City Council - Regular Meeting

It is it is 6:30 and we're calling to order our Elgen Public Library. We are having our Elgen City Council work session agenda and [snorts] we will start with our roll call with council uh member love. Love here.

St. Pierre here. Rodriguez here. Crim here. Brazier here. Mcshan here. Kasnowski here. Gibson here. Swain here. Chuck, will you lead us in our invocation? [clears throat] Dear heavenly father, please watch for our deliberations. Guide us to make the best decisions as we complete these audits. Also guide us as we join the new ESD3. Continue watching over our ever growing community. As our population grows, traffic gets more congested, more accidents happen. Please watch over the UPS plane victims and their families and their communities. Please keep watch over our first responders. Please help us as a community come together. We have some misinformation floating around. Please help clear this up in your blessed name. Amen.

Amen. member. Next is our public comment and you have three minutes uh to speak on item you've signed up for and the first uh we have is West Cal.

Good evening. I want to thank uh start off by saying thank you Stephanie for always being the watchdog you are. Um I don't think we got to the maybe answers we might get tonight if it wouldn't have been for your uh I don't know your dedication to this. Um with that being said, how did we get here? [snorts] I mean, for years the public has been screaming things and nobody in front of me has taken that into consideration. You've heard every excuse a man can hear from pretty much each and every one of them. It's not a fact. I mean, it's not a lie. We can run it back on YouTube. It's it's public knowledge. Um, the whole Tom Madison thing was a complete joke. It's complete nightmare. Transparency has never been a part of this council. Never one time. Miss Love and Miss St. Pierre is the only two that's ever really taken the time to that I've seen to speak with their constituents. That's straight facts. you got to book a a session and have security or whatever to speak with y'all. And then if you do get to speak with, you never get an answer. There's no transparency. So, I'm hoping here tonight, man, maybe I'm speaking for a lot in the crowd, but as a taxpayer and more, I want to know where that money went. I want to know what happened to it. I want to know why it was overlooked and why it's continuing to be overlooked. Y'all have a good night. Thank you, Stephanie. That ends our public comment. No one else signed up and so we will begin this workshop with a discussion over 2022 23 and 2023 and 24 audits and the audit findings and I will turn this over to our interim city manager Robert Eids.

Thank you mayor. Thank you council. If we can have the slides back up. So what I'm pulling up uh again as we discussed in the previous meetings um and at the direction of the city council last time was that as the audit was presented to this council and delivered to this council by Brooks Watson [snorts] um the there needed to be some time to digest. It's a wealthy healthy document and so time was provided so that y'all can go over those uh details. Uh during that time um you know that that was the idea behind it. So today we're here uh discussions that may be uh lingering from the audit that we presented or Brooks Watson presented. Uh but the numbers remain the same. we present the same exact uh presentation with the understanding that uh some time has been given in between and I know there's some travel with council members as well but that was the idea with the council saying give us a little time to digest so we can have some questions go through these documents but I'd lay this back on the table answer some questions uh as we can and clarify some of this information that uh may be asked or or may not be asked, but again, we're here to provide information uh to you as a council and uh we'll, you know, step back and and and work through this as best we can with you. Um but that's what we promise you today and and as I began work here and as they've been trying to do with gradient and others who's who've been with us, we have present with this gradient who's been uh with city working uh with us as well. And so we do have

some abilities to to a ask and answer um some of those questions you may have specifically uh on some of these items and a lot of these items. Uh but we will be limited in in some of this historical stuff that may go back years, decades perhaps, but we want to open this up at least from staff side to be able to answer that. and I defer back to you as a council, you mayor, the city council members, uh, to be able to ask those questions that you need, uh, and we'll try to respond as best we can, but you'll get the, uh, the truth, whether it's a something you like to hear, uh, we're going to give you what you need to hear because it's it's just what it's going to have to be. Uh, numbers won't lie, and that's what we're going to have to give you. So we'll defer back to mayor and council so we can take it from there.

So one of the things I had asked for was to look at the audit findings from the previous um year and what we have now that is duplicated and why it still shows up on there. So I want to start the conversation with uh the actual findings that have been on here and what have we done since then to correct those findings.

Sure. So we discussed uh I think I touched on that a little bit or or maybe in some detail. And so what I show up there is uh the findings for the or the audits for the 23 which would be again what we have to remember too is when we speak of these things as we talk about the 23 and even the 24 audit uh we are talking we're taking ourselves back in time. So when we talk about the 23 audit which we're talking about the period between 10122 and 93023. So in that audit what the findings were internal controls pulled cash bank reconciliations just as I put last time uh PFI investment reports and compensated absences. A lot of those carry over, if not all, I believe all of them carry over. And what the trend you'll see going forward and what I continue to say and I said last time and I'll continue to say our biggest weakness, although it's in the finance section of what we do, but the biggest weakness is personnel. The biggest weakness in not having that person, those people in that office for any substantial period. And so we need to start there. We need to stop the bleeding. We need to hire up. And so that's that's the only way that we can move forward is to be able to do that. And so that's our biggest challenge because without having to do that, in fact, y'all had gave me have given me a charge and one of the top things y'all tked me to do is find a finance director and hire a finance director. That's increasingly challenging when this is the outlook that we have that this is a the very near past, right? And this is what we're looking at and staffing has been the problem. So either turnover,

education, history, background, whatever it may be has just not been there. Right? So as we go through this process whether it be cathartic whether it be an education part it at this point we're trying to get ourselves better and by understanding where our weaknesses are by a third party which our auditor did will show that for this one that was presented just a couple weeks ago. It is in the window of 10123 to 9:3024. And so when we had Brooks Watson up here make the presentation, he was speaking to the period of that time frame. And I know he said it, but I I it gets it can get lost real quick and it may seem as though present day finances are reflective of what he was talking about. Present day finances do not reflect what he was talking about. He's referring to that time period. He got paid and his company got hired to come and do an audit for that period and to test our controls to see if we're doing things correctly, whether uh we have the necessary uh policies and and procedures in place to do our finances correctly. And you know what? We we didn't. We just didn't. And so, but we know that we know what we're missing. We know that the 24 shows what we what we lacked and what we um can anticipate to see moving forward. But again, from 23 and I I'll just venture to say and I'm only guessing even before then it's probably personnel probably finance department personnel and I'll leave it at that because I don't know any better than just to speculate. I can tell you though for the 23 24 I do know because I do have those audits. So when I sit there and look at

this as it carries over one thing that continues to carry over is that staffing component and certain things that'll move on over with what we know. So to answer your question mayor as we're showing these things you can see how they carry over and what's being done. We do have with us Miss Lori Langford who joins us uh who has been engaged and works with us as as one of our team members but as u uh she fills in some gaps that we have uh because we know and this council knows that we've had those gaps in the finance department. And so she's helped us get to the point where we've recognized what we've had. We've had to plug some holes, seal the holes, right? protect funds and put them where we need them to be while we go ahead meticulously work through all the pieces we need to work through so that we can once and for all get these correct, get these funds in the right places where they may be. Now, I will and I can and I, you know, eventually will one day hopefully be able to sit there and find out who's wise and when's. Right now, my charge right now is to get us correct, get our audits complete, get our finances in order, and start earning back the trust of this community. And the way we do that is while we're doing our stuff right now is protecting what we have and moving forward and then inching our way to start correcting what we're doing. So I can tell you today with all guarantee with all guarantees that the monies that we have right now they are in those funds they are in u protected accounts that are protected uh through a logic account that's um an account that's actually um a fund that's a government uh fund

um that is the one that's being still worked on and being decided to to uh assign assigned to the different categories. But it's as simple as that. I I it'd be even simpler to say that it was this basic thing that happened whether bad or not. But unfortunately for all of us, it's more complicated than that. It's not as simple as it's just gone. It's much more complicated than that. It's a lot of different pieces moving in a lot of different places and that needs to be done and that needs to take its course and be done well. And so as we go through that process and as the work is being done, that's what I would challenge everybody to do like let's let's get this right. Let's do this right. Right. I can't speak to all the other stuff. All I can speak to is the data, the black and white, the the the two columns that we work with. And so outside of looking at what we do have right now and moving forward while we look at the 25 audit which will include 1020 101 to 24 to 9:30 2025 you know that fiscal year ended and so we have things that we already know that are upcoming I can't change I got here started my first day was 92425 so I got six days worth of an audit that I have earned and you know what buck stops with me and I've earned it and I keep it and it is mine. I can tell you this. Whatever it looks like, it's going to be true. It's going to be clear. It may not be pretty, but it's going to be the truest thing you've seen. Um, that's all I can give you. That's all we can give you, right? And so, moving forward, what I've promised this council, what I promised the community, you, mayor, council, is the same thing over and over and over is this is there's no easy way out of this. There's no shortcut that

you can take. It is slow, meticulous, grinding work. The staff, I have promised each other, challenged each other, and told each other we're not going to take shortcuts. We're going to do this right once and for all. Whatever may look like outwardly, whatever we have to work through, we work through. We know we've got issues. Again, I've got six days and I already have a list of things that I know are probably coming to me. So, I've already earned quite a few things. So, what I need to work on is guess what? Already an audit that's coming to me with a lot of issues. But what I can tell you this is if I can show you that we're improving on that piece. That's where we're going. Now, you're asking me from what we've done in this very near past and the very near future, mayor. So, I'm giving you th that piece and those that framework. Obviously, there there may be conversations or questions about some some other windows of time perhaps. I at least wanted to give you what I know, what I could speak to without a doubt. When we start getting into the other areas, other time frames, and we start going into some areas that need some further clarification, some other information that we can provide, we'll definitely do that. But I'll tell you the same thing again. If I don't know it, I'm gonna tell you I don't know it. Do I know exactly what happened five years ago, 10 years ago? No. Am I gonna sit here telling you that I I know this or I don't know that? Nope. I'm not going to sign for it. I'm not going to tell you either. But I will say also too there's an advantage uh that we have to is that I think as a team if we go collectively forward at least wanting to seek the very best to start earning back the trust starting with your staff because that's all I can speak for is our team. That's what we're going to do. So that's what I can give you right now with this

piece and that what that's what I can speak to right now with the question. I know is elaborate and long, but I did want to capture a couple pieces in there because I didn't want to miss out the opportunity to go ahead and and drop some things in there so that we can be clear what our charge is because I only control, you know, from my piece and our team. I cannot control, do not want to control. I don't want to be a 10th member up here. I I know my place in life and I want to stay there. But just know um that when you're asking me these questions, I'm going to give this this the straight answer. I got no horse in this race. I got no relationships, no family, no friends, nothing like that to control anything that I do other than the honest truth is what you're going to get. So ask what you you you can of us. We'll answer as best as we can with the information that we can mer um that's what we can show you from the 23 24 and 25 that we again I put anticipated because we know that we will be improving as I'm talking through with Lori and I will say our interim finance director I will bring that up because it may be an obvious like where's our interim finance director our interim finance director happens to be our HR director and our HR director I need her doing HR stuff and she's actually doing she's had a required HR training out of town. So that that goes back to our first basic point of staffing, right? So I appreciate the time you'all allowed me to kind of say that. It doesn't uh change any of the questions perhaps. Uh but I did want to at least speak from the staff side uh before anything else. So thank for the time, but I'm here to answer any questions.

So we have internal controls repeated. Oh, I'm sorry. Sorry. Sorry. Sorry. We have on here, I see internal controls that has been in both of our audits. Can we talk speak to that and tell us what's going on and how we've corrected those issues that came up?

Yeah. So, uh, the internal controls that we're talking about too are there's there's policies that that we've and I got to pull up um the recommendations that we have and even the the uh management letters that we have and that speaks to how we are working through uh the the policies as we're receiving the funds and expensing them out. the biggest elephant in the room, it's obviously how we recognize those expenses and how we're expensing them out because the biggest thing for us is there's no money created extra money. There's no extra expenses created. It's a big pool of money and so the sloppiness of how we treated it is really just out. It's a big pool of money. Dropped it all in there and then when it came time to recognizing how you're doing it, it's just where it should have been expensed out. It wasn't expensed out. It was just expensed out of the general fund. So, at the end of the day, when you start looking at it and calling it out, well, you're going to have a big hole in your general fund because it didn't go out of your capital fund. Right? So, as you sit there looking at that, it is true your your general fund has a hole in it, but there wasn't any extra money in or extra money out, right? So, you need to rewire that. And that's what I'm saying that we are working through those process. Lori and her team and her staff is rewiring that number, those numbers to say that should go to that correctly so that that doesn't show up incorrectly in a different account. So when we speak of extra money, money that is not there that is there, uh I can tell you with all certainty, your auditors have told you with all certainty, your former interim city manager told you with all certainty. other uh financial statements have told you with all certainty nothing from the 23 or 24 audits have found anything to

show anything with any size of hint of anything that was not there missing it is again as your auditors told you uh and reminded you it was just that you start going in history and the past for some other items or other issues. I can't speak to TW before 23 which again puts us back into the year of 2021 2020 and beyond. Right? So that's where we're going because I can speak to 2022 to 23. The reason I can do that is because I sat there with the auditor and that's what the auditors got paid to do is go in there and take a look at our finances. What they told you was they told you what was true. And in fact our own gradient um individuals that sit here with us today is to be honest I think from what I was told this was almost it well not almost I'm sorry I'll take it back. This was an expected report and so we knew that these these numbers were going to come in and they're going to come in ugly. And so as I come in and receive these numbers, you know, a gift as my first week coming in. Thank you very much. Um, we kind of knew that was going to go on and and that's fair. You know, you take what you have and you you got to do what you got to do. And so I I don't dismiss anybody's uh question anybody's reason to question anything. I'm here to serve you, mayor, this council, ultimately the community. So, I I again, what I do want to make sure that we're doing is making sure that that people understand that you have third party agencies that have repeatedly said the

same thing, not us. And so, I fall back on that. If you if there is a question about us, me personally, I guess professionally, our staff perhaps, um, then, you know, then there's a problem, I guess, or a question with Brooks and Watson or Brooks Watson, I'm sorry, and others for years now because it's it's been repeated. And I think even your own team at Gradian's been saying this for a couple years now. your staff has been saying this for a while to say this is this has kind of been sloppy and uh we've known that this has been coming up. It's come to a head and and to be honest, look, this is cathartic. This is good. Maybe once and for all this is going to be cleaned up and we get it straight and we'll have a bigger, better, brighter future and so be it. If it lands at my feet, it lands at my feet. I'll take on the challenge. That's that's what I do. That's that's what we'll do. But um if you're asking me, [clears throat] you know, again with that very pointed question, with those very pointed issues, we've repeatedly, I believe on record in many meetings prior to said the same thing. I don't think that's ever been said any different at any one point by anyone else.

Okay, so let's just open it up for questions. Other questions? Um, can can we address specifically this figure that I don't know where it came from and that's why I'm asking if we could address it. The $10 million where is where is that? Where's that come from?

Miss Langford from uh Gradient. Sorry, American. Thank you. Be honest. I do not follow your social media, Mike. So, you don't follow social media? I don't follow the social media account. So, I do know. Is this working? Is this on?

Can you hold on? Hold on. Laura now you're on. You're good. All right. But I do know there's been a question about $10 million deficit. Can you get it? Which way? More centered. There you go. Right there. Excuse Excuse me. And

oh, sorry. Oh, my name is Lori Langford and I am with Gradient Solutions. I'm sorry. Talking to the mic. and I started working with the city of Elgen in January. I was engaged to come and assess the um finance department and to help get them moving along to be able to do their 24 audit. Y'all have not had a degreed experienced accountant on staff since April of two 2024. And so that's a whole year and a half that you have not had an accountant on staff. And so whenever you brought me in in January, you know, you were looking at several months without an accountant. And at that time, we came in and started to get bank wrecks completed, started to go through several of the processes that needed to be completed. We've reported back to the council a couple of times during this time frame. I believe it was in in April and in June about the inconsistent accounting practices that we came across and the audit started in June and it wrapped up in September and he presented you know a couple of weeks ago. But the number that I think um you're referring to Mr. is on page and if I'm wrong I forgive me because I'm not a mind reader I can only assume is on page 30 of the audit and

sorry are we are we looking at the 232 24 yes ma'am I don't even have a copy of the 2223 because I was not involved in that one at all and so I'm sorry. Again, we're we're basing it off what we generally understand from general. We don't have a pointed question other than

No, I just wanted to make sure I knew which audit to look at. Yeah. Page 30. Page 30. Page 30. Yes, ma'am. Yes. So, there's a column called capital projects and it is showing that there is a deficit of $10 million in that column and I believe that could be what you're referring to, sir, in in Miss St. Pierre. Thank you. What this is saying is that there was not enough revenue in that one year to cover the expenses that went out the door. And what this is also telling me just because I have some knowledge of what took place is that transfers were not made from the general fund and from a capital projects fund. That is noted in the back of the book. And I forgive me governmental accounting is very complicated and um and so it may sound like a lot of smoke and mirrors but I promise it's not. These do follow state these these are GAT these are generally accepted accounting principles but at the back of your audit on page 95 there is another fund called the construction fund and what was determined is that the general fund in the construction fund on page 95 did not give the capital projects fund all of the transfers transfers it should have given to it. So a deficit does not mean missing money. It means the revenue for that specific year does not cover the expenses for that specific year. I'd also just want to make a note if you could refer back to page uh I want to show you what you spent the majority of that money on. It is on page 16. In page 17 there in that specific fund that is

showing that deficit balance [snorts] the the types of expenses were for Elgen County Road, [snorts] Elgen County Line Road some Roy phase three project. There was the police station is the big bulk of that. There was that column. Um, it also had the park restroom project. The way governmental accounting works [snorts] is you can take several funds and roll them into one. And that's what that one column is showing you. And then also you can go down the list. Um, I believe there was some playground equipment and a couple of other items. But that I believe when I added that up about over $13 million just from this list that I have in front of you that was mentioned in the audit is what was spent out of that fund inside 2024. So if I can u mayor uh council member so when we mention about uh having a negative balance and governmental funding as well if you can imagine you you uh you get bond proceeds we go out there we borrow money and we have bond proceeds we I don't know $3 million to do x project well if we get those bond proceeds and we stick them in the bank we got $3 million at the end of the year if we haven't started the project, we got an extra $3 million, right? So, it's going to show up, right?

It's not extra. It's waiting to be spent on those bond projects. But see what I'm saying? [laughter] So, you could deceive yourself and say we got an extra $3 million, but it's not true. [clears throat] So, same thing on the expense side, council member. So, and that's that's kind of where we're saying on this and and what I think Miss Langford is also alluding to is again when you got these pulled items and where you've got to break them back up, put them back on the shelves where they need to go for one for accounting purposes, two for clarity, three for transparency, and four on the interest from all of that revenue makes a whole lot of sense, especially for a smaller community where that interest can accumulate to something, you know, maybe a sidewalk, you know, maybe a some park equipment, right? If you got them dispersed into like 50 accounts out there or just in in these smaller batches. What it does take though, and this is what we get back to with personnel and diligence that you have to track and that's where the internal controls come in. That's where staffing comes in. And so as you're running these pulled accounts, which is again it's not uncommon, uh that you are expensing them out out of the right categories that you are doing that due diligence and they are coming out of the right place. So then when you do have your audit team come out or your finance director and everybody else, you can make sense out of it. When you're seeing your quarterly financial reports, council's understanding what's going on, how we're working this and and what's happening as we're going through. again solving as we're moving and I'm not going to say from this point forward. I'm saying from even 23 I'm 2020 101 2022 forward because that's the data that I'm using at least right now. I'm only saying I'm saying this only for the data sake. I know there's some other questions beforehand, but for today's for my conversation, for this question right now, I should say, let me just leave it there is um is to answer that's why we

do the pool cash. It makes a whole lot of sense and and it is recommended, but you do have to stay on it. You do have to make sure probably should have financial staff. If you do the pool cash system, you need to have a finance director and qualified staff to do it. So, um, that finance,

can I can I just add something real quick, council member? I just to clarify too, it's my understanding we had the poolled cash because Elgen, if you look at the past six, seven years of growth in Elgen, we've grown tremendously. And I think under previous administrations, we had a pulled cash account and that was kind of the way of doing it, especially maybe a smaller we we didn't change our processes, our internal processes quick enough and then we had turnover with the finance team and so that pulled count, the pulled account could have worked had we had adequate staff.

Exactly. And and then we did not. Um and So any so anyways and and also back to the report that Brooks Watson gave us last council meeting under number two their findings it says and I highlighted this however the current staffing levels appear limited relative to the city's expanding financial management responsibilities these conditions can also place additional workload demands on existing accounting staff and may heighten the risk of delays or inconsistencies in financial information provided to management and council. So again, that that's a known known, right? And I and I think the gentleman [snorts] from Brooks Watson last council meeting said that we have a very small accounting staff for the size of city that we're at now.

Um so just just wanted to share that for additional context. Which leads to the question where are we at on a finance director? Thank you. Uh so on that I've had conversations with uh STR who's been running our recruitment for the finance director Larry Gilly specifically. Uh to answer your question is that we've uh temporarily halted that it's become stale. Um and he's recommended this as a professional in the recruitment. It's been still well it's been it was out for a long while with limited to no movement. And so in the world of recruitment is pull it back off, refresh it, look it over. I'd like to look it over. I mean, to see what was produced and the brochure and everything else and um so that we can go back out and see what we can uh do about it because I I it's a self-fulfilling prophecy, y'all. I mean, we're going to be in the same place if we don't get the right person in that. But we [clears throat] can't get there, right? If if we can't do some basic things because all of this, all of this, all of everything is not producing is scaring away a lot of good people, too. Like, so that's why I'm saying we're we're staff trying to earn as quickly but as correctly the trust of the public back because I am desperately that's on my to-do list, guys. I mean, I that's I'm desperately trying to find individuals, but people aren't taking calls with me. [clears throat] They they they they don't want anything to do with that at this point right now. So, all I can do is this. I'm going to work every day super hard at this. We're going to keep busting our butt to go ahead and make these changes, make them long term, right? Because that's all I can do and then work to get this this individual and staff up the way we need to because I got to cut Radiant loose. I I I like

Laura and their team, but I don't like them that much. I'm sorry, but I need somebody in house. I need them to be here soon because if I'm being told by our auditors that's a weakness. You got you got to take that just like everything else. If if we're saying, "Oh, but we need to change the TR patrols, but we're going to be okay with just continue with not having the proper staffing. That's a three-legged stool. You It's not going to work. You take them all." So, all of those are deadly serious, but they all start with one thing. It's people behind the PCs, people taking the calls, checking those emails, and making sure that goes to there, that goes to there, reconciling your accounts. So, I'm sorry to say right now, uh, it's been pulled off because it does us no good to spend hardearned community dollars, tax dollars to advertise for something we ain't going to get anything out of at this point. So, we're going to relook at that, rethink it, see how we can go back at this. But just know that it's on the top of the list you [clears throat] gave me. So, it's a it's the top of my priority list, but I got to rethink how we go back out because if we do the same thing I told council member St. Pierre last meeting, we go about it the same way, we're going to get the same result. And I we don't need to hire finance director. I can hire one tomorrow. We need to hire a good finance director. So that's the problem is that it's finding that right person, the right stick. So that's why we're here today. We got to work through this guys is there's no easy way. It's no easy way. There's no shortcut.

Um that comes to my next question. So the findings that we do have, I see that it has a anticipated uh completion date of the end of this year. How confident are we in that? So I'm sorry. So what we're saying with on sorry on the completion date for the 25 audit.

No the audit. So like look in your book that says single audit reports. Oh yeah the pages 13 through 14. Actually 12 through 14. Um these are the findings. Oh on the seal it says yes. Oh,

it says you know what corrective action should be taken um and then anticipated completion date. Majorities have completion date of December 31st of 2025. Right. So I'm asking how confident are we in having that completed? Yeah. So um with the single audit I mean we're looking at here uh the gap preparation financial statements that's the staffing again these are going to be some things that are going to be carried over. These are not just like the same audit findings in the way that they're situated there. we're going to be carrying over certain things like I I can't I can't change the fact that we're not going to have uh audit staffing in place by 7:31. Not for the single audit, not for a full-blown audit, the other ones. But what we can do is if you can tell with the colors there, the idea is that we'll be improving and getting better because when I'm here, if I'm here for your 26 audit, right? So when I've got full one year's worth of what it's what's happened, I expect to drop off a lot of that list like internal controls staffing should be dropping off or dropped off completely. Bank reconciliation should be done better. So you go from yellow and the green start to drop off. Some things are going to remain uh as a consistent just because you know we have compensated absences. The reason why compensated absences is up there by the way and it's and it's consistent is because in cities you have to recognize and finance or account for sick leave right just in case somebody says hey I'm leaving tomorrow you got to pay me the 12 days of sick leave I have cub well the difference with elegant is that we don't pay your sick leave okay so it's a big difference with us we

We we don't have to calculate that because we don't pay it out except until this year that that's changed. That's still recognized as a requirement for your audit. But because we don't do that here, it's still recognized as being your outside of what's recommended for compensated absences. So you get everybody's sick leave together and says, "Oh, that's a thousand hours worth of sick leave." You put a number to it and you should have that in the bank somewhere accounting for it. That'd be great if we paid it out. When you leave the city of Elgen, you don't get to take sick leave. You get to take vacation, you don't get to take sick leave. So, it doesn't apply to us, but to them and the audit team, it runs through. So, that's why it got to green on the final audit and it will disappear on the 2026 audit. So, that's what I'm saying for this council is it should be going from red to yellow to green, meaning gone. Um, I hope we'll have a

I'm a finance director and I'm looking at the city of Elgen and I'm looking that there's no and I'm looking that there's no accountants on staffs, there's nothing. I'm not going to look at it. So, at TML this past week, I had a conversation with a lady by the name of Marty Simpson. She's the executive direct executive director of the Government Finance Association of Texas

and the assistant director of city financial services for TML. When I had a conversation with her, I talked to her about finance directors because that's what she does, right? Mhm. And she said that the classical thought in city government was that we had to pay a finance director $140,000, you know, but what her team at TML has done has created a boot camp where they come in and if a city has an accountant on staff, they come in and they train them. They get them to where they can do that to where you don't have to pay the full price. I'm not saying we don't need a finance director, but I'm just saying that that could be something we could look at.

Train up internally. Train up internally, right? Fear forward. Yep. Do you get what I'm saying? Yes, sir. And to look at it differently and then we could get a finance director moving forward, but I think we've been so myopic in just wanting a director and not looking at the whole picture.

So, that's just something I think as a council, we're here to do a workshop. We're here to talk about stuff. Let's talk about how we can I can give you this council if I may, mayor and council. I I think we can actually we can do both. So we can run both trains down the road. We can be running to get our finance director which is required just required and we still train up our staff and and seek to even recruit um you know new staff because I I just don't again hearing it straight from the auditor is what a third party comes in not knowing you know anything else but just knowing your numbers the size and it's not just the ratio that they're running, but they know what your weaknesses are and they're telling you it's not like a, you know, police uh population kind of racial thing. They're saying from the weaknesses you're showing consistently, your issue starts with personnel with you need more people, more qualified people. And that's why I'm saying I'm I'm with you entirely. So I like the I like the fact that we can be, you know, going to F GFO to have that while we also do the finance because I need to start making we need to start making that more attractive

because and we need to build as well. There needs to be a beach because sir I know another thing too, right? So I heard smirks and laughs from the audience when I was talking about a finance director, right? But the [clears throat] reality of the situation that the cost of living in the [snorts] Austin metro has gone up 35%. If I'm in the public sector, I am at a delta of 29.2%. So that means if I'm in the public sector, I make 29% more than I mean, if I'm in the private sector, I make more than a public service. And so we wonder why it's hard to find a finance director. It's a whole and then when you couple that with mental well-being and all of the other stuff, there's no there's no question as to why we can't find. It's this too this mess. Everybody knows it's a mess. We're not saying it's not a mess, but there's so much more that goes into it. And it's just we got to we got to create a comprehensive approach on how we're going to address. We can't just expect that we rewrite the job description or we do X Y and Z that they're going to come in. It's a whole it's a systematic issue across the whole entire state. And if TML, [clears throat] which everyone always talks about, we need to go to TML so we can learn. If that learning organization saw a need and created a whole entire division to do that, that shows

and and to go past that too, so government financing, as Lori said, it's a very niche thing. So again without having that profit motive which all around us generally speaking well outside of Austin right with let's say state government and whatnot but generally speaking most people are coming from the private sector are wired in a certain way. So even that you get your CFOs or people that are working through that that is not you cannot walk into a government facility and try to do financial government financial accounting. You will be upside down in no time and your organization will be under right next to you in no time because you are talking two different languages that don't speak and you may get away with it for a little while but in no time you'll be under. So that even narrows our scope to even people understanding government financing even more so. So I think you're entirely right that it's even that more defined trying to find that needle that person in that that so good stuff I wrote down. Thank you. [clears throat]

I'll chime in. I I have similar concerns and and uh thoughts with with Arthur. Um I have spoke with a couple people with email as well and there's not the pool isn't there for directors. Uh similar to teachers there's not a applicant pool for teachers there's not an applicant pool for CFOs uh for the cities. Um, so we do need a different approach.

But the one thing that I haven't seen us do and and maybe uh GSR is, but I just don't know. But I haven't seen us knocking on on somebody's door wherever, you know, Austin or Round Rock, wherever. Somebody who's in the know who we could steal,

poach, poach. I didn't say that. I mean, if I didn't say that. We know that there's good people around us in other places. Um, so if we know we can find them, then let's go talk to them.

I think it's the same thing. Um, we we may know people or want to poach, but they see this mess right here. I was going to say you probably have to drug them at this point. And then it's at the same time um I mean like getting an adequate person that can do the job because people keep throwing around you know CPA CPA that's the difference between a regular CPA at a school

and a a CPA that that understands government finances. So that's a big thing too because we all know what's going on in the news. We all see it and you know even during conferences there's people coming up to us since they're a CPA and they looked at our books but I'm like are you a governmental CPA because government finances are different than the bookstore finances. There's different rules to everything. And so that's an understanding that needs to be had as well. If you didn't go to school for this then you can't really say that you're all into the no. like you may understand some of these numbers because we all should have an understanding of some of our finances and bookkeeping, but I didn't go to school to have this as my full-time job to understand all of government finances. That's why we have the experts.

So, that needs to be understanding, too, to make sure we get the right person as you stated um for the position. So, I I'm with for um you know, halting right now and revamping and going over what we need to do to send it back out and we get this together um over the next couple months because I think people also need to realize too this has been happening for a while and as previous management um exited then that's when stuff really started coming to life and stuff started getting fixed. [snorts] Everybody knows the issues that we have and we have started working on those and it has shown that we have started working on those. you know where the issues are, but this isn't going to be something that's just going to be done in the morning. Um, it's it's like basing the turkey. It's not going to be done in 30 minutes. So, we need to also, like you stated, take the time and really get to what what happened

and and go from there so it can be corrected and on the straight and narrow from now on. Um, that's all I have to say on that one. I just needed to say that. I have a question with the people we have right now.

Sorry. It's It's We apologize. It really is the mics because I've been over here tapping. Yeah. Super close. You gota You gotta be right on top. We can hear you. Thank you. He He has the best mic. [laughter] Pass your mic around.

Sorry. Yeah. Yeah. Sorry about that. Back to the findings. Um and what we currently have now if you can take them off if you eat it. See, I just And what we currently have now. There you go. We understand we're short people, [snorts] but with where Lori has been helping, [snorts] how are our policies and procedures now? Um, and do we have the software and the applications in place for the people that we currently have to do the best job?

Thank you, Council Member. I want to ask Miss Langford to answer. She can. Okay. So, from a policy and procedure standpoint, that is our next one of our next things to do is to start documenting specific policies and getting them adopted by council. Um, and the staff that you have now are working very diligently to do things correctly. They ask me questions. we're posting things the right way. Um, they are learning and they are wanting to do it correctly. They have only I believe the longest tenure is maybe a year and a half in the accounting department at this moment and there's only three of them and so they are working at a disadvantage in that regard. But I do train them every time we work on something. I'm not just keeping the work. I'm teaching them how to do the work. Some of the work I can't necessarily teach it to them because they're not at that level yet. um because I've been doing this for 25 years and some of it will be addressed because of me and my team that will help you get through some of these um these findings for the 25 audit that I'm bringing in some people with very experienced team to help me get some of these things ready for you guys. But that's where once we get it, we need to make sure the next [snorts] person can carry the ball and you have to get that person stuff.

Can I answer um to try to answer your question more succinctly? Yes. Is that we we have uh enough staff on hand, enough qualified individuals and enough individuals that are laser focused on these issues on a daily basis. Like finances is what I go to sleep with and finances is unfortunately what what I go to bed thinking about. Um, it's that deadly serious to me and and it is to all of us. It's a priority because that's that's it it's it's based on that's how we can do things. That's how we provide stuff uh back to our citizens and we we are the stewards of taxpayer dollars. So, we understand that role. We are desperately I don't know how many times we're going to have to say that same thing, right? So, I don't want to continue saying it over and over. wanting, needing a professionals to fill in. So, we can continue down this road and it will be completed. While I'm here, I will u guarantee that we're going to complete everything we need to complete. We're going to report everything that needs to report it. We are going to do what everything that needs to be done and we will get better. How fast will we get there? We can be faster, not more accurate because we're going to be 100% accurate. Can we be faster? Yeah. Let's get some more people in here. But will we be 100%. No. Will we be accurate in what we're doing? Are we doing it the correct way? Yeah. So, they're learning as we go. We're not building an airplane as we're flying. It's not that bad. But I do have to mention once again that that is our our biggest Achilles heel. Now, I got to I got to say though, the individuals that are working in a finance department aside everyone else, but they are taking a big hit on trying to do this work. And I understand that's that's what they get paid for, but from what was being done

previously to now, it is a lot different. And so that's why I'm trying to maintain staff with the current conditions and to say this is your new your this is your new world and this is the new floor that you live with and for the most part everybody understands that and that's what we work with today right so now we just need to keep adding those pieces but we have a support team all of us that are working on this so it's not just we don't call this the finance department issue we all are under this issue period And so that's why it's do we have enough people? Well, I I work at the finance department, too. So does she. So does he. We all do. So we're all going to pitch in. I ultimately the buck stops with me. So I'll guarantee that we're going to be getting the work done. And uh we're going to try to get it out as fast as we can, but I'm going to lean on a lot of good, smart people. Um, but I just go back to the same thing is is yeah, we we we know the challenges that we have, but we we've got this where we can we can get uh things done. Just I'd like to do them faster. That way we can start getting ahead of the curve and start doing some really great things proactively instead of just playing catchup catchup catchup because we're running a city as we're going while we're playing catch-up catchup catchup and that's not a good posture to have not at the finance department not at any department at the city. Um, and look, that's that's maybe Polyiana type thinking, but you should that should be your goal and that's the goal that we have. So, we got to run the city, try to do it as best we can while we get this done, while we start solving those, while we uncover all these things, while we unwind these, while we recruit

Lori, can I ask you a question? Um, [snorts] can you can you explain the difference between messy or sloppy accounting and fraudulent accounting? What I would say messy accounting is inconsistent accounting practices. They're not applying the the accounting practices consistently like they're supposed to. Fraudulent in my opinion would be when somebody is actively trying to deceive or defraud the business that they work for. They are making entries or making transfers in a malicious way to benefit personally from it. And since you

follow question to that is, have you seen any of that? I have not reviewed all of your books from the past five years. Of course, I've only been here since January. I have not seen any evidence of it in the transactions that I've observed.

So, but but but I do want to caution everybody and I I don't want to put Miss Langford, of course, she works for Gra, right? She's not a city employee one, but we're we're you're she's paid by the council. So, I'm not saying not about that. But when we start to ask about, you know, what would be verging on outside of what her purview would be, like I want to make sure that we remain there. There's other people that carry other different authorities that will be able to answer those. Well, what I can say is what she's been working on, she'll be able to answer for herself. And I think she just stated that right now um as to what what passes that line, but outside of what she's able to say and especially on behalf of the finance department, I I I would just temper that by saying, look, what we know is what we can show you, which is here, and not generally what what what our opinion may be. And I apologize, Council. I don't mean to be [snorts] non-responsive [clears throat] in that answer, but it could be um taken as maybe nonresponsive or I I want to be factual in everything that we're saying. So, I don't I don't I don't think that Mr. Langford or anyone else right now has the ability to say what would be that line. And I think an auditor gradient is paid to be a team member. But I think if the question is have you found anything that would raise a flag, right? If if that's the question, council, I don't mean to reward your question, council member. I don't want to do that.

I think I think what I'm trying to get at is is there's there's a difference between sloppy and fraudulent, right? In my opinion, yes, ma'am. And in in my opinion, too. I've had employees who I've had to let go. They weren't doing their job. Were they stealing money? Were they, you know, doing other things? No. But they weren't doing the job, right? And so I kind of equate that to incompetence or sloppiness. And so that's where I look at our financial practices. Unfortunately,

um Brooke and Brooks and Watson and Co. would have stated that same thing if it was fraud. Um if you look on the auditor's responsibility for the audit of compliance, it states that that our objectives are to obtain reasonable assurance about whether material non-compliance with the compliance requirements referred to above occurred whether due to fraud or error. They have stated our errors.

So if they're found fraud in that, they would have stated that as well. Why? Because it's in their responsibility as an auditor. They're bound to report it um in any one of their audits. And I think they've been with your team for quite a while, my understanding. So, and I know again it goes back to the same thing as like how can you have such horrific transactions happened happen and still have a qualified or now it's you know a different version of what they called a good audit clean audit. Yeah. Unmodified. Um it could be very well the same. So again, it's it's determining between sloppy and between something past sloppy because that's where you start changing between unmodified and something else, right? [clears throat] That's where you start to go to the different levels where it's like, and we're going to, by the way, put it in the management letter and give it to your bosses manager to say you've got issues. your staff was unresponsive. Uh counsel, by the way, or I found this, this was hidden, this, this was that, this, whatever it may be. That's precisely what they're paid to do. That's why there's a management letter that's given to you independently of me, to you directly, and that's where it lists out if anything's wrong. I mean, this is not good stuff either, right?

Like, I'm not used to having even findings. So to walk in and have findings to address, I I don't like that to begin with. It is what it is, right? Um but I could say again, stepping way over to say it's even past those findings. Oh my god, you are. Yeah, I I you wouldn't have certain staff even in the six days that I would have been here for that 9:24 to 9:30 period. But as soon as I got here, I I knew that already because in talking with Mr. Turner and talking with our audit team and talking with our finance department too, all of especially the independent uh Mr. Turner who was walking, you know, working for West York tell me too, look, there's some really sloppy, you know, you need to get finance director in there as soon as possible for sure. and you're going to get some real bad, you know, audits, you know, come before you and work with it and then see you later. I'm out. Thanks, Isaac. Um, but so be it. But like I said, we work with the truth and that's all you can do. I mean, I'm sorry, but I I just don't know how else to put it.

Um, so we'll continue to answer the questions. So, I apologize if I got in front of you, council. I didn't mean to do that. I just want to be clear as to what our authorities are to say what what we can say or not say. We've mentioned the word fraud a lot, but I'm I'm not so much concerned that things were done fraudulent fraudulent, excuse me, fraudulently. My concerns with the messy bookkeeping is that laws were violated within this messy bookkeeping. Um, I'm not sure how this isn't intentional or reckless disregard with the use of our finances. Um, we've applied funds that we weren't supposed to use into other accounts uh intentionally and knowingly with Mattis. He used capital improvement funds or project funds into the general fund account. And from what I'm reading on this, it states that part of this problem was based on that we started projects based on operational needs and timing considerations without securing or designating funds first. So what I'm gathering is that some of this capital fund project was probably moved over to cover the funds that we used that we didn't have yet. Okay. But that still doesn't mean that this lack of of this lost track of accounting doesn't violate laws and we just keep talking about fraud and saying that it's not in anybody's pocket. I not care about that. What I care about is that laws have been violated and we're not talking about it.

So when we talk about laws, if I can call in Mr. or city attorney if he can go ahead and speak to I can't speak to any law laws or violations of laws. Mark, you want to jump in here? But that's why these people are here. These people are here to answer and to hear those questions. That's what they're here for. Mark, are you suggesting that we need to go into executive session in order to

I'm not going into executive session to talk about What is the desire of the council? Starting with Rodriguez. Care less. I mean, if something was done incorrectly, fraudulent, whatever. I want to know,

you know, um I don't Well, I don't think we need to go into executive session to just we Yes, I I agree with Mark. I don't think I mean necessarily need to talk to specifically laws that were broken or anything like that. But I think what Tiffany's what she's trying to get convey to to the council and to the crowd if in fact is that there were some things done. uh most likely I don't know for sure I can't prove it uh that we're money was misappropriated uh possibly I don't know that to be the case u but I think that's what she's asking is

yeah I mean just because we stopped doing it doesn't mean it wasn't done I mean I could literally go out and rob banks for a year and realize that that's not right and stop doing it but if I get caught five years later I'm still going to jail for robbing a bank if it's illegally done it was illegally done. It doesn't matter if we stop doing the illegal thing. It was still done illegally. And that's what I've been trying to convey to you. This is what I've been trying to discuss with you. I don't think it went into people's pockets. I don't think it's it's it's not there. I don't think that we don't have the money to continue to uh uh um handle these capital improvement projects that, you know, we're not going to be able to finish something because we used it. What I want to address is the fact that somebody did something criminal with our accounts. They lost track of our accounts to we we didn't have missing on this account $6.1 million. That's intentional and that's reckless disregard for our finances. I I I'm I'm okay with understanding that the money is there and and that we have it and we but what we did was wrong and we have to admit that. We have to look at that. We need to investigate that.

Anybody? Okay. Nobody has any problems on the dis for discussing it. So we can continue this discussion. That's my whole argument for this forensic audit is let's find out how many other problems have been created.

I can say that since we have the Texas Rangers coming to do that investigation, I'm going to be sure that we will find something out from there. And um whatever that might be because I have no idea. And I want you to know personally I didn't mean for this to happen this way.

That's you're we're not discussing that. I understand that. But this is not how I wanted this situation to unfold. I wanted us as a council to come together and understand that there were significant problems and order this ourselves. We should have gotten ahead of this game and now we look stupid because we didn't.

Okay. Um Yes. Speaking to the the Texas Rangers issue, what do we know what the process is that have we been contacted or or can we talk about it or not? Sure. Okay. Chief, would you come forward, please?

No, no, no. I'm just I want to be helpful, but I don't know. The supervis the supervisor of the Texas Ranger said that they would be in contact with us next week to arrange a meeting to discuss what the expectations will be from that point on. Okay. And that's all the information I have. Have you been contacted by the comroll yet? Because I saw that they have also stated that they're sending somebody.

No, I have not. Okay. Okay. Nobody. That's all we That's all we know on that one. Okay. So, continue with the discussion of do you know how Tiffany what you're looking for or how to

sorry can can I say one thing and maybe this is because I know we're an open session as well I think there's some agreements my understanding with u some contractual separation agreement understandings that we need to be aware of when we start talking about individuals former employees disparagement agreements and whatnot that could am I correct Mr. as long as we stay away from personnel, uh, we can discuss.

I mean, I pretty much have said what I've said. I I I think, like I said, we should have gotten out in front of this and we should have ordered this. Um, but there is clear evidence that we have violated Penal Code 3245 in my opinion in several different ways. And I don't think that we can ignore that any longer. and and whoever needs to whatever may happen if somebody gets into trouble that's their problem. In my opinion this they personally knowingly and recklessly spent money and we look stupid because of it

and and I appreciate that things are are getting handled and going forward. I I do have a question though. You talked about procedures and policies going forward to make sure that this doesn't happen again. Do we not have any procedures and policies currently in place? Go, you can jump.

You do have procedures that people are following to do their daily work. I I understand now. I'm talking about when we had our our previous finance director who left, were there not procedures and policies that he had in place to ensure that when he left, we could continue to do what we're doing? I can't speak to what happened in April of 2024. No, ma'am.

Well, he left in 2021. The last finance director left in April 2024 to my knowledge. I can't speak to anything to the person who originally started these accounts because if I'm not mistaken, wouldn't that be like the role of an HR department to make sure that we keep those policies and have them, you know, written and and and in place so that that way when this person leaves and we [snorts] bring in somebody else, they know what we were doing so they can continue to follow procedure and policy.

So I'll let me speak to that because Miss again, she's with Miss Grad and that would be directed at me. So from what I understand uh the quick answer would be I we don't know of policies that we can point to. What we can say is there's policies that we've been following based on audit findings to correct things. So again going backwards and figuring out the who's we're not in that that state currently current staff with gradient today. So, as Miss Langford said, we're going to be memorializing these things, putting them in writing and moving us forward. Um, and but to answer your questions, I I don't even have staff here that is able to answer those types of questions for you, unfortunately. But the straight answer is I haven't found any of those policies because we're having to create those now in all fairness to be able to get this straight today. Anyone else have any more questions?

Okay. um your plan of moving forward. Yes, ma'am. So, slide number two um for FY26 which um falls for October 1, 2025 through September 30th, 2026. Um financial reports council's monthly quarterly beginning in January. So, uh the council should be receiving quarterly reports. I insist that we should be giving you and we'll be giving you monthly reports. Uh what that looks like is going to be a report tailored to what makes the most sense. The quarterly report is going to be a more uh uh more summarized uh report, but you're going to be seeing month-to-month action where you can refer back to it and not because you're excited to see all these numbers uh every month, but to where you're going to have information in front of you and information that we can post to the public so they can follow along with us, right? Uh bank accounts obviously to be reconciled within 30 days, the month end again. And so we're approaching that as a growing. So as we keep growing our our problem and all the amount of of accounts keep growing with us and so we're we're we're growing too. We're catching up but it's it's still growing on this end. So we're getting there. We're getting there. We're getting there. But it's still growing growing growing which is a great thing for us because we continue to grow. But we'll be uh reconciling within 30 days of month end which goes back to um the way we should be doing business. Present count uh council with revised financial policies which will we will be bringing to you. Aside from that um I will be and it's not listed in here too. You will be getting besides the quarterly financial reports you'll be getting quarterly investment reports. So, I want you to know what's in like the uh your investment accounts so you can follow those along, too. And I'll be putting

those. I was talking to Lori. We'll just be dropping those in on monthly, too. It's not going to be a lot of movement in it, but you can see it also. So, just follow along with us as we go. This is your money. Follow along with us. Uh it's going to look like watching [snorts] grass grow, but so be it. That's how it is. Uh we'll be reconciling pulled cash from reserves. Obviously that is just the way we do business and of course complete our audit uh within the state requirements. Uh and I expect to do that you know with a lot of gray spirit in between. So again besides working through what has been done in the past I I get all that and I don't dismiss any of it. Right. What I can tell you today at least in my charge with what I have in front of me is manage this city. manage it well with the other charges of get us on track and get us moving forward. I think we can do a lot of the things at the same time. Uh we may even get something free from the state

to be honest. Uh yeah. So yeah. Yeah. Well, so it's already paid for, right? So but we won't have to tax the citizens perhaps maybe on that one too, right? So who knows? But what I will say this and I'll continue to say it as well if if you know if I may. Uh you can come visit with us. We're not scary people. I'm very approachable. Our our department like I said there's not many of us and I include myself with the finance department. We'll we'll speak to anybody and talk to you about it. It may not be some pretty answers. There may some be some gritty stuff and there may some stuff that we're just going to tell you look that was 2020. that was, you know, 1942 and we just don't know what Bob, you know, was thinking when he did that. But we're going to do that attempt for you and we can only speak to what we know. And so, uh, please bear with us, work with us. We want to get this right. And so, that's why I'm not wanting to short change this. And I could easily sit here and say, let's go an easy, quicker way. I'd rather take the lumps, take it slow because I'd rather do it right than do it fast. So, let's just get this right. So, when we get out of the other side of this, um it's not to say we'll never look back, but our focus will be the front, especially on the finance side because we just got to get going on this because it's too much time, too much energy from not just the community staff, you all. I need to be focused on a whole lot of stuff because we got cities that are just killing us. We can't be doing that. We just got to get out of this rut and get moving. Get moving. Get moving. But tell me where I need to be, coach. I'll be there. Um, but no know we're ready to go. So, let me know.

It is 7:52 and we are adjourned. represent.