Good morning all.

This time I'm going to call the audit and finance committee meeting to order.

Our first order of business is approval of our March 3rd meeting minutes.

All in favor?

Aye.

Motion passes.

Thank you.

We have two briefings today.

Our first briefing is from Patrice Randall.

Our auditor, I'm almost awake today.

Good morning, Patrice Randall, City Auditor.

Here to present an update since our last audit committee meeting.

We've completed a park safety and maintenance audit.

That audit has not been released, but since there were no material findings, we wanted to go ahead and make the presentation.

As a part of the audit, we interviewed park and recreation department staff.

We reviewed responses from the most recently completed citizen survey, reviewed work orders, service requests, inspection records.

We also conducted walkthroughs of selected parks.

We concluded that the parking rec department's process for identifying and mitigating risks was adequate, but we did, however, identify a need for written standard operating policies and procedures.

We've also completed a data analysis report for the first and second quarters of this fiscal year.

No vendors assigned multiple vendor identification numbers, and the wire transfers were adequately documented, supported, and were for city business purposes.

We did, however, identify weaknesses or exceptions with the employee termination payments, gift cards, and personal paid holiday.

So in reference to employee termination payments, we found that four of our 15 sample payments were erroneously calculated.

Two of those were overpayments, two were underpayments.

While we don't make recommendations for our data analysis reports, we did make an audit comment or a suggestion to management that they implement an enhanced process that requires review of terminal leave payment calculations on at least a sample basis or for payments in excess of a certain amount.

We had two departments, neighborhood services and the police department.

For neighborhood services, we were able to account for all but nine gift cards that were valued at 100 each.

I will say that once we made this, once we concluded that these were not accounted for, the neighborhood services department immediately drafted and presented written standard operating procedures that govern their gift cards.

For the police department, we were unable to account for 429 of the gift cards valued at $50 each.

During our review, the police department had reassigned this task to an um an employee.

That employee was actually trying to get the gift card logs throughout our process.

So what we plan to do is come back to the police department within one or two weeks to try to account for these 429 gift cards.

We will say that when you have uh gift cards, it's important to have a log that is centralized and that accounts for our gift cards from the point they are purchased until the gift cards are distributed.

And so whenever you have a change in custodianship, it should only involve transferring a complete set of records from one custodian to another.

So oh chair.

Patrice, what are they using these gift cards for?

Is it for internal awards or is it in community program?

It's a community program.

Okay.

Code yes.

And then personal paid holidays.

So the city allows two paid uh personal holiday leaves for employees, and we found that 35 of the 52 uh sampled employees exceeded that two-day or 16-hour leave.

Uh three of these were overpaid to former city employees.

We had 31 that were overpaid.

These are current city employees, and one that was 31 that was overpaid and one that was underpaid.

And as mentioned, we don't make recommendations, but for this one, since we've had uh prior exceptions with personal holidays, we uh suggested to management that they consider either changing the personal holiday leave to a full eight hour day or set up personal holiday leave as an absence.

And so when it's set up as an absence, the system will prompt the employee to see how many hours are eligible, and so then that way they cannot use more than what's been permitted by city policy.

So that was our suggestion to to management.

And then it concludes our audits.

Are there any questions or data analysis?

Questions.

Patrice, thank you very much.

Appreciate the update.

And I'm at this point, uh Leslie Tinaco, our senior administrative assistant is going to present to you all what we've done so far with our SharePoint.

Good morning, Leslie Tinoko, senior administrative assistant with internal audit.

So I will be presenting our SharePoint site to date.

This is our homepage where you'll find information for the internal audit department as well as more information about our office down below.

I'll start with our first tile, um, which is the status of audit recommendations.

So this section will uh display the status of uh prior audit uh recommendations since October of 2023.

Internal audit will be updating the recommendations no later than 5 p.m.

on the last Thursday of each month.

You'll be able to see the departments listed down below, and I'll be using neighborhood services as an example.

So in this spreadsheet, you'll see all of the recommendations for neighborhood services.

You'll be able to see the audit number, audit title, uh report release, audit recommendations, uh, management responses, and the target implementation dates and the implementation status.

Our second tile is audit tips.

Well, you'll see preventive internal controls, these are resources for management, as well as detective internal controls.

And we also have QA audit tips by roll, where you'll be able to see questions for contract compliance administrators, and we'll add to this.

Uh we'll continue to add this to this in the future.

Our last tile is the audit and finance committee PowerPoint presentations, where we have them listed by calendar year 2025 and 2026.

I'll use 2025 as an example where you'll see all of the presentations uh for last year from uh February 2025 through December 2025.

And I'll click on the first one as an example where you'll be able to see our presentation for that meeting.

And that concludes our presentation for uh our SharePoint site.

Thank you, Leslie.

Any questions?

Thank you.

Excellent.

Thank you.

Thank you.

I agree.

Patrice Leslie, thank you for the presentation.

Our next briefing is a review of our monthly financial report.

We have Kate Perry and Christine Lemon, our assistant finance directors presenting.

Good morning.

Kate's a little bit under the weather, so you just get me today.

Um I'm happy to be here with you.

Christy Lemon, assistant director in the Fort Worth Lab.

Um, just gonna cover a couple things on monthly financial reports, and then of course, have time for questions if you have additional questions.

So we'll start on page five of the report and look at revenues.

So the story is really the same as the last time that we were together.

Um you'll recall that there was an error in the certified values report, 2.6 million dollars is what it lowered our collection.

Um ability to collect.

So you are seeing the the property tax revenue is nine million coming in nine million under budget for the year.

And so that's based on that correction, and then also we're just continuing to see um protests and other things throughout the year, very similar to what happened last year.

So and then for sales tax, we're projected to be three and a half million dollars under budget.

Um again, we had a pretty big adjustment there.

So we had a negative audit adjustment of 3.6 million, so that has a big impact there.

Um we are seeing growth in revenue in licenses and permits um really development activity beyond what we budgeted, so that's great.

So the bottom line for revenue is we're expected to be about 8.4 million dollars under budget for revenues.

Um then we will go to page eight and look at the general fund expenditures.

So, as you'll recall, we have a hiring freeze in place and also a discretionary spending freeze, and that's really related to what's happening with the revenue.

So we've been working with departments over the past couple of months on discretionary spending cuts and bringing down their projections.

Um, we are seeing just under one percent um over budget in revenue uh I mean and expenditure categories for departments.

So, a couple of highlights here.

Um for the fire department, they're uh almost $9 million over budget, and that's really due to a couple of things.

One is overtime, um, and then the other issue is fleet costs.

So we've seen that the past couple of years, their fleet costs have been rising higher uh higher than what we're budgeting for them.

So you will see a projected transfer of $780,000 from the general fund to help offset some of those fleet costs.

So we were holding some contingency there in non-departmental for that purpose.

Um, yes.

Fleet costs and overtime, those are the two drivers, and we are working with the department to see if we can bring down those projections.

Um, same on police department.

The majority of that is overtime as well, and there have been a number of conversations over the last few weeks about how they can make adjustments to operations in order to bring down overtime costs.

So I'm sorry.

So I know that the police department is hiring and expects to be at full force.

Will that bring that overtime down then?

We expect that to continue to drop.

I believe so.

What we're starting to see is that as um they're filling positions, then their normal salary and benefits are going up, but the overtime costs haven't dropped yet.

So we're kind of in that middle space where we're seeing both costs.

So, yes.

Um, and then uh parking recreation and TPW, those are really operation costs, and we're working with them to identify opportunities to trim.

So, some good conversations in the last couple of weeks about where we can make adjustments on those.

Questions on any of the other general fund department expenditures.

Okay, and then I'll just highlight a couple of the other funds.

So, on um CCPD is on page 11.

There we go.

Just want to highlight here, you will see a 10 almost 11 million dollar transfer out.

That's related to 200 Texas Street.

So that's a planned thing, but it's a big number, so just wanted to highlight that for you.

And then on page 20, group health.

Um, this is the one we've been tracking really closely, lots and lots and lots of work behind the scenes.

Um, just continuing to see some high claims costs there, uh, but are working with uh folks in HR department to figure out what we can do about the fund.

Um, so active a lot of active work going on there.

They are projecting to use um almost 17 million in um or sorry, 16 million in net position through the end of the year.

So there will be uh in next week a budget work session on the group health fund, so lots more detail coming in that presentation, but continuing to track closely and working on making those adjustments.

All right, those are the highlights I have for you.

Any other questions on anything in the report?

No questions from me, committee.

Thank you so much.

Thanks very much.

Appreciate it.

I think that concludes our business.

We have one more item.

One last thing.

Chairman Blalock, if you could please come forward.

Okay, on behalf of the Fort Worth Lab Finance and Audit Committee, we'd like to show a token of appreciation to you for the work you've done to support us and to uh just look anyway.

I'm I'm speechless.

Of all times, I'm speechless, but I hate to see him leave, but we're so glad of the time that you shared with us.

I came on board.

Uh you were here when I came on.

You weren't here when I left the last time, and I've really enjoyed working with you.

And I'm gonna pass the mic to Reg, who thinks he's not gonna tie talk as well as Christine.

And you know, just one note.

Yeah, during your leadership, you know, we've seen tremendous improvements in the overall financial management.

As you know, we've had very successful audits over the past several years, and a lot of that's due to your leadership.

So we're gonna miss you.

Uh, around a number of budget issues, not not excluding property tax.

It's been um it's a pleasure to talk to someone who um you know certainly understands like the fiscal obligations of the city and um and the position that we try to keep ourselves in.

So thank you.