Loading...
HomeMy WebLinkAbout2008 03-10 445 CMW REVISEDPACKET AGENDA CITYCOUNCIL/MANAGERWORKSHOP Monday,March10,2008 CouncilChambers,CityHall 4:45p.m. A.CalltoOrder B.RollCall C.Approvalofagenda D.NewBusiness 1.PlanningCommissionInterview (a)TusharDesai4:45 E.OldBusiness 1.Reporton2007FinancialIssuesandDiscussionofNeedfor2008 BudgetRevisions. F.Adjournment AgendaItemE1 AGENDAREPORT CouncilManagerWorkshop TO :CityCouncil FROM: CharlesAhl,ActingCityManager SUBJECT: Reporton2007FinancialIssuesandDiscussionofNeed For2008BudgetRevisions DATE: March7,2008 INTRODUCTION/SUMMARY ThisreportprovidestheCityCouncilinformationonthestatusofthe2007expendituresthatis necessarytopreparethe2007ComprehensiveAnnualFinancialReport(CAFR).The informationincludesareportonactualcostscomparedtothe2008Budgetthatwasadopted andapprovedonDecember27,2007.Informationisincludedontheimpactofthefinal2007 expendituresandthoseimpactsonthe2008Budget,alongwithinformationonsomere- estimatesthatstaffhavepreparedonthe2008Budget.Finally,apreliminaryprojectiononthe currentoutlookforthe2009Budgetwillbeprovided. TheDepartmentHeadshadlimitedinputintothepreparationofthe2008Budget.The DepartmentHeadsandtheirstaffhavespentthemajorityoftheirtimeinFebruary2008, providinganewestimateofthelikelyimpactsandproposedchangestooperatetheirbudget accordingtorealisticestimatesduring2008.Thestaffhavebeenprovidedinstructionsbyme, not toprovideaclearpictureontheoverallexpensesin2007andthatIwillassignblamefor shortfallsinrevenueoroverrunsinexpendituresthatoccurredin2007;however,inmakingre- estimatesfor2008,IwillholdeachDepartmentHeadresponsibleforrevenueestimatesand expenditureplansfortheirentire2008revisedbudget. FINANCIALSUMMARYOF2007BUDGET AsofFebruary29,2008,thereisasurplusoffundsintheGeneralFundof$917,620.Itwas plannedthat2007wouldendwithasurplusof$308,570.Thereare,however,numerous expensesthatremainfor2007thatshouldbereflectedasa2007expense,beforetheCity closesthebooks.The$308,570isreflectedasapercentageoftheGeneralFundBalance. Theapproved2008Budgetreflectsthisamountas36.6%oftheGeneralFundExpendituresfor 2008of$18,027,453.Thus,theCityplannedtohaveanendofyearbalanceof$6,638,260. Thisamountisdeemednecessaryforoperatingfundsasrevenuesarereceivedand expendituresareincurredduringtheyear.Thisamountalsoincludesanycontingencyplanning duringtheyear.Itshouldbenotedthatthe36.6%iswithinthenormalrangeofpercentagefor operatingfunds.TheCityCouncil,inpastyearshasdeterminedthispercentageaspartof budgetpresentationsbytheFinanceDirector.Thispercentagehasrangedfromalowof35% tothecurrentbudgetof36.6%.TherangeisusuallybasedupontheFinanceDirectorscomfort withestimatesandunforeseenexpensesthatmaybeincurredduringtheyear. FINANCIALSUMMARY PAGETWO Areviewofcurrentexpensesthatshouldbeappliedtothe2007expensesisasfollows [Explanationsofeachitemfollow]: ($86,850)Deficitinthe2007RecreationProgramBudget ($299,700)Deficitinthe2007MaplewoodCommunityCenterBudget ($125,660)UnbudgeteddeferredraisesinMCSAContract ($50,000)LMCITPaymentdueforMahnkesettlement ($350,000)PaymentforParkingLotupgradesatMCC,CityHall,PubWrks ($142,460)CarryoverofExpensesnotcompletedin2007 +$94,690PlannedEquityinMCCFund $917,620Feb29,2008ReportonGeneralFundSurplus ($42,360)ActualEndof2007FundBalanceImpact $308,570PlannedEndof2007FundBalanceImpact Deficitin2007RecreationProgramBudget:AttachedisareportfromCitizenServices Director,KarenGuilfoile.Karenhasincludedsignificantdetail,butingeneralwehave foundthatexpensesareunderbudget,butrevenueshavebeensignificantlyover-stated andwerenotachievedcreatingtheshortfall.Thisappearstobeaninheritedproblem frommanyyearspastwhichKarenandherstaffarecorrecting. Deficitin2007MaplewoodCommunityCenterBudget:AttachedisKarensreportonthe CommunityCenter.With2007,theexpensesexceededthebudgetby$46,973almost entirelywithintheBuildingMaintenanceexpenses.Revenuesin2007wereespecially highlyover-statedinthe2007budget.Ashortfallof$252,726wasrealized.Areviewof membershipsindicatesanincreaseofmembershiprevenueof$125,300;however,the budgetplannedforanincreaseof$221,000.Additionally,inconcessionsandother revenues,therewasaslightincreaseinrevenueascomparedto2006;however,the plannedbudgetincreasewas$25,000.Karenandherstaffareplanningfeeincreases andrevisionstotheprogramsatMCCtohelpoffsettheseshortfallsin2008. UnbudgeteddeferredraisesinMCSAContract:ThemembersoftheMCSAbargaining grouphavenothadraisessinceJune2006.Mr.Bethelhascalculatedthatthebackpay totheseemployeesforraisesthattheywouldhavereceivedin2007at$125,660. LMCITPaymentdueforMahnkesettlement:Councilapprovedthissettlementearlier thisyearandshouldbeshownasanexpensein2007. PaymentforParkingLotupgradesatMCC,CityHall,PubWrks:Therepavingofthe parkinglotsatMCC,CityHallandPublicWorksin2007wasplannedtobepaidwith bondingfunds.Thisisnotallowed,asthecashexpenseinthebondwasdedicated moneyfromtheSewerFund.Thisexpenseneedstobeshownasexpenditurein2007, whiletheexcessmoneywillbedeductedfromthe2008bondexpenses. Numerousprojectsareon-goingandwereauthorizedin2007thathavenotbeen completed.Staffhasestimatedthisas: $12,950TransportationportionofComprehensivePlan $12,000Lobbybenchseating $2,600PassportCamera $21,990Dispatchremodeling $32,630MCCExerciseAreaCarpet $39,000MCCExerciseAreaWalls $21,290MCCThemo-DyneRepair FINANCIALSUMMARY PAGETHREE Plannedequityin2007MCCFund:The2007budgetincludedacontributiontothe MCCFundthatwouldhavehelpedtoestablishpaymentstodepreciationanda contingencyamount.Thesefundsshouldbeusedtooffset2007expenses. Unlessthereisdirectiontorevisethesecalculations,staffwillprepareafinalbudgetreportfor 2007adjustmentsforCouncilactionontheseitemsforafuturemeeting. IMPACTON2008BUDGET The2008BudgetwasadoptedbytheCityCouncilonDecember27,2007.Asnoted,the DepartmentHeadshadlimitedinputintotheapprovedcategoriesandspecificlineitems.The DepartmentHeadshavecreatedalistofexpendituresandrevenuesthatisessentiallyaRe- Estimateofthe2008Budget.Followingaretheoverallchangesthathavebeenreportedand willbepursuedinthecomingmonths.Wecontinuetotrackexpensesandrevenuesaswe proceedthroughthisprocess.TheseitemsareopenfordiscussionwiththeCouncil. ($350,930)2007EndofYearFundBalanceAdjustment[$308,930+$42,360] ($25,420)2008MCCProgramRe-estimateShortfall ($30,500)2008RecreationProgramRe-estimateShortfall ($120,000)2008ShortfallinEmployeeBenefitsFund(plan3-yrpayback) $85,5502008SavingsfromEliminationofPublicSafetyManager ($55,000)24-hourSleepingQuartersFireDepartment ($7,200)RestoreTrainingcutsFireDeptimplementedDecember27, 2007 ($23,350)RestoreTrainingcutsPoliceDeptfromDecember27,2007 st ($6,000)AddSergeanttoPoliceDepttocoverlostemployeeApril1 st ($30,000)AddITTechniciantocoverlostemployeeSept1 ($30,000)Restore2/3FTEofPark/StreetMaintcutonDecember27,2007 ($5,000)RestoreTrainingcutfromPublicWorksonDecember27,2007 ($6,000)RestoreTemp/SeasonalWagesfromPubWkscutonDecember27, 2007 $92,150SavingsfrompermanenteliminationofPlannertransferredtoEnv. Planner $66,680SavingsfromdoublebudgetingofUtilityExpensesinFleetMgmt ($150,000)ReduceestimateofrevenuefromBuildingPermitFees $70,000EliminatedoublebudgetingofPark&RecAdmin st ($70,000)AddAssistantCityManager/CommDevDirectorJuly1 ($595,020)TotalImpactofRevisionsto2008Budget PROPOSED2008BUDGETSOLUTION $360,550Authorize98%spendingauthoritytoallDepartments $18,027,459x2% $40,000ReduceoutsideconsultantexpenseinCommunityDevelopment $198,300ReduceFundBalanceto35.5%from36.6% $18,027,459x1.1% 598,850ProposedSavings FINANCIALSUMMARY PAGEFOUR 2008BudgetRevisions:Theserevisionsareaworkinprogress.Manyarestillinreviewbut thislistincludescurrentlyplanningandestimatesandarethebestavailableatthistime.No actionisnecessarybytheCityCouncil;however,inputintotheoveralloperationsisrequested. Baseduponthatinput,thestaffwillbeginimplementationandplanningoftheseitemsoverthe nextfewmonths.Staffmemberswillbeavailabletoanswerquestionsonthislist,includingthe impactsofreducingtheirbudgetsby2%for2008. OUTLOOKFOR2009 FinanceDirectorBobMittethassubmittedareportindicatinghisoutlookonthefinancialstateof thecity.Inplanningfor2008expenditures,itisimportanttolookattheoutlookandimpactsfor 2009.Followingareafewthoughts: ($640,000)PossibleexposuretotheCityifHealthCareexpensesincreaseby40% as rumoredandtherearenochangestocurrentcontracts.Allunion contractsexpireonDecember31,2008.Thiswillbeakeyissueand meetingswiththeLaborManagementTeamhavebeenstartedtohelp makesignificantchangestotheoverallapproachtoemployeehealthcare programs. ($460,000)Ifallemployeesaregranted3%raisesfor2009. ($357,000)Anticipatednewdebtservicefor2008PublicImprovements. Itisnotedthatadebtservicestudyisunderwayandthisamountmaybe revisedbynotingtheoverallDebtServiceFundandfromarefunding issuethatmayoccurin2008. ($250,000)WewillcontinuetoseeadecreaseinrevenuefromBuildingPermits ($1,707,000)Totalofcurrentlypotentialobligationsfacingthe2009Budget $150,000Approximaterevenuerealizedforeach1%LevyIncrease Thestaffhasstartedtheirplanningforthe2009Budgetprocessthispastweek.Includedwill befurtherRe-estimatesofthe2008expendituresandrevenues.Thefirststepwillbetoreview theCapitalImprovementPlanfor20092013.Weanticipatethatprocesstobecompletedby earlyJune2008.Staffwillalsobegintheactualestimatingofthe2009budgetinmid-Mayandit isplannedthattheCityCouncilwillhaveadraftbudgetfor2009availableforreviewinlate-July 2008forWorkSessionreviews.ThiswillallowCouncilinputintothebudgetpriortoadoptionof theMaximumLevythatisrequiredbyStatutebymid-September2008. RECOMMENDATION ThereisnoactionproposedfortheCityCouncilonthisitem.Itisprovidedasinformationas thestaffworksthroughthisprocess.Thisisnotintendedasareportandsolution,butwillbea processforbudgetadjustmentsoverthenext4-6weeks. Attachments: 1.MemoandattachmentsfromKarenGuilfoileonMCCandRecProgramBudgets 2.MemoonFinancialStateofCityfromBobMittet,FinanceDirector 3.CouncilQuestions Agenda Item E1 Attachment 1 AgendaItemE1 Attachment2 Memorandum To: ChuckAhl,ActingCityManager From: BobMittet,FinanceDirector Date: March6,2008 Re: FinancialStateoftheCity Introduction Fromabudgetperspective,2007wasmarkedbythereductionofmanagementworkforce. Thisresultedinapproximately$325,000ofbudgetsurplusforwagesandbenefitssavings thatwereoffsetbyenterpriseandspecialrevenuefunddeficits.2008and2009willlikely bemarkedbychallengesinachievingrevenueestimatesandcorrespondingrequirements forsharplycontrolledspendingintheGeneralFund. Challengesarecategorizedanddiscussedinthefollowingportionsofthisreport. GeneralEconomy Theshakeoutinsub-primemortgagesandtheincreasedforeclosureratewillcertainly impacttheeconomy.Havingspokenwithsomeothercityfinancedirectors,thiscould havevaryingimpacts.Whilepropertytaxeswillultimatelybepaidbythelenderthat repossessesaproperty,thedelaywhilethepropertygoesthroughtheforeclosureprocess canbeasmuchas18months. Economicrecessionwillcertainlyresultinincreasinglay-offscompoundingthepressure onpropertyownerstokeepuptheirpropertytaxpayments. Declininghomevalueswilllikelyresultinincreasingchallengestotaxvaluations. RamseyCountyisconsideringtheirabilitytodealwithchallengestoassessedvaluations andisconsideringaskingforhelpfromotherjurisdictionstofundthelegalcostsofthese challenges. Inthepast,MaplewoodreliedonLocalGovernmentAid(LGA)andotherstateassistance. WhilethecityhasnotreliedonLGAforseveralyears,thedeficitprojectedatthestate level(>$900,000,000)certainlydoesntbodewellforfutureLGA March7,2008 MedicalInsurance Inthefallof2007,managementaskedthevariouslaborunionsandassociationsto cooperateintherestructuringofthemedicalbenefitsprovidedinthecitysinsuranceplan. Labormemberslargelyrejectedtherequesttoreducethecitycoverageofhospitalization costsfromthecurrent100%coveragetoan80%coverage.Thiswasrejectedalthough labordidapproveincreasingtheofficecopayfrom$10to$25pervisit.Thischange resultedinthereductionofpremiumcostsbyapproximately$100,000.Thechangeto 80%hospitalizationwouldhavesavedanadditional$200,000. Ayearearlier,thecitynegotiatedwithMedica,acapontheincreasefor2007of18%. Actualutilizationwouldhaveresultedinanincreaseof23%. IntheopinionofJimSarych,ourbenefitsadvisorfromFinancialConcepts,Inc.theinability tomakethechangeinhospitalizationcoveragecoupledwiththe18%capresultedinthe unwillingnessofcompetinginsurers(BlueCross,HealthPartners,PreferredOne)to providecompetitivequotes. Duringthepreviousyearsreviewofutilization,thecityhadtwosignificantmedicalevents. Thisyearsreviewwillincludeatleastthreeevents,knownanecdotallyandtherecouldbe more.Utilizationofservicesformoreminorneedsarenotknownatthistimeandcould affecttheoverallutilization.Forthisdiscussion,itcanbeexpectedthatutilizationof serviceswilllikelyresultinsignificantrateincreasesasMedicaseekstorecoupthelosses theyhadtoabsorbduetotheratecaplastyearandtheutilizationthisyear. MrSarych,inrecentdiscussions,indicatedthatanotherclienthadreceiveda44%renewal increasefromMedica.Theywereabletomakesomestructuralchangesintheplan, whichhedidnotelaborateon,andwereabletonegotiatea22%increasebyswitchingto HealthPartners.BlueCrossisnotcurrentlyaggressivelyseekingnewbusiness. A40%increaseinourMedicalinsurancerateswouldequatetoapproximately$640,000of increasetotheCityand$150,000ofincreasetoemployees. SalaryIncreases $15,291,000of2008budgetedpersonnelcostsaresubjectto2009contractnegotiations. (Therestofpersonnelcostsareininsurancediscussedearlier.)Ifweassume3% adjustmentsinallcontractswithnootherchanges,thatwouldbeanadditional$460,000. Mostcontractswillbenegotiatedin2008forrenewalin2009. Thecontinuedgrowthinmedicalinsurancecostsarecausingsomeemployers, governmentalandnon-governmental,toquestiontheirabilitytoprovidesalaryandwage increases.Acombinationof40%Medicaincreaseand3%salaryincreaseswouldresult inanoverall6.4%increaseinpersonnelcostsfortheCity. 2 March7,2008 DebtService Theresultofaddingadditionalbondingin2007andproposedbondingin2008forstreet reconstructionistoaddapproximately$357,000annuallytothedebtservicerequirements goingforward.Staffwillbeinvestigatingtherefundingoftwoissuesthissummerthatwill netacumulativesavingsofapproximately$50,000savingsoverthelifeoftherefunding bonds.Finally,onebondissuewillbepaidoffin2008resultinginapproximately$30,000 ofannualdebtservicesavings. AmbulanceServiceFund Discussiontookplaceatthecouncillevelinconjunctionwiththesettingofthe2008 ambulanceratesthatraisedquestionsaboutfutureconsiderationoftheAmbulance ServiceFundasanenterprisefund.Maplewoodratesarethehighestofanyambulance servicethatwassurveyed.Theambulanceservicehasoperatedforafewyearswithouta citysubsidyfromtheGeneralFund. The2008BudgetreflectsamoreaccurateallocationofcostsfromtheFireDepartment thatresultedina$300,000(21%)increaseinratesfor2008.Thisincreasefundsthree newambulancesin2008,2009and2011. Onapreliminarybasis,asurpluswilloccurintheAmbulanceServiceFundfor2007that indicatesthatanincreasemaynotberequiredinthe2009rates. RetainingWall TheretainingwallonMarkhamPondisinpoorconditionandthelatestlegalanalysis indicatestheCitymayberesponsibleforthecostofitsreplacement.Estimatedcosttodo sois$375,000.Aswithstreetreconstruction,theCitymaybenefitfromfavorable competitiveconditionsinthelocalconstructionindustry. OtherRevenueConcerns Revenuesfor2007willshowasurplusoverthebudgetedamount.Mostofthissurplusis attributabletoprepaidspecialassessments Asdiscussedearlier,economicslowdown/recessionwillhaveimpacts.Amongthose impactsarelikelyreductionsinbuildingpermitsandcommunitydevelopmentplancheck fees.Buildingpermitsin2007aredownfrombudgetby$222,000or31%.Plancheck feesaredown$139,000or32%.2008budgetsinbothofthesecategoriesweresetat levelsslightlyabove2007levels. Otherareasofconcernfor2008revenuesareinterestearningsandadministrative charges-PIPfunds. 3 AgendaItemE1Attachment3 CouncilQuestions From:ErikHjelle[erikhjelle@yahoo.com] Sent:Tuesday,March04,20088:30AM To:ChuckAhl Subject:RE:TasteofMaplewoodDates Howisthegatheringofthisinfoproceeding?Ithasbeenover3weekssinceyoure-mail. AcoupleofbasicquestionsthatIhave; IfyouareaskingthattheAuditbedelayedfor2008,whywerethese"facts"notreported duringthelastaudit?Ifthecheckbookhadnotbeenreconciledfor 13months,notrackingoffixedassets,budgettransfersnotprocessed,journalentriesnot checked,etc,whydidtheauditorsnotchecktheseitems?Whyweretheseitemsnot done? Inorderfortheauditortohaveverfiedthatthesetaskswerebeingcompletedprior,we wouldhavetoassumethattheywerebeingdoneandthensuddenlythosesametasks stoppedbeingcompleted.Otherwise,thelastauditreportisworthless.So,assumingthe auditreportisaccurate,whydidFinanceStaffstopdoingthesebasictasks? TheCommunityCenter.Youre-mailclaimedthatrevenuesaredown$260,000.I assumeyoumeanfrom 2007vs.2006.ThatinfowouldbetrackedbytheFinanceDepartment.Butwhotracks allofthosenewmembersthatKarenmentionedinherreport?Forrevenuestobedown $260,000,wewouldhavetoassumethatMCClostMOREmembersthanitbroughtin "new". Inotherwords,moreleftthanjoinedcreatingadeficitof$260,000.Keepinginmindthat MCC,weweretold,hadincreasedrentalbookingsandthoserevenuesexceeded2006 (again,trackedbyKarenandCo). Sopleasekeepinmind,thatanynumbersthatare"now"suddenlytobebelievedbythe verypeoplethatnever"balanced"acheckbook,neverprocessedbudgettransfers,and appeartohaveforgottenhowtodotheirjobwillprovetobeachallengeandlackany credibility.Unlessofcourse,someoneisclaimingthatGregCopelandtiedthemupand preventedthemfromworking,thecredibilityoftheFinanceDepartmentisgone. Goodluck. ErikHjelle From:DianaLongrie Sent:Monday,February11,20087:17AM To:ChuckAhl Cc:RobertMittet Subject:AdditionalInformationRequested DearMr.Ahl, SothatIcanplacethingsintocontext,i.e.atimelineandetc.,pleaseprovidethe followinginformation: 1.Whenwereourauditorshired? 2.Whenwasthelastauditcompletedbythem?Whatwheretheirfindingsand conclusionsregardingthecheckingofjournalentries,trackingrevenue,andprocessing budgettransfers? 3.Didn'tweauthorizeextramoneytohavetheauditorscompleteareportafewmonths back? 4.WhendidGayleBaumanleaveforhernewposition? 5.WhenDanFaustwashere,whowasresponsibleforcheckingjournalentries,tracking revenueandprocessingbudgettransfers? 6.WhenDanFaustretired,whowasresponsibleforcheckingjournalentries,tracking revenueandprocessingbudgettransfers? 7.Didn'twejustreceiveanawardforourFinanceDepartment? 8.Whatwasthecriteriafortheaward? 9.WhyisitthatMs.Guilfoiledidn'trealizethenumbersfortheCommunityCenterdidn't makesense? 10.Whatarethe$70,000.00inexpenses"yettobeincurred"for2007?Doesthismean wehaven'tspentthisyetbutwewantedto? 11.Didn'twehaveoneofthefinanceemployeesretireashorttimeago?Whenwasthat? Isthepositionopen?Whatwasthescopeofresponsibilitiesfortheposition? 12.I'mnotclearwhatismeantbythephrase"dataissues"-Ihavenotheardour professionalfinancepersonalusethistermbefore. 13.PleaseconfirmourAuditorshavebeenconsultedandalertedtothissituationand pleaseconfirmwhofromourprofessionalstaffisworkingontheinvestigationofthis matterwithyou. 14.HaveyoucalledtheStateAuditorwithregardtotheoverallissuesyouspeakofand alsoregardingtheCommunityCenter? Asalways,pleaseprovideanupdateonanysignificantissuesorinformationthat,inyour personalandprofessionaljudgment,youfeelIshouldbecognizantof. Thankyou, DianaLongrie MayorofMaplewood 651-214-0859 ManagerResponsetoQuestions: 1.TheauditorswerehiredinMarch2007witharoletoreviewandissueareportonthe ComprehensiveAnnualFinancialReport(CAFR). 2.TheauditorscompletedtheirreportontheCAFRonJuly30,2007.Theirfindings indicatedtheresultsofthefinancialstateofthecityatyearendfor2006.Theyindicated thattheprocessinplacein2006regardingjournalentries,trackingrevenueand processingbudgettransferswereappropriate. 3.Iamnotawareofanyexpendituresauthorizingtheauditorstocompleteareportafew monthsback. 4.GayleBaumanleftherpositioninearlyFebruary2007. 5.DuringMr.FauststermasFinanceDirector,eitherheortheAssistantFinance Directorcheckedjournalentries,trackedrevenueandprocessedbudgettransfers. 6.UponMr.Faustsretirement,GayleBaumanassumedallthoseduties.Uponher departure,thosedutiesdidnotgetcompletedinatimelymanner. 7.TheFinanceAwardwasforthe2006CAFR. 8.CriteriafortheawardwasbasedupontheGovernmentFinanceOfficialAssociation evaluation. 9.Ms.Guilfoilereportedtheinformationthatshewasprovided.Itwasnotuntillate January2008,asinformationwasenteredintotheoverallfinancialprogramsthatshewas notifiedofthedifferenceindata. 10.The$70,000expensestobeincurredarelistedinthereportascontractsthathave beenletfortheMCCExercisearea. 11.TheretirementoftheemployeeinFinancewasthePayrollClerk.Thatpositionshas beenfilled. 12.DataissuesisatermthatIusedinmye-mailtotheCouncilthatdescribesinmy termsallofthefinancialinformationprovidedbytheFinanceDepartmenttothe DepartmentHeadsandManagers. 13.TheAuditorswillbewellawareofthisinformation.Thisreportisthefirststepin providingtheAuditorswithinformationsothattheycanauditthe2007CAFR. 14.TheStateAuditorhasnotbeenconsulted.ThisisaprocessofinformingtheCouncil ofthefinancialinformationandshortfallssothattheauditreportfor2007canbe prepared. ErikQuestions: 1.Theauditwasbasedon2006.Theseissuesidentifieddidnotbeginoccurringuntil February2007.Theauditorswouldnothavehadaccesstothatinformation.Theywill bereviewingthatinAprilJune2008andthatreviewwillsummarize2007activity. 2.Asnoted,thelastauditwasforworkin2006anddoesnotreflectanythingrelatedto myreport.IprovidedthisupdatesothattheCouncilisawarethatinternalcontrolsneed tobechangedandthatIamtakingstepstoimprovethat. 3.InformationontheMCCbudgetareincludedinmyreport. PreparedbyChuckAhl,ActingCityManager March7,2008