Entertain that okay motion.

Second, all in favor say aye.

Aye.

Aye.

Minutes are adopted.

Item number one.

Let's see.

Authorization of acceptance of donation for hope summer jobs standards.

Good afternoon, Council.

Good afternoon.

For I think for the past two years, and this is the third year in a row, the Tuscaloosa City School System has given the City of Tuscaloosa another an additional ten thousand dollars towards the Hope Summer Jobs Initiative.

And this is the same $10,000 that they are offering to donate to the initiative, and we are requesting authorization for acceptance of that donation.

And I assume we'll have a full presentation on the Hope Initiative at agency funding time.

Well, and I think that so Mr.

Howell mentioned earlier this week that RFs are due in.

They were due Friday.

Give us just a top level five liner appearing, please.

No, you can't uh since you're invited me.

Um but we actually the we actually issue the request for qualifications on April the 5th, 4th or the 5th, and we they were due back this past Friday at 4 p.m.

and we received uh I want to say two um proposals, and so we were actually evaluating those proposals, and so we will introduce those to you in probably the next projects committee.

Okay, and these proposals are to manage the proposal and ballpark remind us how many is it all students or just all students, yes sir.

And with this extra about how many ballpark do we fund it'll be about 55 students.

55, yes, sir.

Okay.

And last year we were we had um actually um 55, and we had several kids from every one of your districts we represented.

Yes, yes, 55, and that's for how long?

It's for seven weeks.

Seven weeks.

What rate?

Uh 1325.

135.

And it's including the insurance contribution as well.

Okay, thanks.

All right.

So we have before us a motion to accept money.

Motion.

Second, all in favor say aye.

Aye.

Aye.

Money is accepted.

Thank you very much, school assistant.

Item number two, Ms.

Standricks.

Yes, this general fund budget revision is in two parts, and it will be and it is attached to your handout.

Um, the first part is accepting that $10,000 donation and budgeting to the Hope Summer Jobs Initiative line item to increase that by the same $10,000.

The second part of the budget revision being requested is to budget the cooperative maintenance agreement with Al Dot that uh Mr.

Thompson briefed you on in projects committee.

That is a total of $61,240.

Now we will not be increasing an um expense line item.

We are just going to be increasing the revenue and then putting that amount to contingency.

Mr.

Thompson's crews have already been doing the work, so there's no need for increased expense for this.

It is just a revenue in.

So what do we do accounting-wise with that swim ballpark?

It was it was a million out 61 in uh of the expenses for his yes, sir.

So added to our general expenses on that.

Yeah, so CFG um will have their built-in expenses for their crew, their grounds crews all ready, and so that's just kind of counted in CFG's salaries, repairs and supplies, things of that nature.

So there is no need for the increased expense, they're just going to continue to do what they did what they've been doing.

Okay.

Is there a motion or questions, comments?

Motion second, all in favor say aye.

Aye.

Aye.

Just you and me.

Okay.

Motion's approved.

Item number three.

The the ever fascinating presentation of annual comprehensive financial report for the fiscal year ended 9 30.

Well, Mr.

Busby, I think it will be fascinating.

Good.

Absolutely.

Um get your popcorn ready.

Um, I think it's great.

I just wanted to really do the preamble to this and then let Ms.

Standridge and and um Mr.

Hand go ahead and give you the details of it.

Um certainly I'm very proud of what's going to be reported to you.

It reflects the financial strength of our city, and you heard Mr.

Mazziek talk about that earlier, but it also reflects really the leadership of two different groups in our city.

Number one, you as a C council.

It reflects your stewardship and your discipline to hold to conservative budgeting practices.

Um, and I'm gonna talk about that in a second.

The other group that deserves recognition is the accounting and finance team led by Mr.

Andridge and the entire team who implement this every single day.

And certainly I want to thank the council and I want to thank Mr.

Andridge and our accounting and finance team for what they do.

Because the report that you see today wouldn't be possible without you and without them.

The last thing that I do want to highlight, and you heard me reference this in my um Capital Projects recommendation, is that there are challenges on the horizon.

Um, whether it's the transition into retirement systems of Alabama, um, the uncertainty of SSUT, frankly, too, you might even add the uncertainty of an economy right now with everything that's going on.

This report ought to inspire us to remain disciplined.

This is not the time for us to stretch ourselves.

Um, and I think it's very important we remain disciplined and we hold true to the practices and management approaches that have kept us at AAA.

And so I'm you know, to that end, I will turn it over to Miss Standridge and then let her guide the rest of the presentation.

Thank you, Mr.

Bosby, Ms.

Dandridge.

Uh and in the um spirit of thanking the team, I would like to introduce a couple people that are here.

Um, you know Samanna Hornsby, she's over here in the corner.

She is the deputy chief financial officer, and she um actually you know moved into this position uh earlier in uh last year and has just absolutely taken off with it, and really a lot of the transition um from a couple of years ago and into this exact uh audit report is um is really going to be due to her leadership of the entire department.

And then this is Brennan Bush in um sitting directly under the seal.

Um Brennan is our director of accounting and financial reporting, so every single daily transaction and every single report like financial report, including this audit that comes out of our department, he is actually responsible for he is the leader of the audit team, our internal audit team.

He is the one that keeps us on track and make sure that all our trial balances are working appropriately, and he interfaces with the audit firm every single day during the audit period in order to make sure that this um product is done appropriately and on time.

And then finally, I'm introducing Lucas Hand, who is part of our audit firm of Malden and Jenkins.

Lucas is actually the um he is the lead on our engagement.

So whenever there's an a general interface on um on deliverables or on deadlines and um and and questions that the auditors have about details of transactions, it's always generally gonna come from Lucas, usually to Brennan.

Um, and we will answer as as needed.

But Lucas, if you would like to come up and do your presentation, you I might provide a little color commentary here and there, but I'm turning it over to you.

And Lucas, it was you I was referring to as the ever fascinating so I have set the bar high.

We're looking forward to it.

You know, I I hope just from my own perspective, that the audit doesn't come off fascinating because if it comes off fascinating, I don't typically think that's a good thing.

So let's let's hope it's as boring as possible.

Fair point.

All right.

Um perfect.

Um good evening, everybody.

My name's Lucas Hand.

I'm the auditor with Malden Jenkins.

I'm like Carly spoke up that I was over the 2025 audit, and I've been over the past couple the past uh uh three years of audits as well.

And are you all out of Lucas?

Sir, or y'all out of?

Uh we are out of the making office, so but we have currently have offices everywhere.

I'm actually standing in for David Irwin.

He we just uh obtained an office out in Texas in Houston, Texas, so he's out there having fun with our with our expansion.

So you know, I hope not to take up too much of your time today.

I hope it is boring, but uh the purpose of today's odd, I mean the purpose of today's presentation is to provide you all with an overview of independent audit report, talk about the results to compliance reports that we issue in uh association with the audit, and hit a few of the financial statement highlights, discuss some of the information that auditing standards require us to communicate, and to answer any questions that you might have.

Well, that was that slide.

All right, so the financial statements themselves that have been presented to you all are the responsibility responsibility of C's management and members of the council.

As your independent auditors, our responsibility is to express an opinion on these statements.

We conduct our audit in accordance with generally accepted auditing standards and government auditing standards.

I'm happy to say that we are issuing a clean, unmodified opinion on this year's report.

This is what you want.

What this means is that in our opinion, the financial statements are considered to be fairly presented in all material respects in accordance with GAP.

In association with the financial statements, we issue two compliance reports.

They make up the single audit report and the yellow book report.

The single audit report is compliance audit that is required when an entity spends over $1 million of federal funds.

As was the case with the financial audit, we are issuing a clean, unmodified opinion on the single audit as well.

The second compliance report that we issued is the yellow book report.

This report is on the city's internal controls and compliance.

I'm happy to say that we know no significant deficiencies or material weaknesses in C's internal controls during our audit.

As we've mentioned to you all before, as per a city of your size, with all the new accounting standards and changes that are being implemented each year, and how complex the financial reporting process has become, it's impressive to be able to present to you all an audit that resulted in a clean opinion with no audit finding.

So that's something you should be very proud of.

And you know, I I do like to take a moment right now to say that you know, for a city of your size, this isn't a very typical thing.

You know, you have what I consider probably one of the best finance departments I, if not the best finance department I've ever had the opportunity to work with.

We didn't pay me.

Yeah, it's truly an honor to have to, you know.

I I say this truthfully, I I work with a lot of clients, and you you typically run, you can figure out real really quickly who who cares and who doesn't.

And there is a significant amount of care.

You know, I work with Savannah and Brennan on a daily basis.

It's it's always nice to see from my perspective.

It makes my job easier than how the private they take in their work.

I can promise you they check every number twice.

And you know, that that's a that that should comfort everybody in this room that you know there's that much care being taken in consideration of the finances of the city.

So thank you.

Yeah, okay, good.

Um, the next part you prepare what we call an annual comprehensive financial report, otherwise known as an ACFAR.

An ACFA requires inclusion of information that goes above and beyond the basic financial reporting requirements.

This document is submitted annually to the government finance officers association, otherwise known as the GFOA, where it goes through a stringent review process but not by not only the GFOA professionals but also special review committees.

When you look at the city's act for their goal is not to assess the financial health of the city, but rather to ensure that the readers of your financial statements have the information available to do so themselves.

Through this review, the GFOA has once again awarded the city their certificate of achievement for excellence of financial reporting for fiscal year 2025.

And y'all have an unheard of 38 consecutive years that y'all have done this, which is when I say unheard of, that that's that's the highest number I know of in this.

So once again, just an incredible and incredible accomplishment by the city.

All right.

The as you look through the report, one of the sections I strongly encourage everyone to read is the management discussion and analysis or the MDNA.

This is written by management and its purpose is to introduce and summarize the basic financial statements.

If you have questions about fluctuations that occurred during the year, often tell people the first place you need to look is the management discussion analysis.

In addition, there is also quite a bit of comparative information that in this section that discloses financial activity for both the 25 and the 24 fiscal years.

It gives a much better understanding of the current year activity when you have prior year numbers compared for comparative purposes.

The city's financial statements include three component units.

They're the government-wide financial statements, the fund level financial statements, and the notes of financial statements.

The first of these of the first of the component units is the government-wide financial statements.

The government-wide statements provide a broad view of the city's operations in a manner manner similar to a private sector business.

All the funds are combined into two columns depending on the nature of the fund.

One for the governmental activities and the second one for the business type activities.

There are also separate columns for the city's discreetly presented component units.

We have a slide here that summarizes the city's financial activity for the year for the government wide perspective.

The city ended the year with total assets and deferred outflows of 1.46 billion dollars.

945 million that consists of capital assets net of accumulated depreciation.

The city also had 412.6 million in cash and investments at near at year end.

It's good.

The total liability and deferred inflows were 868.5 million.

You all brought in revenues of 30, 332 million, which is flat compared to the prior year.

Expenses were 284.2 million, an increase of an increase from 275.1 million in the previous year.

And this resulted in an ending net position of 592.8 million, which represents a strong increase in net position of 48.2 million.

So that's a that's a healthy year.

The next component of the financial statements are fund level statements.

This is what you all typically see throughout the year.

This component focuses on individual parts of the government and reports the C's operations in more detail than the government wide financial statements.

Of all the cities funds, if I'm in your issues, my focus is on the general fund.

It's the main operating of the fund of the city, and therefore accounts for the majority of the revenues received and funds expended.

This slide provides high-level summary of the financial activity, giving you a great snapshot of the overall operating health of the city.

As you can see from the chart, the general fund brought in revenues of 194.1 million and expenses of roughly 200, well, 200.6 million.

Well, while operating expenses slightly outpace operating revenues, the city had about 16.5 million in other financing sources.

When you factor this in, it resulted in a net increase of about roughly 10 million dollars to the general fund.

Next, I'll discuss the break.

Yes, sir.

So that's like not shown under revenues correct, not showing the operating revenues.

So that's typically made up of like transfers in, transfers out.

Um you had the issuance of a subida in the current year, and it's those net um other financing sources that result in the the increase in from of that 16 million.

Yeah, thank you.

The this this slide right here, this chart breaks out the general funds revenues for the year.

As we noted on the previous slide, total revenues for the general fund were approximately 194.1 million.

The most significant source of revenue for you all by wide margin is taxes.

Total taxes were approximately 111.8 million.

This includes such things as sales and use taxes, lodging taxes, as well as property taxes.

A couple of other significant items worth mentioning are your license and permits, which brought in right around 31 million, and your intergovernmental revenues, which sat at approximately 26.6 million.

Monitoring these specific revenues is important because this is your lifeblood for your your day-to-day operations.

The next slide breaks out the general funds expenditures for the year by function.

As we noted on this first slide, yeah.

I'm sorry that I wish I made those numbers a little bit bigger.

Um for the first slide, the total expenditures for the general fund are approximately 200.6 million.

Once again, no surprise, the largest uh expense is the public safety expense.

Currently makes up roughly 39% of the general funds total expenditures, which is is right in line with what other governments of your size uh expense to public safety.

The city also had significant public works expenditures of approximately 38 million, as well as general government expenditures of around 29.3 million for the year.

Another notable item in the chart is the funds distributed to other agencies, which account for roughly 15.1 million of your expenditures.

All right, and so these are those those other uh the general fund other financing sources that we we were just talking about.

Um as was the case in prior years.

The general fund has significant amount of other financing sources and uses.

The per this primary captures the movement of funds that aren't strictly operational revenues or expenses, and this pro this chart breaks those out.

As you can see, the city had transfers in of approximately 23.8 million, which were partially offset by transfers out of 13 million.

You also had approximately 5.7 million related to the issuance of subidas.

When you net all these together, the finance.

I'm sorry, I can't see it not into the issuance of what's so that's subscription-based information technology arrangements.

So that's information technology based.

Yes, sir.

What's an example?

So that that's like your um it's like it's like software subscriptions.

And so if we if we submit so for peregrine or whatever else we're correct.

Yes.

As and and uh TPD's acts on lease items where we you know uh where we will upload all of the body camera footage to the cloud and all that.

That's that is a going to be a subscription-based information technology.

Services, JSON stuff.

Correct.

So whenever you uh you factor all those in, that's what come what that's how you uh receive the increase of roughly 10 million dollars to the the uh the general fund.

Okay, this is one I will provide a little coming caller commentary.

Sorry, this is so this will be general fund balance history.

Um I think that everybody that's dealt with us during um during debt service uh sorry during debt issuance discussions with the credit rating agencies will know that the general fund fund balance is something that we talk about for credit rating agencies quite frequently and quite in depth.

And you will see the nice uh general trend line up, a quick drop in 2024 and then back up in 2025.

The reasoning for this drop is that we actually moved um the elevate fund out of the general fund.

So in here in 2023, this is actually inclusive of elevate.

We we netted it all together in the general fund.

Elevate started becoming really big, and so we needed to start tracking a lot of it on its own, and we wanted to report it by itself on the face of our financial statements.

So we moved it out in 2024, so that's why you see the drop, and now we are trending in the back up position.

So if you had added elevate into this, we would have been continued on an upward trajectory.

Go ahead.

All right.

Well, I don't really have much else to say about that one, so she's correct.

Um before we go on to that one, two slides back.

You talked about roughly 15 million out to other agencies.

Yes, sir.

That's what's an that's not the 14 and change we've agency that it is that is that's what that is.

Yes, all right.

The next uh the okay.

One thing I always like to remind people is that fund balance isn't necessarily what you all have in the form of cash or discretionary spending.

Fund balance is merely the difference between total assets and total liabilities, only a portion of which is available cash.

This is why this breakdown is so important.

As you can see, out of all the out of your total fund balance of 56.5 million, the key factor in here is your unrestricted fund balance of 36.5 million.

Have a health having a healthy unrestricted fund balance is excellent, excellent for the city because it represents the portion of your reserves that are not legally restricted, committed, or tied up in non-spendable assets.

This gives you a maximum amount of flexibility to address immediate immediate operational needs, fund unexpected projects, and smit and smoothly manage your day-to-day expenses without having to disrupt core services.

Additionally, I like to place emphasis on the importance of maintaining a strong fund balance, like the strong fund balance that we just looked at.

First and foremost, it ensures that you have necessary cash flow through the second half of the calendar year, which you all have with you all have in September 30th year in this particular particularly critical.

You're consistently concurring significant operating expenditures every month, averaging six point sixteen point seven million on the monthly base based off your general fund numbers, but your major revenues like certain tax collections don't always flow in even evenly.

Having strong fund balance ensures that you can seamlessly cover those operation costs during the months when your revenues might temple temple temporarily lag beyond day-to-day call cash flows, a strong balance is critical for a few other practical reasons.

It acts as a vital safety net for significant emergencies and unanticipated expenditures such as unexpected weather related costs.

It revives you of flood with flexibility needed for discretionary spending as they arise.

And it ultimately ultimately is a highly important resource to rely on during uncertain economic times.

Enterprise funds are used to account for operations in a manner similar to that of a private business enterprise.

Where the intent of these funds is to be self-sufficient and generate enough operating revenues to cover their operating expenses.

This slide presents the statement of net position, giving us a snapshot of the fund's overall help and accumulate equity at year in.

As you can see in the chart, the fund holds total assets approximately 550.9 million against total liabilities of roughly 26 216 million.

This leads to fund ending with the with ending the year with a very strong total net position of approximately 334.9 million.

So the assets you said are those are after depreciation, right?

Yes, sir.

And then that 215 and liabilities.

So that's so liabilities on this slide will be that will include all of your long-term debt.

So all the debt that we've taken out for the water and sewer fund is included in that um liability number, as well as just the day-to-day operating liabilities of like accounts payable and any like of our lease payables.

Um if we have withheld anyway.

But all our bond debt for those future projects or past ones.

Yes, it's all on there too.

Thanks.

Thank you.

The final chart shows the financial activity for the water and sewer fund.

Here's where we really look at the operational performance by breaking down the major revenues and expenses to see how the fund is doing on its own.

On the revenue side, the primary drivers are the charges for services billed directly to utility customers.

As you can see, the fund brought in strong operating revenues of approximately 83.4 million on the expense side, your major cost center, your major costs centered around logistics and asset management, system infrastructure, and depreciation.

Your operating expenses for the year are roughly 47.2 million.

Seeing major revenues more than adequately cook adequately covered your significant operating expenses is exactly what you want to see.

After factoring in a few other items, such as non-operating expenses, capital contributions and transfers in and out.

You ended the year with a total net positive change in net position of approximately 27.6 million.

This is a great chart that shows the fund is successfully covering its costs, continuing to build its equity and remaining entirely self-supporting.

And where do the standards is we assign to the to the general fund a certain uh percentage that we calculate that's that's what that's the portion that of their cost that go into running our administrative arm of the indirect of our enterprise fund.

Yes, that's still roughly 12%.

And where does that show?

It is it, yes, sir.

It is a approximately, I think we brought it down a little bit because our actual because our revenue is growing so much that our actual costs were less than the 12%.

So I think we did bring it just to actual cost this this upcoming budget year, but you're gonna see it in the transfers out.

In the transfers out, yes, sir.

So that's going to be the transfers out to other funds, and it's going to be inclusive of the other.

So it's not in the operating expense, it's what it's what we transfer out to the general fund.

Yes, sir.

All right.

And finally, the required communications.

One final standard item that to discuss is certain information auditing standards require that we communicate to you.

With the city receiving a clean unmodified opinion, no audit findings.

This information is essentially a formality.

We receive full cooperation from management and staff.

There are no disagreements with management, no significant issues discussed, and no uncorrected misstatements.

Finally, we are independent of the city as part of our government audience standards.

And with that, if anybody has any questions, I'm done.

And I know we've gone a little long.

I do have the um surplus calculation to be able to distribute to the council and answer any questions on that if you would like.

Okay, and Lucas, I want to thank you.

It actually was a fascinating report.

I like it.

And we're in Savannah and Ms.

Standards.

Uh very impressive.

And please pass to the other members of your team as well.

Absolutely will.

It truly is a joy to work with them.

It's nice to have people that really know what they're doing, you know, giving you the numbers.

Well, and I will say that it helps to be able to hire ex-auditors too.

I mean, that I did pay her to say that.

I think on audit background, it all three of us.

Okay, we're gonna go into the um surplus.

Yes, sir.

I have the surplus calculation here.

I think that's your what you need.

Okay.

Um, and so the surplus calculation this year was actually still very healthy, as you saw during the mayor's um project, uh, capital project presentation.

And this is just how we do it.

Uh and Mr.

Henry, I'm going to indulge just a little bit since you are brand new.

That we have a uh city code required reserve amount within the general fund.

It is 20% of the prior year's operating budget.

And so you will um and what Mr.

Hand was mentioning before about the um unreserved fund balance.

That is the number that we're really looking at.

So any unreserved fund balance that is over and above the 20% requirement that we have in code, we consider to be spendable.

And so we do this calculation every year.

We will transfer any of that overage amount into the general fund uh reserve future improvements fund, and then the mayor will make his capital projects recommendation based off of that transfer amount.

So, as you can see on the on the page in front of you, the general fund unassigned fund balance this year was 46 million dollars.

20 percent of the um of the operating uh budget from last year is 34 million, seven hundred and twenty-six thousand.

And so the maximum amount that we had available to transfer was that 11.277 that you see bolded there in the column on the left hand side.

Um, what we have done the last few years and we do request doing again this year is to be extra conservative.

We know that the budget is going to increase next year, so we know that we're gonna have to have some extra reserves to set aside, not knowing if the revenues will actually come in in the upcoming year because we have surplus now.

We are requesting that we go ahead and set aside what we know we're gonna have to reserve for next year.

So when we look at the fiscal 26 budget, um, we see that we will need an extra 1.841 that's in that blue uh highlighted cell.

So we are asking to be able to set aside the 1.841 prior to actually transferring the surplus amount for the general fund RFFI.

If we do that, then we get down to where we can have a transfer amount of the 9.435.

We send that over to the general fund RFFI and we combine it with a couple of closeouts um and the available fund balance in that fund, and that's where we get to the 12.053 that the mayor used during his capital project presentation.

And I know that's a lot of information, but I also am happy to answer any questions that you ever have.

Remember, some of us cannot listen as fast as you can talk.

I'm trying to get out of here.

I know that you guys are tired.

I'm sorry.

I know, and we're there anything else that needs to be done today on the no sir.

Anything else to be brought before finance?

Sir, motion to adjourn.

Motion all in favor say aye.

Aye.

Aye.