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IT'S GONNA BE A GREAT YEAR.[Budget and Fiscal Affairs on January 3, 2023.]
I'M MAYOR PRO TEM.DAVE MARTIN, CHAIR OF HOUSTON BUDGET AND FISCAL AFFAIRS COMMITTEE.
I'M JOINED TODAY BY COUNCIL MEMBER TARSHA JACKSON, DISTRICT B, VICE CHAIR, EDWARD J. POLLARD, DISTRICT J COUNCIL MEMBER MARY NAN HOFFMAN, DISTRICT G COUNCIL MEMBER MICHAEL KOSH AT LARGE POSITION THREE.
COUNCIL MEMBER SALLY ALCORN AT LARGE.
POSITION FIVE AND STAFF FROM COUNCIL MEMBER MICHAEL KNOX'S, OFFICE COUNCIL MEMBER ABBY CAYMAN'S, OFFICE AND COUNCIL MEMBER LETICIA PLUMMER'S OFFICE.
SO I'LL CALL THIS MEETING TO ORDER AND LIKE TO WELCOME ALL COUNCIL MEMBERS IF THERE ARE ANY MEMBERS OF THE PUBLIC SECTOR WHO WOULD LIKE TO PARTICIPATE IN TODAY'S PUBLIC COMMENT SECTION.
THERE IS A SIGNUP SHEET LOCATED AT THE FRONT DESK TO YOUR RIGHT, TO MY LEFT, MY STAFF MEMBER WILL BE MONITORING THE PUBLIC'S SPEAKERS LIST.
DEAR COUNCIL MEMBER, DAVID ROBINSON.
LIKE TO ACKNOWLEDGE COUNCIL MEMBER VICE P VICE CHAIR, ED POLLARD FOR ANY OPENING COMMENTS OR REMARKS, SIR.
UH, HAPPY NEW YEAR'S TO EVERYONE AND, UH, LOOK FORWARD TO THE MEETING.
COUNCIL MEMBERS AND STAFF, PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATIONS.
AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT.
HAPPY NEW YEAR TO YOU AS WELL.
THANK, UH, GOOD MORNING, MR. CHAIRMAN, COUNCIL MEMBERS AND STAFF.
I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING NOVEMBER 30TH, 2022.
THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 300 MILLION FOR FY 23.
THIS IS 37.7 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 126.6 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
OUR REVENUE PROJECTION DECREASED BY 4.5 MILLION FROM THE OCTOBER, 2022 REPORT, AND THAT WAS DUE TO THE SOLID WASTE DEPARTMENT CONTAINER LEASE REVENUE AND CHARGES FOR SERVICES BEING EXCLUDED FROM THE GENERAL FUND.
UH, CONTAINER LEASE REVENUES ARE NOW INCLUDED IN THE NEWLY CREATED CONTAINER LEASE SPECIAL REVENUE FUND.
AS A RESULT, RELATED EXPENDITURES ARE ALSO EXCLUDED FROM THE GENERAL FUND EXPENDITURES, RESULTING IN A $3.6 MILLION DECREASE IN SOLID WASTE EXPENDITURES.
UH, LOOKING AT OUR ENTERPRISE FUNDS, WE HAVE NO MATERIAL CHANGES IN OUR ENTERPRISE FUNDS, SO I'LL MOVE ON TO OUR COMMERCIAL PAPER AND BONDS.
UM, ALL OF OUR VARIABLE RATE DEBT IS WELL BELOW THE 20% THRESHOLD.
ALRIGHT, GOOD MORNING, DIRECTOR JONES.
THIS IS THE FIVE PLUS SEVEN FINANCIAL REPORT FOR THE PERIOD ENDING NOVEMBER 30TH, 2022.
PROJECTIONS ARE BASED ON FIVE MONTHS OF ACTUAL RESULTS AND SEVEN MONTHS OF PROJECTIONS.
OUR REVENUE PROJECTION IS 8.5 MILLION LOWER THAN THE ADOPTED BUDGET, AND 4.5 MILLION LOWER THAN PRIOR MONTH.
THE BEARINGS FROM PRIOR MONTH'S PROJECTION IS DUE TO DECREASE IN CHARGES FOR SERVICES TO REFLECT THE NEWLY CREATED CONTAINER LEASE FUND.
OUR EXPENDITURE PROJECTION IS 2.5 MILLION HIGHER THAN THE ADOPTED BUDGET, AND 3.6 MILLION LOWER THAN LAST MONTH.
THE VARIANCE, AGAIN, IS DUE TO THE CREATE CREATION OF THE CONTAINER RELEASE FUND.
WE'RE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 337.6 MILLION, WHICH IS 1 MILLION LOWER THAN PRIOR MONTH, AND 14.6% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 164 MILLION ABOVE THE TARGET AT 7.5% OF EXPENDITURES EXCLUDING DEBT.
WE'RE PROJECTING NO CHANGES ON THE ENTERPRISE FUNDS.
UM, FOR HEALTH BENEFITS FUNDS, REVENUES DECREASED BY 740,000 DUE TO LOWER ENROLLMENT AND NON NON-OPERATING REVENUES INCREASED BY 740,000, UH, FOR, UH, PERFORMANCE GUARANTEES ON THE ASSET FORFEITURE FUND REVENUES INCREASED BY 1 MILLION DUE TO HIGHER THAN ANTICIPATED CONFISCATIONS.
AND THEN WE HAVE THE CONTAINER LEASE FUND, A NEWLY CREATED FUND, UM, WITH THE REVENUES OF 4.5 MILLION AND EXPENDITURES OF 3.6 MILLION.
ALSO, LIKE TO WELCOME STAFF FROM VICE MAYOR PRO TEM MARTHA TEX TATUM'S OFFICE.
AND I'D LIKE TO ACKNOWLEDGE, UH, IN THE AUDIENCE WE HAVE THE HEAD OF THE HOUSTON FIREFIGHTERS UNION, MR. PATRICK MARTY LANGDON, AND ALSO THE CHIEF OF THE FIRE DEPARTMENT, CHIEF SAM PENA.
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CONDOLENCES ON THE LOSS OF YOUR FATHER.I'M SURE HE'S, UH, IN HEAVEN WITH OUR LORD AND SAVIOR.
I KNOW IT WAS A TOUGH HOLIDAY FOR YOU, SIR.
WE'LL START OFF WITH QUESTIONS FROM COUNCIL MEMBER MICHAEL KOSH.
HAPPY NEW YEAR TO YOU TOO, GENTLEMEN.
IT'S GONNA BE A, IT'S GONNA BE A GOOD YEAR.
THE, UM, THE OPEN FINANCE REPORT THAT I RECEIVED RECENTLY, UH, SAID, WE'RE GONNA GO LIVE SOMETIME IN FEBRUARY, FROM WHAT I UNDERSTAND.
UH, UH, CONTROLLER, UH, WHAT ROLE DID YOUR OFFICE PLAY IN HELPING TO ESTABLISH THIS, UH, OPEN FINANCE, IF, IF ANY? WELL, AS YOU RECALL, COUNCIL MEMBER, WE ORIGINALLY PUSHED, UH, THE CHECKBOOK PROGRAM, WHICH WAS THE, UH, PRECURSOR TO THIS, UM, AND HAD SOME, UM, ISSUES WITH THAT.
BUT, UH, YOU KNOW, WE'VE BEEN IN COMMUNICATION WITH FINANCE.
I THINK WE'VE KIND OF, UH, BUILT ON THAT GENERAL FRAMEWORK, UH, IN DEVELOPING THIS, UH, OPEN BUDGET, UH, SYSTEM.
UM, SOME OF THE KEY ISSUES THAT WE REALLY WANTED TO SEE ADDRESSED AND KIND OF THE GENESIS OF THIS WHOLE, UH, PROJECT WAS THAT WE RECEIVED TRANSPARENCY STARS FROM THE STATE.
AND, UH, ONE OF THE BIG, UH, ISSUES WITH THAT IS, UH, INCLUDING FIVE YEARS OF HISTORICAL DATA.
AND THAT WAS SOMETHING THAT WE INCLUDED IN THE CHECKBOOK PROGRAM.
AND I, I'D NOT GOTTEN CONFIRMATION, UH, ON WHETHER OR NOT THE FIVE YEAR HISTORICAL, BUT I THINK, UH, DIRECTOR JONES RECENTLY, AND TO HIS CREDIT, UH, HAD SAID THAT, UH, THAT IS GOING TO BE, UH, INCLUDED, WHICH IS A GREAT THING BECAUSE WE WILL BE ABLE TO THEN SUBMIT TO THE STATE AND, UH, GET THOSE TRANSPARENCY STARS.
INTERESTINGLY, WE'RE ALREADY DOING ALL THE TRANSPARENCY INITIATIVES ON THE DEBT SIDE AND SOME OF THESE OTHER AREAS.
UM, BUT IF YOU DON'T HAVE YOUR CHECKBOOK ONLINE WITH HISTORICAL DATA FIRST, YOU CAN'T GET THAT FIRST STAR.
UH, SO WE'LL BE ABLE TO BE, PROBABLY GO FROM UNRANKED TO ONE OF THE TOP RANKED TRANSPARENCY CITIES IN THE STATE, UH, WITH THE COMPLETION OF THE OPEN CHECKBOOK, UH, AS LONG AS WE HAVE THAT FIVE YEAR IN HISTORICAL DATA THERE.
AND, AND THANK YOU FOR, UH, FOR THAT RESPONSE.
AND ALSO, I RECEIVED YOUR PERFORMANCE AUDIT OF THE HOUSTON PUBLIC WORKS AND THE HOUSTON PERMITTING CENTER.
AND I'LL ASK A QUESTION AFTER.
WE'LL PUT YOU BACK IN THE QUEUE.
AND THIS MIGHT BE A QUESTION FOR THE CHAIR TOO.
UM, THE COMPENSATION STUDY, UM, THAT WAS, I KNOW IT WAS FINISHED IN JUNE OF 22.
IT'S BEEN UNDER REVIEW AND ANALYSIS.
DO WE KNOW WHEN THAT'S COMING HERE? I MEAN, WE DO SO, SO MUCH OF WHAT THE CITY SPENDS MONEY ON THIS COMPENSATION, AND I THINK IT'S A BIG AREA WHERE WE NEED TO EXPLORE, ESPECIALLY IN AREAS LIKE PERMITTING, WHERE WE NEED TO HOLD ON TO PEOPLE AND ATTRACT GOOD PEOPLE.
UM, AND I THINK WE BASE A LOT OF THAT OFF THE COMPENSATION STUDY AND THE, THE CLASSIFICATIONS AND KIND OF TO TAKE A HARD LOOK AT THAT.
SO DO, DO EITHER OF, YOU KNOW WHEN THAT MIGHT BE COMING FORWARD? NO, I WOULD HAVE TO TOUCH BASE WITH DIRECTOR CHEEKS, HR.
I KNOW THAT IN AN EMAIL I GOT, IT SAID THEY WERE DECIDING WHEN TO BRING IT TO, TO BFA.
SO I DON'T KNOW IF, YOU KNOW, I MET WITH DIRECTOR CHEEKS BEFORE THE HOLIDAY, AND I THINK IT'S COMING IN Q1 OF, UH, THIS YEAR OF 23.
SO WE'LL BRING IT TO BFA FIRST, AND THEN I'M SURE THAT, UH, WE'LL HAVE SOME ACTION THAT'S REQUIRED.
COUNCIL, UM, AND, UH, DIRECTOR JONES, IF YOU COULD GIMME AN UPDATE ON THE ARPA FUNDS OUTSTANDING, UM, ARPA FUNDS REALLY QUICKLY.
I KNOW Y'ALL DO THAT IN THE QUARTERLY, SO, NO.
SO AS OF, UH, DECEMBER 27TH, THE TOTAL SPEND IS 326 MILLION, AND THAT INCLUDES, UH, EXPENSES ON PRIORITY PROJECTS OF 24 MILLION IN REVENUE REPLACEMENT OF 302 MILLION.
SO 326 MILLION SPENT OUT OF THE, OUT OF A TOTAL OF, OF 607, I BELIEVE.
COUNCIL MEMBER MICHAEL KUBOSH.
BACK TO THE, UM, UH, REPORT THAT YOU GAVE ON THE PERFORMANCE AUDIT ON THE HOUSTON PUBLIC WORKS AND THE HOUSTON PERMITTING CENTER.
I, UH, I SAW THE, UH, THAT, THAT YOU, YOU GAVE THEM, UH, YOU FOUND SOME STRENGTHS, BUT MAN, YOU CAME BACK AND IT LOOKS LIKE YOU REALLY HAMMERED THEM ON THE OTHER, WHEN YOU SAID, BASED ON THE RESULTS OF OUR AUDIT PROCEDURES, WE IDENTIFIED WEAKNESSES IN HOUSTON PUBLIC WORKS PROCESS AND CONTROLS NEEDED TO REDUCE THE RISK OF POTENTIAL MISCONDUCT OR OTHER INAPPROPRIATE ACTIVITIES.
KEY ISSUES IDENTIFIED INCLUDE THE LOSS OF PERMIT REVENUE AND INCONSISTENT AND INCOMPLETE PERMIT FEE SCHEDULE, AND A LACK OF MONITORING, UH, RELATED TO PERMITTING AND INSPECTION PROCESS, AS WELL AS THE GEOGRAPHICAL INFORMATION SYSTEM,
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UH, THE GYM'S PERMITTING REVIEW.I, UM, I, I, I MEAN THERE'S SOMETHING THAT CREATED THIS, THIS, THIS, UH, UH, THIS, THIS STATEMENT.
I MEAN, THAT'S A POWERFUL STATEMENT.
YOU'RE, IT'S, UH, IT'S BASICALLY AN ACCUSATION THAT THERE'S A, THERE'S POTENTIAL IMPROPRIETIES THAT COULD TAKE PLACE IN THIS AREA.
DID YOU, DID YOU FIND ANY IMPROPRIETIES? YOU KNOW, I, I DON'T BELIEVE THAT WE DID SPECIFICALLY, OR WE WOULD'VE HIGHLIGHTED IT IN THAT REPORT.
I THINK WHAT WE WERE SAYING IS THAT THERE'S A, A POTENTIAL FOR THAT.
UM, UH, A LOT OF TIMES WHAT WE'LL TRY AND DO IS, IS, UH, LOOK AT THESE, YOU KNOW, FROM AN OPERATIONAL STANDPOINT AND IDENTIFY AREAS, UH, WHERE THERE IS POTENTIAL RISK.
AND I THINK CALL THAT OUT IN ADVANCE.
SO HOPEFULLY, UH, WE DON'T SEE DOWN THE ROAD, UM, YOU KNOW, UH, ANY KIND OF, UH, IMPROPRIETIES.
UM, BUT, YOU KNOW, THIS IS WHY WE CONTINUE TO DO THESE AUDITS.
'CAUSE WE LOOK AT THESE THINGS.
I KNOW, UM, COUNCIL MEMBERS, YOU PROBABLY ALL HAVE GOTTEN LOTS OF CALLS ABOUT PERMITTING, AND, YOU KNOW, THOSE TRICKLE TO MY OFFICE TOO.
UM, YOU KNOW, WE'RE FORTUNATE TO BE IN SUCH A, A LARGE, UH, CITY THAT'S GROWING, BUT AS A RESULT, WE HAVE TO, YOU KNOW, ISSUE A LOT OF PERMITS FOR NEW CONSTRUCTION AND OTHER THINGS.
AND THAT PROCESS NEEDS TO BE MORE EFFICIENT.
SO I, I APPRECIATE YOU COUNCIL MEMBER, UH, CALLING THAT OUT.
I THINK, UH, THERE'S PROBABLY GONNA BE, AS WE ALWAYS DO A FOLLOW UP AUDIT, UH, IN THE FUTURE ON THIS, AND WE'LL CONTINUE TO BE WATCHING, BUT HOPEFULLY THE DEPARTMENTS TAKE NOTICE OF, YOU KNOW, THE RECOMMENDATIONS THAT WE'VE MADE AND, UH, CONTINUE TO MAKE IMPROVEMENTS.
DID YOU PUT ME BACK IN THE QUEUE? YOU IN, UH, WELCOME BACK,
THAT WAS A FAST THREE MINUTES.
UH, DID YOU, UH, YOU SAID YOU MADE RECOMMENDATIONS TO THE PERMITTING DEPARTMENT.
WELL, I THINK WE SEND THESE AUDITS TO THEM, AND, AND THEY ACTUALLY HAVE TO RESPOND.
THE DEPARTMENT RESPONDS TO THE FINDINGS, AND YOU'LL SEE THAT IN THE AUDIT AS WELL.
SO, UH, THEY'RE, THEY'RE WELL AWARE OF SOME OF THE DEFICIENCIES THAT WE FOUND, AND, AND I KNOW THEY'LL BE WORKING TOWARDS, YOU KNOW, CURING THOSE IN THE FUTURE.
WELL, THE, THE CONTROLLER'S OFFICE IN YOUR POSITION IN THE CHARTER, YOU'RE CALLED A WATCHDOG, AND IT ACTUALLY SAYS THAT, YOU KNOW, I WAS SOMETIMES SURPRISED TO SEE SUCH TERMINOLOGY, BUT YOU GOTTA REMEMBER, IT WAS WRITTEN PROBABLY IN THE FORTIES.
BUT, UM, IF YOU SEE SOMETHING, YOU HAVE TO SAY SOMETHING, RIGHT? AND, AND IN YOUR POSITION, YOU'RE INDEPENDENT, INDEPENDENTLY ELECTED CITYWIDE, JUST AS I AM.
AND WE HAVE A RESPONSIBILITY TO THE CITIZENS THAT IF YOU SEE THINGS, YOU HAVE TO LET US KNOW, BECAUSE THE LAST THING WE NEED TO DO IS BE ON NATIONAL TV, UH, WITH SOMEBODY TAKING BRIBES OR DOING THINGS WRONG.
AND I APPRECIATE SO MUCH, UH, YOU BRINGING THIS UP, AND I'LL BE LOOKING MORE INTO THAT.
COUNCIL MEMBER SALLY ALCORN, THANK YOU, CHAIR, AND, AND ALSO ON THE PERMITTING AUDIT.
THANK YOU FOR YOUR WORK ON THAT.
I KNOW, YOU KNOW, I'VE HAD A VESTED INTEREST IN THAT AND HAVE, AND READ THAT THOROUGHLY.
AND, AND, AND IT, AND I THINK THE SAME WITH THE FLEET AUDIT THAT YOU TALKED ABOUT.
WHEN YOU'RE DOING THESE AUDITS, YOU'RE, YOU'RE WORKING WITH THEM THE WHOLE TIME.
SO WHEN I, WHEN THE PERMITTING AUDIT CAME OUT, I, YOU KNOW, OF COURSE CALLED RIGHT OVER THERE AND, AND TALKED TO PEOPLE THAT, THAT, THAT HAD BEEN WORKING ON ADDRESSING MANY OF THE FINDINGS.
YOU KNOW, THEY'RE NOT, IT'S NOT LIKE THEY GET THE AUDIT THE SAME DAY WE DO AND DON'T KNOW ANYTHING ABOUT IT, THAT IT'S KIND OF A PROCESS BY WHICH THEY'VE, THEY'VE BEEN WORKING THROUGH A LOT OF THE FINDINGS ON THE AUDIT.
SO CAN YOU DESCRIBE HOW, HOW THAT WORKS? HOW THEY KIND OF WORK ALONGSIDE THE CONTROL? YEAH.
I MEAN, I KNOW YOU DO A SEPARATE INDEPENDENT AUDIT, BUT ABSOLUTELY.
YOU, YOU ALSO ALLOW THEM THE OPPORTUNITY TO KIND OF START WORKING ON THINGS TO CORRECT THEM.
SO WE ACTUALLY, UH, THESE TYPE OF AUDITS WILL, WILL BE DONE THROUGH A THIRD PARTY.
SO WE'LL HAVE A, AN EXTERNAL AUDITOR THAT COMES IN.
UH, THEY BASICALLY DO FIELD TESTING.
THEY START REVIEWING, UH, DOCUMENTS.
OBVIOUSLY, WE CAN'T, UH, YOU KNOW, TEST EVERYTHING.
SO THEY'LL, BASED ON RISK, THEY'LL DE DEVELOP A SCOPE OF WHAT, WHAT THEY'RE GONNA LOOK AT.
UH, AND THEN THEY'LL, AS YOU UH, ALLUDED TO, THEY'LL START REQUESTING THAT INFORMATION FROM THE DEPARTMENT.
SO, UH, YOU KNOW, THROUGH THE, YOU KNOW, PROBABLY THE FIRST, UH, QUARTER OF THE, UH, AUDIT ALL THE WAY THROUGH THE TO COMPLETION, THEY'RE WORKING BACK AND FORTH, FORTH WITH THE DEPARTMENT.
AND AGAIN, UH, ONCE WE FINISH THE AUDIT, WE ACTUALLY, UH, YOU KNOW, REFER IT TO THE DEPARTMENT AND THEY HAVE TO RESPOND, UH, MANAGEMENT RESPONSE IN, IN THE FINDINGS THAT WE HAVE.
SO, UH, THERE IS A LOT OF BACK AND FORTH, AND I THINK IT'S, IT'S A GOOD THING BECAUSE, UM, WHAT IT DOES IS IT SHOWS THEM THROUGH THE PROCESS EXACTLY HOW TO REMEDY ANY KIND OF, UH, DEFICIENCIES.
UH, THE CHALLENGE THAT WE RUN INTO SOMETIMES IS THAT, UH, EITHER THEY DON'T HAVE THE TIME OR THE RESOURCES TO ACTUALLY IMPLEMENT THE CHANGE.
UH, BUT THAT'S WHY WE DO FOLLOW UP AUDITS SO THAT WE WILL COME BACK, UH, YOU KNOW, HOPEFULLY IN THE NEXT COUPLE OF YEARS, AND WE WILL RE-LOOK AT THIS AND MAKE SURE THAT THE RECOMMENDATIONS THAT WE WERE, WE MADE, UH, WERE IN FACT IMPLEMENTED.
AND I THINK THAT THERE'S THE KIND OF THE HUMAN CAPITAL, UM, ISSUE THAT I BROUGHT UP EARLIER WITH, WITH PERMITTING AND BEING DOWN 85 STAFF
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OVER THERE AND, AND IS A, IS A BIG HINDRANCE TO BEING ABLE TO ADDRESS ALL OF THAT.I JUST DO WANT TO ADD, MR. CHAIRMAN, YOU KNOW, THE THING IN OUR OFFICE HAS BEEN CONTINUING TO PUSH IS, YOU KNOW, TRANSPARENCY IS KEY WITH A LOT OF THESE AUDITS.
JUST SIMPLY HAVING A SYSTEM TO PUT THESE TYPE OF THINGS ONLINE AND HAVE EVERYTHING, UH, DISCLOSED, UH, IT MAKES IT MORE EFFICIENT.
SO, UH, I KNOW THE DEPARTMENT DEPARTMENT HAS WORKED, UH, AND FINANCE AND ADMINISTRATION HAS WORKED IN THAT PARTICULAR AREA, BUT CONTINUING TO DO THAT, UH, LIMITS THE ABILITY FOR SOME OF THESE THINGS THAT WERE MENTIONED IN THE AUDIT TO HAPPEN IN THE FUTURE.
AND COUNCIL MEMBER ALCORN MENTIONED THE FLEET REPORT, UH, UH, THAT WAS THE ONE I QUESTIONED LAST MEETING.
THAT WAS A REPORT DONE FROM 19 AND 20 2019, 2020.
AND I ASKED COURTNEY SMITH TO SEE IF WE CAN DO AN UPDATED ONE BECAUSE, UM, AS WE KNOW, AN INTERNAL AUDIT IS, IS PUT IN PLACE TO IDENTIFY MATERIAL WEAKNESSES AND INTERNAL CONTROLS.
IT'S NEVER GOING TO GIVE YOU A REPORT THAT SAYS, YOU'RE DOING A FANTASTIC JOB IN THESE 20 AREAS.
THEY'RE GONNA DEFINE WHERE THE WEAKNESS IS AND WORK WITH THE FINANCE DEPARTMENT TO DETERMINE WHAT CAN WE DO ABOUT THE WEAKNESSES IN INTERNAL CONTROLS, BECAUSE, UH, THOSE ARE GONNA ALWAYS APPEAR IN OUR INTERNAL AUDIT REPORTS.
AND I KNOW MS. SMITH DOES A GREAT JOB IN PUTTING THOSE THINGS TOGETHER, WORKING WITH OUR OUTSIDE ACCOUNTING FIRMS. BUT, UM, ONE OF THE THINGS THAT, UH, THAT I'M LOOKING FORWARD TO IS, IS, IS SEEING HOW THESE REPORTS THAT WERE REFLECTIVE OF A PERIOD IN COVID, UH, COME OUT TO THE NEXT INTERNAL AUDIT REPORT THAT WE'LL DO.
SO THANKS FOR YOUR CONTINUED WORK WITH THAT COUNCIL MEMBER.
UH, THANK YOU SO MUCH FOR ALL THE WORK THAT Y'ALL DO.
SO, YOU KNOW, YOU WERE MENTIONING THAT, UM, THE AUDIT MAKES RECOMMENDATIONS.
THEY WORK TOGETHER TO MAKE SURE SOME OF THESE RECOMMENDATIONS ARE IMPLEMENTED, BUT WE KNOW THERE ARE CONSTRAINTS.
SO IS THERE ANY WAY TO QUANTIFY OR TO SEE, YOU KNOW, PERCENTAGE WISE, HOW MANY, UM, SUGGESTIONS IN THE AUDITS ARE ACTUALLY BEING IMPLEMENTED? WELL, AND THAT'S, UH, COUNCIL MEMBER, WHAT WE TRY AND DO IN PART FROM THE FOLLOW UP, 'CAUSE WE'LL DO EXACTLY THAT.
WE WILL LOOK AND SAY, WELL, THESE WERE THE SEVEN, UH, DEFICIENCIES OR RECOMMENDATIONS THAT WE IDENTIFIED, AND WE'LL ACTUALLY GO BACK AND REFER TO EACH ONE AND INVESTIGATE TO MAKE SURE THAT THEY HAVE ACTUALLY BEEN IMPLEMENTED.
UM, I WILL TELL YOU, UM, AND AS YOU SEE RECENTLY, WE'VE, UH, PUT OUT A LOT OF AUDITS IN THIS PARTICULAR TIME, AND THEY, THEY DON'T ALL COME OUT EVENLY.
THEY COME OUT KIND OF IN SPURTS.
UM, AND SO SOMETIMES WE DON'T GET ALL OF THESE IMPLEMENTED BECAUSE IT'S KIND OF OVERWHELMING FOR THE DEPARTMENTS, AND MAYBE THEY DON'T HAVE THE RESOURCES TO IMPLEMENT, BECAUSE SOME OF THESE ACTUALLY, UM, YOU KNOW, IT TAKES MONEY TO, UH, IMPLEMENT AND MAKE THE CHANGE.
UM, YOU KNOW, WE HAVE GONE BACK THROUGH OUR, UH, FOLLOW UPS AND I KNOW I, I, I'M PRETTY SURE OUR AUDIT DEPARTMENT IS, IS TRACKING THAT.
I'D BE HAPPY TO GET YOU SOME ADDITIONAL INFORMATION ON, I THINK WHAT YOU'RE ASKING IS HOW MANY OF THESE OUTSTANDING RECOMMENDATIONS HAVE YET TO BE IMPLEMENTED FROM AUDITS THAT WE'VE DONE? WELL, HOW MANY ARE, RIGHT.
HOW MANY ARE LEFT TO BE IMPLEMENTED, OR, YOU KNOW, ARE THERE DEPARTMENT GOALS, LIKE AT LEAST 50% OF THE RECOMMENDATIONS MM-HMM
ARE, ARE HIT, OR, YOU KNOW, 'CAUSE I KNOW WE CAN'T DO EVERYTHING.
UM, SO ARE THERE ANY KIND OF SET GOALS LIKE THAT? I MEAN, OUR GOAL IS A HUNDRED PERCENT.
SO, UM, YOU KNOW, I WOULD SAY, UM, YOU KNOW, IT'S PROBABLY SOMEWHERE BETWEEN 50 AND A HUNDRED.
AND IT DEPENDS ON DIFFERENT DEPARTMENTS.
AND AGAIN, THE RESOURCES THAT ARE AVAILABLE TO THEM.
SOME OF THE, UM, YOU KNOW, SOME OF THE RECOMMENDATIONS, AGAIN, THEY DO TAKE, UH, MONEY.
SO ABSENT OF, YOU KNOW, THIS BODY, YOU KNOW, VOTING TO APPROVE ADDITIONAL FUNDING FOR THE DEPARTMENT, IT'S, UH, THOSE LARGER SCALE.
BUT, BUT, BUT HAPPY TO GET OFFLINE AND MAYBE GIVE YOU SOME MORE DETAILED DATA.
SO THAT CAN HELP ANSWER YOUR QUESTION IN MORE DETAIL.
COUNCIL MEMBER DAVID ROBINSON.
I THINK THIS IS A GREAT CONVERSATION.
AND YOU MENTIONED THE HUMAN, UH, RESOURCES AND FINANCIAL RESOURCES AND, YOU KNOW, THAT IS ABSOLUTELY SPOT ON OF COURSE, WHEN IT COMES TO YOUR ROLE AND YOUR ANALYSIS.
I'M THINKING, UH, HAPPILY OF THE MEMORY I HAVE OF YOUR DAD WHEN HE WAS ON COUNCIL AND I WAS ON PLANNING COMMISSION AND JUST, YOU KNOW, HOW FREQUENTLY WE HEAR ABOUT DEVELOPMENT IN HOUSTON AND JUST KIND OF WHAT A GOOD PROBLEM THAT IS FOR A GROWING CITY.
AND I'M, I'M GLAD YOU POINTED THAT OUT.
YOU KNOW, WE HAVE HEARD, AS THE CHAIR MENTIONED ABOUT COVID RELATED ISSUES.
WE KNOW ABOUT SUPPLY CHAIN ISSUES.
UH, WE KNOW ABOUT THE IMPACT OF HARVEY AND SOME OF THE RECENT CODE UPDATES, THE ATLA 14, ESSENTIALLY THE FLOOD MAPS THAT ARE CHANGING THINGS.
I, THIS IS NOT TO DEFEND THE PUBLIC WORKS IN THE WAY THAT I THINK THEY STAND SOMEWHAT ACCUSED, OR AT LEAST, UH, OF POTENTIAL IMPROPRIETIES AS MENTIONED TODAY.
AND IT'S REALLY WORTH OUR SCRUTINIZING THEM FOR THIS.
BUT IT IS AN, IN SOME CASES, A REALLY, UH, NICE PROBLEM TO HAVE BECAUSE WE ARE EXPERIENCING SUCH, SUCH ROBUST GROWTH.
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YOU'RE AWARE OF THAT.AND IT'S, IT'S, UH, IT IS WORTH, UH, REMINDING I THINK EVERYONE ON COUNCIL IN THE CITY OF HOUSTON THAT WE ARE A GROWING CITY.
AND UNTIL WE ARE NOT A GROWING CITY, WE'RE GONNA BE EXPERIENCING PROBLEMS OR AT LEAST CHALLENGES WITH PERMITTING.
'CAUSE THE CODES, AS WE UPDATED LAST YEAR, UH, GOING FROM THE 2012 TO THE 2015, THIS YEAR, WE'RE BYPASSING THE 2018 TO GO TO THE 2021 AND MODERNIZING OUR CITY IN WAYS THAT ARE CHALLENGING FOR OUR HUMAN RESOURCES.
AND THEY DO PUT FINANCIAL STRAINS ON IT.
SO YOU ALL ARE SO RIGHT TO CALL IT OUT.
AND WE JUST NEED TO, WE NEED TO WORK AS A COUNCIL TO THINK ABOUT THAT, UH, CERTAINLY WITH THIS ADMINISTRATION AND OUR STAFF, UH, TO SEE WHAT CAN BE DONE AND JUST, JUST MAKE IT THE BEST PROCESS WE POSSIBLY CAN.
SO, REALLY APPRECIATING YOUR INSIGHT TO THIS.
AND YOU KNOW, FROM OUR PERSPECTIVE, OUR LARGEST SOURCE OF REVENUE IS PROPERTY TAX REVENUE.
SO A LOT OF WHAT WE'RE TALKING ABOUT HERE IS PUTTING, YOU KNOW, UH, ADDITIONAL VALUE ON THE GROUND, WHETHER THAT'S RESIDENTIAL OR COMMERCIAL.
SO WE WANNA MAKE SURE THAT, YOU KNOW, THE BUSINESSES THAT ARE OUT THERE THAT ARE, UH, YOU KNOW, RISKING CAPITAL TO, YOU KNOW, ADD TO OUR TAX BASE.
UH, YOU KNOW, WE'RE DOING THAT IN AN EFFICIENT MANNER, BECAUSE OTHERWISE THEY'RE GONNA GO TO OUT, YOU KNOW, OUTSIDE THE CITY.
SO, AND IT'S SUCH A GOOD POINT 'CAUSE IT'S A POTENTIAL PROFIT CENTER FOR US TOO.
AND SO, YOU KNOW, FROM MY PERSPECTIVE, UH, INVESTING A LITTLE BIT OF MONEY, UH, TO IMPROVE AND, AND MODERNIZE THIS AND TO MAKE SURE IT'S, UH, SECURE AND SAFE, UH, FROM ANY KIND OF, YOU KNOW, MALFEASANCE, WE WANNA MAKE SURE WE MAKE THAT INVESTMENT SO THAT WE CAN HAVE THE MOST, UH, FINANCIAL, LARGEST FINANCIAL IMPACT TO THE CITY.
NOW MAYBE A FOLLOW UP TO THAT, THAT DIALOGUE.
I KNOW THAT, UM, UH, SEE JOHN SEIDLER AND VERNON, UH, LEWIS, AND I KNOW COURTNEY SMITH.
AND I KNOW THAT YOU'VE HAD SOME CHALLENGES IN THE CONTROLLER'S OFFICE WITH LOSS OF PERSONNEL.
AND THE TYPICAL EXPERIENCE WE HAD WAS A, A LOT OF THE AUDIT WORK, THE INTERNAL AUDIT WORK THAT WE PERFORM, WHETHER IT'S ACCOUNTING FUNCTIONS, INTERNAL CORPORATES, GOVERNANCE, OR LOOKING AT MATERIAL WEAKNESSES OR INTERNAL CONTROLS, YOU'VE BEEN CHALLENGED WITH THAT.
SO, YOU KNOW, AS YOU GET TO LEAVE HERE IN 200 AND, YOU KNOW, 63 DAYS FROM NOW, UM, HOW DO WE GET IN A POSITION WHERE WE GET THE CONTROLLER'S OFFICE IN THAT, UH, FUNCTION THAT WE HAVE IN A BETTER POSITION THAT WE HAVE TODAY? BECAUSE AS COUNCIL MEMBER KUBOSH DID MENTION, UH, IT IS THE, UH, THE WATCHDOG, IT IS THE INDEPENDENT AGENCY THAT, UH, THAT DOES A LOT OF REALLY GOOD THINGS TO IDENTIFY THE CITY'S INTERNAL CONTROLS AND WHAT HAVE OUR CORPORATE GOVERNANCE STRUCTURE LOOK LIKE.
SO ANY RECOMMENDATIONS AS WE SEE MOVING FORWARD AS YOU RIGHT OFF INTO THE SUNSET? YEAH.
WELL, I I VERY MUCH APPRECIATE YOU BRINGING THIS INTO THE DISCUSSION.
UM, YOU KNOW, I'M INDEPENDENTLY ELECTED, BUT UNFORTUNATELY I DON'T HAVE DIRECT CONTROL OVER MY BUDGET THAT GOES THROUGH, UH, THIS BODY AND IS, UH, UNDER CONTROL OF THE ADMINISTRATION.
SO, YOU KNOW, WE HAVE, I THINK ALMOST EVERY SINGLE YEAR, UH, I'VE BEEN NOW IN THE EIGHTH YEAR AS CONTROLLER, UH, TALKED EITHER INDIVIDUALLY OR AS A BODY, UH, TO Y'ALL ABOUT INCREASING THE AUDIT DIVISION BUDGET.
UH, IF YOU LOOK AT DALLAS, FOR EXAMPLE, UH, WHICH THE POPULATION IS A LITTLE OVER A MILLION DOLLARS, I THINK THEY HAVE, UH, 20 AUDITORS.
UH, WE'VE, UH, GOT 10 PEOPLE, UH, LESS THAN 10 PEOPLE ON OUR AUDIT STAFF.
SO, UM, YOU KNOW, WE REALLY SHOULD BE, UH, MAKING THE INVESTMENT, UH, MY HUMBLE REQUEST, UH, TO ADD MONEY.
AND WE'RE NOT TALKING ABOUT A LOT OF MONEY, BUT, UH, ADD MONEY TO OUR AUDIT DIVISION IN THE CONTROLLER'S OFFICE BECAUSE WE'D BE ABLE TO DO MORE AUDITS, UH, AND WE'D BE ABLE TO FIND MORE OF THESE TYPE OF THINGS THAT ULTIMATELY I THINK WILL SAVE THE CITY MONEY.
SO IT'S A GREAT RETURN ON INVESTMENT.
SO THAT WOULD BE, UH, MY RESPONSE.
UM, I DID HAVE ONE, UH, POINT OF PERSONAL PRIVILEGE IF WE'RE DONE WITH, UH, THE QUEUE.
I JUST WANTED TO, UH, UH, ANNOUNCE THAT WE HAVE FINISHED THE, UH, ANNUAL AUDIT, THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, UH, AND THAT IS LIVE ON OUR WEBSITE.
I DID WANT TO, UH, THANK EVERYBODY.
UH, YOU KNOW, IT'S ALWAYS A CHALLENGE DOING THIS, ESPECIALLY, UH, THROUGH COID AND, UH, AS WE START TO SEE, UH, THE HOLIDAYS APPROACH.
BUT THE TEAM, ONCE AGAIN, HAS GOTTEN THIS DONE.
UH, WANTED TO, UH, JUST THANK, UH, BEVERLY RIGGINS IN OUR, UH, FINANCIAL REPORTING DIVISION AND ALSO, UH, CONRAD LIN, UH, BOTH OF THEM WORKED, UH, TIRELESSLY TO HELP PUT THIS THING TOGETHER.
UH, ALSO, UH, WILL JONES IN THE FINANCE DEPARTMENT, WE APPRECIATE, UH, ALL, UH, THE WORK THAT THEY PUT IN.
IT'S A TRULY A TEAM EFFORT, UM, AS WELL AS OUR EXTERNAL AUDITORS, UH, BANKS, FINLEY AND WHITE.
SO THAT IS ONLINE NOW, UH, UNDER THE CONTROLLER'S OFFICE WEBSITE.
AND YOU GUYS WILL BE SEEING, UH, HARD COPIES, UH, PRINTED AND DISTRIBUTED, HOPEFULLY IN THE NEXT, UH, WEEK OR SO.
UH, THANK YOU BOTH FOR YOUR PRESENTATIONS.
UM, WE'RE ON THE TOPIC OF THESE AUDITS TODAY.
[00:25:01]
AND, UM, COUNCILWOMAN MARY ANN HUFFMAN BROUGHT UP A GOOD POINT WHEN IT COMES TO THE FOLLOW UP OF THESE AUDITS.AND I KNOW YOU MENTIONED EVEN HAVING, IT WOULD BE GREAT TO HAVE EVEN MORE STAFF AND MORE AUDITORS WITHIN YOUR OFFICE TO DO SOME OF THIS WORK, BUT THE QUESTION BECOMES WHAT HAPPENS AFTER THE AUDIT? RIGHT? WE CAN, WE CAN SPEND A LOT OF TIME AND EFFORT AND ENERGY, UM, PRODUCING THESE REPORTS BASED ON AN AUDIT, BUT THE QUESTION THEN BECOMES WHAT ACTION STEPS ARE NEXT? WHAT, WHO'S BEING HELD ACCOUNTABLE? HOW ARE WE ABLE TO REALLY TRANSLATE TO THE PUBLIC WHAT THESE FINDINGS ARE IN THE LAYMAN'S, UH, POINT OF VIEW FOR THERE TO REALLY BE SOME DILIGENCE TO ENSURE THAT SOME OF THESE RECOMMENDATIONS ARE ACTUALLY TAKING PLACE? AND I WANNA KNOW FROM YOUR PERSPECTIVE, UM, HAVE YOU SEEN THAT BEING DONE, UH, THROUGHOUT THIS ADMINISTRATION OR MAYBE A PRIOR, UM, AND WHAT WOULD YOUR, WHAT WOULD YOU LIKE TO SEE IN THE FUTURE AS IT PERTAINS TO THESE AUDITS? UM, WE GET 'EM IN OUR EMAILS.
YOU GO THROUGH 'EM, IT'S HARD TO READ.
UM, BUT THERE'S GOOD INFORMATION IN THERE.
BUT THE QUESTION IS, WORKING WITHIN THOSE DEPARTMENTS, WHEN THEY GET THAT INFORMATION, WHAT'S HAPPENING NEXT? ARE WE SEEING REAL FOLLOW UP? ARE WE SEEING REAL PROGRESS? AND IF NOT, WHAT IS SOMETHING THAT WE CAN DO TO MAKE IT DIFFERENT? UM, THANK YOU AND GREAT QUESTION.
UM, YOU KNOW, IT'S A TWO PART CHALLENGE FROM MY PERSPECTIVE.
UH, ONE PART FINANCIAL THAT WE'VE TALKED ABOUT BEFORE.
'CAUSE SOME OF THESE CHANGES REQUIRE INVESTMENTS TO MAKE, UH, YOU KNOW, UPDATE THE STANDARDS.
UH, BUT THE OTHER ISSUE IS GOVERNANCE.
AND WHAT I MEAN BY THAT IS, UH, THE CONTROLLER'S OFFICE DOES NOT HAVE GOVERNANCE OVER DEPARTMENT DIRECTORS.
THEY ESSENTIALLY REPORT TO THE MAYOR.
UH, SO I THINK WHAT YOU'RE ALLUDING TO IS, YEAH, WE CAN PUT THIS REPORT OUT, BUT IF, UH, WE DON'T HAVE, UH, YOU KNOW, BUY-IN FROM FINANCE AND THE ADMINISTRATION, UH, TO IMPLEMENT IT, AND THAT COULD BE HUMAN RESOURCE TIME IS LIMITED, UH, OR FINANCIAL, UM, THEN SOME OF THESE WON'T GET DONE.
UM, YOU KNOW, I, I, I WILL, UH, REFERENCE A A, A BRIGHT SPOT.
UH, WE DID HAVE OF A LIFE SAFETY BUREAU AUDIT, AND I KNOW CHIEF PENA, I THINK IS, IS STILL HERE.
I WANT TO JUST, UH, CREDIT HIM BECAUSE THAT WAS ACTUALLY A FOLLOW-UP AUDIT.
AND WE HAD DONE THAT AUDIT, UH, PREVIOUSLY, UH, MAYBE FOUR OR FIVE YEARS AGO.
AND WE FOUND SOME PRETTY SIGNIFICANT FINDINGS.
BUT, YOU KNOW, NOTHING WAS DONE.
AND WHEN WE DID, AND THAT WAS BEFORE, UH, CHIEF PENA, UH, WAS HERE, UM, BUT TO HIS CREDIT, ONCE WE, UH, DID THAT FOLLOW-UP AUDIT, AND WE FOUND, HEY, LOOK, THERE'S STILL SOME PRETTY SERIOUS, UH, YOU KNOW, PUBLIC SAFETY ISSUES AROUND, UH, YOU KNOW, THESE, UM, UH, FIRE ISSUES AND PERMITTING, UH, YOU KNOW, HE REVAMPED AND, AND REALLY, UM, UH, MADE SOME WHOLESALE CHANGES.
UH, SO, YOU KNOW, WE NEED THAT LEVEL OF, OF BUY-IN FROM THE DEPARTMENT DIRECTORS.
AND, UH, I THINK, UH, WE WILL WORK, UH, CONTINUE TO WORK WITH DIRECTOR JONES, UH, ON, YOU KNOW, TRYING TO PUSH.
UM, BUT I WOULD SAY COUNCIL HAS A ROLE HERE TOO.
I MEAN, TO THE, THE SENSE THAT, YOU KNOW, YOU GUYS ARE SEEING THESE, AND I LOVE THIS KIND OF DISCUSSION.
I, I THINK WE, YOU KNOW, I'VE MADE THE RECOMMENDATION WE SHOULD HAVE ALL THESE AUDIT REPORTS BROUGHT TO A COUNCIL COMMITTEE AND JUST HAVE THIS LEVEL OF DISCUSSION, BECAUSE I THINK I AGREE.
I MEAN, WE, WE HAVE TO KNOW, UM, GO AHEAD AND CONTINUE.
WE HAVE TO, AS A BODY KIND OF KNOW WHEN THINGS ARE EITHER BEING FOLLOWED UP ON OR IF RECOMMENDATIONS ARE BEING, UM, ADDRESSED OR NOT.
AND THEN WE CAN USE OUR MICROPHONES, WE CAN USE OUR INFLUENCE, WE CAN, UH, FIGURE WAYS IN WHICH WE CAN, UM, BE MORE A PART OF THE PROCESS.
I WOULD LIKE TO BE MORE A PART OF THE PROCESS INSTEAD OF JUST READING SOME OF THE AUDITS AND NOT REALLY UNDERSTANDING THE TIMELINE OF FOLLOW UP.
LIKE, I KNOW YOU SAID FOUR OR FIVE YEARS AGO WITH THE FIRE DEPARTMENT THERE OR SOMETHING.
I MEAN, THAT'S A WHOLE TERM, YOU KNOW? RIGHT.
UM, SO REALLY UNDERSTANDING THE TIMELINES AND REALLY UNDERSTANDING IF THINGS AREN'T BEING DONE TO MAYBE, UH, YOUR PERSPECTIVE AS THE WATCHDOG YEAH.
THEN TO REALLY KEEP US INFORMED SO THAT THEN WE CAN BE WATCHDOGS AS WELL.
AND AGAIN, FROM OUR PERSPECTIVE, IT'S A FINANCIAL AND HUMAN RESOURCES LIMITATION BECAUSE, YOU KNOW, IN A PERFECT WORLD, WE WOULD HAVE AN AUDIT DIVISION, AND THEN WE WOULD HAVE AN AUDIT COMPLIANCE DIVISION WHERE PEOPLE, YOU KNOW, WOULD JUST MAKE SURE THAT ALL THESE WERE, WERE HELD.
BUT I THINK, UM, YOU KNOW, IT'S SOMETHING THAT WE CAN CONTINUE TO WORK WITH, UH, FINANCE.
I DON'T WANNA GIVE YOU ANY MORE WORK DIRECTOR JONES, BUT, BUT I, I THINK ULTIMATELY IT'S A GOOD THING FOR THE CITY.
AND, AND IF WE CAN CREATE EFFICIENCIES, I MEAN, MY GOAL WOULD BE TO BE ABLE TO IMPLEMENT SOME OF THESE THINGS WHERE THEY WOULD GENERATE SAVINGS AND, AND WE WOULDN'T HAVE TO MAKE A, A HUGE CAPITAL INVESTMENT OR A HUMAN RESOURCE, UH, DRAW DOWN.
SO, AND, AND EVERY YEAR YOUR OFFICE SENDS US, UH, UH, AN ASK, AND THAT ASK IS, HELP US WITH THESE AUDITS.
WHO WOULD YOU LIKE TO SEE US AUDIT? SO WE HAVE
[00:30:01]
THE ABILITY TO INFLUENCE A CONTROLLER'S OFFICE INTO DOING THESE AUDITS.SO I'M GLAD AS AN ACCOUNTANT TO SIT HERE AND TALK ABOUT INTERNAL AUDITS, BECAUSE THIS IS ABSOLUTELY THE FIRST VIBRANT CONVERSATION WE'VE EVER HAD ABOUT SOME OF THESE REPORTS.
AND EVERY TIME YOU READ A REPORT, THERE IS ALWAYS GONNA BE WEAKNESSES AND INTERNAL CONTROLS.
THAT'S WHAT THE REPORT IS MEANT TO IDENTIFY.
AND THEN WORKING WITH THE ADMINISTRATION, UH, TO IDENTIFY THE WEAKNESSES AND THEN TO CORRECT THEM AND FIX THEM MOVING FORWARD IS THE KEY INGREDIENT.
AND TO YOUR POINT, AS YOU STATE, YOU HAVE NO CONTROL OVER WHAT HE DOES BECAUSE HE HAS NO REPORTING MECHANISM BACK TO YOU.
SO HE CAN EITHER LOOK AT HIM AND SAY, YES, GOOD POINT, WHICH HE ALWAYS DOES, OR JUST IGNORE HIM AND THEN KEEP MOVING FORWARD.
AND THEN YOU HAVE ANOTHER REPORT THAT COMES OUT THREE OR FOUR YEARS LATER.
UH, BECAUSE WE DON'T HAVE ENOUGH PEOPLE TO DO THESE INTERNAL AUDIT REPORTS, WE ALWAYS OUTSOURCE 'EM.
THEY'RE MORE EXPENSIVE THAN DOING 'EM INTERNALLY.
SO IF WE'RE GOING TO BE DISCUSSING VIBRANCY IN THE CONTROLLER'S OFFICE, YOU NEED MORE MONEY TO ATTACK THAT VIBRANCY.
AND I DO WANNA THANK YOU, COUNSEL, BECAUSE WE DO SEND OUT THAT, UH, SUGGESTED AUDITS IN OUR, UH, AUDIT PLAN EVERY YEAR.
AND, AND MANY OF YOU HAVE RECOMMENDED AUDITS THAT HAVE ACTUALLY, UH, IN FACT, I THINK THIS PERMITTING, I CAN'T REMEMBER WHICH, UH, COUNCIL OFFICE, BUT, BUT YOU KNOW, IT'S DEFINITELY BEEN SOMETHING THAT MANY OF YOU HAVE, HAVE SAID WE NEED TO LOOK AT.
SO, UM, COUNCIL MEMBER, ASH, HOW MUCH MONEY DO YOU THINK WE NEED TO PUT IN THE CONTROLLER'S OFFICE? BECAUSE, UH, I, I'D LIKE TO SEE YOU SUBMIT SOMETHING BEFORE THE NEXT BUDGETARY PROCESS SO THAT, UH, WE WOULD BE MADE AWARE OF WHAT YOU'RE WANTING US TO PUT FORTH AS AN AMENDMENT IF IT'S NOT ADEQUATE.
YEAH, I MEAN, I THINK, UM, YOU KNOW, WE'VE BEEN HAVING A CHALLENGE HIRING AUDITORS BECAUSE THE MARKET IS SO COMPETITIVE.
THINGS ARE COOLING OFF A LITTLE BIT.
UM, BUT I WOULD SAY, YOU KNOW, UM, THE AVERAGE AUDITOR SALARY WITH BENEFITS IS PROBABLY A HUNDRED THOUSAND DOLLARS.
I WOULD LIKE TO BE ABLE TO DOUBLE OUR, OUR, UM, AUDIT STAFF.
SO, UH, 10 MORE PEOPLE AT A HUNDRED THOUSAND, A MILLION DOLLARS.
I MEAN, THAT'S, THAT'S A STARTING POINT.
BUT ON A $5.7 BILLION BUDGET, IT'S, YES.
THAT'S, IT'S VERY SMALL WHEN YOU LOOK AT THE TOTAL BUDGET.
AND, UM, AND THAT'S ONE OF THE REASONS WHY, IF YOU REMEMBER BACK ABOUT 2017, 18 SOMETIME ABOUT, THEN I STARTED SAYING THAT, YOU KNOW, YOU NEED TO BE HERE EVERY WEDNESDAY WHEN WE MEET, BECAUSE THE, THE CHARTER SAYS, UH, THAT, THAT THE CONTROLLER SHALL BE PREPARED AT EVERY REGULAR MEETING OF CITY COUNCIL TO GIVE THE SUCH INFORMATION CONCERNING THE FINANCES OF THE CITY, AS THE COUNCIL MAY REQUIRE.
IF YOU HAD A SEAT AT THIS TABLE, YOU WOULD BE, WE WOULD PAY MORE ATTENTION TO YOU BECAUSE YOU ARE A CITYWIDE, YOU'RE, YOU'RE THE ONLY FULL-TIME ELECTED, UH, CITY ELECTED OFFICIAL OTHER THAN THE MAYOR.
WE'RE ALL PART-TIME, BUT YOU'RE FULL-TIME.
AND, AND I, I WOULD SAY THAT YOUR SEAT HERE AT THE TABLE WOULD, IS JUST INVALUABLE.
AND, AND I, I, I BELIEVE THAT WHOEVER THE NEXT CONTROLLER IS, I'M GONNA ENCOURAGE THAT, THAT WE HAVE A SEAT HERE AT THE TABLE, UH, FOR THE CONTROLLER.
'CAUSE YOU ARE THE WATCHDOG OF THE CITY.
AND I APPRECIATE YOUR COMMENTS, AND I'D LIKE TO SEE, UH, IN WRITING WHAT YOU WOULD LIKE FOR US TO PRESENT, UH, AS AN INCREASE IN YOUR BUDGET.
UM, AS YOU KNOW, I DEFINITELY SUPPORT MORE AUDITS, UM, HAPPENING IN THE CITY AND HAD THAT BUDGET AMENDMENT LAST BUDGET CYCLE TO ADD MORE AUDITORS.
UNFORTUNATELY, IT WAS RULED OUT OF ORDER, BUT DEFINITELY SOMETHING I THINK THAT WE SHOULD CONTINUE LOOKING AT.
UM, ONE OF THE REASONS WHY I KEEP PUSHING FOR THE SUNSET REVIEW PROCESS IS BECAUSE OF THE AUTOMATIC TRIGGER THAT IT, AFTER THE, UM, AUDIT, IT WOULD AUTOMATICALLY COME TO COUNCIL FOR SOME KIND OF VOTE TO IMPLEMENT THE CHANGES THAT THE AUDIT FOUND.
AND SO I'M WONDERING, IN THE OTHER CITIES THAT HAVE, UM, MORE AUDITORS AND, UM, DO THIS MORE REGULARLY, ARE THERE ANY KIND OF AUTOMATIC TRIGGERS IN THOSE CITIES THAT AUTOMATICALLY COME TO COUNCIL TO MAKE CHANGES? YEAH, I, I'VE, UM, THROUGH MY WORK WITH THE NATIONAL LEAGUE OF CITIES, I DO, UH, RECALL, AND I, I, I'M NOT SURE IF IT WAS ARLINGTON OR DALLAS, BUT SOME OF THE OTHER CITIES IN TEXAS, UH, DO HAVE A PROVISION, UH, LIKE THIS.
I THINK, UH, IN THOSE CITIES, THEY DON'T HAVE AN ELECTED CONTROLLER.
SOMETIMES THESE THINGS GET CAUGHT UP IN POLITICS, SO THEY DON'T GET IMPLEMENTED.
BUT, UM, I THINK WHEN THAT GOVERNANCE IS MORE ALIGNED, UM, WE, WE PROBABLY DO SEE MAYBE A HIGHER PERCENTAGE OF IMPLEMENTATION.
BUT AGAIN, I THINK ULTIMATELY, UM, YOU KNOW, THE GOAL SHOULD BE TO, AS YOU MENTIONED IN YOUR AMENDMENT,
[00:35:01]
TO INCREASE THE RESOURCES, BECAUSE WE COULD TAKE ON A LITTLE BIT MORE OF THAT GOVERNANCE FOR THE FOLLOW UPS AND FOR THE IMPLEMENTATION, UH, IF WE HAD MORE PEOPLE.AND, AND NO OTHER COUNCIL MEMBERS IN Q, CORRECT ME IF I'M WRONG, THE CONTROLLER FUNCTION IN MOST CITIES IS UNDER THE GUISE OF THE CHIEF FINANCIAL OFFICER, NOT IN CHARGE OF, UH, AS AN INDEPENDENT.
SO THEREIN IS ANOTHER ISSUE THAT, UH, THAT WE HAVE IN THE CITY OF HOUSTON, IS THAT THE CONTROLLER'S OFFICE, UH, IS INDEPENDENT OF THE ADMINISTRATION, AND IT HAS, IF ANY RECOMMENDATIONS COMES IN THE CONTROLLER'S OFFICE AND THEY'RE NOT IMPLEMENTED, THEN THAT RESPONSIBILITY GOES AWAY BECAUSE IT FALLS UNDER THE MAYOR AND THE CFO OF THE CITY.
SO, YEAH, THERE'S, IT'S, IT'S ALWAYS AN INTERESTING DYNAMIC TO LOOK AT CORPORATE GOVERNANCE WITHIN THE CITY, BECAUSE IT'S TOTALLY DIFFERENT FROM CITY TO CITY.
IN THE LARGE CITIES IN, IN THE US UH, THE LARGE TOP FIVE CITIES, UM, ARE ALL ELECTED CONTROLLERS, THE INDEPENDENTS.
I THINK THAT'S A GOOD THING BECAUSE WE CAN, UM, BE THE WATCHDOG WITHOUT, YOU KNOW, ANY KIND OF ISSUES.
UM, BUT, UH, THERE ARE, YOU KNOW, OTHER AREAS WHERE THAT PROBABLY IS A LIMITATION.
SO IT'S BEEN A GOOD DISCUSSION.
ANY OTHER QUESTIONS FROM COUNCIL? MEMBER COMMENTS? CONTROL, BROWN DIRECTOR JONES.
WE'LL MOVE ON TO THE UPCOMING FINANCIAL TRANSACTIONS DIRECTOR, MELISSA DEBOWSKI.
GREAT TO SEE YOU BACK IN THE, UH, CHAMBERS.
HOPE THE NEW BABY'S WELL, AND EVERYBODY'S DOING GREAT.
GETTING, GETTING A LOT OF SLEEP.
I'M HERE TODAY TO PRESENT UPCOMING FINANCIAL TRANSACTIONS ON BEHALF OF THE FINANCE WORKING GROUP.
SO ON THE NEXT SLIDE, SLIDE TWO, WE HAVE TWO ITEMS ON THE AGENDA TODAY.
ONE FOR THE COMBINED UTILITY SYSTEM, AND THE SECOND ITEM ON THE AGENDA IS FOR THE GENERAL OBLIGATION CREDIT.
BOTH ITEMS RELATE TO THE CITY'S COMMERCIAL PAPER PROGRAM.
UM, SO BEFORE WE GET INTO SLIDE THREE, ON THE FIRST ITEM ON THE COMBINED UTILITY SYSTEM, UM, WE'RE ON THE FINANCE WORKING GROUP, TAKING A LOOK AT ALL OF OUR COMMERCIAL PAPER PROGRAMS AND PRODUCTS THAT WE HAVE THAT ALL SUPPORT THE DIFFERENT AREAS OF THE CIP.
SO YOU'LL SEE THESE TWO ITEMS ARE RELATED TO COMMERCIAL PAPER, AND THEN THERE'LL PROBABLY BE SOME OTHER ITEMS IN THE FUTURE AS WE CONTINUE TO, UH, REVIEW ALL THOSE COMMERCIAL PAPER PROGRAMS THAT WE USE.
SO WE MAY BE COMING FORWARD AT A LATER DATE WITH ADDITIONAL ITEMS TO PRESENT TO YOU.
UM, BUT SO FOR TODAY, WE'LL FOCUS ON THESE TWO.
SO ON SLIDE THREE, RELATED TO THE COMBINED UTILITY SYSTEM, UM, THIS SLIDE GIVES YOU A SUMMARY OF ALL OF THE VARIABLE RATE EXPOSURE THAT THE COMBINED UTILITY SYSTEM HAS THROUGH OUR COMMERCIAL PAPER PRODUCTS AND SOME VARIABLE RATE DEMAND BONDS THAT WE HAVE.
UM, SO RIGHT NOW THE COMBINED UTILITY SYSTEM, UH, HAS A COMMERCIAL PAPER PROGRAM, UH, THAT'S $700 MILLION IN SIZE, AND THEY USE THAT TO SUPPORT THEIR CIP PROGRAM.
SO ON THE NEXT SLIDE, SLIDE FOUR GIVES YOU A LITTLE BIT OF BACKGROUND ABOUT THE COMMERCIAL PAPER PROGRAM.
UM, AS I MENTIONED, WE USE THIS PROGRAM TO, UH, SUPPORT THE CIP.
SO THE COMMERCIAL PAPER PROGRAMS ARE A WAY THAT WE CAN ACCESS, UM, CASH, BASICALLY SHORT TERM FINANCING FROM BANKS TO PAY OUR INVOICES ON CIP PROJECTS.
AND THEN ONCE WE HAVE A, UM, A CERTAIN AMOUNT OF COMMERCIAL PAPER OUTSTANDING, WE TYPICALLY WOULD ACCESS THE BOND MARKETS AND TURN THAT VARIABLE RATE, UM, SHORT TERM LOAN INTO LONG TERM FIXED RATE DEBT.
UM, SO THE COMBINED UTILITY SYSTEM ANTICIPATES, AS YOU ALL KNOW, WITH THE CONSENT DECREE BEING IN PLACE WITH THE EPA, UM, WITH THE WATER RATE INCREASE THAT HAPPENED LAST YEAR, I BELIEVE IT WAS LAST YEAR, UM, THEIR CIP PROGRAM IS GONNA BE RAMPING UP.
AND SO IN ORDER TO SUPPORT THESE, UM, RAMPED UP PROJECTS, THE COMBINED UTILITY SYSTEM ANTICIPATES THAT THEY'LL NEED ADDITIONAL COMMERCIAL PAPER CAPACITY.
SO ON SLIDE FIVE, UM, WHAT WE'RE, UH, PLANNING TO DO IN EARLY JANUARY, LATER THIS WEEK, ACTUALLY WE'LL BE ISSUING A REQUEST FOR TERM SHEETS TO OUR QUALIFIED POOL OF BANKERS, UM, TO SEEK PROPOSALS FROM THEM FOR UP TO $300 MILLION IN ADDITIONAL APPROPRIATION CAPACITY TO HELP SUPPORT THOSE PROJECTS.
WITH AN, UH, OF THAT 300 MILLION, WE ANTICIPATE THAT UP TO 200 MILLION WOULD BE FOR DRAWN PURPOSES.
AND ONCE WE GET THE PROPOSALS IN FROM OUR QUALIFIED POOL OF BANKERS, THE FINANCE WORKING GROUP WILL EVALUATE THESE AS WE TYPICALLY DO WITH ALL OF OUR SOLICITATIONS.
AND WE'LL MAKE A SELECTION AND RECOMMENDATION TO PRESENT IN AN RCA, UM, TO
[00:40:01]
THIS BODY, WELL TO CITY COUNCIL IN SPRING.OKAY, ON THE NEXT SLIDE, THE NEXT ITEM RELATES TO THE GENERAL OBLIGATION CREDIT.
UM, SO ON THIS SLIDE, YOU SEE, SIMILAR TO THE, UH, SUMMARY FOR THE CUS COMMERCIAL PAPER, YOU SEE A SUMMARY OF ALL OF THE COMMERCIAL PAPER PROGRAMS THAT SUPPORT THE GENERAL OBLIGATION CREDIT.
UM, SO THESE PROGRAMS ARE USED ALSO TO HELP IMPLEMENT THE CIP ON THE GENERAL OBLIGATION SIDE.
SO THIS WOULD BE FOR POLICE FIRE SOLID WASTE HEALTH.
UM, AGAIN, THESE ARE, UM, WHEN YOU GO TO SLIDE SEVEN, UH, WE USE THESE TO HELP SUPPORT THE CIP.
UM, THE, THE TWO SERIES THAT WE'RE GONNA TALK ABOUT TODAY SPECIFICALLY ARE THE SERIES E, THE SERIES E ONE, AND E TWO.
UM, THIS SERIES WAS CREATED BACK IN THE EARLY TWO THOUSANDS TO HELP SUPPORT OUR LARGE EQUIPMENT PURCHASES AT THE CITY.
UM, SO THINGS, ANYTHING FROM VEHICLES TO, UM, YOU KNOW, LARGE IT EQUIPMENT, UH, WE USE THIS, UH, THESE TWO SERIES FOR, UM, AT THE TIME THEY WERE CREATED, THEY WERE, UH, CREATED UNDER ONE ORDINANCE THAT SUPPORTED THE TWO SERIES.
UM, SINCE THAT TIME, UH, THE FINANCE WORKING GROUP HAS BEEN LOOKING AT ALL THE DIFFERENT, UM, UH, ORDINANCE, THE ORDINANCES AND THE LEGAL DOCUMENTS THAT SUPPORT THIS, UH, COMMERCIAL PAPER SERIES.
AND THE LEGAL DEPARTMENT AND THE FINANCE WORKING GROUP RECOMMENDS THAT WE, UM, HAVE THESE TWO SERIES, INSTEAD OF OPERATING UNDER ONE ORDINANCE SEPARATE THE, OR THE TWO, THE ONE ORDINANCE INTO TWO.
SO THAT SERIES E ONE HAS ITS OWN ORDINANCE SERIES E TWO HAS ITS OWN ORDINANCE.
UM, WE THINK IT'LL BE CLEANER AND EASIER FOR US TO ADMINISTER THAT WAY.
SO THERE'S NOT GOING TO BE ANY CHANGES TO THE TERMS OR TO THE PRICING OR TO THE SIZING.
UM, IT'S JUST A MATTER OF, UH, SEPARATE SEPARATING THEM INTO TWO SEPARATE ORDINANCES FOR EASE OF ADMINISTRATION.
SO IF YOU GO TO SLIDE EIGHT, UM, OUR PLAN IS TO, UH, BRING THIS ITEM TO COUNCIL IN FEBRUARY SO THAT YOU CAN, UM, REVIEW AND APPROVE THAT, UH, SEPARATION OF THE ORDINANCES FOR THOSE TWO SERIES.
AND AS I MENTIONED, UM, IN MY OPENING REMARKS, WE'RE GONNA STILL PLAN TO LOOK AT ALL OF OUR OTHER COMMERCIAL PAPER SERIES AND SEE IF THERE'S ANY ADDITIONAL ACTIONS WE WOULD RECOMMEND TO HELP, UM, HELP HAVE A MORE EFFICIENT ADMINISTRATION OF THESE PROGRAMS. AND THAT CONCLUDES MY PRESENT.
THERE ARE NO COUNCIL MEMBERS IN QUEUE.
UH, VICE CHAIR AND I HAVE BEEN ANTICIPATING THE AIRPORT PROGRAM.
WHEN DO WE SEE THAT COMING FORWARD AND WITH INCREASE IN INTEREST RATES? WHAT'S Y'ALL'S EXPECTATIONS ON THAT PACKAGE? YEAH, UM, DEFINITELY WE'RE IN AN INCREASING INTEREST RATE ENVIRONMENT.
SO WE'VE BEEN ENJOYING HISTORICALLY LOW INTEREST RATES FOR A WHILE.
AND, UM, IT'S STILL ANTICIPATED THAT THE FED WILL MAKE A FEW MORE INTEREST RATE HIKES.
UM, WE'RE HOPING TO BRING THAT DEAL TO MARKET SOMETIME IN THE SPRING.
UM, THE AIRPORT IS, UH, CONTINUING THEIR WORK ON THE FEASIBILITY STUDY, UH, AND WE'RE WORKING ON THE SIZING OF THAT TRANSACTION.
SO, UH, I SHOULD BE COMING BACK TO PRESENT, UM, TO BFA, PROBABLY NEXT MONTH OR THE MONTH AFTER.
AND ANTICIPATE PRICING IN THE SPRING.
WE HAVEN'T NAILED DOWN THE SIZE YET.
SO IT WOULD BE THE TAKEOUT OF THE COMMERCIAL PAPER THAT'S CURRENTLY OUTSTANDING, WHICH IS, IT'S IN YOUR BOOKS, I BELIEVE THAT'S 200, ABOUT 200 MILLION, UM, IN COMMERCIAL PAPER FIX OUT.
AND THEN IF THERE'S ANY OPPORTUNITY FOR SAVINGS THAT, YOU KNOW, THAT MAY NOT BE WITH THE INTEREST RATES RISING, AND THEN, UM, POSSIBLY SETTING UP A CONSTRUCTION FUND AS WELL.
WE HAVE NO COUNCIL MEMBERS IN QUEUE MEANS YOU DID A FANTASTIC JOB AS ALWAYS.
SO WE'LL NEXT MOVE TO, UH, PUBLIC SPEAKERS.
WE HAVE ONE PUBLIC SPEAKER SIGNED UP, MR. DOUG SMITH.
THANK YOU, FIRST OF ALL, HAPPY NEW YEAR TO ALL OF YOU.
AND SECOND OF ALL, I WAS REALLY GLAD TO HEAR WE'RE GONNA HAVE FIVE YEARS WORTH OF HISTORY IN THE OPEN FINANCE PROGRAM.
BUT THE MAIN REASON I CAME TODAY IS TO ASK ALL OF YOU TO PAY REALLY CLOSE ATTENTION TO THE PROCESS SURROUNDING, UH, THE BUDGETING THAT'S GOING ON.
THE, UH, WHAT IS THE TERMINOLOGY, UH, THE, THE TYPE OF BUDGET THEY'RE DOING.
I'VE LOST IT RIGHT NOW THAT THEY'RE DOING THIS YEAR.
UH, OUTCOME BASED, OUTCOME BASED VERSUS OUTCOME, I'M SORRY, I JUST LOST IT.
OUTCOME BASED BUDGETING, PAYROLL BALANCE, BUDGETING.
UH, AND I, I'M, I WOULD LIKE TO ASK YOU TO PAY REALLY CLOSE ATTENTION TO THAT PROCESS AND ASK LOTS OF QUESTIONS AND
[00:45:01]
MAYBE ASK FOR A TIMELINE OF THE VARIOUS, UH, MAJOR ITEMS THAT NEED TO BE DONE TO MAKE SURE THAT THEY MEET THE GOALS AND THAT WE DO ACTUALLY HAVE OUTCOME-BASED BUDGETING.AND THE REASON I SAY THAT IS THAT I FEEL VERY UNEASY THAT MAYBE THEY COULD REACH THE POINT WHERE THEY GET NEAR THE FINAL BUDGET AND THEY'RE SAYING, WE JUST, WE JUST CAN'T DO THAT THIS YEAR.
WE'RE GONNA HAVE TO DO IT THE WAY WE'VE ALWAYS DONE IT.
AND THAT WOULD BE REALLY UNFORTUNATE IF THAT HAPPENED.
AND THE REASON I SAY THAT IS BECAUSE I DON'T THINK IT GOT OFF TO A REALLY GOOD START.
THE SURVEY THAT THEY DID, UH, ASKING WHAT THE PRIORITIES WERE FOR THE CITIZENS.
UH, A CITIZEN COULD SUBMIT MANY MIN, THERE WAS NO LIMIT TO THE NUMBER OF SURVEYS A CITIZEN COULD SUBMIT.
SO I QUESTION THE VALUE OF THAT SURVEY, UH, IF YOU'RE LOOKING AT THAT.
BUT I JUST WOULD ASK YOU, THE MAIN REASON I'M HERE IS JUST TO ASK YOU TO PAY CLOSE ATTENTION TO THE PROCESS.
AND I HOPE YOU FIND MY CONCERNS WRONG, BUT I JUST WANTED TO LET YOU KNOW WHAT I WAS FEELING.
ARE THERE ANY OTHER QUESTIONS FROM COMMENTS FROM THE PUBLIC? SEEING NONE.
ANY QUESTIONS, COMMENTS FROM COUNCIL MEMBERS? SEEING NONE.
UH, BEFORE WE ADJOURN, PLEASE NOTE THAT THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE JANUARY 31ST AT 10:00 AM ONCE AGAIN, JANUARY 31ST AT 10:00 AM IF THERE ARE NO OTHER QUESTIONS OR COMMENTS, THIS MEETING IS ADJOURNED.