City Council Meeting

Gwen RiddlestaffGood evening. Give JC a moment to pull up the presentation. Mayor, members, council, the following presentation and discussion are intended to provide an update and overview on the CIP reconciliation project, including the reformatting of the capital expenses based on some defined parameters for the FY 27 and future budgets the page so quickly we'll start by reviewing details of the CIP audit go over what was approved for in the FY 26 to 2030 CIP provide budget updated budget balances based on the defined general fund categories and then discuss the changes for the FY 27 and beyond CIP development so my team and I which I have one analyst and Jess I'm give her a lot of credit we reviewed approximately 200 base projects and perform comprehensive audits of approximately 100 of

One big note is that with the city's financial system conversion to Tyler, the data is only accurate in our current system starting from July of 2024, so it's fiscal year 25. However, data from both systems, our old legacy system and our current system, was used to pull together the full project audits, and that's what the balances you'll see going forward. So the reason we're going to continue to maintain those audits is to have that full comprehensive project data, especially for those main, the larger projects. And any project that you want, we probably have or could get. Next page. So this is just a summary of what was adopted in the FY26 to 30 CIP. As a reminder, approximately $48 million was appropriate for general fund projects, along with an additional $48.8 for CIP-related projects with other funding sources.

The remainder of this presentation will concentrate on the general funding, which is highlighted in the brackets. So the first section down to the schools is what we're going to talk about. Next page. Something's been missing on the CIP summary sheet is available budgets for these projects or funding that was already appropriated in prior years and what's been spent. Therefore we adjusted the summary sheet that you saw on the previous slide. We're now showing a revised budget number, how much has been spent and encumbered, which is included in a ACT ENC rec column so that includes all actuals encumbrances and any requisitions that are still in process and then we'll have an available balance number

been reviewed by our external auditor and complies with all accounting or reporting standards some of the main highlights of the policy are reviewing requirements are met, move recurring maintenance and repair projects to the associated operating budget, and ensure projects remaining in the CIP will either create or enhance a capital asset. With the implementation of this policy, the transfer from the general fund to the CIP will need to be reviewed to ensure funding remains in the general fund for necessary repair, maintenance, and subscription needs. We will incorporate the necessary financial policy changes needed in the FY27 financial policies and council budget guidelines that will be presented to you on October 28th with hopeful approval in November.

And we're still proposing that there's still some PAYGO coming in from the general fund to pay for those smaller projects that we probably would not want to fund with 25-year debt.

JC MartinezstaffSo, correct. So currently we're budgeting about $12 million in transfer from the general fund to the CIP. As Ms. Rittles stated, looking at this number right here, it's about $8.2, $8.3 million per year on just maintenance activities that we are proposing to transfer out of the CIP to the general fund. So if you reduce that $12 million by about $8 million, that still leaves about $4 million that could be transferred from the general fund to the CIP to account for PAYGO and try to maintain a decent ratio of how much is being cash paid versus financed.

To answer the second part, when and if that were to happen, we would come back to council and ask for potential supplemental appropriation to account for additional funding for that one specific project, have the project manager provide reasoning or feedback of what is driving that potential overage, and then at that time ask council if they so choose to fund the appropriation or the supplemental appropriation. that I also want to note is a good practice a good best practice and something that I've been wanting to institute here and additionally that has been communicated by our financial advisors again Davenport is very similar to our general fund where we have unassigned fund balance we should have

appropriation resolution is an administrative action and it is presented to council at this time every year in order to take into consideration any year in adjustment and final audit work as below the 1% threshold that is set by Virginia code it does not require a public hearing formal adoption is scheduled for the September 30th council meeting as a part of the consent agenda if you flip through the staff report there is a table that breaks out by the big buckets specifically the general fund the capital fund or the CIP the wastewater fund in the stormwater fund those amounts are what we're requesting to basically carry over from FY25 to FY26 these are all exclusively associated and tied to a purchase order

so it's not like I'm asking or we're asking to carry over any additional funds that are not already encumbered again via a purchase order we traditionally don't have to come to council for a capital wastewater or stormwater those are enterprise funds the general fund is really where we want to be fully transparent with council and ask to carry these over again these were FY25 funds where there is a purchase order we're still expecting that those expenditures happen and just very very quickly for a comparison review in the general fund we're requesting about 1.3 or about 47 POS that are being requested to carry over from 25 to 26 and FY 24 as a comparison that amount was about 3 million so it's about half less this year that we're requesting to carry