Mhm.
» Mhm.
» Um So, the budget budget at a glance, I
think that's the second slide down there. Total revenue all funds just over
9 million. Total expenditures all funds is just about 8.9 million. Total net
position across all funds is $108,000 that we're adding.
Um you could slice and dice that different ways. General fund, water and
sewer, we'll kind of get into those those details there. Uh Carly Allen
mentioned the the combined tax rate 72.24
cents up from 63. Uh the reason why that went up is because your taxable values
decreased significantly. So, looking at the uh truth and taxation worksheet,
which is in here last year's taxable values were 588
million. Uh and this year's taxable values were
about 518 million. So, you lost about 11 to 12%. Just on the taxable values,
which is, you know, when the taxable values come down, your tax rate goes up
cuz it's no new revenue to the city, right? So, your revenue's got to remain
the same. So, that's the only way the math could work.
Um So, that's kind of the reason why yes,
the tax rate's higher, but like Carly said, it's it's $5 more on average per
household. It's really not that much of a change.
» [snorts] >> Um
Debt service, which I'll get into, $142,000
this year upcoming, and then the total FTEs are 36.
All right, we go to uh next slide here. It's just kind of a bar chart on or bar
graph on the revenue versus expenditures. Uh you can see the general
fund is the largest operating fund that we have.
Um it's more than half of of what water and sewer is and then the marina fund
and the capital fund. We're good?
Okay.
So, uh general fund, the largest part of
that revenue is is the property tax. Um I know we don't have a huge sales tax
base here in this city. Um so, it's just all all bedrooms, all property tax
really that's paying for the majority of the budget
uh itself. So, that's that's what makes up a lot of the revenue.
It's good. It's good. Sounds good. Uh
next slide over there um is this the property tax rate which we talked about.
So, yes essentially 12% 13% up on the rate 12% down on the on the taxable
values. Kind of math makes sense. It's just
the way it kind of looks is you look like you're raising the tax rate a whole
lot but it's really really not um depending on what size the house is.
Uh I did want to like highlight the attention. Yes, we don't have our audits
done. Yes, we cannot go to the voter approval rate but you could see right
down here the voter approval rate would have been 75 cents or so. So, you would
have about 3 cents to play with um
to hit that voter approval rate and I don't know. I don't see the de minimis
on here. I can't remember if the de minimis was
you know, what whatever that tax rate is but it's half a million dollars more uh
to the city if you go to the de minimis rate. So, those are options we're going
to hope to have uh not necessarily implement but options
hope to have in the future when we get these audits caught up.
All right.
Next slide is debt service uh and fund balances. So,
the debt service uh I kind of wanted to touch on. We got that one bond, the 2021
CO. Um
the tax rate's only a couple cents that makes up the the INS.
So, as we move to get the audits done, you're going to have a lot of
flexibility or capacity down the line to actually maybe issue debt without
affecting the tax rate a whole lot, or there's going to be real transparency on
how we go forward if we want to issue debt.
Um So, I don't know
what the general feel of council is here cuz I haven't really been here long
enough about issuing debt. Um what I will say is I've been I've
been to a few councils that are heavily against issuing debt. And I've kind of
told them like, "Hey, the property owners now are paying
the taxes for the benefit they're receiving. If you're going to continue
to save cash, your property owners now are paying for somebody else to receive
the benefit. So, debt is essentially not a terrible thing as long as you control
the tax rate. Um but that's just kind of one way I put it. And hopefully, we're
going to have a little flexibility into the next year on that INS tax rate.
Uh you can see the fund balances over there. General fund, 1.16 million. And
the INS INS fund's about 38,000. Uh like Carly said, general fund's still
healthy, but obviously working towards the target there to get it higher.
Um and I I think really with the revenues
and the expenses, I really think it could be a cop pushed pretty pretty
quickly. So, and managed.
Uh into a little more detail, uh the general fund overview.
Uh 5.1 million in revenue, 5.1 million expenses, about 24,000 positive. Really
tight, but I think uh you know, the departments and everything working
together is really kind of manageable to get this thing to a balanced budget. Um
I know on our side, we feel pretty good about it.
Uh and I I I hope you guys, as you go through the details, you'll feel good
about it, too. So, it's balanced not really spending
more than we're taking in and we feel pretty good about the
general fund.
A little more detail on the next slide. Uh
by department >> [snorts]
» So, you'll notice administrative services is the largest department that
we're spending our money on. It's kind of a little bit skewed this year cuz I
will tell you in the past you have separated out city manager, finance,
city secretary, HR into all these different departments.
This year we combined them all into one administrative services department. So,
while it looks like it's the largest piece of the puzzle and it is,
it might not have looked that way in the past to you
because it was all separated out. Um
and then your police and fire are next in line and public works. So,
it's kind of just kind of wanted to touch base on on
how we're going to try and combine things and and
be a little more streamlined that way instead of having to separate every
detail out between every person essentially.
» [snorts]
» Uh next slide is proposed staffing. I know we went we had 35 FTE last year.
We're going to add one this year for 36. So,
I think that is in administrative services, correct?
So, >> [snorts]
» and I think last year public safety was all kind of shared and mixed in and
trying to break that out as best as possible between PD and fire department.
All right. Next slide [clears throat]
is the enterprise and the other funds. So, you'll notice the water and sewer
fund pretty balanced. I know we didn't do anything with rates this year.
Correct Correct me if I'm wrong, but I know I talked to Karen a little bit
before I came. Nothing with rates that we're changing.
Uh the marina fund does have a big capital project
budgeted this year. Um however, I they're sufficient I don't
think I know there's sufficient fund balance and cash in that fund to pay for
that. So, we're drawing down the fund balance in the Marina fund to do the
capital projects necessary uh in that fund.
» [snorts] >> We also have another capital improvement
fund uh which can be used for various things that we're going to transfer
$456,000 into.
Um, and whether or not we come back with amendments throughout the year to spend
that money, uh there's going to be money set aside for capital projects in the
future. We also have some internal service funds
for technology and fleet. Um, they kind of handle that.
Wastewater [clears throat] fund's not really much, but $76,000.
We have $100,000 budgeted in the drainage fund for projects.
Um, and then your other little funds, hotel
occupancy and consolidated court. So, >> [cough]
» all in all, the the biggest driver of of maybe bringing down the surplus more
than we're adding to it are the capital projects for drainage and the capital
projects in the Marina fund.
So, next slide is the transfers. Uh we try
to be real transparent with how we're moving money between funds and
appropriately funding things. Um, so water's paying a franchise fee to
the general fund. Uh Marina's paying a franchise fee and
an admin reimbursement. So, we try to really break those out and uh
let everybody know real transparent how much money's moving between funds.
So, uh real common to have the franchise fee
for the water. If somebody else did the water and not the city did the water,
they would be paying you a franchise fee. So, it's real common to actually
have have a franchise fee come over.
Transfers out of the general fund, like I said, we're going to the capital
improvement projects 456,000. And then the technology and fleet, we
transfer money to those internal service funds to fund those services that they
provide to the city.
All right. Uh next slide is the capital improvement
plan. Uh I know Carley said she's been here 51 days. I think we're going to
start digging into this as we as we go on.
But put together something at least something that's in the air, something
that's here uh that we can maybe have a little road
map. But I know as we get into this we're really going to start to dig into
what needs to be done on the 5-year horizon, how we're going to fund those
things. Uh it's important to have a plan as you go down the line, right? Whether
it's issuing debt, getting grants. Um there's so many so many things when
you have a plan in place uh and a 5-year plan is is really
essential to to do that. So.
And then really, you know, Carley touched on the adoption timelines and
next steps. Um September 8th is really the big day, right? You're going to
adopt the tax rate, adopt the budget. Um and really in between then and now, if
you have questions on the line item details and stuff like that,
more than happy to send them to Carley. We're more than happy to answer anything
and dig into details. Um
you know, this is kind of a kind of an open forum, right? Dig into
your budget, ask questions. Um happy to happy to answer them.
So.
That is kind of the overview presentation. Do we have any questions
on that?
» I have a question of it's probably obvious but it escapes me.
The marina fund it looks like there's twice as much
expense for the capital requirements as the money available.
Am I reading that wrong? >> I had the same question.
» Which which which number? >> Marina fund.
» The marina fund. That's the question that I asked Karen earlier and she
provided me with an answer. So the marina Fund, yes, it looks like that
because we're actually having to do those refloats. And that is not covered
with revenues from this year, it's covered with revenues from last year.
So, it looks in this budget like it's more expenses than revenues, but it's
» The money is there. >> The money is there in the reserve fund
for the marina. It's in the fund. And it actually leaves a healthy over a million
dollar balance in there as well. It allows us to continue the marina
operations if we do those refloats by October 28th, then the Army Corps of
Engineers is satisfied.
» Makes them happy. >> It does. Yes, sir.
» Very good.
What have you got? Now's your chance. >> Yeah.
We're here. I'll I'll I know it was a lot probably to take in on the
presentation. So, that's why usually we're like, "Hey, you
got any questions afterwards, let us know. We'll
we'll be happy to >> one to the manager. Um what's the
additional full-time position we're contemplating?
» The The position is actually a It's a partial reallocation of uh
a three I don't know how to describe her. It was
a woman named Ms. Tolman, and she had three positions: HR, CFO, and Assistant
City Manager. We're allocating one of those positions to a Planning and
Economic Development. So, they'll be over city plans, permits, plats, plan
reviews, working with Sit Cog, and also working with our EDC, and uh all of our
city plans, like our strategic plan, capital improvement plan, comprehensive
plan, and work plan. >> Thank you, ma'am.
» You're welcome. >> So, if
she's gone, and [clears throat] we're hiring the city planner, how does that
make for one new position? Wouldn't that just be a replacement of
» No, Mary had three positions, so it's it's it's a lesser paid position.
» Okay. Okay.
» Really, the money still works cuz we're not as expensive as a full full-time
FTE, so >> Yeah. Yeah.
» That's kind of how the money hopefully will work.
» Can I just say I wanted to be a positive person for a moment? This is the easiest
budget we've ever had in 3 years to look at and actually
decide for. So, thank you. >> Okay.
» This process is a breath of fresh air.
» So, I I just um I think I understand this, but I'd like to confirm on the
slide on general fund by department. Um administrative services is is definitely
the largest portion [clears throat] of that. So, in the past um
some of the city manager, city secretary salaries went into those other funds.
So, will the this is just showing all of their salaries and then we'll be pulling
out some to pay the other funds for the city secretary and city manager's
positions and jobs uh working in that area.
» So, are you are you saying typically if there's like an EDC or an enterprise
fund that a city manager or an admin staff member
services >> Right.
» that fund will have a contribution into the city general fund.
» and that's what I was asking. Yes, and that's what's So, it's it's said it
looks a little different this year, but it's really the very same thing. It's
how it's set up, so you can see it. >> So, they have streamlined it to where
administrative services is basically everyone else that's not the PD, Marina,
and fire and public works. So, it it is much more streamlined for ease of
reference. >> Okay.
And I know there were a few like specific line items. I know we increased
legal, one of them, right? Um so, that's in the administrative um
There was audit fees broken out uh cuz is probably going to have to pay for two
audits next year. Right? The 25 and 26 to get that done.
So, there were some costs that added up in that administrative department that
maybe, you know, were a little different than than the prior year, but
um overall, apples to apples, line by line, I mean,
you know, your postage, your telephone, your cell phone, that stuff stays
relatively the same.
» Okay.
» Anything else, council? >> So, will we see all those line items or
will we not? Is that what this is?
» Yes, ma'am. You have a full budget in your packet. So, it's in It's in this.
» So, after the slides? >> Yes. You have the full budget.
» Okay. >> And this is
» I see it. I see it. That Did that That didn't get sent to us
in the >> It did, yes, ma'am.
» Oh, it did. Okay. I did. >> Yes.
» I missed it. >> It's all your line items and um
» Okay. Very good. >> It's the good stuff.
» It's all the details. >> the good stuff right there.
» Okay. Oh, yes, they
» I did I did want to touch on like the truth and taxation worksheet, though.
Um you know,
I'm just thankful y'all don't have any any TURs or anything like that um
because it becomes real muddy and real complicated real fast. Um so, yours is
pretty cut and dry. Um
and but I don't see like any you know, do we have over 65 stuff?
Do we have exemptions and stuff like that? So,
as we come back to the table next year, I think those are also things that
need to be talked about and addressed going forward with property tax. Um cuz
there are some things you can't do uh as far as that.
» Do we have to be up on our audits before we can do some of those things?
» Um as far as like giving exemptions, probably not, but raising the tax rate,
yes.
» I thought there were sources of money um
» Yes, sir. >> to cover exemptions.
» There are some sources of money you can apply for to to cover He's talking about
when we lose money to the military exemption and things like that.
» Oh, yes. >> Morgan's Point Resort does not qualify
yet, but we are looking into that legally.
» Thank you. >> That is a good point because we went
through that Yes, down the road, so Um, yeah.
We'll be working on that.
And I didn't know like while I'm here if there's any specific line items in the
past that have, you know, brought concern or anything, I'd be
happy to look at them. Um, I didn't, you know,
obviously don't know what's happened in the past here too much, but um, any line
items or any hot points that are talked about, be happy to
try and work through those, so.
» And I'd like to thank Doug and and Karen again. Um, we have worked around the
clock on this to make it as simple as we could and my instruction was to make it
very elementary. It was It seemed very, very confusing and complicated the last
couple years. Um, looking back at those, it was very hard for even us to
understand and unravel. So, our goal is transparency first and foremost. Um, and
making it readable to the average citizen, not just those that sit on the
dais, not just staff, but to everyone. And so, after tonight, um, the full
budget, the full proposed budget that council is looking at tonight, will be
available through the city secretary's office. Um,
so, and that's every line item and that's every every detail in the most
readable form we could do. So, thanks to again to Doug and Karen for helping me
make that so elementary for us this year.
» Excellent. Now, this I I like how we can easily
compare the last several years, you know, and that's really good.
» Yeah, this is the third or fourth one that we've had. What
is How many years for us now? >> I don't know. I
» It's like our third or fourth, and this one I can actually understand without
having to try to decipher and pull out an abacus and
so I do appreciate that. I'll echo what Council has said. Thank you very much.
» I'll also touch on the directors and chiefs.
Uh we were able to give them broken out
spreadsheets to give input to us to input into this larger budget, and they
did a great job. Some of them for the first time seeing it. Uh from what I
understand, they didn't have access to do that before.
Um and they didn't have visibility on what they were providing. It was usually
just a meeting or, you know, kind of cloaked in in a lot of secrecy, maybe.
Um but they they really worked with their
staff and their departmental needs, and they got us what they needed um to
continue operations and to take care of their staff and to make sure Morgan's
Point is served, especially the chiefs, uh both police and fire and their staff.
Um they're they're really made sure that
our safety is uh a top priority, and we were able to cover all of their
operational needs without cutting anything, and also increase retention
and recruitment for them so that they can continue
uh to prioritize staffing for coverage of our our town. So, really thank you a
lot to the chiefs and directors as well. >> Yeah, I know that's something we're
working towards as well for for the department heads is to actually provide
them monthly snapshots of what they've spent, what their budget is.
Um we're trying to work on a forecast. I'm not going to promise anything yet,
where you can actually see going down the next 12 months, you know, where
you're going to be. Um but at least you could see what's
been what's been charged, what's gone into each account, and what's going
there. So, that's something we're working towards.
» That's a great point, Doug. I will say that I was shocked when I got here.
Every single director on staff at Morgan's Point Resort said that they did
not know where their budget was and that they had to ask someone specific where
their budget was or if they had money to buy things as simple as bottled water
for their staff um where they had to file a requisition to do so. I I don't
know if any of that firsthand, but I I trust that all the directors weren't uh
embellishing too much and so that just knowing that we needed to clean that
process up and make it easy for them to read, have monthly updates and awareness
of where their budget is, their staffing and operations and expenditures are. And
also, and I'm going to second Doug here, I'm not going to promise the moon too
quickly cuz we're we are working around the clock to get this done in record
time, but eventually when we're caught up, the city manager's office will be
working with Doug and Karen and we'll put out a monthly budget update. Um and
I'll present those to council. Those will be publicly on the website. Um
So, these are things that are common in the cities that we're used to working
for and with uh that I I was really really important to me to bring that
here. So, that kind of transparency for our citizens on our website as well as
for our council. So, we're working hard to get get that uh something we can
manage here. >> I have a question also about um I I know
we've complained a lot about FundView in the last couple years, rightfully so I
think. Are is this budget done on FundView?
» Uh I will say this.
Doug and Karen have worked with FundView for as many years as it existed. They
have no problem with it because they're experts. They have been able to walk us
through getting this done. Um this budget was actually done on their
software. Uh we do still have FundView currently,
but we are changing back to Incode and that has been budgeted. It simply
doesn't work for our city and our staff cannot figure it out. I have met with
the wonderful staff at FundView many times now
and they're very helpful. Um
and you know, it's just an operational challenge for them. They don't have the
software built out to what we're needing to make it operational and work for our
small city and our staff right now. We may grow into that and their staff has
been wonderful and helpful, but it doesn't fit. So, we are budgeting to
change back and we do have that to in the works probably to come to council in
September for for their decision. >> Thanks.
» And just so you're aware, I mean, we have, you know, we do
20 or so clients on FundView, 20 or so clients on Incode, and whether it'll be
nine or 10, so we got experience with all different kinds of
» It's wonderful. >> Yeah. All different kinds of software,
so >> [snorts]
» no really problem either way. >> A topic for another time probably, but
transitioning back from FundView to Incode, will we have some of those same
hiccups? >> We will not. No one can explain why
those hiccups happened, so no. No one has heard of those before and working
with Doug, Wanda at FundView, and Robin and their team at Incode, um everybody
knows each other, everybody works well, and can switch back and forth with ease.
We'll make sure that the records transition appropriately with all of our
teams. >> Hey.
» Council, anything else?
» Well, from here, I will let Doug introduce Lewis Breedlove, who is with
Brooks and Watson, who is our auditor, and if if everyone will join me to
welcome him walking up to the podium with a big round of applause for him and
Doug. Thank you for completing [applause] the
2024 audit in record time. >> How about a round?
» All right. >> I apologize. I was a little late. There
was a traffic jam
» Thank you, sir.
» I think I sent a PowerPoint presentation.
I don't know if that's available.
Was there Was that PowerPoint available? I can also have it printed out, so we
can just go through utilizing that if that's
Okay. Great. Well,
while we're getting that set up, and I'll just quickly I I know I've met many
of you. You know, we
For the 2024 audit, we did experience delays yet again, unfortunately,
but we're happy to be able to finally get everything needed to be able to
wrap up this 2024 test work, get everything uh
prepared for the report, and have the the letters that come with it ready to
go. Uh so, those that just
got wrapped up this past week. And so, we're eager to jump right into
25, and I know you guys have been kind of knee-deep in budget and and that all
that goes with budget, and so I think as soon as that
I think we're getting ready to step right into wrapping up the next audit,
so we can get the city finally caught up to where you should be. So, I know
that's been long awaited and and eager for you all. Um
but I do I have good news. We did have a
clean report issued this year for 2024. So, I will utilize a PowerPoint
presentation to go over the results of the audit. So, in just inside the front
cover of that report, there's a printed out PowerPoint presentation, as well as
two letters that are required to to be issued with the report.
And we can do and then I can wait for that
PowerPoint if you guys want, or I can we can thumb through the
the the printed out version of it. Um
I know I'd like everybody else to be able to see it, too, but uh um
this one, I'll just go ahead and get started on the just on that first second
page there. Uh um overview of the audit process. So, this
page two of that handout. Um just kind of get the ball rolling on that
presentation. So, we do perform the audit in accordance with generally
accepted auditing standards. And so, those standards require us to do a
number of phases. So, the first phase being the the assessment phase. So, um
even if we've done previous year audit, we always have to reassess where the
city stands that year. Uh so, we we do a number of process walk-throughs,
questionnaires that are completed over each department. Really anywhere where
money's coming in and going out, we're looking to see what are the controls
that are in place, what kind of uh recommendations we may be able to
make. Um And we're also looking at any any risks
associated with with those areas, which brings us to the risk-based approach of
that of that uh assessment phase. So, every line item within the financial
statements has a different risk associated with it. Uh and that can vary
year to year, um just depending on what's going on within the city and the
financials. Um and that drives what type of procedures we perform throughout the
audit, what level of detail we perform those procedures to make sure that we're
comfortable with the material accuracy uh when it's all said and done.
Uh we we also have what we call that the fieldwork phase. So, there's that kind
of includes two components. There's a compliance fieldwork aspect of it. So,
we're uh we're looking at bid requirements. Uh if
there were any grants, making sure that the city's following grant requirements.
Uh public fund investment act. We would review all the city council meeting
minutes. So, if you all may have approved something that has a compliance
component to it, we would look at that as well and ensure that uh the city is
meeting those those requirement uh punch points there. And then we do do actual
what a lot of people call that field work phase over the year end financial.
So, we're performing cut off procedures. So, we're testing activity around year
end to make sure that all the appropriate information has been
properly included in the year under audit or excluded if inappropriately
included. We're confirming with third party
wherever possible. So, comptroller, we're looking at the
assessor collector, banks, anyone that we can possibly
confirm with outside of the city to get a third party source to verify the data,
we we do that. Um and then we're also as we're tying out that balance sheet and
making sure that those are materially accurate, we're also testing those
revenues and expenses to make sure that those are right, uh appropriately coded,
and appropriately and materially reflected within the financials.
Uh then we move into the conclusion and reporting phase, that last phase of the
audit. So, it goes through multiple layers of review to ensure that no
additional testing procedures are needed within the audit as well as all
standards are met within the report. Uh and so the report that we have for you
has been reviewed, all disclosures that are required and the way that those are
should be communicated by generally accepted auditing or
accounting standards are met.
Uh thank thanks so much. Uh Awesome.
Yes, perfect. Thanks so much. So, yes, last three there. Appreciate it. Sorry
about that. Uh so, this is the components of the
audit report. Um Oh, the next next slide. Okay, yeah.
Um so, the components within the report, this is from front to back. It first
starts with the auditor's opinion letter. That's our opinion over the
financials, followed by the management's discussion and analysis. So, that's also
often referred to as the MD&A. It's going to give you some year-to-year
comparison. It punches on a lot of the key areas within the financials or
material areas of the financials. So, it touches on budget activity,
capital, debt related activity, and then highlights any major changes year over
year Um um in that portion of the audit
report. Behind that is your basic financial statements. So, that's going
to include your government-wide full accrual statements uh as well as your
fund level statements behind that. Uh and then the notes to the financial
statements. And so, those notes are going to give you a lot of detail as it
pertains to those financials. Often times when you're looking at those
statements, uh you're often wondering what those numbers actually mean. And
so, those notes are helpful in identifying maybe a breakdown of what
those numbers consist of or just giving language to how those numbers are
arrived at. Um behind that you're required
supplementary information. So, that's going to have your budget to actual for
your general fund for the year. Um and then uh follow that following that is
your TMRS related uh disclosure material.
Um as it relates to that first item, the auditor's opinion, there are four
possible opinion types that we as auditors are able to issue. Uh there's
an unmodified opinion, a qualified opinion, a disclaimed opinion, or an
adverse opinion. Uh and you did receive an unmodified opinion for 2024. That's
uh often referred to as a clean opinion.
It's the highest level of assurance that we as auditors are able to provide what
we hope to provide. And so, we're happy to to say that we did issue a clean uh
unmodified opinion for 2024. So, that's good.
Uh next page, financial highlights, just
real quick, covering some of the the activity year over year. So, this is
just uh hitting on uh the 2024 versus 2023 change in fund balance. Uh so, 2024
uh had a overall decrease in fund balance of 693,000 for your general
fund. Uh which was uh
pretty much in line with what was budgeted. Uh it was intended to draw
down that fund balance. The fund balance had grown quite a bit in the city.
Wanted to utilize that fund balance for 2024. So, that's uh I've got a budget to
actual in here in just a second that we'll see and you'll see that's in line
with with uh what would be expected. Your debt service fund, small change
there of 7,000 increase in fund balance. Uh and then your non-major funds, which
uh is a consolidation of any fund that does not meet the requirements to be be
presented as a major fund. So, uh those would be They're all broken out in the
back for for review. Uh but those are represented as one major grouping on the
front of the non-major funds and had an overall decrease of 367,000.
And those are just utilizing those restricted or special purpose funds as
intended. Uh so, in line with the expectations there, no no concerns for
that drawdown. Uh next,
as it relates to your budget to actual for the year. So, this is just a
summarized version of your budget to actual uh that the So, from right to
left, you've got your variance comparing your actuals for the year, which is that
center column, and then what was budgeted after all any amendments in
that far left column. And so, uh that first line there is your overall revenue
for the general fund had a positive variance. Uh so, more being received
than anticipated by 262,000. Uh so, uh then following that, the total
expenditure line, which is where we generally are mostly concerned with. And
in that far right there, you'll see there's a positive variance there of
86,000. So, 86,000 below budget for 2024.
Uh and then uh your other sources and uses line, uh nothing was budgeted for
that. There's Primarily, that's going to consist of transfer-related activity.
Um and so, we had a positive variance there of 25,000 uh for the year. So, net
total positive budget variance of 374,000 for 2024. Uh so, that was in
good shape. Uh behind Below that is just a a highlight of your unrestricted
portion of your general fund. So, we always want to look to see uh that
number helps to determine the health of the fund balance for for the city. So,
that what this number does uh is this is anything that has not been
restricted within the general fund, and we want to compare that to
your operating expenses for the general fund. Uh this gives us a
a little bit of an indicator or a metric to evaluate whether or not there's
much funds remaining to be able to help in that upcoming year. Um so, we
GFOA has a recommendation of a minimum of 2 months in reserves or 60 days or
60%. Uh we did generally recommend a goal of 25 to 50% as a good
target range. Every city is a little different, so that number varies quite a
bit from city to city. Um and so, for 2023, y'all were at 59% when you
compared your unassigned fund balance to your your expenses for the general fund.
Uh with what I mentioned earlier, the 2024
the city planning on drawing down on that fund balance, we would expect that
number to come down. So, the unassigned fund balance was at 33%, which is still
in a good position for 2024. I know we're
in 2026 and getting ready to move on to 2027, so
uh but this is a look looking back at 2024, this is a healthy position to be
in and for 20 at the end of 2024.
Uh next, uh proprietary funds. Uh so, page 60,
this is highlighting your your proprietary funds or or your business
type funds. Uh so, we will evaluate these a little differently than we do
your governmental funds as we do expect these to be able to operate on their own
and be self-sustaining. So, that's the first thing we look at is to see whether
or not there is any net operating income or a loss. Um in 2024, the water fund
had a positive income of 230,000, wastewater was at 29,000, and then the
marina had a loss of 63,000. Uh this was the year where there was a
lot of damage that occurred to the marina, and so it was shut down for a
while, so that I believe would be the primary reason for this. I think in
years past it's it's not been the case, so
um and I haven't looked to see how you guys are doing in in '25 or '26, so uh
but in 2024 it was a loss, which based on what was going on at that time made
sense uh that there would be a loss there.
Uh after all uh really un uh non-operating activity, uh so any kind
of transfers any other non-operating activity there is the overall change in
net position. So there were some transfers in into the water fund uh that
brought that overall change in net position up to 963,000.
Wastewater was up a little bit more uh than the 29,000 up to 93,000, and then
the marina was pretty much the same, 63,000 uh loss there.
Uh and then I included that cash flow just so you can see the overall cash
flow cuz this does operate at a full accrual basis, so um some of these
changes are based on accruals and and non-cash activity.
Uh so that uh just as a from a cash flow standpoint, water had positive uh
increase in cash of 1 million, uh wastewater up 43,000, and then marina
was down 19,000.
All right. And then next, the communication letter,
so this is referring to the two other letters that were inside the front cover
of your report, so there's two letters that are required to go with each audit.
The first item being the communication with those charged with governance.
Uh and so this is that first letter with that would be there.
Uh should be the thicker of the two, um and that includes a lot of required
communication as it pertains to the audit, so it goes over our
responsibility uh as the auditors over the audit, management's responsibility
pertaining to the audit. Um it has a couple of uh
key factors I always like to point out. Uh so one, the audit was conducted in
compliance with all ethics requirements regarding independence.
Two, uh we didn't encounter any diff- uh difficulties related to the availability
of some support timeline. Uh um but ultimately, we didn't have any
difficulties encountered with management beyond that.
And then three, there were no uncorrected misstatements identified.
So, there in the back of that, there are there's an exhibit with the audit
adjustments that were needed for 2024, which have already been entered into the
system and accepted by management.
And then the second letter is communication regarding internal
controls. So, this is where we would highlight any items that we saw that
uh needed some improvement or any recommendations that we may have
identified. In that one,
there were a few items there, some of which were related to just some of the
necessary accruals needed for the year, which are just that's a standard
communication. But then there's a couple other items that were highlighted as it
pertains to some recommendations over some processes,
um most of which I believe have been discussed and a lot of
changes have already been made made in the process since 2024,
but happy to discuss any of those with you all as well.
So, I'll open up to any questions you may have.
» Thank you. That's very encouraging presentation.
I have a question on a different issue. >> Okay.
» With respect to enterprise fund transfers to the
general ledger. Um it could be a marina, it could be
some business, whatever we had could develop in the
community that might be profitable. Can you tell us how we can legally
assist the general fund with profits? I did some work I looked it up and it
sounds like any profits
that we can make in an enterprise fund can be transferred so long as it doesn't
drive up uh
the rate that the resident pays. >> Yeah.
Yeah, so as long as there aren't restrictions
to the the revenue or like the funds that were received, then yes,
technically you're correct and I I we do see
uh cities do that from time to time. Uh whenever sometimes it's due to a hard
time, sometimes it's that utility fund ends up propping up the general fund.
Ideally, it would they would stay in their own lane and they're
self-sustaining operating in that those funds received in the utility fund would
be able to be used to improve infrastructure. Um a lot You
know, that stuff isn't cheap, so having that available is great. Um however, we
do see often times uh where um to their
maybe there's a project that's going on that has some water infrastructure
portion to it and non uh utility functions to that project and they'll
contribute to it um or uh they'll, you know, they're they're
very normal is that any administrative costs that can be thought of the general
fund can essentially charge the utility fund for
the admin costs. But, uh I think what you're Yeah, just profit I mean, there's
technically nothing that I'm aware of that would uh prevent
you from doing that. I'd see it happen. Um
uh I would encourage uh that it not be a
regularly uh uh a regular thing to uh to monitor that
and assess on a recurring basis whether or not
that's something that you would want to do regularly, but I do understand that
it's it's uh it's available to the city and is
» a There was a speaker at the Sit Cog meeting recently
and he said something to the effect that it can be done
uh but he recommends a letter from the auditors
and I was wondering what that was like. And also um
I read that if there is a bond issue related to that
enterprise entity >> Mhm. the bond uh issue must
describe it. Must be in that bond.
» Yeah, so it's very normal I where a bond that's issued the language of it is
it's not usually explicitly detailed in what it's for but
it will often indicate that utility funds can be used or
the governmental side can be used. So the makeup of how those bonds are paid
can sometimes change over time where it may be as initially starts as a 50/50
but then they say hey you know what this says we can use utility funds let's
just use utility funds. So that's I've seen that happen too where they'll
they'll kind of change how much each fund Typically they kind of stay within
like hey this percent this percent and that's how much we're going to pay
towards the bond. Or
um they'll you know just do a big chunk
out of the utility fund to help. I've seen that happen too. There's nothing
that's as long as it says in the bond document that it's a permitted source
then it technically can be used. >> Have you ever in your experience given a
letter to support transfer of profits into the general fund?
» No and I don't know that we would. I'd have to talk internally. Um I so him
saying that I'm curious what what exactly he'd be referring to. Um as far
as like options I think we could like come up with that but you know it's
always up to management. As an auditor we have to
be as careful as we can about um uh we don't want to make it seem it seem
as though we are telling management what to do. Um so so we we essentially are
always going to report on what we've seen already or we can lay out here are
some things that we see and some options that we see. Um
but ultimately leave it up to to management you know the the council to
make the decision. >> Thank you.
» Yes sir. >> Yes sir.
» jump in real quick on >> Yeah.
Yeah sorry. So forward looking on that, um
whether it be profits or whether it be transfers, I know in the legislature
right now they're discussing um removing or limiting this the city's ability to
transfer from utility funds over to the general fund. Uh so, that is something
that they are that is at uh you can go to TML and look
it up, and there there's about four things that the legislature's
discussing. >> to something like our marina?
» That would.
So. >> And by limiting
you expect there to be some language saying
when and how you might be able to transfer
but more strict. >> I would expect there to be yes, not a
direct cut off. I would expect there to be some sort of mechanism to be able to
uh cuz you it's, you know, a lot of these cities that I work on, some of
they rely on those transfers >> Exactly.
» to operate, and that would be that would be a detriment to a lot of
these communities uh without proper planning. So, um
you know, I know that's that's being discussed. Uh luckily here, I don't
think we really have we don't rely on that to fund the general fund.
» Yet. >> Or could we have to? I mean, we don't
have to. >> Yet.
» So, but just wanted to throw that out there.
Thank you. >> [laughter]
» Any other questions? Councilor Meeks?
» Uh anything else? Any additional questions?
» I have one additional question. >> Yes, ma'am.
» What is your estimate, um I know you've been working around the clock with Todd
on the 2025 audit, just so that they can hear what I know y'all have been mad
working magic on. >> Well, I think uh we don't have a
explicit timeline for this. Uh I think and I don't want to speak for Todd. I
think right, they're getting they're they're prepping the 2025 numbers so
that we can I think maybe the budget was kind of
main thing right now and then but we're getting ready to get the 2025 numbers so
we can start that process. Um I I know all entries have already been made in
the system for 2024. Um I believe I I don't want to misspeak
if bank recs nearly there or is good.
» Capital assets rolled forward. >> Yeah, so a lot of things have already
been done for 2025 which uh which I know was a struggle for 2024. So, that's uh
exciting uh for 2025. Um so
um you know, I think I gave uh
an estimate for 2024 that unfortunately did didn't get met
um due to unforeseen issues. So, uh I'm always hesitant to give a uh you
know, but I think you know, if we're able to get the numbers in the next week
or two, I don't know. >> Next week or two?
» Yeah, next week or [clears throat] two. Um
we should have it be able to have it substantially completed
within the month of September and then so then my goal would be able to
hopefully be able to to at least have a draft in October if not present it in
October. Um I think that's a very reasonable
timeline assuming there's no surprise issues that come up which have happened.
So, uh so I think most That would be the most optimistic timeline would be able
to have it all audit work completed within
September be able to issue in October. Um and then so potentially November if
it's on the longer end. Uh So, and then and then which is for for
2026, that is fine cuz then we're you know, November is usually the
earliest we start for 2026 audits. So, and I and also I mean I would have to
talk with uh Zach Tax to Doug and their team and and figure out what that looks
like for them on on that side but I I
we should be able to be in line to get in a normal schedule rhythm for 2026,
so. >> Thank you. Yes, so I just wanted him to
confirm that is that's my my the end of the year. He might they might have it
done faster, but um but yeah, that should get us back in line with where we
need to be. >> We'll go with end of the year. Just so
» Yeah, and and when he says a lot of the things for 2025 has already been done,
when I started, they were not done. It wasn't even touched. And so really Doug
got in there and has been the one to get anything done on 2025 that's been done
and that's record time cuz I started 51 business days ago and he came on way
after that. So um so thank you again yeah for for both
of you for making that a reality to get us back on track with audits. We're
excited. >> Yeah, absolutely.
» Going to be the best Christmas ever. >> Yeah.
» [laughter] >> We'll put a bow on it this year, so.
» Okay, gentlemen, again, we uh we appreciate you both um being here. Thank
you very much uh for your presentations. Keep council up to date and uh
showing us where we're at. Uh ladies and gentlemen, for the workshop, that's all
we have on the agenda, so I'm going to go ahead and adjourn us at 16:58.
Um we've got a little bit of a time now before uh
the regular session convenes, so um
Yeah. Uh Madam Secretary,