City Council - Regular Meeting

to our city attorney Dave Greco, to our deputy clerk, and to our audience here, the administrative staff. Um, this is a special meeting, uh, special meeting study session. And this purpose of this meeting is to review, um, an audit presentation from Plant Moran for the fiscal year ending in June 30th, 2025. And at this time, we will take roll call. Councilwoman Abdo here. Councilman Bulock here. Councilman Jones here. Councilwoman Rosco here. Councilwoman Thally here. Councilman Watssworth here. And Councilman Willilhigh here.

Madam Chair, we have a quorum for this special meeting study session. Okay. The special meeting agenda reads as follows. Number one, roll call. Number two, agenda. Three, discussion. the audit presentation for the fiscal year ending in June 30th, 2025 for public comment five adjournment and a motion is in order to accept tonight's special meeting agenda as presented. So move support. It's been motioned by Miss Abdo uh seconded by Miss Rosco for the approval of the special meeting agenda. Miss Abdo here. I mean yes Miss Rosco. Yes. Mr. Wilhigh. Yes. Mr. Bullock.

Yes. Mr. Wadsworth. Yes. Mr. Jones. Yes. Chairs. Yes. Motion approved.

Thank you, city council. We are now in discussion. Agenda item number three. And I guess I'm going to call on our finance director, Maria Ferris, and she will take us to the next level here. Good evening, council, mayor, chief of staff, clerks, administrative staff, and everyone here in our audience. Um tonight um Plant Moran is here with a presentation. Um we are going to be talking about our audit um as of 6:30 2025 ending and um I have Bill Ricky and Bill um here to discuss um the presentation and we're going to start with Bill.

Thank you Maria and good evening. So, as mentioned, I'm over at Hub with Plant Brand, the the audit partners uh on your account, and we are here today to talk about the June 30, 2025 audit engagement. Um, we talk about the audit, there are several different deliverables that I believe you have. Um, so you have the the city's financial statement, which is the large bound document. We also issued two separate letters uh report to mayor and council and then our report on the city's internal controls and then we have the graph presentation which we'll go through uh in just a moment. So we have covered all these documents in detail with mayor and management and our goal tonight is to provide you a highle summary and certainly address any questions uh that you may have and and I do know a few of you will see this for the be be hearing about this for the first time. So again want to make sure it's as useful as it can be. So certainly if you have questions um please ask. Before we get going I want to take just a quick me minute and thank Maria Gary and your entire finance team for their assistance throughout the audit. The audit does take several months to complete and you know um we appreciate all their cooperation so we're able to complete it uh in an efficient manner. Uh for the present tonight for the presentation tonight I want to cover a few audit related matters before we get into the graphs. Um and then again the graphs will just be a highle summary of some of some of the financial information that is included um in that financial statement. So not not really going to ask you to flip to the pages that I talk about here in the documents, but just want to describe some of the key items that are included in your package. So our main deliverable to you as your auditor is our opinion on your financial statement. So included in that large bound document on page one, that's the only thing in there that belongs to Plantaran. It's on our letter head and basically we're opining on the financial statements and the city did receive what we refer to as an unmodified audit opinion again in the current year which essentially means the statements are in compliance with all the rules and regulations. So it doesn't

speak to whether they're good numbers or bad numbers really just that they're accurate numbers. Um so that's the highest form of assurance we can provide and the city did receive that unmodified opinion uh again in the current year. Um, in addition to that, we also issued our three-page report on the city's internal controls. So, if you were looking at that one, right on the top, the header starts off with report on internal controls over financial reporting. And what this is is the expectation is when we come out to do the audit, the numbers that were provided don't need don't need to be changed at all. So, it's a really um low bar when it comes to us reporting things to you. So in the current here on page three, you'll see what we we have what we refer to as one audit finding. And that's because during the audit process, we we help the city record some capital asset additions as well as some debt transactions. And so we are we are allowed to do this as your auditor. It's just whenever we make or propose any adjustments to your financial records that are provided to us, we have to tell you about it. And that's really what this letter does. Uh important to note that that the adjustments that we proposed and were made had nothing to do with cash transactions. These were year-end closing entries so that the financial statements can be prepared. Historically, we've always had this finding and the amount of entries that we're identifying continues to be reduced. So now we're down to basically two, you know, you know, two types of transactions and each year your finance department kind of improves and does does more of the work there. Um, in addition to that letter, we also have a second letter that's addressed to to mayor and council. And what this is is this is really just our end of audit report. And this takes us through um explaining the audit process. If we had any other issues, like if we had any issues with management, we had any significant delays, if there was anything like that, they'd be documented in that other three-page letter. and

happy to report besides that one audit finding that I just talked about, we did we did not have any issues with the audit. So really really clean audit. Uh you know overall the city continues to have strong internal controls and your team really does a great job maintaining the financial records. Um so again overall you know good news uh on the auditing front. Um so in addition to to those items we have prepared this graph presentation to really highlight some of the financial results and a couple key items. So, I'll call Phil up here and we'll start going through uh the graph presentation. Phil, thank you, Bill. So, as Bill mentioned, um each one of you should have received a copy, but also it's being presented out here um of our draft package meant to summarize really the 80 plus pages of your financial statements. So, we'll start with the first slide here. So, we're looking at your general fund revenues and transfers. Uh we like to show this for the past 3 years. Compared to the prior year, you were up about 478,000 in total revenue. Um a big chunk of that is related to your property tax revenue which increased about 682,000 uh due to increase in property tax values. Now that increase was offset by some decreases. So intergovernmental rent down about 431,000. This is just from some grant revenue that was recognized in the prior years. and then license and permit revenue that can fluctuate and so that decreased about 179,000 just from less significant construction process projects as compared to the prior year. Um in the other there's also some items there and then you have your um interest revenue which increased about 404,000. So on this graph you will see we did want to point out just from 2023 to 2025 there is a decrease but that's what we would expect to see. In 2023, you would have recognized a one-time award for

ARPA revenue that was about 2.4 million was not expected to recur. So that was all recognized in 2023. As well as in 2023, there was some significant projects and some big permit revenue coming into that. So that was a one-time large permit revenue that would have increased that otherwise you have increase from the prior year. The next slide we have here is now looking at that same general fund but looking at your expenditures and transfers. So in total expenses increased about 2.3 million of that general government increased about 267,000 related to just increased cost in city operations. Uh public safety transfers which we'll go into in a couple slides. That increased about 1.5 million. Your public safety expenses increased about 857,000. Both of those increase just from the city being able to fully staff the police and fire departments. So with those being fully staffed, you have those full costs. And then the public works, you'll see that kind of fluctuate in 2024. It's down a little bit in 2025, about down about 586,000. That was due to some large sidewalk projects being started in 2024 and then wrapped up in 2025. The next graph we have here is looking at unassigned fund balance and we do a comparison over the past 10 plus years. Um it did decrease about 1.5 million. We'll talk a little bit about that. So unassigned fund balance is fund balance that isn't restricted committed or assigned for any other purpose. It's can be used as needed and the city does set aside and assign certain fund balance for future budget use. So that increased a little bit which would take away from your unassigned as well as just using fund balance. In the current year, there was about 230,000 of fund balance used. That's a lot less than budgeted was about 6.1 million. So, continuing to monitor this cost. So, you will use that fund balance from time to time. And that is what happened this year. But overall, as we like to look at it, we would compare

your unassigned fund balance to your uh expenditures of your general fund. So, that represents about 41% of your annual expenditures, which we would consider to be healthy. Excuse me. Yes. Maria, is there any reason why that on this sign went down like that? Do you have any specific speak to that specifically on the side from last year? Yeah, from last year to this year. Right. So, um we're going to go into the slides coming up, but it is in the investment into public safety. Okay.

Yeah. So, um and what we stated on the previous slide, let's go back to two. If you look at the graph, the very first line, which is public safety, you'll see it's a little bit over three million. If you look right now, it's 3.8 million. So that's, you know, almost 9 well 800 and some thousand um of an increase in expenses just in public safety. Okay. So when we do invest more to bring up that staffing level into public safety, we did use some of the fund balance, which is that unassigned portion that we're just we're talking about. Gotcha. Okay. Thank you. You're welcome.

I'm sorry. We talked about this. Okay. Okay.

So, the next couple graphs that we have here, we like to show uh the property tax distribution. So what these next couple graphs and slides will show is just for every dollar collected, how much is goes to the city for city operations versus how much might be collected on behalf of other taxing authorities. So the first image we have here is just a dollar with the green highlights being those that relate to the city. So it' be your operating mill, your public safety mill, sanitation, uh promotions, those items. And if we go to the next slide to kind of show this a little more, for every dollar collected by the city, 31 cents goes to city for the municipal operations. The rest goes to the taxing other taxing employees. And that's shown more um in this graph, the third of the graphs, um which is the petro, which breaks it up. So you have your city operating which is about 19%. your restricted which would be the public safety uh library sanitation those are represent about 12%. And then the rest goes to other taxing authorities. So 22% would be schools and then the remaining would be like the county of state education. So really trying to show here that for for every dollar that comes in it's not a dollar that goes directly to city 31 cents of that goes to city operations or those restricted millages. The rest would be collected and then dispersed to those taxing authorities. The next couple graphs we have here, so we did talk, we just talked about this is a public safety fund and what we're comparing on this one is showing the millillage that's levied for public safety as compared to those expenses. So you'll see here there's about 4 million of revenue that's up about 230,000 from the prior year relates to those property taxes with those increase in taxable values. While the expenditures are up to 1.4 formuling which as we talked about is the increase from having the full staffing as well as some capital projects.

In this graph, what this graph is is really trying to show is that for your millillage, it's not covering the full amount. It's covering, you know, about 4 million of those expenses and the rest is then covered by the general fund, which which show on the next slide. the this shows the transfers to the public safety fund from from the general fund for to cover really those additional costs and that aren't covered by the millillage. So you'll see for the past couple of years it's it's gone up um to about 10 million 10.1 million this year and it's projected up more from that just from having that full staffing. Next we just quickly wanted to do one graph on the water and sewer system. So what this is looking at is your working capital. So this would be what's called current assets or items that are either cash or investments or can easily be converted into cash or investments and comparing it to uh amounts that would be due within one year or or less. And so what you're seeing here is that it's about increase about 2.3 million. Um there is that steady increase which you'd like to see and is really building up those reserves and those amounts to fund future infrastructure. um cost. So really building those reserve to fund those future infrastructure based on a detailed capital plan for water and sewer that is being worked on by the city.

I got mine silent.

And then the last graph that we have this is looking at your legacy cost. So this would be your pension or your retirey healthcare or OPED. And what we really want to show here is again the past several years you will see that it's decreasing meaning it's getting more funded. So in the past year, your OPED liability decreased about 1.13 million. Uh really due [snorts] to strong market performance, some earnings on the amounts that were deposited in there. So that's about 26% funded. And then your pension has a 772,000 decrease in that liability. So that's 60% funded. Once again, the decrease in that liability is due to strong market performance. And it's just important to know for your pension since you are in the MS plan, this is based off of 1231 2024, which would be MS0. But as you can see, the main point of the graph is showing that you're continuing to focus and that and those liabilities are going down. I can answer any other questions. Any questions from councelor to the chair? Just a quick comment. You'll see, you know, we've been talking about these plans of the transparency and you'll see a couple anomalies that change and flow that it's been about the increase in in spending in public safety infrastructure and our parks and recreation. That's why you'll see those anomalies that are in there. So, they're not hiccups or something we didn't see. We forecasted those. You know, our unassigned fund balance is our rain day fund, right? So if we look at 80% of the violent crime in our community is committed by people who don't live in our community. It's raining in my opinion. So we've increased funding uh for public safety as well as our infrastructure because we have failed infrastructure. So those are the two things we've been investing in and that's why you've seen us use a little bit more of that unassigned fund balance. Uh industry standards say uh to maintain at least a 20% or higher. We're

right around 35 to 40%. So we still have a healthy fund balance even with those increases. So we're going to continue to to tweak those a little bit. But all of those were foreseen and planned. There was no hiccups or any surprises for us in there. So just want to share that. No, it makes sense. I just wanted to know what that was. So makes sense. So was that were you guys done with your presentation? Yes.

Okay. So I've been charged. Um our previous mayor pro Tim always asks a question of plant Miranda. But before I ask my question, where's Stacy Reeves? Where's she at? Sta Stacy Reeves is um still involved in the city's audit, but she's taking a larger role at Plant Brand as like the head of our public sector and so she is uh I believe out of town this week. Okay. So, will you tell us I will tell you said hi 100%. And um our mayor promotins what would that be? If

I had to give give a grade, I would certainly give an A. I I think we have uh strong fund balance and again unmodified opinion and you are planning for as the mayor pointed out um future infrastructure. I think the biggest challenges for older communities a lot of communities is making sure that you're um setting money aside to fund sidewalks, roads, water and sewer projects and certainly uh you are doing that. Thank you. Appreciate it. No one has anything. A I don't think it was a A. Was it A last year? It was It was a A. Yeah, it was. Okay. Okay. It's a low A. We'll take it. Thank you.

Thank you. Thank you.

If there's nothing else under discussion, um it takes us to number four, public comment. And this is the section on the agenda for the for audience members who wish to address the city council um regarding tonight's special meeting. Um to address city council, raise your hand and after being acknowledged by the chairperson, approach the podium and you may state your name. You will have three minutes to speak and any additional time will be granted at the discretion of the chairperson. Anybody want to speak in the audience? No. Okay. Close it out.

Thank you, Madam Chair. That takes us to number five, adjournment and the time is 6:36. So move support. Sorry. All righty. It's been motioned.