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Draft Minutes
November 29, 2005 1:00pm
Siskiyou Room, Community Development/Engineering Services Building
Christensen/Nutter ms for Alan Case to chair committee. All Ayes
ROLL CALL
Committee members Case, Christensen, Levine, and Nutter were present. Mayor Morrison was absent.
STAFF PRESENT: LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR
CINDY HANKS, PROJECT MANAGER
JOAN BAKER, ACCOUNTING DIVISION MANAGER
SCOTT WHITMAN, STAFF ACCOUNTANT
CINDY WEAVER, STAFF ACCOUNTANT
BRYN MORRISON, ACCOUNT REPRESENTATIVE
Christensen/Levine ms to approve minutes as presented. All Ayes.
PUBLIC INPUT
None
The Committee welcomed Kenny Allen, CPA and Terry Halter, the compliance manager for Pauly,
The Committee questioned what the Charges for Services included and the changes from last year. Mr. Tuneberg responded that Charges for Services represents fees and rates that citizens are charged for services. The change from last year could be attributed to seasonal swings and changes year to year. The most is the growth in AFN transitioning from the build out. The Committee questioned if the Water Fund did not meet the budget amount, and were curious that the increase in fees and revenues are below projections. Mr. Tuneberg responded that they try to estimate the product that will be utilized and it is based upon an average and if they do not have an average year, they may not generate as much revenue. Guy Nuttter, Audit Committee member would like a comparison of fees and charges for services from last year. Staff will provide.
The Committee discussed page 10, the four utilities recording program revenues less than expenses resulting in net costs in Table D. Mr. Tuneberg responded that program revenues were not charged adequately to meet expenses. The City has guidelines for target fund balances, and when he first started here, balances were too large. Now they are working to lower fund balances and that fund balances could stabilize this from year to year. He explained that there are activities in this that require revenues from other sources. Transfers and subsidies are not shown here.
The Committee questioned when rate studies were planned. Mr. Tuneberg responded that Water and Wastewater will be this year and Electric next year. Water and Wastewater were done two years ago. The Committee discussed the changes in the Water Fund from the previous year and Mr. Nutter requested the detail. Staff will provide. It was explained by Mr. Allen that there are three different basis’ of accounting provided in the book: the modified accrual, the full accrual, and cash basis.
The Committee discussed the consumption effecting taxes. Mr. Tuneberg explained that taxes for the Water Fund are based upon debt service. If we change debt service, the revenue stream would change. Taxes do not reflect the water used by the community.
The Committee questioned what intergovernmental revenues and interfund loans represented. Mr. Tuneberg responded that intergovernmental revenues are mostly grant monies the City receives and interfund loans are when they lend money from one fund to another. If it is an operating loan, it is paid back the next year. Construction is paid back within five years. The Committee questioned if any analysis was done on the timing of projects and differences in funds for projects. Mr. Tuneberg pointed to the statistical comparison in budget and actual funds, and changes in fund balances. He explained that those figures are better seen in the budget document. The Committee questioned how the City has shown when projects cost more than budgeted. Mr. Tuneberg responded that it would go to the Council level, but they attempt to comply with state purchasing requirements. The Committee discussed that the City does have to abide by Oregon Budget Law as well.
The Committee questioned the large increase in accounts payable and interest payable in Business-type activities between the years. Mr. Tuneberg responded that the payables fluctuate, and explained that how the fiscal year falls, is in the middle of the construction period and it does not represent missed deadlines in payables. The Committee discussed the interest payable is for long term financing.
The Committee questioned what the loss on disposal of assets was. Mr. Allen explained that the City purged capital assets under a certain dollar figure in accordance with GASBS 34 and it is not an actual loss.
Mr. Allen spoke to the management letter for the City. One reportable condition was that the utility billing system could not break out receivables by fund. This was part of a comment that was reported in the 2003 management letter that has not been implemented, although the other parts of the letter have been implemented. The second comment was that bank reconciliations were a few months behind. They recommend reconciling monthly prior to 20th day of the month. The third comment was that some visa statements were missing supporting receipts. The dollar amount was not significant and it was mentioned as a procedural matter. Mr. Allen stated that they looked at 25 individual statements and found five receipts missing. Mr. Tuneberg responded that the City takes credit card use seriously and have asked the auditors to look closely at it. He explained that the credit card company is questioned about the charges and if the employee does not follow the policy to submit receipts, they will loose their card. One employee’s card was cancelled as a result of the finding. Mr. Tuneberg explained that an employee must put in writing the purchase on the card if the receipt is lost. The Committee questioned whether the City can charge the employee for the purchase. Barbara Christensen, City Recorder and Treasurer explained that the policy states that it is ultimately the employee’s responsibility to pay the charges on the account. The City has authorization as signers on the account. She explained that the City has looked into
other options for purchasing, and this is not a large problem City wide. Mr. Tuneberg explained that he has spoken to Department Heads about this issue and is in the process of educating staff.
Mr. Tuneberg spoke to the responses from Staff. He stated that when the comment came up before, they responded by doing a study on the software. The Government Finance Officers Association (GFOA) did a study on the current system and they have funds in the budget to replace the system. GFOA suggested that the City go out to bid for a new system. It is a complicated issue and the City is unique in that we bill for electricity and cable TV. He added that the goal is to either through internally or externally developed software that will address this issue.
Mr. Tuneberg responded to the second comment on the bank reconciliations and added that the City has had staff changes recently and that will be corrected.
Mr. Tuneberg spoke to the budgetary violation in the Airport Fund. He pointed to page 70 and that they usually have adequate appropriations within the fund to cover over expenditures. This year, the City had grants to do the improvement project. In April through June the project looked fine, but it came in over budget after the fiscal year had ended. After June 30, change orders that were part of the contract were submitted. A budget adjustment was not able to be done since it happened after the fiscal year had closed. The change orders were appropriate but could not be adjusted for in the budget process. He explained that the grants will come in from the federal government to repay the project. The Committee asked what the consequences are for a budget violation. Mr. Allen explained that the Oregon Department of Revenue (DoR) will send a letter asking the City to explain why it happened and to explain that it will not happen again. The Committee asked if the DoR audits cities and what they could penalize for non compliance. Mr. Halter explained that the only penalization he had heard of was that school districts could have their funding held and incorporated businesses could loose their incorporation status.
The Committee inquired on Mr. Deboer’s previous year’s questions about a breakdown on revenue on the businesses the government ran. Mr. Tuneberg responded that it is difficult to breakout and that the detail in the trial balance may provide information the Committee may be interested in. He explained that some services are not put in place to make money and the budget document and performance measurers are the best place to look for how departments are doing.
CUFR
Mr. Tuneberg spoke to the CUFR. He explained that the Parks Commission budget is reflected in the City budget and in financial report as the Component Unit.
He explained that the report was primarily written by Scott Whitman and audited by Pauly,
The Committee signed the annual letter accepting the report as presented and recommended it to proceed to acceptance by Council.
Audit Process – FY 2005-2006
Mr. Tuneberg spoke to the audit contract and extending it. Last year the Committee agreed to extend it one more year. The Committee discussed extending the current contract for one more year to June 30, 2006.
Levine/Christensen ms to approve one more year. All Ayes.
The Committee discussed possibly comprising a condensed version of the book for the general public. Mr. Tuneberg mentioned that there is a Popular Annual Financial Report that could be developed. Ms. Christensen cautioned against additional workload and staff time that would require.
Adjournment
The meeting was adjourned at 3:05 p.m.
Respectfully Submitted,
Bryn Morrison
Account Representative
Administrative Services Department