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I JERRY, YOU GOT OUTTA THE CLOCK.
NO, WELL, WE'RE PAST 1230, SO YOU'RE GOOD TO GO.
WELL, I, MY LOGO AT LEAST THIS IS A TSHIRT ILLUSION.
HOW WE DOING? GOING ON UP AND RUNNING AGAIN.
UM, I'D LIKE TO GO AHEAD AND CALL THIS MEETING ORDER.
THIS IS A MEETING OF THE BOARD OF SUPERVISORS FINANCE AND AUDIT COMMITTEE MEETING ON AUGUST 1ST, 2023.
THANK EVERYBODY FOR TAKING TIME OUT OF THE SCHEDULES TODAY TO, TO ATTEND THIS MEETING.
UM, FOR THOSE THAT MAY OR MAY NOT HAVE BEEN HERE BEFORE FOR THIS MEETING, I'LL GO AHEAD AND, UH, READ THE PURPOSE.
THE PURPOSE IS COMMITTEE, THE FINANCE AND AUDIT COMMITTEE'S PURPOSE IS TO ASSIST THE BOARD OF SUPERVISORS IN FULFILLING ITS OVERSIGHT RESPONSIBILITIES FOR FINANCIAL REPORTING AND INTERNAL CONTROL SYSTEMS AND THE AUDIT PROCESS.
SO THAT'S OUR GENERAL PURPOSE.
UM, WE'RE GONNA, UH, COVER A LOT OF NUMBERS TODAY, SO IF YOU'RE ALLERGIC TO NUMBERS, UH, NOW'S A GOOD TIME TO TAKE AN ANTIHISTAMINE.
UH, AND WE'RE GONNA BE MOVING PRETTY QUICKLY TOO.
SO I APOLOGIZE IF I HAVE TO KEEP SOME OF THE DISCUSSION A LITTLE BIT BRIEF.
WE'VE GOT AN AWFUL LOT OF GROUND TO COVER AND, UH, WE'LL TRY AND GET THROUGH ALL OF IT AND, UH, BE MINDFUL OF TIME AND PEOPLE'S GENEROUS, UH, CONTRIBUTION OF TIME.
FIRST ITEM ON THE AGENDA IS THE APPROVAL OF THE MINUTES.
THE MINUTES WERE CIRCULATED IN ADVANCE TO THIS COMMITTEE ON PAGE TWO.
UM, AT THIS POINT, ARE THERE ANY ADDITIONS, DELETIONS, OR CORRECTIONS TO THE MINUTES? HEARING NONE, I'LL ENTERTAIN A MOTION.
MR. CHAIR, MOVE TO APPROVE THE MINUTES AS PRESENTED I'S BEEN MOVED.
ALL IN FAVOR SIGNIFY BY SAYING AYE.
ANY OPPOSED? A AND ANY ABSTENTIONS.
AND JUST FOR THOSE THAT MAY OR MAY NOT KNOW, WE HAVE FIVE VOTING MEMBERS.
UH, THEY'RE ONLY ALLOWED VOTE.
SO IF, IF YOU'RE HERE AND YOU'RE NOT A MEMBER OF THE COMMITTEE, YOU CAN VOTE, BUT IT WON'T COUNT.
SO, UH, THE FIVE VOTING MEMBERS ARE THE THREE MEMBERS OF BOARD OF SUPERVISORS AND THE COUNTY ADMINISTRATOR, THE DIRECTOR OF FINANCE, UNAWARE.
UH, NEXT ITEM ON THE AGENDA IS THE VOTING KICKOFF.
UM, WE HAVE OUR AUDITORS IN THE HOUSE.
AND, UH, I'M GONNA TURN THIS OVER TO VIC.
WOULD YOU LIKE TO INTRODUCE THE AUDITORS OR IS THAT CARL? UH, I CALL, I'LL INTRODUCE THEM.
SO THIS IS BETSY HEDRICK AND ANDREA NICHOLS.
THEY'VE BEEN OUR AUDITORS FOR AT LEAST FIVE YEARS, PROBABLY LONGER.
UM, WE ARE UP FOR CONTRACT RENEWAL OR R F P THIS YEAR.
UM, BUT NOW IS ABOUT THE TIME THAT WE START MAKING OUR AUDIT ENTRIES.
THEY WILL BE HERE THE WEEK OF SEPTEMBER 25TH, UM, TO COME CHECK US OUT AND THEY PUT TOGETHER A PRESENTATION.
I AM BETSY PRICK AND AS CARLOS SAID, THIS IS ANDREA NICHOLSON.
WE ARE VERY HAPPY TO BE WITH YOU TODAY.
WE HAVE A VERY BRIEF PRESENTATION TO SHARE WITH YOU.
AND SO IT SOUNDS LIKE YOU HAVE A BUSY AGENDA, SO WE WON'T TAKE MUCH OF YOUR TIME UNLESS YOU HAVE CERTAIN THINGS THAT YOU WANT TO TALK ABOUT WITH US, WHICH IS REALLY THE PURPOSE OF, OF US BEING HERE.
UM, JUST ON THE FIRST PAGE, OUR COMMITMENT, A LITTLE BIT OF A REMINDER ABOUT THE FACT THAT WE ARE A REGIONAL FIRM, BUT WE HAVE PASSED TO THE FIFTH LARGEST C P A FIRM, UM, IN THE NATION.
AND WE SHARE THEIR RESOURCES, THEIR AUDIT METHODOLOGY, THEIR TRAINING, AND REALLY HAVE ACCESS TO THEIR EXPERTS ALL OVER THE COUNTRY.
SO THAT'S A NICE BACKUP, UM, FOR US WHEN WE, YOU KNOW, HAVE OUR, OUR AUDIT PRACTICE AS FAR AS THE LOCAL GOVERNMENT NICHE GOES, THAT IS ONE OF THE INDUSTRIES AND THE AREAS WITHIN THE FIRM THAT WE FOCUS ON.
UM, I'M SO GLAD, 'CAUSE THAT'S WHAT I HAVE SPENT MY ENTIRE CAREER DOING IS LOCAL GOVERNMENT WORKS.
UM, I'M GLAD I HAVE A FIRM BEHIND ME THAT SAYS, YEAH, THIS IS AN AREA THAT WE WANT TO GO DEEP IN.
UM, SO WE HAVE EXTENSIVE EXPERIENCE SERVING SAME LOCAL GOVERNMENTS.
AND THE LAST BULLET POINT ON HERE IS THE OTHER ONE THAT I WANTED
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TO CALL YOUR ATTENTION TO.AND IT'S JUST THAT WE HAVE A HISTORY OF CLEAN PEER REVIEWS AND QUALITY CONTROL REVIEWS.
WE HAVE, WE WERE SUBJECT TO A QUALITY CONTROL REVIEW BY THE A P LAST YEAR, AND IT WAS AS CLEAN.
WE'VE NEVER HAD ONE WITH, WITH FINDINGS, KNOCK ON WOOD IN MY CAREER.
AND WE'RE REALLY PROUD OF THAT BECAUSE, UH, QUALITY IS REALLY IMPORTANT TO US WITHIN THE FIRM.
AND WE HAVE A VERY STRICT QUALITY CONTROL PLAN THAT WE EXECUTE ON A DAILY BASIS.
SO THE NEXT PAGE, CLIENT SERVICE TEAM, A LITTLE BIT ABOUT OUR ROLES.
UM, I KNOW MIKE BARBER IS USUALLY HERE, UH, MEETING WITH YOU.
AND ON THIS PARTICULAR ENGAGEMENT, AND ACTUALLY ON A LOT OF OUR COUNTY ENGAGEMENT, WE ASSIGN TWO PARTNERS TO IT.
WE FEEL LIKE THAT'S THE WAY THAT WE CAN GIVE THE BEST SERVICE.
ONE OF US IS USUALLY MORE INTO THE WEEDS.
THE OTHER ONE TAKES THAT HIGH LEVEL APPROACH, WHICH I THINK IS REALLY IMPORTANT BECAUSE THEY CAN ADD A LOT OF INSIGHTS TOO.
AND SO MIKE AND I TOGETHER LEAD OUR, OUR GOVERNMENT NICHE WITHIN THE FIRM, AND WE'VE WORKED TOGETHER FOR 25 YEARS.
SO BOTH OF US HAVE, AGAIN, EXTENSIVE EXPERIENCE.
ANDREA, I'LL KIND OF LIKE LET YOU GO AHEAD AND INTRODUCE YOURSELF AND YOUR ROLE IN THE AUDIT.
I HAVE HAD 18 YEARS OF EXPERIENCE WITH LOCAL GOVERNMENT AUDITS.
AND THIS IS PRETTY MUCH ALL I DO ALL YEAR LONG.
SO I LOVE, UM, WORKING WITH, UH, YOU KNOW, MUNICIPAL GOVERNMENTS AND ALL THE FEDERAL COMPLIANCE AND THINGS LIKE THAT.
I'M THE ONE THAT WORKS MOST CLOSELY WITH CARLA AND HER TEAM.
SO THE DAY-TO-DAY LOGISTICS, GETTING THINGS DONE, ANSWERING QUESTIONS, THINGS LIKE THAT.
AND THEN I ALSO WANTED TO MENTION, UM, MICHAEL CORRAL.
HE IS THE IN CHARGE FOR THE LING TON COMMUNITY SERVICES BOARD.
AND THEN ANTHONY MCAVOY AS, UM, VARIOUS IT QUESTIONS COME UP.
UH, SHE'S DONE SOME WORK FOR US IN THE PAST ON THE IT, UM, PART OF THE AUDIT.
IT'S JUST REALLY NICE TO HAVE THAT DEEP BENCH WHERE SHE CAN ANSWER THE MORE TECHNICAL QUESTIONS THAT MAYBE WE DON'T DEAL WITH ON A DAILY BASIS.
AND THE NEXT COUPLE OF SLIDES, UH, ADDRESS AUDIT COMMITTEE EVER SITE, BUT YOU'RE ALREADY ALL OVER THAT AND KNOWING WHAT YOUR ROLE IS HERE.
SO I'M NOT GONNA READ ALL OF THIS, UM, TO YOU, BUT JUST REMIND YOU THAT OUR AUDITS ARE CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS, GOVERNMENT AUDITING STANDARDS, AND THEN OF COURSE WE FOLLOW THE VIRGINIA AUDITOR PUBLIC ACCOUNT SPECIFICATIONS.
UM, SO WE WILL BE ISSUING AN OPINION ON THE FINANCIAL STATEMENTS OF THE COUNTY TO SCHOOLS.
THAT'S ALSO INCLUDED IN YOUR ANNUAL COMPREHENSIVE FINANCIAL REPORT.
AND A PART OF OUR CONTRACT IS TO AUDIT THE GOOCHLAND
UM, WE'LL ALSO BE DOING A SINGLE AUDIT THAT AN AREA THAT ANDREA SPECIALIZES IN.
ON THE NEXT PAGE, OBVIOUSLY OUR AUDIT REPORTS, WE HAVE QUITE A FEW AGREED UPON PROCEDURES THAT WE HAVE TO DO FOR THE AUDITOR OF PUBLIC ACCOUNTS.
THIS SHERIFF'S INTERNAL CONTROL ONE, UH, LANDFILL CERTIFICATION.
THE TRANSMITTAL AGREED UPON PROCEDURES, THE DATA COLLECTION FORM, WHICH IS A FEDERAL REQUIREMENT, AND THEN OUR V R S EXAMINATION.
SO IN ADDITION TO THE AUDIT, THERE ARE OTHER ENGAGEMENTS THAT ARE TIED TO THAT AND ARE REQUIRED TO BE CONDUCTED.
AND THEN ANDREA'S GONNA TALK A LITTLE BIT ABOUT AUDIT APPROACH.
BUT BEFORE SHE DOES, UM, WHEN WE ISSUE OUR ARRANGEMENT LETTER, WE ALSO ARE REQUIRED TO ISSUE A PENDING COMMUNICATION LETTER.
SO HOPEFULLY YOU'VE SEEN A COPY OF THAT.
BUT REALLY THAT AGAIN, UH, SUMMARIZES HOW IMPORTANT IT'S FOR US TO HAVE OPEN DIALOGUE IF YOU WERE TO HAVE CONCERNS OR ANYTHING THAT YOU WANTED TO SHARE WITH US AS WE DEVELOP OUR AUDIT APPROACH.
'CAUSE EVERY YEAR WE TAKE A FRESH LOOK AT THINGS, AND THAT'S PART OF OUR RISK ASSESSMENT IS HERE AND YOUR INSIGHTS.
BUT WE ALSO REMIND YOU THAT WE HAVE TO BE INDEPENDENT.
WE HAVE STRICT INDEPENDENT RULES, UH, BUT WE FOLLOW WITHIN THE FIRM, BUT ALSO FOLLOWING THE PROFESSIONAL STANDARDS, GOVERNMENT AUDITING STANDARDS AND ALL THAT.
SO WE JUST, UH, ALWAYS WANNA MAKE SURE THAT WE'RE SHARING ANY POTENTIAL THREATS TO THOSE INDEPENDENTS BETWEEN, BETWEEN EACH OTHER.
LIKE THIS YEAR, IF WE ARE TO ASSIST WITH DRAFTING FINANCIAL STATEMENTS, WE HAVE TO PUT IN CERTAIN CONTROLS TO MAKE SURE THAT WE REMAIN INDEPENDENT.
AND WE DO THAT IN, IN ACCORDANCE WITH OUR PROFESSIONAL STANDARDS.
SO, UM, THE REST OF THIS PLANNING LETTER JUST TALKS ABOUT OUR PROCESS MATERIALITY, SIGNIFICANT RISKS, UM, OF MATERIAL MISSTATEMENT THAT WE HAVE TO ASSESS ON EVERY CLIENT, NOT JUST JUST THE COUNTY OF GLAND AND OUR TIME.
UM, SO THE GOOSE PAAN COMMUNITY SERVICES BOARD, SINCE THAT'S A REGIONAL ORGANIZATION WITH MORE, WITH ANOTHER, OBVIOUSLY WITH POWER TAN, DO YOU HAVE A RELATIONSHIP WITH THEM OR ARE WE CONDUCTING THE, THE AUDIT ON BEHALF OF BOTH COUNTIES, BUT HOW DOES THAT WORK? YEAH.
WELL, OUR CONTRACT IS THROUGH GOOCHLAND COUNTY, SO WE DON'T, WELL, WE REPORT, WE STILL REPORT OUT TO THEIR BOARD, WHICH INCLUDES MEMBERS FROM, FROM
BUT AS FAR AS GETTING AUDIT SUBSTANTIATION WITH THE COUNTY, BEING FISCAL AGENT, MOST OF OUR WORK IS CONDUCTED HERE.
AND DO THEY SHARE ANY, SINCE WE ARE HELPING THEM OUT AN WITH AN AUDIT WITH, DO THEY SHARE ANY OF THE COSTS FOR THAT AMOUNT? THAT ONE I, AND I THINK THE ANSWER'S NO.
ALTHOUGH IF I FIND OUT DIFFERENTLY, I'LL LET YOU KNOW.
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IS PROBABLY WORN BY THE C S B, WHICH IS MADE UP OF FUNDING FROM BOTH ENTITIES, SO, OKAY.IT'S POSSIBLE THAT THERE'S FINANCIAL CONTRIBUTION.
SO I'LL TAKE THE AUDIT APPROACH.
UM, I KNOW SOME OF YOU MIGHT BE, UM, FAMILIAR WITH OUR AUDIT APPROACH, BUT IT'S ALWAYS GOOD TO JUST REITERATE IT.
IF THERE'S ONE THING THAT YOU REMEMBER FROM THIS PAGE, IT'S THAT WE DO NOT TAKE A COOKIE CUTTER APPROACH.
WE TAILOR EVERYTHING TO YOUR SPECIFIC FACTS AND CIRCUMSTANCES, AND NOT ONLY OF THE ENTITY AS A WHOLE, BUT ALSO FROM YEAR TO YEAR.
AND SO TO START OUR PROCESS, UM, ESPECIALLY FOR CLIENTS WHO WE'VE BEEN FORTUNATE ENOUGH TO SERVE FOR MANY YEARS, WE BEGIN WITH A BRAINSTORMING PROCESS.
WHAT COULD GO WRONG? HOW DO WE KEEP OUR AUDIT APPROACH FRESH? HOW DO WE KEEP TESTS FROM BECOMING STALE? AND SO SOME OF THE THINGS THAT WE DO IMPLEMENT ARE, UM, PUTTING FRESH SETS OF EYES ON THE ENGAGEMENT, MAKING SURE THAT WE DON'T HAVE THE SAME PEOPLE ALWAYS DOING THE SAME TESTS, AND THAT WE'RE, UM, PUTTING THAT ROTATION IN.
WE'RE ALWAYS COMING UP WITH NEW APPROACHES, WAYS TO USE DATA ANALYTICS AND THINGS LIKE THAT.
UM, SO JUST AS WE KIND OF GO THROUGH THE, THE PROCESS, WE START TO FINISH, WE START WITH THE BRAINSTORMING.
WE OBTAIN AN UNDERSTANDING OF BOTH THE COUNTY AND THE SCHOOLS THROUGH A PROCESS THAT WE CALL THE PRELIMINARY PHASE OF THE AUDIT.
THAT'S WHERE WE'RE REALLY LOOKING AT ALL YOUR MAIN TRANSACTION CYCLES AND SEEING ARE THE CONTROLS THAT SHOULD BE IN PLACE, ACTUALLY IN PLACE.
AND SO I KNOW IT'S VERY IMPORTANT TO THIS GROUP HERE TO KNOW, IS THE AUDIT GOING WELL OR IS IT NOT GOING WELL? I CAN REPORT THAT WE COULD, THE PRELIMINARY PHASE OF THE AUDIT.
AND THAT PART HAS GONE VERY, VERY WELL.
EVERYONE IS EXTREMELY COOPERATIVE, ALL THE INFORMATION THAT WE NEEDED, UM, AND WE DIDN'T HAVE ANY UNEXPECTED SURPRISES COME, COME OUTTA THAT, UM, PROCESS.
THEN AFTER THAT, THEN WE TAKE A STEP BACK AND WE PERFORM A RISK ASSESSMENT TO SEE, UM, BASED ON THE FACTS THAT WE HAVE GATHERED, WHAT ARE THE RISKY PARTS OF THE AUDIT? WHERE COULD THINGS GO WRONG? AND SO THE, THE PLANNING LETTER THAT BETSY MENTIONED JUST A MOMENT AGO CONTAINS TWO OF THOSE RISKS.
ONE COURSE IS ALWAYS MANAGEMENT OVERRIDE OF CONTROLS.
THAT'S GOING TO JUST BE AN EXISTING RISK BECAUSE THE RISK THAT, UM, YOU KNOW, SOMETHING COULD GO WRONG, MANAGEMENT COULD OVERRIDE AND, UM, YOU KNOW, FRAUD OR ERRORS COULD BE, UM, COMMITTED.
AND THEN THE SECOND ONE IS, UM, NEW FOR THIS YEAR, BUT IT'S VERY SIMILAR TO ONE THAT WE REPORTED LAST YEAR.
GS 87, GSB 96 IS OUR NEW STANDARD FOR THIS YEAR.
UM, RELATED TO SUBSCRIPTION BASED INFORMATION TECHNOLOGY ARRANGEMENTS, AND I'LL GO OVER THAT IN MORE DETAIL, UM, HERE, JUST A COUPLE PAGES.
BUT THE RISK WOULD BE THAT THIS IS A NEW STANDARD.
UM, AND THE YEAR OF IMPLEMENTATION COULD HAVE SOME COMPLICATED OR TRICKY ACCOUNTING.
SO WE'RE JUST REQUIRED TO REPORT THOSE RISKS TO YOU.
AND I'M JUST GONNA ADD ON, WE ARE REQUIRED TO SHARE WITH YOU THOSE SIGNIFICANT RISKS.
NOW THAT HAS CHANGED WHEN WE SAY RISK OF MANAGEMENT OVERRIDE, THAT IS EXPECTED FOR US TO DOCUMENT UNDER PROFESSIONAL STANDARDS FOR ALL OF OUR CLIENTS, WHETHER YOU'RE A LOCAL GOVERNMENT OR IN A DIFFERENT INDUSTRY.
SO NOT ANYTHING NEW, JUST SOMETHING WE'VE ALWAYS HAD TO DO BEFORE, BUT WE MAY NOT NECESSARILY HAVE HAD TO TALK ABOUT IT IN THIS MEETING.
SO THEN GATHERING ALL THOSE RISKS, ALL THAT, UM, INFORMATION THAT WE'VE GOTTEN FROM THE PRELIMINARY PHASE OF THE AUDIT, THEN WE MOVE INTO THE FURTHER AUDIT PROCEDURES THAT WE DO IN THE FINAL PHASE.
THE AUDIT, AND THAT'S WHAT CARL WAS MENTIONING, WE'RE COMING BACK AT THE END OF SEPTEMBER TO REALLY, YOU KNOW, HIT YOUR, UM, YOUR ACCOUNTS HARD, THAT BASED ON YOUR JUNE 30 ACTUAL BALANCES, AND MAKE SURE THAT WHAT IS REPORTED IN THE FINANCIAL STATEMENTS IS ACCURATE.
THEN WE, UM, YOU CAN SEE HERE, THEN WE, UH, GO THROUGH WRITING THE, UM, FINANCIAL STATEMENTS AND, UM, DELIVERING ALL THE REPORTS AND THEN REASSESSING, UM, YOU KNOW, HOW DID THE AUDIT GO AND WHAT DO WE NEED TO KNOW FOR NEXT YEAR.
SO THEN AS WE CONTINUE THE THE SECOND PAGE UNDER AUDIT APPROACH, I'M NOT GOING TO READ INTO DETAIL EVERYTHING ON HERE, BUT THIS JUST GIVES YOU A GOOD KIND OF SUMMARY OF ALL THE DIFFERENT AREAS THAT WE LOOK AT.
AND I'M HAVING ANSWER QUESTIONS, UM, IN MORE DETAIL.
AND THEN AS WE KEEP GOING, UM, THE NEW ACCOUNTING STANDARD THAT I MENTIONED WAS GS B 90 96.
IF YOU'RE FAMILIAR WITH GS B 87 LEASES FROM LAST YEAR, THIS IS VERY, VERY SIMILAR TO THAT ONLY INSTEAD OF LEASES OF TANGIBLE THINGS, THESE WOULD BE INTANGIBLE INFORMATION TECHNOLOGY ARRANGEMENTS, SUBSCRIPTIONS, LOOKING AT THINGS LIKE MAYBE YOUR MICROSOFT OFFICE OR, UM, DIFFERENT SOFTWARES THAT YOU USE FOR THE SCHOOL.
UM, THINGS THAT NEED TO BE CAPTURED, UM, FOR A RIGHT TO USE SUBSCRIPTION ASSET.
I KNOW, UM, CARLA AND I ARE GONNA GET VERY, VERY FAMILIAR WITH THIS STANDARD, BUT, UM, IT SOUNDS LIKE YOU'RE IN HANDS AND ALL THAT IMPLEMENTATION AS WELL.
I JUST WANTED TO TO POINT OUT TO YOU THAT YOU SEE NEW ELEMENTS IN THE FINANCIAL STATEMENTS RELATED TO THIS.
UM, I MEAN THE TREND OVER THE, UH, LAST FEW YEARS
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HAS BEEN TO PUT MORE THINGS ON THE BALANCE SHEET, MORE DISCLOSURE.SO THE FIRST ONE, I GUESS WAS, UH, THE UNFUNDED PENSION LIABILITY.
AND THAT'S ON THE BALANCE SHEET NOW.
AND THEN IT WAS OPEN, RIGHT? UH, OTHER POST DEPLOYMENT BENEFITS, THOSE HAVE TO BE CAPITALIZED UNDER FUNDING.
UM, NOW I GUESS, UM, WITH THIS NEW PRONOUNCEMENT, WE'VE GOTTA CAPITALIZE ALL LEASES.
WHETHER THE OPERATING OF CAPITAL LEASES, EITHER ONE, THEY ALL HAVE TO BE CAPITALIZED IN ON THE BOOKS.
UM, WHAT'S NEXT? I MEAN, I, ONE OF THE THINGS THEY'VE BEEN TALKING ABOUT IS, UM, ECONOMIC DEVELOPMENT INCENTIVES WHERE YOU GIVE OUT AN INCENTIVE AND IT'S NOT CAPITALIZED ANYWHERE IN YOUR BOOKS.
IS THERE ANY, IS THERE ANYTHING COMING AROUND THE CORNER THAT IS THE NEXT THING THAT IS GONNA REQUIRE ADDITIONAL CAPITALIZATION PUT ON OUR BOOKS AND RECORDS FOR FULL DISCLOSURE? WELL, THE NEXT BIG THING IS THAT GA B IS GETTING READY TO ISSUE A NEW STANDARD ON THE FINANCIAL REPORTING MODEL.
AND IT WILL COMPLETELY CHANGE, AGAIN, THE WAY THAT YOUR ANNUAL COMPREHENSIVE FINANCIAL REPORT LOOKS.
SO, YOU KNOW, WE HAVE BEEN REPORTING UNDER GASSY 34 ALMOST MY WHOLE ENTIRE CAREER.
THEY'RE GOING TO GO IN AND THEY'RE GOING TO REVISE DEFINITIONS, AND THEN THEY'RE GOING TO CHANGE HOW THOSE STATEMENTS LOOK.
SO MORE AND MORE THAN JUST THE INITIALS, THAT'S A, IT'S GONNA BE A MUCH BIGGER DEAL THAN JUST AN ACTUAL STANDARD ON, YOU KNOW, A PARTICULAR TOPIC.
IT'S GONNA BE LOOKING AT REVENUE RECOGNITION, RIGHT.
AND EVERYTHING WHICH WILL IMPACT BUDGETING, UM, AND ALL AND SO FORTH.
BUT, BUT THEY HAVEN'T ACTUALLY ISSUED THE STANDARD YET.
AND SO I THINK THEY'RE, THEY, I THINK WE INITIALLY HEARD THEY WERE EXPECTING THE ISSUE BY THE END OF THE CALENDAR YEAR, BUT THAT'S BEEN DELAYED.
AND THEN ONCE THAT ROLLS OUT, I DON'T KNOW IF YOU ALL REMEMBER BACK WHEN 34 WAS ISSUED, IT WAS ISSUED IN TIER, SO THE BIG GOVERNMENTS HAD TO GO FIRST AND THE MIDDLE TIER, THAT'S HOW THEY'RE PLANNING TO DO THE REPORTING MODEL.
SO I'M JUST GONNA BRING, UH, G A S B CLOSER TO GAP.
I MEAN, ARE WE, WE'RE BRINGING GOVERNMENT STANDARDS CLOSER TO SECTOR? NOT NECESSARILY.
AGAIN, EVERY TIME G S B I THINK ISSUES A STANDARD, THEY, THEY SAY THAT IT'S SUPPOSED TO MAKE THE FINANCIAL STATEMENTS MORE TRANSPARENT AND EASILY TO UNDER EASIER TO UNDERSTAND.
SO THEY'RE TAKING ANOTHER NEW LOOK AT THIS.
SO WE'LL SEE HOW THE RESULTS OF THAT STILL GONNA ENDS UP BEING, ARE THEY GONNA CHANGE THE BASIS? IS IT STILL GONNA GET MODIFIED CASH? THEY'RE GONNA CHANGE THE DESCRIPTION A LITTLE BIT, BUT IT'S STILL FOR, I THINK THE BIGGEST IMPACT WILL BE ON TAXES AND HOW WE RECOGNIZE REVENUE RELATED TO TAXES.
'CAUSE RIGHT NOW IN YOUR FUND STATEMENTS, WE DO THAT 60 DAY ACCRUAL, AND I THINK THAT THAT COULD BE THE PIECE THAT, THAT HAS A MORE SIGNIFICANT CHANGE.
BUT DEFINITELY CLASSIFICATIONS.
THEY'RE GONNA LOOK AT DIFFERENT BUCKETS OF TRANSACTION CYCLES AND HOW THINGS FIT.
YOU KNOW, IT IS JUST NICE TO TAKE A LOOK AROUND THE CORNER AND SEE WHAT'S COMING.
AND THEN THE FINAL SLIDE IS JUST TO REMIND YOU AGAIN, THAT WE HAVE, AND YOU HAVE THIS EVERY YEAR, YOU KNOW, WE HAVE A REQUIREMENT TO CONSIDER FRAUD IN OUR FINANCIAL STATEMENTS AND PROGRESS.
AND SO, AS ANDREW TALKED ABOUT EARLIER, WHEN WE DO OUR BRAINSTORMING SESSIONS, THAT'S AN AREA THAT WE REALLY SPEND A LOT OF TIME ON.
WHERE COULD THINGS GO WRONG? WHERE COULD THE, THE MISAPPROPRIATION HAPPEN? AND, YOU KNOW, WHAT CONTROLS ARE IN PLACE TO MITIGATE THAT OR TO PREVENT THEM FROM HAPPENING.
BUT, YOU KNOW, IF YOU EVER HAVE SOMEONE WHO HAS REPORTED SOMETHING TO YOU THAT GIVES YOU CONCERN THAT YOU FEEL LIKE, OKAY, THE AUDITORS NEED TO DO A DEEPER DIVE INTO THIS AREA, THAT'S WHAT WE WANT TO HEAR FROM, FROM, FROM YOU ALL.
SO YOU HAVE A RESPONSIBILITY TO SHARE WITH US IF YOU HAVE CONCERNS.
AND WE HAVE A RESPONSIBILITY ON OUR END TO MAKE SURE THAT WE'RE GETTING GOOD ATTENTION TO THAT, CHRIS.
AND THAT'S WHAT YOU, YOU FIND MUCH CORRUPTION IN GOVERNMENT, NEVERMIND
AND I JUST WANNA SAY, YOU KNOW, WE HAVE, I KNOW WE ARE AT THE END OF OUR CONTRACT RUN.
WE CERTAINLY APPRECIATE ALL THE, THE YEARS THAT WE HAVE BEEN IN THIS, UH, ROLE, BEING ABLE TO SERVICE THE COUNTY AUDIT COUNTY'S AUDITORS.
AND WE WILL DO GIVE YOU OUR ABSOLUTE BEST THIS YEAR ON THIS AUDIT.
AND SO, UM, WE APPRECIATE YOUR TIME TODAY.
DO YOU HAVE ANY OTHER QUESTIONS FOR US? UH, LET'S SEE.
QUESTIONS FOR OUR LAWYERS FROM THE COMMITTEE? YES, SIR.
UM, I HAD NEVER THOUGHT ABOUT THIS BEFORE, BUT WHEN, IN REGARDS TO THE SCHOOL'S PORTION OF THE AUDIT, I KNOW THAT WE GET ENGAGED WITH SO THAT THEIR, THEIR FINANCIAL DIRECTOR, DO WE, AND SHOULD WE ENSURE THAT A BOARD MEMBER, SCHOOL BOARD MEMBER IS PRESENT SO THAT, THAT FROM A, A LEADERSHIP PERSPECTIVE AND YOU KNOW, A BOARD PERSPECTIVE, THAT THEY'RE ENGAGED WITH WHAT IS BEING ASKED.
IS THAT COMMON IN OTHER LOCALITIES? SHOULD WE HAVE A BOARD MEMBER ENGAGED SORT OF THAT BRAINSTORMING SESSION LIKE YOU TALKED ABOUT? WELL, WHEN WE DO OUR FRAUD INQUIRIES, UM, NOT JUST AT THIS LEVEL, I'M TALKING ABOUT THE WHOLE AUDIT FOR THE SCHOOL PORTION, BUT FOR THE SCHOOLS, WE DO MAKE SURE THAT WE REACH OUT TO A SCHOOL BOARD MEMBER TO DO, ASK WHETHER THEY HAVE ANY CONCERNS SO
[00:20:01]
THAT THEY HAVE AN OPPORTUNITY WITH THEIR OWN GOVERNANCE TO SHARE WITH US WHETHER OR NOT THEY HAVE CERTAIN AREAS THEY, IS IT, IS IT A POSITION OR IS IT JUST THE BOARD IN GENERAL? GENERALLY WE INTERVIEW THE CHAIR, BUT THERE HAVE BEEN TIMES THAT WE HAVE.IS INVITED TO ATTEND THESE MEETINGS AND, UH, DISTRICT SUPERINTENDENT SCHOOLS AND WHOEVER ELSE WOULD LIKE TO IS OPENLY PUBLIC, SO MM-HMM.
UM, I'VE GOT A COUPLE REAL QUICK, UM, MY, MY OWN RULE HERE, BUT, UH, YOU MENTIONED EARLIER THAT YOU, UH, I THINK CARL MENTIONED, UH, PB MAYS HAS BEEN OUR AUDITOR FOR ABOUT FIVE YEARS.
I JUST WANNA MAKE SURE FOR THOSE LISTENING AT HOME AND THOSE HERE, UM, THAT WE HAVE, UH, CHANGED THE, THE, THE LEADER, UH, THE AUDIT TEAM LEADER, UH, FOR A FRESH SET OF EYES.
SO IT'S SAME FIRM, A DIFFERENT SET OF EYES FROM BOOKS.
UH, 'CAUSE THE RULE OF THUMB, I GUESS IS SOMEWHERE AROUND THE THREE TO FIVE YEARS PERIOD, WHICH REVISIT.
AND SO MAYBE HALFWAY THROUGH THIS FIVE YEARS, WE'VE HAD A CHANGE IN THE EYES TO LOOK AT THE, WHICH I THINK IS HELPFUL.
UH, IT MIGHT, THE LAST 10, 11 YEARS, I THINK WE'VE HAD THREE DIFFERENT AUDIT FIRMS IN ADDITION TO HAVING TWO SETS OF HE BEARS EYES.
SO WE DO CHANGE, UH, THE LOOKUP, UH, EVERY SO OFTEN.
UM, WE MENTIONED THE DIFFERENCES BETWEEN GAP AND G THAT, UH, FOR THOSE THAT ARE COMING FROM THE PRIVATE SECTOR, THAT, UH, GOVERNMENT COUNTY IS A BIT DIFFERENT THAN PRIVATE SECTOR COUNTY.
AND, UH, I'LL LEAVE IT TO THOSE TO DO SOME HOMEWORK TO FIGURE OUT THE DIFFERENCES.
UM, THIS AUDIT IS FOR THE JUNE 30, 20, 23 YEAR END, WHICH IS BEHIND US.
THE AUDIT REPORT IS DUE TO THE STATE OF VIRGINIA BY NO LATER THAN THE END OF NOVEMBER.
NOW, IN THE PAST, THAT'S CREATED A LITTLE BIT OF AN ISSUE BECAUSE OUR LAST BOARD MEETING BEFORE THE END OF NOVEMBER IS THE BEGINNING OF NOVEMBER.
AND IT'S CREATED A BIT OF A CHALLENGE FOR THE AUDIT TO GET COMPLETED BEFORE THE FIRST WEEK OF NOVEMBER.
AND THEN IN OUR NEXT BOARD MEETING WOULD'VE BEEN THE FIRST WEEK OF DECEMBER TO APPROVE IT, AND THEN IT WOULD BE DELIVERED LATE.
SO WE'VE HAD SPECIAL BOARD MEETINGS TOWARD THE END OF NOVEMBER, THE AUDIT, I UNDERSTAND THAT THEY HAVE CHANGED THE RULES.
JUST A MINUTE, THE STATE TO ALLOW US THE FIRST WEEK OF DECEMBER TO GO AHEAD AND PROVE THE AUDIT AND NOT BE, UH, HAVE AN ASTERISK NEXT TO OUR REPORT SAYING IT WAS LATE.
UM, SO IS THAT STILL THE CASE THIS YEAR? IT ISN'T ACTUALLY THE DUE DATE NOW TO THE A P A IS DECEMBER 15TH.
DECEMBER 15TH FOR ALL ACCOUNTS.
THAT, THAT TAKES THE PRESSURE OFF OF THAT.
UM, UH, LAST THING IS, UM, UH, LOW RISK VERSUS HIGH RISK QUANTITY.
UM, I BELIEVE WE'RE IN A LOW RISK CATEGORY NOW THAT WE'VE HAD CLEAN AUDITS FOR AT LEAST THE LAST THREE YEARS AND, AND MAYBE MORE.
UM, IS THAT YOUR UNDERSTANDING AS WELL? ABSOLUTELY.
SO THAT AFFECTS THE AMOUNT OF SAMPLING YOU DO AND THE AMOUNT OF, YOU KNOW, DEEP DIVE THAT YOU MAY HAVE, HAVE TO DO IT FOR LOCUS ONE, ESPECIALLY IN THE SINGLE, IN THE FEDERAL SINGLE AUDIT AREA.
I'M JUST SHARING WITH A LOT OF FOLKS EITHER DOING AT HOME.
THAT'S, THAT'S ALL THE COMMENTS I HAD.
UM, UH, THANK YOU VERY MUCH FOR YOUR TIME COMING TO GOSHEN.
NOW, SOME PEOPLE VIEW THE AUDITORS AS A, UH, OH, HERE THEY COME.
WE USUALLY AS FRIENDS THAT CAN HELP US DO A BETTER JOB.
SO, AND THAT'S WHAT WE WANT TO DO.
WE HAVE, WE NEED TO MAINTAIN OUR INDEPENDENCE, BUT WE DO WANT TO PARTNER WITH YOU TO, TO, TO SERVE THE COUNTY.
OKAY, NEXT ITEM ON THE AGENDA IS THE FY 20 23 4 QUARTER PROJECTED RESULTS AND RECOMMENDED FUND BALANCE CHANGES.
UH, PAGES THREE THROUGH SIX IN YOUR PACKET.
I'M NOT SURE IF ANYONE IN THE ROOM CAN SEE IT, BUT IT'S ALSO IN THE HARD PACKET.
UM, I'M PREDICTING, UM, AND I WANNA SAY THAT THIS IS AS OF JUNE 30, BUT, UM, BETSY JUST MENTIONED THE 60 DAY RULE.
SO WE WON'T KNOW ACTUAL FIGURES UNTIL END OF AUGUST, BUT, UM, WE ARE BEGINNING OF AUGUST AND I AM THINKING WE WILL BRING IN REVENUE $12 MILLION OVER WHAT WE BUDGETED.
UM, MOSTLY DUE TO REAL ESTATE TAXES, PERSONAL PROPERTY TAXES, AND EVEN INTEREST THIS YEAR.
UM, THE DEPARTMENT'S RETURNING FUNDS, UH, THIS HAPPENS EVERY YEAR, BUT BECAUSE WE HAVE TWO MORE WEEKS OF BILL PAYMENT THAT GOES BACK TOWARDS F Y 23, THIS IS STILL JUST A ROUGH ESTIMATE, BUT, UM, I'M THINKING THE DEPARTMENTS WILL RETURN ABOUT $4.4 MILLION LEAVING US WITH THE OPERATING SURPLUS OF THE $17 MILLION.
HOWEVER, OF THAT, AS YOU KNOW, WE PAY OUR CAPITAL PROJECTS OUT OF, WE PAY OUR C S A FUNDS OUT OF THAT, UM, FOR A TOTAL OF 7 MILLION.
UM, SO AFTER ALL IS SAID AND DONE, I AM THINKING ABOUT SLIGHTLY UNDER 10 MILLION.
WE'LL GO BACK INTO THE GENERAL FUND BALANCE THIS YEAR, WHICH IS HIGHER THAN WE'VE HAD IN THE PAST.
[00:25:01]
HAD A GOOD YEAR.UM, QUESTIONS OR THOUGHTS ON THIS TO THE, TO THE COMMITTEE AT THE BOTTOM, UH, WHERE WE WERE IN FULL COMPLIANCE STILL WITH ALL OF OUR POLICY GUIDELINES AS FAR AS DEBT, AS FAR AS, UM, AN ASSIGNED MARKET BALANCES, THINGS LIKE THAT.
AND, UH, I'M GONNA SUGGEST, UH, GOING FORWARD THAT WE, UH, HAD TO WORK MAXIMUM INTO SOME OF THOSE TESTS.
SO FOR INSTANCE, FINANCIAL POLICY COMPLIANCE, TARGET DEBT POLICY, JUST ADD MAXIMUM, UH, THE NEXT ONE UNDER TARGET UNASSIGNED FUND BALANCE MINIMUM.
UM, AND BOTH OF THOSE THAT CAN BE A PERCENT OF GENERAL FUND EXPENDITURES.
UH, AND THEN REVENUE STABILIZATION FUND MINIMUM.
SO JUST SO THAT PEOPLE KNOW THESE ARE TARGETS AND WE WANNA BE OVERRUN THAT.
AND SO AT THE END OF EVERY FISCAL YEAR, UM, THERE IS A SECTION IN THE AUDIT REPORT THAT LOOKS AT THAT TOTAL FUND BALANCE AMOUNT.
SO IF WE END OUR YEAR WITH 57 AND A HALF MILLION DOLLARS IN FUND BALANCE, THERE IS A SECTION IN THE AUDIT REPORT THAT WILL, UM, SHOW HOW OUR BOARD HAS DESIGNATED THESE FUNDS TO BE SPENT.
WHETHER THEY ARE, UM, I'LL PUT THAT UP HERE TOO, WHETHER THEY ARE NONS SPENDABLE BECAUSE OF WHAT THEY ARE, LIKE INVENTORY ITEMS THAT WE HAVE.
UM, WHETHER THEY ARE RESTRICTED FUNDS, WHICH ARE LIKE LEGAL, LEGAL RESTRICTIONS BASED ON, UM, THE WAY WE OBTAIN THE FUNDING, WHETHER THEY'RE COMMITTED SUCH AS OUR REVENUE STABILIZATION RESERVE FUND.
UM, AND THEN WE'VE GOT ASSIGNMENTS, AND THESE ARE FOR THINGS LIKE FUTURE C I P PROJECTS.
WE KNOW WE WANNA HOLD MONEY ASIDE FOR, UM, FUTURE TRANSPORTATION, FUTURE C I P LIKE OUR COURTHOUSE.
UM, WE HAVE SCHOOLS TURN BACK MONEY.
UM, SOME OF THE LARGER, THE LARGER THINGS WE KNOW COMING UP, WE HOLD MONEY ASIDE FOR THAT.
WE CALL THAT AN ASSIGNED FUND BALANCE.
AND THEN THE REMAINDER IS UNASSIGNED, MEANING THAT WE CAN USE THAT FOR OPERATIONS GOING FORWARD.
UM, WE TRY TO KEEP THAT ON ASSIGNED FUND BALANCE AT AROUND 25% LIKE WE MENTIONED EARLIER.
SO, UM, THIS IS JUST A RECOMMENDATION OF WHERE I THINK IT WOULD MAKE THE MOST SENSE TO KEEP THESE FUNDS AT.
UM, AND ONCE WE HAVE FINAL FIGURES, WE CAN COME BACK TO THE BOARD PROBABLY OCTOBER, I THINK IT USUALLY IS TO GET A CHECK IN AND MAKE SURE EVERYBODY'S ON THE SAME PAGE OF IF THIS LOOKS GOOD.
UM, SO IF ANYBODY HAS ANY QUESTIONS, I CAN ANSWER THOSE QUESTIONS.
I THAT IS, UM, MS SO JUST WANNA MAKE SURE I'M READING THIS RIGHT.
SO WHILE THE FUNDS ARE BEING, UM, PUT TOWARDS CAPITAL PROJECTS, IT LOOKS LIKE THE MAJORITY OF THOSE CAPITAL PROJECTS, 4.4 MILLION, ARE BEING RECOMMENDED TO GO TO THE SCHOOLS? UM, YES.
CURRENT, OUR F Y 24 BUDGET, WE, THE GENERAL FUND TRANSFER MORE IS GOING TO THE SCHOOLS THAN COUNTY OPERATIONS.
SO EVEN THOUGH WE HAVE, SO OURS IS GOING DOWN HALF A MILLION.
SO I WILL SAY THE 4.4, I TRIED TO PUT A LAST YEAR VERSUS THIS YEAR AND LAST YEAR IT WASN'T BROKEN OUT.
IT WAS JUST ONE BIG TRANSFER TO C I P, WHEREAS THIS YEAR IT'S BROKEN OUT.
SO THAT 4.4 MILLION IN THE 22 COLUMN INCLUDED COUNTY AND SCHOOLS.
SO IF YOU COMPARE THAT TO THIS YEAR, IT'S UM, AN $8 MILLION TRANSFER.
WE SPENT A LOT, AS, YOU KNOW, WE SPENT A LOT MORE IN C I P THIS YEAR THAN LAST, OR 24 THAN 23.
I, I GUESS WHAT'S DIFFICULT FOR ME IS WE'RE, WE'RE RECOMMENDING CHANGES, BUT I CAN'T SEE WHAT THE CHANGES WERE FROM.
SO IF THE PROPOSED AMOUNT IS NEW AS OF TODAY, BUT I DON'T KNOW WHAT, WHAT WAS THE PROPOSED AMOUNT PRIOR TO THE, THE EXCESS.
SO, SO FOR EXAMPLE, WE SAY, YOU KNOW, THAT THAT 4.4, LET'S JUST USE THAT 4.4 'CAUSE THERE'S NOTHING IN THERE BEFORE.
'CAUSE I DON'T KNOW WHAT THE 4.4 WAS PRIOR TO US KNOWING WE WERE $9 MILLION IN THE, IN POSITIVE YOU UNDERST SHARE'S MENTS.
BASICALLY WHAT I UNDERSTAND YOU'RE SAYING IS WHEN WE APPROVED BUDGET, THE, UH, IN NAP APRIL, WE HAD RECOMMENDATIONS OF WHERE MONEY WAS GONNA BE SPENT FROM.
AND THAT'S WHAT YOU WANNA SEE NOW, WHAT'S CHANGED FROM THAT DOLLAR AMOUNT TO EXACTLY THAT.
AND I WOULD LIKE TO, YOU KNOW, JUST BECAUSE, YOU KNOW, WE'VE GOT TWO FIRE STATIONS AND A COURTHOUSE TO BUILD.
I JUST WANT TO MAKE SURE WE'RE BALANCING THE, THE NEEDS
AND MR. PETER, MR. CHAIR, IS THERE ACTION IN THE BOARD MEETING REGARD WHEN YOU WERE FINISHED? I WAS GONNA, UH, VISIT THAT, UM,
[00:30:02]
IT'S, UH, I'M LOOKING FOR IT NOW.I BELIEVE THERE WAS A ACTION IN A BOARD PACKET, UH, D O S PACKET, UM, ABOUT APPROVING THIS ALLEGATION.
ALLEGATION, UH, FIND HERE SECOND.
I HAVE IT, I THINK THE ACTUAL MOTION IS MADE IN OCTOBER, BUT YOU TELL ME, UM, I THINK THIS MAYBE WOULD BE REFERRED TO PRESENTATION ON THE 2023 HEARING FUND BALANCE PROJECTIONS AND FUND BALANCE ASSIGNMENTS.
THE BOARD IS TO RECEIVE INFORMATION ON PRELIMINARY GENERAL FUND RESULTS BASED ON INFORMATION THE COURT IS REQUESTED TO APPROVE ASSIGNED USES OF GENERAL FUND BALANCE AS THIRD MEETING ONE.
SO IT LOOKS LIKE THE BOARD WILL BE ASKED TO APPROVE THESE, UH, AT LEAST ON A TENTATIVE BASIS BECAUSE THESE ARE NOT FINAL, THESE ARE PRELIMINARY RESULTS, BUT THE IDEA WOULD BE TO PROVE THIS AND THEN TRUE IT UP AT THE END IF THERE'S ANY ADJUSTMENTS FROM THAT POINT.
SO CRACK THE, IS THAT THE UNDERSTANDING? YES.
I BROUGHT THIS UP IN MY TWO BY TWOS THAT I, I'D LIKE TO SEE THAT NUMBER.
SO, BUT AS LONG AS WE CAN, THERE'S ANOTHER, IT'S NOT FINAL YET, THAT'D BE GREAT.
BUT WE'LL BE ASKED, THE BOARD WILL BE ASKED TO, UH, CONSIDER WHETHER OR NOT WE APPROVE THESE.
SO IF YOU, I MEAN, IF YOU, IF YOU ADDING THE COLUMN, SO THE CHANGES, BUT FOR THE NEXT MEETING OR WHATEVER.
BUT IF YOU LOOK, IF YOU EYEBALL THIS REALLY QUICKLY, UM, THERE'S ABOUT, THERE, THERE, THERE'S, SEE, WELL, A COUPLE THINGS WHERE IT SAYS F Y 24 CAPITAL PROJECTS, YOU ADD THAT IN THE LINE BELOW IT, WE'RE INCREASING BY ABOUT 4 MILLION IN THE LINE BELOW THAT FUTURE TRANSPORTATION ABOUT A MILLION.
AND THEN SKIP TWO DOWN, FUTURE C I P, BUT ABOUT 5 MILLION, THAT'S ABOUT 10 MILLION RIGHT THERE.
SO BASICALLY IT'S BEING PUT TOWARD FUTURE SAFETY PROJECTS AND IT'S BEING ASSIGNED NOT COMMITTED, AND IT'S JUST BEING EARMARKED AND SET ASIDE IF YOU'LL SO EFFECTIVELY VIRTUALLY THE ENTIRE OPERATING SURPLUS IS BEING SET ASIDE FOR FUTURE CAPITAL SPENDING.
UH, BUT, BUT I'M GONNA MAYBE SUGGEST THAT WE CAN DROP THE FY 24 IN FRONT OF THE COUNTY PROJECTS SCHOOLS SO THAT WHENEVER IT'S NEEDED, IF IT'S NEEDED, IT CAN BE DRAWN DOWN, BE NEEDED, 24 BE NEED 25.
IT COULD BE TOWARD THE COURTHOUSE IN A COUPLE YEARS, COULD BE TOWARD THE HIGH SCHOOL IN A COUPLE YEARS.
IT'S JUST, IT'S AVAILABLE BEING SET ASIDE, UM, SET WITHOUT BEING OVERLY SPECIFIC ABOUT WHERE IT'S GONNA GO.
SO THAT'S EFFECTIVELY WHAT'S BEEN GOING ON HERE.
NOW THE OTHER THING I MIGHT PUT UP FOR DISCUSSION, UM, WE TALKED ABOUT THE REVENUE STABILIZATION FUND BEING, UH, PERMITTED AS OPPOSED TO A SIGN.
UM, IT'S BASICALLY A SET ASIDE THAT THE BOARD HAS DECIDED TO DO, SET ASIDE FUNDS TO STABILIZE REVENUES IN THE CASE OF A RECESSION OR SOME EXTRAORDINARY ITEM.
SO WE DON'T HAVE TO FIRE PEOPLE IF IT'S A ONE YEAR KIND OF THING.
UM, THIS KIND OF SPACKLES IN THAT DROP.
UM, BUT COMMITTED IN MY MIND MEANS THAT IT, IT MAY BE WHERE WE'VE SIGNED THE CONTRACT TO PAINT THIS ROOM AND WE'VE COMMITTED MONEY TO TO, TO DO THAT.
IN THIS CASE, THE BOARD TOOK ACTION TO SET IT ASIDE.
THE BOARD CAN TAKE ACTION TO DRAW IT DOWN.
THE BOARD CAN TAKE ACTION TO TAKE IT ALL OUT OF THERE.
THE BOARD CAN TAKE ACTION TO CHANGE THAT POLICY OF 3%.
IT'S STILL UNDER THE BOARD'S CONTROL.
SO IS IT TRULY COMMITTED OR IS IT REALLY JUST A SIGN AND AS A PLACEHOLDER AND SET ASIDE, UH, WITH SOME RULES ABOUT HOW YOU CAN TAKE IT OUT AND PUT IT IN.
UM, THAT'LL COME IN LATER WHEN WE TALK ABOUT, UH, CHANGES TO THE FINANCIAL POLICIES BECAUSE, UH, I'M GONNA INTRODUCE AMONG OTHER THINGS THE CONCEPT OF, UH, A MINIMUM AVAILABLE RESERVES, AVAILABLE RESERVES MEANING ASSIGNED AND UNASSIGNED BECAUSE THEY'RE BOTH AVAILABLE FOR THIS BOARD TO TAKE ACTION WITH.
AND THE REASON I'VE BEEN INTRODUCING THAT IS IT'S A CONCEPT THAT THE CREDIT RATING MEANS HE'S LOOK AT AND SAY, IF THE COUNTY GOT IN TROUBLE, WHAT ARE ITS AVAILABLE RESOURCES TO MEET THAT NEED? AND WE COULD CERTAINLY RECLASSIFY, WE COULD EMPTY, WE COULD DO A LOT OF DIFFERENT THINGS WITH EITHER A SIDE OR ON A SIDE.
AND SO THEY'RE BOTH AVAILABLE.
SO LATER ON I'M GONNA BE INTRODUCING THAT CONCEPT.
AND IF WE LEAVE THE REVENUE STABILIZATION FUND IS COMMITTED, THEN IT'S, WE'RE SAYING IT'S NOT AVAILABLE FOR THIS BOARD TO USE.
AND I THINK THAT MAY BE A MISCHARACTERIZATION AT SOME POINT.
SO WITHOUT BEING TOO LIBERAL AND FAST ON THIS, UH, IF WE WERE CHANGE THAT COMMITTED FOR THE R S F, THE R S F, UH, CHANGE IT FROM COMMITTED TO A SIGN, IT WOULD DROP ADDITIONAL FUNDS DOWN TO THE SIDE, DROP ADDITIONAL FUNDS AVAILABLE BECAUSE IT WOULD BE AVAILABLE.
AND, UH, THE ARE THE IMPLICATIONS THAT FROM, FROM THAT REASSIGNMENT, IF YOU'LL, SO
[00:35:01]
THOUGHTS ON THAT.ON RECLASSIFIED, THE R S DID THESE ALREADY FLOAT THROUGH THE PROPOSED EDITS TO THE FINANCIAL MANAGEMENT POLICIES? NO, THIS IS THIS THE SECOND.
THEN THE SECOND PIECE TOO IS, IS THERE ANY REASON WHY FISCAL YEAR 24 WAS DESIGNATED IN THAT WAY OR HAS IT JUST BEEN FLOWING THROUGH 23, 22, 21 AND HISTORICALLY? WELL THE AMOUNTS FOR F THAT ARE LISTED AS F Y 24 ARE WHAT WAS ACTUALLY ADOPTED AS THE GENERAL FUND TRANSFER FOR 24.
SO THAT'S SEPARATE FROM THE FUTURE C I P PROJECTS BECAUSE THAT'S MORE DOWN THE ROAD GUESSES OF HOW MUCH MONEY WE'RE GONNA MAKE.
BUT I MEAN, WE COULD CONDENSE ALL I DO LIKE THE FLEXIBILITY CONCEPT THOUGH.
SO FOR INSTANCE, WE JUST COVERED THE ANNUAL RESULTS AND WE SAW THAT THERE'S A TRANSFER OF 7 MILLION NOW THAT POTENTIALLY COULD HAVE COME FROM THE F Y 23 C I TIME BOUND, BUT WITH A 17 BILLION OPERATING SURPLUS DIDN'T NEED TO.
SO THAT'S, THAT MAY OR MAY NOT HAPPEN AGAIN.
THIS WOULD GIVE US THE FLEXIBILITY.
24, IT'S THERE IF WE NEEDED 24.
IF WE DON'T, GREAT, BUT IT'S THERE.
AND WE SHOULD HAVE SET ASIDE, ASIDE THAT IF WE APPROVED IT IN A BUDGET SHOULD BE SET ASIDE AT LEAST THAT MUCH IN THOSE RESERVES.
BUT WHETHER IT'S THIS YEAR, NEXT YEAR OR THE YEAR AFTER, WHENEVER IT'S BEST NEEDED, I GUESS THOSE ARE SOME THOUGHTS.
ADDITIONAL THOUGHTS ON THOSE PROPOSED REVISIONS TO THE NUMBERS MR. CHAIR? YES SIR.
THERE SEEMS SO KNOWING WHAT WE TALK ABOUT A LOT, THIS IS WHERE FUTURE BOARDS COMING AND YOU KNOW, THEY MAY HAVE THE SAME PHILOSOPHIES.
IT IS THIS A YEAR TO YEAR COMMITTED BECAUSE WHAT, WHAT I STRUGGLE WITH IS, I, I DO THINK YOU SHOULD HAVE YOUR RE DAY FUND AND IT SHOULD BE AS A LAST RESORT, YOU KNOW, BREAK, BREAK GLASS IN CASE OF EMERGENCY KIND OF THING.
WHAT'S THE BENE HOW, HOW DO YOU ENSURE THAT THAT HAPPENS? RIGHT, THAT'S A GOOD POINT.
UM, THE REPUTATION, UH, THE RAINY DAY FUND, UM, SOMETIMES IT'S PUT IN WHAT THEY CALL LOCKBOX AND SOMETIMES THEY PUT IT IN A SHOE BOX WITH A TOP OFF.
UM, THIS
SO THOSE RESTRICTIONS ARE IN THE FINANCIAL POLICY.
SO IT'S NOT SO IT, IT IS ATTEMPT TO MAKE IT MORE LIKE A LOCKBOX THAN JUST THE SHOEBOX WITH THE TOP OFF.
SO IT'S NOT JUST ACCESSING ANYTIME YOU FEEL LIKE IT, MAKE SURE IT'S RAINING.
UH, THE STATE HAS A LITTLE DIFFERENT APPROACH, RIGHT? THEY CAN ACCESS THE RAIN DAY FUNDS FOR THE SUN'S SHINING AND WE DIDN'T THINK THAT WAS APPROPRIATE.
SO I GUESS THE QUESTION FOR ME, SO IS THIS, WAS THIS NEW SAY LAST CALL THIS YEAR, THIS COMMITTED FUND ASSIGNMENT? OR HAS THIS PROCEEDED THE ESTABLISHMENT OF AN R S F UH, WAS DONE BEFORE I WENT UP TO NEW YORK TO MEET WITH THE RATING AGENCIES.
'CAUSE THEY'D LIKE TO SEE RAINA DAY FUNDS, THE REVENUE STABILIZATION FUND CALLED THAT REVENUE STATE.
THE STATE HAS ONE, A LOT OF THE COUNTIES HAVE ONE, ALL THE AAA HAVE ONE.
SO WE WANTED TO BE ABLE TO HAVE THEM CHECK THAT BOX AND SAY, YES, WE HAVE A REVENUE STABILIZATION FUND.
SO THAT'S WHY IT WAS ESTABLISHED.
THEN THE THOUGHT WAS, LOOK, KIND OF RESTRICTIONS DO YOU PUT ON IN TERMS OF WHEN IT CAN BE ACCESS, HOW DO YOU DEFINE RAIN? MM-HMM.
UM, AND SO WE TOOK AN ATTEMPT AND YOU'LL SEE SOME MORE CHANGES AS WE GET TO FINANCIAL POLICY, UM, WHERE I'M SUGGESTING SOME CHANGES ON HOW AND WENT TO ACCESS IT AS WELL.
AND THE ESTABLISHMENT GOES BACK, YOU KNOW, SIX OR EIGHT YEARS.
THAT'S AN IMPORTANT PIECE OF THE PUZZLE.
UM, AND WE SET IT UP AS A PERCENTAGE OF THE BUDGET.
SO AS THE BUDGET GROWS, IF THE BALANCE IN THERE NEEDS TO GROW MM-HMM.
WELL, AND I'M GONNA ASK FOR AN OPINION MR. TRIP, BUT, UH, IF WE HAD A SITUATION THAT WE TRULY VIEWED AS A RAINY DAY, THAT SINGLE LINE ITEM WOULD BE ONE OF 20 THAT WE WOULD BE WORKING ON ADJUST.
I MEAN, TELL ME IF I'M INCORRECT.
NO, YOU'RE NOT GOING BACK TO 2020 PANDEMIC.
WE APPROVED THE BUDGET IN APRIL OF 20 AND BY MAY JUNE IT WAS CLEAR THAT THE ENTIRE ECONOMY WAS SHUT DOWN.
RATHER THAN TAP THE RAINY DAY FUND, WE CUT EXPENSES 8% ACROSS THE BOARD OF PUBLIC SAFETY.
WE, WE CUT REVENUE EXPECTATIONS 8% ACROSS THE BOARD.
SO YES, THE 3% OF BUDGET, WE CUT REVENUE EXPECTATIONS BY 8% AND EXPENSES TO GO WITH IT RATHER THAN TAP THAT.
AND THEN IF THINGS TURN OUT WORSE THAN WE THOUGHT, THAT'S ALWAYS AVAILABLE.
IT DOESN'T HAVE TO BE SHOULDN'T PAID EVEN IF IT IS HAVE TO TAKE IT OUT.
BUT THAT'S WHY, THAT'S WHY I PERSONALLY THINK THE LOCKBOX TERM GETS MISCONSTRUED IS THAT IS A VAULT THAT WE ONLY ACCESS IN THIS SITUATION.
[00:40:01]
I JUST, I THINK I WANT TO CONVEY TO EVERYBODY INVOLVED WITH THE COUNTY THAT WE'RE GONNA BE PULLING DOZENS OF LEVERS, NOT A LOCKBOX LEVER IN A DOWNTURN.AND IT IS THAT 3 MILLION OR THREE AND A HALF MILLION IS COMMINGLED WITH ALL THE OTHER GENERAL, IT'S NOT EVEN IN ITS OWN BANK ACCOUNT.
SO I MEAN WE KEEP IT SEPARATELY IN OUR FUND BALANCE ALLOCATION.
AND IT'S MY POINT JUST 'CAUSE WE WOULD DOESN'T MEAN SOMETHING ELSE
THAT'S ALWAYS THE REALITY IS, IS YOU KNOW, WE CAN'T CONTROL 'EM BEHIND THE HANDS.
AND WHAT I MEANT WITH THE RADIATION IS, UM, THEIR RATING IS WHAT THEY VIEW AS BANKRUPTCY REMOTENESS.
SO TO GET A VERY HIGH RATING, YOU HAVE TO BE VERY REMOTE FURTHER AWAY FROM THE CLIFF.
AND, AND I SAID, WELL IF, IF A RECESSION HITS DISASTER HITS AND A REVENUE ASSESSED VALUES AND OUR REAL ESTATE DROPS 10% AND A REVENUES DROP 10%, THE BAD NEWS IS WE'LL END UP WITH A BALANCED BUDGET BECAUSE WE'RE RUNNING A 10% SURPLUS.
AND IF IT GETS RAINED EVEN MORE AND IT'S DOWN 20%, THEN, YOU KNOW, SO YOU GO THROUGH ALL THAT MATH, WELL WE'VE GOT 25 MILLION UNASSIGNED, IT ISN'T EVEN NEEDED.
YOU KNOW, SO IT WENT THROUGH ALL THOSE THINGS.
THAT'S WHERE WE GOT THE AAA, THEY SAID, OKAY, SO THAT RANGE, THE R S F CHECK THE BLOCKS THAT WE HAVE ONE, UH, WE LOCK IT UP A LITTLE BIT.
UH, BUT THERE TO YOUR POINT, THERE'S A LOT OF OTHER LEVERS BEFORE YOU GET TO THAT POINT.
AND OF COURSE ONE IS JUST TAKING ACTION ON THE ANNUAL BUDGET IMMEDIATELY BECAUSE WE CAN MEET IN ANY MONTH AND SAY WE'RE GONNA ADJUST THE BUDGET.
UM, SO I'M GONNA KEEP MOVING HERE.
ANY OTHER THOUGHTS OR QUESTIONS ON THAT? BECAUSE, UM, BEFORE WE MOVE OFF OF THAT, I GUESS IF THERE'S NO ADDITIONAL DISCUSSION, I'LL ENTERTAIN A MOTION TO RECOMMEND TO THE BOARD OF SUPERVISORS EITHER APPROVAL OR AMENDMENT OF THIS AS PRESENTED.
SO IS THERE, UM, A MOTION TO SOMETHING TO THAT EFFECT? UH, I MOVE RECOMMENDED TO THE BOARD AS PRESENTED.
ALRIGHT, SO JUST BE CLEAR, WE JUST RECOMMENDED THAT THE BOARD ON THESE PRELIMINARY RESULTS DO AN INITIAL ALLOCATION.
SO THIS ISN'T LOCKING US IN, BUT IT'S SAYING WE GOTTA DO SOMETHING WITH THIS SURPLUS.
UH, NEXT ITEM ON AGENDA IS, UH, TO CONSIDER AMENDMENTS TO THE FINANCIAL POLICIES.
UM, WE'VE ALL HAD A COPY OF THE POLICIES, UH, CIRCULATED IN ADVANCE.
UM, LOOKS A LITTLE SOMETHING LIKE THIS AND, UH, ARE, ARE YOU GONNA WALK US THROUGH THIS AS WELL? SURE.
UM, WHEN WE HAD TWO BY TWOS WITH MR. PETERSON, WE TALKED BRIEFLY ABOUT THIS.
SO I HAVE GONE AHEAD AND MADE SOME SUGGESTED CHANGES, BUT WE'RE GONNA REVIEW THEM WITH EVERYBODY AND IF ANYBODY SEES ANYTHING TO CHANGE, WE CAN DO THAT.
UM, THIS IS AN 11 PAGE DOCUMENT, BUT THIS IS PAGE ONE AND THIS IS PAGE TWO OF THE TABLE OF CONTENT.
THESE ARE VERY, VERY HIGH LEVEL GENERIC OBJECTIVES.
UM, DO WE WANNA GO THROUGH IT IN DEPTH? I MEAN, YOU'VE GOT IT IN FRONT OF YOU.
UH, WE'LL GO STRAIGHT TO THE CHANGES TO ANSWER THAT QUESTION.
WHAT'S GONNA BE ASKED OF US? I THINK PROBABLY TO APPROVE THE RECOMMENDED CHANGES, I THINK WE NEED SOME, MAYBE NOT TOTALLY GOT RIGHT.
I DON'T THINK ANYONE'S LOOKING TO CHANGE THE OBJECTIVES, UM, BUT FEEL FREE TO REVIEW THEM.
LET US KNOW IF YOU WOULD LIKE TO SEE ANYTHING ADDED.
UM, 'CAUSE THIS WENT OUT LAST WEEK.
UM, MS. CHAIR, CAN I JUST ADD ONE COMMENT SOONER THAN LATER SO I DON'T FORGET? UM, CAN I, I DON'T KNOW IF A MOTION NEEDS TO BE MADE, BUT I THINK THE RED LINE IS CRITICALLY IMPORTANT TO POLICY CHANGES LIKE THIS IN, IN NOT JUST US UNDERSTANDING IT, BUT IF, IF IT GETS POSTED IN A PUBLIC FORUM, PEOPLE UNDERSTANDING IT.
I I LOVE THIS RED LINE DOCUMENT FOUND ITS WAY INTO YEAH.
AND, AND IF IT ALREADY DOES, I APPRECIATE IT, BUT I THINK SO MUCH SO OFTEN YOU'VE GOTTA PRINT THE LAST ONE AND THE MOST RECENT ONE AND THEN IT'S, IT'S SORT OF BEEN A LAWYER.
YOU'RE ON A POINT, AND THIS IS SOMETHING THAT I WAS GONNA BRING UP AS WELL, WHICH IS YOU'VE IN, WE'RE GONNA GO THROUGH SOME RECOMMENDED CHANGES THAT SHOW THE RED LINE AND WE CAN DISCUSS, AND IF WE HAVE A CONSENSUS AROUND THESE CHANGES, PERHAPS AT OUR NEXT B O S MEETING OR SUPERVISOR MEETING, YOU CAN CERTAINLY IN ADVANCE THE RED LINES AND ASK THE BOARD TO APPROVE THOSE POLICY CHANGES AT THE NEXT BOARD MEETING.
THERE'S NO URGENCY WE WANT TO HELP CONSENSUS AROUND THIS.
UH, MY, MY SHADOWS ARE GROWING PRETTY LONG.
I, MY TENURE ON THIS, I WANTED TO TRY TO GET SOME OF THIS ACCOMPLISHED.
SO, BUT I DO LOVE THIS PRESENTATION AROUND POLICY AND MAYBE IT'S SOMETHING WE GET
[00:45:01]
EVEN BROADER ON OVER TIME.WE GET YOU DEADLINE BEFORE THE NEXT QUARTER MEETING, BEFORE YOU'RE ASKED TO CONSIDER YEAH.
UH, MAYBE IF WE CAN DEVELOP A CONSENSUS IF THERE'S ADDITIONAL CHANGES OR AMENDMENTS BEYOND THAT, WE CAN MAKE THOSE TO THE RED LINE AS WELL.
JUST BEYOND WHAT WE'RE HEARING AND RED LINE FOR THE PUBLIC WATCHING RED LINE IS MR. CHAIR? YES SIR.
THE LAST DOCUMENT ONLY SHOWING THE SPECIFIC CHANGES IN RED, UM, JUST SINCE WE ARE LIVESTREAMED.
SO THE RED LINE IS WHAT WE'VE GOT UP HERE.
UM, THE FIRST CHANGE THAT WE'RE LOOKING TO MAKE IS WE INITIALLY IN OUR POLICY WE'RE TALKING ABOUT, UM, TALKING ABOUT JUST OVERALL A BALANCED BUDGET.
UM, WE'RE LOOKING TO ADD THE WORD STRUCTURALLY BALANCED BUDGET, WHICH FOCUSES MORE ON THE OPERATING REVENUE AND EXPENDITURES RATHER THAN ANY USE OF FUND BALANCE TO BALANCE THE BUDGET.
THE WAY OUR POLICY WAS WRITTEN BEFORE THIS CHANGE, YOU CAN SEE AT THE END IT SAYS INCLUDING USE OF FUND BALANCE.
UM, WE'D LIKE TO TAKE THAT OUT.
UM, THAT'S JUST HOW, UH, IT'S TOO EASY TO BALANCE A BUDGET WITH FUND BALANCE ALL.
IT MAKES IT A MUCH SOUND BUDGET.
YOU'RE NOT CONSIDER THAT AS A BALANCED BUDGET.
A COUPLE THINGS REAL QUICK ON THIS.
WHAT WE'RE DOING IS WE'RE INTRODUCING THE CONCEPT OR NOTION OF A STRUCTURALLY BALANCED BUDGET AS OPPOSED TO A SIMPLY BALANCED BUDGET.
BALANCED BUDGET CAN BE BALANCED, ISSUING DEBT, DRAWING DOWN RESERVES.
THERE'S A LEVER OF DIFFERENT WAYS TO COME UP.
AND THE STATE ONLY REQUIRES STATE CODE A BALANCED BUDGET, NOT A STRUCTURALLY BALANCE BUDGET.
WHAT WE'RE SUGGESTING IS INTRODUCING THE CONCEPT THAT OUR ANNUAL OPERATING REVENUES WILL EQUAL OUR ANNUAL OPERATING EXPENSES, AND THAT'S A STRUCTURAL BALANCE, BUT EXCLUDING ANY DEBT, UH, ISSUANCE OR DRAW DOWN OF RESERVES IT, YOU KNOW, GAMESMANSHIP TO BE ABLE TO BALANCE BUDGET DOWN.
NOW, ONE OF THE THINGS WE CAN TALK ABOUT THOUGH IS, UM, IF IT IS RAINING AND WE TAP THE RAINY DAY FUND TO BALANCE THE BUDGETS, A REVENUE STABILIZATION FUND, SHOULD THOSE DRAW DOWNS OF THE R S F THAT 3% BE INCLUDED WITH REVENUES? BECAUSE WE'RE DOING IT INTENTIONALLY TO STABILIZE AND THERE'S A REPLACEMENT PROVISION THAT SAYS YOU GOTTA REPLACE THESE FUNDS.
CAN THAT BE VIEWED AS SUB, UH, A JUSTIFIED SUBSTITUTE FOR ANNUAL REVENUES TO GET US THROUGH WHAT'S WOULD BE VIEWED PROPERLY AT THE TIME AS A TEMPORARY ISSUE AS OPPOSED TO YOU IT'S RAINING AS OPPOSED TO IT'S SUN SHINING.
SO THAT WE MIGHT INCLUDE, AND I WOULD ALSO SUGGEST THAT WE, UH, CAN EXCLUDE, AND I DON'T KNOW IF THIS IS IN THERE OR NOT, EXCLUDE THE, UH, THE C I P TRANSFER.
SO FOR INSTANCE, UM, EVERY YEAR WE TRANSFER ABOUT 7 MILLION AND THAT'S IN OUR, ON OUR BUDGET.
IT'S IN OUR ADOPTED BUDGET THERE.
SO DO WE WANT TO BALANCE THE STRUCTURAL BALANCE, THE REVENUES, EXPENSES ABOVE THAT LINE, EXCLUDING ANY CAPITAL EXPENDITURES THAT ABOUT ANNUAL OPERATING? YEAH.
SO IF WE SAY, OKAY, ROLL DOWNS, THE R S F ARE OKAY, EXCLUDING C I P TRANSFERS, SO THAT YOU'RE REALLY TRYING TO GET CAPTURE REALLY JUST THE OPERATING HEALTH ACCOUNT.
DOES THAT MAKE SENSE? IT DOES.
AND, AND MR. MR. CHERRY, THE REASON WE WOULD DO THAT IS IT'S A TRUER REPRESENTATION OF ACTUAL CASH FLOW.
FINANCIAL COUNCIL IN THE COUNTY.
I WANNA MAKE SURE WE DON'T WANDER OFF THE PORCH BY USING ARTIFICIAL MEANS TO, TO, DOES THAT MAKE SENSE? YES.
STAFF OKAY WITH THAT? IS THAT OKAY? DO YOU BREAK DOWN SOME OF THOSE CHANGES AND WE CAN ADD THAT.
UM, AND THEN I DON'T KNOW IF YOU NEED TO ADD, UH, WHAT YOU, THE RED LINE YOU DID STRUCTURALLY AND THREE, DID YOU NEED TO ADD THAT IN TWO AS WELL WHERE IT SAYS TWO WE STRUCTURALLY BALANCED BUDGET? YEAH.
IF YOU WANNA JUST THROW THAT WORD IN THERE.
I GUESS MAKE SURE FOLKS UNDERSTAND, BUT WE'RE STRUCTURALLY BALANCE BUDGET.
UH, OTHER THOUGHTS ON, UH, ON THIS FIRST CHANGE? UH, LET'S INTRODUCING THE CONCEPT OF STRUCTURING BALANCE BUDGET, WHICH I THINK IS APPROPRIATE, HOW WE DO IT IF THIS CREATES SOME PROBLEMS BEYOND ADJUSTED, BUT I THINK INTRODUCING THE CONCEPT OF GETTING THE DOCUMENT MAKES SENSE.
OUR NEXT CHANGE WAS, UM, ADDING A LITTLE MORE WORD TO WORDS TO THE CAPITAL IMPROVEMENT BUDGET POLICIES WHERE, UM, IT'S JUST MAKING CLEAR THAT WE HAVE A 20, 25 YEAR PLAN.
WE ONLY ADOPT THE FUNDING FOR THE FIRST YEAR.
WE PLAN THE FUNDING FOR THE NEXT FOUR YEARS, WELL, FIRST FIVE YEARS.
UM, SO WE'RE JUST KINDA ADDING SOME MORE DETAILS INTO THIS.
SO WE WILL DEVELOP A FIVE YEAR FUNDED PLAN FOR CAPITAL IMPROVEMENTS TO BE REVIEWED AND UPDATED EACH YEAR AS PART OF A 25 YEAR PLAN.
SO JUST TO BE CLEAR, WE'RE SAYING WE'RE KEEPING THE 25 YEAR C I P WE'RE CHALLENGING OURSELVES TO FIND REVENUE SOURCES TO FUND THE FIRST FIVE YEARS, BUT THE ENTIRE PLAN, IF YOU LOOK AT IT, IS OVER $610 MILLION.
AND TRYING TO IDENTIFY $610 MILLION WORTH OF SOURCES IS JUST A LITTLE STAGGERING FOR THE FIRST FIVE YEARS WE FEEL IS IMPORTANT.
[00:50:01]
BY YEAR SIX, SEVEN OR EIGHT THINGS MAY CHANGE.ECONOMIC DEVELOPMENT RECESSIONS, AN AWFUL LOT OF THINGS COULD CHANGE NOW.
UM, SO ALL THIS SAYS IS, YOU KNOW, MAKE SURE YOU HAVE, YOU KNOW, WE'RE NOT, WE'RE NOT APPROPRIATING, YOU KNOW, WE'RE NOT APPROVING.
WHAT WE'RE SAYING IS IDENTIFY SOME POTENTIAL SOURCES.
UM, ARE WE, YEAH, I DON'T WANT TO ADDRESS INAPPROPRIATE INTER RIGHT AHEAD, INAPPROPRIATE WAY.
UM, THE ONLY CONCERN I HAVE IS FROM TWO POINTS WE'VE DEALT WITH IN THE LAST YEAR AND I'VE SEEN IN THE FINANCIAL MARKETS IS FIVE YEAR TERMS ARE NOW THREE YEAR TERMS ACROSS THE BOARD.
YOU'RE NOT SEEING FIVE YEAR MONEY OUTSIDE OF THE CAPITAL MARKETS.
SO, YOU KNOW, THERE MIGHT BE FUNDING SOURCES WE USE THAT ARE, UM, BANK THAT, YOU KNOW, OTHER ALTERNATIVE SOURCES, UM, NOT THE BANK THAT FINANCE 'EM AS ALTERNATIVE IN ANY WAY.
UM, BUT I JUST, OH, AND THEN ADDITIONALLY, UM, NOT ONLY THE TERMS, BUT THE MARKETS CAN BE CLOSED AS WE'VE SEEN FOR SPECIFIC ISSUANCES.
SO I, I DON'T WANT, I I UNDERSTAND.
I THINK YOUR LAST POINT YOU JUST MADE ADDRESSES MY CONCERN, BUT THE TERM FUNDED TO BE MISCONSTRUED AS WELL TO FULLY FUNDED VERSUS APPROPRIATED AND, AND THE LIKE.
AND, AND I DON'T WANT TO MISLEAD ANY READER OF A POLICY AND YOU MIGHT HAVE TO BE CRAZY TO WANT TO DIG INTO OUR POLICIES ON YOUR OWN VOLITION, BUT NO, I AGREE WITH THAT A HUNDRED PERCENT.
THE, THE DIFFERENCE BETWEEN FUNDED OR IDENTIFIED SOURCES.
FUNDED MEANS YOU'VE ACTUALLY SIGNED COMMITMENTS YOU HAVE AND ALL THAT.
SO IT'S A LITTLE BIT TECHNICAL, BUT IT IS IMPORTANT MM-HMM.
SO I WOULD SUGGEST RATHER THAN A FUNDED PLAN, JUST HAVE IDENTIFIED THE SOURCES TO PROVIDE, YOU KNOW, TO MEET THE EXPENDITURES IN THAT PLAN.
SO THE, THE EQUIVALENT OF A SOURCES AND USES TABLE WHERE IT'S NOT A CONTRACTUALLY BOUND OBLIGATION, IT'S AN IDEA, A CONCEPT.
SO, SO I THINK BACK TO OUR LAST BUDGET RATE, THIS, I THINK I REALLY LIKE THIS 'CAUSE I THINK OF CARLY'S CONVERSATION WE HAD LAST YEAR, WHICH I KEPT LOOKING AT THE THREE COLUMNS OUT GOING, OKAY, WE'RE, WE'RE, WE'RE PLANNING FOR ONE YEAR.
I'M REALLY LOOKING AT THE HERE TWO YEARS FROM NOW AND THERE WAS NO CON THERE WAS NO CONVERSATION ON THE PLAN.
THIS WOULD, THIS WOULD UM, KICK OFF THAT CONVERSATION OF, WELL WE MAY HAVE ISSUE BONDS OR WE MAY HAVE TO DO LIKE WE, WE'LL SORT OF AT LEAST HAVE A, A, A EARMARK OF WHERE THESE ONES ARE GONNA COME FROM YES.
AND IT WILL ALSO LIMIT THE DISCUSSION ABOUT YEAR 23.
WE'LL GET THERE WHEN WE GET THERE KIND OF THING, BUT I DO THINK YEAR TWO, THREE AND FOUR, JERMAINE.
UM, I THINK I REALLY LIKE THIS.
THAT'S, UH, THAT'S REALLY IT ON THE CAPITAL IMPROVEMENT PLAN IS JUST TO, UH, FOCUS ON FIVE YEARS NOW ALL 20, BUT WE WANT TO KNOW WHAT'S OUT THERE.
SO ALL 25 YEAR PLAN THAT WILL STAY IN PLACE.
WE HAVE DEBT POLICIES TO WHICH WE'RE MAKING NO CHANGES.
UM, THAT JUST TALKS ABOUT OUR PERCENTAGES.
WE LIKE TO SAY WITHIN ARE CHANGES TO THAT, UM, FUND BALANCE RESERVE POLICIES.
WE ARE ADDING A SECTION WHERE WE DISCUSS OUR MINIMUM FUND BALANCE.
OUR CURRENT POLICY ONLY REFERS TO OUR UNASSIGNED FUND BALANCE.
AND WE'RE LOOKING TO KIND OF LIKE MR. PETERSON TALKED ABOUT EARLIER, COMBINE THAT ASSIGNED AND UNASSIGNED AND CALL THAT AVAILABLE FUND BALANCE.
WE'LL STILL HAVE THE TARGETS FOR UNASSIGNED, BUT WE'RE ALSO GONNA HAVE A TARGET FOR OUR AVAILABLE FUND BALANCE.
AND WE MADE OUR TARGET TO BE BETWEEN 55 AND 65%.
UM, AROUND 60% IS WHAT WE ARE CURRENTLY IN THE PAST COUPLE YEARS HAVE BEEN AND IT'S WHAT WE ARE AT WHEN WE GOT THE TRIPLE, TRIPLE RATING.
SO WE'RE JUST ADDING THAT PIECE IN.
UM, IT'S NOT GONNA BE HARD TO, TO MEET.
WE'RE ALREADY THERE AND WE'VE ALREADY BEEN THERE.
WE'RE JUST ADDING SOME WORDING TO KEEP US THERE.
AND, AND AGAIN, JUST AS CARL MENTIONED, UM, THIS IS SOMETHING AGENCIES LOOK AT IS WHAT YOU HAVE AVAILABLE.
UM, THE RANGE THAT WE'RE TALKING ABOUT HERE GIVES US A LITTLE FLEXIBILITY TO MOVE AROUND IN THE RANGE.
IT ALSO IS A RANGE AROUND THE LEVEL WHEN I WENT UP TO GET THE AAA.
SO WE KNOW IT'LL KEEP US INBOUND ON THE AAA RATING AND WE ALSO KNOW IT HAD BEEN FAIRLY STABLE FOR SEVERAL YEARS BEFORE THAT ON A PERCENTAGE BASIS.
NOW AS THE BUDGET GROWS, THESE PERCENTAGES WERE, BUT AGAIN, IF WE RECLASSIFY THE 3 MILLION COMMITTED R S F HAVE TO ASSIGN, THAT WILL ALSO HELP US MEET THESE BALANCES AS WELL GOING FORWARD.
SO, UM, BUT IT'S INTRODUCING A NEW CONCEPT.
IN FACT, I WOULD MAYBE SUGGEST NUMBER SIX, DEFINED TERM AVAILABLE BALANCE IS REALLY A SIGN PLUS ON, AND THEN ADD THE RED, THE RED LANGUAGE THAT SAYS, UH, THE COUNTY'S AVAILABLE FUND WILL BE, UH, IN THIS RANGE IN THE TARGET
[00:55:01]
DEVELOPMENT RANGE.DOES THAT MAKE SENSE TO, UH, I'LL ASK A CLARIFYING QUESTION.
BASED ON ANY CONTRACTUAL LANGUAGE OR POLICY LANGUAGE, THE SAFEST SITUATION TO BE IN IS THE RATING AGENCY SAID THE HUNDRED AAA COUNTIES OR MUNICIPALITIES ARE DOING THIS EXACT RANGE, THIS EXACT THING.
AND LIKEWISE, UM, YOU KNOW, THESE ARE THE LAST 10 DEALS WE'VE SEEN IN THE MARKET.
I MEAN, WHEN WE PUT A NUMBER RANGE LIKE THAT, I JUST WANNA MAKE SURE THAT IT'S, UH, EVERYBODY KNOWS THIS IS NOT COMING OUT OF THE FINANCE AND AUDIT COMMITTEE'S MINDS.
THIS IS COMING FROM THE BIGGEST ENTITIES THAT DICTATE OUR FINANCIAL, UH, SITUATION MOVING FORWARD.
AND, AND WE'RE NOT JUST SITTING IN THE BACK ROOM TRYING TO FIGURE THESE OUT.
I THINK THE SAFEST, OBVIOUSLY IS WE KNOW WHAT THEY ACCEPTED LAST TIME AS SUPPORT.
NOW, I WILL TELL YOU, WHEN I WENT UP THERE, THERE WERE SOME AREAS WHERE BOOTS WAS A SINGLE A, SOME AREAS WHERE WE WERE DOUBLE A, AND THIS WAS ONE WHERE WE WERE VERY, VERY STRONG AAA THAT HELPED OFFSET SOME OF THE SINGLE A, BUT ALSO MENTION THAT AS A COUNTY GROWS, UH, FAIRFAX FOR INSTANCE, YOU KNOW, HAS 15 OR 20%, INSTEAD OF OUR PERCENTAGE, BUT THAT'S 150 TO 200 MILLION.
THEY COULD BUILD FIVE SCHOOLS OUT CASH FOR US.
THIS LEVEL, 60%, WHICH IS MUCH MORE THAN THEIR 15, THAT 50 BANK ONLY BUILD ONE SCHOOL.
SO THEY CAN BUILD 10 SCHOOLS OUTTA CASH.
IT, IT, IT, IT, IT, IT MEANS THAT WE NEED TO HAVE A HIGHER PERCENTAGE OF BUDGET TO MEET HARD DOLLAR NUMBERS THAT ARE CATASTROPHIC IN NATURE.
WHEREAS ONCE YOU GET TO BE A BEHEMOTH AND A BILLION DOLLAR
BUT THE NOM DOLLARS ARE SO BIG THEY OVERWHELM EVERYTHING ELSE GOT.
SO IT'S NOT THAT EVERY AAA HAS A THIS LEVEL, BUT WE'RE THE ONLY COUNTY OUR SIZE THAT HAS THE AAA AND IN PART 'CAUSE WE HAVE THIS LEVEL.
SO IT ALL, ALL THE GEARS ARE CONNECTED, I GUESS.
SO, BUT MR. S WOULD YOU FEEL MORE COMFORTABLE ADDING SOME LANGUAGE TO OUR POLICY ABOUT, YOU KNOW, THIS, THE PURPOSE OF THIS IS TO PRESERVE OUR AAA RATING OR NOT REALLY? ABSOLUTELY.
AN ADVISEMENT WITH THE RAVING AGENT IN YEAH.
IN ACTIVE ONGOING ADVISEMENT WITH THE RATING.
SOMETHING EVEN THAT MORE SPECIFIC.
WELL, WE ALSO, NOT EVERY YEAR
THAT'S NOT THE WAY THE CALENDAR WORKS WITH THESE AGENCIES.
WELL, IT'S ABOUT EVERY THREE YEARS.
MR. CAN I GET ANOTHER POINT? SURE THING.
UM, JUST, THIS IS MORE OF A FORMATTING THING, IF I UNDERSTAND THIS CORRECTLY.
SO WE HAVE THE, THE HEADER MINIMUM FUND BALANCE WITH THIS, WOULD IT BE APPROPRIATE TO ADD ANOTHER HEADER FOR THE COUNTY'S AVAILABLE FUND BALANCE TO AVOID CONFUSING? BECAUSE WHEN I FIRST LOOKED AT THIS, I THOUGHT, WELL, WE'RE GOING TO, WE'RE SORT OF TAKING ON A MINIMUM FUND BALANCE AND MAYBE TAKING IT FROM HERE, WHICH ACTUALLY WOULD REDUCE THE AMOUNT THAT WE HAVE ON HAND.
BUT THAT'S NOT WHAT'S HAPPENING.
SO I'M THINKING FROM A FORMATTING PERSPECTIVE, MAKE SURE THESE ARE STATE DISTINCTLY DIFFERENT.
OH, WELL, NEIL, I TELL ME IF I'M WRONG.
UH, AND, AND, UH, CHAIR, PLEASE TELL ME IF I'M WRONG, MOVING THAT TO THE DEFINED TERM AS MR. PETERSON MENTIONED, I THINK ADDRESSES THAT ESPECIALLY CAPITALIZED OKAY.
NO, I, I UNDERSTAND THE, UH, MISUNDERSTANDING.
BUT I MEAN, IN, IN THIS, IN PROFESSIONAL STUFF THAT THE CHAIR AND I DO, THE CAPITALIZED TERMS ARE THE END ALL BE ALL.
AND THAT'S THE THING WE GO BY.
SO COULD BE AS SIMPLE AS MINIMUM FUND BALANCES, PLURAL.
AND THEN SUBHEADING OVER EACH PARAGRAPH, ONE BEING UNASSIGNED, ONE BEING AVAILABLE THAT WAY.
WE'RE LOOKING AT BALANCES HERE.
TALK AS FAST AS FEDEX COMMERCIAL.
I'VE MADE NO CHANGES TO THE REVENUE STABILIZATION RESERVE, BUT YOU MAY HAVE HAD SOME IDEAS.
I HAVE SOME THOUGHTS ON THIS, ON HOW TO DEFINE RAIN AND, AND WHEN AND HOW IT SHOULD BE ACCESSED.
I THINK IT SHOULD BE LESS SUBJECTIVE AND MORE QUANTITATIVE SO THAT IT DOESN'T LEAVE AS MUCH ROOM FOR VARIABILITY.
SO ONE THOUGHT, ONE APPROACH WOULD BE TO TIE THE ACCESS OF THAT, UH, TO OUR, OUR TO, TO DRAWING IT DOWN FOR OUR BUDGET FOR EITHER THE CURRENT YEAR OR THE, OR THE FUTURE YEAR IN, IN TWO WAYS.
ONE FOR THE CURRENT YEAR THAT IF WE TAKE A LOOK, UM, EIGHT YEAR HALFWAY THROUGH, IF THE ACTUALS
[01:00:01]
REALIZED HAVE DROPPED BY 3% VERSUS OUR BUDGET EXPECTATION.SO THERE'S ACTUALLY A DECLINE.
UM, AND I'M GONNA TIE THAT TO YEAR OVER YEAR AS OPPOSED TO, VERSUS WHAT WE WERE HOPING FOR.
'CAUSE YOU COULD HOPE FOR 10% ONLY GET EIGHT AND GO, OOPS, IT'S RAINING.
SO IF YOU TIE IT TO A YEAR OVER YEAR CHANGE AND SAY THIS FIRST HALF OF THIS YEAR WE'RE RUNNING BEHIND LAST YEAR, THEN I WOULD SAY THAT'S BEEN RAIN FOR THIS YEAR.
SO MAYBE THE SECOND HALF OF THAT YEAR YOU COULD ACCESS IT.
THE OTHER THING IS FOR THE COMING YEAR, IF YOU THINK ABOUT OUR BUDGET CYCLE, WE, UH, ADOPT THE BUDGET IN APRIL IN FULL VIEW OF THE ASSESSMENTS THAT WERE DONE IN JANUARY.
ASSESSMENTS ARE DONE, CALENDAR BUDGETS, APPROVED FISCAL.
WE HAVE A WINDOW FROM JANUARY TO APRIL TO KNOW WHETHER THE ASSESSMENTS ARE GOING UP, DOWN, OR SIDEWAYS.
AND IN FULL VIEW OF THAT FOR THE COMING FISCAL YEAR, THE NEXT FISCAL YEAR, THE ONE THAT WE ADOPT IN APRIL, IF THE ASSESSMENTS IN JANUARY SHOW IT DECLINE 3%.
SO THEN YOU'RE TYING IT TO VERY MEASURABLE THINGS THAT SAY, YES, IT'S RAINING AND YOU CAN ACCESS IT WHEN YOU NEED IT.
DOES THAT MAKE THOSE CONCEPTS MAKE ANY SENSE? WHEN CAN I ACCESS IT THIS YEAR? WELL, WE'RE RUNNING WAY BEHIND LAST YEAR.
I CAN ACCESS IT FOR NEXT YEAR OFF THE ASSESSMENT SHOW.
YOU'RE GONNA COLLECT LESS FOR NEXT YEAR AND YOU PROBABLY, MAYBE YOU'D HAVE, YOU KNOW, YOU ABILITY TO ACCESS IT.
THE QUESTION IS, HOW IS THAT DIFFERENT THAN THIS CURRENT? THIS IS A LITTLE, IS THIS A NEW SECTION? YOU'RE NOT SEEING ANY RED LINE HERE? THIS IS THE EXISTING, THIS HAS BEEN WHAT WE'VE BEEN OPERATING UNDER.
UM, IT, IT TRIED TO DEFINE RAIN.
IT SAYS THIRD OR FOURTH QUARTER FORECAST, GENERAL FUND REVENUES, UM, EXCLUDING USE OF FUND DOLLARS TO DECLINE BY MORE THAN 1.5%.
FROM WHAT? FROM THE BUDGET FROM PRIOR YEAR.
UM, AND RATHER THAN LOOK AT IT EVERY QUARTER AND TEST IT, TEST IT, LET'S JUST TAKE A PEEK HALFWAY THROUGH HOW WE RUNNING BEHIND LAST YEAR OR NOT.
UM, SAME CONCEPT, JUST SIMPLIFY IT AND TIE IT TO QUANTITATIVE.
SAME THING FOR SUBSEQUENT, DURING THE ANNUAL BUDGET CYCLE, JANUARY THROUGH APRIL, IF REAL ESTATE ASSESSMENTS ARE FORECAST TO DECREASE, WELL WE KNOW IN JANUARY WHETHER IT DECREASED OR NOT, WE HAVE THAT INFORMATION.
SO WE, WE DON'T NEED TO LOOK AT FORECASTS FOR THE COMING BUDGET YEAR, WHICH STARTS JAN JULY 1ST.
WELL, I MEAN THE FORECAST MAY HAVE BEEN BASED ON ACTUALS FROM JANUARY'S ASSESSMENTS, BUT THE BOTTOM LINE IS HOW ABOUT JUST TYING IT TO THOSE ASSESSMENTS AS OPPOSED TO FORECASTING.
UM, SO THOSE ARE TWO SUGGESTIONS.
I'M OPEN TO, YOU KNOW, INTERPRETATIONS.
I'M TRYING TO TIE IT TO QUANTIFIED ITEMS. EITHER, YOU KNOW, ASSESSED VALUES OR ACTUAL DECLINES SO WE KNOW IT'S RAINING AND THEN MAKING IT SIMPLE.
ONLY DO IT ONCE A YEAR, UH, MAYBE TWICE A YEAR AT MOST.
AND, AND THEN HAVE THAT BE WHEN YOU CAN ACCESS IT.
NOW THE POLICY ITSELF TALKS ABOUT WHAT WE NEED TO REPLENISH IT AND THAT'S, WE DON'T NEED TO CHANGE THAT.
IT BASICALLY SAYS YOU GOT THREE YEARS TO PUT IT BACK IF YOU USE IT.
UM, AND YOU CAN ONLY USE HALF OF IT EACH TIME.
SO IF THERE'S A RECESSION YOU GO ON FOR TWO YEARS, YOU GET HALF THE FIRST YEAR.
SO, UH, THOUGHTS ON TRYING TO IMPROVE NUMBER ONE AND TWO HERE, CURRENT FISCAL YEAR AND SUBSEQUENT FISCAL YEAR ON WHEN AND HOW TO DEFINE RATE.
UH, MR. PETERSON, I THINK THE ACTUAL CONCEPT, ACTUAL CONCEPT YOU PROPOSED, UH, BY USING THAT TERM IS THE RIGHT WAY TO GO.
SECONDLY, I JUST WANT TO THROW OUT THERE IN MY MIND ANY REASONABLE ECONOMIC SCHOLAR OR PUN, UH, WHAT'S A PUNDIT WOULD SAY THESE ALIGN WITH WHAT WE WOULD CALL A RECESSION, WHICH IS GOOD MARKERS FOR US TO MAKE THESE TYPES OF ADJUSTMENTS.
UH, MR.
UM, THE ONLY QUESTION I WOULD HAVE IS BASED ON THE CHANGES WE'VE PROPOSED EARLIER IN THE LAST PARAGRAPH, IT TALKS ABOUT THE ORDER OF EXPENDITURES FUNDS.
DO WE NEED TO REMOVE THIS RESTRICTED, WHEREAS THAT'S, DOES THAT ORDER STILL APPLY THE NAME? IT'S JUST THE QUESTION.
DO WE NEED IT? I DON'T THINK WE NEED TO INTRODUCE AVAILABLE HERE 'CAUSE IT SIGNED AND UNASSIGNED OR BOTH AVAILABLE THERE SHOW AS AN ORDER HERE.
AND THE ONLY OTHER THING I WOULD SAY IS TO THE, SO I MAY HAVE SKIPPED AHEAD FOR YOUR QUESTION, BUT FOR THE SAKE TIME, UM, MUST BE REPLENISHED 3% LEVEL THREE YEARS OR WHAT? IT'S A POLICY.
EXPLAIN WHY WE COULDN'T GET THERE.
RECESSION CONTINUES, WHATEVER.
BUT THAT DOES GIVE STAFF PRIORITIES AS WE BUILD THE BUDGET OF WHERE AVAILABLE FUNDS ARE ARE ALLOCATED.
SO THAT WOULD PROBABLY BE ALLOCATED BEFORE WE MAYBE DO
[01:05:01]
SOME OF PROJECT IT IS MORE GUIDANCE.THE OR WHAT IS WE VIOLATE POLICY.
THAT'S THE ONE WHAT UH, WHAT THAT'S WORTH.
THERE ISN'T GO TO JAIL OR YES MA'AM.
SO WHEN YOU'RE THINK TALKING ABOUT FORECASTED ONLY HALF THE YEAR IS FORECASTED.
SO JUST SO YOU KNOW THAT YOU STILL WILL BE SOME FORECASTING.
THE SECOND END OF THE YEAR IS TYPICALLY ASSUMED TO BE NO CHANGE UNTIL WE HAVE RIGHT.
BUT IT'S THE FIRST HALF OF THE FOLLOWING YEAR THAT FALLS WITHIN THE FISCAL YEAR THAT HAS NOT BEEN ASSESSED.
SO YOU WON'T KNOW WHAT THAT IS AT THE TIME THAT YOU'RE DOING THIS.
LOOK, I'M A HUNDRED PERCENT THE UNDERLYING ASSUMPTION OR FORECAST IS NO CHANGE UNTIL WE HEAR OTHERWISE.
RIGHT? IF THE ASSESSOR COMES BACK AS THEY WENT UP AND WENT DOWN, IT'S KIND OF SURPRISE I WHAT HAPPENED.
THERE'S A BIT OF UNCERTAINTY, I GUESS.
IT'S NOT THE OFFICIAL ASSESSMENT, RIGHT.
ALLY? WERE FORECASTING A ELECTION RATE TOO, RIGHT? YEAH, THAT IS, THAT IS TRUE.
I MEAN AT THAT POINT YOU DON'T DUNNO.
SO I I, MY ONLY THING IS I I WOULD PROBABLY FORECAST IN THERE FORECAST.
WELL I WANT TO PROPOSE ONE, I MEAN A RECOMMENDATION IS, I AGREE WITH YOU THAT TWO DATES IN TIME IN A YEAR IS ABOUT AS MUCH AS WE EVER WANT TO ADDRESS THIS.
UM, I THINK IT'S, I I'D LOVE A SMALL TABLE THAT SAYS BASED ON ASSESSMENT, ACTUAL ASSESSMENT NUMBERS COMING IN, THIS IS THE EXPECTED DATE.
'CAUSE THEN WE CAN THEN ALIGN THAT WITH THE BOARD'S REVIEW OF THESE NUMBERS AT A CERTAIN BOARD MEETING, UH, BASED ON WHEN WE EXPECT TO HAVE THOSE SEMI-ANNUAL, UH, ASSESSMENT NUMBERS.
SO I, I MEAN I, I DON'T, SOME OF THESE AREAS YOU WANT TO REMAIN VAGUE, BUT SOMETHING TO THAT POINT, I THINK WE COULD DO OURSELVES A FAVOR BY JUST PUTTING IN A, YOU KNOW, UH, PERIOD ONE, PERIOD TWO, THIS IS THE EXPECTED DATE FOOTNOTE.
IT'S, THESE ARE BASED ON ACTUAL NUMBERS COMING IN FROM THE REVENUE, YOU KNOW, MUTUALLY COUNTY REVENUE COLLECTION.
IF THAT'S A, SO THE SUGGESTION IS TO CONTINUE TO TIE IT TO A DATE AND BEEN QUANTIFIABLE AS OPPOSED TO YEAH, I MEAN MORE SUBJECTIVE.
I, I THINK THAT'S A VALID CONCERN.
SO I WANT TO, YOU KNOW, TO ME THAT'S A PROPOSAL TO ADDRESS IT SO THAT IF WE GET NEW INFORMATION BASED ON NEW INFORMATION, THEN WE ADJUST OUR FORECAST.
IS THAT, YEAH, SO WELL WHAT I DID WAS JUST GETTING AT WAS THAT IF YOU'RE GOING BASED OFF ASSESSMENT, THE TWO OF, OF THE ASSESSMENTS FOR LIKE THIS YEAR, UM, ONE HALF OF IT IS IN THIS FISCAL YEAR.
THE NEXT HALF IS IN THE FOLLOWING FISCAL YEAR.
SO, AND MANY PEOPLE, ESPECIALLY ON THE REAL ESTATE SIDE, PAY ANNUALLY.
SO NOT ONLY ARE THEY PAYING FOR WHAT'S IN THIS FISCAL YEAR, BUT THEY'RE ALSO PAYING FOR WHAT'S IN THE NEXT FISCAL YEAR.
UM, SO IT CAN GET KIND OF COMPLICATED.
SO I THINK THERE IS SOME DEFINITE, WHAT I HEARD WAS YOU, YOU KNOW, TRYING TO ELIMINATE THE WORK FORECASTING AND I THINK, I THINK THERE IS GONNA BE SOME FORECASTING IN THERE, UH, BECAUSE THE FIRST HALF OF THE FOLLOWING CALENDAR YEAR, YOU'RE NOT GONNA KNOW WHAT THE ASSESSMENTS ARE.
UM, ALSO, UM, THE JUNE 5TH DUE DATE, IF PEOPLE ARE JUST 30 DAYS OR 60 DAYS LATE, OUR OUR, YOU KNOW, 97, 90 8% COLLECTION RATE, WHICH WE HAVE, WHICH IS VERY GOOD, ISN'T UNTIL ABOUT A YEAR LATER.
SO WHAT DO YOU DO WITH THAT? YOU KNOW, THAT, THAT YEAR, THAT COUNT, YOU KNOW, SO WE GO ON THE COLLECTION RATE, YOU KNOW, SO THERE'S, THERE IS GONNA BE SOME FORECASTING I AGREE IS WHAT I'M GETTING AT.
THERE IS, THERE IS A LOT OF SQUISHINESS THAN OTHERS AND SUPPORT.
UM, WHAT I'M GONNA TRY AND DO IS DISTINGUISH BETWEEN THE BUDGET ITSELF AND THE DEFINITION OF RAIN.
THE BUDGET REQUIRES AN AWFUL LOT OF FORECASTING.
GUESS WHAT? AND KENTUCKY WIND, I'M TRYING TO SIMPLIFY THE DEFINITION OF RAIN, NOT THE BUDGET, BUT RAIN AS SAYING IF TODAY WE GET NUMBERS FROM ASSESSOR AND THEY DROP BY 3%, THAT TRIGGERS SOMETHING.
AS OPPOSED TO SAYING WE'RE NOT GONNA FORECAST THE BUDGET, WE'RE GONNA BUDGET ON WHAT WE KNOW IS HARD NUMBERS.
NO, THE BUDGET IS VERY SOFT SWITCH.
BUT THE TRIGGER, I'M TRYING TO SIMPLIFY THAT.
SO NOT TRYING TO CHANGE OUR BUDGET OUTLOOK, BUT JUST THE
[01:10:01]
TRIGGER.UH, DOES THAT MAKE SENSE? THAT MAKES MORE SENSE.
SORRY, THE ONE I WAS, WHAT I WAS ENVISIONING.
I ABSOLUTELY DIDN'T DO A VERY GOOD JOB AT FIRST GO AROUND ON THAT.
WELL, I, I OVERSIMPLIFIED IT NOW THAT YOU'VE CLARIFIED.
WELL I APPRECIATE THOSE COMMENTS.
DID REALLY MEET THE ROAD ON THIS.
YEAH, I HAD NO MORE RED LINE CHANGES.
WE'VE GOT, UM, REVENUE POLICY HERE.
IT'S TWO PAGES LONG AND TRAVEL ON EXPENSE POLICIES BUT NO CHANGES.
SO MAYOR, YOU'RE BEGINNING TO SEE WHY I'VE SUGGESTED THAT WE TRY TO DEVELOP CONSENSUS NOT TO THE BOARD YET AND WE CAN GET YOU A RED LINE COPY IN ADVANCE OF EVERYTHING WE JUST TALKED ABOUT.
DOES THAT MAKE SENSE TO EVERYBODY? MM-HMM.
SO WE'LL NOT RECOMMEND ANYTHING FOR THE BOARD OF SUPERVISORS TODAY, BUT WE'LL GO BACK AND MAKE SOME REDLINE CHANGES, SUBMIT A COPY, ADDRESS IT, THEN I DO HAVE ONE.
CALL THIS NAIVE ME BEING IN MY FIRST YEAR STILL.
THE TAX AND FEE RATE MENTIONS, UM, ARE BASED ON THE COUNTY'S COST OF SERVICES AND I HATE TO SAY THIS AND THE DISCRETION OF COUNTY ADMINISTRATION AND OUR BOARD OF SUPERVISORS.
I DON'T KNOW IF WE WANT, I MEAN I JUST FEEL LIKE THERE ARE, UH, YEAH I DOUBT WE'RE GONNA HAVE REFERENDUM, UH, REFEREND ON THESE POINTS AND I DIDN'T KNOW IF WE WANTED TO BE MORE CLEAR ABOUT HOW WE'RE GOING ABOUT THIS, UH, PROCESS OF SETTING A IN TAX RATES.
IT MIGHT BE TOO GRANULAR AND THAT'S COVERED IN THE BUDGET PROCESS.
I MEAN WHEN WE GO OVER THERE, WE GO OVER ALL THAT AND, AND YOU, YOU, IF YOU KNOW WE'RE GONNA START WITH WITH WHAT OUR ANTICIPATED REVENUE'S GONNA BE, THEN WE'RE GONNA BUILD A BUDGET TO MATCH THAT.
AND BECAUSE UNLESS THE BOARD CHANGES GUIDANCE TO US, THEN WE ALWAYS START WITH THAT ASSUMPTION OF NO INCREASE OF FEES OR, OR REVENUES.
UM, THIS YEAR WE HAD THE ASSUMPTION OF LOOK TO LOWER.
SO, SO WE WORKED THAT IN AND START THERE.
YEAH, THE UH, INCREASE SURPRISE IN OUR OPERATING RESULTS.
NOT MORE THAN COVERED ABOUT TWO 3 MILLION.
HEY, HAVE WE GOT ENOUGH, ENOUGH TIME MINUTES LEFT? YEAH, LEMME DO FIVE MINUTES.
I'LL GIVE 15 MINUTES BEFORE THE NEXT MEETING.
UM, NOW WE MIGHT WANNA MAKE THIS TOPIC.
WE MIGHT MAKE IT, UM, WE CAN PROBABLY COVER THIS NEXT TIME, BUT WHAT VERY QUICKLY, UH, AT THE BOTTOM, THE REVENUE SOURCES FOR THE LAST 10 LINES OR SO SHOW THAT WE'VE IDENTIFIED REVENUE SOURCES TO MAKE ALL THE PLANNED EXPENDITURES IN THIS BUDGET.
SO WE HAVE A BALANCED C I P FOR FIVE YEARS.
WE CAN GO THROUGH THE LINE LINES LATER, BUT I BELIEVE THOSE ORANGE ONES ARE, ARE CHANGES IS THAT THE, UH, THE ORANGE ONES ARE OPERATING FUNDS, OPERATING FUNDS AS OPPOSED TO UH, CAPITAL FUNDS.
SO THERE IS THE TOP LINE OF REVENUES IS THE ORANGE LINE IS THE OPERATING, UH, TRANSFER.
LIKE THIS YEAR AS YOU KNOW, WE TRANSFERRED UH, 2023 7 MILLION.
THIS IS SHOWING THREE OR FOUR OR FIVE EACH YEAR.
SO, UH, THE EXPECTATIONS, WE'D BE ABLE TO COVER THAT TRANSFER BALANCE TO BUDGET FOR FIVE YEARS.
UM, THIS IS THE 600, I SAY 15 OR WHATEVER IT IS, ALL THE WAY OUT THE RIGHT, THE YELLOW, UH, SIX 50.
THE IDEA OF TRYING TO FIND THE SOURCES FOR ALL THAT JUST DIDN'T SEEM, THAT'S ABOUT IT FOR RIGHT NOW.
THE C I BE ASKED APPROVE THIS, NO, I'M NOT BRINGING THIS UP THE BOARD.
THE NEXT MEETING, I JUST HAD ONE RECOMMENDATION.
THE NEXT SLIDE AND TELL ME IF I'M WRONG, PLEASE.
UM, WE'VE GOT, UH, POLICY ON PERCENTAGES OF THESE TWO CHARTS.
NO THE, THE NEXT SLIDE, THERE'S TWO CHARTS ON TITLE DEBT SERVICE BY TYPE AND TITLE DEBT SERVICE BY SERIES.
YOU KNOW, IS THERE A WAY THAT WE CAN MATCH THAT? JUST PUT A SINGLE HORIZONTAL LINE ON THESE CHARTS TO SHOW PROJECTED CUSHION? 'CAUSE WE DO HAVE THE, IF WE'RE DOING A 25 YEAR PLAN, DO WE NOT HAVE THE NUMBERS TO CALCULATE PROJECTION OF THOSE RATIOS? SO THIS IS ACTUALLY JUST THE CURRENT OUTSTANDING T C S D DEBT, WHICH WAS GONNA BE YET ANOTHER TOPIC WE DISCUSSED TODAY.
THE GENERAL FUND AND THEN THE TCSD, WHICH IS SOMETHING GOT IT.
THAT MORPHS INTO OUR DISCUSSION WHICH IS GONNA USE, THAT'S GOOD TO CLEAR UP THOUGH, 'CAUSE PEOPLE MIGHT ASSOCIATE THAT WITH HOMICIDE.
WELL IF NOTHING ELSE, PUT THE HEADER
[01:15:01]
IF NOTHING ELSE ON THE CD, WE'LL DIVE INTO THIS DEEPER IN OUR NEXT MEETING,
UM, SO WE'LL HAVE SHIFT OVER TO THE TCS D AND THEN WE'LL ADJOURN SO WE GET PLENTY OF TIME FOR OUR NEXT MEETING.
UM, UM, I'M GONNA COMMENT REAL QUICK, GO THROUGH THE SIZE THROUGH JUST THIS ONE AND THIS ONE GOING TO ONE.
WE SENT OUT TWO DIFFERENT PACKETS.
I'VE GOT, OKAY, EACH PIECE WE'LL JUST, WE'LL JUST BACK UP TO OKAY.
THIS IS A A ONE OR TWO HOUR CLASS BUT IT'S TWO MINUTES.
UM, IF YOU LOOK ON THE RIGHT HAND GRAPH, THOSE GREEN LINES ARE THE LEGACY DEBT SERVICE PAYMENTS REQUIRED UNDER THE 20 2002.
THE ORIGINAL DOCUMENTS, THOSE YELLOW OR THE GREEN OBLIGATIONS ARE THOSE OBLIGATIONS.
THE GOOD NEWS IS THAT IN FIVE PAYMENTS THEY'LL BE GONE.
ONE OF THOSE PAYMENTS IS IN OCTOBER THIS YEAR.
SO THAT'LL LEAVE US WITH FOUR MORE PAYMENTS.
ONCE THAT'S DONE, A COUPLE THINGS WILL HAPPEN.
ONE IS IT WILL RELEASE US FOR ALL THE RESTRICTIONS AND OBLIGATIONS UNDER THE ORIGINAL DOCUMENTATION UNDER WHICH THOSE BONDS WERE ISSUED.
CORRECT ME IF I'M WRONG ON THIS.
YEAH, THE SUBSEQUENT REFINANCES, WHICH WE DID TOO OF THEM WERE ISSUED UNDER AMENDED AND RESTATED BOND DOCUMENTS, WHICH INCORPORATED A LOT OF THE ORIGINAL BUT INCREMENTALLY TRIED TO RELEASE US FROM SOME OF THE MOST RESTRICTIVE PROVISIONS WITHOUT GETTING TOO MUCH DETAIL IN THE WEEDS.
AS WE GOT BETTER AND AS THE DISTRICT GOT HEALTHIER AND AS WE GOT ACCREDIT RATING, WE WERE TRYING TO GRADUALLY GET OUT FROM UNDERNEATH THAT.
BUT WITHOUT GOING INTO TOO MUCH DETAIL, THE BOTTOM LINE IS WHEN THOSE FIVE PAYMENTS ARE MADE, ONE IN OCTOBER AND FOUR MORE, ALL THE ZERO COUPON BONDS WILL BE GONE.
THOSE ARE INTEREST RATES ARE AROUND 5% OR HIGHER.
SO ALL THE 5% MONEY WILL RUN OFF AND WILL BE RELEASED FROM THE ORIGINAL BOND DOCUMENTS AND ONLY SUBJECT TO THE REMAINING BOND DOCUMENTS FOR THE TWO RESTRUCTURED, WHICH WERE AMENDED AND RESTATED VERSIONS OF THE ORIGINAL DOCUMENTS.
I DUNNO IF I'M MAKING ANY SENSE HERE.
UM, BUT THEN IF AS YOU CAN SEE ANOTHER YEAR'S PAYMENT AFTER THAT, THAT THE GREENS ARE GONE, UM, THE 2012 CURRENT INTEREST BONDS GET PAID OFF AS WELL AND THOSE HAVE A FAIRLY HIGH INTEREST RATE AS WELL.
SO IN THE NEXT SIX YEARS WE'LL GET RID OF ALL OF OUR 5% INTEREST.
ACTUALLY ANYTHING ABOVE TWO POINT HALF PERCENT INTEREST, WE'VE GONE, ALL THE ZEROS WILL BE GONE.
IT'S ALL FIXED RATE AND IT'S ALL TWO POINT HALF PERCENT OR LESS.
AND YOU CAN SEE THE DEBT SERVICE PAYMENTS DROP FAIRLY DRAMATICALLY.
SO THEN THE OTHER QUESTION IS HOW SOON CAN WE START TO NIBBLE THE WAY AT SOME OF THE EXISTING, THE THE, THE GREEN LINES, THE ORIGINAL DEAL CANNOT BE REFINANCED.
THE OTHER TWO DEALS, ALL OF IT CAN BE REFINANCED.
NOW THERE'S A THING CALLED AN ECONOMIC MAY CALL THAT I INSERTED FOR OPTIONAL EARLY REDEMPTIONS, BUT UNDER THE, THAT ECONOMIC MAY CALL SOME OF THE 20 TWELVES ARE REDEEMABLE TODAY AT PAR.
UM, SO WE COULD, IF, IF THERE WERE EXCESS REVENUES OR EXCESS SURPLUS COULD START TO CHISEL AWAY AT THE OTHER BUDDIES AS WELL AND TRY TO GET THIS RETIRED.
THE IDEA WOULD BE TO RETIRE IT AS SOON AS FEASIBLE, WHICH WILL DO SEVERAL THINGS.
IT WOULD POTENTIALLY ELIMINATE THE VALOR TAX, WHICH EVERYBODY HATES.
IT WILL RELEASE ALL THE COLLATERALS AND PLEDGED UNDER THESE BOND DOCUMENTS.
IT WILL RELEASE THE COUNTY FROM SOME OF THE RESTRICTIONS OF THESE BOND DOCUMENTS SUCH AS WE CAN'T DO THIS, CAN'T DO THIS.
YOU CAN'T LET PEOPLE IN, YOU CAN'T LET PEOPLE DOWN.
ALL THOSE RESTRICTIONS, IT'LL RE RETURN CONTROL OF THE DISTRICT BACK TO US ONCE THESE ARE ALL GONE.
UM, SO THE OTHER THING IS IT WILL REDIRECT THE 55 45 REVENUE SHARING BACK TO THE COUNTY AND PROVIDE THE COUNTY WITH A SIGNIFICANT REVENUE STREAM GOING FORWARD EVERY YEAR.
SO THERE'S A NUMBER OF DIFFERENT BENEFITS TO CITIZENS, THE COUNTY AND EVERYONE ELSE TO TRY AND GET RID OF THIS STUFF.
BUT YOU CAN'T TAKE IT OUT UNLESS IT'S CULLABLE AND REFINANCEABLE AND THOSE GREEN MUCH ARE NOT.
BUT SOME OF THE, ALL THE YELLOWS AND BLUES, WELL EVERYTHING UNDER THE 2012 AND 2020 RESTRUCTURINGS, ALL THAT CAN BE TAKEN IN.
SCOTT, ME PAUSE THERE QUESTIONS, THOUGHTS? THE, THE OBVIOUS QUESTION WE'RE GONNA GET FROM SOME PEOPLE IS, OH, YOU'RE TELLING ME GREEN GOES AWAY AND IT'S TWO YEARS UNTIL WE HAVE MATERIAL CHANGE.
WAS THAT JUST A PAYMENT WATER WATERFALL IN,
[01:20:01]
YOU KNOW, OKAY WE'RE GOING TO, WE'RE GONNA STAY THE COURSE ON THE GREEN LINE SO TO SPEAK AND MAKE UP FOR THE 2000 TWELVES AT THE VERY END OR WAS THAT SOMETHING DIFFERENT? THIS IS A COMBINATION OF WHAT CAN WE TOUCH, WHAT CAN WE REFINANCE? YEAH THAT'S EXPENSIVE ENOUGH TO SAVE SOME MONEY AND WHAT WE CAN'T TOUCH.AND UNFORTUNATELY THERE WAS A LOT THAT WE COULDN'T TOUCH AND THAT'S THE BULGE UP FRONT.
SO THEN THE QUESTION BECOMES AFTER YEAR FIVE YOU SEE A STEP DOWN THE TOTAL DEBT SERVICE, I'M GUESSING FIVE YEARS FROM NOW, THE 32 CENT APP ALARM AND A 55 45 SHARING WILL CONTINUE TO GENERATE ADDITIONAL FUNDS.
THAT'S WHAT COULD BE AVAILABLE TO TAKE OUT ALL THE REST OF THOSE PAYMENTS AFTER THE GREEN BECAUSE THEY'RE ALL FREE REFINANCEABLE OR SUBJECT TO OPTIONAL EARLY REDEMPTION, WHICH MEANS YOU CAN TAKE 'EM OUT AND PAY 'EM OFF.
SO THE IDEA WOULD BE TO RE REDIRECT THAT CASH FLOW, ACCELERATE THE REPAYMENT AND GET OUT OF THOSE, THOSE BONDS EARLY.
DOES THAT MAKE ANY SENSE? 'CAUSE THEN ALL KINDS OF GOOD THINGS HAPPEN AFTER THAT.
AND, AND IS THE REASON THE BLUE LINE INCREASES IN 2030 IS BECAUSE WE'LL PROBABLY BY THAT TIME HAVE TAKEN OUR SECOND UH, PIECE OF THE, THE BOND FROM THE BOND REFERENDUM FOR THE COURTHOUSE AND TOTALLY DIFFERENT DEBT.
THE SCHOOLS AND COURTHOUSE ARE GENERAL OBLIGATION BONDS WHICH ARE BACKED BY THE FULL FAITH AND CREDIT OF THE ENTIRE COUNTY.
THESE ARE BACKED BY A COLLATERAL PLEDGE GROUP THAT INCLUDES EVERYTHING THAT HAS TO DO WITH THE APPROPRIATE SERVICE DISTRICT.
SO ALL OF THIS IS ALREADY OUTSTANDING.
OKAY, SO THIS OBVIOUSLY SHOWS NO NEW DEBT, NO NEW DEBT, NO NEW DEBT.
THERE ARE INCREASED PAYMENTS BECAUSE THE CAPITAL APPRECIATION BONDS, THE ZERO COUPON BONDS KEEP SNOW PLOWING THE INTEREST.
IT'S EFFECTIVELY BORROWING MORE EACH TIME.
AND YOU BORROWING THE INTEREST ON A ZERO COUPONS EVERY YEAR EFFECTIVELY, THERE'S NOTHING WE CAN DO TO TOUCH IT IF YOU DON'T REDEEM EARLY.
IS THAT ALL FAR OUT? IT REALLY GOES IS 2042.
AND JUST FOR CLARITY, THE T C S D IS COLLECTING SUFFICIENT REVENUE TO MAKE THOSE DEBT SERVICE PAYMENTS.
IT'S NOT UNDERWATER AT THIS POINT.
NO PLAN TO BE AT THIS POINT CAPTAIN.
WE MIGHT, WE MIGHT OVERLAY THE A UH, LINE GRAPH ON THAT AS PERCENTAGE T C S D DEBT SERVICE AS A PERCENTAGE OF EXPECTED REVENUE.
'CAUSE THEN YOU WON'T JUST SEE A SMOOTH DECREASE.
YOU WILL SEE A MUCH MORE SERIOUS DECREASE AS A PERCENTAGE OF THAT'S TRUE.
AS THE DISTRICT GROWS THE DEBT SERVICE, UH, YOU CAN INFLATE YOUR WAY OUT, RIGHT? YEAH.
MORE REVENUES COME IN, UH, FROM PROPERTY VALUE INCREASES YOUR FIXED RATE.
UM, LIKE I SAID, THERE'S NO VARIABLE RATE IN HERE EITHER.
IT'S ALL FIXED RATE SO THAT, THAT'S CHISEL AND STONES.
AND AS YOUR REVENUES GROW IN RELATION TO THIS, IT ENABLES YOU TO BE ABLE TO TAKE IT OUT EVEN SOONER.
UH, ANY OTHER THOUGHTS OR QUESTIONS THAT, UH, I'M GONNA CALL THIS MEETING ADJOURNED.