[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,

Regular City Council Meeting on August 11, 2026

Transcript