The 2025 expenses were largely related to restoration and the main reason for the 20% increase in Education and Recreation expenses.   These initial expenses were offset by approximately $500,000 of flood and property insurance proceeds and a $1.0 million donation from the Tosa Foundation. 

The City’s Community Development Authority also incurred a $3.9 million expense as it donated land previously purchased as described below under the Minor Special Revenue Funds fund balance discussion that contributed to the 22% increase in Conservation and Development.

Charges for services increased 16.4% fueled by a $1.0 million increase in Public Works that was driven by the implementation of a new $15 vehicle registration fee to be used for physical road improvements to impede reckless driving.

Government activity revenue grew $9.0 million year over year largely driven by an increase in general property taxes due to a 1.2% levy increase and $6.5 million in chargeback revenue (classified as property taxes) from the other taxing jurisdictions for their share of the Froedtert settlement.

Business Activities

Net position also grew for Business Activities by $11.6 million as shown below.  Similarly, to government activities, this was driven by investments in capital assets discussed later in this section. 

Year over year expenditure and revenue changes are discussed under Proprietary Funds section of the Fund Financial Analysis below.  However, the notable $4.8 million decrease in Grants/Contributions shown in the figure below was caused by a one-time developer contributed capital in 2024.    Sanitary expenditures increased $1.6 million due largely to a $0.6 million increase in waste water treatment services resulting from increased transmission (and also offset by increased revenue).  The remainder was due to capital improvements not depreciated due to private ownership.

Statement of Net Position

An effective way to evaluate the strength of a balance sheet is through a quick ratio - dividing current assets by current liabilities as presented below.  A healthy ratio exceeds 1.0.  Both governmental and business activities exceed this threshold with governmental activities showing a relatively flat ratio while business activities showing significantly more balance sheet strength.  This is not surprising since all three proprietary funds are in the process of building fund balance for future large capital projects  

The Equity Ratio measures the total net position divided by total assets and is another method for measuring balance sheet strength over time.  As seen below, both governmental and business activity balance sheets show relative stability over the past five years with governmental activities showing year over year increases since 2022.  This has been driven by a 41% growth in net position over this 5-year period.  Business activity assets and net position have grown at a relatively similar rate (32% and 34% respectively) producing a stable ratio.

The final balance sheet metric presented is non-current liabilities

Noncurrent liabilities for the primary government fell as a percentage of total assets (a positive trend) as the pension liability increase was offset by a $2.1 million decrease in the Other Post Employment Benefit liability.   This also offset an increase in liabilities due in more than one year.  This increase in liabilities due in more than one year is largely due to borrowing in 2024 and 2025 that exceeded defeasance of principal as the City continues to undertake large utility projects as part of a dedicated asset replacement program and to expand capacity of the stormwater system in the face of climate change induced heavy rains.  This decrease has also been fueled by a 20% increase in assets.

Detailed Analysis

Fund Financial Analysis

Governmental Funds

The City of Wauwatosa has established fund balance policies for many of its funds in accordance with the Government Finance Officers Association’s “Rethinking Reserves” project.  Fund reserve levels are established based on the main risks and volatilities unique to that fund.   This following section will discuss the fiscal year surplus/deficit position of each fund along with the status of its fund balance as compared to the policy.  A stoplight analysis is presented where a “green” light indicates that the fund reserve is at 95% or greater of its benchmark, “yellow” when it is between 80 and 95% and “red” when it is below 80 percent.   The “Performance” column in the table below presents the fund’s reserve level as measured by the benchmark (i.e. days of operating expenditures, percent of claims, etc.) while the “% of Benchmark” column represents that metric as a percentage of the policy goal.  For example, if 90 days operating expenditures is the reserve policy benchmark and the fund is at 100 days, then it is 111% of the benchmark.  When necessary for operational purposes, an adjusted fund balance is also shown.

General Fund

The General Fund ended the fiscal year with a $2,778,170 surplus.  The unassigned fund balance is grouped into three categories as shown in the table below.  The City has 71 days of operating expenditures available in its Emergency and Working Capital assigned reserve which represents of 117% of its 60-day benchmark.  The reasons for this surplus are described in the “General Fund Budgetary Highlights” section.

The City’s “Amortization Fund” which is an assigned General Fund balance fell to 85% of its benchmark.  While there was no change in the balance, debt service increased, causing the ratio to fall.  Given strict levy limits discussed below, this benchmark is expected to continue decreasing which prevents it from being used to cash finance capital and will increase pressure on the City’s bond rating.

The City’s contingency fund fell to 86% of the benchmark due to a small amount being used in 2025 and budgetary expenses increasing.  Per policy, it will be replenished as of 1/1/2026 from the Emergency and Working Capital fund balance.  While still remaining below benchmark, the City did increase its Recycling Stabilization Fund $83,766 due to strong commodity sales.

Other Major Governmental Funds

The table below presents the financial results for the other major funds.  The Debt Service Fund posted an expected $249,027 deficit as it spent down earned bond premium and the principal amount borrowed on behalf of the Milwaukee Area Domestic Animal Control Commission, and recorded as a non-spendable fund balance, was paid down by $175,000 to $1,050,000.

The Capital Projects Fund posted a $3.8 million surplus due mostly to an increase in unused bond proceeds as the Engineering Division works to complete several multi-year projects.  Unused bond proceeds are maintained as a Restricted Fund Balance and not considered as part of the benchmark which remained constant at 170%.

The Tax Increment District Fund posted a $2.1 million surplus driven largely by property tax increment exceeding project plan costs by approximately $1.0 million in Tax Increment District 6 - Innovation Campus and Tax Increment District 8 - State Street East.  This offset a $0.5 million expected deficit in Tax Increment District 7 - Burleigh Triangle as a developer loan was paid off with fund cash which will be repaid over the next 2 years.

Nonmajor Special Revenue Funds

Of the Nonmajor Special Revenue Funds, only the Tourism Fund has a fund balance benchmark.   Following the COVID pandemic, and recognizing in retrospect the vulnerability of the fund to macro-economic factors impacting hotel/motel taxes, it’s primary revenue source, a policy was adopted to maintain 6-months of operating expenses in reserve with any surplus allocated to a capital reserve.   In 2025, hotel revenues dropped 2.8% year over year as decreases in the average daily rate offset occupancy increases (see figure below) resulting in a $65,592 surplus as compared to the budgeted $117,851 contribution towards reserves.  However, the fund was able to maintain its fully funded operating reserve.

The Community Development Authority (CDA) posted a $3.8 million reduction to fund balance.   This was caused by the planned exchange of the vacant Boston Store acquired at auction in 2022 at no cost for the elimination of the real estate agreements at Mayfair Mall that prohibited residential development and for the recruitment of the Scheels retail store.  As a result, the CDA had to write down the purchased cost of the Boston Store.  This did not have a cash impact on the CDA as TIF 10 - Mayfair Reserve had financed the debt necessary for the acquisition.  The CDA maintains a $1.4 million fund balance reserved for affordable housing and economic development purchases.

The Parks Fund posted a $424,448 surplus despite Hart Park being the site of extensive flooding in August.   Flood related losses were offset by $453,370 in flood and other insurance proceeds and a $1,000,000 donation from the Tosa Foundation.  Repairs continued into 2026 and is anticipated that some amount of the $1.6 fund balance (net committed fund balances) will  likely be spent but the exact amount remains uncertain as the City continues to wait to hear if the State will provide emergency disaster relief after the federal request was denied.  Currently $653,626 is not reimbursed.

Nonmajor Capital Project Funds

The Fleet and Information Systems Reserves both posted surplus’ as the depreciation transfer from the respective internal service fund exceeded the capital outlay. The Public Works Building Improvement Reserve posted a $236,265 anticipated deficit as $360,00 was transferred to the Capital Project Fund to pay for roof work and the Fleet garage resurfacing.

Internal Service Funds

As a self-funded entity, the City maintains a Health/Life Insurance fund which posted a $1.6 million deficit largely due to the $1.4 million-dollar Other Post-Employment Benefits expense that was posted.  In addition, the fund issued a $750,000 dividend to employees following a very strong claims year in 2024.  Similarly, in 2025, claims were 94% of budget providing a $487,321 savings compared to budget.  When adjusted for current assets and current liabilities, the fund’s adjusted balance is at 137% of our benchmark.

General Liability posted a $2.5 million loss due to the City settling large property value litigation case with a local hospital and issuing a $10,000,000 refund (from the General Fund).  $3.6 million was funded via a transfer from the General Liability fund which had been building a contingency for this purpose over several years.   The balance was paid for through chargebacks to the other taxing jurisdictions.

The Workers Compensation fund had a challenging year as the incurred but not reported amounts for several large claims from prior years were inadequate creating expenses in 2025. $750,000 was transferred from the Health/Life fund to offset this unbudgeted expense but the fund still fell short by $78,249 and the fund balance dropped to 75% of the benchmark.

The Municipal Complex posted a $179,414 surplus as it builds fund balance to be used for future capital projects.

An important component of governmental fund health is intergovernmental revenue as percentage of total revenues.  As shown below this has been largely on an upward trajectory due to the American Rescue Plan funds received by the City beginning in 2021.  This funding peaked in 2024 at $9.2 million and the total amount of these funds utilized will continue to decrease through 2026 when they will all be spent.  In addition, the State of Wisconsin permanently increased local government funding in 2024.

Proprietary Funds

All three utilities enjoyed a 2025 surplus and have Adjusted Balances (current assets- current liabilities net of unspent bond proceeds) that are adequately funded.  In fact, they are over-funded as all 3 funds are building balances to be used to cash finance upcoming capital projects.

Approximately half of the Water Utility’s $5.3 million increase was driven by asset growth while the remainder was driven by net income.   $3.1 million of this asset growth was related to the on-going construction of the west-side pumping station which was recorded as a revenue as it was financed by Federal COVID response American Rescue Plan grants and considered “contributed capital”. 

The Sanitary Reserve was budgeted to surplus by $2.3 million as it builds up a cash balance as described above.   The additional $0.6 million in surplus was generated primarily by better-than-budgeted interest earnings that resulted from higher than assumed short-term interest rates.

Storm exceeded its budgeted surplus by $1.6 million.  This was made up of $0.4 million of revenue exceeding budget targets due to interest earnings as described above and higher than projected rate revenue.  The budget also assumed $700,000 in cash financing of capital; however, since this is a non-GAAP expense, it was not shown as an actual expense.  It will be reflected instead over time through depreciation expense.

Another important indicator of proprietary fund health is annual enterprise income over time. The chart below displays inflation adjusted operating income for our three utilities.  All three utilities posted positive net income over the past 5 years.

The Water Utility shows a steady increase beginning in 2022.  This is due to a 30% rate increase in 2023 that was intended to provide sufficient operating income through approximately 2028.  The Stormwater fund shows a fairly flat level of net income with no notable commentary.   Sanitary on the other hand shows a downward trend.  This is driven by a health fund balance (as discussed above) that allowed for three consecutive years of a rate freeze beginning in 2023.

General Fund Budgetary Highlights

Differences between actual revenues and expenses and the final amended budget resulted in a positive revenue variance of $11,111,182 (13.9% of the original budget) and a negative expenditure variance of $8,333,011 (-10.5% of the original budget) including transfers.  The following explains these variances:

General Fund

The General Fund, ended the year with a $2,778,170 surplus which equates to 2.7% of total budgeted expenditures.  The tables below provide detail by expenditures and revenue categories.  In general, the $10,000,000 settlement with Froedtert caused significant revenue and expenditure variances and “static” in the year-end results that requires some explanation.

General Fund Revenues

In total, actual general fund revenues were 113.9% of the original budget, a surplus of $11.1 million.   This is broken down by revenue category below.  The graph below uses a “stop-light” formatting to indicate which revenue categories exceeded the revised budget (green), were within 90% of budget (yellow) or were less than 90% (red).   Also included is a comparison to prior year actuals.

“Taxes” is not a category that typically varies from budget however “chargebacks” are considered a tax and made up 99% of the variance.   The chargebacks were revenue received from the other taxing jurisdiction for their share of the Froedtert settlement.

Building permits drove the 23% revenue surplus in category 03 despite the value of building construction being down 37% year over.  This is due to timing issues - the Medical College and Three Leaf projects construction value was counted in 2024 but the revenue was earned in 2025.   If you average the construction value over those 2 years, it equals $139 million which slightly below average ($146 million). 

Shortfalls in Court Penalties drove the 9% deficit in Law and Ordinance Violation revenue.   We earned $349,462 of a budgeted $481,000 as we continue to feel the effects of past and current police vacancies.  This was consistent with 2024.  Notably, Parking Violations exceed budget by 11.1% and was $42,327 over last year, despite having parking checker vacancies in the fourth quarter.

Federal and State Grant revenue surplus is for grants received that were not known at the time of the adopted budget and are offset by expenditures so they have no impact on the net surplus.

 “09-Interest” was at 111.3% of budget with a $2.7 million surplus.  Approximately 23% of this total, $619,000, were real gains.  This surplus was driven by higher than budgeted interest rates.   The 2025 budget assumed 125 basis points in cuts in the Fed Funds rate as compared to the actual 75 basis points. The City has held larger balances of liquid investment as it was anticipated that higher than usual

cash balances would be needed to cover the Froedtert property tax settlement and increased

cash financing later in the year. That, plus the lack of rate cuts contributed to the surplus

earnings in the liquid portfolio

The required mark-to-market adjustment increased the surplus by another $2.1 million.  As interest rates decrease, bond prices increase so the City’s portfolio now exceeds its par value by $1.3 million.  So long as the City holds its investments to maturity, which it has sufficient cash to do so, those paper gains will not be realized (just like our paper losses in 2022 and 2023 were not realized).  Due to the volatility of the mark-to-market adjustment made annually as of 12/31 and its non-cash nature, the City does not budget for it.

The chart below shows the historical changes in value due to the mark-to-market.

Finally, transfers were short of budget by 10.2% however, there are mutiple moving pieces.  All things equal, revenues should be short by $4,000,000 (as would be expenidtures) as a result of the Expenditure Restraint state aid contigency which is a budget-only figure.   However, $3.55 million was transferred from the General Liability fund to the Genearl Fund to cover the City’s portion of the Froedtert settlement.  So the only material impact on year-end surplus among the transfers was the $129,000 shortfall in the transfer from the Water Utility - this is a payment in lieu of taxes and the budget assumed a higher tax rate than actual.

General Fund Expenditures

In total, General Fund expenditures exceeded budget by $8.3 million, which represents a 10.5% variance of budget.   This large variance was driven by the Froedtert settlement as well as the Medical College property tax court judgement which will be discussed more below.

The City saw a 1% deficit in wages as overtime overages exceeded salary savings in both the police and fire departments.  Positively for the Fire Department, year-over-year overtime was down $158,824 and as can be seen in the graph below, the department was successful in managing the overtime by avoiding summertime spikes as had occurred in prior years.  This was done primarily by proactively limiting overtime call-backs which did have an impact of staffing a fire apparatus with 3 instead of 4 firefighters more frequently. Overtime was driven by vacancies and paid time off.  The department ran a 5% vacancy rate in its union positions, the equivalent of 4.0 FTE.  However, vacation payouts limited the associated salary savings to offset overtime.  Offtime (sick and vacation) was also a significant overtime driver.

Police overtime was driven more largely by staffing shortages.  In fact 44% of total overtime was due to patrol and dispatch vacancies.  The table below produced by the police department below shows that shift shortage is due to vacant and inactive positions (primarily military and workers compensation leave) which peaked at 25% and remained elevated at year-end.

The benefits category exceeded budget due to pension and social security costs being calculated as a percentage of pay. 

“Operating Expenditures” greatly exceeded budget as the Froedtert settelment ($10.0 million) and the Medical College judgement ($2.1 million) were incurred in this category.  As described under “Revenues”, the Froedtert expenses was offset by chargeback and contigency revenue.  However, due to the timing of the Medical College judgement which was paid after Oct. 1, that chargeback revenue will not be received until February 2027 so accounting rules prohibited recognizing it in 2025.  Were it not for these expenses, we would have realized a small surplus in this category.

The surplus in “Other Expenes” was driven by a favorable timing issue in the police department budget related to the body worn camera and taser contract.

“Interdept Charges” 10% surplus was driven nearly entirely byPublic Works operations and Engineering billing more time than budgeted towards capital projects (as opposed to their operating budgets).  This is a positive development and both departments should be commended.

“Capital Improvements” deficit of  $606,682 was driven by an expense of a $988,506 for a Subscription Based Information Technology Arrangment in the police department.  This was offset by projects funded by the vehicle registration fee that will be completed in 2026.

$4.0 million of the “Inter-Fund Transfers” surplus was offset by the revenue deficit related to the Expenditure Restraint Aid contigency.  The majority of the remainder was due to utilizing unbudgeted bond premium to pay for a portion of debt service which would have otherwise been paid for with property taxes.

Significant Capital Asset and Long-term Financing Activity

Capital Assets

The City of Wauwatosa net investments in capital assets for its governmental and business-type activities as of December 31, 2025 increased $15.3 million to $250 million. This investment in capital assets includes land, buildings, sewer and water main improvements, machinery and equipment, parks facilities, roads, and bridges. The increase in the City of Wauwatosa’s investment in capital assets for the current fiscal year was 8% for governmental and 6% for business-type functions. The increase for business type functions reflects the continuation of the City’s enhanced capital improvement plan to replace infrastructure (largely roads, bridges and sewer mains) that are past-their useful life or of insufficient capacity.

The City monitors the health of its capital asset investment program by monitoring the net dollar amount of assets added in a given year (Additions-Deletions) divided by the annual depreciation expense.  The 5-year results are displayed below by activity type.   A healthy investment in capital assts should result in a ratio greater than 1.0 (warning line).  The trend for both governmental and business type activities since 2022 has been upward with the governmental investment ratio exceeding 1.0 in 2025. 

2025 represents the largest nominal amount of capital additions in the last 15 years for which the City has data available.  However, this is skewed by the addition of the new $4.2 million Firefly Grove park and $4.0 million renovation of the Muellner Building in Hart Park.  Both were funded with American Rescue Plan funds.  Removing Firefly Grove as a new asset (not replacing a current asset) still maintains a 2025 ratio of 1.52 - above the warning line.  Despite this one-time revenue funded improvements, the City had its single largest amount of infrastructure additions during this 5-year period. This $8.0 investment included $3.2 million in street improvements, $1.6 million in street lights, $1.5 million in sidewalks and $1.1 in fiber optics.

The 145% increase in net Business Type Capital Assets was driven by $11.3 million in net stormwater infrastructure projects that were largely bond-funded and replacement of existing infrastructure.  This included the $5.5 million Potter Road storm sewer and $4.6 million Watertown Plank storm sewer projects which greatly expanded the capacity of that sewer shed.    $5.8 was also spent on water utility infrastructure projects, the most significant being the water main improvements as part of the North Avenue project from Mayfair Road to the Menomonee River.

The City also monitors capital investments by the linear feet of roads paved and utility mains replaced.  The 5-year trend as tracked in the statistical section is shown below.   Feet are reported in the year they are actually paved/replaced as opposed to the table above which shows when the asset is capitalized.  This timing difference could be contributing to the downward trend.  In addition, the stormwater projects described above were of limited length but dramatically increases in the size of pipe which could also be driving the discrepancy in the two charts.

Additional information on Capital Assets can be found in note 4E on pages 39-40 of this report.

Long-term Financing Activity

At the end of the current fiscal year, the City of Wauwatosa had total net general bonded debt outstanding of $144.1 million which equaled 1.4% of equalized value.  This includes all General Obligation Debt and Bond Premium and is net of net position restricted for debt service.  Please see the statistical section for annual comparisons. During 2025, the City of Wauwatosa issued $26,635,000 in General Obligation bonds for street, sewer and water main improvements.  The City maintains a “Aaa” rating from Moody’s for its general obligation debt.

The City’s level of debt remains manageable as shown in the table below showing governmental funds debt service (including tax increment districts) as a percentage of total governmental fund expenses and transfers out. This ratio remains below the 15% warning line and has been on a downward trend since 2023 as debt service remains relatively flat while expenditures have increased.  

State Statutes limit the amount of general obligation debt a government entity may issue to 5% of its total equalized valuation. The current debt limitation for the City of Wauwatosa is $506,114,720 of which the City has utilized 29% for its current outstanding general obligation debt.

Another way to measure the impact of outstanding long-term financing activity is per capita and as a percentage of personal income as show below. While the amount of outstanding debt (including all of the types listed in Schedule 10 of the Statistical Section) has risen per capita over the past 5 years (red line), it has grown slower than personal income (blue line) suggesting manageable levels.

The remainder of the City of Wauwatosa’s debt represents bonds secured solely by specific revenue sources. The Wauwatosa Water Utility has outstanding debt of $28,150,000 of which $7,315,000 are revenue bonds. The Water Utility maintains an Aa2 rating from Moody’s.

An additional long-term liability important to monitor is the City’s “Other Post-Employment Benefits” (OPEB) liability which is made up predominantly of paid retiree health insurance.  The table below shows the liability, which is $37.1 million in 2025, as a percentage of covered payroll.  Through a combination of ending the benefit for non-represented employees, transitioning to a defined contribution program for new public safety employees and aggressive claims management, the City has managed to reduce this liability from a peak of 238% of payroll to a low of 91% in 2025.

C.                     Strategic Plan (Area of Focus)

Priority Area One:  Economic Development and Financial Resilience

D.                     Fiscal Impact

For informational purposes only

E.                     Recommendation

For informational purposes only