Council Budget and Finance Committee - Regular Meeting

Great. Okay. Good afternoon everybody. It is Wednesday, May 20th. This is the Council Budget and Finance Committee. Call the meeting to order. It is 5.31 p.m. And if we can have roll call, please. Sure. Mayor Salinas. Mayor Salinas.

Mayor Salinas.

Mayor Salinas.

Mayor Salinas. Mayor Salinas.

Mayor Salinas. Mayor Salinas. Okay, so we do have quorum, so we'll move on to public comment. This is for anybody online. The audience that would like to make a public comment on something. We're not on the agenda. Is there anybody in the public that would like to make. Online no one online. Is there anybody in the room? Seeing none, I can tell the public comment. And then move on to people with minutes moved by mayor pro, Tim, Sarah, the 2nd, 5 mayor. and there are no objections and it will be unanimously passed moving on to uh reports and action items this is uh fiscal year 2025 annual audit process oral presentation external auditors so i guess we passed it over to you open that up after you've got a partner um just to um clarify we are not um yeah let's have her sit yes i will i'm happy to jump back here

Are you sure? Yeah, yeah. No, no.

So the item is not complete, but there are some items that we use. And we can also give you a bit of an update on the process.

Cool. Well, thank you for having me. I just wanted to, I guess, to start, it sounds like you guys got the memo that I gave to Christy to print out. So I'm going to be going over this. But as Deanna mentioned, my name is Ruth, and I'm an audit partner with Mays & Associates, and we're the external auditors overseeing the fiscal year of 2020 audit. And with me tonight is Maria, who's the manager, who helps me with the audit. So the purpose of the memo, and you don't have to read through it necessarily. I'm going to cover it tonight, but definitely take a read through after. But basically what this memo is is our required audit communications.

So we're required to communicate certain aspects of our audit to you.

So some of those things are like the scope of our audit, our audit timing, what we're expecting from management, and then what we're going to test. Um, and then also, uh, inquiries related to. So, those are the. So, overall, our responsibility is to audit the financial statements. And in order to do that, we have to issue an audit. And what we're saying with that is whether or not the city's financial statements are material. So, when we're and then also in the US gap, so those are like the.

Pieces to it.

In order to be able to get to the point of being able to render an opinion, there's a bunch of stuff that we do internally. So we start off with a risk assessment process. So that's done with our audit team. And we're looking at the risks of a material misstatement and the risks in order to be able to plan what we're going to test and how. So we do that before we even start any work. And then we develop an audit plan. So that comes from our brainstorming session and risk assessment process. So it details everything we're going to do, all of the transaction cycles we're going to test and the way we're going to test. We have to, in order to get to the planning model of planning that we do, we have to consider the city's internal control over financial reporting. And then the city's internal compliance requirements for major federal grants. That we're testing, so we have 2 phases of the audit. We have what we call preliminary or. And that's where we're testing the internal controls. Of the city, so we're doing detailed tests of transactions. And looking at segregation of duties. Just to make sure that. the same person or yeah, the person who has access or those that have access to the city's assets, but they can't also modify the records underlying those assets in the financial statements without someone else revealing. So we tailor our approach during that phase of the audit to kind of tests around that. So we look at cash, we look at revenue, we look at accounts payable, we look at payroll. And journal entries, those are kind of like the bigger areas that we test during our preliminary phase. And then based on the results of those audit or that part of the audit, we plan more of a final testing. And that's like the year end. So that's after the city has closed their books. And we're getting the data from the city, from the trial balance. And using that data, we're planning what balances and activity are material. And then we develop tests around those material balances to make sure that they're materially accurate. So one thing I did want to point out too is our audit opinion just covers the financial statements. It doesn't cover the required supplementary information that goes in the city's ACTFR. That's the Annual Comprehensive Financial Report. The required supplementary information includes management's discussion and analysis, as well as statistics and budget to actuals. So we don't audit those particular pieces, but we do look at those pieces to make sure they're materially reasonable given the financial statements. So we look for material inaccuracies. So talking about fraud. So when we're talking about financial statement fraud, we're looking at it from the lens of it's an intentional act that results in a material misstatement in the financial statements. So there's two concepts with fraud. So the first is inaccurate or, I guess, fraudulent financial reporting. So that's like cooking the books, making the books look better than they are. The 2nd concept is that of misappropriation of assets. So that's more tangible like theft. Or even concealment of a city asset. So, we do tailor all of our audits has stated. To that definition of fraud, so everything that we, we look at improper revenue recognition, we always deem that high risk. So. we assume that revenue could be overstated. So we test based on that kind of assumption. And then we also look at management's potential override of internal controls. So is there anyone amongst management that can, again, access the city's assets and then modify the records without someone else being a part of it? So we do want to include you guys in the fraud part of the questions that we have. So in this memo, I'll be emailing each of you a copy of it. And there are four questions that I will ask in my email. And then I'll ask you to respond to me with your responses to questions. Just because in this format, it's kind of awkward to ask each of you.

You know what I mean?

So this way you have clear channel. And also you have my contact information just in case you have any questions or anything comes up during the year. So just feel free to ask questions if you have any related to this after you have a chance to kind of digest.

Sorry, what is the scope or the timeline of what you're auditing, but which fiscal year is this for?

Oh, fiscal year 25. Yeah.

Or 5-6.

No, 25. So we're looking at... 24. Yeah.

And this is pretty standard to what we did last.

Yeah, this is required every year, so it's nothing new.

Yeah, yeah. Yeah, we'll probably also, because it's 23. Yeah, and so really the things that you want to, I mean, the engagement letter is just standard boilerplate language. That's like put on this page and find the thickness of it. That's this kind of I think that the content is really important for the first three pages that you want to read through. But yeah, so I thought I might also go over our audit status. I know Deanna kind of mentioned it, but we have completed the majority of our audit work. So we had our preliminary phase in June of 25, and then we wrapped up a little bit in October 25. And we were hoping to work on the final audit during that time, but the city wasn't quite ready. So we pushed it to April. So we just finished our final phase of the audit in April of 2026. We do still have open items that we will actually I should correct myself on that because Shannon actually just shared with us what was left for what we needed to complete the audit. So we're we have that stuff in house. We just need to have time to go through it. And we do have a team scheduled the week of June 8th to work on wrap-up. So hopefully we'll have a better idea after that wrap-up phase of where we're at and timing of issuing the financial statements. And then we did meet with management to discuss, at least finance management, to discuss potential findings for fiscal year 25. So those are in draft form, but we do expect to have some. So those would be reported in what we call our memorandum of internal control. And then let me see what else.

I just have a question about that. Yeah. So this is a particularly important year for us to look at this audit. And I guess I'm wondering what kind of material analysis we might, I guess I'm just, I'm hoping we can glean something from the ways that our finances were structured or some besides where our finances were structured. You go first. So, yeah, I guess I'm curious here what kind of insight I could be able to glean from this memorandum, or is it not going to touch some of the issues that came up that led to the deficit?

To an extent, as far as the deficit relates to the financial statements in that year, it will discuss that. It will. Our memorandum will cover that. Yes. But it'll have it'll be just tailored to what the financial statements have. OK. And then any other internal control issues related to that. OK. Which it'll be clear when you read it. OK. Yeah. So it'll glean it'll give you enough detail. Yeah.

Can you give an example? Well, OK, let me think here. Because I have, I didn't bring a copy, but it's okay.

So I think an example, the bigger one is the fiscal year 25 budget inaccuracies. So just having to modify the budget, you know, late in the game, so to speak, in a material way.

I see. To improve the budget that wasn't actually that accurate. And you're going to tell us why we were able to do better or how management was able to do better.

where it was different yeah yeah okay yeah and why and you know yeah all that so that'll be pointed out and then the general fund yeah connection reserves yeah that will be another comment um and we'll talk about what we see from that standpoint because the reason i asked is like everybody had mentioned before we got this process a few times prior to us arriving at the deficit and there were certain practices that in hindsight it didn't feel like they should very

strong rules or regards around how vacancy savings are being used, for example, or certain positions being staffed by... That won't come up here. That won't come up here. Okay. Or staffed by overhead positions. There are just practices that seem regular to us that never surfaced, so they didn't feel like something that we needed to materially name in the four questions that you were asking, where in hindsight, I'm like, maybe we should have brought that up in these conversations. Or to California's point, would that not have been material to this conversation?

Well, if it was related to fraud, then it probably would have been something you would have reported because those questions that are on that page are more focused on fraud as opposed to errors.

Okay. Or bad management practices.

Or bad management practices.

It would be able to feel safe. this is your statements that you're reporting let me go and verify that that's correct like even though the numbers we might have like ran the budget into the ground as long as things if no material misstatements then but then because we had to revise it so many times that there's issues there right yeah that's exactly

So you can have a clean opinion from our standpoint and still have a structural deficit and have those. I mean, what we look at is in terms of the audit. So at June 30, 25, I'm going to look forward up till. So whenever my opinion date is, I don't know what that's going to be. Looking forward 12 months to make sure that there's no growing concern, meaning that there's no concern that the issue will, or the city will be able to operate the way it intends to in the next 12 months.

Okay. Okay. Thank you. Yeah, I'm just trying to understand, or at least for the public's benefit, like what the value of the audit is, or at least really clarify the scope of what it's going to provide the city insight. So thank you for answering.

Yeah. I think to the extent that the audit doesn't answer any of your questions, then managerial. I think some of that's what our lessons are. Yeah. But if there's some of that still feels left out, we can work those out as well.

Yeah. You know, your comment about expecting findings i know you haven't determined those right now but um i'm anticipating findings i'm expecting bones and um you know one thing i was thinking is um you know also you know to you know just sort of put this on the table you're looking at you're looking at the budget um and you know this is not going to be a or Will it, let me ask it this way, will it or will it not be a sort of gotcha, this person did this, that person did that, you know, kind of opinion? What would be the nature of that opinion?

So the comments... The internal control comments are related to the opinion, but not. You can still have a clean opinion from, like, my standpoint, so, like, materially accurate financial statements and still have a bunch of internal control comments. As long as we were able to get to the point of, okay, material accurate financial statements. So the opinion isn't going to mention anything. or call out findings. It's going to refer to this other document, the Memorandum on Criminal Control, that is actually going to outline the severity in all the findings. And it's not going to name. That's not what our role is. Our role is just, in general, we have to have five pieces, the criteria, the cause, the effect or potential effect of the finding, and then the recommendation. See, did I name all that? I think condition, criteria, effect, recommendation.

Is it cause?

Cause. Yes. Thank you. And so those will be in general, like from our standpoint, what we found. But it's not going to be a name calling thing. Yeah. Yeah.

No.

And in my experience, there's a set of this. We may respond to that. Yes. To these actions to practice the future.

I also appreciate your comment about, you know, you may have a clean, you know, a clean findings, but yet a structural deficit.

Yeah.

Yeah. And, and, and the reason why I say that is because over the years we have had clean findings and we've consistently had structural deficit and that we have been trying to close. And so that's, so, you know, so yeah.

I mean, as long as your financial state is accurate. Yeah, we're not.

going to be judgmental. We're not judges on that. We're just reporting on what is in the financial statements at a point in time. And is it materially accurate?

Yeah, I think last summer there was some discussion about something like a time saying, well, it seems like more you want a policy review or some sort of analyst to come in and look at it more than an audit, just as what you said. It's just recording. Yeah. Not a judgment statement.

Yeah. Okay. Questions? No? Questions? Okay. Questions? Okay.

The other thing is this will cover all funds. So you guys, I think there's some questions. Yeah. So as we finish, we'll bring the final question.

these are coming out and this wasn't even here for us.

So what they have. And then what's the, what's the deadline? When will the audit be complete?

Well, I think we'll have a good idea after this June wrap-up. We'll have a better timeline, but I didn't want to put a, like, during time on it. But I anticipate at least no later than December 2020. That's pretty far. I don't really think that it's going to get to that point. I'm hoping for the end of the summer.

Oh, OK.

But it's dependent on this next phase of work that we're going to do.

So as she noted, we've delivered everything that they needed. We struggled a bit with compensated abscesses calculation here. It's a little bit here. Not that finalized. And yeah, so we're working to bring that into the extent we can. taking some of our lessons from this one into 26. What was the document you mentioned?

You're struggling to get what over?

It's a document called compensated absences where we calculate compensated absences. So it is a cost of paying out basically vacation leave and calculate that. It's identifying our financial statements.

Okay. Thank you. No, it's okay. Just want to make sure as I'm understanding. Okay, thank you.

Thanks. Yeah. Just let me know if you have questions and I'll be emailing each of you with this memo and ask them for your response. Perfect.

Thank you. Recommendation, please help yourself with some ice coffee. I'm trying to go. Yeah. Oh, I see.

Okay.

So, moving on to receive an order for and provide comments on the fiscal year 2020. Monthly job fund.

It wasn't necessarily one of the other salary updates.

Sorry, the mouth. I'm sorry. I'm sorry. I'm sorry. I'm sorry.

I'm sorry. I'm sorry. I'm sorry.

But sometimes, when they want something, they don't know how much money to pay.

We'll go to the next slide. We wanted to start with just some overarch information. As we were working on 26.7, we really found that there were some items that we still weren't understanding well, so we've had to really update the 25.6 budget. It's in alignment with our resolution that was adopted in November. I look back at the November, I think at that time we expected to be around $234 million, and now we'll see that in the next couple of slides, but we're at about $241 for 25-26. Remember, this is the 25-26 update. We've offset those by increasing transfers of the dental fund, primarily workers' compensation cash balance, and information technology funds. The budget does remain in balance, but we do have some risky items. We'll talk about them. We've got red, yellow, green for you. And so we may have further updates and we plan for this possibly. So in terms of the details, so revenue is still going to be a bit lower in those specific revenue areas that projections. This feels like a big number because of where we are. It's about a percent. So I think it's worth showing that. We talked a bit about special pays throughout. process, including our labor negotiations. So the salary benefits budget was increased by nearly $10 million more than we had already increased it. Again, we offset that with transfers from other funds. And we're continuing to monitor closely. Departments are really doing their best to bring in their spending. You'll see overtime controls. And so once we close, so for example, the sales tax revenue, we don't get all of that until August. So we'll be posting those transactions to the correct fiscal year. And once that is done, we'll be making these transfers to minimize the amount of the transfer. And they were ending for zero. The revenue index is in the transfers line, very precisely.

So in total, we were off by $20 million with our budget. Are you saying this is...

When compared to the adopted at the beginning of the year, it was closer to... So we said $8.9 million, so we got to $22.49 million. I'm sorry, the exact was about 30. So about 30 million instead of 26.4.

I see.

You can go to the next slide. This is where we'll get into the exact numbers. So we've, property and sales tax, we're still, you know, we're, by the projection, we should look okay. But they are forecast property tax. We've gotten our big payments, but they're supplementals. Meaning somebody's sold a property or bought a property. They'll get a tax bill. It kind of wraps through the account. We get a share of it. So if a property sells in Oakland, we get a share of that. And if a property sells in Hayward, they get a share of it. So it's a little bit of an unpredictable revenue source. We've got this projection from both from our consultant and also looking at your actuals. We're just not sure if it's... you know, if it's a little bit too optimistic, but we think we're okay. Sales tax, we've used the optimistic projection from our sales tax consultant. Remember that this is only eight months because it's always two months behind. So again, hoping that we receive that optimistic revenue that we will have for another few months.

So right now, at this point, we would have received up through February 6th.

Utility users tax down a little bit. Again, from a consultant estimate, but not a huge number down. And franchise fees, the biggest one is PG&E, which comes in once a year. And so we've brought that projection down quite a bit. Property transfer tax, another really volatile source. We did have that unusual transaction when the Saturn model was sold. We had another one recently that we felt burns that number up. But still yellow because we still feel like that might be a bit optimistic. TOT, we had that increase that started in February. So we've done an optimistic projection, but still just a little bit below that last projection. Cannabis is really trending down. So again, we looked at last year to see where that was and go to the more conservative projection. Business license tax, we're a bit low. That audit is not coming in as quickly as we would hope. We still may get that total amount of about $400,000, but it might not come in this year. And our excise tax also very far down. So we've been working with our departments really closely, charged for services such as planning fees, development fees, building fees. That is above our last projection. So really great work on their part. We do have a large That's a large payment expected for one of the data center projects. But again, still monitoring in case those don't come in. Intergovernmental, that's typically grants. Every fire contract is a big piece of that. So that is definitely performing, and we're more confident in that projection. Fines and forfeitures, we're just looking at a straight line, just a little bit below. And other revenues, we found that some of these were just not funded as well. So really, when we looked at past history, these monies weren't coming in. So we've just brought that down to assess it. Again, the general fund has no cash sitting in it. There's no interest coming in. There's a little bit of actuals, which is really more related to the employee loan program. Not really going to move that at all.

It's kind of a question and maybe some feedback to offer. The color coding is a little bit confusing on this slide. So, like, let's take a look at other revenues, for example. Our unauded actuals have surpassed our fiscal year projection, correct?

Our fiscal year on other revenues?

So, other revenues, the unauded actuals and the fiscal year 2026 projection, we've surpassed that, right? We're looking at $1,026,000, and we had projected $1,020,000.

Yeah, I think that was probably just a, so if we look at, there was another one that was similar to that. I guess we did at 105. I think my question is why, why is that red?

Is my question.

It's way below the budgeted, that 3.8 was what we budgeted. Okay. That's almost the bulk of bringing down the numbers.

We're going to baseline it off of that.

On the side, I see.

March, the left-hand column.

Okay. And then the projection as we set a budget.

Shows you kind of based on our fiscal year 26 projection, how do we think we're coming in. Okay.

If we just did a forecast, either a straight line or the estimate.

So compared to the March 26th.

So all the red are coming in under what's on the left-hand side.

Exactly.

OK.

It's significantly under. Yeah.

And then it's yellow because we're still monitoring it. We're hopeful. The yellow is still monitoring it. We're not entirely sure.

OK. And then, yeah, I'm still a little bit confused as to if the projection has percent of budget. Can you try to frame it back to me one more time?

So it's the projection column divided

What we present over the left to basically the 77 million property. Yeah. We're saying that's how much they told us that we were going to break it. Yeah. 79 billion, which is what they told.

I see. So it's a percent of what we had budgeted for.

Exactly.

Okay.

But the revised budget in March.

Got it. Okay.

And this year is so screwy. There were several budgets. Okay. This is the one that we told you in March.

And these revised projections are the straight line based off of the actuals available. So basically, that middle column just shows you how you're performing. But it just really is informing the projection to say, are we going to be over what we thought we were going to be or under in terms of revenue?

OK. I understand. Yeah. I think that we're bringing up the columns starting off a little bit. OK. Thank you.

So you think of the middle column as a year to date?

Yeah. Thank you. But how did that intergovernmental jump Is that, can you just explain that?

That $400,000 in our governmental charges for service use? Yeah, the biggest chunk, there's two big pieces. One is the buyer contract was higher than was budgeted, so that was good. And also, we identified we had some revenue in a grant fund, but that is top revenue. And so the expenses were happening in the general fund, and we didn't touch it. The transfer would come in, the money was coming into another fund. So we corrected that, brought that money in. It was about $500,000. And so those, I mean, obviously, those set.

There was also some coverage for some other areas there. But for instance, the Fairview Fire District contract is based on a CPI calculation. And so we had to get that number, my understanding, and then that determined the transfer. And that was why it might vary from your budget. Because you're asking why would it vary from our budget? And some of those things are dependent on information that needs to get updated.

The real property transfer tax, that is interesting that it's up 103. It's forecasted. It's forecasted. And so, I mean, what's the status of the market right now? I mean, are people buying homes?

I mean, there's still transactions happening. You know, some of this would anticipate some commercial transactions which tend to be higher. And I know we had one very recent.

So those are commercial and residential.

There's always homes that are turning over. And I don't know, maybe you know, but 11.5 adjusted budget from March may be different, may have already been adjusted for the market, the down market.

This is one that's always behind. So I think we just got a payment, which would have been.

Yeah, I can. And I can tell you. compared to prior years, because I think that will also be... So, for example, it was $21 million in fiscal year 2022. So, it is very down. But it's just that March... It's like the 10 months in March.

So, the cannabis tax. So, I mean, you know, what do we see? Where do we see that going? I mean, just, you know, I'm... keeping the dispensary that was just approved, putting that sort of off the table for a moment. Just generally speaking, I mean, what is the trend for cannabis taxes? You know, in the region, I mean, do we know that in the region or in the state? I mean, I read some stuff saying that cannabis taxes are actually going down and flattening. I'm just curious.

I don't know.

I don't know. Yes, we can work with our consultant a little bit and bring that back next month. I mean, it's likely. get another victim of the economy. You know, it, you know, it's one of those things that people, when they, you know, they're choosing between gas and food and cannabis may not be the thing that they're able to purchase.

Or I'm also wondering how the tax is structured and if the tax is so high that it's incentivizing.

Yeah, it certainly could be.

Absolutely.

Do we know who has the lowest cannabis tax?

Alameda County Unincorporated.

Alameda County Unincorporated has no cannabis tax?

I feel like when we looked at it, we looked at raising it.

There's also different modifications to how they tax. Retail, manufacturing, distribution, different segments of the industry are taxed at different rates. I think Hayward's is kind of flat. I think there's some room for nuance. Sorry, I had a follow-up question. Okay, go ahead. So the excise tax, that sunsets pretty soon, right? Is it just for hotels or other industries that that's impacting? Are we prepared for losing that $2 million?

It's built into our forecast. The loss of it's built into it.

they pay their transient occupancy tax. Businesses pay it when they pay their annual business license tax. They pay the excise tax.

Apartment dwellers, multifamily folks pay it when it's billed quarterly.

And then it's also billed on the final water bill. So it's like multiple different avenues that this tax is paid.

I guess as we're looking at long-term planning, I mean, when is the sunset for this? December 31st, 2021.

So we've already built into our models.

Yeah. Yeah. And similar to our approach to K1, I'm just wondering if an extension or a modernization of the XI is a path worth exploring, or if that's not enough to warrant the squeeze there. But I guess what are your thoughts? What is the function of an XI's path? And does it provide value? It would have to go to the voters. Yeah.

so that our emergency services would be able to perform, I guess. I think it works.

Okay. Well, broadly, I think we've heard you, and we've talked internally, looking farther out in a couple years, maybe discussing again some other revenue options. Yeah. I'm not sure, because this got approved by council, so before some of all the laws that were approved.

So we probably wouldn't do it this way.

We'd probably talk about other measures. But we can have that conversation in a year and a half or so. Or sooner, whenever you guys want.

And just to sort of follow up on that, I know it hasn't been given a ballot title yet, but the ballot initiative is coming in November. What's the, I mean, what is sort of the principle of that? It's capping the amount that cities can, even charter cities, it's capping the amount that cities can ask for voters?

Do you, someone, I mean, I can explain.

Well, it's part of the, it's part of the real property transfer tax. And it would make general taxes by,

It would roll back, so there's kind of a city and county portion of real property transfer, which is actually about $0.55 per thousand. The assessed value or market value, I'm not sure. And then it gets split between the county. The county gets $0.55, we get $0.55. That's what most general law, my understanding, cities get charged for. Because we're a charter city, I think we went to the voters and said, we want to charge $8.5 per thousand. So that's why we get so much more than a lot of other cities. And what this is saying is it's going to roll that back. We're going to basically discard the fact that voters and Hayward voted for this, and we're going to roll it back to the $0.55. And then we'd only be able to charge $0.55 per thousand on all the value of those property transfers.

So, what happens, what happens to all those proceeds that we don't benefit from it?

Well, we don't, they're not going to take them back. Oh, okay. Same going forward.

That would be, you know, a $12 million.

We would get a little bit, you know, if you have sense. So, it'd be another problem, you know, we've talked about the architectural, that would be more $10 million around additional structural money.

If it passes. If it passes there. And that's coming out of the, who's the group? Is that the Jarvis? The Jarvis gang, right?

We got an update.

Yeah.

We got an update today from Cal City that our state manager meeting this today. They think that there's a lot of negotiations going on now in June to potentially try to get that taken off the ballot. But, and they're not sure what they want. So like, do they, So there's negotiations saying if there might be some sort of legislative fix that. Sometimes Jarvis puts things like this on the ballot to. Is it as a negotiating tool for something else? So they're matching everyone's trying to figure out what that is and try to do that and get that done. I believe in June. So it could get taken off about we don't know.

Okay.

Yeah. Do I know that this is from the budget in March? And then we're kind of like, and I know that it's like a percentage off, but that percentage is like $2 million. So is the idea then that for the rest of the year, somehow you guys are going to go and find that $2 million to make up because we don't have $2 million in the reserve just to say, well, we kind of want to. It's only going to happen. Yeah.

So we've built it to this number now. You'll see the transfers, which is the next slide, so that the revenue and the expenses match. Yeah. But what we're also saying is these are yellow. We don't know. So we may even have to do a little bit more than that, which would still be applicable.

We're going to the next couple slides.

Are you ready to go? Yep. So this is what we talked about in terms of this. We want to just be sure this is really transparent for you in terms of what's happening there. So the first few transfers are normal annual. They're ongoing. They're not one-time. We have a cross-allocation plan that's recovering costs. It's our city manager. Gas tax. There's a transfer for traffic signals. That's what they told me. Facilities districts. So, and then a loan repayment. So that all comes in. And that's an annual thing that always happens. Measure C, of course, we've talked about Measure C. We're treating that as a short-term transfer. So it's not like in that long one that's always going to happen. Oh, we have trust. You'll see that move in the budget. It's really a revenue because that money's not sitting on the city anymore. But we wanted to keep it a little more consistent. It's confusing to explain. So We send a report out to the trust's held at CalPERS and then they give us payment back to reflect the actual spend we have. And so that's short term. We have over $40 million in that trust right now. So that'll continue probably in the next few years. Back when the budget was adopted and there were some cleanup items, there was 5.6 million in transfers adopted. We just haven't done the transaction yet, but these, we wanted to just be clear about what those are. So those still are going to take place. And then the other funds, this next one is the Workers' Comp Fund. And so, or I'm sorry, the next one is the Information Technology Fund. So to take out 3.1 million, other funds have contributed. This is cash balance they have available. They've had savings every year and that results in a cash balance. So to take out 3.1, we have to refund the other funds as well. So it'll be more than 3.1 taken from their cash balance, but it is available still at this time. And workers' compensation, similar. The reason that it shows like zero, we were looking at both other funds. We just kind of split it up for more transparency. So again, about 4 million, I think this was about 4.8 for workers' comp total coming out of the fund to refund all of the funds. So it's based on how it's allocated in. So we're taking the transfers from a proposal to 26.7 to 20, almost $30 million. And again, a lot of that, so over 25 million, I think, is that shorter term, including measure C. And so we just wanted to be sure that was really clear as to what's taking place there. And that's, again, we would look back, probably more workers except if you've taken it IT about as far as we can go.

And to be clear, I mean, I think, Tana, so if to get to your question, let's say it comes in worse or it's better, then that $4 million is that lever. That's the final, like if it comes in worse than we think it would be, we need to do more than $4 million. If it comes in less, then we might do less than $4 million. So that $4 million is not, and that's why we don't know yet because we're going to only take what we need to balance the budget.

There's not ways of, like, cutting that $2 million, so we're not transferring from the funds. I mean, are you comfortable transferring from, like, the workers' comp?

We're doing well, yeah. So we'll see that next. You know, we are absolutely trying to bring our expenses. Yes. We are semi-comfortable. I mean, we don't, you know, we would rather have a bigger balance than our workers' comp, and it's how we're proposing to help balance our budget for next fiscal year, too, so We're, you know, but we think this is, we have a fund balance, this is our best bet. We would rather not.

Yeah, we're still hoping to bring it even better than this. We just want to be really, as we've been discussing, really transparent about what's happening. Ready to move to the expenses? So we basically, for salary benefits, we had a start. We had to look at actuals and say, what's going on in the actuals? Mary did a lot of work on this for us in terms of looking at payable cycles. And after we did all these changes, we made some labor concessions affecting overtime. We had voluntary separations, layoffs, other separations, vacancy management. So we really rebuilt this to our $5 million number. And so again, showing up from that one to five, I told you about a $10 million difference, but really, you know, really you had to recap from the get-go. So that's where that big increase was, really struggling to understand our special pays, unfunded actuarial liability and how we're transferring that and making those charges across departments. So that's the key area. As we go into the other areas, maintenance and utilities, we feel we'll land pretty close to where we expect. Services and supplies, that's an area where we have the most room. We're really limited on what else we can do with salaries and benefits. Although, again, departments are really managing vacancies, managing overtime. We'll see that next slide. And so from an actualist perspective, we're on track, but we do have, you know, you don't necessarily get things paid right away. You know, you get work done in April, the bill might come in May, and that's not going to help you. So we'll be watching that all the way through again until August to see what those numbers end up at. I can tell you, though, the departments are really reining in, making sure they're keeping it as tight as they can. So that's that 3.2 million. The departments are really trying to take that extra amount out of the service.

Just to put a fire, I mean, Deanna and Mary, we went back to departments and said, look at your budgets now, give us an estimate to get to that 3.3 million. Like, give us an estimate of what you can save between now and the end of the year so that we can have a plan for balancing the budget, try to reduce expenses proactively so that we try to minimize how much we have to use when the workers call.

So next slide, internal service fees, that's a fixed amount. So this is fleet, facilities, information technology, they've now caught it all the way up. So it'll definitely be 100%. But we'll also be looking at refunds, for example, if there's an overage. So, for example, if IT has some budgetary savings and we didn't have enough cash, we could also take that savings back as well. And, again, capital is a straight transfer. Charge-outs, I think we talked about this in our session a couple weeks ago, but this is mostly public works, a little bit of maintenance services. So if they do work that can be charged to another fund, it's actually a fully loaded rate. So by working on our fee schedule, we were able to adjust that even into 26 because it's an internal charge versus external. So we really brought that number up. A lot of great work from LA Public Works Department really supporting this for us and working together with us through our budget process. And transfers out is, you know, when the general fund needs to make payments to other funds, such as through a liability, and that will likely be – I think we've reduced some of those transfers out. That's why we're showing that as well.

A few questions. I'm really trying to, I'm just a visual person, so the color coding is not making sense to me. Why do we have yellow lines, but then they're also marked red? Like, let's just use supplies and services as an example. Can you help me understand the reasoning behind, like, what's the logic behind the colors here?

So, supplies and services is red because we know.

Oh, supplies and services.

Oh, supplies and services. Yeah. We're over. We're showing, well, we've shown this reduction in the projection, but we feel like it's a bit too optimistic. So we're just trying to be, I guess, really abundantly clear that this is a risk area. So we mentioned in the first slide or two that we still have some risk concerns. And even for the charge-outs, we're showing that it's forecasted over. But if we don't get as many charge-outs as we hope for, then, you know, that's a big risk.

So that's what you're thinking of there, right? account his question is like if it's yellow they're watching it because they're not yeah not confident that that projection for 26 is going to hit so it's something that they're keeping i mean we can see it's red obviously but that's yellow that means they're keeping an even closer eye on it because their level of confidence is that high yeah we can change the plot i mean i think what your point is yeah something

Red, yellow, or green. Yeah. We keep one. Yeah, we keep one. So we can change the, I think the font should just be black and it should just be yellow.

Thank you. I just want clear criteria because there's a meaning behind why we're, you know, saying like red is like this is a crisis and staff is spending time trying to address this and yellow is like we keep it up.

So I think it's fair. Going forward, we can change that font to black.

And then at the bottom, the projection to budget is 241 to 240, but the projection percentage is 100%. You want me to reconcile that? The total expenditure and transfer out the bottom row.

It's so close. It's less than a percent.

Okay, understood.

So just rounding. Okay, got it. Okay, thank you.

I know it's a million dollars, but it's such a big number.

I am just pointing out that it was, you know, from back in November. So payroll, because we have 26 pay cycles, that was a big issue in some of our forecasts. So we're looking at April, that's 83.3% of the year, but we have it made through payroll cycles. So we're at a different point in the year in the pay. So we're doing different calculations on it.

Got it. Okay. I know this question sounds kind of obvious, but we're trying to emphasize transparency.

Make the format that works.

Accessibility for the public. I just don't want anyone to be surprised.

So another question I have, another question I want to put out there is, so with salary and benefits, I know that there was a major ground shift in conceptions when we negotiated the foregoing of COLAs, right? And so I just, you know, sort of, can you explain either of, you know, how significant foregoing those COLAs were on this chart right here?

Well, that is for next year, except for FHIR.

So it's working at 26.7. Yeah.

So FHIR did forego their COLA. We don't want to minimize that that happened. They did forego their COLA. And they modified minimum staffing and PD had some changes in our plan, which you'll see on the next slide. We have still a salary monthly slide, but for the other units, UNREP and Executive Team furloughed, Council deferred. So we, But for the other units, those will see the next step.

Okay. And those COLAs, were those COLAs, did they forego and then forgiven forever?

Or are they going to defer until the end?

Yeah, those are deferred. Is that it? Okay.

All right. Basically, right at the end of the contract. Okay. Technically, with FIRE, they're going to do a salary survey in March. Yep. And then what we say in the contract is we're going to read what that looks like and decide what happens for the next year.

Okay. So how confident are you that that 205 is going to stay?

The 205, I actually have more confidence in that number than I do in the services of life. But I feel the risk is more in the services.

Oh, and that's why you don't have that yellow.

I mean, the department's public safety, especially, you'll see that in the next slide is our salary slide, but they're really managing, they're holding, you know, in terms of vacancies, there's still some vacancies that get held off for a bit. So I think they're really holding the line. And they're also in the line of supplies and services. It's just there's only so much they can hold.

Just a big kudos to Deanna because the reason, I mean, basically having to use the actuals to kind of build a budget, so kind of building it from top down and then also trying to build it back up again. It was a ton of work. That's why I feel so confident with all the time spent to really make sure we understood. Yeah, this is amazing. The whole time I

I mean, this is a great discussion that we should have been having the whole time until Deanna came on board. So I agree. It's going to work.

Yeah, what we're looking forward to next year is that we'll just be doing the adopted budget and not this thing I'm like, oh, we looked at it last time. It should be an adopted budget. Maybe some amendments. Somebody says, oh, I've got a grant. And so you'll see an amended budget, but it'll be the clear amendment that you'll understand. I think that's good. One of the biggest challenges, what do we want to show you up against? So we chose to show you against the last thing we saw. So you could just really see, rather than just change it and you don't really know, we're trying to show you against the last thing we showed you.

And grants can pay for staffing, can pay for services.

That's an example of something that they have been in terms of the department saying, hey, I need to make a budget adjustment. And in a situation like this, the common one that we would be open to is, oh, we've got revenue to pay for this.

that you're not closing a $30 million gap? No. We don't want to do that again.

Okay, so now we're into the monthly salary. And I think what's important here is to see that the numbers are going down. So even just comparing March to April may will be up because may has three payrolls. So it'll be, um, you know, it'll be around probably the 18 million range. Um, we're looking at about six, just over 6 million of payroll right now. Uh, but if you look back, we were at six and a half at the beginning of the year. Um, so, uh, related changes, we did adjust this number, but we found, um, I mentioned earlier that I thought of extra liability. That's a fixed number. Um, we've been doing that through payroll so that if there's vacancies, we're not getting the right number. Um, into the forecast. So we took that out for now and we'll adjust how we're, but it's basically 100% transfer. So when we're looking at where we're at, 81%, when we're 80.8% of the year, knowing the beginning of the year was over budget, we're kind of getting us right about where we need to be. And again, that's why we're confident in that 205.

I'm sorry, can you just walk me through this? I'm having a hard time understanding the slide. Can you just start at the top? Sure.

This is our salary and benefits number. What we have excluded is the CalPERS unfunded actuarial liability. So we get a base number. This year it's about $44 million that we have to pay for CalPERS. This is in addition to what's collected per employee. You go right to left. So back in July... we were spending about 13 million and our target should have been that 12, 12.8 million. So we were, you know, we were trending over budget. So this each month is, is kind of referencing where we were at compared to where we should have been based on what percent of the person. Okay.

Okay.

So, um, you know, we're, we're bringing ourselves in closer. So if we think about, uh, December, we were halfway through the year. We were still a little bit over. We're just getting ourselves lined up to where we want to be around.

Over 51.5%.

Because we course corrected. I see. With the workforce reduction, with the vacancy management and all of that, then we're seeing smaller payrolls going into the end of the year, which is why we can't use the straight line average to sharpen how we're going to end up.

Remember, percent is about 1.6 million. And so that 1.5%, we're in the 2 million range of being over.

So we're trying to bring that in as time goes on.

So we're tightening back in. Okay. I see that.

So the reason that it's red, the whole last row, is we've actually been over budget the entire, like we were over budget the entire time, but we're getting really close. Yeah. We're 1%. We're going to end on budget. Okay. The last payroll, hopefully we'll hit the, we'll finally go back. Got it. Okay.

That's why we did the blue comparison, right? Just so you can see like where one of our highest payrolls in September and now we're down. I see.

I see. And you'll see the number of payroll very high. That's a three payroll month because we paid every two weeks. So every six months you'll have a third payroll and you'll get that high payroll. But if you divide it by three, it's, it's.

So, so on that bottom row, we want to be at a hundred percent.

Maybe it's a finance question, but is there a reason why we started with the most recent month first versus having it be left to right?

Left to right, yeah.

Actually, somebody asked that question before. We can certainly switch it the other direction. So I think, yes, in a lot of cases, you're looking back. We're trying to get the current thing in front of you, what's currently happening, what gets the most correct. Brains read left to right, so we can flip that.

Yeah, I guess it's just each slide, we're trying to tell a story, not just to the council, but to the public about how we're making changes with our budget. So it was very difficult for me to understand when we get the first row of information, like what story are we getting from this? But now I understand. Thank you for taking the time to explain it to me. I'm happy that we're trying to get it right.

Yeah. So the next time we look at this, it's going to be this one.

Yes. We keep refining. Again, next year we're, you know, having a more permanent start. Yeah. Yeah. And we'll, we may adjust even whatever, there's some other fixed items that might just take out.

We appreciate actually. Well, this is good. I mean, I mean, yeah. I mean, I think there's, to go back to the story, you know,

This is the story of getting out of this, you know, and, um, yeah, it's.

All right. And this is supposed to be a good slide. Yeah, this is right to the left. Yes, sorry.

We're here, but we're seeing, I mean, look at the number in April compared to September. September was a two-table month. So really seeing those declines, that's a lot of management on the part of police and fire and the labor units.

So we're saying that in September, we had in September of 25, we had 1.3 million in overtime. And we're saying right now we have less than 4 million.

Wow. This is a large part of what the work is.

Yeah. Council members are making a story. Overtime.

But then also look at 25, this year, 25 compared to what we're expecting for this.

It's going to be around 9 and last year ended around 16.

6.5 million reduction. No, that's great. Thank you. Yeah, thank you. Thank you for the flexibility as well. Yes.

I think as we go into the future, I mean, you may see some of these spikes during wildland fire season. We may have to do adjustments, but revenue will come into those. But yeah, this is just really incredible work and incredible partnership. That's great. We've updated the revenue budget based on projections from our consultant, adjusted expenses, but also accounted for the operating transfer. And so the revenues went up compared to what we had budgeted. And we didn't go as deep into measure C as we did in federal funds. You're not seeing all the changes. But we did have to adjust our debt service numbers. And so our total expenses are up a bit from our last, but we are still, and so our expenses are exceeding the revenue. So we are going to be drawing down that fund balance. So we'll keep projecting this out to better understand the time that we're doing longer transfers year by year. So we'll, you know, now that we are not trying to do two at once, we'll be able to focus on some of these other funds, and this is a big one for us.

When we originally set that transfer amount in the fall, you can see that before we sort of redid our revenues, we last year had budgeted $23.5 million for this, but we've seen a huge decline in sales tax. So that's why we thought, oh, we can afford the $9.7 million. We can afford that and not have to go in the red. So the revenue is what's changed. The economy is doing worse than we were.

So this is something because we're depleting our, like originally, I guess just to, and I don't mean to, I'm just saying it because it's super important. Something that's clicked for me recently is that I think originally we had planned that we wouldn't have to go into the red and we could just be using kind of some of the excess revenue that we did not commit in a measure C to help us balance our job loan budget. But now because of this, we're going into the red. So I think going forward when we update our projections, otherwise we'll Even if you decide we want to use measure, see, we're going to probably have to reduce how much because we're going to start to run out of. And so I think right now we're projecting is probably closer to 5 or 6Million. You know, I know you don't want to use any of it, but even to be able to rely on it as a regular operating revenue, it's probably closer to 5 to 6Million every year. 5 to 6Million of the fund now measure see that we could use continually based out of the 20Million. I'm sorry it's confusing, but I just want, I mean, so. Because we can't keep drawing down and there's only this is right now.

Yeah, that's right.

That was the drawdown for next year is that's what to balance that really tight year next year. But we're going to, I think, as we update our projections, we're going to have to. If we're going to continue to use measure, see, we're going to have to reduce how much we can transfer. So we don't keep running.

We're taking ourselves off of it.

Yes.

Yeah.

We're going to adjust also in 27 operating expenses to account for, you know, same thing, salaries.

Because essentially what we're doing is we're spending more measures to them, which is why we're having to use them.

Because when we originally calculated that transfer to general financing, the 9.75, they had budgeted it based on what we thought we were going to bring in.

But that we're bringing in less, yeah, I've never seen suffering the same decline as.

Yeah, but I mean, I know that is totally a mistake. But that 18Million, the reason why it's so important that we stopped dipping into that is because that's kind of our only. Yeah, so I see what you're saying.

Um, next year's not coming here, but we're, I mean. You know, it is something we need to start planning for. It's been a lot of work to see.

So you'll keep seeing this forecast too. Yeah, exactly. So that's for that reason.

Can I just say what the operating expenses, let me clear whose salaries that are, that we are eligible, you know, and so we're suffering a measure C, not only from the reduction in sales tax, like we are the general fund, but also the higher salary.

Yeah. Um, You know, gas is expensive and it's going up. The gas tax, you know, so do you know, as the price of gas goes up, do we benefit from, you know, from that anyway?

It's a special gas tax fund because it's restricted to spend on roads improvements. I would bet, should I guess, it's probably offset by us buying more gas at a higher price. But we'll see some sales tax from that as well. You can see that a little bit in UUT because my answer needed to buy fuel. And so there were some real spikes around 22, 23, I think it was. We saw our UUT went up. So I think that's been one of our challenges when we look backwards. We've had some things that looked really good and that they there was some forecasting base. Sometimes I understand why that's not really an ongoing situation. And we've been working with our, with our consultants to better understand and, you know, and why that matters, you know, that, that they're understanding, is this a peak? Is this a weird anomaly or is this something that's going to happen? The barcars are some easy example, but again, in our BGT, we've had a spike, I think again, around 22 by three, two or $3 million.

I've been to some conferences that have talked about gas tax and people buying more electric vehicles. So you're actually, they're trying to think about how to restructure at the state level the gas tax so that it continues. So we still need to fix our roads and how you restructure the whole fundamentals of gas tax. So even though we guess more people buying EVs and are buying less gas, so...

Yeah, and I just hope that, you know, some of the ideas that we're throwing out as to ways in which we might get a little bit more out of VLT commoditization can help us offset or bring ourselves off metricity. Yeah, this isn't sustainable for us to keep going about it this way.

Yeah. Well, And we're and, you know, but, but, I mean, I see this, but, but, you know, the commitment. You know, by the council, eventually we were in this back.

I'm going to just be honest, but it's going to be hard. Yeah, pay it back and try and see what we are. I think I mean, I think it's good. We're struggling to figure out how to. What's the budget operating? I think we can still have it as a goal. So let me say it this way. Structurally, have a $30 million, balance a $30 million structural deficit and then pay back.

So let me reframe. I want to be honest. Yeah, no, no, no. So let me reframe. Let me say it this way. The commitments that we made with Measure C to voters, we've made those commitments and we're at the end of Measure C. And now, you know, I know there's still some outstanding things that we're doing to pay for by Measure C, but we're towards the end of Measure C and we have a fund that we can tap. I mean, it doesn't mean that we're going to go crazy with this. It doesn't mean that we're going to go, you know, use it all up. But, you know, the commitments have been made delivered now. dealing with this.

And then we're using it as that, you know, being able to help us through this time period. And I will say, I mean, like, I know a lot of the commitments related to public safety or related to blight and cleanup, and we are absolutely, I mean, the expenses we have on the job.

Yeah, I mean, library. Far exceed what we're using. Firehouse. Yeah, exactly. I mean, I mean, these were the big things that we walked into the split.

And K1 starts in 2034. Is that the beginning of the extension? I got it.

Okay.

Oh, okay.

Yeah. I think we already did that. Okay.

The next item is

review of agenda, is that the review and approved bill?

The next is 26-27. We just put that on there. I know we had a very robust discussion. We're going back on June 2nd. We haven't decided how to do the direct questioning, so we just wanted to provide an opportunity to add any direct questions. We can send a question by email or in a separate discussion, but we just wanted to look at how the normal group would be seeing you before getting their counsel. But we just wanted to just, you know, let you know that if you have some questions on 2647, if they come in not prepared in this moment, that's fine too. We're working on that book this week to get it back to you on Tuesday.

I guess I don't have a question as much as I do just want to make a comment about, you know, You know, as we are moving through this, and clearly there are milestones that we're reaching, we do have positive news. You know, I'm not saying that we need to, you know, start going, you know, start delivering press releases every Friday. But, you know... you know, we should start thinking about how do we, you know, how do we deliver, you know, good news to the, you know, to the public about where we stand. That is a, I think, a narrative that we, you know, you know, it doesn't have to start tomorrow or, you know, this weekend, but, you know, particularly as we start to move to approving the budget in June, you know, we should start looking at how we deliver the story. How do we deliver the message to the community about delivering a balanced budget, you know, and how we are on this road to recovery.

Yeah, so, I mean, I guess after the, if assuming the council approves the budget on June 2nd, that's something that date more widely that there's, you know, approved a balanced budget. We're on our road.

26 with the increases against 25, we're down, even though there's things like unfunded actuarial liabilities. So, and then I think 27 is a little bit above 25, but not a lot. So just really a lot of, a lot of good work. And again, there's some costs we, we can't do anything about, particularly in,

I think some of the key things that people are, you know. That, you know, they may not know a whole lot about, but they are the key words right over time. Right? I mean, I mean, going back to that last chart clearly where, you know, we are reigning in overtime.

Yeah.

I mean, clearly, I mean, you know, so, you know, I don't know how you tell a sexy story about overtime, but, you know, boom, there it is. Yeah, I mean, but, I mean, but these are, you know, you know, these are, you know, particularly around public safety. I mean, these are, these are the, those are the code words that, you know, take a lot of attention.

I think, building on the Mayor's point, if and when we adopt this budget, sharing that we've passed the balanced budget and the highlights, thank you very much. As far as the agenda is, oh, and then there was a slide that we looked at during the budget work session that showed over the course of four years how we're trying to reduce, like, where we're going to be in the budget, and then swing ourselves off and rebuild our reserve. Do you remember that slide?

Yes, it was from February.

And I think, like, to me, that was the first time I felt like we were actually starting to chart a course out of the deficit. And that was the first time I felt a sense of, like, oh, I can see a lamp. So I don't know exactly how we would frame that. you know, the city being able to, we've lost that card, that core second deficit, I think is an optimistic framing that we hopefully can work into that messaging. As far as this agenda is concerned, Council Member Andrews had brought up a question around just wanting more clarity into what kind of grants we're getting that fund operations in the city. I know this is a larger ask, and so this could be something towards the end of this year, or maybe even earlier, next year i don't see this high priority as we deal with deficit um but but she had mentioned that um you know what operational costs are being functioned by grants uh i'm curious how long those grants last uh i think when we have to reduce assets that makes me understand that we weren't funding asset from the park program in a way that made sense and uh have we had more uh insight into that if you made it with ask city management to change that sooner rather than it uh being sent down the program and then there's also a question around do we want to have a policy around positions that are funded with grants that requires us to review them in a certain on a regular basis and uh i don't know i kind of it's a question i want to turn to staff and this is councilman andrew's request i guess i just want to get maybe your initial impressions um now and then if you think it's worth putting on the agenda at another time

We do have, we can add this to like our future agenda. That's the next agenda item. But certainly we can add that to a future agenda in terms of, yeah, what grants are funding. We did, Samantha and I spoke today about that. We've written some fiscal policies.

We're going to kind of regroup a little bit on that.

But that's included federal grant policies.

So maybe we'll just send them into like just different policies kind of bundle or something.

We're going to really regroup on that. And so that can include a little bit more detail about, yeah, what do you do with it? Secret funding positions with the grants.

Yeah.

And how are we, both from the employee perspective and also our school perspective, how we manage it. So, for example, the HPM was a very exciting one. Yeah. So we can just add it to one of our future agendas, maybe like August.

Yeah. Yeah, there's no rush. It helps us understand our vulnerabilities as well, because we were very happy to celebrate our reduction in homeless numbers the other day. And in our press release, we talked about how great the HEART program was in helping with that. And because of the way it was structured funding-wise, we had to slash parts of it. And I think it's one thing for us to celebrate, and then on the other hand, we're removing it. That's because we didn't have insight into how it was going to work. So, you know, it gives us, the council, a chance to review what positions we are at risk of losing when it's bad funding expires and figure out and begin to strategize on how we want to make it a permanent goal versus, you know, adjust in some ways to perform. Does that make sense? Yes.

I just had a couple things just to think about. Because I do think, like, we're, for instance, the lean program, which is part of the heart. Yeah. We're actively trying, because we think it's, you know, from a great perspective, really kind of A good one to go after. So we're looking for earmark. We're looking for all kinds of money. So sometimes we're actually looking proactively for grants to cover operating costs. And then those expire. Then we have to absorb them again. So sometimes it is a little nuanced. So we're actively trying to get maybe three years' worth of money for the loan program. So that way the general fund is on the table.

Yeah, that makes sense. I mean, I'm not saying that we should absorb everything into the general fund. It's just good to know what those timelines are so it can become a priority for council.

Yes, and the forecast should reflect that. Yeah. And then one of the things I just want to give a heads up about is that there is a SAFER grant just got released, which is a federal grant to cover the cost of firefighters. And it's due, I think, by the end of June. And I haven't even had a chance to hear it. But it is something... that it could help us based on the agreements we currently have with 1909, the minimum staffing goes back up after a certain time period. So the SAFR grant could essentially help us off some of that and offset some of that, but it will come with some matching costs. So it might be something, and I'll be working with the council. I just want to give you a heads up. There's things like that that can be complicated. We're going to have to look at that. So we're looking for things to help us, but it also comes sometimes with a matching cost.

And I think we can show in that same report something that we haven't always thought about in the past because of the volatility at the federal level. It was not a grants pass-through, but it was funded by federal monies. It's self-secure in the past.

Then for me, I don't know if we're going to do this or not, but, you know, is there a way to look at tax funding that we're going to be allocating out of this year?

Uh, yeah, that's the way that contract is going to you guys. on consent on the second. Full transparency. You don't see the full contract, but we can, I know that both Emily Young and Carolee actively work on trying to, so we'll make sure that we talk about that even more.

And then I agree with council members, you know, just taking one And then the other thing I would say is just related to the city's budget. You know, I would almost characterize this like in a position of me So I don't want to get too far ahead of anything because we still have an under $30 million issue. You know what I mean? So I know that we're making great progress. Even when I was thinking about stabilizing, I was just like, wow, a year ago compared to where we're at now, things just feel so much more stable. Like with you, you know, you here. I mean, we just had with you and your role, like everything was just so chaotic, like, you know, a year ago with all the interim stuff everywhere and, you know, not as, you know, like overtime was out of control clearly because we saw what was last September. goes to the leadership in this room. So I just really want to acknowledge that. First, the transition.

It's been a lot.

And I know getting to the end, I feel like just really stepped up the professionalism of our finance department generally. And I know the department was good before, but I just felt like you've really elevated all of our financial disciplines. So just really thank you.

I didn't want to take a quick moment. I neglected to introduce Shannon, who's our accounting manager. So I'm leading the audit. So she's been on listening.

Great. Hi, Shannon. Welcome.

Yeah, the words I used were on a road to stability. Yes. That's good. We're looking at your press release. Yeah.

So there is. Hey, um,

I'm treating this as the future agenda discussion. Also, in our budget discussion, we talked about fund balances, I think, and cash balances. There's some nuances there that I always want to talk about and maybe bring some of those to you. So we'll work on that. I think we'll bring it here and then if we want to bring it to the full council, we're fine to do that. We'll do some, I think, as part of our budget update of those impactful ones. You saw the measure, see how that matters. So I just wanted to acknowledge that from the budget discussion and that are probably a deep discussion. We'll be happy.

Okay. Are there any council referrals reports? Okay. Ms. Nunn, meeting adjourned.

Thank you. It is summer.

Well,