Audit and Finance Committee - Regular Meeting

All right, good morning, it is 9.01. I'm gonna call the Audit and Finance Committee meeting to order. Our first order of business is the approval of the June 2nd meeting minutes.

Thank you.

Okay, all in favor? Aye. All right, motion passes. We have two briefings this morning. The first is with Patrice Randall, the Audit Work Plan and Activities Update.

Good morning, Patrice Randall, City Auditor.

Here with a quick update of the status of the fiscal 2026 audit plan. So we have three audits that have been completed as far as field work and we expect to release those reports prior to fiscal year end. The internal service billing process and cost allocations audit, we've had the exit conference. So once we receive responses from management, that report will be released. The other two are in the report writing phase. The municipal court case processing audit has been completed and is pending my review. We have six audits that are currently in progress and we expect to complete those by fiscal year end. Two or three of those are substantially completed, but again, all of those are expected to be completed by fiscal year end. We have two that are expected to be completed in early fiscal 2027. And those will be started prior to fiscal year end, but not completed in fiscal 2026. And then we have two projects that are ongoing, which is our data analysis and our follow-up audits. We have one audit that's on hold. It's pending discussions within the Environmental Services Department. And we have two audits that are carried forward, and you'll see them on the 2027 audit plan. And those are carried forward because most of the hours for that project will be, those hours will be exhausted in fiscal 2027. And that summarizes the status as of today. At the October meeting, you all receive a more update as to what we have and have not completed for the fiscal year for 2026.

Thank you, Patrice. Questions from the committee? So, Patrice, can you talk a little bit about the audit on the homeless response efforts?

That audit is still in progress. We're looking at the overall process. We're looking at funding. We're looking at the programming. We're looking at contract compliance and overall view. Okay.

Other questions? Okay. Thank you, Patrice. Next, we have our monthly financial report for fiscal month nine, Kate Perry and Christy Lemon.

Good morning. Christy Lemon, Assistant Director in the Fort Worth Lab. Nice to be with you this morning. Just going to walk through a couple of funds in the monthly financial report. And then, of course, I can answer any questions that you might have. We will start on page five with a general fund overview. So we can look at revenues here. So we've been talking about revenues a lot this year. Really same story, and there's going to be more conversation at work session this afternoon. So we'll just kind of touch lightly on this. You'll see that the property tax revenue is $13 million below budget. About $10 million of that is due to protests, mid-year protests and litigation. So we've just seen that trend continue throughout the year. Sales tax was increased a little bit. So the June to June sales tax is up 6%. So good trend there. And of course, we don't yet know about the sales tax that was generated by the World Cup. So our sales tax collections are a couple of months in a row. So we'll find out about that soon. So looking forward to that. And then high level, you'll see the general fund. We've reduced expenses and we're projecting to save $660,000 in the general fund. So we can jump now to page eight, and we'll just look at an overview of the departments. So when we looked together at the March monthly financial report, we were projected to be more than $10 million over budget. So we've cut about $10 million in expenses since we put the hiring freeze in place and started to cut discretionary spending. in the general fund departments. So incredible effort there by all of our departments to reduce expenses. You'll also notice that in the police department, the number is down quite a bit from last time. We've moved some overtime costs, eligible overtime costs, over into the CCPD fund. So you'll see that in the CCPD section of the report. Any questions on general fund departments at this point?

I just want to say it's excellent work. Because what we looked at last time and what we're looking at now are two different things. When do we expect, and you said it and I missed it, when do we expect to get the update on sales tax? Because it looks like that's moving in a positive direction.

Yes, moving in a positive direction. The ones we're really interested in seeing are for the months that the World Cup was in town. So they're a couple of months behind. We receive them a couple of months in arrears. So it'll be a little while longer. We'll start to see that September, October.

But hopefully that will help to move the needle more upward. But it's good to see total revenue where we are.

All right. We can look at CCBD. That's on page 11.

Of course, we had ‑‑ it's not working. There we go.

So for CCPD, we had a planned use of fund balance for 200 Texas Street, and then you'll see that there was savings in operation and maintenance, and so we moved some of the overtime expenses there. So those are eligible to be funded out of CCPD, and that gives some relief to the general fund. On page 20, we can look at the health fund. So we've been tracking that one closely.

Can we go back to Kevin and the CCPD funds? Yes. We moved over time over to CCPD. How does that affect some of the programs that we fund?

Does that come out of it? There's not an impact on programs. There was savings due to attrition in the recruit classes. So there were savings there, and that's why we did that. Yeah, that's why we made the adjustment, because they were able to continue as planned with all the programming.

No, and the only reason I ask, because we are doing some good programming out of that, and I want to make sure we're not cutting any of that.

Yes, of course. That was savings from other things. All right. Page 20 is the health fund. So in last month's monthly financial report, we were projecting to use $14.6 million in fund balance You'll see a big adjustment there. So now we're projecting to use about 9 million. We did receive some prescription drug rebates, and we're projecting one more rebate payment in September. So that's why you see that big variance from last month. So positive news. Continuing to work through changes in the health care fund to bring that back into balance. And we've contributed some extra dollars in 27 to balance the fund in 27. So making good headway there. on that one? Councilwoman Peebles, keep going.

I'm sorry, I'm full of questions today. Go ahead. We got the news that we're no longer gonna fund the healthcare, the prescription pills and stuff. Will that impact any of this? I know this is the retirees fund and I don't know how, if retirees are using it, but do you expect that to help?

So in the general employee fund, that's where we have the deficit. And we expect to start to see some relief in 27. So there's a 90-day waiting period from the time that we give employees notice about a change to the plan. And so we won't see any of that in the current year. We expect to see some differences in cost in 27. And then the retiree fund is actually doing well. So we don't have concerns there. And then the EMS fund, if you want to take a quick look there. I know folks are very interested because that's a new one for us. Continuing to learn on that one as we go. But the charge for services has been stronger than we expected, and so we're seeing a contribution to fund balance there. We expect to use that contribution to fund balance to help fund new ambulance purchases or the equipment that goes into an ambulance. We still have some pretty old ones on the road, so working – working there to improve the condition of the fleet.

I know that we're working with the EMS fund, but on the hotel occupancy venue tax fund, do we see any net positives there with the work?

I think we're still in arrears. We won't get that until September, October.

Yeah. The hotel as well? Okay.

Yes. Yeah. We won't know for a little bit longer. We're extremely curious, so excited to find out.

Christy, I have a quick question on charge for services on EMS. Is that in arrears as well? I mean, how many months do we have to wait to see those funds come in?

I actually don't know the answer to that. Do you know, Kate or Reggie?

So, is this mic on?

So, the way that it's billed, we do have accounts in place that kind of bring what we believe is going to be the revenue on that back to what we anticipate collecting. And so as Christie mentioned, we are still kind of learning about this new service that we're providing to the community and watching those types of revenue streams to really get those down and understand when we see, we typically see about a 45-day receivable on those. So it's a small lag, but it's not a large one.

Okay, thank you.

All right, so that's what I have. Any other questions? Any other questions? Deborah?

Okay, moving on. Our next action item is approval of the proposed fiscal year 2027 annual audit plan.

Okay, now for the 2027 proposed audit plan. Required by the city code, we are presenting to you a proposed audit plan, which is required to be approved at least 30 days prior to fiscal year start. The audit plan is a working document in that we continue to assess risk throughout the year. So if we ever identify an audit that's not included in the plan that we think should be included, we present that back to you for approval. The types of audits included in our plan are operational and performance audits, compliance audits, and follow-ups. So when we developed the plan, the risk factors we took into consideration were liquidity of assets, potential for negative publicity, various types of changes, extent of laws and regulations, and time since our last audit and prior audit results. As a result, we're presenting to you the proposed audits for fiscal 2027. We have access controls over PII, construction projects, EMS billing process, EMS controlled substances, fleet maintenance, fleet utilization, IT readiness, municipal parking revenue, nuisance abatement billings and cost recovery, other contractual services expenses, sales tax registration verification, SBE program, sole source and emergency procurements, and solid waste collection recycling contract compliance. We also will have special requests that you all may make as well as the city manager's office. Our data analysis and our follow-up audits are ongoing. And these are our proposed audits. Are there any questions?

Questions, concern from the committee? Thank you, Patrice.

Oh, and I'm sorry. We have two carryovers that I mentioned when I discussed the 2026 audit plan.

Thank you. Okay, so we need a motion to approve the proposed plan. Thank you. Need a second? Second. Okay, all in favor?

Aye.

All right, motion passes. I think that's the last of our business, correct? Okay, perfect. Move to adjourn.