We're gonna call the meetings order and audit advisory committee at seven o'clock on uh July 9th and D and Field and Share.

We're gonna go around and introduce themselves that way we can get the voices for the reporting.

Russ Barron, Citizen Fort Smith.

Amanda Strange, Director of Internal Audit.

Andrew Richards, Chief Financial Officer.

Katie Flores, senior manager with Forbes and SARS.

David Hallman, I'm on the audit partner, for instance, the water board member.

Who's going to get signed as one of the directors?

The law in the citizen.

All right.

And now that we've done the roll call on the agenda, the only item in business is the review of review the draft of the 2025 AFCR report.

And so that said, I'll throw it over to David.

Alright, well, um, thank you for for allowing us to be here and go over this.

So as far as where we're at in the audit process, so we we have reviewed the act for uh Andy's at for we've suggested a few changes, he's made a few changes, added some stuff.

So we are in the process of doing our final tie outs and our file to make sure that we've captured everything, all the adjustments that Andy made while preparing the YAC for.

So after that, we you know we we've already done our initial review.

Um we think it's in good shape, and so I think Andy is going to walk the committee through a few financial highlights on the financial statements themselves, and then Katie's gonna discuss our audit results, and then we can have any questions you have to talk about.

So one just one clarification item for you, sir.

The draft we're using is the June 28th draft.

Is that the version?

Thank you.

Did you update it prior to that?

Or was it was it June 28th?

June 28th is the is the most recent draft that I've yeah, I think I think you got a draft initially.

Um it was missing um the library's financial state, which is a component unit that we do not audit.

Um take credit for for them doing the audit.

So that was put in, and I think um you made a couple of adjustments since that draft.

So this is this is draft number three, 2025 Act for 628.

Yes.

Yes.

That is the one.

All right.

Okay, so I'll I'll kind of give a high level overview and then um address a couple things that I want to point out to the to the committee and the board members on the committee, and then um whatever questions, specific items you want to go over.

I'll take those questions and we'll go from there.

Uh I guess I'll just start on page 26 of the draft is is a government wide financial analysis.

And so I like I like to review that with you because it has um it has 25 and 24 comparative together and it's a very high level, so you can see um so usually work from the bottom up on these type on the on these type of things.

So like total net position for 2025.

We ended up with one billion one hundred and eight million, and uh um that was up from a million sixty-nine or one billion sixty-nine billion um for the year.

So um I think we had about a thirty-eight million dollar increase in our total financial position for the uh for the government, and then looking at the components of net position.

Um you know, we had an increase in our investment in capital assets from 909 million to 949.

So we had about a 40 million dollar uh increase in our infrastructure and other uh long-term assets.

The restricted net position is relatively the same.

It's 105 million compared to 109.

Um, you know, most of that is gonna be um sewer consent decree restricted about 31 million dollars of that is restricted for that's the cash for the um that we have on hand that we can use for for the consent decree.

Um the un the unrestricted net position or deficit uh decrease slightly.

We're at 53.8 million and 24, and we ended up at 48.9 million in 25.

31 million dollars of that is restricted for that's the cash for the um that we have on hand that we can use for for the consent decree um the un the unrestricted net position or deficit uh decrease slightly we're at 53.8 million and 24 and we ended up at 48.9 million in 25 um and then kind of looking at that piece further that'd be you know that's our basically our net assets that we have to use um you know on our different programs so that's you know it's kind of this similar to our working capital or for the long-term approach our fund balance unrestricted fund balance similar to that so um so the unrestricted deficit the governmental activities had a 20 point six million dollar deficit that was up from 9.5 million dollars um from 24 so you know I think that's that doesn't surprise me I think that and a lot of that is just because we were spending um you know we had we talked about this last year and it pretty much starting at this point last year and then and all the way through the rest of the year we worked on reducing our operating expenses and talking about a structurally balanced operating budget and so um you know we're seeing that here um where we ended up with 25 so we're taking that um even further a big piece of this deficit though would typically when you when I look at these and this is pretty common for most cities is when you have an unrestricted deficit you're like well that's horrible well the net pension liabilities that the cities have recorded which ours is uh about sixty five million dollars you know that is a you know that's not something that you use for capital it's you know it's a considered an operating type liability so that hits this net position so the so the deficit itself is in large part because we have 60 my uh 65 million dollars in net pension liabilities that's the police and fire pension apers for the court clerk and primarily loppy and the two old plans that Lope has those pension liabilities are getting it's the position our positions in those pension liabilities are getting better they're improving so even they're still large but they're but you know they've I think we've maybe seen some reduction um from the prior year you I know you're looking at that if I remember the right yeah there's been a substantial reduction if you go back a few years and it's been going down every year as long as the stock market holds up this year you'll see you'll see the same thing this year.

Now one thing I like to be clear on though is like when you spend four million dollars for the building and when you spend two million dollars on that land out on Mazar effectively that increases your deficit it it I I believe it goes into investment capital assets and creates an additional larger deficit.

So those both are one time one time right so that you know you see so I just say that to say you know having this deficit is not you know an a rare thing it's pretty common among cities that have these pensions you know the the liabilities are going to be paid off way in the future and they're not they don't back like a at a capital asset or anything so that's not a common so you see like our our business type activities which is you know primarily uh water and sewer and solid waste the unrestricted um net position was 69.5 million and at the end of 25 it was 63.3 million dollars in 24 so we you know we saw we'll see improvement in the water and sewer fund because of water rate increases and the sewer and um I think solid waste stayed fairly level there so um I mean overall those look good the long-term liabilities we should see um an increase in long-term liabilities for governmental activities 101 million in 24 now it's 193.5 million because of the sales tax bond issue that we that was done for the um for our consent sewer consent decree and so you'll see that increase there um and then we should see an increase in current assets and governmental activity so it was 180 million in the first top line there for 24 for governmental activities 180 million compared to 270 million so that is primarily the proceeds from that bond issue so that's what's driving that so um so pretty uh otherwise you know fairly consistent we're seeing you know in overall improvement in our financial condition as we continue to invest in our infrastructure um I'll just point that out governmental activities 476 million in the capital assets net investment capital assets compared to 490 million so that's about a 26 billion million dollar improvement so that's going to be streets infrastructure um being capitalized and or spent on streets primarily um so um so if you want to look at the next page 27 shows our changes in net position for the year probably probably reiterate some of the same things that we saw uh pointed out

So that's about a 26 billion million dollar improvement.

So that's gonna be streets infrastructure being capitalized and spent on streets primarily.

Um so if you want to look at the next page 27 shows our tw uh changes in net position for the year, probably probably reiterate some of the same things that we saw uh pointed out in the overall, but uh the increase in net position 38.3 million dollars in 25 the overall increase in 24 our overall increase was fifty-four point five million dollars, so not quite as much as last year.

Um I would probably attribute that to the to the increase in spending operating expenses uh inflation and those things that we were seeing that we were dealing with during the year.

Um that's probably the that that's a big part of it.

Total revenues 243 million compared to 254 million in 24, so that was down.

That's probably gonna be grants that we haven't that we didn't receive last year.

Yeah, it looks like operating grants 13.6 and 24 and 25 10.9, as well as our capital grants at the top of 17 million and 24 compared to 13 million and 25.

So our fees charges for services are actually up slightly from 95 million to 100 million.

So that's gonna be reflective of chart increases, the rate increases that we've adopted during 25.

Um property taxes, it's a slight increase, 15 million compared to 16.3 million in 25.

Um I think we'll actually see a pretty decent increase in the future as well.

You know, if you notice like our the assessed valuation went up about 11%, and our red property tax revenues went up seven percent.

So that that takes effect that takes effect in 25.

So well the levy, the levy uh actually our 26.

So we'll see it when we when we do financial things when we do this automatically.

Yes.

We should, yes.

Um and then sales tax was flat, right?

Just a slight decrease, but flat compared to 24 to 25.

Um 23 was the big year.

Yes, right, and then it was slightly down 24, slightly down 25.

Yeah.

Okay.

But we're coming off a record of 23 and 23 and so.

Yeah, for sure.

On your uh sales tax revenue for this year so far.

I've seen things that we're ahead slightly.

Yeah, we are now, yeah.

April.

Yeah, that's kind of a it's kind of a it was a little misleading because you know, we we can we compare it to the prior month last year.

Well, we had a we had a bad month last year this time because of um there's about 480,000 worth of audit rebates and returns that were offsetting.

So our net receipt that we get was low.

So when you compare what our net receipt, what we collected this year, it looks like wow, we went up seven percent, and everything's looking good.

Um but you drill down to the the details um we can get the details by business code a few days after we get the money, and then we can start kind of looking and see what's happening.

We pay attention to the retail sector in total.

Um wasn't bad, but it was an increasing, you know, retail sales.

That's and it that represents about 50 something, 55% of our total sales tax.

So of course, you know, 2023 was gangbusters, um, but it was slightly behind our gross receipts for 23, even though our net receipts look like we had a big gain, we're really kind of flat.

So we still need, you know, of course, we were all looking at um, you know, we just opened the Bass Pro Shop opened.

So when does it does that have any impact?

And I think it'll be the following month where we may see something there.

June June.

So when we get the numbers in July.

That's right.

That should have the May sales full full month of that activity.

So is that remake where you said that the remake came through last year?

Yeah.

Is that a timing thing, or is it just whatever's hitting?

It's haphazard.

I think it's a matter of large companies filing, you know, calling back sales taxes.

I don't think it's a good one.

Well, like the tax back program the state has like when they will give you back sales tax on construction.

They make you pile all that in one time.

So you accumulate all the invoices.

And you actually filed it in over long, but they only issued a check one time at the end.

Yeah.

They want to order stuff before they go to our investment down at four million.

And you know, we buy it every month.

But we didn't get anybody was finished and they did whatever they did.

So you know, some of the other sectors besides retail actually looked improved for that month.

So you know, that looked good.

Manufacturing and of course utilities and wholesale, you know, look like there were higher sales in those areas.

Of course, they don't have as much of an impact as retail.

And then food food and lodging continues to increase every month.

I've seen over the last several months.

So anyhow, we're we're watching that.

Is the intergovernmental line is up for grants or congressionally directed spending?

What is that?

Intergovernmental is that's gonna be the ARPA funds from that we that we spent in 24, the last bit of that.

Okay.

Yeah.

So okay, so we talked about revenues, our overall increase.

Looking at our expenses for 24 and 25, sorry expenses increased about almost six million, 199.6 million in 24 compared to 205 million in 25.

Um, you know, we're seeing some increases in solid waste of about two and a half million.

Uh water and sewer expenses actually declined about three million dollars.

Um public works expenses went up a couple million dollars.

Uh public safety actually went down a million and some change, and then general government went up, went up a couple million dollars, and that's probably where you know we're we've done some other grants and things where we've the beneficiary of the grants was actually like the schools that are doing um noise mitigation grants and things that we've got.

So those a lot of those things that they ended up or the airport, you know, the some of the money that we've spent um for the airport, they ended up in these um general expense categories, so that's usually why we see things like that.

Otherwise, it's fairly consistent.

Uh the transfers, you see some transfers between governmental activities and business type there, the 23 million and 25 compared to 24.

That is the consent decree work as that work gets done.

It gets expensed out of the sales tax funds, that's a governmental activity, and then it gets transferred into the water and sewer fund, which is a business type activity.

So the prime the prime amounts in that is primarily what we've gotten done during the year and transferred to CIP uh construction and progress.

So that's gonna continue to go.

Yeah, we're gonna see that for several years, yeah.

Yeah, we hope it grows.

We want to get as much work done as we can.

So all right, so that's you know, that's um that's really a kind of a nutshell the whole year for 25.

You know, charges for services, we're seeing improvement, we're seeing improvement in water and sewer.

Sales tax revenues is flat, property tax revenues is good.

Um overall balances, you know.

Maybe let's uh take a look.

Let's go to the general's fund real quick.

Uh what page page 4039, 39, 38, 39.

So the governmental funds balance sheets.

So the general fund uh fund balance end up at 26.3 million dollars in total.

Uh 19 of that was unassigned.

Uh last year we had a significant amount that we had assigned to this year's budget because of the large deficit, so that has been lowered to 6.3 million.

And so our unassigned fund balance represents about 29% of our total expenditures and transfers, basically the appropriated spending out of the general fund.

Last year it was down to 16%.

We talked about that.

So you know, we did we made some adjustments mid-year to the budget, improved things, and we ended up at 29%, and then also the budget that we adopted for 26 is kind of representative of what this 6.3 million that we've got assigned for 26 budget in there.

So we're seeing improvement in the general fund based upon the actions that we've taken this time last year, really.

Also on this page, you'll see like if you turn the next page, page 42, this shows the revenues and expenditures and changes and fund balances, uh the new sales tax funds.

Um are there.

I need to fix that heading don't I show me that all right.

So 100 million dollars in the sales and use tax fund, which is for the consent decree, uh 94.3 million dollars in bonds issued, the premium was six and a half million dollars, and then we didn't um we got that bond issue was done in October or the very end of September, and so not a lot of money spent um $340,000 during 25.

So we're we're starting to we're starting to spend that money as fast as we can this year, and we'll we'll continue to spend that over the next two or three years and to spend that money.

So you have that, you have the bond fund that was new, which is gonna pay this these bonds off there, and so that's that's new there.

So all right, so um probably the next thing we want to look at is the operating statement for the enterprise funds or the proprietary fund, which is on page 48.

The water and sewer, you can see the operating income was uh 9.8 million dollars there.

Um the overall increase in the um in the water and sewer fund was 32 million, which seems very high, but that is you'll see the 26 million dollars in capital grants and contributions that's a big factor there.

That's what was transferred in from the sales and uh from the sales tax fund.

So the big increase is the consumer consent degree work getting done and coming in as a contributed contribution to the water and sewer fund.

So that doesn't impact our net revenues available for debt service, which we monitor very closely.

So the you know, the the operating income in water and sewer last year in 24 was 1.6, so now we're up to 9.8.

So you're seeing improvement there.

Uh I think we're seeing um slight decrease in expenses.

We talked about that, and then um, and then a uh well, yeah, and then a slight increase of about six million dollars.

Well, that's almost 10% in operating revenues, water and sewers.

So water water and sewer is looking better.

What how are we seeing a decrease in water and sewer expenses?

Because all I ever hear from them is that we need to get more expensive.

Um, I mean, we've we had to how do we do that?

I'm excited to see it, but that's not uh the impression the board gets.

I think the impression we're in crisis.

Do what now?

I'm under the impression we're in a crisis.

We're in a crisis.

That's what they tell us.

I mean it's gonna be more expensive or one failure away from prices.

Well, that is um our situation with our capital, our infrastructure.

You know, we're looking at what is what it costs us to operate today.

That's what these that's what these figures are showing.

So we're we've been improving our budget, or we've increased our revenues, we've got better debt service coverage.

We talked about that, but the capital, our capital needs are still concerned.

So it might look good here, but it goes beyond that.

We've got to look to, you know, we've got to look at what do we need to get done.

Um, and I think a lot of I think a lot of municipalities right now are starting to see this.

You know, our infrastructure this infrastructure is coming up on about a hundred years old.

Well, that's probably pretty common for most municipalities.

Everyone is dealing with this infrastructure at some point.

Everyone is dealing with this infrastructure at some point this you know, at some point in the 100 years ago, everyone started putting these systems in.

Yeah.

But just on the operation.

So everyone has got to deal with these capital needs.

I mean, all I hear is that it's you know, chemicals are more expensive, everything's more expensive.

I mean, I'm pleased to see this.

Um it's just as surprising to me.

I think I think that is true though.

I think that um I think the chemicals are from what we've seen are more expensive.

We're getting ready to do our put our chemical bid out, by the way, in the next couple weeks, so we should see that.

Do what?

Do you have the channel?

Oh, sorry.

No, I I think I think all of those are true.

I think all of the I think our you know, work that we've done, you know, all start you know, through the spring of 25 through the end of that year to reduce operating expenses.

Uh I think we did a lot of that work.

We continued that for the 26 budget.

But I think I think it's true that the components of the things that we still have to buy with the dollars that we leave in the budget.

I think those things are are getting more expensive.

I think chemicals are more expensive than they used to be.

I think pipe costs significantly more than it used to, but we've done other things to reduce our use with the spears and we've cut place.

That's how expensive.

I mean, we've we've cut we've cut items from the operating budget that we could either defer or not do, uh, you know, and and at the same time have incurred increased cost and off and the things that we do have to buy.

And Andy's right too, is that and and Neil, I mean, to some of the comments made earlier about you know, we're in crisis.

I think that's forward-looking.

I think I think we're looking at at projects that we need to do to make some corrections to uh items that we see now that are potential failure points.

We don't want them to fail.

We we don't want them to go into that type of crisis, but we are sort of starting to treat them that way so that we can get them addressed before they become not what the media portrays.

Well, but now it is certain.

Yeah, it's important to say, okay, 2025 was the first year of the 12 months of the water grade increase that was put into effect in August, August 1st of 24.

So where you had five months of that in 24, you have 12 months.

So that's that's really the reason for the revenue increase.

And if these revenue levels, it does cover the expenses that now exist.

Right.

But yeah, I I certainly agree that the capital is the issue, specifically the capital for the water line.

There's plenty of money for the next six or seven years or the consent decree or at least five years, uh, to do a lot of construction.

And if you drive around at all, you see construction all that will spend.

I mean, they they drove a 100 foot pipe across my neighbor's yard yesterday to go down the hill by the high adversity to put it in the ground.

So they're doing a lot of work around here.

You know, before this, you know, when you know we started out, we started showing you the allocation between water and sewer in the interim reports that we put out, we pretty well showed that the water revenues were not covering the cost.

The water was not carrying its own water, the sewer was was picking up the tab, and then and then but we also had costing uh increases and stuff, you know, and so the whole thing was that's where we had the issues with we're not meeting debt service coverage.

Yeah.

Um I don't remember that, but I do feel like the feedback I'm getting from the department heads is that we need another water rate increase because we're not covering expenses.

I mean, I don't know how many times we've been holding expensive.

Yeah.

I think operating expenses to some of the levels of some of them want to see it.

I don't disagree with that, but I think operating expenses to cover the budgets that we we've adopted.

We are make we are making the revenue to cover this.

Well, we're I'm concerned, and Andy and I've talked about this a lot.

Is is the capital function going forward?

I mean, I the because I don't that all is dependent on the rates that we've got and the revenues we have coming in to be able to afford debt service for future projects because we we we know that there are significant future projects that we don't have funding for right now.

Yeah.

Yeah.

On the um that's still page 48 that the internal service fund.

Yeah.

And it was it was mentioned, I think in some things that's brought up that we've got in the expenses about 14.6 million of insurance claims and expenses.

Yes.

Is that are the proceeds from the insurance in that 13 million above yes?

Okay.

And that was for Mail, or was that another no?

This is that's that that's primarily our health cost.

That's that's probably our self-insured health plan.

I'm sorry, then okay, that makes sense.

And workers comp.

Okay.

Yeah.

So if you have a big claim.

Okay.

So the distinction matters.

Sorry, I had in my head the property insurance.

I was just trying to figure out why that was the same.

Yeah, that's that we don't have a separate internal service fund for that.

We've contemplated doing one, but so far we've just done it department by department.

Okay, so um looking at solid waste, it had an operating loss of 3.3 million.

And 24, it was actually an income of 343, and so um keep an eye on solid waste.

What's that?

The trades for the capital.

Yeah, well, this is just operating expenses.

Um we had total operating revenue 21.6 million compared to 24.9 million dollars in operating expenses and 25.

So solid waste.

I think we did have some rate increases.

Hopefully that improves.

Yeah, hopefully some hopefully some of those ratings helps improve this situation there.

Yes, typically.

Um this non-major parking fund.

It's not the parking garage.

We need to address this.

We'll need we'll need to address it during the budget.

We need to figure out what we want to do at the parking garage.

It is not it, it is costing us funds.

We've had to um we're in a deficit with this with the parking fund.

And so it's borrowed about $350,000 from the other funds right now that we'll have to deal with.

I thought we I thought we had a common agreement we wanted to sell it.

If if it's sell it.

Yeah, that's what that's what that's what I was anticipating, but we've not done that.

But if you look at so if you look at these this uh income for 25, you know, we're making about $54,000 and build billing build revenue for parking, monthly parking, and then um $91 and a half, you know, $91,000 on operating expenses.

Um if you look over on the next page, you can actually see the cash flow impact of some of this stuff.

So if you look and it kind of it's it's kind of buried in the way we have to do this, but if you look down in the page 51 in this reconciliation page, you see a change in assets and deferred inflows of resources, and you see due to other funds.

The change in due to other funds was $123,000.

That's how much cash we burned.

We had to borrow in 25 alone.

For the parking garage?

Yes.

We need to deal with the parking garage.

It came from the it came from the pool, the cash pool.

So it's it's basically a loan.

Maintenance.

Uh part of it was maintenance, but I think just operations.

The contractual stuff there's a contract.

We did we did put in a project of about $60,000, it looks like during the 25.

Was that the elevator?

Yeah.

Was that the elevator or the what was it?

Um the lights for the um alleyway.

No, it wouldn't have been that.

And it wasn't the elevator because the elevator, if you remember, is still still not working, and it's we have an estimate on that for $130 ish.

I remember I think that's what we generated.

So yes.

Um the 60, I I know we did a light change out, but I think we got rebates from the uh energy company for that.

Uh so I don't know that that's the 60,000.

And I uh that may have been some structural repairs because we have every year we have that uh thing identified by a structural engineer to identify where concrete needs repairs and and the iron plates that sit on top, you know, the way that things put together, it it deteriorates, and so we have to make repairs periodically to the structure so that it so we can solve that and then see I think there may have been some uh concrete ceiling on the top level of that to help waterproof.

Oh, are we doing anything to market that?

We are not currently.

I mean our our our biggest our our our biggest approach on that would have been to approach the window.

Yeah, uh for that they are they are struggling otherwise on the side of the example.

They don't want the well you can't be on board.

Is there this I remember a swap deal with we the government lets us, federal government lets us use the parking lot for free, we let them use the deck for this.

That's approved.

Yes.

So the general fund or somebody is getting a good deal on parking directly across from the headquarters building.

In exchange for giving free parking.

I just mentioned that.

I didn't say explain that again.

Well, so we trade parking in the parking deck to I think the federal government.

State government and they let us use a lot that they own that's close to our building.

So nobody gets any money.

Right the ball is right by the restaurant, right?

Right, right by the way.

Okay, yeah.

So we we get some value from that, but it messes up the account.

The other thing, the other thing that has hurt us is that the parking fund used to get the revenue from the parking meters.

We don't have parking meters anymore.

I know the meters lost money though because we had to pay the meter rate.

Well, that's true.

There was there was that also.

I mean, when they but when they were when I well, I'll just refer to when I first got here, we were making about $90,000 a year in revenue from the parking meters and also about $90,000 of rip of revenue a year from leasing spaces in the parking deck itself.

So we were we're generating about 180,000 uh revenue per year, and we're not anymore.

I mean the the meter revenue has gone away.

The fact that we're not charging uh metered spaces anymore has decreased the demand for leasing our spaces in the garage for 40 dollars a month.

Yeah, they don't have to pay on the in the garage anymore.

So could we somebody put forth a motions to initiate sale of uh department groups?

Sure.

Now the other part of that is sell it as is because we haven't fixed the elevator.

I mean, if anybody owned it besides us, we would make them fix the elevator because it's not 88.

And frankly, with with the with we purchased the city hall building.

When we purchased that, we did not also purchase all of the parking lot that originally went with that building.

So we have the of course the parking lot behind it on the same property, but we don't own the property that's a block away, and the other property that's two blocks away.

Littlefield still owns that.

And so when we've filled the building up now with our staff, we have the limited space in the back.

Uh, and then we are also directing our employees that also that work in the building to park in the parking garage because it's it's property that we own for parking that's you know a block block ish away from city hall.

So we are having our employees park in that structure at the moment.

Jeff, we can look book value is on that, what it's on the books for.

Um I've the parking day.

I think we looked it up in the it was in the four million range.

Are you talking about the well the net book value is in here?

Yeah, that's what he that's what he has.

Yeah, let me tell you, yeah.

Uh let's see here.

So we fit paid to all the thing one on.

You can just get involved.

And you can get it to me later.

It'll time the question it'll lay it down beyond the nice.

I mean, it is uh one and a half million.

About that.

It's on the books at 1.5.

Yeah.

1,484.

So it's about $3 million and about 10 and about uh uh well, it's about $4 million, or about two and a half million in depreciation.

But the land it's setting on is $1.3.

That's right.

So it's it's essentially fully depreciated.

So I mean that's where I was trying to figure out.

Yeah, yeah.

I mean, you basically on your financials you have sorry, you have the land.

I think it's it if you look on page 46, you can probably see it clearer.

Thank you.

All right.

There is 116,000 in CIP there.

Except for the Lord.

Sure.

Now that the meters are gone, it's really the only asset that's left is the garage, right?

And that's the only computer assets in that fund.

Everything's fully depreciated.

All right.

Just want to point out a couple things just towards the back, just because I like the 10 year information in the statistical section is where you could kind of look where where have we gone, how do we do long term?

You know, this is the one report that that work that you're going to get from us that shows the long-term aspect of our finances.

You know, 157 is the first one where it shows that the total the total net position for the last 10 years.

So at the very bottom is everything.

And if you look at 2016, we had a total that was not just governmental activities.

Looked like business type activities unrestricted was only 12.5 million with a 38.4 million dollar deficit back then for a total deficit of unrestricted 25.9 million dollars.

That's not very good.

That was hard.

I mean, those were the that was the so, and so you can see, you know, 10 years later, you know, we went from 700 million dollars in capital assets net of the debt to nine to almost a billion, 949.8 million today or in 25, and an understrict net net position of 48.9 million dollars.

So over the last 10 years, is the city better off than it was 10 years ago?

Yes.

I mean, overall, you can see that's almost 75 million dollars.

Yes.

So that's why it's good to look back at some of this stuff.

You know, we always stick to the current budget cycle or last year and this year.

How are we doing over the hall?

We've we've continued to make improvements in our financial condition overall.

So and then a couple other things I want to look at back here, just show you the service ratio.

We can look at that.

Um, if you want to, you know, if you want to see 10 years worth of the sales tax over, you know, that's on page 164.

10 years ago we had 59 million dollars in sales tax revenues, and today we're in the 83.5 million dollar range.

And there's been no increase.

That's right.

No additional increase, right?

No, no additional uh increases.

That's just two percent.

Right.

Yep, that's interesting.

That is true.

So that's just you know, economic growth right there.

Um then, like on page 165, you can see the property taxes over the years.

It hasn't grown quite like our sales tax has, but lately it's starting to grow.

Um our tax collection, so um so that the total tax levy is that what we need to do.

Yeah, okay.

Yeah.

So we're expecting 26 when we do this in the next year.

Yeah.

That's gonna jump up probably.

Yeah, 1.5 million bucks.

I'm hoping we're gonna get a nice boost in property taxes.

A large piece of that helps us pay the lofty contribution, but I'm hoping the lofty contributions will dip down some.

So I'm hoping that'll be less strain on the general fund.

We'll see.

I think that I think that the the loft people have a strategy to keep it flat.

And I've seen that in the report where you know, if you look at it over the next 10 years, you see the year three drops like half a million dollars.

But then the next year you look again, and they they've done the same thing.

The next two years are the same, but maybe 697, for example, police, you that year drops 550,000.

So they want you to pay that name 697, and they're gonna keep doing it.

I don't think they're gonna change until you've got it all paid up, and then it'll say, oh, we you paid it off early.

But that's five years, six years ago.

But originally it was forever, and it was two and a half million a year.

So the the one thing I would say about property taxes is and what we're beginning to see is any of these industrial buildings that go in, uh they get they they get one of these uh uh agreements, payment in blue taxes, pilot piling agreements, and the board approves these.

Everybody else does, and it's the right thing to do.

But it gives you a 50% or sometimes a 60% discount on your property tax until it runs out.

And our best I know, for example, it's got two more years, and their property tax on the cleary is gonna go.

And that's you know, they're paying 250,000 that we've had 500,000, and that's all for spent.

So we're gonna one thing I I I'd talk to you, Andy about is it's I think it's 173, page 173.

Yeah.

Where we were we were talking about that's comparing Fayeville and Fort Smith.

We made some changes to that info since the last graph.

Did we?

Oh, yeah.

Well, then this is it.

We we're showing you can see the personal income of our of the city and the NSA.

We're showing both.

Oh, good, good, good.

So we're our per capita income is based on our city income, which is 35,000.

So you can compare this.

I think uh I think Fayetteville's personal income was about seven million.

It's it's like, yeah, it's it's considerably higher.

Yeah.

But so when I was looking at it, it was just it was counting, and it was throwing me off.

Yes.

Uh and so I'm glad you guys did that.

That really gives a good handle on.

Okay, but now I understand the you you changed.

I'm looking at version two, not the third version.

Yeah.

So my the page I have, uh which demographic statistics, it shows that the per capita income was 47,023, 34,002.

Did you change that?

Yes.

Okay.

It was 34,002 and 35,000 in 25.

It's like how is that dropped?

Because our personal income, it it all that that per capita is just a formula.

You take the personal income and divide it by the city population.

So our personal income is has declined.

2023 were showing 4.2 in 24.

That is kind of interesting.

I should go back and look at that.

That absolutely did not happen.

I mean, uh I you got it from the federal government, right?

Yes.

Yeah, but so they're bad money.

I thought we could get it.

I thought we were in the 50.

We all see that we were like we've got to be.

We were dragging that way.

Based upon MSA personally, we were for the 50s.

4847.

So we would have been.

Well, but but but you're you're doing your calculation, or this calculation here is the same calculation all the way down, right?

Yes.

So it was that would that would make sense that it would be targeting up to 50.

But it just wrongs.

Yeah, we might take a look at it.

They they gave you some bad numbers.

Yeah.

Bad.

We called the Bureau of Economic.

Whatever.

What's the call?

This is a bad reflection.

You've got it sourced here.

Um I'd rather leave that line, leave those two lines out, just say information on that.

Well, and these, but the problem is is these numbers drive some of these other calculations.

You know, there's a lot of you know, debt per cap, you know, debt divided duration of debt to per capita income.

I'm saying the income numbers over there.

Well, they're not going to be able to do the per they use the per capita income number on some of these as well.

I'm just telling you there is no way in the world.

We'll do some work on that.

Yeah, double check the time.

We'll we'll figure something out, right?

All right.

And then that's let's uh you can you could put S just carry it forward and put estimates.

I can just leave it at the time.

I I can take out personal and just use MSA if you want.

We go back to the 11 million.

It'd be better just to carry forward 23, 24 as is 23 numbers, 24 and 25.

That was just put a note in the bottom.

We think they are wrong.

We gave up with our own estimates.

Okay.

And they're always full of right.

So that's wrong.

All right.

Ask us to put a lot in this thing.

Yeah, but this isn't there's a lot of great information.

Yeah, absolutely.

Only if it's right, though.

And it seems like every year it's a lot of work.

Every year it increases.

So it gets better and better if you're looking at it to try to understand where the finances go.

I can I can say that I can do a lot of the status.

So all right, so we can talk, I think I'm done talking, but there's a lot of other statistics in here, but um I just wanted to point out some of those, and and um, you know, there's a lot of there's a we don't you know we don't spend enough time back to these pages, but sometimes it's good to take a look at it and because you know the the the credit at the rating agencies are looking at these statistics um just as much as anybody.

So we can talk, I think I'm done talking, but there's a lot of other statistics in here, but um I just wanted to point out some of those, and um you know there's a lot of there's a we don't you know we don't spend enough time back to these pages, but sometimes it's good to take a look at it because you know the the the credit the rating agencies are looking at these statistics um just as much as anybody um and so you know it's good to pay pay attention to that.

All right, I think I'm done.

Anybody have questions with that you want to talk about?

Did we talk about uh debt service coverage ratio?

Uh we let's talk about that.

That's on page 140 172.

All right, 148%.

Yes.

That's good.

That's the rate increase.

So if you look over the last 10 years, um 2016 and 2017, and then 2018 are really high.

But if you notice we did it, but we remember we issued a we did a big bond issue in 2018.

Yeah, that large coverage percentage enabled us to be able to issue that debt.

So and then the 2018 bond.

Right.

And so it will be.

See, that's a thing.

If we're gonna do a bond issue, you know, we're looking at 110, right?

Yeah.

Well, if we go issue more debt and we have more debt service requirements, the goalpost moves.

The 110 gets larger.

So even though we think about 130 or 140.

Well, 125.

But it's it's 125 based upon the new debt requirements, not the current ones.

So the 110 is based upon our current schedule.

What's the triple one?

It's the length of the bond issued that you use there.

Yeah.

So the these bonds we issued in 2018 are the bonds.

Well at 2018, they they they get paid off by 2035.

These are the ones we're gonna call that we're gonna call it.

The second half of the consent curve.

They can be called as early as 28.

The consultants have wait until 23rd.

Okay, and the numbers will work.

And if you think about it, we we spent 50 million a year of the of the on the construction, and then those the the bonds from 2025 are gonna last uh six or seven, seven or eight years.

Yeah.

Yeah.

Maybe a little beyond.

Yeah.

And the other thing is the sales tax we're collecting is a lot more than it takes to service the debt.

So when in the sales tax committee, we're seeing those sales tax funds, but even though we're we're putting money in those debt service funds, the sales taxes in the sales tax fund is continuing to grow uh because it's a lot more than it takes to service the debt, because we only issued 100 million, and the whole thing is gauged to cover 385 million bonds.

Okay.

When we refinance the um the 2018 bonds in 2030, will that be enough?

Will we be able to do it enough to um finish our obligation on the construction?

Well, you know, it always depends on how much the construction is versus kind of guessed for 10 years, 12 years in the future.

But we we we we did it to say 250 to 300 million.

That's how the original schedule is done.

250, 300 million available after we pay the refund to bond.

Now, again, the sales tax is gonna last longer than we predicted because the growth's gonna help us, so it maybe by the time we get there, it'll take less.

But uh these ratios are really good.

They're really good.

There's an opportunity to do some things in 27.

So we can look forward to your town all here about that.

Yeah.

All right.

Anything else we want to talk about in here?

So follow that.

That was a lot of information.

It won't be quite as well.

Yeah, I'm gonna treat these.

Um so I'll go over our required communications and the preliminary results of the audit.

Um so as we all know, the objectives of our audit are to um issue an opinion on whether those financial statements are materially correct.

Um management's responsibility is the financial statements, our responsibilities issue an opinion on those.

So we provide an opinion on the financial statements.

We report on compliance with laws and regulations and accordance with government audience standards.

We express an opinion on compliance with the uniform guidance, which is in relation to your single audit for your federal awards, and on internal controls over financial reporting.

So in terms of the opinion over the financial statements, we are preliminarily issuing a uh unmodified opinion or a clean opinion on the financial statements.

Um see no reason why that will change, but of course it's not final, but um we were we will also issue an unmodified opinion on um your report on compliance for the major federal program.

So there was one federal program that we audited this year, it was the federal transit cluster, so um the grant funding of the local transit system.

Um just high level, some the use of the expenditures this year related to a couple of um passenger bans were purchased.

There was a roof conversion done on one of the buses, and then you know, various fuel and um transit personal salary costs, but um material weaknesses or significant deficiencies to report um for the um for the single audit or for the financial audit um and no non-compliance was was noted during our uh single audit over the federal, the major federal program.

And in terms speaking to a non-auditor or non-financial guy, if I'm if somebody said it's a uh unmodified opinion or a clean opinion made, what does that mean?

It means we did our audit in accordance with the auditing standards and you're getting the best possible outcome.

It it um we apply certain standards like materiality level, we don't audit every dollar.

Uh generally accepted auditing principles to make sure that these financials are presented in accordance with our acceptable standards.

Okay, and if there's anything that anything audited there, it would show up.

Yeah, so they would be required to communicate that with you in accordance with the standards.

Okay.

Um because you get federal awards, we have to look a little bit deeper in your internal controls over compliance and financial reporting.

Um, if there's anything that rises to a level of significant efficiency or material weakness, then we're required to report those.

Okay.

Thank you.

So last year, I then we had an issue with some of the state funded things were actually thoroughly funded, and did I create a bit of a delay?

Are we seeing any of that this year?

We kind of got to the bottom of that and kind of figured out what the state it did not end up being federally funded, but it just it took a while to get them to confirm that.

So I think we kind of know what we're looking at now, so we can tell if it's federal or not in the future.

We have that was kind of educational.

Yeah, but the the macro problem has not gone away.

You just have I I think Andy's done a good job of of kind of taking it head on.

Um so we're still having seeing issues with our clients getting funding and it not being evident where it's being funded from.

But in terms of this year and and with the city of Fort Smith, we did not run across anything this year, so but it still was a like they could say kind of a macro issue.

I can't remember to be sure if we've had any findings for it.

We consider it a low-risk audit detail.

Yes.

Okay, so that's a for the federal audit.

They have to do more work if we had to um you're you're a low-risk audity if you get your audit done within nine months of year end, and you don't have any findings.

Um so that's kind of an overall risk assessment we do on your on your your federal awards, and then of course, any new grant that you get that's over a million dollars, we would be required to audit that, and then any grant that you have continuously over several years every three years, it would be obvious.

Yeah.

So we we audited train up in 22, and so this year it was it was due for an audit.

And I I can't uh David may want to mention this too.

I might be still in our thunder, but of course, um, always great to work with Andy and his team.

They do a fantastic job of getting us things timely, um great on the communication side.

This is of course, as we mentioned, a massive document to put together, and we they always do a very good job every year, so I can't I can't leave without giving them some kudos, but yeah, um I I think that the documents are probably in as good a shape as it's been in a long time.

Um I'm I I think it it's something that you all can be proud of in looking at it.

Um you know, we're as I said at the beginning, we're we're in the final stages of our review just making sure our essentially our work papers agree to what this says.

So you know, this is a long process, so sometimes we'll get a trial balance or for from them and then three months will go by, and he gets spends a week doing this.

Oh, I need to change this, so that we just need that change.

That's what we're at.

When will we have the final version you think?

So I think um I I think what they have done in the past is is required it to go to the board before it's issued.

So w our plan is for us to be in a position to when you all approve it on the twenty first, I think, um, is to be able to hit send.

That's that's the goal.

Well, some sometimes we have like a special meeting at the beginning of the next study session, which we think everybody's gonna do there, like you know, a 10 minute meeting where it's presented.

Um right?

We can back in the past, and then then we just approve the board approves it and then you go on to the study session.

But but I but now of course now you're behind that citizens form regularly.

So the almost rather do it in the special.

Yeah, we we still have to go to our concurring partner review.

So we need so 21st would work out okay.

Yeah, I think so.

And the SP's okay on this.

Um they've asked for it, but they've asked me to respond by like September.

So we're fine.

It would be everything.

And and when when we approve it, is Dina come and offer it or do you guys come?

That's I think we've never been.

Yeah, what we've done is I wouldn't present an AD's there when we answer questions, but it would be kind of in the board with a lot of things.

That's how it's traditionally been done.

We've kind of had this meeting so y'all can drill us.

Yeah, I'm not aware in all the years I've been on the audio community that the water is.

Yeah, I think I've been in front of board with terrorists.

Yeah, I went once exactly.

Oh, okay.

It was that's the question.

When you compare Fort Smith to some city that's got a regional what I think of little one.

You're not basically there that what whole water operation they have is completely independent of the city financiers.

So you are it's a regional Central Arkansas water.

Yeah, yeah.

So they they they do all the water.

They do their RR.

So it makes their financials really simpler.

Yeah, uh indeed.

You know, sometimes you you know, the city still have to take care of the trash, and then they build it it it it adds complexities in some places because you know, like they'll nobody wants to get a trash bill, a water bill, and all three different bills for so they bill it and then there's that reconciliation process with the city.

But cities do use like cards or waste management or somebody the individual gets the bill and then the city's not involved.

Yeah, so we're complex, more complex because we have all these services.

We're not the same as the as a smaller city now for Northwest Arkansas.

They have the Bieber water industry.

Uh-huh.

Do they run their they all run their own separate buildings and that sort of thing?

Uh well that they that's where they buy their water water.

So they're they're beaver water is not a retail of their thing basically.

They've got five customers.

They say this is what we're gonna charge it for the water.

Yeah, we're gonna charge you this for a gallon of water, and then the cities have no control over what that charge is, right?

No.

I mean, I I don't know if there's they have a board.

And then they build a customer.

But they're just like our coma basically.

But they still be the water basically.

They still have the same infrastructure issues.

I mean, there's still delivery of the water and all that delivery.

It's just getting it.

Yeah, the processing is done by the right.

But they I mean they still do their billing and everything like that.

Oh, right.

Well, it's at the city.

The city that does.

Yeah.

Okay.

Just a quick question before we get to add.

On our uh depreciation, the like the water system reserve system.

I know we're using useful lives of 10 to 50 years as the footnote.

Are the lines sticky years?

That's what we're appreciating that one.

Yeah.

Okay.

I thought so just pretty sure.

Yeah, you know, water lines and streets can be really, really tricky because if you think about a street and say, okay, it's gonna last 50 years, or what if I go and resurface it?

Yeah.

So some of that can get tricky.

So we try to do the best, they try to do the best they can, but it's not perfect.

Yeah.

Well that really was just, you know, we talked about this sales tax bonds when we should have third-year bonds on some stuff as your issue number work that's considerably longer than that.

And then it's um yeah, and and you know, I think one of the and I didn't say anything when they were talking, but I think one of the most important concepts really for people that don't understand anything about accounting and finance is you know, you have to make money, you have to have cushion in there for the future, right?

And that that's not easily seen as a financial statements, right?

I mean, if if if your water insurer fund is even every year, like everybody wants it, you know, you don't have any capacity to fix things you need to fix.

So that's really really important.

They're putting in, see if you've got the street where I live.

I mean, these are giant molding pieces of concrete in one piece.

They bring them in on a truck and they lift them up with a crane sort of thing, and they set them in this giant hole, but they're solid concrete.

There's a deep seal.

Yeah, I mean that it's it yeah, you know, you you gotta keep in mind enterprise funds have to make money and they have to pay for themselves or something's gonna break, right?

So you have to have a profit every year in order to create a margin in their capacity.

Sometimes that's hard to explain when you increasing rates and everything else.

So I think it was for that one out there.

Common is that we can't get to that yards uh no uh no, we're we're good.

Uh we we just have a a little bit of reconciling to do with Andy, um, and then we're we'll we're off the final review, and it should be in good shape.

I was gonna ask, did you make any significant journal injuries or anything like that?

Um nothing material.

Yeah, that that's what we're reconciling right now.

Um you know, some some of these engagements we prepare this document ourselves, we don't like doing that.

Um we like it when it's like this, but you always have to go on the back end and make sure the work you did is reflected in here, otherwise, what's the reason to do in the work?

And so we we don't have any material variances right now.

We're just kind of tightening up our work papers a little bit.

We've already done the test work, it's just and we need to get into Andy's mind.

I know one year we had to like uh went on the lap for auditing some things.

We're not pending really anything significant other than just pre-HR and the audit process.

And we're we're done with the audit process, so um we just we had to wait on that component unit when we got that in.

Now we can look at the the document totality, tie everything out.

So we're we're a day or two away.

Okay.

We're very very close.

There's some things you just can't do until you have the file.

Does anybody else have questions about the report process?

Then we can ask management talk to the auditors and we'll have you on the back.

Okay, well here in that we have this too long, don't we?

So uh just uh for the record the Englishman has left, so we're just discussing anything with auditors that you want us to be aware of as a repository audit advisory committee.

Um I I do not.

I you know, I I've seen gradual improvement, you know.

I can remember some of these meetings were hard things there, but um I think I think they're that you know Andy's got his arms around everything right now, and I think he's doing an excellent job.

I uh I don't know too many in the state that are better.

Just the dump hand of some of the bonds and then the work synthetic work going on just because it is a huge volume.

You feel like that's being tracked if he's accounting for that.

So issues I didn't do.

Yes.

I mean, we you know uh Andy I mean we can always get the questions answered, you know.

We can track it down and so I'm I'm very confident in his abilities and in this document that he's he's he's producing for you all, super confident in it.

Just for the just to ask difficulties working with management, know the things you felt might overheld or information that wasn't freely shared.

No none whatsoever.

I mean we came down, I think we were here for about a month on site.

Um, and so we we hold up and um yeah, I mean we got our stuff done.

Is it unusual to have problems?

I mean not here, but is it unusual?

Is it usual to have problems in other systems?

It's not unusual to have problems.

Okay.

So we're so we're ahead of it.

You know, well, Lavon was here uh five years ago and we had a lot of problems.

He was here too.

Yeah, we were here five years ago.

We went 18 months, 24 months without recognition bank accounts.

You know, I I always always advise like audit, you know, councils and boards, you know, if you're getting a good monthly presentation on or however you set it up for quarterly, or or however if you're feeling pretty confident about that, that's a good feeling to have, right?

Because you know, ask questions on that.

It's when you start not getting those, or they're four months behind, or a year behind, or whatever, that's when you just need to start asking questions.

Yeah.

Because that means they're having internal problems, right?

Um, but I'm not seeing that at all now.

Just from the board vendors, the quarterly financials and the reporting that needs to be now.

Do you feel like that's adequate for your needs at least giving information, timely information?

I know she's worth that.

Well, and I'll say I look at those myself from that time on the board.

I was when they come out of the city doesn't know how to do that.

And can you know in the beginning, the those only started in like 2008 or 1900?

Or 2020 or 21.

There was nothing there before that.

You went the whole year, and the first view might have an eight-year budget review, which is very hard to understand.

And then you go to the end of the year, and it's kind of how are we doing nobody knows until the end of the year.

But now you can look at that quarterly, and it's broken down a little bit like this, and that is the general fund and water and sewer actually split between water and sewer separately, the supplemental schedule, and the solid waste, and then all the like the street fund and all that.

Is it a little bit different?

More like the budget stuff, and like the expenses include debt service payments instead of depreciation.

So it's truly a cash kind of a cash in cash out.

Yeah, but it means it's very useful in assessing where the city is, and he does it on a comparative basis.

So you can compare this year with last year, and it's not hard to figure out uh how you're doing it's really good, um really good job.

You know, really the only thing I you know if we could speed the process up a little bit, I'd like to do that.

I'd like to like sit down with Andy, let's just challenge ourselves to get this plus through May 31 instead of June 30 next year, or something like that, you know.

But that's we've been talking, you know, that that's just a comment for an auditor to say that, you know.

Um, build a little, you know, because I mean it is a lot of work, a lot of work, and and uh there's nobody else at the city that can do this.

I mean, I guess that's a risk for you.

Yeah, see over time.

The two of you have been doing this for at least three or four years, and so maybe you're familiar with where we started.

Yeah, you'd be in a little trouble if Andy left.

Yeah, but do you are you seeing any growth?

Are you seeing growth, reasonable growth in the people that he has underneath?

The daily operations, yes.

You know, like like like the transactional type stuff I am, but like I don't know that he has a second person that could get, you know, if something happened to him, he had a heart attack or something, they could, you know, you'd probably be calling me, you know.

Um, or something like that, you probably have you know, I don't I don't I don't know that that you could get this done without him.

This may be something to think about as relationships to this whole change of government discussion.

Because that would affect Andy.

Well, well, you know, depending on I don't know how it's gonna go.

A city that knows what it's doing would have somebody who's the runs the finance department and does the financial treasurer is a separate guy who doesn't have to know anything about anything.

The people from Little Rock said if the treasurer never comes to work a single day, you still have to pay him until he's recalled.

Okay.

He doesn't have to do it.

If something crazy happened, it might not necessarily have a finance department to me, the city for Smith, as long as we've got 600 million to go on this consent decree, and this water thing we've got to get done, and as long as it's as complex as it is, you're gonna need a CPA kind of at least close to the quality of Andy.

I think he's way better than the average, but a CPA who knows how this thing works and you can watch the money.

Like we you know, he he does, we don't have an outside firm that does our investments.

Andy, you know, it has to follow the law, but he negotiates with the bank, and we have a hundred and eighty million dollars pretty much invested at all times.

And you see these interest numbers having a big impact on these individual fund statements.

Like the reason that the uh the solid waste fund is not way in a big deficit, 3.3 million dollar operators, but they had a million six of interest income.

They're all set back.

Yeah, and some other income like that.

So what Andy does is so far from the year that you and I came on the board in 2019, and you came on three months earlier than I did, but it's so different.

I mean, yeah, this all was a mystery back then.

Yeah, I mean, I I think it's something that you ought to think about.

I mean, there is a risk to you there.

I mean, like, there's a lot of knowledge with that guy.

And I mean, I'm I'm dealing with the same thing right now, you know, trying to bring Katie along and get her caught up and learn how to do all this stuff.

Um, what we do is not quite as popular as what other auditors do.

So we're kind of specialized, right?

And Andy's specialized too.

And so that is a risk for you all.

So uh, you know, maybe and people that understand GASB and these actors, like they're hard to find now.

Yeah.

Okay.

Um not that the place would blow up something.

I'm not trying to tell you that.

I'm just saying, like you you all have made a lot of progress the past five years, and you know.

We want to hold a whole lot of things.

Yeah, so I mean, it might be worth thinking.

Right about the chart, and yeah, and then something happened, you know, something happened, and then get two years behind you.

And I mean I'm not saying I'm just saying worst-case scenario, you know, like I mean, I I think you know, you get your bills paid, everything would still keep running.

It's just the audit and all that stuff.

He's pretty uh it's his show.

Okay, good.

And that's I mean, that's a great point because that's a concern I had talking about the change, just what that treasurer position, because there's nobody I agree to earlier.

I don't think there's anybody can say that this knowledge about government or county that works for a city state to me.

Yeah, um, you know, typically the treasurers that we work with, they're not really that involved in the audit process.

What do they do?

Um treasurer.

They they ask but I handle the investments, like you know, um that's risky.

You know, uh making sure that your yield is is good, and you know, um we we do ask, we do ask one of them that help us with the the GASB 72 footnote, you know, the level one, level two maturities and stuff like that.

If they have really complex investments, sometimes they'll help with that.

Um so other than that, not much involvement with us.

Okay.

Um I didn't say it.

Put it in the spray for treasure.

I don't know how we're already got a job.

The more complex your investments you know, if if if your city has a couple pension plans that they still manage the investments on, becomes more complex, you know.

Yeah.

Um I mean I I'm glad we got to talking about that because I I don't know that I've ever told y'all that you know Andy right now, I mean it's kind of irreplaceable in your operation.

Uh for for the audit, at least the audit, the reporting part of it, right?

I mean, we would figure it out if something happened uh with what you have, and I'm not not saying that they're not doing a great job, but as far as like you know, that 45 minutes where y'all learned all what went on in the city, I don't know that there's anybody else that could do that right now.

Or or write the prepared.

This was good the first time we got, yeah.

Pretty good.

Yeah, it wasn't perfect, it was pretty good.

Yeah.

I am happy from the course perspective that y'all are getting that financials and that they're timely and they're accurate because you know, looking at those years when we had the issues.

It was a while before the board or the audit committee knew something was wrong because they weren't getting we weren't getting anything anyway, and so it's like why don't we have the audit sort of starting this?

Yeah, that's true.

Yeah, we found out in in like July of 2019 that there had not been one bank account reconciled beginning January 1st, 2008.

Yeah.

Uh yeah.

Yeah.

And when I was telling you about in replay, I you know, I I wasn't even thinking about Amanda.

I mean she can figure it out too.

Yeah, yeah.

She I mean, so that is a good contingency.

Even though that's not our current job, if something happened, it would take her a month or two, but she would figure it out.

I I wasn't even sure.

How old was she in this process?

She's she wasn't.

But she has a auditor public accounting background, which is a real benefit to you all.

She she kind of understands how you guys, right?

Yeah, she worked, she worked with us.

Uh not not in our specific but you know, in auditing.

So I mean that that is a good backup for you.

That should help you sleep a little better.

I I wouldn't even think about that.

She could replace Andy right now, but I mean she has the capabilities.

Okay.

Thank you.

I have any other questions for Katie.

We appreciate you very much.

Yeah.

We'll be looking for kind of the final questions and then I guess we need to reconvene at some point about the parrot island deal when we do that.

And like I said, you'll look at it and you can just next week if you got something that you can look at and painting things and then yes, I'm like, as soon as we potentially can just so we can get it back into bed.

So we're we're just make sure I'm clear on the 21st.

The board will have this on the agenda.

You'll this be on the agenda and you will present and we'll vote on the once you approve it, um, then we'll send Andy and Jeff the rep letter for them to sign and then we'll release the opinions.

Everything works out between now and then that's the plan.

Okay.

Thank you all very much.

Thank y'all.

Have a good idea.

Let us know if you if you need anything.

Feel free to go free to call.

Okay.

Yep.

I'll find them out there and send them back in.

Safe travels.

All right.

Okay, I was great to see you.

And see you.

I mean, did you reach out to them?

Uh I haven't yet.

Okay.

I plan to.

Thank you.

I'm sure you'd be happy to hear from him.

Okay.

Bye.

They come back in at the top.

Yeah, for me.

I don't know.

We haven't heard it was the only one that heard being here.

So maybe maybe it's more.

Here's a clean telephone.

And so just wanted to get all the opportunity, anything that you need to talk as far as how audit win, any issues, anything we need to be aware of.

There weren't any significant issues.

Pretty smooth as usual.

Next time, you know, like I think, you know, I need to try to close faster.

But you know, we're competing with quarterly reports, uh finalizing the budget at the same time as we're trying to close these books and watching the sales taxes and all the things, the budget reviews and things.

We're trying to maintain, you know, obviously those things, those the timing of those things come as we're trying to close, so that's challenging there.

Um we need to improve some of the reporting systems.

We're still seeing ways that we can uh get the numbers in there easier, make them work better so it'd be more efficient.

But you know, all in all, you know, I'd like to be able to get this thing done and out to you by the middle of May and probably have a first run at it May 1.

That's my goal to get there.

So that's about a 30-day improvement.

Um so we you know, I think if we keep, you know, staff is still learning this as well, so but they're um you know, we've we're still making strides there, you know, as far as staffing wise, um we've kind of can in my department we have taken opportunities to eliminate the number of staff, but elevate um the staff we have.

So we'll try to you know train them, move them up, you know, pay them better, but redu but you know, usually it's a budget neutral thing, or we say end up saving money, but people that are dedicated and learning and growing, you know, move up, and so we're getting we're doing that, and but you know, we've got to we've got to be careful of uh being too lean now, I think.

Um you know, we've got you know we've got people that are right now.

I know some people are on medical leave and we're covering for them type things, you know.

So you know, typically you want to have people cross-trained and can do this and do that, but you also want to have good controls and people separate from everything.

It's kind of like you got you want everything, right?

So but we're we have a pretty lean but talented group now.

And um, so we you know we're we're good for now, but we gotta make sure that we can you know if somebody leaves that we can cover or somebody goes out of medical leave, but um they've done a great job doing that.

Do you feel like that other staff?

I know they appreciate accounting for sure.

Do they do you have others there in your department that really understand the governmental funds and that will be the oversight of like if they were to have to bring these governmental financials?

Um there, yeah, there's a hand there's a handful that are close to me that are that have a pretty good understanding of it.

Um I don't know if they could write this without some help, but but they know they understand a lot of it.

Um the other thing I was gonna ask you is just with some of the new gas pieces and then new standards and things are becoming effective.

Do you see any big changes as far as your leads or things as far as drafting this next year?

Um I think it's gonna, I think it's gonna be a little bit of an undertaking with the you know this, you know, this is kind of like a mold.

Yeah, we're gonna have to re-mold some of it.

We're gonna have to shift some things around.

So we're we need to plan and do that, but I don't I don't suspect it's gonna be a you know, it's just a more of a planning thing and allowing time for it and then um you know getting it done.

So I don't I don't think we'll have any huge challenges.

But it's it's uh it'll be an undertaking.

Yeah, so yeah, it will be anybody anything else.

So just from a logistics sample plan on being the 21st to present this to the board.

I guess if there are any additional changes, will you send another draft around?

I will I will send a um I'm gonna hopefully based on discussion of them.

I'll have another draft tomorrow, hopefully.

Okay.

Um and then that will get reviewed by their uh quality reviewer.

So I may just wait until I get the comments back from the quality reviewer, and if there's any other changes, and at that point I will send y'all so I'll probably you know, unless you want it, I won't bother sending you the draft that's gonna happen tomorrow.

I'll wait till they get through the other review.

That should be the last round if any changes.

So if there's anything of significance, I'll you know point them out to you.

I know we said earlier, it's not really pending anything significant at this point everyone's just reviewing it, that's what it sounds like.

Yeah, okay.

Anything else?

Oh great job.

I appreciate that.

Before we adjourn, I would say great job to you and your team on this.

I think it's you know it's a quality quality report, and we appreciate all that you do and retain us command as well.

Thank you.

Um 32 and I would accept a motion to adjourn.

Second.

Second.

So maybe thank you.