Orem council approved moving $3.68 million to capital projects after the fiscal 2025 reserve finding

In February 2026, Orem's finance staff proposed moving $3,680,788.60 from the city's general fund into its capital improvement projects fund, according to the council's Feb. 24, 2026, agenda packet. ^[2]

The proposal followed the city's fiscal 2025 audit, which reported that the general fund's balance exceeded the state limit. ^[1]

What the audit said

Larson & Company's fiscal 2025 state compliance finding, in reports dated Nov. 21, 2025, cites Utah Code 10-6-116(2), which limits a city's general fund balance to 35% of the fund's total revenue. ^[1]

The finding gives a maximum of $30,563,646 and says the city exceeded it by $4,072,195. ^[1] It lists an unassigned balance of $26,559,579 and an assigned balance of $9,713,187, which add to $36,272,766, and gives the total as $47,593,378. ^[1]

The auditors wrote that money set aside for future capital projects had not been transferred out of the general fund by year-end. ^[1] The city responded that it "will be including a budget amendment in FY 2026" to transfer enough from the general fund to the capital projects fund. ^[1]

What the February packet proposed

A note in the packet says that after the city completed its fiscal 2025 annual report and calculated the state maximum, "the City exceeded the maximum allowable amount of 35%." ^[2] It continues: "Therefore, the City is required to either spend or transfer $4,100,000 by the end of the current fiscal year." ^[2]

The note says staff had identified projects that could be paid for with the excess, "as well as an operational need for dispatch services." ^[2] Because the projects might not be finished by the end of the fiscal year, it says, the funds "need to be transferred to the Capital Projects Fund so that the funds will be available when the specific projects are identified and receive approval to proceed." ^[2]

The note says that with the transfer, the general fund balance "would fall below" the state maximum "and the City would then be in compliance." ^[2]

The packet's Exhibit A lists a general fund expense of $3,680,788.60 labeled "Cont. To - Fund 45 - CIP" and a matching revenue line in Fund 45. ^[2] On the general fund's revenue side, it lists $3,645,000 labeled "App. Surp - CIP Projects" and $455,000 labeled "App. Surp - Operations," which together equal $4.1 million, along with $35,788.60 in donations for a Gold Star Family monument. ^[2]

The packet's $4,100,000 figure differs from the audit's stated excess of $4,072,195. ^[1][2] The packet does not explain the difference.

The vote, and what isn't known

The ordinance in the February packet was an unnumbered draft with a blank vote record. ^[2] The signed version, Ordinance O-2026-0004, says it was passed and approved Feb. 24, 2026. ^[4] Its vote sheet marks all six council members, Jenn Gale, Chris Killpack, Jeff Lambson, Quinn Mecham, LaNae Millett and Crystal Muhlestein, voting aye, and Mayor Karen McCandless also voting aye. ^[4]

The signed ordinance's Exhibit A lists the general fund expense of $3,680,788.60 labeled "Cont. To - Fund 45 - CIP" and the matching capital projects fund revenue line. ^[4] The ordinance says it takes effect upon publication. ^[4]

The records reviewed do not show whether the transfer was posted before June 30, 2026, or what the fiscal 2026 audit will conclude.