Make a note about that.

Right.

But but but if an employee is in fact routinely um overstating their their leave time and that sort of thing, that's something that they would catch.

Yeah, and we can give you kind of we keep that materiality is about the only thing we have that we don't really share with anybody just because we don't want management to come in just right below those levels to commit that.

But kind of on a general level, if you look at total assets of a fund, you can guess it's around five to ten percent of what that number is, is what we kind of deem materiality to be.

And and every firm has a little bit different formula that they use, but essentially at a at a high level, it's judgment as to if this number was misstated by this amount.

Would somebody use these financial investors or bondholders, would they be hurt um with that information?

So yeah.

This is the materiality concept, and then there's the tolerable error.

So that's like insignificant dollar amount that you're like, okay, there's this mistake, but it's tolerable.

We're gonna pass on that because it's not significant to the users of the financials.

Correct.

Yeah, you got it.

Oh yeah, it's a it's a fun business, a lot of judgment, a lot of communication with management.

That's all, yeah.

But we appreciate that's really it.

And if you guys ever have questions, just don't hesitate to reach out.

Appreciate you.

Thank you very much.

Appreciate your time.

Okay, the next item on our agenda is a discussion regarding the FY25 budget closeout.

Yeah, we've got exact documents.

Did everybody get one at the table and then it's gonna pass around to any bio that wants one.

Um what we're highlighting here is as Clint said, Um, we have closed out fiscal year um 25.

We closed the books on fiscal year 24-25.

And and what you see reported here as actual figures is what we have turned over to the auditors.

Um, so I just wanted to highlight a couple of things here in the general fund.

Um, and I have this same information for all of the funds of the city.

I'm gonna send out a few more in your council packets, but in the interest of time, I just wanted to highlight the general fund and I'm gonna uh talk a little bit about the normal forward fund.

Um but again, if you have an interest in any other funds, let me know we'll send you this sort of detail as well.

Um so here in the general fund, which as you know is the largest fund of the city, and by definition is the uh the fund that accounts for all of the revenues and expenditures that are not accounted for someplace else.

That's the actual statutory definition of the general fund.

Um couple of things I wanted to highlight here.

Uh in column A, you see where we estimated uh the revenues uh for fiscal year 25 for sales tax on line four, and then in column B, you see the actual uh revenue.

So we're about a million eight short of where we estimated we would be for that particular revenue source.

Um the other one is in the other revenue category on line 10.

We were quite a bit short of our estimate there.

Uh that is the largest things in that category, and again it's a category of revenue, but the largest things in there are the um convenience fees and uh uh fees for um technology fee that the courts charge, those sorts of things are in that category, and we were quite a bit short, basically because there's a major um uh credit card charge that we are not charging to the public anymore.

Um we are not passing that fee on because it was reduced from our merchant processor.

So um that that is a revenue source that's probably gonna remain down where it has been, and we'll correct that in next year's budget.

Um how much that is off the top of your head, how much that fee is um I'm only looking at the category, but I'm gonna say that that particular fee is probably budgeted at about 750,000.

What uh if we were charging that to residents, what would that be?

Is it two dollars or it's it was three dollars.

It's three dollars.

So the city is eating three dollars per transaction.

Okay.

Um on line 22, you see that um we were quite a bit short of our capital outlay revenues.

Um if you drop down to line 37, you see that that's basically a money in, money out where all of the capital equipment expenditures that we budget for, um, where equipment is gonna be booked to the general fund, uh, but the revenue is reimbursed from the capital fund.

So where we were short of revenue, we were also short of expenditure.

So it really doesn't have any impact on the bottom line.

Um the bottom line now to see on line 16 for revenue.

We were about $4 million short of our estimated revenues, and we were about $4 million short of our um estimated expenditures on line 40.

Um there is a fairly significant difference in um our expenditures from transfers um on line 55 and a couple of those that I'll highlight is uh uh we estimated a transfer expenditure about 2.6 million dollars into the public safety sales tax fund, and that was only about 212,000.

We did not uh estimate that we would have to subsidize or make a transfer to the Westwood fund, and we did uh of about 260,000 dollars to make that fund um zero out at the end of the year.

Same thing in the WIFAC fund.

Um whether it's over expenditures or under revenues in those two funds, just know that the general fund had to make up some losses in the YFAC fund and the Westwood Fund.

Um dropping down then to the bottom line, our expenditures are about six million dollars short on line 61 of estimate on the whole.

Um all of this sort of came out in the wash, though, uh on line 63.

You see that we estimated that we would have a loss of about 5.6 million dollars.

We actually had a loss of about 5.8 million dollars in the general fund.

Um that obviously is not a good situation to be in.

We're working towards addressing that in the longer term.

Uh, but but that's a that's something that we continue to monitor and and bring to council's attention.

Um we ended fiscal year uh 25 with uh with with the general fund balance of 11.8 million dollars, um which is about four million dollars above our mandated reserve uh in the general fund that's down on line 69.

Um the reserve for encumbrances that you see there on line 67 are things that we had uh um encumbered the money for.

We know who we're gonna buy something from, we know how much we're gonna pay, but the money had not gone out the door yet.

So those encumbrances carry over into the fund balance um into the new fiscal year that you see there on line 25, and that's where you will see um some expenditures uh revenues carrying over um on lines 34 and 35.

Um I want to look out there in column D.

See that the ending fund balance of 11.8 million dollars carried forward as the beginning fund balance now for the estimated in fiscal year 26.

Uh want to highlight the problem that we have with sales tax.

You remember that we budgeted sales tax as flat, but it was flat of what we estimated for fiscal year um 25.

So since fiscal year 25 came in below where we thought we were gonna be, there will be a concern that will be if we are flat, we're gonna be below where we budgeted to be for this fiscal year.

Um all of those things coming out in the wash again if everything is as is as expected, and it will never be uh but we would uh lose $7.2 million in this fiscal year and end with the fund balance of $4.6 million, which is dangerously low.

Um $1.3 million dollars above our mandated um 3% reserve, and again, we're not looking at the fiscal years going forward that we project um at least in this look, but just know that as we are progressing in the budget year, we will be.

Um, and those are things that we need to be addressing that that um expenditures outpacing revenues is a problem in the general fund.

And what is the main or primary contributing factors to that seven million dollar the simple simple answer is that the loss of revenue, but what expenses?

Um we we we have the mandated four percent um mandated merit increase for salaries which carry over into the benefits um and and say our major revenue sources are not growing at at four percent.

So is that across all city staff or yeah, that's a that's across four percent increase every year across all city.

And that's if there is no cost of living adjustment, that's just merit increases, yeah.

Okay, it's uh I mean we always talk about how I mean most of our budget is personnel in the general fund salaries and benefits in the general fund, and um that's what can make it really difficult to that's what makes it try to reduce that spending is when it's on people and we already have a shortage of staff people in like every department anyway.

So okay.

Okay, then turning to the Norman Forward Fund.

I just wanted to point out a couple things there.

Um again, sales tax revenue in the Norman Forward Fund as well as below um where we estimated it to be.

We expect that to carry forward into this fiscal year.

Use tax revenue is kind of right where we thought it would be, um, which is an interesting trend because it had been exceeding our expectations since use tax started.

Uh, but we're for lack of a better way of you know, I don't know if that's good or bad, but we're getting really good at projecting use tax and I think and that's that's not a conservative factor as it had been in the past.

Um dropping down there to the capital projects line, you see that we're uh about 8.6 million dollars of project expenditures that we're expecting.

Um that's mostly carry-over things, um where we budgeted for things that were to be done in in past years that are only now catching up.

I wanted you to highlight those debt service figures.

Um about um nine million dollars of debt service payments um in this fiscal year, um, and those are programmed out in the future.

Um, those are the major expenditures that we have in the normal and forward fund going forward.

Um, and it was a conscious decision, and I believe a prudent one that the city made and the council made and the fathers of Norman Forward made um to um to issue debt so that we could build those facilities in advance of the money coming in.

But now we're paying those loans off, we're paying that mortgage off, if you will, for uh for the YFAC or for the library and those sorts of things.

So those those expenditures will continue to be reported.

Um at the bottom line though, you see that um revenues exceed um expenditures exceed revenues on line 33, and we project that we will end this fiscal year with a 6.8 million dollar fund balance in the normal forward fund.

And we will be talking more about this in the um financial oversight board.

But as we have been projecting things um going forward in the normal forward fund, we were very concerned about where cash flows were going to be in fiscal year 26 and 27.

Um, but we're okay.

We're we're doing okay.

Uh whether that's because expenditures have lagged, our revenues have been not as bad as we expected them to be.

Uh we expected that you know we got to fiscal year 29, fiscal year 30.

There'd be some money left over in Norman Forward, but there'd be just cash flow crunch in the middle years of 26 and 27.

But it looks like we're gonna be okay in those middle years.

So the CFOB will be talking about that and making recommendations to you about what we might do with with projects and making sure that all the projects are gonna be covered and that sort of thing.

Uh, but but normal forward is in a relatively healthy state.

Mayor Holman, I think over 90 percent of the projects are finished from my understanding that have been accounted for.

And um with Norman Forward talks of Norman Forward 2.

We've talked before about the idea of doing more pay-go projects potentially, so we're not paying so much debt service, but I think Anthony's brought up a good point before about weighing that against uh if it if it takes us longer to raise the money and the cost of the project sitting more expensive, and does that wipe out the savings from not having to do debt service?

So things that we'll have to be thinking about over the next few years as that process moves forward and uh how we think about wanting to fund it, because I'm always like, man, that nine million dollars could build a whole nother thing if we've yeah, but then we could say the nine million dollars has already been built.

You know, we there would not be a if if we had done things on a pay as you go basis, you know, the library would be done by both libraries would be done in the order that we did them.

Both libraries would be done.

We probably have the Westwood Pool facility, but we probably would not be uh able to have been in WiFac or in Ruby Grant Park or in Reeves or in the senior center, certainly not.

Um so so again, I think that was a prudent decision.

Yeah, so corner maybe a community priority of would we want to wait longer and maybe not have to pay so much debt, or we want to do them quickly.

And in my experience, most people are like, I voted for it and I want it all built all at once immediately.

So um, but that's I think stuff for us to consider and maps.

I think that relies a lot on pay-go, but Oklahoma City has a much larger tax base, of course, so they can and maps is one percent.

Yeah, normal forward is one half percent.

So okay, cool.

Council member Dixon.

Real quick back on the credit card processing fee.

Are we still being charged by the merchant?