Fort Worth Finance Committee Meeting - March 3, 2026: Audit, AI Governance, Financial Report, Health Fund
Fort Worth Finance Committee Meeting - March 3, 2026
The Finance Committee met on March 3, 2026 to receive briefings on the annual comprehensive financial report and external audit results, internal audit updates including an AI governance review, the monthly financial report for fiscal month four, and a comprehensive performance update on the city health fund. The meeting began with unanimous approval of the February 3, 2026 meeting minutes.
Consent Calendar
- Approval of the February 3, 2026 meeting minutes passed unanimously.
Discussion Items
Annual Comprehensive Financial Report and External Audit Results
Dan Barone of Forvis Mazars presented the results of the city's annual audit. He reported a "clean" or unmodified opinion on the financial statements, with no audit adjustments or findings. The audit also covered federal and state single audits, marking the third consecutive year with no findings at the federal major programs (Highway Planning and Construction, Coronavirus State and Local Fiscal Recovery Funds, Low-Income Home Energy Assistance Program) and clean results for state major programs (Routine Airport Maintenance, Homeless Housing and Services). Barone commended the city's finance team for their cooperation and professionalism. No management bias or issues were identified with estimates such as pension liability and OPEB. Future GASB statements were discussed, but no significant impacts are expected.
Internal Audit Work Plan and AI Governance Update
Patrice Randall, City Auditor, presented the results of an artificial intelligence audit. The audit found that most departments use AI, with a city AI policy available on the intranet. IT Solutions Director Kevin Gunn elaborated on the city's AI governance. He explained that two committees (AI Request Review Committee and AI Governance Committee) have been created to evaluate AI projects, balancing innovation with risks such as data security and bias. The city has selected Microsoft Copilot as its preferred AI platform, citing its integration with existing tools, security in the government cloud, and no additional licensing cost. Access to other AI tools will be phased out over the coming months. The Fort Worth Lab is developing training for employees on prompt engineering and agent creation. Kevin Gunn responded to questions about costs, confirming that most current AI use is on free versions, and a handful of paid licenses (e.g., Grammarly) will be migrated.
Monthly Financial Report for Fiscal Month 4
Christy Lemon, Assistant Finance Director, presented the first projections for FY26. Revenue is expected to be down nearly $4 million from budget, primarily due to a $2.5 million reduction in property tax revenue from a business correcting a misreported value. Sales tax is projected to be on budget, with potential World Cup-related growth. Expenditure overruns are driven by police and fire overtime, with fire also facing higher fleet repair costs. The city manager's office has directed the fire department to bring projections in line with budget. Parks is over budget due to summer part-time employment not fully budgeted after the minimum wage increase. Kate Perry, Financial Management Services Assistant Director, noted a change in reporting to separate budgeted use of fund balance and highlighted that the health fund may need an additional $6-7 million contribution to avoid a negative net position.
City Health Fund Performance Update
Kristen Smith, HR Director, introduced a comprehensive review by Hub International consultants. Andrew Weager and Brent Wieger presented detailed findings and projections for the health fund. Key statistics: per capita health care spend in 2025 was $18,808, a 20% increase year-over-year. Pharmacy utilization rose 34.6%, driven by GLP-1 weight loss medications (estimated $12 million annual spend). The fund balance has decreased from $45 million in FY21 to a budgeted $8.9 million for FY26, well below the target minimum reserve of $25.1 million (25% of expenses). Hub projected that without changes, the fund balance would approach negative in FY27. They recommended a three-year strategy: FY27 stop reserve depletion, FY28 bend the cost curve, FY29 achieve sustainability. Proposed cost-saving measures include deductible changes, making weight loss medications 100% member cost (saving $8.4 million), implementing mandatory networks for joint/spine surgery, and conducting a dependent eligibility audit. The city has already made some plan changes for weight loss in 2026. Staff emphasized that these are proposals under consideration, and member impact and education are priorities. Councilmember Hill asked clarifying questions about the proposed changes and the balance between premium competitiveness and member costs. The committee requested future updates on progress.
Key Outcomes
- The February 3, 2026 minutes were approved unanimously.
- The committee received the audit results, AI governance update, monthly financial report, and health fund presentation as informational items; no formal votes were taken on these briefings.
- The city manager's office has directed the fire department to align its overtime projections with the budget.
- An additional $6-7 million contribution to the health fund may be necessary in FY26 to prevent a negative net position, using interest income or other sources.
- Staff and the Hub consultants will continue developing a multi-year strategic plan for the health fund, with future updates to be presented to the committee.
Meeting Transcript
And finance committee meeting to order. First order of business is approval of the February 3rd, 2026 meeting minutes. All in favor, say aye. Aye. Motion passes unanimously. Okay, we have several briefings today. Our first is our annual comprehensive financial report and external audit results. We have Dan Barone with four this Mesars here to speak. Dan welcome. Appreciate it. Appreciate the opportunity to come and have a talk about another successful audit. So if you're wanting a exciting presentation, this is probably not going to bore you a little bit. It is a good result. So first of all, I do want to acknowledge and thank the your team, your Reggie and Kate and Christian and your whole management team. They do such a great job. Very cooperative and working with us, always timely, very professional. And so I do want to thank them and acknowledge them. It's a lot of work putting together your annual comprehensive financial report and not just putting it together, but with the results that you have, it's it's amazing. Really great results on the financial side, on uh internal controls, and and you know, even with your grants. So we'll kind of walk through that our results, and please don't hesitate to stop me at any point in time if you um have any questions or you know want any clarification on anything. Josh wanted to be here this morning, but I told him he couldn't. I really wanted to bring the person who leads us and guides uh our engagement team, Kelsey Blackshire is with me, and I just wanted to acknowledge her as well too. Kelsey is our in-charge. She's really I say she's my boss. She's really the one that works with the engagement team and and uh doing the audit and working with your management team. So Kelsey's with me here today. Um and as I said, we'll talk through the audit scope and the results, and then we'll kind of walk through some of our um future pronouncements and some of our other matters as well, too. I'll leave um time at the end for any questions you may have, but as I said, don't hesitate to stop me at any point in time. So just to remind you, you know, it's it's what we do is very different than what Patrice and the city auditors do. Um we do work hand in hand. We work um with them to make sure there's no overlap in in what they're doing versus what we're doing. But really, what we do is is uh twofold. We do the audit of the financial statements, your annual comprehensive financial report, and issue opinions on those. And so we have issued uh clean or unmodified opinions on those. So those are the type of of opinions you want. Um those opinions also reference the the reports of other auditors, so you do have different components that are audited by other auditors, so we do reference that those are and we do rely on the work of those other auditors. We also do your your federal and your state single audits as well, and those um there's two different reports that are issued with those. There's a report on internal control over financial reporting and other matters. Uh and then there's a report on uh in your internal controls and compliance with your major federal and state award programs. So both of those were issued clean, no reportable findings for either of those, either on financial reporting or on your uh major federal programs. The major federal programs that we um looked at this year that we audited, and we go through the uniform guidance. There's a risk-based approach in identifying which programs to audit. Um, all your programs are subject to audit, but we do look at that risk-based approach to identify which programs will be selected, and we look at your direct and material requirements. What's what are the requirements of those audits of those programs, and then we look at internal controls as well over those the compliance for those. So this year we had the highway planning and construction um program. We had the coronavirus state and local fiscal recovery funds program, and then the low-income home energy assistance program. And so um, and then those are the expenditures that were um audited um that are included in your schedule of expenditures of federal wards. And I think this is the third year in a row where there's no um findings at your major programs at your at the federal level, so um all clean um uh reports on on those. Your state major programs. We did two programs.
openpublica.com