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MORNING,[Budget and Fiscal Affairs on October 3, 2023]
STAFF OF COUNCIL MEMBERS AS WE HAVE ZERO COUNCIL MEMBERS PRESENT.WE HAVE STAFF FROM DISTRICT A, AMY PECK'S, OFFICE, STAFF FROM DISTRICT C, ABBY CAYMAN'S, OFFICE, DISTRICT D CAROLYN, EVAN SHABAZZ'S, OFFICE DISTRICT I, ROBERT GALLEGOS, OFFICE VICE CHAIR, ED POLLARD, DISTRICT J MICHAEL KNOX, POSITION ONE, AND SALLY ALCORN, POSITION FIVE.
I'M THE CHAIR OF THE CITY'S BUDGET AND FISCAL AFFAIRS COMMITTEE AND VICE MAYOR PRO TEM MARTHA CASTEX TATUM WITH MS. DEI HERE.
I'M THE CHAIR OF THE CITY'S BUDGET AND FISCAL AFFAIRS COMMITTEE.
I CALL THIS MEETING TO ORDER, AND WE WOULD LIKE TO MALCOLM COUNCIL MEMBERS AND GUESTS IN ATTENDANCE.
IF THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO PARTICIPATE IN THE PUBLIC COMMENT SECTION.
THERE'S A SIGNUP SHEET IN THE FRONT TABLE.
MY STAFF MEMBER DAMARI WILL BE MONITORING THE PUBLIC SPEAKERS LIST.
I'D LIKE TO ACKNOWLEDGE COUNCIL MEMBER ED POLLARD, WHO IS NOT HERE TODAY, BUT ED IS THE VICE CHAIR OF BFA.
ANY COUNCIL MEMBERS AND STAFF, PLEASE HOLD YOUR QUESTIONS TILL THE END OF THE PRESENTATION.
AS OF DEADLINE YESTERDAY, THERE WERE ONE PUBLIC SPEAKERS THAT WE ADDED.
THERE ARE ANY ADDITIONAL MEMBERS, AS I MENTIONED.
AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR OF FINANCE WILL JONES FOR THE MONTHLY FINANCIAL REPORT DATED AUGUST, 2023.
COUNCIL MEMBERS AND STAFF, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING AUGUST 31ST, 2023.
IN THE GENERAL FUND, THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 420.4 MILLION FOR FY 24.
THIS IS 45.8 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT, AND THAT'S DUE TO A 45.8 MILLION LOWER REVENUE PROJECTION THAN FINANCE.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 237.3 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
THE FY 2024 BEGINNING FUND BALANCE IS 41.4 MILLION HIGHER THAN THE FY 23 ENDING FUND BALANCE REPORTED IN THE JUNE 30TH, UH, MONTHLY FINANCIAL REPORT.
AND THIS IS DUE TO YEAR END ADJUSTMENTS TO REVENUES AND EXPENDITURES THAT WILL NOT BE FINAL UNTIL THE FY 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT IS PUBLISHED.
UM, HOPEFULLY THE NEXT, UH, COUPLE OF MONTHS.
OUR PROJECTIONS ARE UNCHANGED FROM THE JULY, 2023 MONTHLY FINANCIAL REPORT.
UH, MOVING ON TO THE ENTERPRISE FUNDS, WE ARE PROJECTING NO CHANGES IN ANY OF THE ENTERPRISE FUNDS.
SO I WILL MOVE OVER TO THE COMMERCIAL PAPER AND BONDS.
IF YOU LOOK AT ALL OF OUR VARIABLE RATE DEBT, UH, ALL OF OUR, UH, DEBT IS WELL BELOW THE 20% THRESHOLD.
UH, AND THIS CONCLUDES MY REPORT.
THANK YOU, CONTROLLER WILL JONES, FINANCE DIRECTOR, CITY OF HOUSTON.
THIS IS THE TWO PLUS 10 FINANCIAL REPORT FOR THE PERIOD ENDING AUGUST 31ST, 2023.
PROJECTIONS ARE BASED ON TWO MONTHS OF ACTUAL RESULTS AND 10 MONTHS OF PROJECTIONS.
SO IN THE GENERAL FUND, BOTH OUR REVENUE AND EXPENDITURE PROJECTIONS REMAIN UNCHANGED FROM THE ADOPTED BUDGET AND THE PRIOR MONTH.
WE'RE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 466.2 MILLION, WHICH IS 14.8 MILLION HIGHER THAN PRIOR MONTH, AND 19.1% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 283.1 MILLION ABOVE THE TARGETED 7.5% OF EXPENDITURES, EXCLUDING DEBT SERVICE AND PAY AS YOU GO.
WE'RE PROJECTING NO CHANGES ON THE ENTERPRISE AND SPECIAL REVENUE FUNDS.
UH, THERE ARE NO COUNCIL MEMBERS IN QUEUE, SO I HAVE A FEW QUESTIONS.
SO, UH, CONTROLLER AT FOUR 20, FINANCE AT 4 66.
IF I LOOK AT THE NOTES ON PAGE THREE, UH, PROJECTED FUN YEAR IMBALANCE OF 483 IN FISCAL YEAR 2023, PROJECTED TO BE 4 66 AND 1 95.
SO, UM, HOW IS THE SALES TAX REVENUE? I KNOW WE'VE ONLY HAD INDICATIONS IN, I THINK IT'S JULY, BUT ANYTHING ON THE AUGUST SALES TAX NUMBERS? ALRIGHT, UH, WE SHOULD GET THAT IN BY NEXT WEEK, I BELIEVE.
UH, BUT JULY WAS, UH, SHOWED GROWTH ABOUT TWO POINT, UH, 2.6% OVER PRIOR YEAR.
UH, SO WE DID SEE POSITIVE, UH, GROWTH, UH, FOR JULY.
UM, BUT YOU KNOW, AS WE, AS WE TALKED ABOUT IN THE BUDGET, WE WERE CONSERVATIVE AND WE BUILT IN A 3%, UH, DECREASE IN THE BUDGET.
SO, UM, HOPE TO CONTINUE TO SEE SOME TYPE OF POSITIVE GROWTH.
NO, NO MORE OF THE DOUBLE DIGIT GROWTH LIKE WE SAW OVER THE PAST 18 MONTHS OR SO.
BUT, UM, STILL HOPING IT CONTINUES TO TREND, AT LEAST IN THE, IN THE POSITIVE RIGHT.
BUT OUR PROJECTION WAS NEGATIVE 3% NEGATIVE, AND NOW WE'RE AT POSITIVE 2.6 FOR THE FIRST MONTH.
SO TRENDLINE SEEMS TO BE GOING IN OUR FAVOR FOR SURE.
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STATEMENT IN YOUR, UH, GENERAL FUND, THE, THE FY 24 BEGINNING FUND BALANCE IS 41.4 MILLION, HIGHER THAN 23, AND IN FUND BALANCE REPORTED ON JUNE 30TH, MONTHLY FINANCIAL REPORT, THE INCREASE IS DUE TO YEAR END ADJUSTMENTS TO REVENUE AND EXPENDITURES THAT WILL NOT BE FINAL UNTIL THE 23 ANNUAL COMPREHENSIVE FINANCIAL REPORT.CAN YOU LEND SOME COLOR TO THAT? WELL, YEAH, AS WE, UM, END THE FISCAL YEAR AS WE CONTINUE, UH, TO WORK THROUGH THE ANNUAL AUDIT, UH, WE HAVE, UM, YOU KNOW, TRANSACTIONS THAT ARE BOOKING.
THIS HAS BEEN A, UM, AN ISSUE THAT I'VE, UM, YOU KNOW, TRIED TO ADDRESS.
UH, WE WANNA TRY AND CLOSE THE BOOKS, UH, IMMEDIATELY, BUT, UH, YOU KNOW, WE ALWAYS, WE'RE SUCH A BIG CITY WITH SO MANY DIFFERENT ENTITIES, SO MANY TRANSACTIONS, WE HAVE TO SOMETIMES ACCRUE SOME OF THOSE TRANSACTIONS BACK TO THE, UH, PREVIOUS FISCAL YEAR.
SO AS WE GO THROUGH THAT PROCESS, WE'LL HAVE TRIP AND ADJUSTMENTS, AND THEN JUST ALWAYS WANNA REMIND PEOPLE UNTIL WE FINISH THAT AUDIT PROCESS, UH, WE DON'T HAVE AN ACCURATE, UH, COMPLETE, UH, REFLECTION OF, OF THE EXPENDITURES.
SO AGAIN, WE SHOULD BE WORKING, UH, THROUGH, UH, THE AUDIT AND, UM, HOPEFULLY WE'LL HAVE THAT DONE, YOU KNOW, THE BEGINNING OF DECEMBER, AND IT WOULD BE MADE AVAILABLE ONLINE, UM, SHORTLY AFTER THAT.
SO ON THE, UH, THE GENERAL FUND, UM, BALANCE SHEET, ALL THE EXPENDITURES SEEM TO BE IN LINE EXCEPT FOR HUMAN RESOURCES.
DOES ANYTHING PARTICULAR HAPPEN IN THERE? BECAUSE THEY'VE SPENT OVER 50% OF THEIR ALLOCATION FOR THE ENTIRE FISCAL YEAR IN TWO MONTHS, THEY'RE AT 8 82 VERSUS FINANCE PREDICTION OF 1.50, I, I, I CAN SPEAK TO THAT.
UH, I BELIEVE FOR THE HUMAN RESOURCES DEPARTMENT IN THE GENERAL FUND, THE ONLY THING THEY HAVE IS TO HIRE HOUSTON YOUTH, WHICH IS AT THE BEGINNING OF THE YEAR.
SO THEY WOULD AC UH, UH, INCUR MOST OF THEIR EXPENSES AT THE BEGINNING OF THE YEAR 'CAUSE OF THE HIGHER HOUSTON YOUTH.
THAT'S THE ONLY GENERAL FUND EXPENSE THEY HAVE.
SO THAT'S A NORM THING THAT WE HAVE.
THAT'S, THAT'S HAPPEN EVERY YEAR.
FIRST MONTH OF THE YEAR IS ALWAYS GONNA BE A, A LITTLE BIT OF A UPTICK AS WE WRAP UP THE SUMMER INTERN PROGRAM.
SO MY LAST QUESTION, WE HAVE NO OTHER COUNCIL MEMBERS IN Q, BUT A CONTROLLER.
THERE'S BEEN A LOT OF DISCUSSION WRAPPED AROUND THE CITY IN A STRUCTURALLY BALANCED BUDGET.
LOOKING AT WHERE WE ARE TODAY, HOW MUCH MORE ON THE REVENUE SIDE WOULD WE INCLUDE TO HAVE A STRUCTURALLY BALANCED BUDGET? WELL, I THINK THAT'S A COMPLICATED QUESTION.
ONE OF THE CHALLENGES THAT WE HAVE, IT'S SOMETHING THAT I HAVEN'T AGREED WITH, IS, UH, WHEN WE GOT THE, UH, FEDERAL, UH, COVID MONEY THROUGH ARPA AND CARES, UH, WE'VE ACTUALLY INCLUDED THAT.
IF YOU LOOK ON PAGE SEVEN, WE INCLUDE THAT IN, IN GENERAL REVENUE.
UM, YOU KNOW, MY CONTENTION WAS ALWAYS THAT WE SHOULD HAVE, UH, PUT THAT DOWN IN, YOU KNOW, ONE TIME FINANCING SOURCES.
SO WHEN YOU LOOK AT THE, UH, NET CURRENT ACTIVITY, WHICH IS SOMETHING THAT I'VE CONSTANTLY REFERRED TO DURING MY, UH, TWO TERMS AS CONTROLLER, UM, OUR ESTIMATES, UH, IT'S ONLY 75 MILLION, BUT THAT DOESN'T TAKE INTO EFFECT, UH, MONEY THAT WE'VE USED ONE TIME FINANCING SOURCES FROM, UH, FEDERAL MONIES.
UM, YOU KNOW, I WOULD SAY, UH, DIRECTOR JONES CAN CORRECT ME IF I'M WRONG.
I THINK THAT NUMBER, UH, FOR THIS FISCAL YEAR IS AROUND $150 MILLION, 1 61, $160 MILLION.
UM, SO WE WOULD ADD THAT TO THE 75 MILLION.
UH, SO YOU'RE LOOKING AT ABOUT, UH, $235 MILLION.
NOW, YOU KNOW, THE, THE OTHER THING I WANT TO CAUTION, UM, AND I HAVE DONE THAT SEVERAL TIMES WITH THIS BODY, IS, YOU KNOW, I I REALLY FEEL, UM, YOU KNOW, GIVEN MY, UH, HISTORY HERE, UH, NOW 20 YEARS AT THE CITY, UH, AND FORMER, UH, EXPERIENCE, UH, TRADING ON WALL STREET, YOU KNOW, IT REALLY FEELS LIKE WE'RE IN A 1999 OR 2007 KIND OF IN A BUBBLE TERRITORY, AND WE'VE SEEN THAT EVIDENCED BY, UM, PRETTY SUBSTANTIAL INCREASES IN PROPERTY AND SALES TAX.
UM, SO HEREIN LIES THE REAL CHALLENGE.
AND, AND THIS IS SOMETHING THAT I KNOW, UH, DIRECTOR JONES AND I TRY TO THE BEST OF OUR ABILITIES TO ESTIMATE WHAT THE FUTURE, UH, WILL HOLD FOR THE CITY.
UM, I WOULD SAY ON TOP OF THAT 235 MILLION, YOU HAVE TO ANTICIPATE AS, UH, WE'VE RECENTLY SEEN, UM, WITH BILL GILMORE'S ESTIMATES FOR SALES TAX, HIS LOWER BOUNDED SALES TAX ESTIMATE REVISED IS NOW, I BELIEVE DOWN 11%.
UH, IF WE WERE TO SEE AN 11% REDUCTION YEAR OVER YEAR, UH, IN SALES TAX, UH, WE COULD ADD ANOTHER $90 MILLION TO THAT EQUATION.
SO, UH, YOU KNOW, NOW WE'RE AT 320 MILLION.
UM, ALSO ADDED TO THAT EQUATION WILL BE WHATEVER SETTLEMENT THAT WE HAVE WITH, UH, POLICE, I'M SORRY, WITH THE FIREFIGHTERS AS A RESULT OF THE 7 36.
UM, SO WE DON'T KNOW WHAT THAT NUMBER WILL BE, BUT, YOU KNOW, ROUGH ESTIMATION, I THINK THAT NUMBER IS, YOU
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KNOW, IN EXCESS OF $400 MILLION MM-HMMAND RIGHT NOW, I KNOW THAT, YOU KNOW, WE ALL SIT AROUND AND TALK ABOUT HOW GREAT IT IS BECAUSE WE HAVE, YOU KNOW, EXCESS FUND BALANCE.
BUT, YOU KNOW, SHOULD THAT SALES TAX, UH, COME DOWN, UM, YOU KNOW, WE WILL HAVE TO HAVE A SETTLEMENT WITH THE FIREFIGHTERS.
YOU KNOW, ALL THESE THINGS ARE GONNA NEED TO BE PAID FOR.
UH, WE WILL HAVE, UM, YOU KNOW, CREDIT TO THE ADMINISTRATION, WE WILL HAVE SOME, UH, MONEY IN THE FUND BALANCE.
BUT, YOU KNOW, THE STRUCTURAL DEFICIT IN, IN MY VIEW, HAS INCREASED SUBSTANTIALLY.
SO EVEN IF YOU HAVE, UH, A FEW HUNDRED MILLION IN THE BANK, YOU'RE STILL GONNA HAVE SOME PRETTY SEVERE FINANCIAL CHALLENGES DOWN THE ROAD.
I, I, I AGREE WITH YOU, BUT I'M GONNA LOOK AT THE LAST YEAR AND THE PROJECTIONS FROM FINANCE HAVE BEEN CLOSER TO REALITY THAN THE PROJECTIONS FROM THE CONTROLLER'S OFFICE.
SO THE PROJECTION WE TOOK WAS A NEGATIVE 3% ON SALES TAX, AND WE UP 2.6, THAT'S A 6% DIFFERENTIAL.
BUT IF THE TREND LINE CONTINUES, WE'LL BE IN GOOD SHAPE.
IF DOOM AND GLOOM COMES, YOU KNOW, THE CUSHION WE HAVE SO FAR IS WE'RE AT 2.6, WE PROJECTED NEGATIVE THREE.
AND YOU KNOW, THE, THE, CORRECT ME IF I'M WRONG, THE FINANCE DEPARTMENT'S, UM, ALLOCATIONS AND THE, AND, AND FUTURE OUTLOOK SEEM TO BE MORE PROMISING THAN THE CONTROLLERS AND THE FINANCE DEPARTMENT HAS BEEN A LITTLE BIT MORE ACCURATE.
WELL, AND I THINK, AGAIN, THE STRUCTURAL CHARGE FROM, OR I SHOULD SAY THE, THE, UH, THE CHARGE, UH, UH, FROM THE CITY CHARTER, UH, MY OFFICE HAS TO, UH, CERTIFY THE AVAILABILITY OF FUNDS.
SO, YOU KNOW, I ALWAYS SAY, I'M GONNA PAINT THE PICTURE AT THE END OF THE DAY WHEN THE BILLS COME IN, I WANNA MAKE SURE WE HAVE THE MONEY, BE ABLE TO PAY IT.
UM, I THINK THAT, UM, YOU KNOW, THE, THE, THE SALES AND PROPERTY TAX HAS BEEN, UH, YOU KNOW, UP QUITE SUBSTANTIALLY, I THINK UNEXPECTEDLY BY MY MOST, MOST ACCOUNTS.
I THINK EVEN DIRECTOR JONES WOULD SAY, WE DIDN'T EXPECT TO SEE, UH, YOU KNOW, 15 OR 16%, AND THEN 11% YEAR OVER YEAR INCREASES IN SALES TAX.
BUT AGAIN, MY EXPERIENCE AS A FORMER WALL STREET TRADER, YOU KNOW, WHAT GOES UP MUST COME DOWN AND, AND, YOU KNOW, THIS IS AGAIN, WHAT WE WOULD LOOK AT FROM A STATISTICAL PERSPECTIVE.
UH, YOU KNOW, WE'RE IN A, I, I BELIEVE A A TWO STANDARD DEVIATION INCREASE ON SALES TAX THAT'S A ONE IN 45 YEAR, UH, EXIST, UH, OCCURRENCE.
SO, UH, YOU KNOW, WE'RE GONNA PROBABLY REVERT BACK DOWN TO THE MEANS.
SO, YOU KNOW, IF YOU LOOK AT THAT JUST BACK OF THE NAPKIN MATH, UH, WE SHOULD END UP SEEING PROBABLY A SEVEN OR 8% DECREASE IN SALES TAX.
UM, SO, YOU KNOW, THAT'S A 60 TO $70 MILLION REDUCTION IN SALES TAX FOR NEXT YEAR, WHICH, YOU KNOW, ISN'T FACTORED INTO THE BUDGET.
SO WE CAN TAKE IT OUTTA FUND BALANCE, BUT WE DO KNOW THE FEDERAL MONEY IS, UH, EXPIRING.
WE USED, UH, FEDERAL MONEY IN PART TO, UH, AS REVENUE REPLACEMENT.
SO, YOU KNOW, THESE ARE JUST THINGS, AGAIN, NOW IT'S DIFFICULT TO HAVE THIS CONVERSATION BECAUSE, YOU KNOW, I COME HERE AND WE BOTH AGREE THERE'S, YOU KNOW, UH, $260 MILLION OVER THE SEVEN AND A HALF PERCENT, UH, IN RESERVES.
BUT, UH, THAT COULD QUICKLY CHANGE AS THE FEDERAL MONEY EXPIRES.
SALES TAX, UH, GOES DOWN AND, YOU KNOW, SHOULD WE SEE ANY KIND OF, UH, RECESSION.
AND AGAIN, MY CHARGE IS THAT I HAVE TO MAKE SURE THAT WE HAVE THE AVAILABILITY OF FUNDS.
SO AT THE END OF THE DAY, THE BEAUTIFUL THING ABOUT WHAT I TELL EVERYONE HERE, UH, WHETHER YOU THINK IT'S GLOOM AND DOOM, IT, IT'S ACTUALLY A, A, A PRETTY, UH, WHAT I USED TO SAY IS A WIN-WIN ON THE TRADING FLOOR BECAUSE, YOU KNOW, IF I'M RIGHT, WE'RE PREPARED IF I'M WRONG, WE HAVE A LOT MORE MONEY AND WE CAN USE THAT MONEY TO ADDRESS ALL THE CHALLENGES THAT WE HAVE AT THE CITY.
UM, AGAIN, THIS IS MY CHARGE, SO I'LL CONTINUE TO, UM, RIGHT, AND, AND SOUND THE ALARM.
AND I'LL LOOK AT IT AS OUR PENSION OBLIGATIONS WENT FROM $8.2 BILLION TO 2.2 BILLION.
OUR EP OBLIGATIONS HAVE GONE FROM 9.5 TO AROUND 4.5.
OUR FUND BALANCE IS PROJECTING YOUR NUMBER FOUR 20 MILLION FINANCES, 4 66.
SO WHEN I LEAVE THIS HORSESHOE, WHEN YOU LEAVE THIS HORSESHOE, WE ARE GIVEN THE NEXT BODY THAT STARTS JANUARY ONE, A MUCH BETTER FINANCIAL POSITION THAT WE INHERITED.
WE BOTH INHERITED IT EIGHT YEARS AGO.
AND, UM, I THINK THAT WHILE THE PROJECTIONS, WE'VE BEEN VERY, VERY CONSERVATIVE ON IT, ESTIMATING SALES TAX REVENUE TO BE NEGATIVE 3% IN ACTUALITY FOR THE ONE MONTH, ONE MONTH OUT OF 12, ISN'T THAT BIG A DEAL? WE ALL KNOW THAT.
AND WE HAVE A NUMBER OF EVENTS COMING UP IN 24 THAT ARE GONNA BE BRINGING, I THINK, MORE VISITORS TO THE CITY.
I JUST ATTENDED A CONFERENCE ON MONDAY, UH, WITH A NUMBER OF PEOPLE THAT WERE IN FROM OUT OF TOWN.
AND WHEN I DRIVE AROUND, WALK AROUND, PEOPLE ARE STILL GOING TO FOOTBALL GAMES AND RESTAURANTS AND EVERYTHING.
AND, UM, THE DOOM AND GLOOM THAT, UH, THAT MAYBE WE LOOKED AT ENTERING THE CONSERVATIVE VIEW OF 24, I DON'T THINK THE DOOM AND GLOOM IS THERE.
I THINK PEOPLE ARE SPENDING MORE MONEY TODAY, UM, THAN THEY'VE
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AND SALES TAX REVENUE WILL CONTINUE TO INCREASE MY OPINION.AND WHAT WE'LL SEE ON THE HOME VALUATIONS IS, YOU KNOW, WE LOWERED THE TAX RATE, BUT THE VALUATIONS CONTINUE TO RISE IN THE CITY OF HOUSTON.
SO WE'LL ALWAYS HAVE THAT DILEMMA THAT WE HAVE TO FACE.
BUT I FEEL AS YOU SHOULD FEEL PRETTY COMFORTABLE LEAVING THIS BODY ON DECEMBER 31ST AND MUCH BETTER POSITION THAN WE INHERITED IT WHEN WE TOOK OFF AS EIGHT YEARS AGO.
AND THEN I, WE'LL, I'M NOT MR. JONES, I'M NOT SURE IF YOU HAVE ANY COMMENTS TO THOSE.
YEAH, THERE'S NO ONE IN Q SO WE CAN HAVE THIS COMMENTARY,
YEAH, NO, YOU, YOU TOUCHED ON A LOT OF POINTS THAT I, THAT I WAS GONNA BRING UP.
SO, 'CAUSE WE'VE, I'VE ALWAYS BEEN UPFRONT THAT YEAH, WE, WE DON'T HAVE A STRUCTURALLY BALANCED BUDGET.
THE, UH, THE ARPA FUNDS THAT WE USED DID ALLOW US TO REPLACE REVENUE THAT WAS, WAS LOST AS A RESULT OF COVID AND IT'S NOT GONNA BE THERE NEXT YEAR.
SO WE FULLY UNDERSTAND THAT, YOU KNOW, THAT IS NOT GONNA BE THERE NEXT YEAR.
UH, ONE OF THE THINGS WE DID SAY IT, EVEN WITHOUT THE ARPA DOLLARS, WE WOULD'VE BEEN ABLE TO BALANCE THE BUDGET, UM, WITHOUT, YOU KNOW, LAYOFFS OR ANY TYPE OF, YOU KNOW, CUTS TO SERVICES.
BUT I THINK IT'S EXTREMELY IMPORTANT WHEN WE TALK ABOUT, UM, WHERE WE ARE TODAY FINANCIALLY, UM, COMPARED TO WHERE WE WOULD'VE BEEN, LIKE THE PENSION REFORM, AGAIN, GOING FROM EIGHT, 8.2 BILLION DOWN 2.2, NOT JUST THE LIABILITY.
UM, BUT ALSO IT WOULD'VE HAD A MAJOR IMPACT ON THE OPERATING BUDGET.
THE, THE AMOUNT THAT WE WOULD'VE HAD TO CONTRIBUTE, UH, WOULD'VE DOUBLED, OR WHO KNOWS, MAYBE EVEN MORE THAN THAT.
SO THAT WOULD'VE BEEN A FACTOR INTO THE BUDGET DEFICIT.
UM, SO, YOU KNOW, THE NEXT, THE NEXT MAYOR WON'T HAVE TO DEAL WITH THAT.
THE, THE GAP THAT WE'RE LOOKING AT IN THE OUT YEARS WOULD'VE BEEN A LOT GREATER.
UM, AND THEN ALSO WHEN WE TALK ABOUT OPEP, ALL OF THOSE THINGS ARE, SHOULD BE DISCUSSED WHEN WE TALK ABOUT THE STRUCTURAL BALANCE OF THE BUDGET, BECAUSE THOSE ARE THINGS THAT HAS A MAJOR IMPACT ON THE CITY'S FINANCIAL STANDING.
SO WHEN THOSE THINGS ARE ADDRESSED, THAT MAKES IT, UM, YOU KNOW, THOSE ARE THINGS WE DON'T HAVE TO WORRY ABOUT FOR THE NEXT ADMINISTRATION FOR, YOU KNOW, THE THE FINANCIAL HEALTH OF THE CITY.
SO WE CAN'T, UM, YOU KNOW, IGNORE THAT WHEN WE TALK ABOUT WHERE WE ARE FINANCIALLY, BUT ALSO BE AWARE THAT WE STILL HAVE CHALLENGES.
YOU KNOW, WE, WE TALKED ABOUT THE, YOU KNOW, THE, THE REVENUE CAP, UM, THE 1.9 BILLION THAT WE'VE LOST SINCE HITTING THE CAP.
SO THAT IS, UH, UH, ONE OF THE MAJOR IMPACTS.
AND THAT'S WHAT, WHEN WE TALK ABOUT THE CITY'S CREDIT RATING, THAT IS WHAT THEY'RE LOOKING AT, UM, AS AN IMPACT TO THE CITY.
THEY, THEY WERE LOOKING AT THE, THE PENSION, THEY WERE LOOKING AT THE OPEP.
THEY SAY, YOU'VE CHECKED THOSE BOXES, FANTASTIC CITY, BUT NOW WE STILL HAVE THE REVENUE CAP.
UM, SO IT'S, IT'S, IT'S NOT LIKE WE'RE SITTING BACK DOING NOTHING, UM, YOU KNOW, WAITING FOR US TO FALL OFF THE CLIFF.
WE, WE'VE BEEN, YOU KNOW, WE HAVE THE 10 YEAR PLAN.
WE'VE IMPLEMENTED A LOT OF THINGS FROM THE 10 YEAR PLAN.
WE'RE GONNA CONTINUE TO LOOK AT THAT IN OTHER REVENUE OPTIONS.
UM, AND ALSO WHEN IT COMES TO, THERE WAS DISCUSSIONS ABOUT, YOU KNOW, GILMORE'S PROJECTION AND THE, YOU KNOW, THE 10%, UH, WHICH HE DID PROJECT A 10% DROP A FEW MONTHS AGO.
UM, BUT THEN WHEN YOU LOOK AT THE, THE FED FED CHAIR IS NO LONGER PROJECTING A RECESSION, UM, I THINK A COUPLE OF MONTHS AGO THEY SAID, WELL, WE'RE NO LONGER PROJECTING A, A RECESSION.
UM, SO IT'S, IT'S STILL A CHALLENGING TIME TO TRY AND FIGURE OUT WHERE THE ECONOMY IS GONNA GO.
SO WE TRY TO GO, WE, WE APPROACH IT, UM, AS CONSERVATIVELY AS WE CAN WITHOUT IMPACTING SERVICES.
SO WE'RE NOT GOING TO RELY ON SALES TAX GROWING DOUBLE DIGIT, WE'RE GONNA DECREASE IT BY 3%.
UM, AND THEN WE WILL BE ABLE TO MANAGE, UH, HOW, HOW TO CLOSE THAT DEFICIT.
UM, BUT LIKE I SAID, HAVING A STRONG FUND BALANCE IS GONNA HELP US.
UM, BUT LIKE I SAID, YOU CAN'T IGNORE ALL OF THE MAJOR, UM, THINGS WE DID TO ADDRESS THE STRUCTURAL BALANCE BUDGET.
UM, 'CAUSE IT, IT DIDN'T JUST IMPACT THE LIABILITIES.
IT HAD AN IMPACT ON OUR OPERATING BUDGET.
AND SO, AGAIN, THE, THE, WHAT WE ARE LOOKING AT NOW COULD HAVE BEEN, UH, A LOT WORSE THAN WHAT IT IS WHEN WE LOOK AT THE OUT YEARS.
HAVE WE NOT DONE THOSE, THOSE CHANGES.
UM, SO I STILL THINK THE CITY'S IN THE STRONGEST FINANCIAL POSITION THAT WE'VE BEEN IN.
BUT THAT DOESN'T MEAN WE, WE, WE DON'T HAVE CHALLENGES WHEN, AND THAT WE WON'T.
BUT I, I STRONGLY BELIEVE WE'LL BE ABLE TO, YOU KNOW, ADDRESS THOSE CHALLENGES.
UH, YOU KNOW, IT WASN'T EASY DOING PENSION REFORM.
IT'S NOT EASY DOING OPEP REFORM, BUT, UH, WE, WE WILL BE ABLE TO ADDRESS THOSE CHALLENGES AND WE ARE IN THE STRONGEST FINANCIAL POSITION THAT WE'VE EVER BEEN IN.
I'M NOT SURE IF YOU HAVE ANY PARTING WORDS.
I KNOW WE TALKED ABOUT THIS BEING, YOU KNOW, WE HAVE THREE MONTHS TOGETHER LEFT ON THIS.
I, I DID A LOT OF STUDYING LAST NIGHT ON FEDERAL GOVERNMENT.
THEY DON'T COME CLOSE TO PASSING THE BALANCE BUDGET
I LOOKED AT TRS, THEY TALKED ABOUT THE OUTSTANDING DEBT ON T TEXAS RETIREMENT SYSTEM AND THE TEACHER'S RETIREMENT SYSTEM, AND IT'S
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TRILLIONS OF DOLLARS.SO FOR OUR LIABILITY, WHEN YOU LOOK AT $2 BILLION AND YOU COMPARE IT TO THE FEDERAL GOVERNMENT AND THE STATE GOVERNMENT, YOU DON'T WANNA SAY, YOU KNOW, YOU CAN EASILY MAKE THE $160 MILLION TO DO STRUCTURALLY TO 2 35, BUT I WOULD ARGUE THAT IT'S IN A MUCH BETTER POSITION THAN THE FEDERAL GOVERNMENT IN THE STATE OF TEXAS NOT LOOKING AT SOME OF THE THINGS THAT THE STATE HAS IN THEIR FUND BALANCE.
SO, ANY, WELL, I, I WOULD JUST SAY THAT, UM, YOU KNOW, THE PICTURE THAT I'VE PAINTED, UH, THE GOOD NEWS IS THAT WE HAVE SOME TIME, UM, WE'RE, UM, OUT OF OFFICE NOW, UH, AT THE END OF THIS YEAR.
SO IT'S REALLY GONNA BE, UH, THIS IS GONNA BE PUT ON THE FOOTSTEPS OF THE NEXT ADMINISTRATION.
UM, AND THEY WILL HAVE TO START ACTING, I THINK, IMMEDIATELY TO TRY AND ADDRESS THIS.
BECAUSE AGAIN, GOING BACK TO THE NUMBERS, UM, YOU KNOW, YOU DON'T WANNA HAVE TO CUT 10% OUT OF THE BUDGET IN ONE YEAR, BUT YOU CAN DO, YOU KNOW, 3%, 3% AND 4%, UM, TO GET YOU THERE.
AND SO, YOU KNOW, THERE'S GONNA HAVE TO BE SOME TOUGH DECISIONS MADE.
I THINK, UM, TO, UH, DIRECTOR JONES'S POINT, YOU KNOW, PENSION REFORM HAS BEEN POSITIVE.
THE OP E UH, REFORM IS, IS POSITIVE, BUT YOU KNOW, WHAT I'M TALKING ABOUT IS THE OPERATIONAL BUDGET, BASICALLY OUR CHECKING ACCOUNT.
AND WE NEED TO MAKE SURE THAT WE HAVE MONEY TO PAY THE BILLS IN THE FUTURE.
NO OTHER QUESTIONS FROM, UH, ANYONE LIKE TO WELCOME STAFF FROM COUNCIL MEMBER TARSHA JACKSON'S OFFICE, DISTRICT B MARY ANN HUFFMAN, DISTRICT G DAVID ROBINSON POSITION AT LARGE TWO LETITIA PLUMMER POSITION AT LARGE.
SEE Y'ALL TOMORROW AT 9:00 AM EARLY THIS YEAR, A BUDGET AMENDMENT WAS PASSED TO INCREASE THE VISIBILITY OF CITY AUDIT REPORTS AS A RESULT OF THAT AMENDMENT, WE'LL BE REVIEWING TWO AUDIT REPORTS TODAY AS WE PREPARE FOR THE FY 24 AUDIT PLAN.
I'VE WORKED WITH THE CONTROLLER TO CREATE GUIDELINES FOR BRINGING AUDITS TO BFA WITHIN 45 DAYS OF AN AUDIT RELEASE.
NO MORE THAN THREE AUDITS WILL BE PRESENTED IN A SINGLE BFA AND THE CONTROLLER AND CITY AUDITOR WILL REPORT ON THE SCOPE OF THE REPORT RELEASED NOW.
PLEASE WELCOME LIMPING UP THERE, COURTNEY SMITH, THE CITY AUDITOR FOR THE CITY OF HOUSTON TO PROVIDE A PRESENTATION ON THE AUDIT PRESENTATION.
AND WHAT HAPPENED? I HAD FOOT SURGERY
YEAH, I, THEY AUDITED YOUR KNEE SO FAR SO GOOD.
I ASKED YOU DID THEY AUDIT YOUR KNEE? UH,
ALRIGHT, THANK YOU AND WELCOME TO COUNCIL MEMBER AMY PECK.
FORGIVE ME WITH NO HANDS, IT TAKES A LITTLE LONGER TO GET SORTED.
MORNING, UH, CHAIRMAN, UM, COUNCIL MEMBERS AND STAFF.
MY NAME IS COURTNEY SMITH AND I HAVE THE HONOR OF SERVING AS THE CITY AUDITOR.
IN THIS ROLE, I LEAD A TEAM OF EIGHT DEDICATED PROFESSIONALS WHO ARE COMMITTED TO PROTECTING TAXPAYER DOLLARS THROUGH THE CITY'S INTERNAL AUDIT FUNCTION.
IN RESPONSE TO COUNCIL MEMBER PECK'S 24 BUDGET, I HAVE THE PRIVILEGE TO BE HERE WITH YOU TODAY TO PROVIDE AN OVERVIEW OF THREE REPORTS OUR OFFICE RECENTLY RELEASED.
TODAY I'M GOING TO BEGIN WITH A BRIEF OVERVIEW OF THE AUDIT DIVISION, INCLUDING THE SOURCE OF OUR AUTHORITY, OUR RESPONSIBILITIES, AND OUR PROCESS.
I'LL ALSO PROVIDE AN OVERVIEW OF THE FY 23 GSD BUILDING SECURITY AUDIT, THE FY 24 ANNUAL AUDIT PLAN, AND THE FY 24 HOUSTON PARKS AND RECREATION FOLLOW UP AUDIT.
AS THE INDEPENDENTLY ELECTED TAXPAYER WATCHDOG, THE CITY CONTROLLER IS RESPONSIBLE FOR INTERNAL AUDIT FUNCTIONS IN THE CITY.
THIS AUTHORITY IS CODIFIED IN TWO PLACES.
FIRST, THE RESPONSIBILITY IS OUTLINED IN SECTION SEVEN OF THE CITY CHARTER, WHICH YOU SEE ON THE SLIDE BEFORE YOU.
THE FIRST LINE OF THIS SECTION GIVES THE CONTROLLER THE AUTHORITY TO CONDUCT INTERNAL AUDITS IN ACCORDANCE WITH PROFESSIONAL AUDITING STANDARDS.
WE FOLLOW THE YELLOW BOOK STANDARDS ISSUED BY THE US GOVERNMENT ACCOUNTABILITY OFFICE, OR THE GAO AND THE RED BOOK STANDARDS, WHICH ARE ISSUED BY THE INSTITUTE OF INTERNAL AUDITORS, OR THE IIAI DO WANNA TAKE AN, A BRIEF SECOND RIGHT HERE TO NOTE THAT THE CITY CHARTER DOES NOT GIVE US THE AUTHORITY TO INITIATE INVESTIGATIONS OF
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ANY KIND.THE SECOND PLACE IN WHICH OUR AUTHORITY IS CODIFIED IS THE AUDIT CHARTER RED BOOK STANDARD 1000 REQUIRES THAT WE DEFINE THE MISSION SCOPE, AUTHORITY, RESPONSIBILITY, AND ACCOUNTABILITY OF THE INTERNAL AUDIT FUNCTION.
THE AUDIT CHARTER DETAILS THOSE AREAS AND FORMS THE BASIS OF OUR COMMITMENT TO SUPPORT THE RESPONSIBILITIES GIVEN TO THE CONTROLLER IN THE CITY CHARTER.
IN THE AUDIT DIVISION, WE CURRENTLY HAVE AN AUTHORIZED HEADCOUNT OF 10 WITH NINE POSITIONS FILLED.
THAT NUMBER IS ACTUALLY WOEFULLY SHORT COMPARED TO OTHER CITIES ACROSS THE STATE OF TEXAS AND THE NATION.
BUT AS YOU CAN SEE FROM THE LIST OF RESPONSIBILITIES ON THIS SLIDE, OUR TEAM STILL MANAGES TO DO QUITE A LOT.
IN THE AUDIT DIVISION, WE VIEW RISK AS ANYTHING THAT COULD PREVENT THE CITY FROM ACHIEVING ITS STRATEGIC OBJECTIVES OR ITS OPERATIONAL GOALS.
THE FRAUD HOTLINE IS A KEY TOOL IN HELPING US EVALUATE RISK WITH CITY OPERATIONS.
WE FIELD AND MONITOR INQUIRIES AND CONCERNS FROM THE PUBLIC CITY EMPLOYEES, VENDORS, AND OTHERS.
WHAT YOU SEE ON THIS SLIDE IS THE STATUS OF THE REPORTS THAT WE WE RECEIVED IN FY 23.
THIS SLIDE ILLUSTRATES OUR BASIC AUDIT PROCESS.
EACH AUDIT WE UNDERTAKE HAS A UNIQUE SCOPE AND OBJECTIVE, SCOPE AND OBJECTIVE COMBINATION.
BOTH THE RED BOOK AND THE YELLOW BOOK AUDIT STANDARDS WE FOLLOW REQUIRE US TO USE A SYSTEMATIC APPROACH TO ENSURE THAT WE APPROPRIATELY ADDRESS THE AUDIT OBJECTIVES, HAVE GATHERED SUFFICIENT AND APPROPRIATE EVIDENCE FROM WHICH TO DRAW CONCLUSIONS AND PROVIDE VALUE FOCUSED INFORMATION FOR THOSE CHARGED WITH OPERATIONAL MANAGEMENT AND GOVERNANCE.
THE YELLOW BOOK STANDARDS REQUIRE US TO CONSIDER RISK AT THE ENGAGEMENT AND THE PROCESS LEVEL.
THOSE AUDITING STANDARDS PROVIDE DETAILED GUIDANCE ON PLANNING FIELD WORK, REPORTING DOCUMENTATION, QUALITY MANAGEMENT, INDEPENDENCE, ETHICS, AND EVEN TRAINING.
FOR EACH AUDIT, OUR FINDINGS AND AUDIT RECOMMENDATIONS CAN TYPICALLY BE CATEGORIZED AS ONE OF THREE TYPES.
THOSE WITH A DIRECT FINANCIAL IMPACT, THOSE WITH AN INDIRECT FINANCIAL IMPACT, AND THOSE WITH A NON-FINANCIAL IMPACT FINDINGS AND AUDIT RECOMMENDATIONS WITH A DIRECT FINANCIAL IMPACT, ARE THOSE WHERE THE ACTUAL AND ESTIMATED FINANCIAL IMPACT CAN BE CALCULATED.
EXAMPLES OF A DIRECT FINANCIAL IMPACT ARE REDUCED OR INVO OR AVOIDED COST.
COST RECOVERIES, INCREASED REVENUE OR IMPROVED EFFICIENCIES AND PRODUCTIVITY FINDINGS AND AUDIT RECOMMENDATIONS WITH AN INDIRECT FINANCIAL IMPACT ARE THOSE THAT IDENTIFY THE AMOUNT OF REVENUE EXPENDITURES OR ASSETS THAT THE PROCESS, ACTIVITY OR PROGRAM THAT THE AUDIT RECOMMENDATION IS INTENDED TO PROTECT OR ENHANCE.
SO AN EXAMPLE HERE IS A RECOMMENDATION TO IMPLEMENT OR ENHANCE A CONTROL THAT WOULD PROTECT AN ASSET FROM DAMAGE, VANDALISM, OR THEFT.
AND LASTLY, A NON-FINANCIAL IMPACT IS ONE WHERE THE IMPLEMENTATION OF AN AUDIT RECOMMENDATION WILL RESULT IN AN IMPROVED ETHICAL CLIMATE, OR PERHAPS THE ABILITY TO PROVIDE MORE SERVICE FOR THE EXACT SAME AMOUNT OF FUNDING.
IN LATE JUNE OF THIS YEAR, OUR TEAM RELEASED THE GEN GENERAL SERVICES DEPARTMENT BUILDING SECURITY PERFORMANCE AND COMPLIANCE AUDIT.
THIS REPORT GAINED QUITE A BIT OF ATTENTION.
AND ALSO TO DETERMINE WHETHER THE CONTRACTED SECURITY SERVICE WAS PERFORMING ACCORDING TO THE CITY'S CONTRACT.
AMONG OTHER FINDINGS, OUR TEAM NOTED THAT THE FORMER CITY EMPLOYEES WEREN'T DELETED FROM THE BADGING SYSTEM UPON SEPARATION IN A TIMELY FASHION.
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IDENTIFIED UNAUTHORIZED BUILDING ACCESS THROUGH AN UNSECURED ENTRANCE.THE SAFETY AND WELLBEING OF CITY EMPLOYEES, VISITORS, AND THE PUBLIC SHOULD BE ONE OF MANAGEMENT'S PARAMOUNT OBJECTIVES.
IT'S OUR HOPE THAT THIS REPORT WILL SERVE AS A ROADMAP FOR US TO MEET THIS OBLIGATION.
IN OUR REPORT, WE RECOMMENDED THAT GSD MANAGEMENT PROVIDE A, A REVIEW OF THE BADGING PROCESS AND THE SYSTEM, AS WELL AS REAFFIRM EXPECTATIONS AND REQUIREMENTS OUTLINED IN THE SERVICES AGREEMENT THAT WE HAVE WITH THE SECURITY CONTRACTOR.
WE BELIEVE DOING SO WOULD BE STRONG STEPS IN HEIGHTENING THE SECURITY POSTURE OF CITY FACILITIES.
SINCE WE RELEASED THE AUDIT, WE'VE HAD DISCUSSIONS WITH GSD ABOUT THE CORRECT WAY TO SUBMIT UPDATES INTO OUR AUDIT SOFTWARE SYSTEM.
SUBMISSION OF THOSE UPDATES ARE THE FASTEST WAY FOR US, FOR THEM TO INFORM US OF THEIR PROGRESS ON REMEDIATION OF THOSE ISSUES.
IN, IN LATE JULY, OUR OFFICE RELEASED THE FY 24 ANNUAL AUDIT PLAN.
THE ANNUAL AUDIT PLAN IDENTIFIES AREAS TO BE PRIORITIZED FOR AUDITS, AND IT IT'S A COMMITMENT TO FULFILLING THE OBLIGATIONS OF OUR OFFICE AS AUTHORIZED IN THE CITY CHARTER.
THE PLAN IS FLEXIBLE IN ORDER FOR US TO BE ABLE TO RESPOND TO REQUESTS AND RELEVANT DEVELOPMENTS WITHIN THE CITY.
THE RED BOOK REQUIRES US TO PERFORM AN ENTERPRISE LEVEL RISK ASSESSMENT PROCESS ANNUALLY AS A PRIMARY DRIVER TO SUPPORT THE ANNUAL AUDIT PLAN.
THAT PROCESS, COUPLED WITH THE INPUT THAT WE GATHER FROM OTHER SOURCES, INFORMS THE DECISIONS THAT WE MAKE TO SELECT AUDITS FOR THE PLAN.
AND AT THIS POINT, I'D LIKE TO TAKE, UH, JUST A COUPLE OF MOMENTS TO THANK EACH COUNCIL MEMBER AND, AND COUNCIL STAFF FOR WORKING WITH US, UM, AND MEETING WITH US TO PROVIDE FEEDBACK FOR THE AUDIT PLAN.
WE KNOW THAT YOU HAVE A LOT OF DEMANDS ON YOUR TIME AND WE APPRECIATE YOUR INPUT IN OUR PROCESS.
SO RELEASED IN EARLY SEPTEMBER, OUR FOLLOW-UP AUDIT FOR THE PARKS DEPARTMENT DETERMINED WHETHER CORRECTIVE ACTIONS HAD BEEN TAKEN OR WERE UNDERWAY TO ADDRESS FINDINGS OUTLINED IN PREVIOUS AUDIT REPORTS.
THE FOLLOW-UP AUDIT REVIEWED OPEN FINDINGS FROM THE VEHICLE ALLOWANCE PROGRAM AUDIT AND THE CASH HANDLING PROCESSES PERFORMANCE AUDIT.
A TOTAL OF NINE FINDINGS WERE ORIGINALLY ISSUED AS A RESULT OF THESE REPORTS.
SIX OF THOSE FINDINGS WERE CLOSED AS A RESULT OF PRIOR FOLLOW-UP AUDITS.
THIS AUDIT LOOKED AT THREE OPEN, THE THREE OPEN FINDINGS THAT STILL REMAINED AS A RESULT OF THIS AUDIT.
THE FINDING REMAINING, THE, THE FINDING REMAINING FROM THE VEHICLE ALLOWANCE AUDIT CONTINUES TO HAVE A STATUS OF NOT IMPLEMENTED AND WILL REMAIN OPEN WHILE THE TWO FINDINGS THAT REMAIN FROM THE CASH HANDLING AUDIT NOW HAVE A STATUS OF FULLY IMPLEMENTED AND THEY ARE CONSIDERED CLOSED.
SO THIS CONCLUDES MY PRESENTATION.
UM, AND I'M HAPPY TO, TO ANSWER ANY QUESTIONS THAT YOU MIGHT HAVE.
AND THANK YOU SO MUCH FOR THE PRESENTATION.
I REALLY APPRECIATE, UM, COUNCIL'S SUPPORT ON, UM, HAVING YOU PRESENT THESE PRESENTATIONS.
UM, AFTER EACH OF THE AUDITS, I JUST THINK IT'S A GREAT WAY TO KIND OF SHOW THE WORK THAT YOU'RE DOING AND HIGHLIGHT SOME OF THESE THINGS.
UM, FOR THE PARKS AND RECREATION DEPARTMENT AUDIT.
UM, FOR THE, UM, FOLLOW UP, FOR THE PARTS THAT ARE NOT IMPLEMENTED STILL, CAN YOU JUST KIND OF WALK THROUGH THE PROCESS ABOUT WHAT HAPPENS AFTER YOU DO THE FOLLOW UP AND SOMETHING STILL HASN'T BEEN IMPLEMENTED? WHERE DOES IT GO FROM THERE? SO, UM, JUST TO TAKE A STEP BACKWARD, UH, WHENEVER WE DO ANY AUDIT, UM, IN OUR OFFICE, WE, WE KIND OF SEPARATE AUDITS FOR AS REGULAR OR FOLLOW UP.
SO THE GENERAL SERVICES DEPARTMENT WOULD BE A REGULAR AUDIT.
AND THE A FOLLOW UP IS A FOLLOW UP.
ANYTIME THAT, UH, A FINDING IS GENERATED FROM ANY OF OUR WORK, IT GOES INTO A SOFTWARE, UH, DATABASE THAT WE KEEP AND WE PERIODICALLY REVISIT THOSE TO SEE WHERE MANAGEMENT IS ON REMEDIATING THOSE ISSUES.
UH, WE PROVIDE THEM WITH ACCESS, UH, LIKE A PORTAL ACCESS INTO OUR SYSTEM SO THAT THEY CAN PROVIDE US WITH UPDATES ON THE
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THINGS THAT THEY'VE DONE.UM, SO IF, IF THERE WERE THREE THINGS THAT THEY NEEDED TO DO FOR A FINDING, THEY CAN GO INTO THE SOFTWARE AND SAY, WE'VE DONE, UH, ACTIVITY ONE ANOTHER DATE.
WE'VE DONE ACTIVITY TWO, ANOTHER UPDATE.
AT THAT POINT, WE THEN GO BACK OUT AND, UM, DO WHATEVER TESTING OR REVIEW THAT WE THINK IS NECESSARY TO VALIDATE THAT THEY HAVE ACTUALLY REMEDI THE REMEDIATED THE ISSUES.
AND, UH, IF THEY HAVE, THEN WE CONSIDER THE ISSUE CLOSED.
EVEN AFTER WE DO A FOLLOW UP AUDIT.
IF THE ISSUE IS STILL NOT CLOSED, WE WILL GO, WE'LL COME BACK AND DO ANOTHER FOLLOW UP AUDIT UNTIL THEY'RE CLOSED.
AND SO BASICALLY FROM YOUR DEPARTMENT, IT'S, UM, MORE AUDITS UNTIL IT'S CLOSED.
AND I ASSUME THIS IS ALSO SENT TO THE ADMINISTRATION, UM, SO THAT THEY'RE AWARE OF SOME OF THESE THINGS THAT ARE OPEN STILL THAT NEED TO BE CORRECTED.
UM, AND IN FACT, ONE OF THE THINGS THAT WE'VE REALIZED, UM, IS THAT WITH STAFF TURNOVER, UM, CHANGES IN DIRECTORS, UM, PEOPLE MOVING FROM DEPARTMENT TO DEPARTMENT, WE HAVE TO BE VI UH, VIGILANT IN MAKING SURE THAT THE PEOPLE WHO ARE STILL THERE KNOW THAT THEY HAVE OPEN FINDINGS.
AND, UM, WE, WE KIND OF REVISIT WITH THEM, HEY, YOU HAVE THESE, DO WE STILL HAVE THE CORRECT CONTACT PERSON? IS THERE SOMETHING WE NEED TO CHANGE IN OUR SOFTWARE? THAT SORT OF THING, JUST TO MAKE SURE THAT WE'RE TRYING TO KEEP THE, THE, THE FINDINGS VISIBLE, RIGHT.
SO THAT THEY'RE AWARE THAT THERE'S STILL SOMETHING THAT THEY NEED TO WORK ON.
THERE ARE NO OTHER COUNCIL MEMBERS IN QUEUE.
I'LL, UM, I'LL APPRECIATE YOUR WORK.
I'LL ARGUE WITH YOU ON YOUR OPENING STATEMENT THAT THE CONTROLLER'S OFFICE DOESN'T HAVE ANY INVESTIGATIVE POWERS.
I'VE BEEN TALKING ABOUT FORENSIC, AND I'M SURE THAT WAS AIMED AT ME.
LET ME JUST MAKE SURE EVERYONE KNOWS.
EVERY EMPLOYEE IN THE CITY OF HOUSTON IS SUBJECT TO TPIA, TEXAS PUBLIC INFORMATION ACT.
FOIA LAWYERS LAWS OPEN RECORDS AND ALLOW ME TO READ THIS LAW COVERS NEARLY ALL DOCUMENTS THAT ARE IN POSSESSION OF GOVERNMENT AGENCIES IN THE STATE THAT ARE COVERED BY LAW.
SECTION 5 5 2 0.002 SAYS THAT INFORMATION IS PUBLIC.
IF IT IS COLLECTED, ASSEMBLED, OR MAINTAINED UNDER A LAW IN CONNECTION WITH THE TRANSACTION OF OFFICIAL BUSINESS BY A GOVERNMENT BODY OR FOR A GOVERNMENT BODY.
AND THE GOVERNMENT BODY OWNS THE INFORMATION OR HAS A RIGHT TO ASSESS IT.
ANY PERSON, NOT JUST CITIZENS OF TEXAS, CAN REQUEST PUBLIC INFORMATION.
A STATEMENT OF PURPOSE IS NOT REQUIRED, NOR THERE IS A LAW ON HOW THE RECORDS CAN BE USED.
THE TEXAS PUBLIC INFORMATION ACT ALLOWS 10 DAYS FOR A RESPONSE TO PUBLIC RECORDS REQUEST.
MY WHOLE COMMENTS WERE ABOUT, I THINK THE CITY OF HOUSTON'S CONTROLLER OFFICE SHOULD LEAD IN AN INVESTIGATIVE AUDIT WRAPPED AROUND FORENSICS THAT IS LEGAL BECAUSE EVERY EMPLOYEE IN THE CITY OF HOUSTON, THAT TRANSACTS BUSINESS IS SUBJECT TO TPIA READ IT RIGHT FROM THE STATE LAW.
WE, EVERYBODY IS, IS SUBJECT TO TPIA.
UM, HOWEVER, UM, FROM OUR OFFICES, FROM THE AUTHORITY THAT'S BEEN GIVEN TO OUR OFFICE, WE DON'T INVESTIGATE.
WE, WE CAN DO AUDITS, MEANING WE LOOK AT PROCESSES, WE LOOK AT, UM, FINANCIAL RECORDS.
WE, WE, WE LOOK AT ALL OF THAT.
UM, BUT IF THERE IS AN ACTUAL ALLEGATION OF WRONGDOING, WE ARE REQUIRED BY ACTUALLY POLICIES PUT IN PLACE AND THE LACK OF THE AUTHORITY PROVIDED TO US IN THE CHARTER, WE'RE REQUIRED TO ACTUALLY TURN THAT OVER TO THE OIG.
SO WE, YOU KNOW, WE, WE DEFINITELY COMPLY WITH TPIA REQUESTS.
I WOULD, I WOULD REMIND, NOT REMIND, BUT LET COUNSEL KNOW THAT OUR, THE ONLY THING THAT WE HAVE ANY POWER TO PROTECT IS OUR ACTUAL AUDIT WORK PAPERS.
SO I'LL STAND BY MY COMMENTS IN TPIA IN SECTION 5 52.
ANY OTHER QUESTIONS OR COMMENTS FROM COUNCIL MEMBERS? OKAY.
AS A REMINDER, THE DEADLINE YESTERDAY, THERE WERE ONE PUBLIC SPEAKERS THAT ACTUALLY SPOKE THAT HAVE SIGNED UP FOR OUR FORUM.
HOWEVER, IF YOU'D LIKE TO SPEAK, THIS IS YOUR FINAL OPPORTUNITY, PLEASE SIGN IN
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AT THE FRONT TABLE TO MY LEFT.TO YOUR RIGHT, WE HAVE ONE PUBLIC SPEAKER, MR. DOUG SMITH.
AND, UM, I HAD THE SAME COMMENT YOU DID REGARDING AUDITS VERSUS INVESTIGATIONS.
THAT IS A VERY FINE, UH, DI DIFFERENCE IN TERMS AND UH, SURE.
I MEAN, AUDITS ARE COMPRISED OF FINANCIAL AND FORENSIC.
YOU CAN DO EITHER ONE IN THE FORENSIC SIDE AS GOVERNED BY THE TEXAS PUBLIC INFORMATION ACT.
WHICH MEANS YOU OR ANYONE OR THE CONTROLLER'S OFFICE CAN LEAD IN THAT ENDEAVOR.
AND I GUESS THEY DON'T AGREE WITH THAT, BUT THAT REMAINS TO BE LOOKED AT.
BUT IT'S A LAW AND, UM, THEY'RE ALL GONE.
SO THEY CAN'T ANSWER THIS QUESTION, BUT HER AUDIT TALKED ABOUT A FINDING, I THINK IT'S WITH PARKS VEHICLE ACCESS OR SOMETHING LIKE THAT.
UH, WHY IS, AND I ASSUME THAT'S WHEN IT ORIGINATED.
WHY IS SOMETHING 14 YEARS, UH, AGO IS STILL OUTSTANDING.
SO THAT WAS A PART OF
BUT THAT WAS PART OF AMY PECK'S AMENDMENT THAT SHE PUT FORWARD IN OUR CONVERSATIONS WITH THE CONTROLLER'S OFFICE.
AND I'LL REPEAT AS A RESULT OF THAT AMENDMENT, WE REVIEWED TWO TODAY AND AUDITS FROM BFA WITHIN FIF 45 DAYS OF THE AUDIT'S RELEASE WITHIN 45 DAYS OF THE AUDIT'S RELEASE.
SO I CAN'T ANSWER YOUR QUESTION.
I WOULD POSE IT TO THE CITY'S CONTROLLER'S OFFICE, AND I'M NOT SURE IF COUNCIL MEMBER PECK HAS ANY THOUGHTS WRAPPED AROUND THAT, BUT THAT WAS PART OF HER AMENDMENT.
AND I THINK I'LL LET YOU SAY YOUR OWN WORDS.
THAT WAS PART OF YOUR PROCESS.
I DON'T KNOW THE ANSWER TO THAT.
AND THAT'S KIND OF THE REASON WHY I HAD THIS BUDGET AMENDMENT, IS TO BRING SOME OF THOSE THINGS TO LIGHT.
I MEAN, WE, I, I READ ALL OF THE AUDITS THAT COME OUT, BUT WITHOUT IT COMING TO COMMITTEE AND HAVING THAT KIND OF BROUGHT UP, IT'S HARD TO GET SOME OF THOSE QUESTIONS ANSWERED SOMETIMES.
SO I THINK THAT IT'S GONNA BRING A LOT OF THOSE QUESTIONS TO THE FOREFRONT ABOUT WHY SOME OF THOSE THINGS HAVE NOT BEEN IMPLEMENTED.
SO IT'S BEEN BROUGHT UP AND HOPEFULLY THE FACT THAT IT'S NOW PUBLIC WILL PUT SOME LIGHT ON 'EM AND GET SOMETHING DONE, BUT MAKES NO SENSE THAT SOMETHING'S 14 YEARS OLD AND IT'S STILL NOT FIXED.
WELL, I, I THINK, I'M NOT GONNA PUT WORDS IN THE CONTROLLER'S MOUTH, BUT YOU IDENTIFY THE WEAKNESSES, YOU GIVE THE ABILITY TO THE DEPARTMENT TO IDENTIFY THOSE WEAKNESSES AND FIX THEM, AND THEN YOU COME BACK WITH A SUBSEQUENT AUDIT TO MAKE SURE THAT THEY FIXED WHAT YOU TOLD 'EM WAS A MATERIAL WEAKNESS.
ALWAYS GOOD SEEING YOU, MR. SMITH.
BEFORE WE ADJOURN, I'D LIKE TO MAKE NOTE OF THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING.
AND IT'LL BE ON TUESDAY, OCTOBER 31ST AT 10:00 AM AGAIN, TUESDAY, OCTOBER 31ST AT 10:00 AM THERE ARE NO OTHER QUESTIONS OR COMMENTS.