 for Wednesday, March 13, 2024 to order. Are there any agenda additions or changes? Gonna pull out consent item 6B and make it 5B, B and C, C and D. I move that we, are there any others? No? Okay. I move we make a consent item 6B business item 5B. Second. Great, all those in favor say aye. Aye. Those opposed? Aye. Amber. Amber, motion passes. Great. I'm going to read this as we start. The city council previously had a meeting disrupted by anti-Semitic and racist hate speech. The city council does not tolerate such actions and strongly condemns them. Well, it may not always be possible to prevent hate speech from occurring during public comments. The council will continue to take measures to make it more difficult to express such views. We're moving on to public to be heard. This is the portion of the meeting where folks can bring comments or concerns to the city council. These can be on any topic that's on, that are on the agenda or not on the agenda. So is there anyone in the room that has anything that you'd like to talk about? No? Okay, anybody on Zoom? See a hand raised for Albert. Albert, if you'd share your last name and where you're from with us before you start with your comment. And I see that you've unmuted, but I can't. Oh, you haven't. Albert, are you with us? I can, yeah. Can you give us your last name as well? Oh, sorry. Great, thanks. No problem. The federal speaker in my way is coming from the federal state and local government. We have government run programs that give assistance to non-life homies and fatalities that are just resiliency. We have criminal justice in that, let's criminal burning, murder, investigate Christians, bring a big murder back. Oh, it's serious? Yeah, six tourist corporations controlling 96%. Okay, we're gonna stop you right there. You're now cut off. Thank you for joining us. Goodbye. Talk to you, boy, or block him. Thank you. I don't know, Albert, if you just heard what I said, but you're welcome to not join us again if that's what you're gonna share. Sorry, that French speech hurts me. Chad, I hope I said my last name correctly. I think Albert's still talking and I don't know if we can get rid of him in the meeting. I'm now under the security tab if you can set a waiting room, that might be good in case he decides to come back. Okay, Chad, are you with us? There it is, finally. Hello, Chad Basewell here, can you hear me? Yes, thanks. How are you? Okay, yeah. Oh, okay, thank you. Well, it's interesting you started the meeting with a disclaimer of anti-Semitism, but that's the elephant in the room right now, it's the Jewish problem. And I think that's the main guy. What is going on? Love you, go. Thank you. Have a nice day. You fucking nigger fuck. Oh, jeez Louise. People have no lives. No lives. Wow. Anyone else online or in the room? When folks say that this isn't in our community, I hope they've just paid attention because it is very much in our community. That's right. All right, we're gonna move on. Business item 5A, FY23 audit presentation with Bill Kaiser. Yes, so we've got both Bill and Jess. Yeah, how are you doing? Good, how are you? Super. It's been a good meeting so far. Thanks for joining us. Yeah, no problem. Oh, you don't need to apologize. Jess, if you're ready, I can get started right here. Good, good to go. Yeah, did you want to, did you want me to show any of the audit report while you're running through? No, I imagine it's part of the board pack and I haven't checked that out yet. We're good, okay. Yeah, no, I'm good. I've got it on my screen, but if you wanted to do a speech error for questions later on, that's fine, but I can get started. And if anyone has any questions, feel free to interrupt. Great. Yeah, no, nice to see all of you again. Sorry I couldn't make it down, but it's kind of crunched up in our industry this week. But I'm Bill Kaiser. I'm the principal at Kattal Brownigan in Sargent up in St. Albans. We're the auditors for the city of Essex Junction. First time I've been saying that, or first time I said that. So if I say village at all during the meeting, I'm sorry. But now we were doing fieldwork for the city in the middle of October and we issued our reports about mid January. The audit for the June 30, 2023 year end resulted in unmodified opinion. We made or proposed no material adjustments to management that would affect the numbers that you would have received throughout the year in the 2023 audit. So overall, it was a very clean audit experience from fieldwork all the way to the end. As always, there are a few management adjustments, the changes are being made really right through the end of October. But overall, I think what you see in the financial statements reflects the financials that you would have seen pre-audit, which is speaks volumes to a strong finance department. One difference from 2022, but in the city or in the village, but the village slash city is used to it. There was a single audit in 2023 due to federal expenditures spent on the Crescent Connector Project and total federal expenditures exceeded the $750,000 threshold. In total, there are $3.5 million federal expenditures by the city in fiscal year 2023. And that Crescent Connector Project, which was our major program, made up 2.8 million of that amount. A single audit includes additional testings for grant funds that were spent to ensure they were used for appropriate eligible costs. And if there are matching requirements, it ensures they were met as well. We noted no issues or findings in relation to the expenditures specific to the Crescent Connector Project. Also a big part of the scope of the single audit is a review of the internal controls. And in 2023, we noted sound controls for the city. I would like to know those, the internal controls used are still those that were initially implemented by the town during the potential merger. In talking to Jess after field work, she is in the process of developing control specific to the city. So I would imagine while the controls being used now are still part of those old procedures. And while they are being followed properly, I'd imagine, there will be new controls for the 2025 fiscal year. Again, there were no findings for the single audit and the testing that we performed and all documents were readily available with no instances where grant required policies and documentation were requested and not provided. Now, getting into the financial statements. The format of the financials is consistent with prior years starting with the MD&A. The financial statements for the city not being comparative. The MD&A gives the reader a good year-over-year comparison of the financial activities of the city as well as the financial highlights and future plans. Next is the government-wide financial statements which are reported more on the accrual basis of accounting similar to a for-profit entity. Not typical for the city's budget process but how GAAP likes to report a financial statement. There are some differences for 2023 if you compare it to the village statements in 2022. This year, you will notice a large amount of cash balances and delinquent tax receivables. These were moved over from the town as of June 30th, 2023 and in past years, the cash and receivables had both been reported as a receivable from the town. The majority of the inter-entity balances have been settled as of field work in October but you'll notice on the balance sheet there is still a due from the town of about $430,000 that's still being worked through. The city did establish an allowance for doubtful accounts on delinquent property tax revenues of $12,000. That's offsetting the taxes receivable balance of approximately 60 grand as a gross. The city took back from the town only the 2022 receivables that were billed only because those are what the city is legally able to collect on. So the town has retained any receivables from before the 2022-2023 tax billing period. So those are not part of the towns they are or the cities they are, I'm sorry. Consistent with prior years utility collections in the accounts receivable have had significant success and subsequent to year-end, I think all about 4% of the utility billings had been collected. So there is not a need for a significant allowance consideration there. One other thing I'd like to point out is due to the city being a new participant in the Demers plan with the state of Vermont, you'll see a few new lines for deferred outflows and net pension liabilities in the government wide financial statements. The deferred outflows represent the city's obligation to fund the current portion of the retirement contributions for both 2022 and 2023 since the measurement date is a year behind. That's why 2022 is also included in there. The net pension liability is an estimate and will fluctuate year to year depending on mainly on market conditions. So 2022 was a bad year. You would see that net pension liability increase, but as the market improves the net pension liability that the city would be liable to fund that plan would then decrease with market conditions. There's also a lengthy footnote that you'll notice in the footnote number 13 describing the benefit, a summary of the benefits available under the Demers plan as well as a description of a number of the amounts on the balance sheet. Moving on to the fund financials, which is the modified accrual basis of accounting and more similar to cash basis in what the city would budget on. The receivables in the general fund are low, mainly due just to the 2022 tax delinquencies being included in that. The city is required to reserve in the fund financials any taxes not collected over 60 days after year-end. So you'll see an offsetting liability for unavailable revenues due to uncollected property taxes. That's a net of $46,000. There are, there's a large capital projects AR is the grant revenues from the department of transportation from the pressing connector project. These amounts have not been billed or collected 60 days after year-end. So they're also considered unavailable grant revenues for fund financial reporting. Once billed and collected in 2024, these would be recognized as revenue. And on the capital projects fund in the what you would consider the income statement, you'll see a loss. That loss would revert to an income once those revenues are billed. The ARPA funds are also on the balance sheet as a liability. They, a portion, a small portion of those were recognized in the 2023 single audit, but there's still $2,800,000 to be recognized. The plan I believe is to recognize the remaining funds in fiscal year 2024. So it is anticipated that these, those ARPA related expenditures as well as additional 2024 expenditures for the Crescent connector project would both be tested as major programs next year single audit. The other thing to know on the fund financials is the equity restrictions. There's a detail on pages 27 and 28 of the financial statements. Similar to prior years, just detailing what the commitments, assignments and non-spendable portions are for. The general fund has a fund balance of $1,471,000. And of that amount, $148,000 has been assigned for specific future expenditures. 435,000 of that amount is related to inventory and prepaid expenses that are non-spendable at June 30, 2023. And the remaining unassigned balance of $886,000 falls well below the fund balance policy for the city of 15% of next year's budget, which next year being 2024's budget. The cities right now unassigned fund balance is about 7.5% of the 2024 budget expenditures. 2023 general fund operations overall increased and resulted in an increase of $650,000 to the fund balance. Next in the financials, the proprietary funds, business funds or enterprise funds as the city refers to them as are meant to be self-sustaining. The water and wastewater funds had positive increases in that position for 2023 while the sanitation fund had a reduction in that position. You'll also see reported on these statements as EJRP, which ended up with income of $350,000 for the year. Beyond these financials is the footnotes to the financial statements where you'll see detailed explanations and many of the balances on the statements, specifically allocations of the fund balance, like I had mentioned, capital asset details and debt summaries. And like I said, there's also a new footnote for the VMware's plan with the state of Vermont. The supplementary and required supplementary information consistent with prior years is the budget of actual schedules for the general fund as well as all of the enterprise funds and the supplementary information. And then later on, you'll see all the single audit reports. That issue, a clean single audit with no audit findings. That is all I have for now. If anyone wants, I'd like to open it up for any questions. Great, thanks, Bill. Yeah, you're welcome. Thank you. Any, just, did you have anything you wanted to add to that before we start answering, asking questions? Nope, I think I'm all set. Any councillor, 70, anything to ask for the last? Oh, I was just gonna say, I was happy to see a clean audit. That's all. I just, for my own understanding to help get this a little bit better. So under, right at the beginning of your document here, corrected and uncorrected misstatements, recognizing the fact that, again, this is a clean audit, but I'm curious about what it means to be an uncorrected misdeme, because it sounds like in this paragraph that there was something, but then it was chosen to not react or respond. I'm not sure. I just wanted clarification on what that was. What document are you referring to? I'm sorry. So I'm looking at the packet that we received. Okay. So probably this, okay. So uncorrected misstatements would be adjustments that we proposed to management that were not made. I do not believe actually in the 2023 audit for the city, there were any uncorrected misstatements. Corrected misstatements would be any, in the case of the 2023 audit for the city, like I had mentioned, any corrected misstatements would have been proposed by Jess or Shannon during our audit procedures, nothing that we had noted during our audit testing resulted in a misstatement in general, but also a material misstatement where we would have proposed an adjustments. The other thing, and this is not necessarily a question for you, this brought up a question for me. I was looking at the section in regard to compensation, compensated absences. And I'm kind of curious about how often this is used because I was looking at this table here and, if you're above the age of 55, you've been here for 20 years, you could get up to almost a year's worth of, hey, again, my reading of this, you can get up to almost, because it's 800 max hours. So estimating that's about a year's worth of hours that you can get compensated for. The reason I brought this up, not as concerned for this audit, but just thinking about our staff and making sure that they're actually taking advantage of the time that we give them to take off, to reduce stress, to help them be, to maximize their ability to be good employees and you're in the city. So that brought me a little curiosity concerning whether or not, I understand this is a policy, but I'm kind of curious as to whether or not people are taking advantage of this policy or whether or not they're actually taking advantage of the hours that we give them to take time off and are taking advantage of that. Did you see what page you're on? So I'm on page 23. Page 42, sorry, 42 of the back. Got it. And it's not, if I understand this right, it's not that we have many situations like this that it's possible. Correct. So I think also that policy, that balance that you're seeing there doesn't only include vacation time, but also I think it's compensated absences in sick time as well. Right. I'm not sure on the actual usage specific to the city just may be able to speak more to that possibly. Yeah, so Marcus, the chart that you're referring to that I have up on the screen right now is specifically for sick time. And this is part of the association contract, which in turn applies to all city employees. There are not very many people that have, that would fall into like the max payout of sick hours. But there are definitely some staff who would, sick time. And I can tell you like, I mean, I've been here two years, over two years now and I've taken maybe like three sick days. So it just sick time is not used. The other, you know, vacation time and things like that, people are good about using and we have a policy that you're required to take a certain amount of vacation time each year. But sick time is a totally different, totally different bucket, which is what this chart specifically is referring to. Well, even in that context, I would say that I hope that staff are taking the time off they need to be, even in this particular case, to be healthy. In a post COVID world, believe me, I remember living in a time where I would go to work and not take my sick time. Now I'm encouraged to take that particular sick time. And it's not just my organization. I see that with organizations all over the place. So I would hope that even for this organization, it's a city that our staff is being encouraged to stay healthy, do what they need to. And if that means taking time off, we're encouraging them to do so. The only thing is, as I look at a policy like this, I just hope that it's not encouraging people to do the opposite, to accumulate time for which that they can financially benefit later. I get it, but it's like the balancing act of making sure that we're encouraging them to stay healthy versus encouraging them to just rack up time until they retire. Mm-hmm. Yep, yeah, it's a good question. We definitely encourage people to stay home whenever not healthy or even mental health today. So, and I think there's some history behind this table and how it came to be, and I don't fully have that at the top of my head in terms of where that came from and how it got there, but I can find out that history and let you know. But certainly we encourage folks, if not feeling well, to actually take their sick time off. But I definitely hear you in terms of what policy like this can potentially do. And I'd also like to add just for clarification on the policy that as part of the audit process for these specific rules, we do audit the caps and the years of service and make sure that nobody is over the cap. That is part of our audit procedures and recalculating. We'll take a sample of individual balances, trace them to the time off report or the pay stubs, which typically show the hours available or other supporting documentation and ensure that the city wouldn't be over accruing for somebody an unallowable amount of hours. Thank you. Amber, I can't see you. I'm just wanna give you an opportunity to participate if you have any questions. I'm good, thanks. Okay, Bill, I think we probably ask you this every year, but can you describe in more plain English for the folks that don't do this work, what a clean audit and unmodified opinion means just so we have that on the record? An unmodified opinion is not necessarily always gonna mean a clean audit. We can still issue a good opinion with multiple and we could have 20 audit adjustments and still issue a clean opinion as long as the material, as long as the financial statements are not materially misstated, but a clean audit in the term, when I say clean audit, specific to the city of Essex Junction, the fact that we could come in and do an audit and really have no adjustments, the reconciliations are all balanced. You can tell there's clear controls in month-end close as well as year-end close, where you get a reconciliation, you can go to the trial balance and the balance, it ties out, you're not finding errors where a check was cut in August 2024 and should have been an accounts payable and accrued back to the prior year. You're not finding any issues like that throughout our audit procedures. Materiality is typically a lower level where we're gonna propose an adjustment. So we're real, I mean, when I say a clean audit, I'm saying we didn't find really any errors that were like $5,000 even, going through our testing unless it was an estimate, then we would consider not adjusting it because it's just an estimate and one year it could be 5,000 too high, the next 5,000 too low, but our factual testing where we know what the balance is, we're not finding any errors, mainly related to cutoff. Thanks, I appreciate that. You're welcome. I don't have anything else. Thanks for joining us. Yeah, thank you very much for having me. I'm sorry this year took a little longer to get into presenting the audit. That's right, Brad, I wanted to get Regina. I just didn't know if you wanted to see anybody else. Yes, I don't know what I do with the various counselors of the manager needling me on the public to be heard. Is there anyone online that has any questions or in the room that has any questions about this topic or comments? Not seeing anyone in the room, not seeing anyone who's raised on Zoom. So I guess not. Thank you, Bill. Jess, congratulations. Nice work. Thank you. Thank you. Thanks, Bill. Thank you very much for having me. Thank you, Jess. Yep, thank you. Bye. Nice job. Bye. All right, I imagine Jess is sticking around for what's now 5B, ARPA fund obligation and expenditure. Yep. Do you want me to share this, Jess? Now that... I can share it to whatever is easier. I have it up. Okay, you might be minutes ahead of me. Can you see that? The memo? Yes. Yes. Perfect. All right, so if you'll recall back in April of 2022, after all of the ARPA funds were received for the city, the council then trustees elected by motion to up for the standard allowance for ARPA funds, which meant that basically all of the ARPA funds we received would be used on the provision of government services. So currently today we have with interest accrued over the last couple of years, we have a total balance of $2,824,513.71 sitting in ARPA funds right now. VLCT through work with both the National League of Cities as well as direct work with the U.S. Treasury in around December, January started advising municipalities that they should really consider using their ARPA funds as quickly as possible. So as you'll see in the packet, I included a slideshow that Katie Buckley, who was the VLCT ARPA guru, presented at the Vermont GFOA workshop in February. And basically at that point, they were down to making two recommendations to municipalities. Given the potential changing political climate in November, even though we could obligate funds by December 31st of this year and spend them by December 31st of 2026, they put out some information and guidance that they would advise towns to spend directly their ARPA funds on specific projects in FY24 or FY25. The city's intention all along has been to spend at least most of the ARPA funds on the to Lincoln project and we've just been waiting for numbers basically to come in. So with that project not being able to be complete in the timeframe that VLCT is recommending at this point, the second option is what applies best to the city. So what they're advising is that the city formally designate the remaining balance of our ARPA funds to pay for municipal personnel expenses, transfer those funds into the general fund and then that will basically create a surplus in the FY24 budget and that surplus we're allowed to use however we want provided that it's within the context of provision of government services. So anything that the city would normally spend money on. So at this point, I have checked in with Katie directly at VLCT and also had conversations with Bill at Cattel, Branigan and Sargent on the best way to go about doing this on the books so that we account for the funds the way that is required by US Treasury and also meets all of the tests for our single audit that will happen later this fall for FY24. And so what we kind of came up with as a group is that we should make an adjustment to the FY24 budgeted general fund revenue to transfer those ARPA funds in the 2.8 million and increase the two Lincoln building expenditures. And so essentially what we're doing is we're saying that we're going to apply those, the 2.8 million in revenue to personnel covering our personnel costs for this year. And the surplus that is created by doing so will be assigned to the two Lincoln renovation. This has a net effect of zero on the FY24 budget. It's simply a mechanism for moving our ARPA funds into the general fund where they need to be in the timeframe that VLCT is advising at this point. So our reporting period for the Treasury is April. So everything has to be done heard this memo by March 31st, so that as of our April 15th reporting, we can say we transferred our ARPA funds to the general fund to cover salaries and we're done. The money. I don't know if we lost just the money. At that point cannot be pulled back. She said the money could be pulled back. That's okay. Yes. I have talked about this, so I don't have any questions. It makes sense to me. Is anyone? Was there a particular reason why you pulled it out of the reading button? Pulled it out to make sure it was in the minutes that when we made the motion, it was loud and clear that this is what the intention was and we did it. And it's an actual motion in the minutes essentially. That's the only reason. That's a good idea. So that it's not just in the consent to the. Okay. Sorry, I should have explained that. And we just wanted to make sure it was above board recorded. Yeah. That sort of thing. Amber? I don't have any questions. Amber, any questions from you? No. Okay. I'm not hearing any others. So the on page 92 of the packet, the recommendation, is that the motion we need? Yeah. So we definitely need the very first motion. And then if you'd also wish to designate the surplus at this time, we can do it all in one shot. So both the 1st is the motion to move the ARPA funds to the general fund for personnel expenses. And the 2nd item down here is to designate the surplus to the to Lincoln renovation project. Anybody want to take that on? I can read it. Okay. The move that the council approved the transfer of ARPA funds and FY 24 budgeted revenue increase in the amount of $2,824,513.71 to the general fund to pay for municipal personnel expenses in FY 24 per the recommendations from VLCT and also approve an increase to the FY 24 budgeted to Lincoln building expenditures for the same amount. Furthermore, the council will designate the surplus of the same amount created in the general fund to the to Lincoln renovation project. Second. A motion and a second. Any further comments? All those in favor say aye. Aye. Aye. Motion passes unanimously. Great. Thank you. All right. The next two items are executive session items. So do I have a motion to approve the remaining consent agenda? Oh, sorry. Just one note on the consent. Yes. Just want to let people know because it wasn't clear in the packet the application for the street vending permit. We do have the certificate of insurance. We just didn't have that checked off. Okay. Move we approve the consent agenda. Great. Second. Awesome. All those in favor say aye. Aye. Aye. Motion passes. Manager Ford, council member comments. So just two things. One, we had a staff training last week and a staff appreciation event on Thursday, which went well. And I think it was already mentioned in this meeting, but the governor did sign the city's charter change amendments today. So that's exciting. And we will get that up and running again. The ballot for annual meeting is already set in stone. We move forward with those questions to the voters, but then moving forward, we'll be able to take advantage of the charter change. I'd just like to say once again, how appalled I was at the comments from the beginning of the meeting, waiting for the motorcycle and how disappointed I am that we had to endure that and that members of the community had to hear that as well. Amber, I really can't see that hand for you. I just wanted to note that last Friday, I attended the legislative council night at the Blue Spruce Grange. And I just wanted to say thanks for the invite. It was a very, very good event. They had a lot of thoughtful questions on the budget and the current projects that the city's working on. And so just thank you for the invite. Anything else? Nope. All right. Anything from the reading file? All right, if there's nothing else, I can get these right here. You do? Go for it. I move that the city council make the specific finding that the general public knowledge of pending or improbable civil litigation or prosecution to which the public body is or maybe a party would place the city at a substantial disadvantage. I move that the city council enter into executive session to discuss pending or probable civil litigation or prosecution to which the public body is or maybe a party pursuant to one VSA 313A1E to include the city council and city manager. Second, both. Any comments? All those in favor say aye. Aye. Aye. Motion passes. And do you want to read the next one? Do you have that one? Next page. Yes. I move that the city council enter into executive session to discuss a personnel evaluation pursuant to one VSA 313A3 to include the city council. Is that supposed to include the city manager as well? Oh, yes. Sorry. Is it? Yes. Okay. Then I will modify my motion. Who includes? Excellent. Second. All those in favor say aye. Aye. Aye. Motion passes. All right, we are in executive session. Thanks everyone. We don't expect to come back. So that for all intents and purposes is the meeting for tonight.