Budget/Audit/Board of Review Committee.

Becky Hammond

The second finding that we had was related to the underfunded retirement plan, which is the Firefighters' Pension and Relief Funds. This has been a finding since 2017, but what I'd like to highlight here... Here is the fact that the new system has hovered anywhere from 7% to 12% and in 2025, it's up to 18% funded. The old system has been as low as 2.82% and it is up to 25% funded in 2025. So the funding percentages are going up and some of that is market dependent, but also that you're continuing to just make contributions to the plan based on the required actuarial amounts that the actuary says you need to make. So that's slowly being rectified. It's just still at that very low level where it's considered a non-compliance. So hopefully we'll see some improvements there and that will come off in the near future. So on to our overview. This is basically just a bird's eye view of the net position of the city. This is everything government-wide, including all of your funds, all of your capital assets, all of your long-term liabilities. And so we did have an increase in net position overall from $930 million to $1.72 billion. And the biggest factors involving this is the fact that there was a lot of capital investments and then quite a significant amount of reduction in long-term liabilities. And I'm going to go over that in a future slide to give you a little better appreciation for that. As far as capital assets, again, here you can see that we did have some significant increases in building and improvements and infrastructure, some reduction in construction and progress where about $141 million moved from construction and progress into those other categories. But overall we did have an increase after depreciation of almost $300 million for the year. Now normally when I do these presentations I like to give a five-year look back and I also included the 2026 budget for perspective because this administration and this council have done a lot of work already to make changes to your fiscal policies and to kind of change where things are going. So I'd be remiss if I didn't include that. So this is just your sales tax receipts over the last five years. upward. And then I think the budget is because you were probably conservative in budgeting. I know that you had been reported to as of April 16th that you had already collected 25% of that $271 million budget for sales tax. So I imagine that that will continue to trend in the same regards, but sales tax seems to be down in other parishes as well. And so that conservative estimate makes a lot of sense. As far as ad valorem collections, that we're seeing a downtrend from the last three years. And so again, your budgeted number makes sense. Again, it was reported to you as of April 16th that you had already collected 92% of that $276 million. So I would expect that your actuals will be over the budget, which is a good thing. All right, for general fund, this is the slide I think everybody wanted to see and wants to know about. So we can see the gold is cash balances and the blue is your fund balances. We can see kind of a high in 2022, and we're down in 2025 to $67.3 million in fund balance. That is $138.3 million decrease from prior year, which consists of $129.9 million from the 2025 deficit, as well as the $8.4 million of prior period restatement that I mentioned earlier. So that gets you to that $138.3. In the next slide, I'll give you some perspective of what that fund balance means as far as future. But I also want to highlight, while the cash, and I apologize, I should have put your investment balance here as well, because I think that tells a story, so I'm going to elaborate there a little bit. But your cash did increase $124.8 million, but that is because you liquidated $186.4 million of investments. So you're really down a net of about $62 million when you look at cash and investments altogether. But I think the positive is, and obviously that cash has the proceeds from the revenue anticipation note in it. So that explains why that cash position was so high right at the end of the year. This graph shows you the general fund equity as a percentage of expenditures. And basically, the GFOA says that they recommend that you should have about two to three months' worth of expenditures in your general fund. So that's about 16% to 25% when we look at that in comparison to this graph. So you can see, in previous years, we were well over that in 2024, probably right in line. And then in 2025, as we all know, we're not really where we needed to be. You've already made steps to make those corrections, so I don't think we need to harp on that any. But ideally, you're going to be able to do that. But ideally, while I think the two to three months is a good idea, I think given the challenges that this city has and also the concerns that we have with hurricanes and other natural disasters, a better target probably is more in the 50% or six months of expenditures to have in your general fund is a good measure. But that's just kind of my take on what you kind of should have. This graph just shows you all your governmental funds. And so this is your general fund and all of your special revenue funds, capital projects funds, and debt service funds all together. But all your revenues and your expenditures. And so we can see our expenditures have continued to exceed revenues, which is why you've had to make so many steps this year to kind of right that ship. So, again, I would have put the budget amounts there, but that is a pretty tumultuous task to try to get all those numbers together. But you know what that looks like, and you've already tightened that down. So there's really not much more to say there. And in this last slide, there were quite a number of things happening here for the year for long-term liabilities. Additions to long-term liabilities were $45.7 million. Your deletions to long-term liabilities were $372.7 million.

Becky Hammond

The biggest contributor in that was in claims and judgments. You had a $121.5 million decrease. Of that, $100 million of that was because of the consent decree going away. So that did result in a significant reduction in liability for the city. The other big, big decrease was in your net pension liabilities, which decreased on the whole $180.6 million across your municipal employees' retirement system, both the firefighter systems, and then there's a little piece of municipal police with the state that's in that number as well. A large part of that, again, is favorable market conditions, which reduced the liability at the actuarial level, as well as just continuing pay down of about $55 million in bonds and your debt service to round that out. So while we know that these numbers will go back up with the recent bond issues, which is healthy because we need to have a continuous bonding program and have that cash flow, it was positive to see some of those large reductions, especially in claims and in the pension liabilities, because those are areas that you want to kind of keep control over. Any questions?