Work Session

Welcome. We're going to convene our September 10th work session. At this time, I'll turn it over to interim manager Russ over.

Thank you, Mayor. And I'll point to Jenny to click. [snorts]

Um uh well, here's the agenda for tonight. We're going to um review the upcoming meeting schedule and then [snorts] um finance director Kim Branch will come up and do some fund balance training with us which is part of the OSA recommendation 13. So, it'll be good to start that and then obviously and and part of that then get some training on the way it is now, but also have a uh initial discussion I'd frame it um to start the discussion about what you may want changes to be in the future. And that will continue to come back and we'll have discussions on what changes uh may take place uh later in the year. I'll give some updates and then we'll adjourn. And that's it. I'll throw it to Jenny to do the uh meeting schedule.

Okay. Well, I'm just looking at the upcoming meeting. We originally had held September the 16th as a joint meeting. Um, but then there was talk about having the a special called meeting at that time. Also, um, Tuesday 22nd is the work session, September 24th, regular meeting. And then October, we're back to our work session, regular meeting. Just a reminder, the quarterly is September the 15th, followed by the other one in November on the 5th. As you're um thinking about dates, wanted to we've kind of heard some feedback about joint meeting holds and need direction on whether we're continuing with scheduling joint meetings are using these times as work sessions and just wanted to get the council's opinion about that.

I think our work s my opinion I think our work sessions are more time critical and I would use those times for that. I'm open to what my colleagues have to say. Agree.

Agree.

Yep.

Okay.

Okay. And I believe September the 29th, we wouldn't have one then because of there's some key staff members that are out of town, but we would start with that on October the 12th.

Okay. Bring Kim up.

They told me my mic wouldn't start until I cross this line.

Hello. Hello. Can you Am I on? Yep. We

All right.

Good evening, Mayor and Council. Y'all know I always get super excited when I have the opportunity to come before you and talk about some of our most significant financial topics. Tonight, um, as Russ mentioned, we are going to go through some finan balance training. I have to say, as I've pulled this information together, it's become fun balance um, for me. So hopefully um, throughout the night as we get this training or continue this training, you all will see, you know, find the fun in it as well. We are going to pick up from where we left off during your annual meeting in February. If you remember, we started a fun what we called fund balance 101. So, this is a part two of that session. So, some of tonight will serve as a refresher um for you, but there will also be some new concepts that we use so that you all can continue to to build your toolkit as we transition as Russ mentioned into thinking about ways we need to adjust our fund existing fund balance policy um for who to reflect who Carrie is today. Okay. Um, additionally, tonight this training is serving its purpose as responding to a recommendation that the office of state auditor um provided for us. So, we want to always make sure you all are equipped with the information you need as often as you need so that you can better make decisions. Okay. So, with that tonight, we are going to continue to train and build our understanding on terminology and components and how fund balance fits into our overall financial position. Financial position is a big big concept. We'll use it several times throughout um this presentation. What does this mean? Finan um financial position also people look at as financial health. What that means is our ability for the most part

to be able to respond to pay our short-term long-term obligations. Our ability ability to be able to respond to emergencies. Um just that overall make makeup. and third parties look at our fund balance number to be able to assess that. Okay. Secondly, we are hoping to explain the per we're not hoping to, we will continue to explain the purpose um and um why fund balance pretty much is important because it will support our financial stability and resilience and um the role of the policy as it plays into guiding again those financial decisions. and we will connect the policy with financial stewardship because we will talk a little bit about how we manage, how we evaluate and use it to support our long-term financial sustainability. So, with that, I'm hoping that you take away three things tonight. You will take away that fund balance helps us build our resilience. Um, when we have policies that gives us capacity, it gives us a safety net to respond to things like emergencies, to respond to things when our revenues are not coming in at the same time that we're having to pay things out. That's the resilience that fund balance allows us. [clears throat] Tonight, as we talk about policy, we're going to talk about what the right target could be because a right target is based on risk. And when I say right target, it's the right target for Carrie. So I am going to talk a little bit about some other jurisdictions and where their levels are um from a percentage standpoint. However, as you all have conversations, we are going to just have to talk about what those sign those risks are for carry that makes us um specific to that target that we will establish. Lastly, the policy um allows us to have you all to have financial safeguards because as you select um as you settle in on a policy, you'll know what your minimums are. You'll know what we're saying fund balance can be used for. So those

guardrails will be there for you. Okay. So with that, you all may remember this from February. Let's just talk about fund balance definition baseline. All of you should have My voice is shaking. I know y'all. I don't know why it's shaking. [laughter] You all should have in front of you schedule C that I have printed out for you. This is just an excerpt from our annual comprehensive financial report. If you remember when we had our education on how to read the the um ACTER for short, um we talked about that this schedule C was a very important schedule. This is the one that you will always see at the end of the audit in your aer. Um this is the balance sheet for governmental funds. The fund that we are most interested in from an operational standpoint is general fund. So definition the definition of fund balance the net worth of a fund which is the same as financial position is calculated assets minus your liabilities. And you can see from your schedule. I just want you to see here this is the balance. You see the assets there, liabilities there, and you see the fund balance starting at the bottom. We will do a deeper dives if you turn to the um bottom of the front the second page. We'll do a deeper dive tonight of the categories that are very important where we're going into um continuing to understand um those um what makes up like a policy. Um what I will say that's not on this slide is fund balance is not simply cash. Cash measures like liquidity. Fund balance is more about our overall resources that we have after we've paid long-term short-term liability after we consider short-term long-term liabilities and after any g given year after what we've paid out. Okay. So that will give us our fund balance level.

Real quick question. So when you say balance, you're not necessarily talking about unrestricted funds, just total balance.

Right now we're just talking to um fund balance in general. Total fund balance.

Thank you. Okay, so the next two slides that we have here, they kind of go hand in hand talking about why fund balance matters and the purposes of fund balance. Why does it matter? It provides us continuity. Again, it gives us a safety net to where when our revenues are not coming in at the same pace, as I mentioned before, as expenditures, it allows us to to continue to pay those obligations, right? It's a t it's a timing. We do public safety, police, fire, streets, all of those things. things we have to continue to do, you know, on a day-to-day regardless of the timing to how things are going um are coming in. So, fund balance allows us the ability to be able to continue services without having to shut things down, right? And that's what we want to do. It allows us to be resilient. It's giving us that it a good fund balance will give us the capacity we need to be able to respond in times of emergencies. There are so many things that could come up that's unknown. We know we have storms. We had COVID. There are various different things that can drive or determine how our revenues and expenditures will flow. With a proper fund balance, it will allow us the resilience to keep up with that flexibility. Fund balance gives us options. If there is a project, a capital project that maybe pops up we didn't know about. It's another uncertainty during the year. onetime expenditure fund balance allows us the opportunity flexibility to be able to make that decision if we want to dip into fund balance or not. Uh [clears throat] lastly I have here credit and cost. Um our fund balance level again the measure of our financial health is looked at among several several and third parties. We have our um rating agencies that you

all are familiar with. We have investors who are wondering how they can um be a part of when we're borrowing money. Um local government commission, they look at levels. It's a different level, but they look at levels of fund balance. So there's several people who pay attention to our fund balance levels. [clears throat] Positive, good, healthy fund balance levels allow us to be AAA rated like we are. It allows us when we borrow money to be able to issue at lower rates. So there are benefits that we can get from strong fund balance levels. Fund balance purpose. Some of this I've mentioned before, but this is just to bring it into perspective very quickly. Cash flow. It covers short-term cash flow. That just talks about really the difference in how first three months of the year we don't get sales tax, right? So when we when we don't um get again the revenues at the same pace as we're getting our um expenses, it's a cash flow situation and fund balance allows that. Emergency and contingent and contingency reserves, fund balance again, safety net for unexpected events. Um plan capital and one-time expenditures. I mentioned that as well. just f I felt like these three pointed ones was worth repeating because this goes to some of the purpose to why we use fund balance. [snorts] Okay, let's talk about categories. This is another slide you may be familiar with from our fund balance 101 part one. Um but we want to go into this is a refresher for all of you I believe. Okay, categories. You will see these from that bottom of that exhibit C that you have at your table um on into the second page. Non-spendable fund balance cannot be spent. What usually goes in this category are items like inventory and prepaid expenses. Like if we pay for something early, but it doesn't really occur until the next year, those are restricted because we can't spend those

funds. Restricted. This is a pretty big um category on our balance sheet. is one of the larger ones because there is an element in here that is restricted by state statute that is a very detailed calculation um that we have to run at the end of every fiscal year. It includes components like cash incumbrances which are commitments that we've made um all expenditures there's a whole bunch of components that go into that calculation. So that is where this sits and it is required by the state. Grants as you can imagine if we have money grants mostly all the time are restricted to a purpose right so that's where that sits committed the committed category is a category that at some point there was a formal action by council to say we want to make sure we have money on reserve for these items. and our committed item um items you should be able to see on your schedule is mostly the law enforcement separation allowance. Assigned assigned is intended for specific purposes as well, but these funds come from smaller funds that we I'm going to get a little technical that roll up um into the general fund, but they have their own respective fund balances. So that's like workers comp. We have workers comp reserves just in case anything happens. We have things on reserve. Small claims, we have accidents, whatever the case may be, we have funds on reserve for that purpose. The last category that should make everyone smile and um which is one [clears throat] I like is no restriction category. This is unassigned. Um, and I will give you a little preview of our thinking just as you all go into thinking about fund balance policy right now. And we'll talk about it, but I'm jumping ahead just because I see it on the screen. Our fund balance policy exists on total fund balance. Total is all five of these categories.

We would love to shift to an area of the

um more flexible. You see here I have less flexible to more flexible categories that are more flexible. So that can be total available which is assigned unassigned or unassigned. Right? So that's just something for thinking going forward. Here you also see unrestricted. There's a reason there's this is this the category of unrestricted is committed assigned and unassigned. You will see this reference later in the presentation because GFOA, our government finance officers association, they look at unrestricted as a recommendation. I'm going to stop because I said a lot um right there to see if there's any questions just on what fund balance is and things like that.

Any questions?

So, uh last page.

You want me to go back?

Yeah. Yeah. So all these categories are designed by law or we can change or like assigned restricted. So we are responsible, we are reliable for reporting certain things. It's just a requirement, right, with our um GFOA requirements. The categories of what's in them with the exception of restricted, well, with the I'll say with the exception of non-spendable, we really don't have any say on that because inventory is inventory. It's really whatever our balances are. Um restricted that calculation has to be done. We can't change it. We have to do it. That's state required. grants. If we have any grants, we have to report them. Um because there are laws that say they have to be separated. Um committed. Again, I I mentioned these were set aside at some formal action by council. You all can make that decision to if you want what you want in this category or if you want to shift from what's already in there, but it has to be formal action. Assigned. Um these are ones that we just assign because we know they they have their their separate funds of tracking but there again we can say how much we want to have like we can max out at a

certain level right there and so I hope that explained

yeah thank you

kind of the covers

okay any other questions

can you help there's two places where I'm hoping for a little bit of clarity first understanding the practical difference between non-spendable and restricted in those top two category ories, but also secondarily, I want to make sure I understand the unrestricted bracket. These are monies that council makes decisions [snorts] about assigning the money to a project or a fund and that's why they're they're unrestricted because we can make decisions to move that money.

They're unrestricted because you you all can make the decisions and what you want in those categories. We have no flexibility less flexible in those restricted categories. Right? Those numbers will change from year to year because we may have grants this year, we may not have grants next year depending on our cash may be lower one year or higher one year. So that restricted state statute calculation is going to flux every year as well.

Can [snorts] you offer more clarity to the non-spendable bucket? So the non-spendable is really just reserving the stuff that we just it's it's not um there's no cash or anything related to it. Inventory that's inventory we may have like in the warehouse, you know, around town that we have that value of that. We can't it's a part of our assets. We can't we can't do anything with it. So it has to be restricted from the standpoint of you can't really appropriate that for a future capital project. Can I say that another way to make sure I understand that if we buy a significant number of of water meters and have those on a shelf, the value of those water meters would fall in this nonsp inventory? Yep.

Okay. Thank you. That's where I just wasn't.

Does this also apply to a property? Like we buy property

and um we're not using that property today. Most of

most of the property we have that's just a fixed asset.

Okay. So that

buildings that Yep. That's just an asset that we have that's a part of fund balance because it's assets minus liabilities but it's not included in here because it's not like we're not using it. It's not going off a shelf. So um if I were to rephrase uh my understanding of this conversation between the less flexible and more flexible in le less flexible categories you will need council's approval to move the money uh for various purposes but in less more flexible you will not need that approval. Is that correct?

So I love the way you said that. Thank you for that. Um because my bracket may not be what I would do per se. Like for me non-spendable restrict restricted that's not flexible at all. Less flexible could be committed because that was set aside by formal action. You all can revisit at a at a meeting and say you know formally what you want that reservation to be. But the council approval is needed for both to move the money or council approval is needed only for one versus another.

Council formal action is for committed restricted. We're restricted by the state. It is going to be what it's going to be.

Okay. Yeah.

And how about assigned and unassigned?

Assigned and unassigned is C council. you all drive both of those really because like I said with the assigned it's more of those just reservations that if we're we you know we have activity on workers comp and so it's whatever is reserve whatever is left over in that fund we tend to put it in a sign because at some point we we said it's just been a practice not formally adopted by council but it's just been a practice that we're going to keep these reserves in the event something happens. So together um all of these categories together they

they total to this.

I love that you said that. We're going to get that 100. Is that 106.4?

Yes. Yes. I didn't wanted to say it. I don't want to. My math is not math thing today.

Well, your math was very good there. Yes. All of these together. And I will put in one of the slides. You have numbers to go with these categories from fiscal year 25.

We're under audit now for 26. So we'll revisit 26 later. So it would be accurate to call the first two non-spendable and restricted inflexible.

That's right.

Committed as less flexible and then the bottom two is more flexible.

Okay.

Next time I come to y'all, I'm going to have that adjustment made for you.

I I [laughter] get it. You explained it well.

All right.

Do do retirement benefits fit into the restricted

the money set aside for pension or healthcare? Are those restricted?

No. No.

Okay. Now they're in our liabilities because you may remember a few years back we had to set up liability for OPED.

Right. Right.

Um but they are not um a restriction that we have on our general fund balance sheet. Those are long-term. So you will see those on go sorry technical another statement not general fund.

Okay.

Yeah.

So so when you said that um it depends on the council on which side we want to shift. Sounds like the first two categories are like something we cannot touch but the last three is something where we can make a policy adjustment if needed or if we want to.

That's correct.

So are you going to talk about what is required by the state and what we are doing and the difference and all of that stuff? When are we going to talk about that? We will reference those topics throughout the presentation. I will tell you off the bat there's no requirement for a fund balance policy reserve level at all. Now there are recommendations and I will show you the government

finance officers association recommendation. Um and [clears throat] we can talk in general about what the LGC says.

Some of it's coming in the next section.

Okay.

Thank you. You looked ahead.

That's what I was trying to get at. We're going to talk about that.

All right. So, so in the in this page the restricted I see the police operations and activities 850 and at the committed there's also police operations and activities. So it's 4 million. So what's the differences?

I think the first restricted I couldn't go back and verify would be grants and that's it. But we do have funds that have police like capital funds in it and so those would be

um and Yeah. Okay.

Yeah. For that purpose.

Yeah. Okay. Y'all good? All right. Let's go into our next fund section. Policy fund balance policy. All right. Here we go. We were talking about a benchmark. Let's talk about government finance officers association. This is our national um overseer of most of local not most local governments um in the nation. Um their recommendation is two months minimum of unrestricted budgetary fund balance which is what they have and they are comparing that to regular general fund operating revenues and expenditures. That means at the end of the year if you look at those categories and if you recall um unrestricted was committed assigned and unassigned if you look at those balances that's the numerator divided by the budget for um operations re they say revenues or expenditures um you should they want they would they recommend a minimum of two months that is about 16.7%. Um I think I want to I do not I think I want to call attention to they say revenues or expenditures if budgeted number y'all know we we um we balance

our budget. What I will say is as you continue to to listen to this um education a lot of people are doing different things. So there's no you know rhyme or reason again it goes back to that what did I say the right target for carry. And so that's what we'll determine what our baseline is. But 16.7% is what?

Operating

um operating. Yes.

Okay.

Yeah. Just cleared.

Um so the question does come up, well when would we ever consider a higher target than that? As you can imagine, that goes back if you saw one of the takeaways, fund balance policy is risk based. So it depends on the risk that you all will talk through and figure out what level of capacity you want to have there. But we have here revenue and expenditure volatility. Um, we know a couple of years ago, I think it was 25, Stacy, you can keep me honest, we had sales tax, y'all remember that, um, plummeted. That's revenue volatility. I've been in local government for a number of years. And there were years back the state did not revert sales tax to the local jurisdictions because they had gaps on the state end that they had to fill. Now they made us whole eventually but in that me that interim we had to use fund balance to help mend the gap right um so revenue and expenditure volatility um if there's any disaster exposures those are the types of risk that you would consider if you want a higher than 16.7 [snorts] um percent. I do have here don't confuse the GFOA minimum with our policy target and I actually talked about that a little bit. So in risk, are we going to talk about bond rating agency risk or is that another day?

So

because that's a risk to me also.

Yes. So the education of that is another day during your quarterly y'all are going to start hearing more about the importance of that. Um I will at the end of this presentation just give you some

of those considerations so that as you all go back and have conversations um start you know you'll be you know you'll identify okay if we look at this AAA bomb rating what does that mean for us all right so let's just talk about our current policy our current policy I know y'all probably know this like the back of your hands now is 33.33% of budgeted general fund expenditures we use operating expenditures. Um for this baseline we say here oh well let me keep going fund expenditures include total expenditures and debt service. It include it excludes other financing sources. What that means is we have operational expense expenditures and then we have what I say is below the line like transfers the capital transfers out are what we are saying are other financing sources. We don't include that in our baseline. Um we also say here this approximate about four months 33 um 333%. That is one that you could question the flexibility of that because again what is our baseline is total fund balance and so that has restrictions in it right which is another reason we're trying to transition or get you all to transition away from that. All right [clears throat] please let me know if you have questions on this as we go through it. This is just our way of trying to show you that different people do different things. Fund balance methodology. There's two parts. One I wanted to show you on the left side is Carrie's policy. And again, this shows you the numbers. The numbers I'm pulling are from fiscal year 25. The total fund balance that we had, y'all have it on your sheet, 106.4 million. Our baseline is those budgeted expenditures that I just gave you in the definition. That was for fiscal year 2025 259 million. You don't see that on any of what I handed out. This is more of a talking point. But at the end of the year, the calculation showed that we

were about 41%. So our policy 33.33%. We um calculated 41%. So that shows we were in excess of policy which is good. And Kim, a point there would be that's why it's hard to project what it is during the year because your cash flow versus revenues coming just to hit. It's easy to show at the end of the year.

Very good. Yep.

So the number that you said isn't anywhere as a talking point. The 259 million,

right? Where you will find this number is um what we use is budgeted um expenditures for a for a year that's adopted. So that for fiscal year 2025 in the general fund summary, that's where you would find it. So for 2026, if you want to know what our policy is, it's on the general fund summary that was adopted for the fiscal year 2026. What is your plan like I don't know how to ask this uh what is your plan for making let's let's say we don't make any changes to the budget policy like let's say today is like uh May 30th or June 1st and we're getting ready to to to um pass a budget. Can we make the balance sheet line up with what you're showing so that I can find the actual equation easier rather than asking? Can we make it easier for our residents to either do the math or do the math for them? So what we have decided and it's from you know you all's direction is that every time at the end of the year because that's where all these calculations take place in our annual comprehensive financial report there's going to be a fund balance calculation that will show you these

good

direct calculations

and each of those numbers will be articulated so that if I I know the budgeted FY25 expenditure number I can see where it came from. We will make sure you can.

Okay, that would be helpful [laughter] just because it it's helpful to have this and now I'm loving this and all I wish I had is

Sorry, I should have did the general fund summary for you.

That's okay.

But I see now like I see the 106 and I can definitely see how you got to that number. That's really helpful.

Y

um so what you will see on this right side is that like I mentioned there are a lot of jurisdictions who do different things. So the numerator like you can see I illustrated our numerator was the 106.4 that was our total fund balance. Some people use like GFOA that unrestricted number that's adding up the committed assign unassigned. Some people use what we call available that's assigned and unassigned. Some people use unassigned and then there is the total like um we calculate ours on. So as the numerator as the denominator there's so many different options for that as well. Some people use actual expenditures.

Um so at the end of the year you look at the um I'm trying to stay away from some of the technical terms but profit and loss statement see your expenditures that's the number that they use. A lot of people are using budgeted numbers their budgeted expenditures like what was adopted in a given year but that even that's even different. Some people use budget expenditures on the current year which is what we do. That means budget fiscal year 2025. We're doing comparison of 2025 fund balance. Some people would have the fiscal year 2025 fund balance but they the numerator could be the budgeted operating expenditures for the next year. Um so as you can imagine those numbers could be vastly different because most years our budget numbers are increasing. I am one of those believers who say that's the most conservative um to use [clears throat] the second year, but you all can decide what your preference is there.

Which of those is the GFOA denominator?

So GFOA they did they do revenues or expenditures. They would do the I'm assuming they would do the the I don't know. I mean you know you know so one

thing that I will say when you said that the way it's written the way GFO you can do what you want as long as it's in that parameter just keep it consistent. So I'm saying that to say I'm hoping that we write our future policy to be very specific

because our current policy says budgeted expenditures excluding um other financing sources. But which budgeted expenditures? We have elected to use the current year, but could we have used the subsequent year the way it's written? Yes. Um, but we're consistent that we're using the same baseline so we can compare. Um, so that's what you'll notice in some of the policies, too. And Kimberly, can any numerator be paired with any denominator

or

do does it make sense if you're using one of these numerators, does a that help determine which denominator might make most sense or does it just then adjust your percentage accordingly and then adjust your percentage accordingly

and then your policy reflects that?

That's right. That's right.

And maybe maybe your point is to spell out exactly how you do it.

That's right. That's my point. But also if you want to see options, what does it look like here? So yeah, we can we do

I was going to say and that gets back to the risk of the bond rating agencies. What are they looking for?

You want me to jump before Tai [laughter] is coming on the 15th. He's the expert next week.

All right.

I just don't want us to go too far down this and then have the bond rating agencies. Yeah, you can do that. But if you do, shame on you.

Something you can think about is they use available. Well, they we have three bond ratings. They all have different methodology

and Ty will explain it.

And Ty will explain it.

Yeah.

Sorry. And you said which one was the GFOA? I'm sorry.

Unrestricted, which is committed

and the denominator

the denominator I from how it's written, I can't tell you if they're between budgeted current year or budgeted

subsequent year.

Okay. So, one of the

I think it's one of the budgeted. Yes.

Okay. Okay. Sorry about that.

That's okay.

When was this policy in Kerry? um last reviewed or what like do we [clears throat] know

we updated

when when was the decision made on this policy just for some context here

we update our last update was in 2020 reflective in that 2021 year

we did all the work 2020 we fiscal year 2021 was the first year

so Kim last time we have um a slide of other municipalities comparisons so there are different numbers

next one

next how Y'all are very clairvoyant.

Yeah, I looked [laughter] ahead.

It's coming.

Okay. Okay.

All right. Y'all ready?

All right. So, I do want to You've seen this. This is the five-year history of our actual fund balance at the end of the year. You can see 2025. These are our numbers um here. And the next slide will show you clear what our numbers were for 2025. But what I think is nice about this um history is that we see that our levels for 2025 are getting back to um 20 fiscal year 2021 in particular with that unassigned number which is the orange um bracket. We can also see the telling story that y'all talked about for months of using spending down fund balance um and how we've been um very mindful with correct to get back on track with our existing um policy

and these are [clears throat] you know looking at them the percentages associated with them.

So these are not the percentage associated with them. I did not do that. I could bring that forth when I come back to you in November. But what I will say is you can see the percentage for 2025. Excellent. Oh, for the categories is the next slide. But holistically for um 2025 policy 33.33% we came in at 41.

Okay.

Yeah. And that's total total fund

balance again.

Okay. All right. So this is what

sorry this slide. Yeah. So 2023 I see that we are in negative. Maybe you asked that question. We are in negative unassigned. [laughter]

Yep.

Um was that intentional or something happened

that we I know the answer. I just want you to say it.

Well there was planned appropriations of fund balance that year. I think to the magnitude of about 21 million that year. Um so that caused that um downturn because this is I do think this is representative of total fund balance. So when we're looking at total fund balance we're not really the categories they do matter because we're spending into reserves that we probably should

which means that this money was um taken from the fund balance and allocated to another project. Um usually when you all make the um decision to appropriate fund balance, there are projects that you are identifying that you're saying we want to appropriate fund balance for this purpose

and most of the time it's capital

and it's with council's approval.

That's always with council's approval.

This was council's approval. It

appropriated fund balance. The appropriations that we notice for that year is always with council's approval.

Okay.

But we didn't have this chart.

Yeah.

You have this information,

right?

Just saying.

And so that's part of the education. So you're knowing the cate, you know, you're knowing the questions. We're hoping to equip equip you with questions to ask and we're committed to showing you what we need to show you.

So So can double check the year is from like 2025 is from uh calendar year 24 July 1st to 25 uh June 30th.

It's July 1, 2023.

I mean sorry 2024, right? to to June 30, 2025 specific. Yeah, it's the fiscal year,

not calendar year.

Not calendar year. Yeah, that's right.

So, if I were, tell me if I'm reading this right. If I'm looking at 2025 of 51

million is unassigned, meaning that in going back to your numerator and denominator, the the 37 is restricted and the five is non-spendable and then the four is committed. And that could be flexible or not. Guess what?

Oh,

look at the numbers.

Okay,

let's go back.

Numbers.

Excellent.

That's I didn't look at that slide. Okay.

Yeah, this is what you This is very This is a magical slide.

Um, so you can see here non-spindle bull represented 2%, restricted 14%, committed 2%. The big numbers that I would think you you know going forward you may care about are those between assigned and unassigned. Um and as you can see here unassigned 20%. That 51% we did the calculation it represents 20%. Which 20% you know we know 16.7 is two months. So it'll give you a reserve between 2.4 between two and three. Yeah. Because I know 25 is three months. So can all these numbers you get all these numbers in late 2025 like uh December.

So it it comes with the audit. So we end our fiscal year in June of every year. We report final audits to y'all usually in December. So it's usually in that half mark of the next um fiscal year because we got to do all the audit work. We're we're under audit.

Um now we're coming back to you all in November. I'm hopeful because that's not my December. Um, but I'm hopeful that you'll have some preliminaries that we can look through and talk through for 2026.

Kim, Cim, could you [clears throat] explain better what you just said that we're under audit? Um, so that folks that are watching this understand better what you mean as far as the always, you know, outside of our current circumstances, [clears throat] what the audit procedure looks like for for the town every year in a completely

normal year.

Yes. Every year we are required to go through an audit with an external audit firm. In our case, Cherry Beckert is our external audit firm. We do close the year at the end of June. However, when we close that that date does not mean our year um specifically is closed because there's sales tax that's still coming through that we have to make sure we acrew. You know, we have a couple of months maybe through September that we're acrewing things back to make sure they're in the proper period. Um but during that time as we're still closing out our books, our auditors are coming out to do transactional testing um to make sure internal controls are in place. Um so we from a closed closed book perspective, we usually are around I you know I'm hesitant to dates because it does depend on the year. Um, but we have the auditors out here for the most part starting in July through October, beginning of November doing work.

Kim testing.

Kim, would you clarify? This is the audit that is required by the state of North Carolina

of every local government every year. This isn't a special investigation or a special audit.

That's good.

Thank you.

Thank you for that, Susan.

Yep.

Okay.

Appreciate that. Y'all ready for the next slide?

Questions y'all just asked them. We're going to the next. [laughter]

All right.

Is there Can you go back one?

Is there some sort of best practice associated with [laughter] how much of that available should be assigned or unassigned? Because if going back one more chart, you have the orange and green, right? So you had 50.

Is there a best practice to what those levels should be? Yeah,

there's not a best practice of what those levels to be because what those levels are, it's really math, right? Because you have your assets minus liabilities and then you have a number. Non-spendable is a number. We got to subtract it. Um restricted is a number.

We have to subtract it. So really, you left with what's left,

right?

For the available number, is there a best practice for how much should be assigned or how much shouldn't be assigned?

Should it just all be unassigned or should we have

Oh, you made between assigned and unassigned.

Yeah. in the available cont.

There's no recommendations on the categories. No.

And and [laughter] I feel like I'm repeating myself.

Bear with me.

Sure. [laughter]

Managing a household. I don't want to put so much money in savings and have debt and capital needs. I need to know what makes sense.

Yep.

In savings. And that's out of all of this. The question I want to answer is how much money should we have in savings because it seems like it's excessive and we need to [clears throat] get information to drive us to a point where we can talk about that.

Yeah,

I know Lori and I have talked about it for years with other council members and it seems to just go round and round and round and I never come to a conclusion about where we should be.

Yeah. Now, I'm sure we we'll have recommendations for you, but it is about the level of risk and the things you want to make sure that's concluded um included in that um type of because there's so many things to consider. So, like tonight, I can't give you that.

Sure.

Including possibly what council strategic goals are for spending in future years. [clears throat] What are your saving? What are you saving for? I

mean, most

well, and and I don't want I I do want to Oh, who was talking? Who? Sorry, Michelle.

Michelle, you're you're

I didn't actually say anything.

No, it was me. It was me. It was Dana.

Oh, Dana. Sorry. You were leaning in, so I thought that's okay.

I thought it was her, too.

I wanted I wanted you to know I was next. I I think for um for this conversation, for the conversation next Tuesday, for the conversation in November, for the conversation in December, your questions and your

discussion is extremely helpful for us in understanding your perceptions of what would be ideal and what your level of risk tolerances. And each time we're going to drill in farther and farther so that we can collectively make these decisions about um risk tolerance. And so just tonight just conversation make is is a very helpful tool in getting us to um a recommendation for the changed policy.

So having said that in past years when we've had this debate over fund balance we talked about emergencies. For example, I remember talking with the manager of Newurn and they had a hurricane and they got federal funds. However,

it took months to get those federal funds. They had to come up with cash

and that's what fund balance is for. That's right.

We had hurricane Fran what 40 years ago

that trashed a lot of carry.

Um had to have cash 30 [laughter] years ago.

Yeah.

I just moved here for it and I was like

Yeah. Yeah. Uh so those are things you need cash for, but again that gets how much do we need? We'll need expertise from staff to tell us

what can we do to keep the lights on? What can we do to keep running if we have a national disaster, natural disaster? Um and then back to the bond rating agencies, when are they going to start frowning at us if we start taking some of that money out of savings? and then we don't want too much money in that, you know. So, I'm just back and forth waffling, needing information to drive me to a decision. That's where I'm going with this.

Yeah.

So, I'm going to ask a very I [clears throat] think it's a difficult question, but um and you don't have to answer if you don't feel like you don't think you have the answer today, but um

generally having I'm talking in a layman's term. Um having savings is always seen a good thing. Um you know um even in like personal if we go by the example of personal household having saving account and going above the level that we want to maintain is a good thing.

Yeah. Not [clears throat] necessarily.

Does this represent does this represent a good financial standing for the municipality? Um, so my personal opinion is that, you know, it does go beyond just the terminology of fund balance because I'm hoping that you all look at this as a management tool to build the capacity of whatever we feel like we need to absorb the risk that may come our way. Um, so I say all that to say is we [clears throat] do have to be mindful if reserves are too high, right? And then maybe we have a tax that it wouldn't make sense, right? Um so but we have to consider those things um like expenditure flexibility, revenue volatility because I would say if we don't have much expenditure flexibility when things happen we can't really reduce um our thing if revenue is down and our revenue volatility is there then our reserves may need to be higher

right and if it's the opposite we don't have much volatility we have flexibility then you can go with lower so I didn't answer your question directly But those are elements we need to talk through.

And to pile on to that question, personally, if I'm saving a lot, but my debt service is higher, well, my debt service has a higher interest than my savings, so I don't want a high debt service. I want to lower that.

And that is a part of the equation as well. Yeah, I think that's um that's a good point um that you raised

that having too um too high a fund balance could also be a pro problem

and what is that right threshold and few few months ago I heard someone maybe it

was Lori or Chrisa uh one of you may have mentioned this that um we just you know um as we're growing the [clears throat] size of the maybe it was you the size of the municipality also matters and you have to find that threshold because when we were small 33.3% seemed viable but today that might not be

right

my there were two things that I was thinking of as you were going through the part of the discussion is if you're if the goal is to have it for an emergency and our policy currently says four months which is would you say 16.7% or

33.33 our current policy represent depending on how how we align it then we need to think about well you can't really do the even if we have an emergency you can't use any of the unavailable even if we have an emergency

however [clears throat] you can you can make tough choices to take things that you've assigned just like if you had your own budget you don't buy the car because you have to fix the house because a tree fell on it and you don't have the insurance or whatever you can make different decision decisions with the assigned information or assigned number. So I think the idea as we talk about it is I like using the available. I think that's a a more valuable number that it's real rather than using the entire amount that's just not real. You can't touch it then it shouldn't be considered.

Could you go back to the colorful slide?

Colorful slide.

Yes.

Okay. Let's see this one. Is this the colorful one?

Sure. I figured when you got there I'd say stop.

Okay.

Um, going back to [clears throat] first I wanted to say the level of detail that we've gotten in the past year. Anything number related has been remarkable compared to my previous two years. And I

it it obviously makes a difference. We that's what we want is the level of specificity

[clears throat]

um transparency and all of that. thinking about what you said about we don't really know all of our actual numbers until all the audits take place and everything and it's

December. I'm thinking um that fiscal year um started July 2023.

July 2022

22 because it ended

it end June 20th June 30th 2023. Yeah,

but it wasn't until December 2023 when you had really knew [clears throat] actual numbers.

That would have been about the time we reelected. And I was just thinking how it's a good illustration of how it really matters the level of detail that we're getting. And in addition, because looking at whatever the fund balance is, the 33.33%. I mean most of it was [clears throat] nonsp which is which restricted and assigned but very little was

unassigned. I'm just thinking

there's no unassigned

borrowing.

So we were borrowing.

I mean but

I I wanted to point out the fact that or my it may not be a fact. My speculation is that if council was not getting the level of detail that we are now,

they may not have realized at the time. And this was before me, so I feel better saying.

I I joined at almost that exact time. So I was I joined council uh two months after that budget was adopted and it was well known that we had dipped into our fund. It was it was not uh you know I think it was a maybe how much I think probably wasn't completely clear or like

you said the mix of the revenues

the policy was a key point.

Correct.

You didn't know the policy was violated.

Yeah.

We knew that fund balance was lower but we didn't know the policy was violated. And if the policy had been more specific versus what about what kind of [clears throat] um whether it was unassigned, assigned, whatever, then that would have been easier to determine and make the decisions.

Yeah.

And when I I I got some, you know, tutoring when I first came on board to make sure I understood because you remember I I was elected strangely a year and a half after the typical election date. So in an effort to make sure that I understood where we were, it was pointed out to me that this was unusual. This these budget decisions were extraordinary and not how it it typically is done. So and that was when I very first joined. Um, so I would say that that doesn't that probably reflects [clears throat] a strategic decision. Um, a commitment to avoiding a tax increase that probably, you know,

last year,

right? So

didn't

correct. Correct. So I think that's something that with the current tax rate, we've corrected for that lack of unassigned and what I would consider true reserves. when I when I first learned about the fund balance and our policy and that this is for emergencies, but the majority of it is often unavailable to use in an emergency.

Mhm.

I said, "Okay, so that's like my two savings account. I have one that's really hard to get at because it's in a online bank and you know takes days for the money to transfer. That's a different bucket of money and frankly I really need it for retirement so it is not really available." And then I've got the one tied to my checking account. That's my uh crud. You know, I need a car repair.

That's my unassigned, uncommitted, completely available. That's my reserve fund.

So, I just want to echo what you said, Lori, from the minute I learned about how our fund balance policy works. I would really prefer a fund balance or a

reserve balance policy that is truly available reserve funds and and not quite so complex because I also secondarily too [clears throat] it would make me feel better about making a decision when it comes to the risk tolerance.

It would I think it would also help residents who are looking at our our what we're talking about now and looking at our budgeting documentation to understand better what in the world we're talking about. Um, so I just think that's

simpler is almost always better when you're talking about [cough] money,

is it not? I mean, I'm obviously not a CPA by any stretch of the imagination.

We like simplicity, too.

So, I just wanted to share that I I really do feel strongly. We talked about this enough now that I do believe um approaching the fund balance policy differently to me does make sense. That being said, um, at this time, I'm I'm kind of, I think, in the same place you are, Harold, Mr. Mayor. I am nervous all the time lately about the economy and about sales tax. I remember I was a very negative Nancy when we were doing we were working on the budget last year and the year before, concerned that the sales tax revenue was going to drop off, concerned that we're going to go into a recession. And it's that's the the if you ask me this question five years from now, I probably am going to have a different risk tolerance profile than I do right now. I don't have a ton of confidence that if there are federal funds available for an emergency in theory that they'll be paid in practice.

That's right. Yeah.

And I that and that's one of the things that just sort of gives me a great deal of pause. I would like to be able to say, you know what, it's going to do a it's going to do good things for our tax rate to reduce the amount that we feel necessary in the fund balance, but I also think right now I'm the ris risk averse part of me feels like this is not an easy decision to make and and is

something that gives me a great deal of pause. So,

yeah, and I think us talking it through and understanding what what our risk tolerance is is really helpful. And I think we're we're kind of coalesing on some numbers. The numerator also drives what that percentage going to be, right? So that will also because I I know you're going to get to it, but looking at every other municipality, not only do they have different ways of looking at the denominator, they have totally different ways of looking at the numerator as well. And with both, we'll need to understand what how both of those play in. [snorts]

Yeah. Right. Mhm.

I think from my perspective may um I'm thinking this more from um the perspective that you know maybe we this is a great opportunity to go back and look at you know the this policy and align it with u what the vision and the growth for the town is and where we are as a current in our current state and considering what we are going through. I think this is probably the right time for that and I agree that if something is fixed we cannot touch it, we cannot spend you know we cannot move then why wouldn't consider that. So have like a practical um policy which is easy to understand and easy to communicate.

Yeah, makes sense to me. I was going to add one thing as we finish out the slide in the section though also as you're giving commentary to the work done you also have to recall the work you've done over those two years maybe 23 and 24 closing capital projects

totally

that that type of thing that you were also

kind of knew you had to make some decisions to make sure that we met fund balance and we had a lot of projects going that cost also increased

and a lot of them can't stay closed forever

don't get us starting talking about roads again,

right? [laughter]

Not trying to, but there was hard

decisions made to meet your policy.

And I'm guess some point we'll get a budget update and and make Carissa feel better about sales tax numbers still coming in higher.

It does. Every time Dana comes and does a sales tax revenue update. My heart soarses.

I know.

I I It's my favorite pleasant surprise of the quarter.

Every quarter.

I feel you.

Yeah.

Okay. You ready to move on?

All right. Right. So, let me jump. All right. Peer municipalities. Um, we are going to see a number of peer um municipalities. We did shorten our list from what you saw in February to reflect municipalities mainly that are using that unassigned fund balance. However, what I will say about that is even with that, you'll have questions. Well, what are they using for their base and things like that because I will tell you they're all across the board even, you know, even um with that. So um first I'm going to show the total fund balance because that is our current policy. The other AAA rated jurisdiction in North Carolina that has uh that uses their that has their policy based on total is that happens to be Charlotte. Um and as you can see here what I'm trying to illustrate is the months when I looked at their 2025 annual comprehensive financial report. This shows about the number of months that they came in actually um on their reserve. So for Charlotte in this case um 25% Charlotte uses 16% which I said is approximately 2% because you remember

GFOA was 16.7 which is really those um those two months what I would say with Charlotte and Raleigh from what I know these jurisdictions also have and this is another technical component which is why I'm saying everybody does something different they have a debt service fund where they are all they have like another reserve um that they're considering that could,

you know, contribute to their lower rate

of 16%. Right? Does that make sense? Like it's not just a general fund. There's some other money um

coupled in there. Okay.

Is that a best practice having another fund? I mean,

there there there is not a I'm not going to say if debt service fund is a best practice. What I will say is it's a nice management tool for future for current debt and future debt. How to manage it?

Whole bunch of things. We'll get

your job easier.

What a debt service.

Um my job easier I think it's another management tool that will allow us to have everything in one place really because right now all of our our debt service is running through the general fund and we will get there too in some months to come. I don't you know I don't know if right now we're ready to jump. I'm not going to make you answer that question now, but I would like you to answer that question at some point. Got it.

You know, so we don't consider something that actually makes everybody's jobs more difficult.

That's right. Right now, I can't say we're living, you know, we're struggling.

Yeah.

Let me add to that um question.

Uh you'll find that a debt service fund is more typical in larger municipalities. define larger

um Charlotte Raleigh

uh population um you know you're in the complex three four more 100 and so uh we kind of went through this when we were deal doing some things related to our investment and debt carri size is like we're just growing into what is getting close to being considered maybe a large municipality so some of these tools are things you're probably going to want to consider as we get a little bit larger and you know um more sophisticated in the total uh balance that we have.

Makes sense. Thanks Dana.

So is our retire going back to retirement funds. I'm worried about that. Is that a considered is that considered unassigned or sorry restricted money?

No. remember um it's not when we look at fund balance policies they're normally on the general fund level which is a current

12 months pretty much typical activity

long-term liabilities like other oped things like that we report we have to report what those potential liabilities are governmentwide so it's at a totally different

um level that is not considered in a restriction now could you consider if we get some you know if we decide that we want to do x y and z dur you know on something that's a whole another formal process that we have to talk through. Maybe we can have those reserves, you know.

So today we're kind of in some respects a little like social security or a pay as you go.

Pay as you go.

So we're paying retirees health benefits and p pensions as we go even though without you [clears throat] know

Yeah. benefits different than pensions though.

OPED.

Yeah. Oh yeah, you're right. You're right. You're right. You're right. We don't we don't have like a long liab. not included in our restrictions.

It's not included. Okay. [clears throat]

All right. I'm just uh worried because that that's a growing

and restricted amount of money. I mean, those folks are still going to need healthcare. They're still going to need

funding. And we see the social security as an example. Social Security is kind of pay as you go, but it also has a trust fund.

So, it kind of has both. Y

we don't have the trust fund, right?

We do. It's in our

reserve. Yeah.

Okay. Okay, so that's total fund balance. Now, let's go. We ch made the decision again to use unassigned. These are AAA um jurisdictions in North Carolina who have AAA and they are using unassigned as their base budgeted expenditures. Greensboro has a policy of 9% in fiscal year 2025. They met their 9%. Um Durham, you can see here, is 12%. Um they came over the 12% at 21. Asheville, you can see here, is 15%.

They came in at 14%. As you can see here, their actual is lower than what their policy says. So, that's one of those if you go in under policy. They probably have a replenish plan because that's something else that you all will consider. Um, in your policy, they had hurricane Helen. So, that is part of their reason to why they dipped into their fund balance.

Can I ask a quick question? Why some municipalities don't do all three bomb rating agencies and only do two? I think that's I do think that's a preference.

Um I can't answer it for the jurisdiction.

I'm just curious why

um

doesn't have all three. [clears throat] I do know that Fitch used to be super in my older days, they were super strong in the utility and so that is why we opted to get their additional um well I say me we I was in the other jurisdiction when we did that. So [laughter]

um but you know that could be some of it because they have a utility strong um side but I can't tell you about the other jurisdiction.

Mayor that's a great question.

It's not a mandate

mayor that's a great question for Tai on Tuesday.

Okay.

Yes. Thank you,

Kimberly. Before we leave, um, help clarify for me. Our very first slide was GFOA recommends two months. Is that where the two-month recommendation came from with GFA?

And so, here we see everybody is

less than under two months means some of them significantly. So, is the two months a recommendation tied to using total fund balance and it's lower if you're using unassigned or are these municipalities just under that? So these municipalities are just under that. That's a quick answer. But theirs their 2% if you remember was on unrestricted which was committed assigned and unassigned. So it was not in it was not total either. That's another

caveat,

right? Maybe we're saying the same thing. So

I think you are you and you said 2%. I think it was two months. Is that what

two months? Yeah. 2%. Two months. Two months. Two months.

Yes. Two months. 16.7%. So does GFOA

then have different recommendation? I mean is two months their recommendation no matter what numerator and denominator you're using or is two months really a reflection of total and if we have other ways of calculating it

I think that's fair. Okay.

I mean I do think two months though is would be two months. Yeah.

Right. So like whatever baseline you're using, as long as you have some type of reserve, it could be potentially meeting that recommendation. So example, Raleigh had honestly I can't remember if they were at 15%, but GFOA has a recommendation of two months. So they recently updated their policy to 17%. And it was strictly driven by but it's based on unassigned, right?

Um and it's it's it was strictly based on the GFOA um minimum. And before we go, it's 607. Just a time check. That means y'all are having fun.

Yeah,

y'all [laughter] hitting that fund balance.

What you just said, you mean 16% of operating expenses.

16.7

16.7% just represents two months.

GFOA has a recommendation of how to get there, but a lot of other jurisdictions are getting there in a different way, but they're still having two months in resolution. did. So, what exactly did Raleigh do?

Raleigh had I can't remember if it was 15 or 16%, but they adjusted their policy so they would have a minimum of two months.

Okay.

So, they're at 17% now. I think when I bought it to you in February, I'd have to go back and look. I don't think it said um 17% on the slide. Um but we've had it updated.

But they also use the lower number. They only use unassigned. They don't use

They use unassign. Yep. They'll be You want me to keep going? So, it's not apples to apples with how we're computing our 33%.

There you go. It's not apples to apples.

I was trying I was trying to get there. I was with you. Okay. Well,

our unassigned is 20% from this last year

and our assigned was 3%. So, together we

were at 23% of those two notes.

That's right.

So, we're still higher

much

than most of them because our

we still would have you know

if we calculated it differently.

Yeah. And that's what I was saying going into it. Everybody has a different um baseline.

Okay.

Um so here 16% for Winston Salem. You see their actual percentage for 25. Raleigh. This is what we were just talking about. 17% they came in. Is that 18?

Yeah. 18.5.

18.5%. I do know they have a debt service fund as well. I talked to my friends today. Um and they within their if you look at their annual um report you'll see in assigned actually it's it's up here that has the reservation for debt service whereas unassigned. So you could think that maybe they're able to do that lower um percentage because they already have a reservation for things like debt service that we have flowing through our general fund.

Oh right. Yeah.

Can you when you provide some of that information, can you give us like so for instance, if I were going to make us be somewhat similar to Raleigh, even if we made our unassigned, we wouldn't be similar to them because they have an entire act

bucket of money. So, I think that's fair.

Ours would have to be bigger.

It would have to be bigger if we wanted to be aligned with them. Plus, they only do two months reserved. And right now, we look at four. That's

but theirs might be closer to that depending on how much is in the debt s.

Yeah. I don't know what it how much.

So now Lori, what I would say is if you look at our existing policy and those numbers that you you said 20 something% in those in the areas that you think that ain't that's not a sorry my apologies. No, no, I was listening really hard.

That that's not four months, right? That's not uh 25 represents three months. So it's still less than that. Four months is what our current policy said according to how it's written.

Right. Right. Right. Right.

Yeah.

Yeah. I was just saying how much of that bucket of money what what's the

percentage of that bucket of money? Not whether or not it aligns to our policy.

Do you happen to know how big those those reserve buckets are? Those debt service?

If you asked me yesterday, I would remember the number, but I don't want to mess up Riley's numbers. So, it's a good

I'm just wondering if they were significant or not.

It's a good amount of reserve.

Yeah.

But it's for debt.

Future debt. That's a whole plan and that's our

actual and then actual percentage would would change every year because that was last 2025 we were like 41% but maybe next year will change right

depending because it's driven by what you all decided to do during the year but also where we are at the end of the Yeah. Well during the year year end tells us

how it's going to change but it will

sales tax will grow by 5%. You never know. Y I'm getting to be sunshiny and I'm [laughter] working on it.

You're manifesting.

Yeah. All right.

This is a great Morrisville. [clears throat] Morrisville is at 25%. And they got 29

as of 2025.

And then come I'm going to get you to stop here because we will run out of time.

Too much fun. Sorry.

Too much fun. I love it. And the section that she'll be getting to is updating our fund balance policy and give you some things to consider and more food for thought and we need to allow time for that conversation. So I'd suggest that we do that at an upcoming work session.

Yes. And I would like to formally thank council because y'all noticed my voice stopped shaking as we went on. Y'all made me feel welcome. Thank you. [laughter]

You're always welcome.

Thank you.

All right.

Now I've got to Hold on. Don't look.

Don't look.

All right. I just want to do a couple of updates. Um, and specifically, it's going to be around our moving forward dashboard because we've made some changes in the last two weeks. Um, specifically, if you go to our website and look at the dashboard, um, anyone can sign up to receive updates. So, when something changes, like last week, um, you can see what's changed. Um, last

week, we shared that four of the Wombleon Dickinson recommendations moved uh, from not started to research. this Friday. So tomorrow, we'll anticipate updating six more recommendations. Um five will move into development category, including one recommendation from the state auditor's office that will move into research phase. So again, moving some from not started to the next step. Uh there's a lot of moving parts. So by the end of the week, most all of the 39 recommendations will be in research followed by development. And I'll just say it again, 39 recommendations is a lot of work. and the staff that is also running um the day-to-day high-quality operations that we do are also working on on this work. Um in our response to the state auditor, they required us to establish implementation dates. So, we did what they asked and developed those dates to set realistic expectations for this work. We're working through it. We're making progress and as the work moves forward um on we'll keep updating the dashboard and updates and progress um we'll get them out especially at work sessions like this so that you can see um of the six um I mentioned kind of the their womble bond that were the four that were updated last week this week it was OSA I'm just going to say the ones and you can u see online which they were but OSA 13 uh which also is tonight we started the training on OSA 13 so we moved that from research to development womble bond research to development. Womabond 14 not started to development. Wombleon 17 not started to development. Womabond 18 not started to development. And Wombleon uh 21 was from not started to research. Um any rate um we have time. I also want to um thank you for your work on uh Tuesday night for the committee of three that met. It was your first um meeting as such and uh I was able to not be there but watch it online. So, thank you for doing that and I hope others did as well. But you talked about compensation including salary benefits and allowance, travel and training and code code of ethics. You set your next meeting for September

uh 14th, so next Monday. And I thought I'd turn it over to the three if you had anything to share with the full council from that meeting.

Yeah, we we intend to work at least through the end of September weekly. We feel a sense of urgency. Uh spent most of this meeting brainstorming and gave ourselves homework. Uh Miss Richards and Miss Conson took most of the homework on [laughter] a little bit. Uh but our next meeting we should start framing up some recommendations. I feel I don't know if you have anything to

Well said. I think what was important was we in the discussions it was clear that what we expect to do probably in in there'll be cases where we'll gel on a single recommendation. I I feel like the conversation was going that way based off of factors like some of the pre-ressearch um you know timing constraints when we can and can't do things but it does feel as though we'll likely come with um some instances where there'll be a little little bit of nuance so that the full council um can sort of fill in those blanks or not they won't be blanks but but have feedback opportunities that'll make a material difference I think in the ultimate policy we all settle on. So, I didn't get the feeling that we're going to come with everything done done, but a lot of leg work done. Um, and I I really do believe this is going to be expedient.

Yep.

I really I felt like that after the meeting.

One one other thing for the the rest of council, if you have ideas and you send us thoughts, we're going to put them on a web page for everybody to see uh for the sake of transparency. So while we're discussing that uh everybody can see what we're talking about. So that was another thing we decided. So

my colleagues covered it. [laughter]

Yeah. No, I I agree though. I think the the tenor of the conversation was um productive, but also that I think there was so much common ground as a starting

point that I I think we're also going to be able to come to the rest of council with some thoughtful suggestions um and [snorts] our our research done uh so that we'll we'll I think be in a position to make decisions sooner rather than later. And thank you to Council Member Richards for doing pre-work that kept us from running down a a path that we shouldn't have been doing at the time or to, you know, considering things we couldn't do by so we understood what we can and can't do and when we can do it. So she identified some like statutes um that require certain things be done at budget time. So, it was helpful because I was riporn and ready to dive into that and she saved us a lot of time and breath

and out of if if uh anyone hasn't had the chance yet to watch our riveting two-hour meeting [laughter] uh what council member Cohen Johnson is referencing and I'll thank Lisa for helping a layman through the the statutory language but realizing that when it comes to our compensation and the statutory definition of compensation is salary and allowances is that the very soonest we can implement that change will be when we pass next year's budget. Um that uh the state authority only allows us to adjust the compensation then. Which is not to say that the committee will not get to work and that we will not be coming back to you with recommendations that we couldn't have a policy ready to go come budget season next year. But that if the notion was we were going to be able to adjust our pay just as soon as we wanted to, that is a timeline that's imposed on us by the state.

Yep.

All right. So, it would seem like uh possibly for the committee to be updating full counsel in a work session is maybe a good way to go moving forward. Sounds good.

All right. And that's all we have for tonight.

All right. We are ajourned. Thank you.