Finance staff delivered the city’s FY2026 first‑quarter financial report and responded to detailed council questions about timing, one‑time receipts and apparent deficits.

The report showed a number of timing and one‑time variances: a $325,000 receipt described as state unclean property revenue and about $411,000 in insurance recovery from the demolition costs tied to the Sylvia School fire, which together made the miscellaneous revenue line look unusually high for the quarter. Staff cautioned the council these receipts are nonrecurring.

Councilors devoted the longest questioning to health‑insurance expenses and their effect on net school spending. One councilor summarized the concern: the school department’s healthcare projections were exceeded, triggering large transfers into the health‑care trust fund. Finance staff said the city transferred approximately $7 million from free cash into the healthcare trust fund during the prior year to cover the shortfall and that the $5 million figure frequently cited as the FY25 net school spending overage is tied to health‑insurance credits and reporting conventions that had not historically been applied the same way. “The money’s already gone,” the director said, and staff promised a detailed plan and clearer documents at the next meeting.

Councilors also pressed on several enterprise fund items that looked out of line on the snapshot: EMS enterprise fund timing made the year‑to‑date deficit appear $1.6 million (staff said this reflected front‑loaded lease and insurance payments), and the sewer enterprise fund reflected a roughly $2.7 million deficit that staff attributed to debt‑service payment timing. Staff repeatedly described the book’s presentation as subject to cutoff‑date timing (the report captures activity through Sept. 30) and pledged to provide comparative, trend‑style reports and reconciliation notes so councilors can judge whether figures reflect timing or structural shortfalls.

Other items: councilors asked about SAFER grant timing (federal government shutdown delayed award notices), MSBA school project reimbursements (staff said final MSBA vote and payment were expected on a December agenda with receipts by January or February), and a request for a clearer breakout of inactive capital projects and bond/reimbursement status for the Kathy Assad tot lot, where councilors expected a CDA reimbursement to lower net city bonding needs.

What’s next: Finance staff promised to supply the council with explanatory backups — year‑over‑year trend lines, Gallagher reports on health‑insurance performance, exact accounts for the Sylvia School receipts, a reconciliation of inactive projects and a firm timeline for MSBA reimbursements — before the next quarterly update.