Thank you, Mr.

Mayor, members of council.

We are happy to have you here this morning to progress to uh really focus on um first a recap of how we ended FY25.

Uh we will then take a look at what we are expecting for FY27.

Um, and then as we move through the morning and talk about um a compensation philosophy and some of our uh historical issues that we have had with recruitment and retention over the past year.

We'll take a look at our most recent community survey results, and then we will wrap up after lunch with what we're calling a council priority exercise, which will get you all up and moving, hopefully generate some discussion about council priorities.

So with that, I will first turn it over to Marta Wayne, our finance director, who is going to give a year-end report on FY25.

Good morning, Mayor, Mayor Cartem and Council.

Good morning.

This morning I'm going to be reviewing the preliminary financial statements for fiscal year 2025.

The financial statements on column calling them preliminary because the city is still in the process of undergoing the external audit.

As a result, the fund uh excuse me, I can't talk this morning.

As a result, the financial numbers are considered unaudited at this point in time.

We are pretty far along in the external audit process, and I don't anticipate any significant changes to the numbers that we are going to be discussing.

The slide that I'm starting with is a preliminary slide of the summary of the general fund and audited results.

This slide reflects the adjusted budget compared to the actual revenues received and actual expenses for the fiscal year.

When you're reviewing the slide, you'll notice that our fund balance decreased by approximately 3.8 million during fiscal year 25.

Um, we had actually planned for to appropriate a larger amount of fund balance.

So this is actually good news, and I will discuss that a little bit more further in the presentation.

Um, another item that I was going to discuss is whenever you're looking at the total fund balance here, you'll notice further along in the financial statements review.

I'm going to be reflecting a different number.

And the number that is shown is the total fund balance.

The fund balance is comprised of various categories that I'll discuss a little later.

Um that you're looking at right now is focused on revenue.

It shows the general revenue budget versus the actual revenues.

You'll see that property tax exceeded budget by approximately 666,000.

Um, another reason for the increase in our revenue, which it this is an extremely difficult number to budget, but it's interest earnings.

So our interest earnings came in approximately 1 million dollars over what we anticipated.

And if you're wondering, our average interest rate that we earned in fiscal year 25 was 4.36 percent in total revenue came in of our budget by approximately 3.3 million for the general fund.

Now I'm gonna be moving along to general fund expense.

Total expense came in under budget by approximately 3.8 million.

A portion of this, actually, a large portion of this related to purchase orders that we had actually entered into during fiscal year 25, but the work had not been completed.

So we are moving that budget forward to fiscal year 26, and that totaled approximately 2.2 million.

During fiscal year 25, we had anticipated using approximately 11.9 million of appropriated fund balance.

However, in the end, we only needed to use 3.8 million, so that's really good news.

Next, we're moving forward to the various fund balance categories.

This is the amount that cannot be spent because it's not in a spendable form.

So if you're wondering examples of that would be prepaid expenses.

So it's assets that we have on the books because we're planning to incur the expense in the future.

It just hasn't taken place yet.

We also have restricted fund balance category.

Restrictive fund balance, they're restricted by a third party.

So that means the council cannot touch those funds.

It's limited to a specific purpose and it's defined by someone else, whether it be for a grant, a grant would be considered restrictive funds.

And for the state of North Carolina, something that you see that a lot of other municipalities and states don't have is stabilization by state statute.

This is a required calculation that restricts a portion of the fund balance for things that we have already obligated.

So this would be where like the purchase orders that we entered into in fiscal year 25 that had not actually spent yet, that is considered in this portion of the fund balance category.

Our next category would be considered committed funds.

These are funds that have been set aside for specific purpose.

And this is actually done through city council action.

So an example would be public safety.

So this would be, for example, committed for law enforcement separation allowance.

For example, if we commit funds for debt service, and those those are funds that we're holding for future debt payments.

Okay.

Now we're moving forward to assign.

Assigned is the money that we have set aside for specific purpose that's neither restricted or committed.

Examples of this would be subsequent years expenditures.

So those are funds that we have actually kind of set aside to budget the future.

So at fiscal year 25, when you see subsequent years expenditures, that's money that we've appropriated in the fiscal year 26 budget to balance it for one-time expenses.

So whenever we're using fund balance, we always want it to be for a one-time expense that's not reoccurring.