Good morning, calling the St.

Paul City Council Finance and Budget Committee to order.

We have uh it looks like light schedule, but it's not.

We've got um uh our wonderful staff member Madeline Mitchell from OFS is going to offer us our 2025 year on projections, and then we also are having a conversation about um the chair's budget and any budget amendments that are coming from my colleagues today.

Um, even though it looks pretty light, we've got a lot to get through.

So um, Madeline, to the best of your abilities, please um give us your best timely presentation.

Um I think what I will do is um again kind of mischief, not mischief management, but time management.

Um, so we'll be open to questions, but kind of the moment we hit a critical point, I'm gonna make sure that Madeline gets the rest of her presentation.

So with that, I hand it over to you today.

Hi, Madeline, welcome.

Thank you.

Good morning, council members.

I'm Madeline Mitchell, budget manager in OFS.

I'm here today to present the 2025 projected general fund spending and revenue.

Um I I was asked to be brief, so I will do my best.

Uh, I'll talk quickly.

Um I would like to start by thanking the budget team and all of our department partners.

There's a ton of work and time that goes into making these projections.

Um so thank you to all involved.

Um, if I could distill this presentation into two takeaways, they would be that this is an extraordinary year due to the cyber incident and a historic payment for a lawsuit, and that these projections are changing every day.

Um we work really hard each year to provide the most accurate and um information that we can, but there's still a lot that can change, and really the only thing that I can guarantee about these numbers is that they will change.

Um, so like I said, uh we have two extraordinary and unexpected costs that created um immense pressure on the city budget this year, two and a half million in costs related to the cyber incident, 1.5 of which is in the general fund, and the seven and a half million paid in September as the result of a recent lawsuit.

Um, this is the best information we have right now.

Transactions and budget amendments will continue to process through the end of the year, and then revenue will continue to come in even into 2026, as some of our revenue lags a month or two behind.

And then we have year-end transfers and internal charges that occur well into 2026.

So this is a really busy time of year for city accountants as they continue to clean up entries and make um final budget changes.

On the whole, we are projecting that we will have a one-time deficit of 8.4 million for 2025.

This number comes from comparing projected revenue to projected expenditures.

Um, said another way, we expect to spend 8.4 million, then we will receive in revenue.

As you know, um, we do have a spending and hiring waiver uh hiring freeze in place to help with this gap.

We won't know the full impacts of this freeze until the books are closed on 2025, but we're hopeful that it will continue to help bring that 8.4 million number down.

Um in OFS, we are actively working with departments to find creative solutions to close the gap for 2025, but it will be a significant challenge.

So to start, here's a high-level summary of our projections.

Um I'll walk you through reading this table.

The amended budget in the second column reflects the adopted budget plus any changes that have occurred in the last 11 months, um, including budget amendments and any carry forward needed for purchase orders that were open at the end of 2024.

Um, these second, the third column are projected actuals, and those are a combination of actual spending and revenue that has occurred and uh posted in our finance system, and any anticipated additional spending and revenue for the remainder of the year.

The fourth column there is the projected variance.

That's the difference between the projected actual spending and the amended budget.

A positive number in the projected variance column is a good thing.

Uh on the spending side, it means a department has not overspent their budget.

On the revenue side, it means we collected more revenue than budgeted.

And the last column shows the percent of the amended budget over or underspent or um over or under revenue.

We are expecting the 2025 general fund budget um to be overspent by 8.9 million, which is balanced by additional uh projected revenue of 5.3 million over budget.

Um and if you're doing the math here, you may wonder why our deficit is 8.4 instead of um the difference between 8.9 minus that 5.3 number.

And this is because the number in the fourth column, that projected variance are um variants to budget.

So if you look at the second column, you'll see that our amended spending budget is 419 million, and our amended revenue budget is only 414 million.

The majority of the difference between those two is due to our carry-forward process where budget authority for open purchase orders is rolled forward into the next year.

If we compare projections of actual revenue to actual spending, that's where we get the $8.4 million number.

Next we have spending by department.

Oh, sorry.

Yep, sorry.

Cruiser Millennium, whose question was it?

Oh, council president.

Sorry, council president.

Thanks, Chair.

Um, so Ms.

Mitchell, just to make sure I understand, because um we were gone kind of quickly through that.

So even before the cyber incident costs and the lawsuit payment costs, we would have been 8.4 million below what we expected to be, or does that include those additional costs?

Council President, um the before the 8.4 million includes the cyber attack and um the lawsuit.

So were it not for those two items, we would be 617 to the good.