Heather Bell
RADFORD – The Virginia Auditor of Public Accounts has decided the City of Radford “meets the criteria for fiscal distress under the Commonwealth’s early warning system.”
“City leadership appreciates the collaborative and transparent process conducted by the Auditor’s Office and welcomes the opportunity to continue working with state partners to strengthen Radford’s financial position and ensure long-term stability,” reads a written statement from the City of Radford.
In the VAPA letter to the city, it notes the city’s overestimation of revenues over multiple budget cycles has been a notable reason for the fiscal distress.
“During the Office’s 2025 monitoring process, we noted that the city’s ratio analysis showed further downward trends and cumulative ratio points exceeding our established evaluation threshold,” it reads. “In addition, the Office evaluated other external factors and qualitative indicators for Radford related to ongoing fiscal issues and budgetary challenges, including risks related to the city accumulating unpaid liabilities to American Electric Power (AEP) for its wholesale purchase of electricity and recent budgetary challenges attributable to overestimated revenue projections throughout multiple budget periods.”
“Based on the Office’s review and discussions with city officials, we observed two primary conditions that indicate the city’s situation meets the defined criteria for fiscal distress,” the VAPA report notes. “The first condition relates to Radford’s challenges with sustaining a structurally balanced budget, driven by shortcomings in revenue projections and uncertainty in billing and revenue collections. Radford officials communicated that during the fiscal year 2026 budgeting process, they identified inaccuracies in the city’s revenue estimation process, resulting in overly optimistic revenue projections throughout multiple prior budget periods. City officials have since implemented changes to reflect more realistic and conservative revenue projections that exceed planned expenses, along with measures to increase tax rates and utility fees and reduce overall spending.”
“Radford officials indicated that the city manager and finance department face limitations in effectively monitoring billing and revenue collections and obtaining necessary revenue data for budgetary estimates,” it continues. “These limitations relate to the city’s organizational structure, as billing and revenue collection responsibilities fall under the purview of the independently elected treasurer, whose office operates on an older, standalone financial system. City officials noted that ongoing efforts are underway to transition the treasurer’s office to the city’s modern financial system.”
According to the city’s statement, city staff “has already taken proactive steps to address the challenges identified in the report,” including engaging The Berkley Group to provide consulting services focused on improving financial operations and long-term planning.
Radford has also contracted with Brown Edwards to conduct forensic audit services, enhancing financial transparency and accountability and “has strengthened its financial leadership team” by hiring Chief Financial Officer Trish Cox, Assistant Finance Director Diane Newby and Accounts Payable Clerk Kathryn Woodyard.
Other notable changes according to the city’s statement include:
The City Treasurer and Commissioner of Revenue Offices are in the midst of migrating their financial operations to Munis, the city’s Enterprise Resource Planning (ERP) software, which will improve financial reporting, internal controls, and coordination across departments.
The city has implemented improved and more conservative methodologies for revenue forecasting to ensure more accurate and sustainable budgeting practices moving forward. In addition, the city has made measurable progress in addressing its obligations related to wholesale electricity costs.
“At present, Radford has reduced its outstanding balance with American Electric Power (AEP) from six months to three months, reflecting ongoing efforts to stabilize the city’s electric fund and meet its’ financial commitments. City officials remain fully committed to resolving structural budget challenges, improving operational coordination, and ensuring the long-term sustainability of municipal services.”
“The city also supports the Commonwealth’s consideration of targeted assistance and advisory services, which will complement the actions already underway. The city will continue to provide updates to residents and stakeholders as additional progress is made.”
