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HomeMy WebLinkAboutBudget/Finance Committee Minutes 01.16.2007 MINUTES BUDGET/FINANCE COMMITTEE JANUARY 16, 2007 5:30 P.M. COUNCIL CONFERENCE ROOM MEMBERS PRESENT: Chairman Mark Mace Kate Hart Gay Easton Doug Poehis Mayor Ken Olson OTHERS PRESENT: Mary Embleton Chairman Mark Mace called the reguhr meeting of the Budget/Finance Committee to order at 5:41 p.m. There was no public in attendance. The minutes of the January 2, 2007 Budget/Finance regular meeting were approved as presented, via motion by Kate, seconded by Doug, and passed unanimously. June Journal Voucher #556 and July Journal Voucher #607A were reviewed by the mayor and committee. Mary expla'med that they were a result of the auditors' work. Motion by Kate, seconded by Doug to approve them. Motion passed unanimously. Mary then briefly cxpla'med the Year End Journal Vouchers #YEA600 - YEA615, which were also reviewed bythe mayor and approved. December Journal Vouchers 0626-630 were reviewed and approved by the mayor. Additional entries were made by the auditors to carry through on their year-end corrections. Utility Billing adjustments for December 2006 were reviewed by the committee. The year-end, December, and UB documents were approved via motion by Gay, seconded by Kate, and passed unanimously. The December 2006 Financial Statements were reviewed by the committee. Most funds' revenues and expenses appear to be within acceptable parameters with 50% of the year expired; however, there are some departments within the General Fund that are over the 50% and are of some concern. The Building Department revenue is much higher than budgeted due to the WalMart building p~t,dt. Mary pointed out that the East 1st St. project is complete, and the negative cash balance orS 125,366.07 indicates the minimum amount of loan that should come from Intercap. The project had a budgeted loan of $330,000, but due to the timing of this project, Street Maintenance money has already been used to pay for the project. So rather than borrow the total budgeted, Mary recommends borrowing only $130,000 to finish this project. This will lessen the debt service burden on the Street Maintenance Fund, which in turn flees up more money for projects. As of December 31, 2006, the Street Maintenance Fund has over $131,000 which can be used for O&M for the next 6 months. Then, the second half tax money will come in June. This can then be used for projects after July 1a. It was also pointed out that there are separate cash line items in water and sewer, designating cash for certain projects. Excess operation cash can be transferred to a project reserve cash line item, which is recommended. These recommendations came out of the CIP and Projects meetings held last Thursday. Mayor Oison commended staff for their good work during those meetings. Motion by Doug, seconded by Kate, to recommend approval of the December Financial Statements to the council. Motion passed unanimously. The following purchase requisitions were presented for approval: Budget]Finance Commillce January 16, 2007 GENERAL FUND: 35 sets ofwildland boots - fire dept. 48 5-gal jerry cans of Phos-Chek foam- fire dept. $5,215.00 $2,820.00 9-1-1 FUND: Dell Power Edge 1900 server - police $3,424.00 Fire Chief Scott Wilm arrived at 6:05 to explain his requests to the committee. Regarding the foam, it is difficult to det~amine how much quantity should be on hand since this is so new. Regarding the boots, the current boots had 2-4 years' use, and the new boots are of better quality, according to the fire chief. The committee reviewed the Comp/OT reports for PPE 12/31/06. This was a typical pay period with a holiday (Christmas). Mayor Olson wasn't able to meet with Chief Musson regarding discussion of the DUI grant shit, s and overtime reimbursement. The Payroll Register for PPE 12/31/06 totaling $142,253.23 was reviewed by the committee. Motion by Doug, seconded by Kate to recommend council approval of the payroll register. Motion passed unanimously. Clerk/Treasurer's Comments: Mary briefly reviewed the draft auditors' findings, a copy of which is attached to these minutes: 06-1 -the city needs to identify how to get infi.astmcture costs fi.om the developers of newly developed/annexed subdivisions in order to book their value, as required by GASB 34. 06-2 - the court has already prepared their response, and will be asking the state to provide program enhancements in order to properly account for time pays. 06-3 -the clerk doesn't agree with the practical applications of this finding, but will implement the reports showing deleted documents for the mayor's and/or administrative assistant's review. 06-4 - the city is working on updating and correcting the direct cost allocation spread sheets developed by the administrative assistant. 06-5 - this is a major concern regarding the issue of overtime for dispatchers. Mary stated that the city attomey is working on the issue, and an agreement will be presented at the January 30th workshop. However, she recommended following the auditor's suggestion that the IRS be consulted to ensure compliance before the city takes action. Mayor Olson stated that thc city attorney has researched this issue, and there should be no concerns, and that he will follow his legal advice. 06-6 - the city planner has been given this issue to address. 06-7 - the city has a process in place to address this issue, and it will be implemented. 06-8 - the city will do more oversight to ensure proper coding, and more education of department heeds was recommended. 06-9 -the policy needs review to det~mdne if $1,500 is too limiting, and to discuss any other areas of improvement. 06-10 -this has already been addressed, and emphasis will be to have future files maintained in the clerk's office. 06-11 - the city is currently developing an RFP for engineering services, and information has been distn~outed to depash~ent heads regarding the matter. 06-12 - the cash reserve in the Sweeping Fund will either be moved to a separate line item in Fund 4000 (Capital Pmjects) or identified in the Sweeping Fund as capital reserve, with the offset reflected in the appropriations. Adminiatrative Assistant to the Mayor comments: Main Street Water Line Replacement - Perry stated that the project has two punch list items remaining, both requiring asphalt, so it may have to wait until the weather is conducive to working with asphalt. Sewer Trunk Line Replacement - This project is on schedule. The change order is on tonight's agenda th for approval, and the change to the engineering contract will be on the Jarl. 30 workshop agenda. th 8 Avenue Project funding - Mary stated that the conference call with Sandy Straehl, Lynn Zanto, and Dick Turner from the DOT occurred last Monday. The discussion was mainly about bonding and other 2 BudgctfFinance Commiitee January 16, 2007 funding sources. They needed to know if the city was going to request a redesign for a lower, narrower street. They are planning to put a package together to present to the commission by the end of the month. CIP - The mayor stated that there would be something before the council around the first part of February. RFP's are being prepared now to address some of the requests, in order to get ahead of the curve. The mayor wants a structure for the process as an end product. Impact Fees - It was reported that Mark Richards is working with Sam regarding how to establish a district boundary outside of city limits. Once that is determined, then the city will go RFP for development. Mayor Comments: Cable TV Franchise - Mayor 01son distributed a memo f~om Sam, and the committee will review this item and discuss it next week. The next regular Budget/Finance meeting will be held on Tuesday, February 6, 2007 at 5:30 p.m. The next agenda will be the same as this one. The meeting adjourned at 6:28 p.m. Respectfully Submitted, Clerk/Treasurer 3 CITY' OF LAUREL SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2006 SUMMARY Of AUDIT RESULTS FINANCIAL STATEMENTS: Type of auditor's repot[ issued: qualified Internal control over financial reporting: · Materiel weaknesses identified? · Reportable conditions identified that are not considered to be material weaknesses? Noncompliance material to the basic financial statements noted? FEDERAL AWARDS: X yes no yes X none reported X yes no Internal control over financial reporting: · Matedal weaknesses identified? · Reportable conditions identified that ara not considered to be ma/eriar weaknesses? Type of auditor's report issued on compliance for major programs: unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? Identification of major programs: yes X no yes X none reported yes X no CFDA Numbers 97,044 66.458 Dollar threshold used to distinguish between type A and type B programs? Auditee qualified as Iow-risk auditee? Name of Federal Pro~lram or Cluster Assistance to Firefighters Grant Capitalization Grants for Clean Water-State Revolving Funds $300,000 yes X no FINDINGS - FINANCIAL STATEMENT AUDIT 08-1. Establish Procedures to Identify and Record Donated Infrastructure and Equipmeul During our audit, the City assumed maintenance responsibility for infrastructure in two completed subdivisions located within City limits. Cost breakdowns for water and sewer lines, curbs and gutters, streets, etc., were not developed by the public works and utility departments, When the City assumes maintenance responsibility for infrastructure related to completed subdivisions, cost information for water and sewer lines, curbs and gutters, streets, etc., should be developed by the public works and utility departments. The information and supporting documentation should be used to record the donated capital assets in the accounting records. Additionally, Project HELP, a non-profit organization, donated playground equipment located in Kiwanis Park to the City in June 2006. These donated assets were not included in the City's capital assets. We recommend the City develop procedures to ensure that all donated equipment is included within the capital asset records. 06-2. City Court During our review of the city court, we noted the time pay accounting report did not include all of the relevant trensactlons, such as community service, time served and/or suspensions, We recommend the City Judge contact the software vendor and request 36 CITY OF LAUREL SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2006 a software update. Once the sof~ware is updated, the report should be printed on a monthly basis and reviewed and approved by the City Judge. 06-3. Permission Control Groupe The City uses the permission control group feature of the accounting software. The permission control groups define levels of access. However, the clerk still has the ability to change or delete posted journal vouchers. We recommend the ability to change or delete posted journal vouchers be turned off. Further, the Administrative Assistant to the Mayor should review the cancelled documents report for all transaction types on a monthly basis. 06-4. Administrative .~enses The general fund cha~ges the enterprise funds for administrative expenses. The charges [o the enterprise funds are based on a percentage of pdor year operating expenditures/expenses less capital outlay and debt service. For the year ended June 30, 2006, total charges to the enterprise funds were appreximataJy $315,000. We recommend costs specifically related to the enterprise funds be charged directly to the enterprise funds themselves. The use of administrative charges should be discontinued. 06-5. Disoatch Work Schedule and Compensation Effective July 1,2005, the city approved a three year agreement between the city and the local employees union. Among other employment items, the agreement specifies the compensation, work week, work day and work schedule for all employees covered under the agreement. Article VIII, Section 1 of the agreement specifies the standard workweek to consist of fody (40) hours, composed of any five (5) consecutive workdays immediately followed by two (2) days off. Further, Article VIII, Section 3, subsection b. specifies the work schedule for ali shift personnel shall be eight (8) continuous hours. Dudng our payroll tastwork, · we noted that the work schedule for the dispatch employees is six (6) consecutive workdays followed by three (3) days off with eight and one-half (8.5) continuous houm per workday. This schedule is not in accordance with the agreement. Additionally, Article IX, Section 2, subsection a. of the agreement specifies that when employees are required to work in excess of eight (8) hours in a twenty-four (24) hour pedod or in excess of forty (40) hours in any week, they will be compensated at one and one-half (1.5) times their normal rate for additional time worked. Dispatch employees are not paid overtime on hours worked during their regularly scheduled shift. We recommend the city contact the local Internal Revenue Set-rico office and legal counsel regarding overtime pay for dispatch employees. 06-6. Develoe Citv/Countv Plannin~ Interlocal Aoreement As noted in the pdor audit, an intedocal agreercent is not on file for the Laurel City/County Planning. We recommend an interlocal agreement between the County and City be developed. 06-7. Reconcile Worker's Comoensation Waqe~ Procedures have not been developed to reconcile gross and worker's compensation wages at the end of each pay period. Reconciling gross and worker's compensation wages would identify errors in individual employee setups. We recommend a procedure be developed and implemented to reconcile the various wage bases after each payroll. 06-8. Correctl Code Ex enditures During our analytical review and review of claims, we noted inconsistencies and errors in the classification of expenditures. Audit adjustments were made for significant inconsistencies and errors. Examples include planning, engineering services for the sewer trunk line, chip seal projects, supply purchases and prepaid expenditures for fire equipment. We recommend department heads properly code expenditures. The coding of the claims should be reviewed by the City Clerk/Treasurer or the Administrative Assistant to the Mayor prior to being paid. Corrections, if any, should be made prior to posting to the accounting system. 06-9. Adol~ted Purchasinq Policy not Followed During our expenditure testwork, we noted the City's pumhasing policy was not adhered to. We found examples where purchase orders were incomplete or not attached to the claim, pumhase requisition forms for purchases in excess of $1,500 were not attached to the claim, purchase requisition forms and purchase orders were dated subsequent to the invoice, contracts were not obtained for cedain disbursements in excess of $1,600 and documentation that department heads contacted two or more vendors and requested quotes was not attached to the claim. 37 CiTY OF LAUREL SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2006 The City's purchasing policy requires all of the items discussed above. We recommend management review the purchasing policy with department heads. We also recommend the accounts payable clerk return claims to department heads if the apprepdate documentation is not attached, 06-10. Grant Files not Maintained at a Central Location During our audit, we noted that grant files for the fire and police departments were not on file at the City Clerk/Treasurer's office. We recommend the fire and police department heads be required to maintain grant files in the City Clerk/Treasurer's office. 06-11. Publicly Announce Requirement for Enq neednq Services The City did not publicly announce its requirement for engineering services, nor did it publish in advance its requirement for engineering services relating to the various public works projects. This requirement applies if the fees for architectural or engineering services are greater than $10,000, We recommend the City develop procedures to ensure compliance with applicable statutes, 06-12. Cash Reserves Cash reserves for the Street Sweeping fund were in excess of one-half of the adopted appropriation. Section 7-6-4034, MCA, states that the amount that may be added as a reserve to any fund to meet expenditures made from the fund dudng the months of July to November of the next fiscal year may not exceed one-half (1/2) of the total amount appropriated and authorized to be spent from the fund dudng the current fiscal year. We recommend state statutes related to budgeting be adhered to. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS AUDIT There were no findings and questioned costs related to federal award programs. 38 CITY OF LAUREL PRIOR YEAR AUDIT FINDINGS - FINANCIAL STATEMENT AUDIT Prior Year Audit Findings 05-1. City Court 05-2. Permission Control Groups 05-3. Administrative Expenses 05-4. Funding of Enterprise Replacement and Depreciation Restricted Cash Accounts not Sufficient 05-5. Continue Developing the Accounting Policies and Procedures Manual 05-6, Grant Revenues Netted to Expenditure Line Items 05-7. Develop City/County Planning Intedocal Agreement Status Not Impremented Not Implemented Not Implemented Implemented in fiscal year 2007 Implemented Implemented Not Implemented 39