City Council - Regular Meeting

It's Monday, July 13th at 1 p.m. Welcome to the Marco Island City Council's special called workshop for order review for the physical years 25 and 26. For those in attendance, counselors and staff, we all know rules of decorum extend even to workshops and we've been doing a great job with that lately. We appreciate that. Counselor, this is a workshop. It's a little bit less formal. I will not go by light signs unless we find a heavily debated topic. If not, just pop in. Raise a hand if I miss you. Especially Counselor Gray, Counselor Henry on the outside of the dais. Just give me a holler if not. We'll make sure we all have our say-so. Jim, would you call the roll, please?

Counselor Henry. Here. Counselor Goeller. Here. Counselor Dome. Here. Vice Chair Champagne. Here. Counselor Schwan. Here. Counselor Gray. Here. Chair Palumbo. Here. All right.

All councils are present. If you're able, please stand for the Pledge of Allegiance. I'll be happy to lead this one this time.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

All right, the reason we're here, item four, presentation of the 2025 audit results and the annual comprehensive financial audit report. Chris Ketzler will be presenting, but we're going to start off, and Chris is with Clifton, Larson, Allen, LLP, but we're going to start off with Jean. Jean, come on up. Siegel, I apologize. And Jean, you're going to open this up for us, please.

GOOD AFTERNOON, CITY COUNCILORS. ON BEHALF OF THE AUDIT ADVISORY COMMITTEE, I'M REPRESENTING THE AUDIT ADVISORY COMMITTEE. THANK YOU VERY MUCH. ON BEHALF OF THE COMMITTEE, WE WANT TO WELCOME THE CITY COUNCIL TO THIS WORKSHOP AND REVIEW OF THE CITY'S ANNUAL COMPREHENSIVE FINANCIAL REPORT AND THE INDEPENDENT AUDIT FOR THE FISCAL YEAR 2025. We would have preferred to have this meeting a month earlier. As you all know, the audit was not, we wanted to make sure that the audit was complete and accurate and thoroughly reviewed, and that created a delay. However, the good news is, even though we had a delay, I'm pleased to report that the audit was completed and filed by June 30th statutory deadline. And so we are very, very pleased about that. So having said that, I would now like to introduce Chris Kessler, managing partner of CLA, our independent audit firm who will present the audit results.

Chris, welcome. Good to see you again. Good afternoon. Good to be here.

Excuse me. Chairman, before Chris starts, would you like to just introduce the people that are on the line perhaps? Oh, yeah.

Thank you for reminding me. Guys, Zoom calling in. We have our city attorney, Alan Gabriel. We also have Chris Scherzinger of the Order Advisory calling in. And we had somebody else. Did we not? I don't see him on my Zoom anymore.

We also had Elena McFann that was going to try to call in as well. All right. We'll see if we get her back. Guys, can you hear me?

We're on Zoom. We're going to assume you could hear me. Chris, start, and we'll let them jump in when they have to.

Thank you. Sounds good. And for the record, Chris Kessler, managing principal with CLA. And I've got a presentation to walk us through the results of the 2025 financial statement audit for the city. I think I'll go through these slides, but if there's questions along the way, please jump in. We can make this more conversational than a formal slide deck here. Starting off for 2025, the services we performed is just a quick overview. There's two main areas that we are performing our audit over, and it's one, your financial statements. So it's your annual comprehensive financial report, your ACFR. for the year ended September 30, 2025. And that audit is done in accordance with government auditing standards, as is required for a municipal government. And then we also audit your state compliance. And so that is really two buckets that that falls in. One, it's your state single audit, which is your grant expenditure compliance for all of your state project expenditures that you incurred during the year. as well as an examination of Florida statutes as it relates to your handling of investments and public funds. In prior years and potentially in future years, there could be a third area here on your federal compliance, but you all did not spend over a million dollars in federal funds this year, so a federal single audit was not triggered to be part of the audit this year. The reports we deliver, and these are all the documents within the ACFER that have the CLA letterhead on them, it's your independent auditor's report, your report on internal control over financial reporting, your independent auditor's report on compliance for each state project, so that's your single audit report, as well as the independent accountant's report on compliance with Florida statutes, That's an examination over the public funds and the investment handling that I mentioned earlier. And then a management letter that's required by the Florida Auditor General. So from prior years, there have been no changes to those reports from a standard standpoint or a requirement standpoint. So those are consistent year to year with the deliverables there. So before I get into the audit results here, just a quick overview of what we do from a financial statement and compliance audit standpoint. We take a risk-based approach. And for your all's knowledge, a risk-based approach is something that we are doing every single year based off the transactions of the year under audit. balances of the year under audit, any items that have happened. This starts at the beginning of our audit planning process. We have discussions with council members, city management, paying attention to what is happening in the public domain, the news, to determine where our risks lie within the city audit. And really when we look at the areas that we typically hone in on, it's internal controls, and that's every single year. We will always look at internal controls. Revenue recognition, making sure that your revenue in 2025 is truly belonging in 2025. Significant estimates, these are things that, as they sound, management makes an estimate on what these balances are. They're subject to potential bias and fluctuations, so we have to take a look at those inputs. Debt and any sort of covenants that are related to that debt to make sure that you all are in compliance there. Cut off of accruals and expenditures. So again, just like the revenue, making sure your expenditures are in the proper fiscal year in your financial statements. We look at your information technology controls, so making sure that user access is appropriate, that there's not an overlapping of responsibilities, making sure that you have cybersecurity policies, things along those lines in that internal control environment. We look at your grant compliance, and then we look at new accounting pronouncements. This year there was one that I'll hit on in a little bit. But this risk-based approach, we develop it at the start of the audit, and it is a fluid, living assessment that we have to update throughout the audit as things occur. We find items in our audit or just events come to our knowledge that we have to adjust. So these are the key areas, not the only things that we look at. So the results of the audit, I'm pleased to tell you, your financial statement audit opinion is unmodified. So that's a clean opinion on your financial statements. That's the highest level of opinion that you can receive in an audit. It means that your financial statements are free of material misstatements. And the document that you have in front of you is accurate. The numbers here are what they should be. From a state single audit standpoint, again, that was an unmodified opinion on compliance, meaning that there were, again, clean opinion, highest level of opinion, meaning there were no areas of noncompliance noted in the project that we looked at. So from a results standpoint, the financial statements, we had two findings in the financial audit, none in the single audit. But in the financial audit, we had two material weaknesses. both related to essentially the same item. It's audit adjustments that are noted during the course of the audit. And the simplest way I can summarize that is when we are making corrections or noting things that need an adjustment within your financial statements, we propose those journal entries over the course of our audit to correct the financial statements. Management then does an analysis on what we are recommending or what we have questions saying we think this looks wrong. Management agrees and books the adjustment into your financial statements so that the document is correct. Now, because we note them in our audit procedures, it does become an audit finding because we find it along the way. So that's the nature of those two material weaknesses. One's related to grants, the other's just a general audit adjustments comment, but they both relate to the same root cause at the end of the day. But because we had two separate findings last year in the grant category, and I'll call it the general category, Under the government auditing standards, we have to keep those as repeat comments this year, so it is two comments. If this had been the first time this happened, it likely would have just been under one comment for audit adjustments in general as things go forward. Before we get into, because I'm sure there's some questions and discussion there, I do just want to highlight this one little bit here before we go too much deeper on that. The other deliverable you have besides the financial statement is what we call our governance communication letter. That is our letter that we issue to you all at the conclusion of the audit that summarizes the audit. If there were difficulties, if there were issues, if there were challenges, if there's anything you need to be aware of, Those items are in that letter. And there are things required by standards that we have to include. These bullets on the slide are the majority of the highlights that I do just want to talk through that I think are critical for you all as counsel to hear. First is the scope of the audit proceeded as planned. So when we talk about the risk assessment that we did and where we thought our higher risk areas were, as we did our procedures, we did not adjust any further high risk areas. They were what we thought they were. Your significant accounting policies are in accordance with industry practices. Generally accepted accounting practices, GAAP. And you implemented a new accounting standard this year, and that was GASB, Government Accounting Standards Board, number 101. They number these, so they're up to 101 now, and they're just up to 105. So they continue to change the rules that keeps governments on their feet and keeps us accountants employed along the way. So we have lots of fun with these. But what this one was, you all were recording compensated absences previously, and it changed the rules. on how you have to record compensated absences. And what compensated absences mean, it's your liability for vacation time and sick time that you all have obligated to your employees that is a long-term liability. What this changed, previously you didn't have to record sick time in that liability. It existed, but it didn't go in the books. What GASB requires now of governments is that We know there's vacation time, but now sick time is also a large obligation that the standard setters believed also should sit on the financial statements to show the obligation that has been made to employees. So they captured that. If there's any sort of maternity leave, any sort of other PTO categories, things along those lines, they basically just changed the standard to capture more leave balances. it didn't have a material impact in your financial statements it was required to be retroactive you all did not have to record a prior period adjustment because it wasn't material what your change from last year to current year was but i highlight it because it was a large lift on behalf of the city to go through all of the leave balances and all of the employee trends to make this estimate and so when you see these new accounting pronouncements sometimes it just sits in the numbers it updates a footnote, but the city has to work very hard to determine, because what this one also required is you had to make an estimate of what the likelihood of that payment or that use was. So they had to go back and look at past data, determine what the historical earning and use of sick time was to come up with that probability of what was going to be in there. Everything was good on the city side, no issues, no exceptions. They ask us tons of questions as we go. Most of our clients do. So we help out and make sure that that's done in accordance with the standards. Difficulties, we had no difficulties encountered in performing the audit. I will say the timeline was later, you know, as we've all talked about and we're all aware of. than what was agreed to. So there's a variety of things that go into that. But as we've talked about and as we've communicated with the audit committee along the way, When you all, you know, went through kind of what you went through and we had an audit timeline that was planned, you know, when we sat down in October, we said this may be difficult for the city to catch up and to be ready for audit for that March 31st deadline. And it ended up being true and, you know, for a variety of reasons. But the key here is that you made it out the door by June 30th. None of us like that to be at the midnight hour as it was, but the important thing is that you got it out by the end of the month to meet the Florida statutes and to have the requirements there. And then the last bullet here I will say, management was very helpful in working with us to complete this. So there was nobody on either side of the table that wanted this to go six months towards June 30th when we really were supposed to be starting this in January. Management worked hard along the way. It wasn't a matter of somebody was not putting in the effort. It was just kind of the hand that the city was dealt and what you all had to work through from a capacity transition standpoint to get everything caught up, closed, and audit ready. And everybody at the city was also full speed ahead to get us to that point. If the city was not, it would not have gotten out by June 30 at the end of the day. A couple other highlights here, just estimates for you all to be aware of. These are the significant estimates for pension liability and asset, your OPEB liability, which is your post-employment retirement benefits, as well as your claims liability. Those are just significant estimates that you all need to be aware of that fluctuate year to year. And then the other bullet here, as we talked about, we proposed a significant amount of audit adjustments that were booked during the year. Those are what resulted in the material weaknesses. And then there also were uncorrected misstatements, meaning that we noted these. Management agreed, but they were not material above our threshold that they would need to be in the financial statements because they were not material either individually or in aggregate, so management has an ability to pass on them. And it was related to some prior year adjustments related to grant revenue, capital assets, and then current year items, accruals related to expenditures. that are in 26 that should have gone back to 25, as well as some grant transactions that are in 26 that should have been moved back into 25. But again, immaterial, just under standards, I'm required to flag those and just say these exist for everybody's acknowledgement and awareness. So to wrap us up, I just kind of wanted to summarize here all of this, because we hear material weaknesses, we hear findings, and findings are not what you want at the end of the day. You never want to be in a position where you have these, but they are a nature of the process to get here. It has nothing to do with your financial health or your financial stability, the numbers that are in here, they were a result of the processes and the procedures to get the books closed and to get the audited financial statements out the door. So the reality is your opinions are clean both on the financial statements and the single audit. Financial health is strong. Some findings did repeat from last year. The city was not audit-ready in a timely manner. January 1st start date to get out by March 31st, that did not happen, and that's a pathway that you all are going to work through going forward to say what does that look like and what is a realistic timeline. And then numerous journal entries were required as a result over the course of the audit to get the financial statements correct and in accordance with GAAP. But from where we were last year, having this conversation, a lot of progress has been made. So some findings did not repeat. Your grant compliance findings rolled off. Those are not in here. And the city has made investments in personnel and processes to resolve this going forward. So the takeaway on this is, You all have to continue putting the sustained attention on correcting these things, right? This is not a – the comments just don't go away magically. They will take work. They will take the effort. I know city management is already working on that. They're working towards that. They're committed to fixing that. But it may take multiple audit cycles to resolve some of these things that we've been talking about for the past two years so as we talk about 2026 and getting either Back in a more timely manner or even not at noon on June 30th, you know at the last minute being issued really really important that you all start now of saying what is our timeline to work back from June 30th and to figure out when we need to have the books closed for the audit to start and everything be ready and closed so that my audit team can come in and start working through these things. So I know everybody at the city is already working at that and management is completely invested in doing that, but that is the key to getting this back on track and back on time is really investing today on building those timelines and those processes. With that said, I want to say thank you to city management. A lot of effort went into get us here presenting today. Pleasure serving the city. And those are the end of my prepared comments. And we'll love to turn it over for Q&A. I'm good. Thank you. Thank you.

How many municipalities does your firm audit?

We serve over 3,700 governmental entities.

And Mark Weiland compared the group. Pretty much average, above average?

I would say above average. We serve states to special districts across the country.

I was looking at the findings, and it's kind of a broken record. Basically, our problems really just exist because of personnel. And if we can get the right personnel, this process should continue to improve as in past years. I would agree. Okay, thanks. That's just a cliff-nose version of how I understood it. Thanks.

Chris, thank you for the presentation. Councilors, it seems like we're used to the light signs and we're good at it. So feel free to jump in. We'll stick with the light signs. I see them lighting up already. And that's not a bad way to keep this going. Councilor Gray, did you want to? I saw you light up and I saw you off.

Do you want to go forward? Yeah, I thought there was a lineup, but sure. In your experience looking at all these municipalities, do you have any perspective on what percentage might have a stormwater utility? let's say 30 to 40 percent okay thank you and looking at our financial statement and the flexibility I'm trying to understand where our existing financial flexibility might be on the balance sheet so for example in the unassigned general fund it was just over 11 million obviously reserve approximately seven for all special emergency causes Are there other fund balances that could be drawn upon to be utilized for capital expenditures? How would I try and determine what level of unused firepower might exist on the balance sheet?

Looking at your general funds I would really just look at that unassigned because basically every other category of your fund balance is going to be allocated to something specific either through legislation budgetary policy or in some cases management direction, but that unassigned number is Which for your governmental funds is 6.1 at the end of the year across your governmental funds.

That was the 16. I think it was reduced. There were two numbers. There was 16 and there was 11. And I wasn't sure I could decipher the difference between those two markers.

So the 11 million is in your general fund. Where I'm getting the 6 is it's netting with your deficit in the grants fund. And the deficit in your grants fund is a result of your timing of your FEMA reimbursements. Because you're unable, under the governmental rules, you're unable to recognize revenue unless you've collected it within 60 days after your rent. So you're putting a deferred liability that's essentially creating a deficit position in your grants fund on there.

But in terms of if it was within compliance with their ordinances and everything else, it's really about $4 million, the difference between the 11-4 and the $7 million. I'm trying to look at that for affirmation. One reference in the contingent liabilities was nothing was identified in terms of litigation or anything else that would achieve a measure of materiality. Where would be the marker for materiality?

It does vary. And I'll acknowledge, I'm not going to know our materiality offhand. That's fine.

No, I was just looking for a direction.

What I would say In general, we're probably talking about half a million or so in that ballpark of what would be required to be recorded in that footnote.

So if we had contingent liabilities that were not covered by insurance and we sized those to be at least a half a million dollars or more, that might encroach on the materiality compensation.

It could, yes.

Okay. Bear with me one second. One of the themes in the audit was our stable financial position, continued strength of its long-term financial foundation, but it references material concentration and ad valorem revenues, which are currently about 71% of our total revenue picture. And it seems to be maybe grown a little bit, that percentage. So in terms of there were suggestions in the audit that we focus on diversified revenue streams to try and create a little more flexibility for us. Do you have any suggestions on what categories of revenue streams we're not taking a good look at that we could use to try and leverage? diversification of revenues?

I do. And the first answer I always have to that question is looking at various grant sources that may be available, both from a state level and a federal level, that are not being utilized. Now, you still have to spend and typically increase your expenditure side to receive those grants. But the other thing that we're seeing, and it's become very relevant lately here in Florida as we've talked about property tax reform, is really looking at the fee structure that exists. Because the fees that we charge are typically going to be limited by statute for various degrees and various levels. But what we find in the governmental space is that those fees typically haven't been adjusted truly to the cost of those services. and that the general fund or other funds are ultimately subsidizing them. And, you know, normally it's a good look to take a look at that fee structure and say, should we be increasing because it's costing us more to deliver upon those services? But it's especially relevant now, as you talked about, at Valorum's 71% roughly of your total revenue sources. Now that that may potentially be at risk going forward, it's definitely a good time to be taking a look at those sources.

Okay, thank you. One of the other references in the audit was 59 percent of our city residents are 65 and older. Florida's average is about 30 or countywide is 34 percent and statewide is 28. Do those type of population distributions have any effect on how we should be looking at running our balance sheet and P&L?

I would typically say not necessarily. I mean, I think from a purely financial health standpoint, no. But I think in operations of government what we typically see is when we have that level of aging within the population, it becomes much, much more sensitive from a property tax standpoint on what you do with the millage rates.

Thank you. That was actually exactly the insight I was seeking perspective on. The subscription payables in the audit was this year for 25 was $321,205. When I look at the footnotes, it suggests subscriptions in 26 are $217,000. You don't have to look for them. $162,000 in 27 and $162,000 in 28. We're really going to have that material drop off in the subscription revenues between 25 and 26?

Yes, because that is ultimately just what is essentially the run rate of your current subscriptions. As you renew or enter into new agreements, those numbers could potentially increase.

Okay. One more question, Mr. Chairman, and then I'll – Please. Depreciation was shown at $7.8 million for general funds and water and sewer at $8.3 million. I assume in terms of my trying to create my own cash flow forecast or analysis, We do not run those through our P&L. They're just directly a reduction of the assets on the books.

Correct.

Okay. So it shows no expense flow at all in our?

In your utility fund, it will. It does run through your P&L on a gap basis. Now, from a budgetary basis, that's not going to have a cash impact on it, but depreciation is in the utility fund P&L.

Okay. Thank you, Mr. Chairman.

Thank you for the excellent questions. Vice Chair Champagne.

Thank you. A good presentation. Appreciate it very much. And before I get started with the questions for you, I want to thank the four candidates for city council for attending today. I think this is perhaps one of the more important meetings for new city councilors to sit through. I wish there had been more people here running for office, but nonetheless, starting with four is pretty good. Now to specific questions. From the business world, I'm accustomed to books being closed on a monthly basis. Is that even reasonably expected for a municipality of this size?

I would say there is a level of close that should happen on a monthly basis, yes.

Is that happening now?

Not in a formal sense, no.

What would be required to make that happen?

Typically there would be reconciliations on a monthly basis to reconcile your accruals, your grant revenues, you're doing your bank reconciliations and cash reconciliations but some of the other accounts that flow into the inflows and outflows of your budgetary statements would be closed with some sort of reconciliation process.

Has management been aware of your opinion?

They are. We have talked about it.

Correct. Are we taking action on that?

it is something that is going to be worked on by management as far as I'm aware.

Do we have the appropriate personnel to make that happen?

I think you have a need for additional personnel to truly do it from a full-time, you know, regular habit and process routine standpoint.

Let's shift gears slightly to what should the interaction with the audit partner be with the city manager on terms of frequency of contact during an audit cycle how frequently should you and Casey be talking

I would say there's not a should necessarily and I would say it varies across all of our clients and really what that looks like. It is good that the city manager is involved with the finance team and is aware weekly as audits are progressing. Where we typically pull in city management is either when we're having some challenges on responsiveness with staff or there are timing conversations that we need to have or if there's things that need to get to the level of conversation with city council bringing them in along the way.

I refer only again to my own business experience and quite frankly during any audit cycle as CEO I was very frequently chatting with the audit partner. I thought that to be normal to be honest with you until I get here and that's not so normal. Why wouldn't you and she be speaking more frequently? Is there anything that we should avoid because it's not proper

There's not as much of a proper. It's more, I would just say in government we find that there's usually an assignment of those responsibilities and typically that there's a, I don't want to say a delegation, but essentially the process of the department directors handling the audit and working through things. When things are going well, there's not as much of a direct need for some of those communications.

Well, I would argue that, to be honest with you, because we've already experienced where the department manager wasn't doing so well and we didn't know about it. I would suggest that we need to pick up the pace on that. No, she's not going to roll up her sleeves and do the accounting. That's not her responsibility. She'll never get into that. However, an interaction to understand that, hey, you're seeing things or maybe here's a suggestion you might, as a city manager, talk to your finance director about, you know, hints along the way of how to, how for her to improve her function. Because ultimately, when people in the community read this report, do they go to the finance director and hold her accountable? It's aimed at Dr. Lucius. So she better know a heck of a lot more than what she knows or should know. So my suggestion, both for the city manager and for you, is that in the 26 audit, somehow, some way, there ought to be more phone calls maybe occasional face-to-face meeting but and and then I'm going to tie it in how frequently should you be talking to the chair of the city council should you be reaching out to him during the audit

Typically not unless there is something in the level of fraud waste or abuse outside of the purview of management We have some regular connections throughout the audit and then at the conclusion here, but that's that is where That conversation of that communication would go.

Yeah, and I would argue that also I would say that if it appears as if Deadlines timetables are not being met phone call Hello Is this Darren? Yeah. Well, I'm running a little behind, not because of this or that, but because of X, Y, Z. I find also unusual that the city council is not as informed or involved in audits as we are in the business world. My executive staff, regardless of what function they had, but if they were at the top of that function, they knew what was going on in the audit. as it was going on we didn't wait i think that produces better understanding on everyone's part of how the city should run how it is running what needs to be done to run better and certainly from the city council point of view because after they pick on casey guess who else gets He's the next target.

I have thick skin, it's okay.

Yeah, we all do. But nonetheless, I think all I'm trying to suggest, not that you're doing things improperly, is I think we can improve what we're doing and how we're doing it if everyone involved becomes more educated on what the process is, how it's working, how it's flowing, We don't have to wait for material deficiencies to talk to each other. That's the point I'm making. Now, individually, separate from you, then they have a responsibility for following up with each other and with the finance director, so there should be more interaction, more communication in the entire process, I think. Whether or not we can accomplish that is yet to be seen, but certainly I think it would behoove us to make that effort. And we as counselors, not as the chair, also need to engage a little more and really fully understand what is it that when you make these reports, what is it telling us? Other than hearing your words, you know, where we're financially healthy, People read this report in the community are not going to say, hey, you're financially healthy. Oh, my God, something's happening. Second year in a row, I can almost repeat what the comments are going to be. Someone's not doing their job. I think it's the city manager. I think it's the chair. Come on. So we, as leaders in the community, need to be able to explain ourselves to the people who bring these questions up. What is going on? Why the... they should be concerned or why they shouldn't be concerned. But anyway, I appreciate the work that you've done this year. I think it's healthy. I think it's up to us. I'm disappointed that once again we're here. We could use more personnel or more qualified personnel, however you want to phrase it. The fact is we need more talent to do certain things. We're coming upon the budget session. I don't think There should be a pushback on filling at this time. On the first audit, two years ago, we were slow to react, from my perspective. We should not be slow anymore. How many times do we have to go through this before we, as a city councilor, grant the funds necessary to fund the appropriate number of people in the finance department? Stop complaining. Start doing. End of comments.

Before I turn this over, Chris, I'm going to just jump in very quickly. Just so the council understands our interaction, and from the last time we got together, my standpoint with Chris was I'm available if you need me. However, I can't really help you through the process. Councilors are going to most likely reach out when the process is done. We are the ultimate client, correct? But you work with the staff on a daily basis. And I think we made it very clear. Let's make sure things haven't changed. If there's a problem, we want to know directly from you right here to this level. We haven't heard from you. I'm assuming there was no communication problems with the staff. I'm assuming all the new staff members are working great with you. Would that be a correct?

That is correct.

All right. So no news is good news in that.

Correct.

Very good. Casey, one quick question for you before we get to Councillor Henry. We spoke about this a little bit regarding staffing. My belief was that staff wanted to get their own feet wet, get us in order, understand what they need to before they bring more people on. Would that still be correct?

Yes, that's correct.

Okay, so they're ready when the time comes, but look at the condition we're in compared to last time, so great job. Councillor Henry, you're up next.

One thing, if I can just add to that, and through the process, attending the Audit Advisory Committee meetings, Chris has attended and has presented, and findings along the way have been presented, so I think it's kind of We have to look forward knowing that change is happening and that, you know, it's not the same as it was. So because Chris has given such attention to the audit advisory meetings and I know you've been at them, that I feel along the way we have been aware. And I know Dr. Lucious is a part of it because I know you ask questions as the process is going on and talking to the finance department and stuff like that. So I really think it's kind of There's a new regime, and it's definitely moving forward in the right direction. But what I wanted to start with is I wanted to thank Dr. Lucius, and this goes back to the audit advisory meeting the other day, for making the executive decision so that the audit advisory meeting could be held with the required quorum, which is the key behind that. Our audit advisory committee led by Jean Siegel and Elena McFann did their jobs as volunteers I might add They asked good questions of city staff and CLA all members of this committee take their responsibility seriously and no members of the community should ever put them down for their efforts and I do encourage everyone to watch the audit advisory meeting from last week because a lot was covered. Things that might not be repeated in this meeting, almost all counselors were present, but for the public, the committee and staff and CL, the conversation was very productive. A lot of great questions were asked. So I just don't want anyone to miss anything just in case it was mentioned there and not here. the thoroughness of that previous meeting, I really feel like they did so much of our job for us because they did such a great job. I want to thank Chris for your thorough and honest presentation. You made several comments at the audit advisory committee meeting that were very forthright that we needed just the facts. But one question I have is since – and this might be more of an accounting – I'm not sure. Since Marco is moving into transition of leasing our vehicles, this change will affect our assets. to liabilities and then the lack of depreciation significantly. I'm thinking like a business mind, but I don't know in a municipal way our assets are going to go down significantly and we're going to have more of a liability. Is that something we should keep our eyes on moving forward for next year's audit?

I will just say from a financial health and presentation standpoint, no. Without getting into the weeds of the accounting, it won't change your financial position too much as you transition to that. It's really a cash flow decision. Do you want to purchase something and outflow the cash up front, or do you want to break that out over three, five years to lease those vehicles? That's really the only decision factor, and it really won't impact the audit and the financials.

Perfect, because that was the one thing I picked up in there. The other thing was, any modifications or changes in our accounting software? I know it was discussed at the last meeting about how much backtracking had to be done on a per invoice basis. I think we've made some modifications in our accounting program, but is there other accounting programs that might be better used or more advanced for our situations?

Currently, I guess my overall recommendation would be to do an assessment on the software you're using, Tyler Munis, and really make sure that you're using it in the most effective way possible. I would say you're probably still not. We talked about this last year. At length, there have been some improvements. That has not been the primary focus. The primary focus has been getting your books closed so that the audit could continue. Munis is a good software. I mean, there are plenty of other powerful software platforms out there. Munis is still a good platform for a city like Marco Island with the functionalities that you all require. There are other data tools that you could start thinking about as far as data visualization, dashboarding, different reporting modules that you could plug in or overlay on top of the software that would be more cost-effective and beneficial than just going into a whole new ERP environment. So those are the things that I would suggest you start to take a look at.

Because I look at it, it's always good to you represent a lot of municipalities. So we only know what we know. I mean, I think Marsha coming in is great because she comes from a different city that had different products. So we learn from talking to each other and comparing notes. And then one thing I thought was interesting, the pages were unaudited, but this is for the public reviewing. And Councillor Gray brought it up. Review of the pages 128 to 132 were interesting to even a non-accounting person. It was data about our population, number of employees over the last 10 years, which I thought was a very interesting chart to read. That accounting, I think now you're at six. Through the years, it's been eight. of all the various departments, how the employees' numbers have changed up and down. So it was just very interesting data in those four or five pages that weren't per se maybe audited, but it was a part of the presentation, just for people to understand the history of where we were where we're going um and you know what we've accomplished in numbers of employees versus population comparison so so but thank you very much for everything your time and efforts are truly appreciated thanks thank you counselor counselor schwan

Thank you. Thank you, Chris, for the presentation today. And I was at that Audit Advisory Committee where you also just presented, too. I have no further questions at this time. Might have been taken already. But I do want to specifically thank the Audit Advisory Committee. This was such a hardworking committee, and they made great advancements this year with all the members who were working hard, and particularly the leadership of our chair and our vice chair. And I know Elena, the vice chair, current new chair, she's on today. But Jean Siegel is in the audience today. And, Jean, I just want to thank you for being the steady, diligent hand you were this past year for this committee. So thank you very much.

Thank you, Council, for acknowledging them. Councilor Goehler.

Thank you again. I did watch your presentation to the Audit Advisory Committee, and it was really good. And I also want to continue Consul Schwan's sentiment about thanking our Audit Advisory Committee. You are fantastic, and your hard work is very much appreciated. And thank you, especially Mr. Siegel. Thank you, I know. I mean, all of you are appreciated, but Mr. Siegel, you've been doing this for a long time, and you are very much appreciated. So my couple questions are probably mostly for our finance team. So first of all, thank you for everything you did. And I know we still are a little bit behind. And Dr. Lucious has a lot of work to do, as all of us have a lot of work to do. It's a new direction. It's new restructuring. a new team, and we have to give them a little bit of break. And I know you have been also softening a lot, because we still have the material weakness in there, which kind of – but thank you for that, but you're still bringing it up. We have a lot of work to do, as we all know. And Carol, you've been a champ. Thank you for that. So I – obviously, you already met Ms. Marshall. She's been working with auditors. She comes from very broad background, and my question will be for our finance director from Ms. Marsha. What are the measures that we're taking right now? This material weakness for the grants are actually kind of worrying me. I know that we have kind of – are we lacking on a personnel? What direction – I'm sorry, Chris, I know I want you to engage. What are the directions are we taking right now that we actually make this more fixable? And how can we help? How can Chris help? And what are the next steps?

Well, thank you very much. There are a lot of next steps. On the grant side, the city is relatively small, and I appreciate part of Chris's answer is that may be part of an answer to getting more revenue, look for more grants. But one of my first steps, I'm trying to get a handle on what are all the grants that we have and what stage are they. At one point, there was a comprehensive list. I think it's fallen a little bit by the wayside. But that's very important. Not just finance, not just the city manager, but all the departments need to be aware of what all the pieces are because it's not just a finance thing. There's a lot of administrative and operational things that have to happen for grants. So whatever department or departments are involved need to make sure they know everything that has to be accomplished and they're following all the right rules. Finance should also have an oversight to help them go. Okay. This is the expectations. These are reporting requirements But we can't do it just one department at a time. We've all got to work together So that's already been communicated to all the directors and that's would be my expectation going forward in terms of the other things We already have a meeting set up with CLA I think it's actually at the end of the month on July 28th to go over not only this past audit and what the issues were in the timing, create the timeframe and the deliverables for the next audit. So it's kind of a post-audit and a pre-audit meeting. So those are the two key steps that are happening. And also I totally agree that the books need to be Closed on a monthly basis. So that's a key thing. We'll be working towards also providing reports and Carol gave a good one last time every quarter That's a little more comprehensive than you've gotten in the past because I agree communications are key You need to everybody needs to know what's going on I think we should get to the point where it's almost a no-brainer and I appreciate the comments that the city manager should be involved but it should be that I'm keeping her informed and she's so well informed and that you all can be informed, and we get to the point where it's like, we're fine. You don't need to talk to us. I mean, you do, but it should be at that point where you're very confident as to what's going on and that you know if there are any issues. It's going up the chain as rapidly as possible. We shouldn't have any surprises, particularly for a city that's in good financial shape like Marco, and it's not huge, so we shouldn't get buried in the details because there's a manageable number of details in my mind.

Ms. Marshall, thank you. And I think you put all of us, my colleagues and myself and Ediz, and thank you for being on our team. And that's all I'm going to say. And please keep us involved in whatever you need our help. I cannot be much help. Thank you very much. Thank you, Chris, again.

Thank you, Counselor. As we've all had one go around, I'm going to take my turn before we pass it off again. Chris, I want to talk on some big, broad strokes, all right? It's a campaign season, not for you, but for some of us. And we're going to hear how physically irresponsible Marco is. I think it's quite the opposite. I think I live in one of the most magnificent, fiscally conservative communities in all of America. That's just my opinion. I want to highlight a couple things and confirm. So our physical health is strong, as you said.

MR. Correct.

MR. All right. We are still AA bond rated? MR.

Correct. MR. All right.

People want to lend the city of Mar- how does that rank in the realm of bond ratings? Is that good or is that bad?

MR. That is good.

About as high as you can get, right?

Yeah, that is top tier.

That's as high as it goes. So we're still – people want to lend the city of Margo Island money because of our rating. A few things to point out. In 2016, I noticed – and this is a great report – tax basis, property tax basis, $8.5 billion, 2026, 18.4. So what that means is taxation has gone up.

through assessments and evaluation, even though we rolled back the rate eight years and went to slightly above millage neutral for a year.

One thing I want to point out, can we pull up by any chance page 49 of 167? Is that possible on the annual report? If not, I can highlight the numbers. And while I'm talking, if we can get up. If not, I'll just tell you what I'm looking at here. And Chris, I mentioned this when you were here last, and we'll get into material defects a little bit, but I mentioned something that was overlooked in the entire conversation when we were talking about material defects and policies and procedures. Principal paid on long-term debt, $10,865,289. We are knocking principal down while we are rolling tax rates back, while we are getting AA bond ratings and getting strong financial ratings from our audit firm. I think that's incredible. Now, I've done this a few times before, and this is maybe more just for the community. While we're doing all this, and guys, rollback was not a perfect system. There was a few holes in it. I've never argued, but it's a 90% perfect system, in my opinion. And if you could be that good, you're in the Hall of Fame of any sports. If you're a stock picker, you're the greatest in the world. While Marco's being a beacon of financial accountability in a physically conservative community, our national debt just hit $39,442,000,000. I'd rather be us. But I do want to focus. Material weakness. How many cities do you represent, roughly, again?

3,700.

Can you give me a rough idea? How many of them will have a material weakness over the course of the ballpark, do you know? Or most? Or usually everybody?

A quarter to 50% usually have something in a five-year period.

I know we beat that dead horse last time. And it was something that we needed to address. It was also something that was getting politicized. Can I just ask from respectfully, when you started with us to this working relationship now, how are we doing?

MR. I would say very good. You can see the progression and the emphasis on corrective action and wanting to be the beacon process and procedure-wise that you are from a financial standpoint.

MR. Excellent. Wonderful to hear. In all the time you've been with us, even our material weaknesses, we never broke any state laws. We never missed any – had any fines, have we? no not that I'm aware of so even though we were in much better shape than we were and we weren't where we were we didn't want to be it seems to me that we are really made strides and I want to thank the staff for that that's been a tremendous accomplishment in a short period of time we know there's a little more work to be done and we talked touched about in a little bit but as most of it just in hitting the monthly numbers and systems making sure we continue to stay on track and update those or anything else we're missing anything you see large items that we're just missing as a city

It's what we talked about last year. It's processes, it's procedures, it's the reporting and closed discipline to get to the point of being a well-oiled machine. That's really the key.

I do appreciate it. Sounds like we're in great shape in my opinion. I appreciate your work. I appreciate the staff's work. To follow up with me, Dr. Lucius, do you want to go next before I give anyone else a go around? You have your first turn. I'll turn it over to you.

Thank you. I would like to make a couple comments about, you know, obviously thanking Chris, thanking Carol. Carol really took on this task as a new finance director and dedicated so much of her time, even outside of her normal business duties, normal hours, to make sure that we met the deadline. And I thank CLA and Chris's team for doing that as well. I want to let the council know how I feel about this audit. I'm disappointed with the findings. And I'm disappointed because they're the same findings as last year. So it makes me feel like we haven't made any progress. It makes me feel that we haven't improved. And I take that seriously because I'm a person who believes in continuous improvement, and I want the city to be better and do better. So, you know, I've only been the city manager now for a couple of months, but I had six months as interim, and I want to share with you some of the things that I have done in the past few months to at least try to tackle some of these issues even before we got the formal report. One of the first things I did was actually assign Chris Burns, admin assistant, to be a, I don't know what the official title is, but to essentially step up her duties and responsibilities to include grant administration. So someone mentioned we have this kind of master spreadsheet. She became the owner of that master spreadsheet, working with all of our departments to keep track of the grants. So that was one change that we made, I think, gosh, over six months ago. As you know, I made two new hires in the finance department. And just hearing at every meeting, you hear something new from Marcia that I think reassures all of us based on her experience. And she's already bringing such great value to the city. the department heads I have explained to the department heads and I will continue to explain to the department heads that this annual financial report is not just a finance report it's a city report and all departments have to take ownership for what's in this report and the way I explain it to our staff is the budget says what we intend to do The financial report says what we actually did. How did we do? And you can see, you can go back and look at the FY25 budget that said here's what we intend to do. This document says how did we actually do. And you can look. There's a, I think it's page 102 that outlines how every department did on their budget. Were they under budget? Were they over budget? And that's what I'm going to hold the department heads accountable to. I've also said to the department heads, they are responsible for their grants. It's not a finance function. There's accounting that goes along with the grants, but there's also just keeping track of the administrative paperwork. Have we submitted reports in a timely manner? When do we expect reimbursements? Following up with the granting agency. Those things are the responsibility of the department heads. as well as invoicing. So one of the reasons we had the material weakness and the financial statement corrections was because of invoicing. I explained this to you all months ago, but, you know, we had some work that was done in FY25, carried over into FY26, got the invoice, paid it in FY26. and it should have been two separate invoices, partially 25, partially 26. So we've talked to the department heads about that, saying you have to look at your invoices. You have to make sure the invoice date matches when the work was done, and then when we pay it, make sure the payment matches the year that the work was done. So one of the things I'm trying to do is really make this a citywide endeavor across all departments and have the department heads take more ownership. I've set the expectation with Marsha for a timely close and timely reports to City Council. We're also working on reducing the number of transactions every year. We have, I think, over 6,000 financial transactions a year, which is a lot for a small city. Our purchasing manager has already reduced that by almost 1,000. just by reducing the number of credit card transactions and opening purchase orders. And he's gonna reduce that by another thousand in FY27. So we're already working on that. Communications, I just wanna reiterate, I had probably communications with Carol two to three times a week on the status of the audit, and then maybe every other week with Chris, especially in the last couple of months. And then, obviously, I meet with all of you weekly, and I kept you abreast in weekly conversations with the chair. And then finally, as Marsha mentioned, July 28th, we're meeting with CLA again to go through what the next steps are, and we're going to keep this as an iterative process. So I just wanted to mention those few things to let you know that I've already made some changes. We'll continue to make improvements. And I don't think this is an awful report by any means, but I'm not satisfied with it, and I won't be satisfied with it until we get through the process and procedure improvements that we need to make. Thank you.

Dr. Lucius, thank you. Love your standards. Love what you're looking for. Don't sell yourself short, though. You've made great strides, and we're in good shape, and we can only get better, and that's a wonderful thing. All right, Vice Chair Champagne, second go-around.

Yeah, I forgot to bring up on my first go-around what your opinion of using AI in the financial department is. Is it being used by some of your clients? To what extent? For what purposes? and could we implement it here more effectively than we may have?

Yes, and that's a loaded yes. There's a couple ways to look at AI, right? Because you can break down AI into automation, and you can break it down into language models, like a chat bot, you know, ChatGPT and Claude and things we're thinking of. There is AI in the accounting space today that is making debit and credit journal entries along the way. Let's just call it bookkeeping. That exists. That is not, I'd say, municipality ready yet. That is when you have small business doing the same transactions over and over for it to learn. Where you all can use AI to really improve things are in the automation space. We see it in accounts payable automation where, let's just say on a very simple format, you're scanning in the invoice when it comes in, you have an automated tool in the background that is identifying the vendor, the amounts, figuring out which expense category it goes to, and booking that payable into the system, and then routing it through various workflows within the city. Again, that's data entry reduction, but that's really where AI has been beneficial today. The other way that we'll see it, and we use it this way at CLA, is just something basic like Microsoft Copilot, or if you're using JetGPT enterprise model, whatever that may be, of using it to summarize data. pivot data, run analyses on data, even just data extraction that you've gotten out of a system to make it into a better format, or use it as a research tool to help you create that information. It's time-saving at the end of the day. You still have to review it. The human still has to stay in the loop to be able to understand what's coming out and that it makes sense. But it does save a significant amount of time, and there's a lot of ways you all can do stuff like that.

May I suggest one other area that it may be helpful here, but I'd like you to opine on that suggestion. We've had issues with grants. We now have a quote unquote grant administrator from an administration point of view. Couldn't that administrator take that master grant plan, convert it to AI, and update it? I mean, talk about ease. All you're doing is putting information in and letting it spit out. And it does it so quickly, it saves a huge amount of time. Am I correct that could save us a lot of effort?

It absolutely can. And actually, when I forget what the latest model of Cloud Opus that came out and rolled into Microsoft Copilot was, When that arrived, you have the ability now to put in grant agreements, grant contracts, compliance supplements from the state or federal government and say build me a checklist, a summary, any sort of documentation that we need to maintain at the city level and it will create all of this for you and save a significant amount of time.

And that's what I'm reading and hearing. And the other is that You can even ask it, what are the grants opportunities out there? Tell me the state grants that are available and timetables for those. How about the federal? You ask these questions and a dummy like me gets responses that quite frankly, are meaningful. So see what's available out there. You would have to do hours and hours and weeks and weeks of research to find the data. It spits it out maybe in two minutes. I mean, it's amazing what it can do. So I would say grants and administration of grants is a key area which has posed a problem for us. And it could be linked by department. If every department is on the same AI wavelength, it should work like a charm, I think.

Yes. And there's actually vendors out there that are grant-focused that are putting AI tools that you can have licenses for and search for grants and have automated queries made.

Bingo. Okay. Well, thank you.

Thank you, Vice Chair. Counselor Gray. Thank you. Casey, a couple questions for you before I go back to Chris, and these are really future-pointed. In the Audit Committee meeting, there was a conversation with the moderator that the video was part of the official record. I thought it had been conditioned previously that only the minutes are part of the official record, because there was at least a conversation there to try and correct the minutes, and the comment was the video is part of the official record. Please, or if you want to answer it now, you can, but...

I'm going to refer that to the city clerk.

Sure thing. So the official city record is the minutes, the written minutes. And that is what each of the committee approves every time they meet. They review that and they approve that. We use the video as a courtesy. So part of our minutes, it's not verbatim. So it's not a transcription. It is action-based minutes. And so what we do is we use that video to kind of fill the gaps. If people have questions, what was discussed about more. But the minutes are action-based. We basically want to capture what was the motion, who made it, who seconded it, and how did you guys vote. So that is your official record.

Thank you. So in light of that context, if there was some question to change those minutes, that person could rediscuss that at the next meeting upon approval of those minutes. Yes. Because they were led to believe the video was part of the official record. If they wanted to retool the commentary, they would have the ability to do that.

Well, the time to address so the minutes have been approved, I'm guessing. So if the discussion was about minutes that had been written up from the last workshop, and they were approved, that was the time to bring up the discussion about them being corrected. And then that administrator could go back and review the video and take a look at their notes again to see if it was captured correctly or not.

Thank you for the explanation. Casey, one more for you before I switch to Chris. There were two material variances presented in the audit. I assume that's part of the budget conversation, not really something I should be dwelling on in the audit? Or should I? The two categories were there was a material variance in emergency and disaster relief. The budget was 67,000, and the actual is 1,000,037, so that's material. And then intergovernmental revenues came in at $2,236,000. Oh, it was a negative variance. The budget was $2,686,000 and the actual was $449,000. I just didn't know if this was the place to be discussing material variances.

I think we can absolutely discuss those now because to answer your question, this is a look at FY25. We're moving on to our FY27 year budget, so we're not going to go back and revisit FY25. If you have questions about FY25, today's the time.

Thank you. The variance on emergency and disaster relief. Can you reference the page number? Page 118, I believe. Okay.

And also just to clarify, materiality may not be material weakness. So I just want to clarify what you're speaking about is in reference to the auditor's finding or if it's just in reference to?

I'm not searching for materiality. I'm searching for a $900,000 variance on page 103. It's 103, which is the same as 118. There's two, they're cross-referenced. The deck shows a different number than the actual page numbers.

All right. So you're looking at the ACFER page 103?

Yes. Signed final ACFER upload, and it shows 67,000 final budget for emergency and disaster relief, and then actual 1,000,037, or a variance of 969,000.

Carol, can you speak into the mic?

Nope.

Okay, good. I was just clarifying what page he was looking at. He was looking at specifically the Grants Fund P&L KC.

The deck listed as page 118. Yes. And the page number in the deck is 103. 103.

Right. So the title of that page is in reference to a grants fund. But to your question of why is there $1 million in actual?

Well, we budgeted $67,490, which is what's in this page. The variance, the actual was $1,037,000. So the variance was $969,621. I was just trying to understand. what might have influenced that?

So I would like to take a look at that. But my recollection is, when Carol and I spoke about this, it was payroll for Dorian. And there were two hurricanes in 25, I believe. Milton and Helene. Thank you.

So the twins got us.

Yes. And I believe we're supposed to be reimbursed for that, which is why it's on the grants fund balance sheet, whether or not we get that reimbursement.

Thank you. It just jumped out at me. And then intergovernmental revenues, which is on page 122, I think, of the DACA. REFERENCE A NEGATIVE VARIANCE OF $2,236,000. THE BUDGET WAS $2,686,000 AND THE ACTUAL WAS $449,000.

SO PAGE 122 WHERE IT SAYS PRINCIPAL PROPERTY TAXPAYERS, IS THAT THE PAGE YOU'RE LOOKING AT?

I THINK HE'S LOOKING AT 107. IT'S 107.

I think so.

Okay. So now this is the capital projects fund.

Right. And it showed under total revenues on the top section, $2,686,000. It shows an actual, under that category, of $187,000 and a variance of $880,000. And then if it, I think if it flows down, I know budgeting is a sport. I know that there's great pride in trying to nail your numbers. When I see material variances, I'm just kind of curious.

I can't answer that off the top of my head. It's something I'll work with Carol and Marsha and we'll get back to you.

We don't need to dwell on it. Okay. Thank you very much for putting up with me, Chris. Just a couple more questions. A city of our size, 250 FTEs, how does that sound to you? Is that pretty typical?

I'd say that's about median, yeah.

Okay, so we're kind of in the ballpark there. The audit meeting listed three things. I'll call them the trifecta. The timeline never received a completed trial balance. That was a quote in the meeting. Significant improvements still to be made. That was another quote in the meeting. And then we're still on a journey, and I think that referenced the postings. We've now got a finance team in place. I have to respectfully say they have a learning curve. Could we expect – first, I was trying to understand what percentage of municipalities hit this kind of trifecta. in terms of those performance metrics? And could we expect with an established finance team going into 27 that we would be able to address all those?

I would say to answer the first question of how many experience it, I would say the majority do that have turnover in key roles like you all did going into fiscal year 25. I would say with an experienced finance team, though, you have the groundwork to resolve them. It may not be in 26 because we are in, what, month 9, month 10 of fiscal year 26. So that also is what I would have some realistic expectations on to say the audit results themselves may still have some similar items. Not to say you want that or you should target that, but there is a reality that some of that is going to be in place. And it's really about, I'd say, two years from now to say do those findings roll off. As we get into 27, is that when they disappear completely? That's a real measuring stick.

Nothing more important than creating realistic expectations. Then my final question, watch me lose it. Oh, hell. The advanced water meters. It was in your audit, great write up on the power of it and explained in detail that they had a 15 to 20 year life expectancy. And reviewing the contract as I read it, the replaceable up to five years and then there's a pro rata replacement between year five and 10. And there's some suggestion those batteries have a life expectancy of five years, all of which says I didn't know if that would change any of the allocations or depreciation or anything else. If those meters had a finite life expectancy of 10 years as opposed to 15 or 20, what would that do to the accounting treatment?

you would have to look at impairment on those assets and potentially accelerate the depreciation. So should that happen, the impact in your utilities fund would be a higher level of expense in those years where you either have to dispose of them or adjust the life expectancy of them.

Thank you. No further questions, Mr. Chairman.

No questions. Thank you. Councillor Henry.

I just have one question, and this is in light of last year's activity. Are there any additional charges we have incurred this year?

There are. There are. We've been working through it with management. We've submitted a first tranche and we're working on a second tranche currently.

Is there a hint of what kind of numbers we're looking at? I'm going to guess not as significant as last year.

We have submitted so far about 24,000. The second tranche will be that much or more, slightly more. What I told the audit committee chair, it won't go above 60 based off my assessments right now. But we haven't worked through it yet with management, so I say that with a big qualification on it.

And then my question would be, because last year it was a surprise hit. Is this something that has been, because I know there was a conversation, this was maybe six months ago, of some additional things, and it was kind of talked about. Because of staffing, it's a cost incurred because of the assistance and the wonderful job CLA did. Has this conversation been ongoing? So there is no surprise.

Yes. And going into the engagement, you all asked for that ability to do that as well.

Okay, great. Thank you.

Thank you, Councillor Henry. As I'll finish with a few thoughts, Audit Advisory Committee, I echo the sentiments of my colleagues here. You've done a tremendous job, and it shows across the board excellent choice councillors in who you chose to put on this committee. I've heard over and over that this is one of the best audit advisory committees we've had in a very long time, not to diminish anybody before you. You've just really stepped up to an entire another level, so we're lucky to have you. Staff, I think we are absolutely in the right direction. Casey, you were the right choice for the job, and you are – from us to you to the staff, it's all flowing – I wouldn't say down, but flowing in the right path, that we – while there's still some work to be done, I think everybody agrees we are on the right path. I do not want to see next year just coming under the gun. I don't want to just get our – I don't want to Just make it under state law. I'd like to have a little, or should I be here next year? It depends. But regardless, I'd like to see the city have a little more lead way for questions, for counselors, for everybody to be involved, including our citizens. But it seems like we're absolutely in that right direction. Chris, I'm very glad we're able to work it out between ourselves and your firm. It's not easy to change accounting firms, legal firms. These are things that are big undertakings. And so it's excellent that we have such a good working relationship, and it seems like you and our new staff, our transition staff, are really coming together. So love hearing that from the team. And overall, Casey, I agree, striving for more is absolutely important, but we are in very good shape where we sit, especially where we were. That doesn't mean we should just rest on our laurels, but we're in excellent shape, and we're only going to get better. It seemed like an exciting news and a good budget to me. Chris, anything else to add, closing thoughts, or should you need to?

No, just want to say thank you to you all for continuing the relationship and looking forward to standing here next year, hopefully earlier, and with less to discuss.

Councilors, I see no more light signs. Staff, so before we – Chris, hang around for a few seconds. We're going to check a public comment first, and we might have a few questions.

We have no members of the public who have asked to speak.

Excuse me, Tyrone. Yes. I know we've been talking about the Audit Advisory Committee, but I think we need to acknowledge Gene – He has been on the Audit Advisory Committee for eight years, and this was his final audit. So I think we just need to commend him for his years of service to the city.

The standing ovation, councilors.

I didn't deserve that, but thank you. You absolutely do, Gene.

And you're just a heck of a nice guy to boot. Thank you.

At any rate, just a closing comment from the perspective of the Audit Advisory Committee. And thank you, Chris, for this great presentation. And also thank you for the work that you and your staff has done, because they were great. And any time I called Chris, he responded immediately. He worked so closely with Carol, and so above and beyond. And Deb, you were involved when we selected CLA, and it was a very good choice. It was unanimous. If you remember, not a lot of things in this world are unanimous. Give you credit for that. The entire committee chose them. So that was really good. But from the audit advisory committee's perspective, the audit was completed professionally. It found no fraud or material irregularities. THE CITY WAS IN COMPLIANCE WITH ACCEPTABLE ACCOUNTING STANDARDS AND FINANCIAL STATEMENTS WERE FAIRLY PRESENTED IN ALL MATERIAL RESPECTS. AND WHAT I'M VERY PLEASED ABOUT IS THE AUDIT CONFIRMED THAT THE CITIES ENDED THE FISCAL YEAR 2025 IN A STABLE FINANCIAL POSITION REFLECTING THE STRENGTH OF OUR LONG-TERM FISCAL FOUNDATION. So I'm very pleased about that. We should all as citizens be pleased that we have a very solid financial situation in our city. So on behalf of the audit advisory committee, thank you Carol and your staff for the job that you did. We welcome Sharon and her new staff. And thanks again to CLA and Chris for your hard work. Appreciate that. So thanks, everybody.

Thank you. Thank you. Thank you. Any closing thoughts? All right, I'll just simply say in no particular order, thank you, council, for your work on this, audit advisory, Chris, you and your firm, citizens for reaching out with questions, especially our staff for the amount of time. If you're watching this, you don't realize, and we get weekly updates from Dr. Lucius, but you don't realize these aren't just a few hours. These are 30, 40, 50, 60, 80 hours a week sometimes to get all this in order and to deliver this to us and especially to go back in the past and just... revisit things and make sure everything's in order. So I really appreciate that.