# Council Budget and Finance - January 29, 2013 > Auto-transcribed civic record · January 29, 2013 - **Permalink**: https://meetings.lexingtonky.news/meeting/2858 - **Source video**: https://lfucg.granicus.com/player/clip/2858?view_id=14&redirect=true - **Date**: 2013-01-29 - **Last revised**: July 16, 2026 - **Length**: 11,512 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget & Finance Committee met on January 29, 2013, at 1:00 p.m., with Ellinger presiding. The committee addressed seven agenda items, including organizational matters, financial reports, and a deferred discussion on the Affordable Housing Trust Fund. Four motions were voted on during the meeting, and the committee heard four public comments. The committee approved the election of a Committee Chair and selection of a Vice Chair, as well as approval of the November 27, 2012 Committee Meeting Summary. Two informational presentations were received: the Monthly Financial Report and the Comprehensive Annual Financial Report and Management Letter. The Affordable Housing Trust Fund discussion led by Henson was deferred to a future meeting. ## Attendance The following individuals were present at the meeting on January 29, 2013: * Ellinger * Gorton * Kay * Ford * Beard * Farmer * Henson * EQ Chair * TBD * TBD No absences or late arrivals were recorded. ## Votes and Decisions The meeting included four votes, all of which passed by voice vote. **Election of Budget & Finance Committee Chair** [timestamp: 00:03:30] A motion was made by Stennett and seconded by Beard to elect a Budget & Finance Committee Chair. The motion passed by voice vote. **Appointment of Vice Chair** [timestamp: 00:04:00] A motion was made by Scutchfield and seconded by Massadi to appoint a Vice Chair. The motion passed by voice vote. **Approval of November 27, 2012 Committee Meeting Summary** [timestamp: 00:05:06] A motion was made by Gorton and seconded by Kay to approve the Committee Meeting Summary from November 27, 2012. The motion passed by voice vote. **Motion to Adjourn** [timestamp: 01:26:58] A motion to adjourn passed by voice vote. ## Public Comment Four speakers addressed the council during the public comment period, presenting perspectives on affordable housing and homelessness initiatives. **Adam Jones** [timestamp: 01:16:04] spoke on behalf of BUILD in support of the Affordable Housing Trust Fund. He urged the council to act before the March 2013 deadline, emphasizing that 27,000 households are affected by the affordable housing crisis and that immediate action is necessary. **David Christensen** [timestamp: 01:18:52] argued that the Affordable Housing Trust Fund and the Homeless Commission's proposal should be treated as distinct initiatives. He contended that the Homeless Commission's proposal focuses exclusively on homelessness and urged the council to consider both proposals separately. **Dr. K** [timestamp: 01:22:11] provided clarification on the Homeless Commission's report, correcting what he characterized as misinformation. He stated that the Homeless Commission's proposal allocates half of its funds to affordable housing and incorporates most of the Affordable Housing Trust Fund's recommendations. **Council Member Beer** [timestamp: 01:23:47] raised concerns about the proposed approach to tax increases. He opposed splitting the proposed tax increase into two parts, arguing that this approach would be politically unwise. He advocated instead for a single, decisive action as a more effective strategy. ## Appointments The following appointments and reappointments were made during the meeting: * **Ellinger** was reappointed as Budget & Finance Committee Chair * **Stennett** was appointed as Budget & Finance Committee Vice Chair ## Contested Items **Affordable Housing Trust Fund vs. Homeless Commission Proposal** Council members were divided on how to treat the Homeless Commission's proposal in relation to the Affordable Housing Trust Fund. The core disagreement centered on whether these should be considered as separate initiatives requiring distinct consideration, or whether they should be evaluated together given their overlapping goals and recommendations. Some members advocated for treating the proposals as independent items for deliberation, while others emphasized the substantial overlap in objectives and urged a unified approach to the two proposals. **Tax Increase Strategy** A heated discussion emerged regarding the implementation timeline for a proposed 0.5% tax increase. Council members debated whether to implement the full increase immediately or to phase it in across two separate periods. The debate reflected concerns about potential public backlash and the political feasibility of the tax increase. Members weighed the benefits of immediate revenue generation against the risks of implementing an unpopular measure all at once. ## Election of Committee Chair [timestamp: 00:03:30] Councilmember Stennett nominated Ellinger for reappointment as committee chair. The nomination was seconded by Beard. The motion passed unanimously by voice vote. Following the election, Ellinger was asked to appoint a vice chair. ## Selection of Vice Chair [timestamp: 00:04:35] Ellinger was tasked with appointing a vice chair for the body. He requested that Stennett serve in this role. Stennett accepted the appointment. No formal vote was taken on this selection. The appointment was approved. ## 11.27.12 Committee Meeting Summary [timestamp: 00:05:06] The committee considered approval of the summary from the November 27, 2012 meeting. Speakers Gorton and Kay participated in this agenda item. The committee voted to approve the meeting summary. No substantive discussion occurred beyond the motion and vote to approve the document. **Outcome:** Approved ## Monthly Financial Report Bill O'Meara and Melissa Luker presented the December 2012 financial report [timestamp: 00:05:40]. **Revenue Performance** Revenue was slightly ahead of budget, with employee withholdings performing particularly well compared to projections. **Profitability and Expenses** Net profits fell below budget expectations. Expenses exceeded budget by 4.5%, primarily due to personnel costs. However, this overage was attributed to timing factors rather than structural issues. **Outcome** The report was presented for informational purposes. No questions were raised by attendees regarding the financial results. ## Comprehensive Annual Financial Report and Management Letter Simon Keemer and Travis Thomas from Dean Dorton & Allen Ford presented the audit results for the organization's financial statements [timestamp: 00:20:06]. **Audit Opinion** The financial statements received a clean opinion, indicating that the organization's financial reporting met applicable accounting standards. **Internal Control Findings** The audit identified two significant deficiencies in internal controls: - **PeopleSoft Access**: A deficiency was noted regarding access controls within the PeopleSoft system - **IT Security**: A deficiency was identified in information technology security controls Despite these findings, no material weaknesses in internal controls were identified during the audit. **Disaster Recovery Planning** The auditors noted that a formal disaster recovery plan was not in place at the time of the audit. **Outcome** The presentation was informational in nature. The clean audit opinion on the financial statements indicates sound financial reporting, while the identified deficiencies in PeopleSoft access and IT security represent areas for management attention and remediation. The absence of a formal disaster recovery plan was also flagged as an item requiring management action. ## Affordable Housing Trust Fund — Henson [timestamp: 00:58:18] Councilmember Ford provided a five-minute historical overview of the Affordable Housing Trust Fund, tracing its development since 2008. Councilmember Kay updated the committee on the Homeless Commission's report, which largely incorporates the Trust Fund's recommendations but proposes a 1% tax increase and a different allocation structure. The committee agreed to defer final action on this item until the full Homeless Commission report was presented. **Outcome:** Deferred ## Items Referred to Committee [timestamp: 01:25:25] Schoninger provided an update on several items that had been referred to committee for further discussion and analysis. The update covered the following matters: - **Procurement Task Force** — Status and progress on this initiative were discussed, with plans for continued committee review. - **Solid Waste Cost and Tax Structure** — The committee received information on this referred item, which addresses cost considerations and the associated tax structure for solid waste services. - **Local Vendor Preference** — This item was reviewed as part of the referred items update, with scheduling for future discussion. - **Financial Efficiency Measures** — The committee discussed various measures aimed at improving financial efficiency, scheduled for additional deliberation. All referred items were scheduled for future committee discussion. The outcome of this agenda item was informational in nature, with Schoninger providing the committee with updates on the status of previously referred matters rather than taking formal action on any of them. --- ## Decisions - **Motion** — passed: Election of Budget & Finance Committee Chair - **Motion** — passed: Appointment of Vice Chair - **Motion** — passed: Approval of November 27, 2012 Committee Meeting Summary - **Motion** — passed: Motion to adjourn --- ## Full transcript Music Thank you. Thank you. Thank you. Thank you. Thank you. and today is January 29, 2013, and this is the Budget and Finance Committee of the Council. And the first item on our agenda is the election of a committee chair because we're starting a new two-year cycle. And so I would ask you to please log in, Councilmembers, if you wish to speak. And we have Councilmember Stenet. Thank you, Vice Mayor. I take the opportunity to nominate Council Member Ellinger to continue on as budget and finance chair. Second. Okay. We have a motion by Council Member Stennett, second by Council Member Beard, to nominate for the list Council Member Ellinger. Is there any discussion? Seeing none, all those in favor say aye. Aye. Anyone opposed? Are there any other motions to nominate anyone for the position of chair? Seeing none, do I have a motion to elect Mr. Ellinger to chair? Council Member Scutchfield moved and Council Member Massadi seconded. The motion to elect Mr. Ellinger as chair of Budget and Finance. Is there any discussion? Seeing none, all those in favor, please say aye. Anyone opposed? So with that, Mr. Ellinger, I'll ask you to please, at some point, appoint a vice chair and then to go ahead and take over the meeting. Thank you, Vice Mayor, and I want to thank my colleagues for giving me this opportunity again. I really appreciate this, and I would ask Council Member Stennett if you would be vice chair. Thank you. With that, we'll go ahead and continue on the agenda. The third item on the agenda is the committee meeting summary. Do I have a motion to accept? Move approval. We have a motion to approve. I'm Vice Mayor Gorton. We have a second from Council Member Kay. All those in favor, say aye. All those opposed, that passes. The next item on the agenda is number four, is the monthly financial report. And I think, Mr. O'Meara, I think you have your hands full today. Welcome. Thank you very much. I am here as acting commissioner today and Melissa Luker is going to be here as acting budget director and we're going to follow the same presentation format of previous meetings and give a financial update for the month of December 2012 to the committee. We start with unemployment rates and this is a trailing graph comparing Fayette County with the regional unemployment rate as well as the national and the state unemployment rate. And we continue to have good news. Kentucky is at the top with 8.1% for the month of December. Total for the United States is at 7.8%. The Lexington MSA, or Metropolitan Area, is at 6.1%, and Fayette County Lexington is at 5.9%. So we are continuing the trend of having one of the lowest unemployment rates in the state and are thankful for that. The next version is a three-month rolling average, kind of lets you see the trend, and the trend is good in the fact that all four are trending downward, which is what we've all wanted since 2008. Selected economic indicators. As we talked about, Lexington's at 5.9. Just as a comparison, same time last year, we were at 6.5%. The next one is actually how many people are employed. And this is a Bureau of Labor Statistics number that is always six months in arrears. So the most recent one we have is June of 2012, and that's at 178,500. That is back to the levels of 2008 before the current recession at that time, and so we're encouraged to report that. Under permits issued, we are following the same seasonality in the fact that the month of December would be lower than the previous month, But as you can see, comparing that to the same time last year, we have a trend that's favorable, 870 permits versus 726 in December of 2011. Our new business licenses follow the same path with a decrease between November and December due to the seasonality, but again, slightly ahead of the same time last year. Home sales also are slightly ahead of last year, and one that is good for us is foreclosures down to 72, and we were in the 90s previously during the fall. So hopefully that process is starting to work its course through the tax commissioner. For the month of December, the four largest revenue sources are employee withholdings, net profit, insurance, and franchise fees. We had a good month for employee withholdings at a favorable variance of $1.4 million. We had a weak month for net profits below budget of $1.5 million. Insurance is really a non-issue in the month of December. There's very few receipts received. That's more of a quarterly pass-through, and franchise fees are showing below budget. What is more important than just one month is year-to-date. And so at the halfway point through our fiscal year, the six months ending December 2012, pretty much the same issues show up in the year-to-date as we saw in December. We are slightly ahead of budget in employee withholdings. less than 1%, but still ahead of budget. Our net profits are below budget, and if you see that year-to-date variance of $2.17 million, I would remind you that for the current month, $1.5 million occurred in December of that year-to-date variance of $2 million. Hopefully I haven't confused you. But the lesson learned is net profits are not meeting budget at the halfway point. Insurance is slightly ahead. That's a good sign. And then franchise fees are down. That has multiple reasons. One is an assumed rate increase is in the budget. That was not instituted in September. So that variance was expected to grow throughout the year since the budget assumed a rate increase and one was not put into place. But then the second is usage, and that is weather dependent. And the good news is we've had moderate weather. The not-so-good news is it's reflected in our franchise fee revenues for the first six months of the year. Now, I've compared the month and the six months to budget. If you want to see how we're doing at the same time last year, this is actual to actual for the 12 months ending December 12 versus December 11. And they show that we are trending ahead in employee withholdings, and we budgeted that, that we are trending below in net profits, and that's showing up in our budget to actual comparisons. and the insurance is ahead, and we're actually slightly ahead in total revenues year over year with the franchise fee, but again, it is not reflecting, when you compare to budget, the rate increase that was assumed. Next slide is council members asked to track nuisance abatement and lien collections throughout the year, So this is your July through December activity with total collections at $109,000. So before I have Melissa come up and talk about total revenue and total expenses, Chair, if it would be okay, I took a pause to see if there are any questions on the four leading revenue stories. Council members, Vice Mayor Gordon. Thank you, Mr. Chair. Thank you, Bill, for your report. Do we have any comparison basis for the code enforcement slide for any other year, 2012, fiscal year 12? I do not have a slide for that, but I can certainly put it in for future presentations. I was just curious to see how that stacks up with previous years. I'd be glad to add it. Okay, I appreciate it. Thank you very much. Thank you. Council Member Farmer. Thank you, Mr. Chair. and congratulations. It's on page 7 of ours, page 4 of yours. It's the comparison of economic indicators from 2011 to 2012. And largely it's fine news. I'm just interested in this foreclosure line on the bottom there, which is just noticeable in the difference between 2011 and 2012. Wow. Any, I mean, brought on by the length of the recession or just people running out of opportunity? No, I think it's actually a reflection of what's happening nationwide. Right. I think you might have heard the concerns about robo-signing by mortgage companies and that type of thing. And then there was a moratorium put in for no foreclosures by banks until those reviews were done. And those reviews have been finished, and so then foreclosures are back into the pipeline now. I would say that this is a reflection of that in the micro Fayette County that's reflected nationally. Now I've forgotten the source, but there's a national reporting that makes the news, and this peak and starting to go down was reflected nationally as well. So we hope that that will continue in Fayette County. I see that towards the end of this. All right. Thank you. Thank you very much. Anybody else? I have questions at this point. Seeing none, Mr. Mayor, would you continue, please? I'd like to have Melissa Luker come and talk about total revenues and total expenses. Welcome in your new capacity. Thank you. Well, Bill's talked about the first four, so I won't go back over those. If you look down, there's obviously some timing variances that we have on some of these. If you look at the bottom, we are basically at budget. But if you look in other license permits, we're a little higher. That's some timing issues that we're going to be looking at. We're going to pay close attention to that and to the ad valorem. We're also tracking higher on that as well. Could be timing issues. We're going to keep track of that. Basically, if you look at the others, we're right at either right above or right under budget, so we're not too concerned about those right now. Let's go to the expense. There we go. If you look at the expense side, our personnel right now, we are 4.5 ahead of budget. Before everybody thinks we're way ahead, January is a very big month for personnel. We've got lump sum termination payouts. We have sick checks coming out. So while it looks really high right now, it's probably not going to be that high in the coming months to end out the fiscal year. The operating, as Bill said, in relation to the franchise fees, the utilities, we're doing well on that with favorable weather. So that is one part of the operating why we're doing so well. We've just cut our basic spend. We're doing better. We're on course with budget, so it's too soon to say that we're going to be ahead of budget on operating as well as it is on personnel. That's the big ones on the expense and revenue, and I'll take any questions. Council members, if you would log in, if you have any questions. Seeing none, thank you very much. Thank you, Melissa. I was going to introduce our next guest, if that would be appropriate, Chair. Yeah, I did not hear earlier, and one of the questions I had, and I didn't hear about the net profit. Did you comment on the reason, and I didn't hear if you did, why we were? I'm sure the refunds have had a big effect on that. Correct. I did not comment on that today, but have made that comment in the past. we have seen a trend where corporations have rolled their credits forward. They paid more in estimated taxes than when they got their final taxes due, and yet this year they want their money back. So some of that variance is where we've had a little larger than normal corporate refunds, but then part of it is that the actual filings, net profits of businesses, have not met the 4% increase that was assumed in the budget. Okay. I think, Mr. Stendon, did you have a question on this one? Vice Chair? Mr. Romero, would it be possible, and I know this could get cumbersome adding to this chart, but can you add another column in there of what last year's 2000, the previous budget year's actuals were, based on the CAFR information that we receive each year? Would it be possible to compare it year-to-date to last December? Sure. Now, let me clarify your request, because you said CAFR, and that is an audited number at June 30. You would rather have year over year, December 12 versus December 11? Is that what you're asking? Okay. We can. If I could suggest, we might look at having a separate slide rather than try to put it all on one. But let's look at format, and we'll be glad to end that. I think it would give us more indication about where this year compares to last year. Are we up or down? seeing this as compared to budget is a little misleading because obviously our budget changes every year and it's a little higher this year than it was last year so if we could get that a different side it would be great we'll be glad to add it I think it would be a great request anybody else have any questions seeing that let's move Vice Chair Lane former Vice Chair Lane I didn't have the opportunity to thank you for your service last time as Vice Chair You're in the future not going to be on this committee, so you weren't able to be vice chair, but I want to thank you for your service. Thank you very much. I enjoyed working with you, and good luck in the coming year. The only question I had was on the insurance expense, and I noticed that the amount budgeted and the amount actual was identical. Is that just sort of an accrual number that you've got in there? Because our insurance expense is really based on losses as paid. Is that how we do that? You have me as not an expert to answer that question. Okay. But I think we're on the same page as that throughout the year we have an accrual, and then we actually, I believe, use actuaries at year end for claims incurred but not yet paid and that type of thing in order to have a final number. But I'm going off into a little bit of knowledge rather than being an expert on that. Well, I also concur with Vice Chair Stennett. I think having last year's numbers, for example, the insurance expense, even if it were a cruel number, would give us a perspective on that. That would be a good addition. Thank you for your answer. Seeing no more questions on this item, we move on to item five, the conference of the annual financial report and management letter. And I think this is you. Again, you'll introduce our guest, please. If I could, yes. As we spoke at the last Budget and Finance Committee when we gave a summary of the comprehensive annual financial report, we said that our auditors, Dean Dorton and Alan Ford, would come to this meeting after all of their work had been done, have the single audit to complete and that type of thing, in order to make a report to management. So Simon Keemer and Travis Thomas are here on behalf of Dean Dorton-Allen Ford to make that report to management. Thank you and welcome. Good afternoon. I'm Simon Keema. I'm the owner from Dean Doughton-Allen Ford, who's responsible for the audit of the Urban County Government. Travis Thomas, who is with me today, was the manager on the audit, and it covers both the comprehensive annual financial report, the CAFA, as well as the A133 report, or the CFA. We're here today basically to provide our overview of the audit and to also provide some required communication that our auditing standards require us to give to you in your role as governance. There's the contents of the pack of information you have in front of you and we'll be going through the first two agenda items and then you have a number of exhibits that are available in your packs for you to look at. The exhibits contain all of the significant written communications between management and Dean Dorn and Alan Ford. Our audit standards require us to provide those to you. You will find within those exhibits the representation letter for the financial statements, in essence the written letter that management gives us at the end of the audit, which puts in writing all of the oral representations that they have made to us during the audit. Attached to that representation letter is the summary of uncorrected misstatements. These are the misstatements that we identified during the audit, but management believed that the impact of those misstatements was not material to the financial statements. We concurred with management's determination that they were not material to the financial statements, so they have not been adjusted for, or if you will, the CAFA has not been corrected for those misstatements. Also within those exhibits is the representation letter related to the A133 audit, and then there is also a letter communicating internal control deficiencies and other matters. In summary of the audit, the financial statements received a clean opinion, an unqualified opinion. The A133 report will issue two opinions on that, one regarding controls over financial statements and one regarding compliance with major programs. Both of those opinions were also clean opinions unqualified. The A133 reports do make reference to the significant deficiencies that we identified during the audit and are included within the A133 report, and we will also be going through those this afternoon in the last agenda item, internal controls and communication of control deficiencies. Really just kind of to introduce that it is auditing standard number 114 that requires us to make these communications to you in your role as those charged with governance. As part of those required communications, we are required to clarify our professional responsibilities. In essence, the next few slides go through those responsibilities. In essence, it is clarifying that the financial statements, both the CAFA and the A133 report, is primarily the responsibility of management. and it is our job as auditors to audit the information on a test basis to make sure that the amounts and disclosures within those financial statements are not materially misstated and have been presented in accordance with accounting principles generally accepted in the United States of America. When we come to our opinions with regards to the A133, reporting. Again, here we identify our professional responsibilities are primarily outlined within government auditing standards, but we are also responsible for reporting on compliance in accordance with OMB Circular A133. Again, it is management's responsibility to make sure that the organisation and the financial statements are in compliance with OMB Circular A133 and it's our responsibility based upon our audit to state an opinion as to whether we believe they are in compliance or not. The result of our procedures were that we believe they are in compliance with government accounting standards, with US GAAP, with OMB Circular A133, but we have identified some matters which we believe are significant deficiencies within internal control. With regards to adoption or change in accounting policies, there was nothing material that we determined needed to be reported to you in your role as those charged with governance. In terms of significant or unusual transactions, again, we did not identify any significant or unusual transactions or any accounting policies in controversial or emerging areas. where there's a lack of authoritative guidance or consensus. In terms of judgments and accounting estimates, we're actually going to go through these in detail to just provide you with some guidance on what the policy is, how management is applying that policy, and then the procedures we performed to determine the appropriateness of those policies and procedures. This is going to be an overview of what we believe to be the significant accounting estimates and judgments. It's not necessarily every accounting judgment and estimate that is within the CAFA or the CFA. So to start off, we have the net pension and the other post-employment benefit obligation, the OPEB obligation. In essence, the accounting policy, as stated in the CAFA, is that the government records an accrual for the net pension and OPEB obligation. based upon the difference between the annual required contribution and the actual contributions made. So the annual required contribution is, in essence, an amount determined by the actuary to keep the plans appropriately funded, and the actual contributions is, in essence, a decision made by LFUCG as to how much of that annual required contribution will be made. The key estimate in this balance is obviously the annual required contribution. And again, the government employs an independent actuary to perform those detailed calculations. Those calculations are based upon payroll information provided to the actuary by the government. and then management, when they receive the actuarial report, actually reviews the assumptions used by the actuary to make sure they appear reasonable. We also received that report from the actuary. We also received the information that the government provides to the actuary for the actuary to base their calculations on. And we also performed testing to ensure the actuary's assumptions appear reasonable, that the actuary is appropriately qualified, that they have the appropriate experience. to perform the calculations and then we also test the underlying data provided to them by the government to make sure that the government is not, that management is not manipulating the outcome of the actuary's assessments by manipulating the data given to the actuary. We did not find anything that we needed to report, so concluded that the net pension and OPEB accounting estimates and judgments appeared reasonable in relation to the financial statements taken as a whole. The allowance for doubtful accounts. Obviously there's an accounting policy that an allowance is recorded to the extent that a debt may not be collected. In that estimation process, management is periodically reviewing the aging of the AR to evaluate the collectability of the accounts. They're considering matters such as historical loss rates, the age of the account, collection patterns for that customer or that customer type, general economic conditions and any ongoing disputes with regards to the balance. We tested, again, the underlying data supporting that allowance calculation. We considered whether there was any bias within management's estimates of those allowances and again concluded that they appeared reasonable in relation to the financial statements taken as a harm. Capital assets and depreciation expense. The accounting policy there is that capital assets with a life over one year will be recorded at cost and then depreciated over their useful economic life. Management is using past experience as the primary indicator of what those lives should be. We reviewed the lives that were being assigned by management Again, tested underlying data within the capital asset register and concluded that lives appeared reasonable. Landfill closure liability. The U.S. GAAP requires you to make an estimate for how much it will cost to close and cap the landfill. The estimation process there is primarily based upon third party quotations that will receive to actually close and cap the landfills. Management then, rather than getting those quotations annually, applies an annual inflation factor to those quotations and also considers any changes in technology, any changes in the site conditions, or any additional long-term care requirements that may be applicable. We obtained management's calculation. Again, we tested the underlying data, which included actually going back and looking at those initial quotations and then recalculating the inflationary factor, making sure that factor appeared reasonable and held discussions with management as to whether there was any other matters with regards to the landfill that should be considered with regards to any changes in technology, any changes in site condition or any changes in long-term care requirements. and again concluded that the estimated liability appeared reasonable. The self-insurance program, the liability for the self-insurance program is based upon an actuarial assessment of claims, including claims incurred but that have not yet been reported, known as IBNR. An independent actuary is retained to perform the calculations based upon information provided by management. Similar to the pension and OPEB, we obtained the actual valuation and considered whether the assumptions used by the actuary were reasonable. We also obtained the underlying data provided to the actuary and tested that to ensure that it was reasonable and again concluded that the liability within the financial statements appeared reasonable in relation to the financial statements taken as a whole. Contingent liabilities. U.S. GAAP requires an accrual to be made in the financial statements whenever a contingent liability is probable to occur and the loss can be reasonably estimated. primarily the process is housed within legal counsel the department of legal and they're responsible for maintaining all of the pending cases and performing their estimate of what the likely outcomes are in certain cases they also retain outside counsel to provide advice and help we discussed pending and threatened litigation with management and with in-house legal counsel We sent confirmations to external counsel where they were being used and saw external counsel views on the litigation that they were helping to litigate and again concluded that the contingent liability accrual appeared to have been reasonably estimated in relation to the financial statements taken as a whole. With regards to financial statement disclosures, Disclosures, there is nothing in the CAFA or within the A133 report where we believe we need to report to you. We consider that the disclosures appeared consistently applied, that they were clear to users, and that they presented a neutral rather than a biased view of the financial position and performance of the government. Summary of recorded adjustments, there were no audit adjustments that we identified that were made to the original trial balance Uncorrected misstatements, as I mentioned earlier, there were some uncorrected misstatements that management determined were immaterial We concurred with that and they have been provided to you attached to the representation letter in Exhibit A Other communications that we are required to report to you on these are what we generally term as the NROM clauses if you will because they're dealing with in essence the integrity of management. Did they have any discussions with us as to alternative treatments where they didn't particularly like what gap would produce? We had no such discussions. disagreements with management, there were none consultations with accountants, with other accountants deals with maybe where we've informed management that they need to account for something one way, they don't like the outcome they go out and try and find another CPA firm that will argue with us and try to prove us wrong again there was no other consultations with other accountants of which we're aware, there were no difficulties encountered in performing the audit and there were no significant issues discussed with management other than those that are provided within Exhibit A. In terms of significant deficiencies and material weaknesses, these are reported in the A133 report, but we are also going to summarize them here. In essence, when we find deficiencies in internal control, we have to categorize them as either control deficiencies, significant deficiencies or material weaknesses. So first off, we identify an internal control deficiency. Our first step there is to determine whether we feel that deficiency is of a nature where we believe it needs to be brought to your attention as those charged with governance. If we feel it's important enough that we should inform you formally in this meeting, it is classified as a significant deficiency. The second step is we look at significant deficiencies and consider whether any of those deficiencies could result in a material misstatement of the financial statements. Any of those deficiencies that we believe could result in a material misstatement of the financials then gets upgraded to a material weakness. We did not identify any material weakness as a result of our audit this year. That is in essence the slide that is a little more complicated in its explanation. So going through the actual significant deficiencies that we identified, segregation of duties with regards to access to PeopleSoft, in essence this impacts in a couple of ways, but primarily it's you don't want, as an example, somebody who can prepare a transaction also being able to authorize that transaction. We're fairly comfortable that when paper is being moved that that segregation of dutas exists. However, within PeopleSoft, we did identify that there were certain areas where employees did have access to both prepare and authorize transactions. Just to clarify that they had the access, that does not mean to say that they actually were. We did not find any indications based upon our testing that people were authorizing transactions they had prepared. However, they did have the access to do it if they chose, and I believe many of the people didn't even realize they had the access. As we've identified there, allowing employees to have too many privileges can be conducive to fraud or errors remaining undetected. Next significant deficiency, information technology systems with regard to safeguarding and security. There were a number of different areas where we felt that the government's safeguards and security over its IT environment could be improved. And when we looked at all of those deficiencies together, we believed that together they elevated up to the level of a significant deficiency. The items we identified were password improvements in terms of complexity of the password, the use of special characters, how many passwords would be remembered by the system so it would prevent the reusing of passwords, passwords not being adequately secured. so we found in some departments, some divisions, that some employees would share passwords with other employees. There was not a formal policy and procedure to perform network vulnerability and penetration assessments. Wireless access within the government building was using a somewhat outdated security system, and we believe that that is inadequate in today's environment and should be improved and that there should also be a formal disaster recovery plan such that should anything bad happen, that there is actually a formal written plan that would allow any skilled IT employee to recover the data from the backups. Also within PeopleSoft, the change management process does not have appropriate segregation of duties. In essence, when you're going through any change management of an IT system, you want there to be a segregation between people who are working on the changes and people who are authorizing those changes, and then those changes being put into what's known as a production environment. while you do have personnel and their duties are segregated on a day-to-day basis again everybody had the ability if they wanted to to breach the change management segregation of duties again without that segregation of duties being applied and very formally it would be it makes it easier for fraudulent or malicious code to be introduced into the PeopleSoft environment, which could obviously impact your operations. In terms of the schedule of expenditures of federal awards, this matter is kind of a continuation of a similar matter that we had last year. We reported last year that there was, in 2010, Then there had been a government program, a federal program that had been omitted from the CIFAR. It was omitted from the CIFAR in 2011. We identified it through our audit procedures and got it added to 2011. But obviously that resulted in a deficiency for preparation of the CIFAR. This year, kind of it was the same program that's caused trouble again this year. and that was that in essence there was delays in identifying that the grant contained federal money. It was a CAIR grant. Internally, it was believed that it did not contain federal monies. It was later identified that it did contain federal monies. That's why it had been omitted from the CIFR in the past two years. That resulted in the program coming under the management of grants and special programs later in the process, which then resulted in last year's CIFAR overstating expenditures by $222,000, which then had to be corrected in the current year's CIFAR. That brings me to the end of my presentation. I am available for questions. Thank you very much. You have a very soothing accent. Is that eastern Kentucky? I tell people I'm originally from just south of London, and that would put me just over the Tennessee border. There you go. As long as you're still in Kentucky, that's all that matters. We have a couple people who have questions. Vice Mayor Gordon. Thank you, Mr. Chair. Thank you very much for your report. You're welcome. So back on page 27, where you talk about the landfill closure, I just was wanting a little more, not real detail, but I know this year or this past year the state closed the Raven Run landfill. We closed a few years ago the old Frankfort Pike landfill, and now we're in the process with Haley Pike. Does this include all of our landfills and follow them every year? It does. How much does it include? It does. The U.S. GAAP requires you to consider all landfills and to create a liability over the life of that landfill so that when you get to the end of its useful life, it has no more airspace, that you actually have enough liability on your books to close and cap that landfill. Now, with the Raven Run landfill, where the state closed it, and I'm not familiar with all the detail of that, does the state have some liability or do we have all the liability? I'm not in a position today to answer questions on particular landfills. I don't have that level of detail in front of me. it's possible that there's a sharing of liability or if it's determined that it's a state-owned area that maybe they would take that liability entirely themselves Okay, and then back to the I guess starting on page 36 where you talk about PeopleSoft access how I mean I know how I got access to PeopleSoft but how does someone get both sides of the coin on PeopleSoft someone else has to give it to them right the authority to approve and the authority to go in and our view on that is that we believe that that's evolved over time that, you know, in your current position, you need to be able to prepare transactions so you're given that access. And then over time, you now are in a role that you can authorize transactions, but nobody ever went back and turned off the prepare. It can also be caused by the use of user groups. Sometimes you can get user groups that end up because you set up one user group to do one thing, and then over time you decide a user group needs to do something else. But if you flow that all the way down the chain, you find that there's an individual that's ended up getting incorrect access, inappropriate access in one particular area. So on those positions that have changed where someone goes from one to the other and so ends up with both the access and the creation, then I would suppose there's some kind of control we need to put in place that once someone rolls off of one, their access is cut off. You can do a preventive control, which would probably look somewhere along the lines of whenever anybody requests access, that somebody then reviews to make sure, to look at what that person's total access is and to see if there's anything that conflicts. That would be a preventive control. Normally, we see in large organizations that they also complement that with a detective control, which would be on a periodic basis that you actually run segregation of duty scripts within PeopleSoft and look for conflicts organization-wide. Okay. Is that extra step costly? Or is it something that can be built in? It's something that can be built in. PeopleSoft is a somewhat complicated system, so it's possible you would have to get that from PeopleSoft, but we do have organizations that run simpler software where they've written that script themselves. Okay. So it's possible it could be done in-house. Well, I know our new CAO is in the room and is listening. And then my final question is about the IT. There was a lot in here about information technology, and I wonder how serious you view all these pages of significant deficiencies in IT. That depends on what frame of reference you use. We do not believe these would likely result in a material misstatement of the financial statements. However, from an operational standpoint, we believe there are significant challenges to the government coming from its current implementation of PeopleSoft. Okay. All right. Well, thank you very much. I appreciate it. Thank you. Council Member Beer? Thank you, Chair. Just a little further in that arena, you mentioned a disaster recovery plan. Do you also recommend a disaster recovery off-site test? Is that even possible in this environment? It is possible, and I believe we were comfortable with the off-site storage. But the formal disaster recovery plan should include periodic reinstating the data to make sure that it can be done. Yes. Does PeopleSoft, and I don't know the answer to this, and I've groped around about it for some time now, does it reside only on the mainframe, or are there certain functions that are parceled out to the servers? And where are you going to find an environment that is going to match that, if that's the case? I'm afraid I'm not an IT expert, especially not in PeopleSoft, to be able to give you an honest answer to that question. We could certainly provide feedback from, we have an IT consulting group. They are primarily responsible for the work that's done during the audit on PeopleSoft. so they give me enough information to make my determination from an audit perspective, but the type of question you're asking, I could certainly go back to them and get a response from them and provide that to you at a later date. That would be great if you could. Thank you. Thank you, Chair. Thank you. Vice Chair Steenet. Thank you, Chair. I just wanted to follow up on a couple of the items you mentioned. You said the accounting policies are the ultimate discretion of management, which in this case is our administration and mayor. Are we following the GASB standard? Yes, we did not. In our reporting under disclosures, in that we stated that there was nothing we needed to report in terms of the application of GAAP. Our opinion also on the financial statements covers that their application of GAAP is materially correct. It is? So we're using that standard right now? Yes, sir. Okay, very good. Thank you. Thank you, Chair. Thank you. Council Member Henson? Thank you, Chair. Thank you for the presentation. You're welcome. I guess I'm just curious. Some of the corrective or the deficiencies have already been addressed, I believe. So is that something you would be aware of or something that the Administration could answer? As part of the requirements to report under OMB A133, when we put our findings in the A133 report, we provide management with the opportunity to make a response. So management's formal response is included within the A133 report. Okay. I'll read over that. But thank you for bringing that up. You're welcome. I saw the CAEA was standing up. Did you want to make a comment on that or not? It's not necessary, but I saw you get up and sit down, so I didn't know if you... I debated this because I hated to apologize the first day for being wrong, not what I was talking about. I went over, because I came out of the auditor's office the last time, I went over this quite at length yesterday with IT and PeopleSoft. Because I'm a firm believer that, as Simon knows, that when you say significant deficiency, it's not material, but it says you need to take a look. You know, things can happen if you don't look. And so this is extremely important. Chad and they have looked, you know, Protivity has come in and done a very thorough study of all of this. And they have come back with about the same thing you see, except there are many, many more aspects. And they get very, very detailed on this. And so Chad, and I think he's here, is we had the conversation yesterday. They have got a plan to approach all of this. They realize that they need a disaster recovery plan. They need to address these change management issues. And, you know, it's sort of like everything else. Things have grown fast, and to keep up with all this sometimes gets ahead of you. But they are working on this, and you are going to see in more detail the results of that protivity study and their answers to how they're going to address those issues. We might have a question for you. That's about as far as I can go. Thank you, Sally. I was thinking that where it says the government does not have a formal disaster recovery plan for IT. And I believe that came across our docket just recently and that that was corrected. I want to make sure that I'm not misspeaking. and that's just more power. In all deference to both the committee and the question, issues around disaster recovery and network security, I would feel more comfortable handling those instead of a closed session and not being in a public forum. But the issue that you saw that came across the docket was for us to continue our contracts with our service provider, IBM, so that we have the ability to go off-site and continue tests. You know, it has nothing to do with the policy and the plan itself. It's to give us the option so that we can take our IT data and take it to an off-site location and perform our tests to ensure that we can actually recover in the event of a disaster. And Lexmark has been providing that service? No, it's been with IBM, and it was a contract renewal for IBM. Okay. Thank you. But we're working on the plan. Yeah. Okay. But, you know, I'd be happy to entertain any questions in regard to this. And Sally's done a good job. But we've received a comprehensive audit this year from ProTivity and Internal Audit. And that's in Sally's hands now. And it's going to go back to the audit board before it makes its way back to you. But it covers in great detail 68 pages of a lot of the same type of issues. Again, none of them I didn't see that were of a material nature. but we've got a comprehensive approach that we've laid out to address those. But historically, when we brought stuff like this before the council, and I'm sure Linda can remember, issues around disaster recovery, and especially network security, are not things we really want to talk about publicly. We kind of need to keep those in-house so that we're not exposing any more vulnerabilities to the outside. Councilmember Farmer. Chair, I think we might have it. Councilmember Farmer. Yeah, you got me. I'm holding on for one second. Thank you. All right, Chad. Yes, sir. You have mentioned the possibility of a closed session. Yes. Would you be available for that today or next Tuesday? Hang close. Thank you. We have a motion and a second to go on closed session. I wasn't going to make a motion to make all these people move. We can take this up after work session, in my estimation. There's no reason to make everybody leave this room and come back for us to take this up. I'll be as hot then as I am now. In that case, we'll do that later then. Any other questions on this topic? Seeing none, Simon, do you have anything else you want to present? I have nothing else to formally present other than to close and thank LFUCG for retaining us as our auditors, and the audit team extends our thanks to the finance department. They did a great job this year in terms of getting us through the audit as quickly and as efficiently as possible. Thank you so much. Thank you for your work. We'll move now on to the next topic, and that was put in by Council Member Henson, number six, Affordable Housing Trust Fund. Did you want to say anything to start with, Council Member Henson? If not, I've asked Council Member Ford, but since we have three new members on this committee that are here right now, to just kind of give, like you did last time, just about a five-minute update of where we are in the trust fund, and then we'll go from there. Did you have anything you wanted to start with? Okay. Council Member Ford, if you would, kind of just give a brief summary of how this ended up in this committee and where we are presently right now. And after that, I'm going to have Council Member Kay give an update of what was going on with the Homeless Commission. Thank you. Very good. Thank you, Mr. Chair. On page 48 of your packet, you guys will find a history and activity timeline. And to the benefit of the members in the audience present with us and our new colleagues on council, I'll go over that. If you could place that on the overhead for me, guys. It's a pretty rough shape. Just in reference to page 48, this activity on affordable housing trust fund started about five years ago. When advocates in the community, in the faith-based community, demonstrated and made a request for additional funding for affordable housing, in May of 2008. Then Mayor Newberry appointed an affordable housing trust fund commission, a blue ribbon panel made up of 47 members with diverse professional and civic backgrounds. That commission worked pretty tirelessly. That looks better. Worked really hard over the summer of 2008, and it brought back its report in September. And the report included a recommended funding source of 1% increase in the insurance premium tax with an estimated dedicated revenue of $3,000,000,000,000,000,000 annually. It's important to understand that even before we started this process, and I had the great fortune prior to my time on council to be a member of this original task force back in 2008, with the understanding that the definition of an affordable housing trust fund is a publicly dedicated source of revenue. And so that recommended funding source, which has been debated since that time, was an increase to an existing insurance premium tax. In the fall of 2008, the mayor at that time did not fully endorse the funding recommendation and came back with a counter proposal to solicit a public and private financing partnership to be capitalized with a quarter of a million dollars in general fund appropriation, and that never met fruition. In the fall of 2009, then Vice Mayor Gray appointed the Trust Fund Council Task Force, and many of the members here have had the fortune to work on that task force. Its first meeting was in November of 2009, and it has had 24 meetings to date. The primary role of the Council Task Force, however, was to examine and vet the funding source. Was the recommended insurance premium tax the appropriate funding source for the Council to consider? The summer of 2010, the Council Task Force, after many meetings, were fortunate enough to come up with about $25,000 to seek outside and professional economic advice. It awarded a contract for an economic impact study to the Fong Commonwealth Economics here in Lexington to examine that funding source. The consultants came back with this report. At this time, I was now on council, just personally speaking, March 2011, and presented this economic impact study to the council work session. And it basically, this report basically says that assuming an 8 to 1 leverage ratio, that the estimated annual impacts of $4 million of trust fund investment was substantial. It would have an average, it would create an average of 470 housing opportunities each year, a mix of both new construction and rehabilitation projects. that over 350 new jobs would directly and indirectly be supported by trust fund investment and that more than $43.3 million of direct, indirect, and induced economic activity will be generated from trust fund investment. So all social benefits aside, please mark that date, March 2011, when the Economic Impact Study came back in a favorable light to the trust fund proposal. As it should have, and in consideration of the questions asked at that time, the issue was set to the Economic Development Committee in the fall of 2011, and the Council Collective asked its task force to go back and do some additional work. And over the winter of 2011 and the earlier part of last year, 2012, seven interim task force meetings were held. Almost ten months ago, March 2012, the council's task force brought back some revisions. And what we have saying in this committee at this time is what is at the bottom of the screen. It calls for a one-half percent increase in insurance premium tax, excluding health premiums. It generates almost $2 million for the fund, publicly dedicated, with an average household cost of $15. For the purpose of accountability, it recommended a sunset provision, which will, of course, require annual reports and updates of the trust fund activity, but after the first five years, council will be required to reauthorize, if not fully sunset, the trust fund. for governance that call for a 13-member affordable housing trust fund governing board. It will benefit households at or below 80% of area median income. And of that fund allocation, a minimum of 50% will be dedicated to households at or below 30% of the area median. As you see on my chart, that was our activity report as of March 21, 2012. Since that time, this issue has been referred to the Budget Committee. It was referred to the Budget Committee in April, right as we began to embark upon the budget deliberations. So we truly took up this issue in the Budget Committee in earnest, say, fall of 2012. And since that time, the Mayor's Commission on Homelessness has begun its work. So it requested our patience and deference to their work before we made a final decision on this effort. And so we look forward to hearing their report today. But this gives a long five-year summary, Mr. Chair, of the activity of the proposed affordable housing trust fund. Thank you. Are there any new council members having questions for Council Member Ford at this point that might, are you all good with his wrap-up? That was very succinct. Thank you very much. At this point, I would ask Council Member Kaye if you would give us, I know today at the work session we're going to be hearing the report coming from the Mayor's Commission on the Homeless, but I think you had asked us to wait for that, and you were just going to give us an update of where we stand and where you see this headed in this committee and with your report. Thank you, Chair. Essentially, I want to pick up where Council Member Ford left off. We did ask when the Commission was formed to hold this question because we believed that there was potentially a relationship, potentially a lot of overlap, that some of what we were working on would bear on the question of affordable housing. The timing today is unfortunate because logically we would get the commission report and it would bear on this issue, but that's not how it's working. Right now the question before this body is the Affordable Housing Trust Fund as it has been submitted. When I make my report this afternoon, I don't want to anticipate all of it, but a part of what I will say is that from the Commission perspective, we believe that the Commission report and its recommendations incorporate almost entirely the interests, the concerns, the perspectives that have gone into making the Affordable Housing Trust Fund recommendation that is presently before this body. So I want to repeat that. In the commission report, we ask that there be, first of all, an increase in the requested fee from a 0.5% increase to 0.1% so it would generate twice as much money, and that half of that money be allocated to the recommendations currently contained within the Affordable Housing Task Force recommendations. So it would incorporate all of that, and it makes a case that many of the activities that would be conducted by this larger body are really related to both homelessness and to affordable housing. That is, there's an integral relationship between the two. So if you look, you may not have this in front of you, but one of the statements that's in the present Affordable Housing Trust Fund proposal, one of the statements in there, and this is taken from the 2008 report of the first Commission on Homelessness, It says that money that is used for affordable housing prevents homelessness more effectively than anything else. And when you look at the integrated set of recommendations that will come from the Commission this afternoon, I believe what you will see is that the Affordable Housing Trust Fund, part of that has been maintained essentially in whole. in order to do that there's a few differences and I will be explaining more about that when I make that report but I believe that the question that all of you who are here today and I know that most of the people in the room are here because you are either directly affiliated with Build or you've been following this and you care about the Affordable Housing Trust Fund proposal, if you look at the commission recommendations and you compare them to the present recommendations that are before this body, the Affordable Housing Trust Fund task force recommendations, what you will see is that your concerns and your interests are reflected there and they are included in this more comprehensive report. So I think what I would like to do now, we don't need a motion on this, but it seems to me that the appropriate thing to do is to hold this recommendation one more time. And when I report this afternoon, I will be asking Council to take the fiscal element of our recommendations, which is the increase in fee and the way it would be allocated, and I will ask them to put that recommendation in this committee. If Council agrees at that time, next month we will be able to look at the whole picture. So that's essentially where we're at. And I guess if there are questions from Council Members, I'll take those at this time. Council Member Ford, was your question in relationship to Council Member Kay? No, sir, Mr. Chair. There was one item, and I thank Council Member Kay for his update and his report. There was one item of significance that I failed to mention, both in the timeline, but I think it's very pertinent now. Let's go back there, if you don't mind. Now, let's see if anybody has any questions for Council Member Kaye, and if not, then we'll move back to that. Anybody who has a question for Council Member Kaye? Seeing none, then go ahead, Council Member Kaye. Thank you, Mr. Chair. In regards to the trust fund being a publicly dedicated source of funding, is that for the last few years, we have always the advocates and proponents of the trust fund have been working towards this calendar goal line, if you will, of late March. Because in order, if the council in this government affirmatively enacts the funding source, In order for it to start capitalizing, we would have to notify the state approximately 100 days before the beginning of the fiscal year. So 100 days prior to July 1, which is the start of our new fiscal year, is roughly the last week in March. It's when we would have to notify the state revenue officials of some sort of what that fee will be in order for them to assess that fee. So it's very important in regards to moving the trust fund itself forward. Now, the timeline speaks for itself. We've spent a lot of time over the last five years debating and discussing the validity, the pros and cons, the cost effectiveness, et cetera, et cetera. And at the end of the day, personally speaking, I stand for support of us passing the trust fund, even if it requires us to measure twice, three times in order to just cut once. But I do think with all this time going past, for us to have some level of consciousness about the last week in March 2013, if we want to get this trust fund enacted so it can begin to capitalize funds that hopefully we can start benefiting from, perhaps as early as calendar 2014. Thank you, Mr. Chair. And I think that's a very important point. And I foresee after today that this will be brought to us for the February 19th. And I foresee, as I said back in the fall, that we would be making a motion would be raised at that time, and then we would make a vote on that. And if for some reason that didn't happen, I would request a special meeting for the budget plans we had to to make sure that we had that so we fit within the timeline of the end of the March deadline that has to be done, the 100 days. I think we're all cognizant of that deadline. Is there any other questions on this issue? There is a large group out here I know that are very interested in this issue. And we always give the opportunity if people like to speak, but we'll be bringing this up next month. I'm not sure if we need to do it both times. And I think it would probably be better fitted if we wait to hear what the Homeless Commission report says and if we need to discuss that next week. But you're more than welcome. If there's anybody who would like to speak at this point, you're more than welcome. Was there a sign-up sheet, Mr. Schoeniger? Is there a sign-up sheet in the back? Okay. If you could, Mr. Schoeniger will get that. And I'll recognize those individuals. Thank you. The first one we have on the list is Adam Jones, and if you would give your name, your address, and you have three minutes. Thank you. Adam Jones, 909 Somerville Drive. And just to stretch our legs and to demonstrate, if you're in support of the Affordable Housing Trust Fund, could you stand as it's presented today by the task force? I come to you on behalf of the BUILD organization, on behalf of many of my friends that are needing affordable housing that the private sector and the nonprofit sector have not been able to provide. I want to remind you, because we do have new council members, that there are 27,000 households affected by our affordable housing crisis. There are over 12,000 households, renter households, that pay more than half of their income for rent, which is at a huge risk for homelessness. and as representative of Bill, we would like to make our position clear today that we support the Affordable Housing Trust Fund as presented and put together by the Affordable Housing Trust Fund Task Force. We believe that the two years' worth of work that that task force put into the trust fund is solid. And we also support the March deadline. We strongly urge that action be taken on the trust fund before the March deadline. It's been four years. We are pretty sure that apart from our new council members, much of our council is well-versed in the Affordable Housing Trust Fund and the work that's gone into it. And we would strongly urge that this year you take action as a council on this Affordable Housing Trust Fund. It has been used in over 600 other communities in our country as the most impressive mechanism for addressing affordable housing crisis in communities. I'd urge you to look at the research, review that research as you're making your decisions. and again BUILD is for the Affordable Housing Trust Fund as presented by the task force and we are for the timeline of March that action be taken on the trust fund and we have folks in our congregations, friends in our circles, I'm representing today Anita Wilson and John Anderson and Bob Morehouse who have all had to move out of Fayette County and can't be here because they could not find housing that they needed so I'd urge you to take action before March thank you mr. Jones David Christensen my name is David Christensen I live at 4844 Brennan Drive here in Lexington we have a lot of familiar faces and I see some new faces and welcome and Congratulations to all of you. As the former co-chair of the original Affordable Housing Trust Fund Commission and as a member of the task force, I would like very much to present a differing view of the two proposals. If you read carefully and you look, there's a lot of confusion because the word Affordable Housing Trust Fund has been attached to the homeless recommendation, But it appears to me in looking through the report as it's been released, the definition of affordable housing that's contained in the homeless proposal is targeted exclusively to homelessness. And in particular, there's a lot of provision on page 52 of that report targeting emergency shelter, transitional shelter, permanent housing with supportive services. So in my view, what we have before us are two separate and distinct proposals. One that has been before you for some time is an affordable housing trust fund proposal that targets exclusively the affordable housing crisis in our community. The soon-to-be-recommended, I'm sure, affordable housing proposal is recommending a one-point increase in the insurance premium tax, and all of that money is exclusively devoted to homeless prevention or homeless housing programs and homeless services. So in my view, it should be a homeless trust fund. Therefore, I think the Affordable Housing Trust Fund proposal that you have is clearly distinct. There is not a whole lot of comparison. and there is no need to delay the Affordable Housing Trust Fund, both of these proposals are good, and I think they should both receive their consideration and have their day in court, so to speak, by going on to council. But as you dig into these two different reports and what their intent and purposes is, you will find that there is not much correlation in terms of purpose and intent, and therefore each should be considered a separate proposal. And I concur with those that have heartily suggested that we move forward with the long effort to deal with affordable housing by moving that proposal forward. And then, if it comes to this committee, take on the Homeless Trust Fund proposal. Thank you very much. Thank you. Is there anybody else that did not sign up that would like to speak? If you would, just go to the microphone. You'd have three minutes. Seeing none, are there any? We have Siobhan Akers. Oh, I believe. Mr. Chair, I believe that Siobhan was sitting in the seat this morning and did not log out. And so I'm not going to try and channel her. I think I'll just, I need to log out and log back in. Thank you. Okay, well, that was you, so we'll go, Mr. K, Dr. K, and then Mr. Beard. Thank you, Chair. We're going to do an extensive presentation this afternoon, but I would be remiss, I think, if I did not correct misinformation with all due respect to Mr. Christensen. It's just been put forward. I believe if you read the report, what you will find is that the 1% fee increase which we are recommending clearly is stipulated that half would be for affordable housing as it's recommended in the trust fund recommendation, and a half would be for other services and support for homelessness, which could also include affordable housing. So I think it's a little hard to, it does get a little complex, but my view is actually that the Homeless Commission recommendation would provide more affordable housing than the proposal that's presently before Council. The second thing is, Mr. Christensen said that the full 1% would be devoted only to homelessness, and I guess I've just addressed that. But the point is this. The Homeless Commission report incorporates the Affordable Housing Trust Fund recommendations almost entirely. There is a little bit of difference in terms of administration, obviously a difference in terms of the amount of funding that's requested and the way it would be allocated. So I urge you to look at the report and make your own judgment about whether, in fact, it does incorporate the concerns that you've had or not. Thank you, Chair. Thank you. Council Member Beer. Thank you, Chair. David, I, too, am going to have to contradict you. No, you don't need to come to. If you remember all the meetings we had and the discussions we had about what the public might think about a tax increase during pretty bad times when we started anyway. I don't think we could do a half percent now and another half percent next year. we'd have people marching in the streets and that wouldn't be good. I think we'd have to either bite the bullet and go ahead and get the job done once and for all now and take our lumps as opposed to waiting and splitting it up and shoving it in the face of the public twice. My opinion only, but But it just makes more sense to me anyway. Sorry to single you out, but you brought the subject up. So I'll, at this point, give it back to you, Mr. Chair. Thank you. Any other issues on this topic? Seeing none, we'll move to the final item. And I want to thank you all for coming. And I'm sure I'll see you all this afternoon at the work session. And then the final item is items referred to committee. And we can go through these rather quickly. Mr. Schoeniger, if you would, just kind of give an update. And the two that I have in here, I've met with the purchasing director, and he has given me a memoir where we stand for the procurement task force, and we will be meeting in the spring here to come up with the issues that we did not address the first time around With the minority women business, the service selection, let's see, were those the two? The two, yes. Yes, sir. Okay. And then if you would go through the other ones, please. I'd be happy to. The solid waste cost and tax structure, that is in the Waste Management Task Force, which has their next meeting on the 31st, and I think we'll be reporting out either later winter or earlier spring. the local vendor the local vendor preference I think it's part of your the activity based costing from Council Member Lane that will be part of the of February 19th February 19th or February 12th February 19th committee meeting the affordable housing trust fund report you've just heard about and any financial efficiency measures that will also be in the part of Council Member Lane's presentation on the 19th. Thank you very much. Do we have any other business in front of this committee? I will entertain a motion to adjourn. We have a motion and a second. We stand adjourned. Thank you. you