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HomeMy WebLinkAboutBudget/Finance Committee Minutes 01.29.2001 MINUTES BUDGET/FINANCE COMMITTEE JANUARY 29, 2001 6:30 P.M. COUNCIL CHAMBERS MEMBERS PRESENT: Chairman Bud Johnson Chuck Rodgers Gay Easton OTHERS PRESENT: Brent Olness Matt Erekson Mary Embleton Jim Stevens Dick Larsen Larry McCarm Kurt Wyss Dan Meats Jean Kerr The purpose of this special Budget/Finance Committee meeting was to conduct an exit conference with the city's auditors, Olness & Associates in regards to the audit of fiscal year 2000 financial reports. ~ Brent Olness and Kurt Wyss represented the audit firm, and they conducted the audit for the City of Laurel during the week of December 18, 2000. A copy of the draft audit th str ted report had been received on December 27 and di ibu to the committee members prior to this meeting. Mayor Rodgers began with questions regarding last year's findings and their implementation status. (Note: Of the 18 findings last year, 4 were implemented, 7 were partially implemented, and 7 were not implemented.) Brent responded that due to the conversion to new accounting software, it is expected to take some time to learn the new programs. He felt that the staff was gaining in knowledge and making progress. Brent drew attention to finding #00-5 Volunteer Firemen. He explained that he had talked with Fire Chief Jim Stevens regarding the rate of pay for the firemen. The $6.00/hr/call started out as a clothing allowance or reimbursement years ago. Due to the fact that it is based on an hourly rate, it has raised the question as to whether that constitutes wages, which are taxable, rather than a reimbursement. Jim had contacted the Wage and Hour Division of the Department of Labor to get their opinion, and Director John Andrews stated that he considered it a "nominal fee" and therefore are not wages. Brent suggested that a written statement from the Department of Labor is needed to bring closure to the matter. It is the city's intention to maintain the volunteer status of the fire department. The next finding discussed was #00-8 Administrative Expenses. The audit states that these expenses charged to the water, sewer, and garbage funds "...should be based on actual costs incurred, rather than anticipated budget amounts. Costs specifically related to the Enterprise funds should be charged to the funds themselves." Dick Larsen concurred, explaining that these funds, as well as all city funds, should be run as a business, and offered to assist in next year's budgeting process. Mary explained that for the current year, the costs were based on the prior year's actual expenditures and not on budgeted figures in an attempt to make a more gradual change to the process so as not to have as big an impact on the General Fund non-tax revenues. More questions and discussion followed. Finding #00-9 Enterprise Replacement and Depreciation was discussed next. Bud asked the auditors if they had any suggestions as to how to arrive at a figure to set aside every month for replacement and depreciation. Discussion followed and one suggestion was to look at the annual depreciation expense as a guideline. It was stated that each enterprise fund should have it's own reserve to replace assets. The assets used in the General, Street, and other funds also need replacing, so reserves should be set up for these items as well. Dick suggested different ideas and stated that the council and mayor need to make tough decisions to ensure that the rates structures for water, sewer, and garbage include enough to set money aside for replacements. Bud stated that during the last water rate increase process, it was documented that the new rate would allow $100,000/year to be set aside for water line replacement, yet the money is not there, and no one has been able to tell him where it went. Currently, the city has some reserves set up for asset replacement. Brant recommended that £mding #00-10 Accounting Policies and Procedures should be done in the event of employee turnover to ensure a smooth transition. They are simply "how-to" instructions on office operations such as claims processing, payroll, utility billing, etc. Judge Kerr asked about finding #00-4 City Court. It was stated that the pending cases and bonds are being reconciled on a monthly basis between the court and city clerk's office. The court is working on establishing a better tracking system for the time-pays using an idea from Livingston. Once this data is captured on a spreadsheet, the total will be put on the city's books as a receivable and reconciled. Some discussion was held regarding new case management and accounting software currently being tested in some courts as directed by the Supreme Court. Other matters discussed included: the need for a budget amendment resolution each time a variation in the adopted budget occurs (#00-15 Budgets); the need to follow bidding procedures, especially noting that Gas Tax requires it for anything over $4,000 (#00-13); the need to follow the city's purchasing policy by submitting the purchase requisition for purchases over $500 prior to purchase (#00-14 Expenditures). Bud asked about implementing these findings. Brent suggested that a plan needs to be developed, which is usually the city's response to Department of Conunerce following the audit, and also to establish a time-line in which to implement the changes. The meeting adjoumed at 8:15 p.m. The next regular Budget/Finance Committee meeting will be Monday, February 5, 2001 at 7:00 p.m. Respectfully Submitted, Mary K. Embleton ~ .~. ~ ~?