The City of Cambridge’s finances earned the highest possible rating this year, with independent auditors reporting that the city’s budgets, grants and financial practices are in strong shape, according to a recently-completed audit.
At the Dec. 8 meeting of the City Commissioners, Audit Manager Ryan Taylor of the PKS accounting firm walked officials through the results. He said Cambridge received a clean, or unmodified, opinion on its fiscal 2025 financial statements, essentially confirming that the city’s books are accurate and well managed.
Because Cambridge spent more than $750,000 in federal funds last year, auditors also performed a separate review of how the city handled that money. Federal spending exceeded $6.1 million, including grants for pandemic recovery and flood protection. PKS found no compliance problems or weaknesses in how Cambridge tracked or reported those funds.
Strengthening the General Fund
The city’s main operating fund ended the year on solid footing. Revenue came in at just under $17 million, slightly above budget and about $400,000 higher than last year. Spending totaled about $17.1 million, and a planned $300,000 transfer from the special projects fund helped support operating costs.
The city’s financial cushion of reserve funds continued to grow, Taylor said. At the end of the fiscal year, the general fund held about $16.3 million, including money set aside for emergencies, debt payments, waterfront litigation, shoreline protection and routine budget support. The unassigned portion, essentially the city’s rainy day money, was about $8.4 million.
Altogether, Cambridge now has the equivalent of nearly 11 months of operating expenses in reserve. For comparison, national finance experts recommend having at least two months. The city’s overall fund balance has also risen significantly over time, increasing from about $5.7 million in 2020 to more than $14 million in 2025.
Grants Driving Major Projects
Much of the city’s capital improvement work is supported by state and federal grants, which are tracked in the special revenue fund. In 2025, Cambridge received about $8.6 million in outside funding. Major contributors included American Rescue Plan (ARPA) pandemic relief, Community Development Block Grants (CDBG) in Cannery Park and Pine Street, Federal Emergency Management Agency (FEMA) flood mitigation assistance and grants for habitat restoration and stormwater upgrades.
Other grants supported downtown revitalization, demolition work, Boys and Girls Club improvements, Race Street property upgrades and shoreline and drainage projects. Many of these initiatives remain under construction and will later convert into long-term assets.
Cambridge originally received about $12 million in ARPA funds. The city spent just over $2 million last year and had roughly $2.5 million left at the June 30 deadline for obligating those dollars. All federal timelines were met.
How the Water, Sewer and Marina Funds Performed
The city’s water, sewer and marina operations function like stand-alone businesses funded by user fees. Auditors reviewed each one and noted that required accounting rules temporarily distorted salary numbers, though actual staffing costs were consistent with previous years.
Water Fund revenue held steady at about $2.5 million, supported by stable usage and newly reinstated impact fees. Operating income reached about $812,000.
The Sewer Fund generated about $5.8 million in revenue, helped in part by new development along River Marsh. Operating income came in just over $900,000.
After shifting to city-run operations last year, the marina posted an operating loss of about $536,000, largely due to increased staffing and accounting adjustments. However, state waterway improvement grants and interest income offset the loss and produced an overall gain.
Across all three enterprise funds, Cambridge holds about $48.4 million in long-term value, mostly tied to infrastructure. Each fund also met or exceeded recommended cash levels needed for daily operations.
New Accounting Rules and Next Steps
This year’s audit included a new requirement to track unused sick leave, which added about $967,000 in reported obligations across city departments.
Commissioners thanked the city’s finance staff for keeping up with daily demands while assisting auditors. Taylor also praised city employees for their cooperation. With the PKS audit contract expiring, City Manager Glenn Steckman said the city will soon review options for future auditing services.
Write a Letter to the Editor on this Article
We encourage readers to offer their point of view on this article by submitting the following form. Editing is sometimes necessary and is done at the discretion of the editorial staff.