[1:59] Mhm.
[3:54] » Mhm.
[7:44] » Mhm.
[9:39] » Mhm.
[11:34] » Mhm.
[11:52] » Um
So, the budget budget at a glance, I
[11:56] think that's the second slide down
there. Total revenue all funds just over
[12:00] 9 million. Total expenditures all funds
is just about 8.9 million. Total net
[12:05] position across all funds is $108,000
that we're adding.
[12:10] Um you could slice and dice that
different ways. General fund, water and
[12:12] sewer, we'll kind of get into those
those details there. Uh Carly Allen
[12:16] mentioned the the combined tax rate
72.24
[12:19] cents up from 63. Uh the reason why that
went up is because your taxable values
[12:26] decreased significantly. So, looking at
the uh truth and taxation worksheet,
[12:32] which is in here
last year's taxable values were 588
[12:36] million.
Uh and this year's taxable values were
[12:39] about 518 million. So, you lost about 11
to 12%. Just on the taxable values,
[12:46] which is, you know, when the taxable
values come down, your tax rate goes up
[12:50] cuz it's no new revenue to the city,
right? So, your revenue's got to remain
[12:53] the same. So, that's the only way the
math could work.
[12:56] Um
So, that's kind of the reason why yes,
[12:59] the tax rate's higher, but like Carly
said, it's it's $5 more on average per
[13:03] household. It's really not that much of
a change.
[13:07] » [snorts]
>> Um
[13:08] Debt service, which I'll get into,
$142,000
[13:12] this year upcoming, and then the total
FTEs are 36.
[13:20] All right, we go to uh next slide here.
It's just kind of a bar chart on or bar
[13:24] graph on the revenue versus
expenditures. Uh you can see the general
[13:27] fund is the largest operating fund that
we have.
[13:30] Um it's more than half of of what water
and sewer is and then the marina fund
[13:34] and the capital fund.
We're good?
[13:38] Okay.
[13:41] So,
uh general fund, the largest part of
[13:43] that revenue is is the property tax. Um
I know we don't have a huge sales tax
[13:47] base here in this city. Um so, it's just
all all bedrooms, all property tax
[13:53] really that's paying for the majority of
the budget
[13:55] uh itself. So, that's that's what makes
up a lot of the revenue.
[14:07] It's good. It's good. Sounds good.
Uh
[14:10] next slide over there um is this the
property tax rate which we talked about.
[14:14] So, yes essentially 12% 13% up on the
rate 12% down on the on the taxable
[14:20] values. Kind of math makes sense. It's
just
[14:23] the way it kind of looks is you look
like you're raising the tax rate a whole
[14:26] lot but it's really really not
um depending on what size the house is.
[14:33] Uh I did want to like highlight the
attention. Yes, we don't have our audits
[14:36] done. Yes, we cannot go to the voter
approval rate but you could see right
[14:39] down here the voter approval rate would
have been 75 cents or so. So, you would
[14:44] have about 3 cents to play with
um
[14:47] to hit that voter approval rate and
I don't know. I don't see the de minimis
[14:52] on here. I can't remember if the de
minimis was
[14:55] you know, what whatever that tax rate is
but it's half a million dollars more uh
[14:59] to the city if you go to the de minimis
rate. So, those are options we're going
[15:02] to hope to have
uh not necessarily implement but options
[15:06] hope to have in the future when we get
these audits caught up.
[15:11] All right.
[15:14] Next slide is debt service uh and fund
balances. So,
[15:19] the debt service uh I kind of wanted to
touch on. We got that one bond, the 2021
[15:24] CO.
Um
[15:26] the tax rate's only a couple cents that
makes up the the INS.
[15:32] So, as we move to get the audits done,
you're going to have a lot of
[15:36] flexibility or capacity down the line to
actually maybe issue debt without
[15:41] affecting the tax rate a whole lot, or
there's going to be real transparency on
[15:44] how we
go forward if we want to issue debt.
[15:48] Um
So, I don't know
[15:50] what the general feel of council is here
cuz I haven't really been here long
[15:54] enough about issuing debt.
Um what I will say is I've been I've
[15:57] been to a few councils that are heavily
against issuing debt. And I've kind of
[16:01] told them like,
"Hey, the property owners now are paying
[16:05] the taxes for the benefit they're
receiving. If you're going to continue
[16:09] to save cash, your property owners now
are paying for somebody else to receive
[16:14] the benefit. So, debt is essentially not
a terrible thing as long as you control
[16:18] the tax rate. Um but that's just kind of
one way I put it. And hopefully, we're
[16:22] going to have a little flexibility into
the next year on that INS tax rate.
[16:28] Uh you can see the fund balances over
there. General fund, 1.16 million. And
[16:33] the INS INS fund's about 38,000.
Uh like Carly said, general fund's still
[16:37] healthy, but obviously working towards
the target there to get it higher.
[16:42] Um
and I I think really with the revenues
[16:44] and the expenses, I really think it
could be a cop pushed pretty pretty
[16:47] quickly. So, and managed.
[16:53] Uh into a little more detail, uh the
general fund overview.
[16:56] Uh 5.1 million in revenue, 5.1 million
expenses, about 24,000 positive. Really
[17:02] tight, but I think uh you know, the
departments and everything working
[17:06] together is really kind of manageable to
get this thing to a balanced budget. Um
[17:10] I know on our side, we feel pretty good
about it.
[17:12] Uh and I I I hope you guys, as you go
through the details, you'll feel good
[17:15] about it, too.
So, it's balanced not really spending
[17:19] more than we're taking in
and we feel pretty good about the
[17:22] general fund.
[17:25] A little more detail on the next slide.
Uh
[17:28] by department
>> [snorts]
[17:30] » So, you'll notice administrative
services is the largest department that
[17:34] we're spending our money on. It's kind
of a little bit skewed this year cuz I
[17:38] will tell you in the past you have
separated out city manager, finance,
[17:42] city secretary, HR into all these
different departments.
[17:47] This year we combined them all into one
administrative services department. So,
[17:52] while it looks like it's the largest
piece of the puzzle and it is,
[17:55] it might not have looked that way in the
past to you
[17:58] because it was all separated out.
Um
[18:01] and then your police and fire are next
in line and public works. So,
[18:05] it's kind of
just kind of wanted to touch base on on
[18:08] how we're going to try and combine
things and and
[18:12] be a little more streamlined that way
instead of having to separate every
[18:15] detail out between every person
essentially.
[18:18] » [snorts]
[18:20] » Uh next slide is proposed staffing. I
know we went we had 35 FTE last year.
[18:25] We're going to add one this year for 36.
So,
[18:29] I think that is in administrative
services, correct?
[18:33] So,
>> [snorts]
[18:35] » and I think last year public safety was
all kind of shared and mixed in and
[18:39] trying to break that out as best as
possible between PD and fire department.
[18:48] All right.
Next slide [clears throat]
[18:51] is the enterprise and the other funds.
So, you'll notice the water and sewer
[18:55] fund pretty balanced. I know we didn't
do anything with rates this year.
[18:59] Correct Correct me if I'm wrong, but I
know I talked to Karen a little bit
[19:02] before I came. Nothing with rates that
we're changing.
[19:05] Uh the marina fund does have a big
capital project
[19:08] budgeted this year.
Um however, I they're sufficient I don't
[19:13] think I know there's sufficient fund
balance and cash in that fund to pay for
[19:17] that. So, we're drawing down the fund
balance in the Marina fund to do the
[19:20] capital projects necessary uh in that
fund.
[19:23] » [snorts]
>> We also have another capital improvement
[19:26] fund uh which can be used for various
things that we're going to transfer
[19:30] $456,000
into.
[19:32] Um, and whether or not we come back with
amendments throughout the year to spend
[19:36] that money, uh there's going to be money
set aside for capital projects in the
[19:40] future.
We also have some internal service funds
[19:44] for technology and fleet.
Um, they kind of handle that.
[19:49] Wastewater [clears throat] fund's not
really much, but $76,000.
[19:52] We have $100,000 budgeted in the
drainage fund for projects.
[19:56] Um,
and then your other little funds, hotel
[19:59] occupancy and consolidated court. So,
>> [cough]
[20:03] » all in all, the the biggest driver of of
maybe bringing down the surplus more
[20:07] than we're adding to it are the capital
projects for drainage and the capital
[20:11] projects in the Marina fund.
[20:15] So,
next slide is the transfers. Uh we try
[20:19] to be real transparent with how we're
moving money between funds and
[20:23] appropriately funding things.
Um, so water's paying a franchise fee to
[20:27] the general fund.
Uh Marina's paying a franchise fee and
[20:31] an admin reimbursement. So, we try to
really break those out and uh
[20:36] let everybody know real transparent how
much money's moving between funds.
[20:40] So,
uh real common to have the franchise fee
[20:43] for the water. If somebody else did the
water and not the city did the water,
[20:46] they would be paying you a franchise
fee. So, it's real common to actually
[20:49] have have a franchise fee come over.
[20:53] Transfers out of the general fund, like
I said, we're going to the capital
[20:57] improvement projects 456,000.
And then the technology and fleet, we
[21:01] transfer money to those internal service
funds to fund those services that they
[21:05] provide to the city.
[21:11] All right.
Uh next slide is the capital improvement
[21:15] plan. Uh I know Carley said she's been
here 51 days. I think we're going to
[21:18] start digging into this as we as we go
on.
[21:22] But put together something at least
something that's in the air, something
[21:25] that's here
uh that we can maybe have a little road
[21:28] map. But I know as we get into this
we're really going to start to dig into
[21:31] what needs to be done on the 5-year
horizon, how we're going to fund those
[21:35] things. Uh it's important to have a plan
as you go down the line, right? Whether
[21:39] it's issuing debt, getting grants.
Um there's so many so many things when
[21:43] you have a plan in place
uh and a 5-year plan is is really
[21:46] essential to to do that.
So.
[21:52] And then really, you know, Carley
touched on the adoption timelines and
[21:55] next steps. Um September 8th is really
the big day, right? You're going to
[21:58] adopt the tax rate, adopt the budget. Um
and really in between then and now, if
[22:04] you have questions on the line item
details and stuff like that,
[22:08] more than happy to send them to Carley.
We're more than happy to answer anything
[22:11] and dig into details.
Um
[22:13] you know, this is kind of a
kind of an open forum, right? Dig into
[22:16] your budget, ask questions. Um
happy to happy to answer them.
[22:21] So.
[22:26] That is kind of the overview
presentation. Do we have any questions
[22:30] on that?
[22:35] » I have a question of
it's probably obvious but it escapes me.
[22:40] The marina fund
it looks like there's twice as much
[22:45] expense for the capital requirements as
the money available.
[22:51] Am I reading that wrong?
>> I had the same question.
[22:54] » Which which which number?
>> Marina fund.
[22:57] » The marina fund. That's the question
that I asked Karen earlier and she
[22:59] provided me with an answer. So the
marina Fund, yes, it looks like that
[23:03] because we're actually having to do
those refloats. And that is not covered
[23:07] with revenues from this year, it's
covered with revenues from last year.
[23:10] So, it looks in this budget like it's
more expenses than revenues, but it's
[23:16] » The money is there.
>> The money is there in the reserve fund
[23:18] for the marina. It's in the fund. And it
actually leaves a healthy over a million
[23:22] dollar balance in there as well. It
allows us to continue the marina
[23:24] operations if we do those refloats
by October 28th, then the Army Corps of
[23:30] Engineers
is satisfied.
[23:31] » Makes them happy.
>> It does. Yes, sir.
[23:33] » Very good.
[23:44] What have you got? Now's your chance.
>> Yeah.
[23:47] We're here. I'll I'll I know it was a
lot probably to take in on the
[23:50] presentation. So,
that's why usually we're like, "Hey, you
[23:55] got any questions afterwards, let us
know. We'll
[23:58] we'll be happy to
>> one to the manager. Um what's the
[24:01] additional full-time position we're
contemplating?
[24:04] » The The position is actually a It's a
partial reallocation of uh
[24:10] a three
I don't know how to describe her. It was
[24:12] a woman named Ms. Tolman, and she had
three positions: HR, CFO, and Assistant
[24:18] City Manager. We're allocating one of
those positions to a Planning and
[24:21] Economic Development. So, they'll be
over city plans, permits, plats, plan
[24:26] reviews, working with Sit Cog, and also
working with our EDC, and uh all of our
[24:31] city plans, like our strategic plan,
capital improvement plan, comprehensive
[24:35] plan, and work plan.
>> Thank you, ma'am.
[24:37] » You're welcome.
>> So, if
[24:39] she's gone, and [clears throat] we're
hiring the city planner, how does that
[24:41] make for one new position? Wouldn't that
just be a replacement of
[24:45] » No, Mary had three positions, so it's
it's it's a lesser paid position.
[24:49] » Okay. Okay.
[24:55] » Really, the money still works cuz we're
not as expensive as a full full-time
[25:01] FTE, so
>> Yeah. Yeah.
[25:03] » That's kind of how the money hopefully
will work.
[25:09] » Can I just say I wanted to be a positive
person for a moment? This is the easiest
[25:13] budget we've ever had in 3 years to look
at and actually
[25:17] decide for. So, thank you.
>> Okay.
[25:19] » This process is a breath of fresh air.
[25:25] » So, I I just um I think I understand
this, but I'd like to confirm on the
[25:29] slide on general fund by department. Um
administrative services is is definitely
[25:36] the largest portion [clears throat] of
that. So, in the past um
[25:40] some of the city manager, city secretary
salaries went into those other funds.
[25:46] So, will the this is just showing all of
their salaries and then we'll be pulling
[25:50] out some to pay the other funds for the
city secretary and city manager's
[25:56] positions and jobs uh working in that
area.
[25:59] » So, are you are you saying typically if
there's like an EDC or an enterprise
[26:03] fund that a city manager or an admin
staff member
[26:06] services
>> Right.
[26:08] » that fund will have a contribution into
the city general fund.
[26:11] » and that's what I was asking. Yes, and
that's what's So, it's it's said it
[26:15] looks a little different this year, but
it's really the very same thing. It's
[26:19] how it's set up, so you can see it.
>> So, they have streamlined it to where
[26:22] administrative services is basically
everyone else that's not the PD, Marina,
[26:27] and fire and public works. So, it it is
much more streamlined for ease of
[26:32] reference.
>> Okay.
[26:37] And I know there were a few like
specific line items. I know we increased
[26:41] legal, one of them, right?
Um so, that's in the administrative um
[26:47] There was audit fees broken out uh cuz
is probably going to have to pay for two
[26:51] audits next year.
Right? The 25 and 26 to get that done.
[26:56] So, there were some costs that added up
in that administrative department that
[27:00] maybe, you know, were a little different
than than the prior year, but
[27:04] um overall, apples to apples, line by
line, I mean,
[27:07] you know, your postage, your telephone,
your cell phone, that stuff stays
[27:10] relatively the same.
[27:15] » Okay.
[27:21] » Anything else, council?
>> So, will we see all those line items or
[27:25] will we not?
Is that what this is?
[27:28] » Yes, ma'am. You have a full budget in
your packet. So, it's in It's in this.
[27:33] » So, after the slides?
>> Yes. You have the full budget.
[27:37] » Okay.
>> And this is
[27:39] » I see it. I see it.
That Did that That didn't get sent to us
[27:44] in the
>> It did, yes, ma'am.
[27:45] » Oh, it did. Okay. I did.
>> Yes.
[27:47] » I missed it.
>> It's all your line items and um
[27:50] » Okay. Very good.
>> It's the good stuff.
[27:53] » It's all the details.
>> the good stuff right there.
[27:55] » Okay.
Oh, yes, they
[27:58] » I did I did want to touch on like the
truth and taxation worksheet, though.
[28:03] Um
you know,
[28:06] I'm just thankful y'all don't have any
any TURs or anything like that um
[28:10] because it becomes real muddy and real
complicated real fast. Um so, yours is
[28:14] pretty cut and dry.
Um
[28:17] and but I don't see like any
you know, do we have over 65 stuff?
[28:22] Do we have exemptions and stuff like
that? So,
[28:25] as we come back to the table next year,
I think those are also things that
[28:29] need to be talked about and addressed
going forward with property tax. Um cuz
[28:33] there are some things you can't do
uh as far as that.
[28:39] » Do we have to be up on our audits before
we can do some of those things?
[28:45] » Um as far as like giving exemptions,
probably not, but raising the tax rate,
[28:49] yes.
[28:52] » I thought there were sources of money
um
[28:55] » Yes, sir.
>> to cover exemptions.
[28:58] » There are some sources of money you can
apply for to to cover He's talking about
[29:03] when we lose money to the military
exemption and things like that.
[29:06] » Oh, yes.
>> Morgan's Point Resort does not qualify
[29:08] yet, but we are looking into that
legally.
[29:10] » Thank you.
>> That is a good point because we went
[29:14] through that Yes, down the road, so
Um, yeah.
[29:19] We'll be working on that.
[29:28] And I didn't know like while I'm here if
there's any specific line items in the
[29:31] past that have, you know,
brought concern or anything, I'd be
[29:35] happy to look at them. Um, I didn't, you
know,
[29:39] obviously don't know what's happened in
the past here too much, but um, any line
[29:42] items or any hot points that are talked
about, be happy to
[29:45] try and work through those, so.
[29:49] » And I'd like to thank Doug and and Karen
again. Um, we have worked around the
[29:53] clock on this to make it as simple as we
could and my instruction was to make it
[29:57] very elementary. It was It seemed very,
very confusing and complicated the last
[30:02] couple years. Um, looking back at those,
it was very hard for even us to
[30:06] understand and unravel. So, our goal is
transparency first and foremost. Um, and
[30:12] making it readable to the average
citizen, not just those that sit on the
[30:15] dais, not just staff, but to everyone.
And so, after tonight, um, the full
[30:20] budget, the full proposed budget that
council is looking at tonight, will be
[30:23] available through the city secretary's
office. Um,
[30:27] so, and that's every line item and
that's every every detail in the most
[30:31] readable form we could do. So, thanks to
again to Doug and Karen for helping me
[30:34] make that so elementary for us this
year.
[30:37] » Excellent.
Now, this I I like how we can easily
[30:41] compare the last several years, you
know, and that's really good.
[30:48] » Yeah, this is the
third or fourth one that we've had. What
[30:52] is How many years for us now?
>> I don't know. I
[30:54] » It's like our third or fourth, and this
one I can actually understand without
[30:58] having to try to decipher and pull out
an abacus and
[31:02] so I do appreciate that. I'll echo what
Council has said. Thank you very much.
[31:07] » I'll also touch on the directors and
chiefs.
[31:10] Uh
we were able to give them broken out
[31:13] spreadsheets to give input to us to
input into this larger budget, and they
[31:17] did a great job. Some of them for the
first time seeing it. Uh from what I
[31:21] understand, they didn't have access to
do that before.
[31:24] Um and they didn't have visibility on
what they were providing. It was usually
[31:26] just a meeting or, you know, kind of
cloaked in in a lot of secrecy, maybe.
[31:32] Um
but they they really worked with their
[31:35] staff and their departmental needs, and
they got us what they needed um to
[31:39] continue operations and to take care of
their staff and to make sure Morgan's
[31:42] Point is served, especially the chiefs,
uh both police and fire and their staff.
[31:46] Um
they're they're really made sure that
[31:48] our safety is uh a top priority, and we
were able to cover all of their
[31:52] operational needs without cutting
anything, and also increase retention
[31:56] and recruitment for them so that they
can continue
[31:58] uh to prioritize staffing for coverage
of our our town. So, really thank you a
[32:02] lot to the chiefs and directors as well.
>> Yeah, I know that's something we're
[32:06] working towards as well for for the
department heads is to actually provide
[32:11] them monthly snapshots of what they've
spent, what their budget is.
[32:15] Um we're trying to work on a forecast.
I'm not going to promise anything yet,
[32:19] where you can actually see going down
the next 12 months, you know, where
[32:22] you're going to be.
Um but at least you could see what's
[32:25] been what's been charged, what's gone
into each account, and what's going
[32:29] there. So,
that's something we're working towards.
[32:32] » That's a great point, Doug. I will say
that I was shocked when I got here.
[32:35] Every single director on staff at
Morgan's Point Resort said that they did
[32:38] not know where their budget was and that
they had to ask someone specific where
[32:43] their budget was or if they had money to
buy things as simple as bottled water
[32:46] for their staff um where they had to
file a requisition to do so. I I don't
[32:51] know if any of that firsthand, but I I
trust that all the directors weren't uh
[32:55] embellishing too much and so that just
knowing that we needed to clean that
[32:59] process up and make it easy for them to
read, have monthly updates and awareness
[33:05] of where their budget is, their staffing
and operations and expenditures are. And
[33:09] also, and I'm going to second Doug here,
I'm not going to promise the moon too
[33:13] quickly cuz we're we are working around
the clock to get this done in record
[33:16] time, but eventually when we're caught
up, the city manager's office will be
[33:20] working with Doug and Karen and we'll
put out a monthly budget update. Um and
[33:24] I'll present those to council. Those
will be publicly on the website. Um
[33:28] So, these are things that are common in
the cities that we're used to working
[33:32] for and with uh that I I was really
really important to me to bring that
[33:36] here. So, that kind of transparency for
our citizens on our website as well as
[33:40] for our council. So, we're working hard
to get get that uh something we can
[33:43] manage here.
>> I have a question also about um I I know
[33:48] we've complained a lot about FundView in
the last couple years, rightfully so I
[33:52] think. Are is this budget done on
FundView?
[33:57] » Uh
I will say this.
[34:00] Doug and Karen have worked with FundView
for as many years as it existed. They
[34:04] have no problem with it because they're
experts. They have been able to walk us
[34:07] through getting this done. Um this
budget was actually done on their
[34:11] software.
Uh we do still have FundView currently,
[34:14] but we are changing back to Incode and
that has been budgeted. It simply
[34:18] doesn't work for our city and our staff
cannot figure it out. I have met with
[34:23] the wonderful staff at FundView many
times now
[34:26] and they're very helpful.
Um
[34:29] and you know, it's just an operational
challenge for them. They don't have the
[34:32] software built out to what we're needing
to make it operational and work for our
[34:36] small city and our staff right now. We
may grow into that and their staff has
[34:41] been wonderful and helpful, but it
doesn't fit. So, we are budgeting to
[34:44] change back and we do have that to in
the works probably to come to council in
[34:48] September for for their decision.
>> Thanks.
[34:51] » And just so you're aware, I mean, we
have, you know, we do
[34:55] 20 or so clients on FundView, 20 or so
clients on Incode, and whether it'll be
[35:00] nine or 10, so we got experience with
all different kinds of
[35:04] » It's wonderful.
>> Yeah. All different kinds of software,
[35:07] so
>> [snorts]
[35:09] » no really problem either way.
>> A topic for another time probably, but
[35:14] transitioning back from FundView to
Incode, will we have some of those same
[35:18] hiccups?
>> We will not. No one can explain why
[35:21] those hiccups happened, so no. No one
has heard of those before and working
[35:24] with Doug, Wanda at FundView, and Robin
and their team at Incode, um everybody
[35:29] knows each other, everybody works well,
and can switch back and forth with ease.
[35:32] We'll make sure that the records
transition appropriately with all of our
[35:35] teams.
>> Hey.
[35:44] » Council, anything else?
[35:49] » Well, from here, I will let Doug
introduce Lewis Breedlove, who is with
[35:53] Brooks and Watson, who is our auditor,
and if if everyone will join me to
[35:56] welcome him walking up to the podium
with a big round of applause for him and
[35:59] Doug.
Thank you for completing [applause] the
[36:02] 2024 audit in record time.
>> How about a round?
[36:05] » All right.
>> I apologize. I was a little late. There
[36:07] was a traffic jam
[36:19] » Thank you, sir.
[36:28] » I think I sent a PowerPoint
presentation.
[36:31] I don't know if that's available.
[36:38] Was there Was that PowerPoint available?
I can also have it printed out, so we
[36:43] can just go through utilizing that if
that's
[36:48] Okay.
Great. Well,
[36:52] while we're getting that set up, and
I'll just quickly I I know I've met many
[36:56] of you.
You know, we
[37:01] For the 2024 audit, we did experience
delays yet again, unfortunately,
[37:06] but we're happy to be able to finally
get everything needed to be able to
[37:10] wrap up this 2024 test work, get
everything uh
[37:14] prepared for the report, and have the
the letters that come with it ready to
[37:19] go.
Uh so, those that just
[37:22] got wrapped up this past week.
And so, we're eager to jump right into
[37:26] 25, and I know you guys have been kind
of knee-deep in budget and and that all
[37:31] that goes with budget, and so I think as
soon as that
[37:35] I think we're getting ready to step
right into wrapping up the next audit,
[37:38] so we can get the city finally caught up
to where you should be. So, I know
[37:42] that's been long awaited and and eager
for you all. Um
[37:46] but
I do I have good news. We did have a
[37:49] clean report issued this year for 2024.
So, I will utilize a PowerPoint
[37:54] presentation to go over the results of
the audit. So, in just inside the front
[37:58] cover of that report, there's a printed
out PowerPoint presentation, as well as
[38:03] two letters that are required to to be
issued with the report.
[38:09] And
we can do and then I can wait for that
[38:13] PowerPoint if you guys want, or I can
we can thumb through the
[38:18] the the printed out version of it. Um
[38:27] I know I'd like everybody else to be
able to see it, too, but uh um
[38:30] this one, I'll just go ahead and get
started on the just on that first second
[38:34] page there. Uh um
overview of the audit process. So, this
[38:38] page two of that handout. Um just kind
of get the ball rolling on that
[38:42] presentation. So, we do perform the
audit in accordance with generally
[38:45] accepted auditing standards. And so,
those standards require us to do a
[38:49] number of phases. So, the first phase
being the the assessment phase. So, um
[38:53] even if we've done previous year audit,
we always have to reassess where the
[38:58] city stands that year. Uh so, we we do a
number of process walk-throughs,
[39:03] questionnaires that are completed over
each department. Really anywhere where
[39:06] money's coming in and going out, we're
looking to see what are the controls
[39:08] that are in place, what kind of
uh recommendations we may be able to
[39:12] make. Um
And we're also looking at any any risks
[39:16] associated with with those areas, which
brings us to the risk-based approach of
[39:20] that of that uh assessment phase. So,
every line item within the financial
[39:24] statements has a different risk
associated with it. Uh and that can vary
[39:28] year to year, um just depending on
what's going on within the city and the
[39:32] financials. Um and that drives what type
of procedures we perform throughout the
[39:36] audit, what level of detail we perform
those procedures to make sure that we're
[39:39] comfortable with the material accuracy
uh when it's all said and done.
[39:43] Uh we we also have what we call that the
fieldwork phase. So, there's that kind
[39:48] of includes two components. There's a
compliance fieldwork aspect of it. So,
[39:52] we're uh
we're looking at bid requirements. Uh if
[39:56] there were any grants, making sure that
the city's following grant requirements.
[39:59] Uh public fund investment act. We would
review all the city council meeting
[40:04] minutes. So, if you all may have
approved something that has a compliance
[40:06] component to it, we would look at that
as well and ensure that uh the city is
[40:11] meeting those those requirement uh punch
points there. And then we do do actual
[40:16] what a lot of people call that field
work phase over the year end financial.
[40:20] So, we're performing cut off procedures.
So, we're testing activity around year
[40:25] end to make sure that all the
appropriate information has been
[40:27] properly included in the year under
audit or excluded if inappropriately
[40:31] included.
We're confirming with third party
[40:34] wherever possible. So,
comptroller, we're looking at the
[40:38] assessor collector,
banks, anyone that we can possibly
[40:42] confirm with outside of the city to get
a third party source to verify the data,
[40:47] we we do that. Um and then we're also as
we're tying out that balance sheet and
[40:51] making sure that those are materially
accurate, we're also testing those
[40:53] revenues and expenses to make sure that
those are right, uh appropriately coded,
[40:58] and appropriately and materially
reflected within the financials.
[41:02] Uh then we move into the conclusion and
reporting phase, that last phase of the
[41:06] audit. So, it goes through multiple
layers of review to ensure that no
[41:09] additional testing procedures are needed
within the audit as well as all
[41:13] standards are met within the report. Uh
and so the report that we have for you
[41:17] has been reviewed, all disclosures that
are required and the way that those are
[41:21] should be communicated
by generally accepted auditing or
[41:24] accounting standards are met.
[41:30] Uh thank thanks so much. Uh
Awesome.
[41:35] Yes, perfect. Thanks so much. So, yes,
last three there. Appreciate it. Sorry
[41:39] about that.
Uh so, this is the components of the
[41:43] audit report. Um
Oh, the next next slide. Okay, yeah.
[41:48] Um so, the components within the report,
this is from front to back. It first
[41:52] starts with the auditor's opinion
letter. That's our opinion over the
[41:54] financials, followed by the management's
discussion and analysis. So, that's also
[41:58] often referred to as the MD&A. It's
going to give you some year-to-year
[42:01] comparison. It punches on a lot of the
key areas within the financials or
[42:05] material areas of the financials. So, it
touches on budget activity,
[42:09] capital, debt related activity, and then
highlights any major changes year over
[42:13] year
Um um in that portion of the audit
[42:16] report. Behind that is your basic
financial statements. So, that's going
[42:19] to include your government-wide full
accrual statements uh as well as your
[42:23] fund level statements behind that. Uh
and then the notes to the financial
[42:26] statements. And so, those notes are
going to give you a lot of detail as it
[42:30] pertains to those financials. Often
times when you're looking at those
[42:33] statements, uh you're often wondering
what those numbers actually mean. And
[42:37] so, those notes are helpful in
identifying maybe a breakdown of what
[42:41] those numbers consist of or just giving
language to how those numbers are
[42:44] arrived at. Um
behind that you're required
[42:47] supplementary information. So, that's
going to have your budget to actual for
[42:50] your general fund for the year. Um and
then uh follow that following that is
[42:54] your TMRS related uh disclosure
material.
[42:57] Um as it relates to that first item, the
auditor's opinion, there are four
[43:01] possible opinion types that we as
auditors are able to issue. Uh there's
[43:04] an unmodified opinion, a qualified
opinion, a disclaimed opinion, or an
[43:08] adverse opinion. Uh and you did receive
an unmodified opinion for 2024. That's
[43:13] uh
often referred to as a clean opinion.
[43:15] It's the highest level of assurance that
we as auditors are able to provide what
[43:18] we hope to provide. And so, we're happy
to to say that we did issue a clean uh
[43:22] unmodified opinion for 2024.
So, that's good.
[43:32] Uh
next page, financial highlights, just
[43:34] real quick, covering some of the the
activity year over year. So, this is
[43:37] just uh hitting on uh the 2024 versus
2023 change in fund balance. Uh so, 2024
[43:45] uh had a overall decrease in fund
balance of 693,000 for your general
[43:49] fund. Uh
which was uh
[43:52] pretty much in line with what was
budgeted. Uh it was intended to draw
[43:55] down that fund balance. The fund balance
had grown quite a bit in the city.
[43:58] Wanted to utilize that fund balance for
2024. So, that's uh I've got a budget to
[44:03] actual in here in just a second that
we'll see and you'll see that's in line
[44:06] with with uh what would be expected.
Your debt service fund, small change
[44:11] there of 7,000 increase in fund balance.
Uh and then your non-major funds, which
[44:16] uh is a consolidation of any fund that
does not meet the requirements to be be
[44:21] presented as a major fund. So, uh those
would be They're all broken out in the
[44:25] back for for review. Uh but those are
represented as one major grouping on the
[44:30] front of the non-major funds and had an
overall decrease of 367,000.
[44:34] And those are just utilizing those
restricted or special purpose funds as
[44:39] intended. Uh so, in line with the
expectations there, no no concerns for
[44:43] that drawdown.
Uh next,
[44:47] as it relates to your budget to actual
for the year. So, this is just a
[44:51] summarized version of your budget to
actual uh that the So, from right to
[44:55] left, you've got your variance comparing
your actuals for the year, which is that
[44:59] center column, and then what was
budgeted after all any amendments in
[45:02] that far left column. And so, uh that
first line there is your overall revenue
[45:07] for the general fund had a positive
variance. Uh so, more being received
[45:12] than anticipated by 262,000.
Uh so, uh then following that, the total
[45:18] expenditure line, which is where we
generally are mostly concerned with. And
[45:23] in that far right there, you'll see
there's a positive variance there of
[45:26] 86,000. So, 86,000 below budget for
2024.
[45:30] Uh and then uh your other sources and
uses line, uh nothing was budgeted for
[45:35] that. There's Primarily, that's going to
consist of transfer-related activity.
[45:39] Um and so, we had a positive variance
there of 25,000 uh for the year. So, net
[45:44] total positive budget variance of
374,000 for 2024. Uh so, that was in
[45:49] good shape. Uh behind Below that is just
a a highlight of your unrestricted
[45:55] portion of your general fund. So, we
always want to look to see uh that
[45:58] number helps to determine the health of
the fund balance for for the city. So,
[46:02] that what this number does
uh is this is anything that has not been
[46:06] restricted within the general fund, and
we want to compare that to
[46:10] your operating expenses for the general
fund. Uh this gives us a
[46:14] a little bit of an indicator or a metric
to evaluate whether or not there's
[46:18] much funds remaining to be able to help
in that upcoming year. Um so, we
[46:24] GFOA has a recommendation of a minimum
of 2 months in reserves or 60 days or
[46:29] 60%. Uh we did generally recommend a
goal of 25 to 50% as a good
[46:36] target range. Every city is a little
different, so that number varies quite a
[46:39] bit from city to city. Um and so, for
2023, y'all were at 59% when you
[46:44] compared your unassigned fund balance to
your your expenses for the general fund.
[46:49] Uh
with what I mentioned earlier, the 2024
[46:53] the city planning on drawing down on
that fund balance, we would expect that
[46:56] number to come down. So, the unassigned
fund balance was at 33%, which is still
[47:01] in a good position
for 2024. I know we're
[47:05] in 2026 and getting ready to move on to
2027, so
[47:08] uh but this is a look looking back at
2024, this is a healthy position to be
[47:12] in and
for 20 at the end of 2024.
[47:16] Uh next,
uh proprietary funds. Uh so, page 60,
[47:22] this is highlighting your your
proprietary funds or or your business
[47:25] type funds. Uh so, we will evaluate
these a little differently than we do
[47:29] your governmental funds as we do expect
these to be able to operate on their own
[47:34] and be self-sustaining. So, that's the
first thing we look at is to see whether
[47:37] or not there is any net operating income
or a loss. Um in 2024, the water fund
[47:42] had a positive income of 230,000,
wastewater was at 29,000, and then the
[47:47] marina had a loss of 63,000.
Uh this was the year where there was a
[47:52] lot of damage that occurred to the
marina, and so it was shut down for a
[47:55] while, so that I believe would be the
primary reason for this. I think in
[47:59] years past it's it's not been the case,
so
[48:02] um and I haven't looked to see how you
guys are doing in in '25 or '26, so uh
[48:06] but in 2024 it was a loss, which based
on what was going on at that time made
[48:11] sense uh that there would be a loss
there.
[48:14] Uh after all uh really un uh
non-operating activity, uh so any kind
[48:20] of transfers any other non-operating
activity there is the overall change in
[48:23] net position. So there were some
transfers in into the water fund uh that
[48:27] brought that overall change in net
position up to 963,000.
[48:31] Wastewater was up a little bit more uh
than the 29,000 up to 93,000, and then
[48:36] the marina was pretty much the same,
63,000 uh loss there.
[48:40] Uh and then I included that cash flow
just so you can see the overall cash
[48:43] flow cuz this does operate at a full
accrual basis, so um some of these
[48:48] changes are based on accruals and and
non-cash activity.
[48:52] Uh so that uh just as a from a cash flow
standpoint, water had positive uh
[48:57] increase in cash of 1 million, uh
wastewater up 43,000, and then marina
[49:02] was down 19,000.
[49:06] All right.
And then next, the communication letter,
[49:10] so this is referring to the two other
letters that were inside the front cover
[49:13] of your report, so there's two letters
that are required to go with each audit.
[49:17] The first item being the communication
with those charged with governance.
[49:20] Uh and so this is that first letter with
that would be there.
[49:25] Uh should be the thicker of the two,
um and that includes a lot of required
[49:28] communication as it pertains to the
audit, so it goes over our
[49:31] responsibility uh as the auditors over
the audit, management's responsibility
[49:34] pertaining to the audit. Um it has a
couple of uh
[49:38] key factors I always like to point out.
Uh so one, the audit was conducted in
[49:42] compliance with all ethics requirements
regarding independence.
[49:45] Two, uh we didn't encounter any diff- uh
difficulties related to the availability
[49:49] of some support timeline.
Uh um but ultimately, we didn't have any
[49:54] difficulties encountered with management
beyond that.
[49:57] And then three, there were no
uncorrected misstatements identified.
[50:00] So, there in the back of that, there are
there's an exhibit with the audit
[50:04] adjustments that were needed for 2024,
which have already been entered into the
[50:08] system
and accepted by management.
[50:12] And then the second letter is
communication regarding internal
[50:15] controls. So, this is where we would
highlight any items that we saw that
[50:19] uh needed some improvement or any
recommendations that we may have
[50:23] identified.
In that one,
[50:26] there were a few items there, some of
which were related to just some of the
[50:31] necessary accruals needed for the year,
which are just that's a standard
[50:34] communication. But then there's a couple
other items that were highlighted as it
[50:38] pertains to some recommendations over
some processes,
[50:42] um most of which I believe have been
discussed and a lot of
[50:46] changes have already been made made in
the process since 2024,
[50:50] but happy to discuss any of those with
you all as well.
[50:54] So, I'll open up to any questions you
may have.
[50:59] » Thank you. That's
very encouraging presentation.
[51:03] I have a question on a different issue.
>> Okay.
[51:06] » With respect
to enterprise fund transfers to the
[51:11] general ledger.
Um it could be a marina, it could be
[51:15] some business,
whatever we had could develop in the
[51:19] community that might be profitable.
Can you tell us how we can legally
[51:25] assist the general fund with profits?
I did some work I looked it up and it
[51:33] sounds like
any profits
[51:36] that we can make in an enterprise fund
can be transferred so long as it doesn't
[51:41] drive up
uh
[51:43] the rate that the resident pays.
>> Yeah.
[51:47] Yeah, so as long as there aren't
restrictions
[51:50] to the the revenue or like the funds
that were received, then yes,
[51:54] technically you're correct and I I we do
see
[51:57] uh cities do that from time to time.
Uh whenever sometimes it's due to a hard
[52:02] time, sometimes it's that utility fund
ends up propping up the general fund.
[52:05] Ideally, it would they would stay in
their own lane and they're
[52:08] self-sustaining operating in that those
funds received in the utility fund would
[52:12] be able to be used to
improve infrastructure. Um a lot You
[52:16] know, that stuff isn't cheap, so having
that available is great. Um however, we
[52:20] do see often times uh where
um to their
[52:24] maybe there's a project that's going on
that has some water infrastructure
[52:27] portion to it and non uh utility
functions to that project and they'll
[52:32] contribute to it um or
uh they'll, you know, they're they're
[52:36] very normal is that any administrative
costs that can be thought of the general
[52:39] fund can
essentially charge the utility fund for
[52:43] the admin costs. But, uh I think what
you're Yeah, just profit I mean, there's
[52:48] technically nothing
that I'm aware of that would uh prevent
[52:53] you from doing that. I'd see it happen.
Um
[52:56] uh
I would encourage uh that it not be a
[53:01] regularly uh uh
a regular thing to uh to monitor that
[53:05] and assess
on a recurring basis whether or not
[53:08] that's something that you would want to
do regularly, but I do understand that
[53:12] it's it's uh it's available to the city
and is
[53:15] » a There was a speaker at the Sit Cog
meeting recently
[53:19] and he said something to the effect that
it can be done
[53:24] uh but he recommends a letter from the
auditors
[53:28] and I was wondering what that was like.
And also um
[53:34] I read that if
there is a bond issue related to that
[53:39] enterprise entity
>> Mhm. the bond uh issue must
[53:44] describe it.
Must be in that bond.
[53:47] » Yeah, so it's very normal I where a bond
that's issued the language of it is
[53:53] it's not usually
explicitly detailed in what it's for but
[53:57] it will often indicate that
utility funds can be used or
[54:03] the governmental side can be used. So
the makeup of how those bonds are paid
[54:08] can sometimes change over time where it
may be as initially starts as a 50/50
[54:13] but then they say hey you know what
this says we can use utility funds let's
[54:17] just use utility funds. So that's I've
seen that happen too where they'll
[54:20] they'll kind of change how much each
fund Typically they kind of stay within
[54:24] like hey this percent this percent and
that's how much we're going to pay
[54:27] towards the bond.
Or
[54:29] um
they'll you know just do a big chunk
[54:33] out of the utility fund to help. I've
seen that happen too. There's nothing
[54:36] that's as long as it says in the bond
document that it's a permitted source
[54:41] then it technically can be used.
>> Have you ever in your experience given a
[54:46] letter to support transfer of profits
into the general fund?
[54:50] » No and I don't know that we would. I'd
have to talk internally. Um I so him
[54:55] saying that I'm curious what what
exactly he'd be referring to. Um as far
[54:59] as like options I think we could like
come up with that but you know it's
[55:03] always up to management. As an auditor
we have to
[55:06] be as careful as we can about um
uh we don't want to make it seem it seem
[55:11] as though we are telling management what
to do. Um so so we we essentially are
[55:17] always going to report on what we've
seen already or we can lay out here are
[55:21] some things that we see and some options
that we see. Um
[55:24] but ultimately leave it up to to
management you know the the council to
[55:28] make the decision.
>> Thank you.
[55:30] » Yes sir.
>> Yes sir.
[55:31] » jump in real quick on
>> Yeah.
[55:34] Yeah sorry.
So forward looking on that, um
[55:39] whether it be profits or whether it be
transfers, I know in the legislature
[55:42] right now they're discussing um removing
or limiting this the city's ability to
[55:49] transfer from utility funds over to the
general fund. Uh so, that is something
[55:53] that they are
that is at uh you can go to TML and look
[55:56] it up, and there there's about four
things that the legislature's
[55:59] discussing.
>> to something like our marina?
[56:03] » That would.
[56:06] So.
>> And by limiting
[56:09] you expect there to be some language
saying
[56:12] when and how you might be able to
transfer
[56:15] but more strict.
>> I would expect there to be yes, not a
[56:19] direct cut off. I would expect there to
be some sort of mechanism to be able to
[56:24] uh cuz you it's, you know, a lot of
these cities that I work on, some of
[56:27] they rely on those transfers
>> Exactly.
[56:30] » to operate, and that would be
that would be a detriment to a lot of
[56:33] these communities uh without proper
planning. So, um
[56:38] you know, I know that's that's being
discussed. Uh luckily here, I don't
[56:41] think we really have we don't rely on
that to fund the general fund.
[56:45] » Yet.
>> Or could we have to? I mean, we don't
[56:47] have to.
>> Yet.
[56:50] » So, but just wanted to throw that out
there.
[56:53] Thank you.
>> [laughter]
[57:02] » Any other questions?
Councilor Meeks?
[57:05] » Uh anything else? Any additional
questions?
[57:10] » I have one additional question.
>> Yes, ma'am.
[57:13] » What is your estimate, um I know you've
been working around the clock with Todd
[57:18] on the 2025 audit, just so that they can
hear what I know y'all have been mad
[57:22] working magic on.
>> Well, I think uh we don't have a
[57:26] explicit timeline for this. Uh I think
and I don't want to speak for Todd. I
[57:30] think right, they're getting they're
they're prepping the 2025 numbers so
[57:33] that we can I think maybe the budget was
kind of
[57:37] main thing right now and then but we're
getting ready to get the 2025 numbers so
[57:41] we can start that process. Um I I know
all entries have already been made in
[57:45] the system for 2024.
Um I believe I I don't want to misspeak
[57:50] if bank recs
nearly there or is good.
[57:54] » Capital assets rolled forward.
>> Yeah, so a lot of things have already
[57:57] been done for 2025 which uh which I know
was a struggle for 2024. So, that's uh
[58:04] exciting uh for 2025.
Um so
[58:08] um you know, I think I gave
uh
[58:12] an estimate for 2024 that unfortunately
did didn't get met
[58:17] um due to unforeseen issues. So,
uh I'm always hesitant to give a uh you
[58:21] know, but I think you know, if we're
able to get the numbers in the next week
[58:25] or two, I don't know.
>> Next week or two?
[58:26] » Yeah, next week or [clears throat] two.
Um
[58:29] we should have it be able to have it
substantially completed
[58:33] within the month of September and then
so then my goal would be able to
[58:36] hopefully be able to to at least have a
draft in October if not present it in
[58:41] October. Um
I think that's a very reasonable
[58:44] timeline assuming there's no surprise
issues that come up which have happened.
[58:50] So, uh so I think most That would be the
most optimistic timeline would be able
[58:55] to have it
all audit work completed within
[58:59] September be able to issue in October.
Um and then so potentially November if
[59:03] it's on the longer end. Uh
So, and then and then which is for for
[59:09] 2026, that is fine cuz then we're
you know, November is usually the
[59:15] earliest we start for 2026 audits. So,
and I and also I mean I would have to
[59:19] talk with uh Zach Tax to Doug and their
team and and figure out what that looks
[59:23] like for them on on that side but
I I
[59:26] we should be able to be in line to get
in a normal schedule rhythm for 2026,
[59:30] so.
>> Thank you. Yes, so I just wanted him to
[59:33] confirm that is that's my my the end of
the year. He might they might have it
[59:37] done faster, but um but yeah, that
should get us back in line with where we
[59:40] need to be.
>> We'll go with end of the year. Just so
[59:43] » Yeah, and and when he says a lot of the
things for 2025 has already been done,
[59:47] when I started, they were not done. It
wasn't even touched. And so really Doug
[59:52] got in there and has been the one to get
anything done on 2025 that's been done
[59:56] and that's record time cuz I started 51
business days ago and he came on way
[59:59] after that. So
um so thank you again yeah for for both
[1:00:03] of you for making that a reality to get
us back on track with audits. We're
[1:00:06] excited.
>> Yeah, absolutely.
[1:00:08] » Going to be the best Christmas ever.
>> Yeah.
[1:00:11] » [laughter]
>> We'll put a bow on it this year, so.
[1:00:15] » Okay, gentlemen, again, we uh we
appreciate you both um being here. Thank
[1:00:18] you very much uh for your presentations.
Keep council up to date and uh
[1:00:22] showing us where we're at. Uh ladies and
gentlemen, for the workshop, that's all
[1:00:25] we have on the agenda, so I'm going to
go ahead and adjourn us at 16:58.
[1:00:29] Um we've got a little bit of a time now
before uh
[1:00:32] the regular session convenes, so
um
[1:00:36] Yeah. Uh Madam Secretary,