MINUTES EMPORIA CITY COUNCIL BUDGET WORK SESSION CITY OF EMPORIA MUNICIPAL BUILDING APRIL 15, 2025 Note to Reader: Although the printed agenda document for this City Council meeting is not part of these minutes, the agenda document provides background information on the items discussed by the City Council during the meeting. A copy of the agenda document for this meeting may be obtained by contacting the Office ofthe City Clerk. Emporia City Council held a meeting on Tuesday, April 15, 2025, at 5:30 p.m. at the Municipal Building, located at 201 South Main Street, Emporia, Virginia. Carolyn S. Carey, Mayor, presided over the meeting. ROLL CALL The following City Council members were present: Councilman Mark Lilly Councilwoman Doris T. White (arrived at 5:45pm) Councilwoman Yolanda Hines Councilwoman Carol Mercer Councilman James C. Saunders Councilwoman L. Dale Temple Councilman Clifton Threat Others present: Carolyn Carey, Mayor William E. Johnson III, City Manager Tessie S. Wilkins, City Clerk Alton Mason, Deputy Director of Public Services Troy Hawkins, Interim Chief of Police Shannetta Beck, Economic Development Manager Alicia Hargrove, Director of Finance Melvin Prince, Director of Public Services Troy Allen, IT Manager Matt Culbreath, Planning and Zoning Manager Brian Petty, Building Official Absent: Mayor Carey opened the budget work session by welcoming everyone in attendance. General/Utility Funds 1. The council to identify which department heads they would like to hear from in upcoming sessions. Councilwoman Hines stated she would like to hear from the Commissioner of the Revenue, Registrar's Office, Economic and Community Development, and Child Advocacy. Mr. Johnson stated that Council must discuss the Utility Fund as a whole. Councilman Saunders expressed concern about the Utility Fund and the overall budget, noting uncertainty due to delayed audits and unclear fund balance details. He stated he had reviewed the Utility Fund line by line and identified potential areas for cuts but had not yet reviewed the General Fund in the same detail. He emphasized the need for a conservative approach due to economic uncertainty and questioned the sustainability of maintaining a 10% fund balance. He also raised concerns about the merit increase process and suggested a more structured evaluation and feedback system for employees. Lastly, he recommended inviting the school superintendent to discuss the additional state funding and school budget implications. Mr. Johnson stated that funding for the merit process is include in the current budget, with the Berkeley Group assisting. Training is being provide for both supervisors and staff. Employees rated as "exceptional" will receive an additional 2.5% merit increase, while all employees will receive a 2.5% COLA-related increase. Merit increases will apply on the anniversary or last promotion date. Councilman Saunders explained that, in a typical merit system, employees are rate in tiers with varying percentage increases based on performance. He stated that even those not meeting expectations may receive a small cost-of-living adjustment along with a performance improvement plan. He emphasized the importance of choosing either a merit-based system or across-the-board increases, rather than combining both. Councilman Saunders asked whether the FY2023 audit had been complete at the state level and noted he believed the answer was no. Mr. Johnson stated that you are correct. Councilman Saunders expressed concern about the lack of response from the previous auditor and hoped no payment had been issued. He suggested having Brown Edwards take over the audit and noted this may be contributing to additional costs this year, beyond the recordation fee. Mr. Johnson stated that the additional fee was a premium to accelerate completion of the FY2024 audit and ensure FY2025 is complete on time. He noted they could discuss what it would take to finish the FY2023 audit but acknowledged it would be challenging. Mrs. Alicia Hargrove stated that another company could come in to ensure audit readiness; however, Brown and Edwards stated that this is not within the scope oftheir services. Councilman Saunders stated that legal pressure might be necessary and suggested having a conversation with Eric either that evening or the following day. He added that he hoped funds had been withheld to ensure the work is complete before the final payment. Mrs. Hargrove stated that no payment had been sent and noted that audit inquiries were made by phone and email three to four times daily, with Mr. Johnson informed each time. Councilman Saunders mentioned that some funds were used for utilities, expected to be reimbursed, but he questioned the allocation of the remaining funds. Mrs. Hargrove stated that, while she did not want to speak without written confirmation, the issue was related to school payment. Mr. Johnson stated that the City had to true-up with the schools and never received the funds back. He added that there were extensive discussions with Mr. Brown, who eventually confirmed that the fund balance was reduce by the amount not reimbursed by the schools. Councilman Saunders asked whether the city paid the schools more than what had been budgeted. Mr. Johnson stated that the schools did not spend all the funds. Mr. Johnson stated that the ongoing debate with the schools and county involved year-end balances. For example, the city might spend $4.2 million, but only $3.9 million was spend, leaving a $300,000 difference. In one audit, the city owed $500,000, and in another, $1 million. A letter was sent for $1 million, but the schools later said they forgot to credit the previous $500,000. He noted that this issue was carry into the current audit with Mr. Brown, where we disagreed. Councilman Saunders expressed that the City decreased its fund balance for funds that were never actually disbursed. He pointed out that the City only provided the schools with the allocated budget and negotiated the amount owed, raising concerns about the reasoning behind reducing the fund balance. He also questioned why the schools' owed amount was not documented as accounts receivable. Mr. Johnson stated that the issue dated back two or three fiscal years, and the auditor was trying to true- up, clean it up, and zero it out. Councilman Saunders questioned reducing the fund balance without issuing a check and expressed confusion over the process. He also questioned why, despite extensive discussion, the auditor did not clearly explain this approach. Councilwoman Hines asked ifthis is something the new auditor can advise on for future handling. Mr. Johnson asked which day this week or next week Council would prefer to reconvene. 2. Council to decide which outside agencies to invite for budget presentations. Mr. Johnson asked the Council which outside agencies they would like to invite to the upcoming budget presentation. Councilwoman Hines stated she would like to hear from Child Advocacy, Hard Knocks for Life, and John Tyler ASAP Program, Greensville Historical Society, and Imagination Library. Mr. Johnson asked the Council which individuals or departments they would like to hear from at next week's meeting. It was the consensus of the Council to hear from Melvin Prince with the Utility Department and Dr. Edwards with Greensville County Public Schools. 3. Discuss and set the date for the next budget work session. It was the consensus ofthe Council to reconvene on April 22, 2025, at 6:00 p.m. ADJOURMMENT With no further business to come before the City Council, Mayor Carey adjourned the meeting. Carolyn S. Carey, Mayor Roou DRgr Qve Tessie S. Wilkins, CMC City Clerk