Budget Committee Meeting
CALL TO ORDER
May 12, 2016, 6 p.m.
Civic Center Council Chambers, 1175 East Main Street
Chair called the meeting to order at 6pm.
Runkel (Chair) Present
APPOINTMENT OF THE LIAISON TO THE AUDIT COMMITTEE
To appoint Mary Cody as the Liaison to the Audit Committee.
APPROVAL OF MINUTES
That the minutes of the February 18, 2016 Citizens Budget Committee meeting be approved as amended.
That the minutes of the February 18, 2016 ECTS Subcommittee meeting be approved.
That the minutes of the April 27, 2016 ECTS Grants Sub Committee meeting be approved.
That the minutes of the May 5, 2016 ECTS Grants Sub Committee meeting be approved
Email received from
870 Cambridge Street.
Ashland OR 97520
“The current trends of Climate Change indicate the ravages of climate chaos is happening much faster than calculated.
As you are examining the current budget and issues related to it, remember there are climate change issues of great concern to Ashlanders which include catastrophic events such as drought, flood, and fire. In addition, there are insidious consequences of high levels of greenhouse gases (GHG) which will exacerbate problems. Physical and mental health issues, food availability and changes in population are just a few of the detrimental effects of rising GHGs
A budget developed for 2015-17 should be examined with the question: does this budget reflect how we think we should be handling issues in relation to climate change? Don’t wait for the Climate and Energy Action Plan-as leaders you must look ahead and anticipate the challenges.”
DISCUSSION ISSUES FOR THE BUDGET COMMITTEE
USE OF STUDY GROUPS IN BUDGETING
Runkel introduced the item and noted that he had distributed a memo to the committee on this subject. He asked for comments from Kanner.
Kanner stated that he was concerned that the proposals in the memo will expand the scope of the Citizens Budget Committee (CBC) purview and that he believes these are governance issues for the council to consider with the one exception being contributions to the city’s general fund from the city’s enterprises. He stated that most of the items listed didn’t relate to the approval of the budget. He added that he is also concerned about the increase in use of staff time that could occur. Kanner quoted AMC 2.04.080 and noted that a councilor’s requests for information from staff must comply with that code and stated that he believes it will take more time than allowed by the code. He continued and said he is also concerned about public meetings law noting that the attorney general has ruled that a subcommittee of a public body that is appointed for the purpose of advising a public body is
itself a public body, which means that all proposed study groups would be subject to public meetings law and would need to be noticed and have minutes taken. For all of these reason, Kanner said, he encourages the committee not to go forward with this.
Seffinger said that she didn’t realize how much of an impact it has on staff and the issues with transparency and public records aspect and agrees that some of these are council issues.
Furuichi believes the CBC needs a mechanism for learning and understanding what goes on in the budget process and asked how that can be accomplished. Kanner said this information is offered through financial reports.
Furuichi went on to ask what they should do if they have questions. Kanner said that most questions can answered by either himself or Lee Tuneberg.
Furuichi clarified what he is looking for is a way to learn how to use the budget document and wanted to know how he was able to reach out to other members without breaching public meeting laws.
Kanner suggested organizing some training on how to use the document and noted that multiple members of the committee getting together is possible depending on the intent of the meeting. He also suggested if there are specific questions they be forwarded to himself and Lee Tuneberg and they can be answered at the meeting of the full CBC.
Furuichi would still like to create a group who might meet to frame those questions and perhaps resolve them before taking up staff time. Kanner believes it is problematic to meet in groups especially if it is an appointed group. He reiterated his concern about it taking up a lot of staff time and stated that while this currently applies to the council, he thinks it should be amended to be applied to boards and commissions. Kanner again stated that the easiest way to address this is to ask himself or Lee Tuneberg time permitting.
Marsh used an example of 3 people meeting over coffee with their budget documents, and asked if that would be subject to public meeting law. Kanner answered no, however, if one of those members then took that information and discussed it with another group of three people and so on, then it would be considered a serial meeting as such are not allowed.
Marsh asked how they can assign groups to ask specific questions if they fell within the standard of questions allowable by the CBC.
Voisin asked if three groups met and discussed three different topics, would that be considered a serial meeting. Kanner answered no. Voisin noted that it can be frustrating as a council member to be asked questions on the night on the spot and then have such a limited time to answer them.
Dave quoted from the Local Budgeting in Oregon Manual “Can I consult with other budget committee members about details in the budget other than at budget committee meetings? Discussion of the budget committee must always take place in the forum of a public meeting. One of the reasons Oregon uses the budget committee process is to ensure public comment and full disclosure of budget deliberations. It is much better to abide by the spirit of the law and hold all discussions at budget committee meetings.”
Moran asked if it this applies to citizen members. Kanner noted that all members of the CBC are subject to public meetings law. Kanner said he supposed that if they met to share information but did not deliberate on a subject and the deliberation took place at a full meeting, this may be allowed. Kanner stated that information should not be considered legal advice.
Furuichi thinks it’s applicable when there is a new budget, but in budget law and in the local budget workshop document it states that pre meeting discussions are allowable.
Kanner agreed and said they still need to take place in a public meeting as per ORS192.610. He said the serial meeting statement comes from the attorney generals manual and stated he is not disputing that they can meet, but that it needs to be in public.
Runkel said that he has a different perception and believes that a gathering of the committee members with a variety of experience would be advantageous outside of the formal approval of the budget document and that the idea was not to ask the city for information, but for groups to gather to discuss issues that may have budgetary impact. He went on to explain his idea that would be an independent group that would discuss these ideas and then bring them back to the full CBC. He said the goal is not to cause trouble for the city, but rather to take advantage of the variety of experience of the CBC members. He believes that this would not be a hindrance to the use of staff time.
Morris pointed out that members of the audience should be aware of where information raised at meetings comes from and that this should be an open process. He used the example that, if during a meeting, a member mentions they had discussed this subject prior, it may be problematic and believes that they have to follow public meetings law.
Voisin quoted ORS 192.610 “Meeting means the convening of a governing body of a public body for which a quorum is required in order to make a decision or to deliberate toward a decision on any matter. Meeting does not include any on-site inspection of any project or program. Meeting also does not include the attendance of members of a governing body at any national, regional or state association to which the public body or the members belong. [1973 c.172 §2; 1979 c.644 §1]”
Voisin went on to state that she believes the meaning would be to convene toward or deliberate toward a decision and doesn’t think that is what the subcommittee is being designed for.
Kanner noted the definition of governing, or public body is very broad. He explained that if the CBC appointed a subcommittee of 3 people and 2 of them get together for the purpose of reporting to the CBC and act in advisory capacity to the CBC, it is considered a quorum of a public body and if they are working on any kind of advice or recommendation for the CBC, that is considered a public meeting as per the Attorney General’s Public Meeting’s manual.
Seffinger raised the question, if it is appropriate to ask someone with legal expertise or experience, for clarifications and if one person presenting to the committee could be an option. Runkel noted he thought Kanner had said one person committees would work but his concern would be that it’s then a one sided opinion. Seffinger clarified that she is asking about the difference between clarification and recommendation. Runkel added he believes the goal would be to take advantage of the knowledge and expertise of the committee.
Rosenthal referred to the prospective topics list in the memo and asked if this should be a function of the chair to be working with city staff at future meetings. For example, if CBC members raised a subject, they would present this to staff and let them determine if it’s appropriate for the CBC to discuss.
Furuichi suggested the possibility of training on certain topics and learning how to interpret the budget document.
Runkel said this would take more staff time and suggested. He then said he felt it was time to dispose of the issue one way or another and suggested making a motion.
Marsh said she believes the issue should drive the structure not the structure drive the issue and if there is an issues the first step should be to talk to the Chair, then the second step should be to place that issue on CBC agenda so that a presentation can be heard. She explained possible outcomes after that could be requests for more information needed or they could suggest an ad-hoc group take over. Runkel said he was not interested in taking up more staff time but would support the committee’s decision either way.
Furuichi asked about the possibility of submitting questions to the chair and if the chair didn’t have that information available that they form a committee and ask for councils help. He added he would like to move forward the idea of beginning some sort of education or training as a group or that if there was a topic that was of interest, there might be a presentation on it. Furuichi asked to recommend that the chair be allowed to form a subcommittee at the pleasure of the council.
Marsh believes this topic was already broached in the beginning of the year. Runkel agreed. Marsh asked if the topics are on future agendas. Kanner said yes they are.
That the budget committee members submit questions to the chair and the chair sort them into categories that he will present to the City of Ashland Council for the Budget Committee to consider at their next meeting
Moved to amend Furuichi
That the chair be allowed to appoint one person study groups and that that person may prepare a report for the Citizens Budget Committee.
Motion to amend accepted by mover and second
Marsh asked for clarification from Voisin regarding the motion. Voisin clarified that the chair would gather issues and then he would select issues or, according to Furuichi’s amendment, would form one person subcommittees who could research the issues and present them to council for consideration of a full CBC meeting. Marsh asked if it needs to go to council and why can’t the chair just decide what to do with the issues.
Kanner recommended avoiding terms ‘appointing’ a subcommittee.
Furuichi asked to amend the amendment and asked to remove the word “appoint” and replace it with “ask”
Motion to amend amendment accepted by mover and second
Voisin asked if Runkel is comfortable with CBC members sending him questions and then forwarding those questions and allowing other members to do research without going to council, or would he like councils blessing. Runkel said he thinks this is a question for councilors.
Gates suggested that if someone instigates the inquiry, they should be the point man who would liaise with chair and then discuss at the meeting, where, if it were unresolved they could bring in an expert on the matter.
Morris asked how would they determine which issues are policy or not. Runkel said this is something that council has to determine and disagreed with Kanner’s belief that most of the things on the memo are policy, saying that the CBC would be restricted to revenues and expenditures which are outlined in the budget document. He went on to state they would have to narrowly determine what the disputes would be, but they would deal with revenues and expenditures and would be taking advantage of the experience of the various committee members.
Cody used an example of a CIP issue she researched last year and pointed out that she finds it useful to use questions to make herself more confident in approving the budget.
Voisin agrees that it’s best for the questions to go to Runkel to field to council for them to determine if its policy or not.
Seffinger asked if this means that council would vote on whether it’s a policy issue and whether to forward it to the CBC. Voisin answered it would be a council vote to decide if the CBC would meet regarding the issue brought forward by the chair. Seffinger asked if it isn’t a council policy issue, where would it fit in regards to public meeting law if the CBC appoints a subcommittee and what effect would that have on staff time. Voisin said it would have no effect and if council determined that it was a CBC issue, then it would go forward to the CBC for consideration.
Marsh suggested that CBC staff should not be asked to move forward with any issues unless council approves it.
Morris noted that he will be voting no and referred to an example used by Cody where it might seem that the budget committee might override departmental decisions and thinks it’s too fine of a line between what is and isn’t a policy. Cody said she is just interested in the policy, not overriding the other committees.
That Citizens Budget Committee members be allowed to submit questions to the chair and that the chair sort them into categories to be forwarded to Council for approval and that the Citizens Budget Committee may then present such questions at their meeting, and that the chair can nominate a person to research a topic.
Roll Call Vote
Runkel (Chair) Yes
Department presentations & their prioritization
Kanner discussed the two elements of this being the standardization of budget presentations and prioritizing the presentations because there wasn’t enough time for some of the departments who needed it most. He pointed out that the city used to do standardized budget presentations and this is something that we could go back to. He went on to say that he has discussed this with department heads and they seem to be happy to go back to this format.
Furuichi said he thinks it is a good idea because if it’s standardized, the committee is more aware of what to expect. He said his only concern would be that they present metrics for informational purposes. Kanner noted they have been working on performance review measures and that there is a program that International City/County Management Association (ICMA) offers where the city can benchmark ourselves against other communities in the country. He also said that League of Oregon Cities started a program called LOC Data and he was beginning to look into using this as a benchmark against other Oregon cities.
Moran suggested that each division should outline their expenditures in the same way. Kanner said this is doable as they already supply the complete compensation plan for the entire city in the budget document and asked for clarification from Moran if he was asking for it to be broken out to into compensation for each division. Moran clarified that he would like all information on one page. Runkel asked which of the departments Moran would suggest be used as a template. Moran said he found that all of them needed to be looked at and needed to be made more transparent.
Voisin noted that many years ago some departments would have an entire night to do a presentation and she found this very helpful.
Kanner said he would like to hear from the CBC as a whole as to whether they would like to move to a standardized presentation.
Tuneberg projected a power point presentation for the Fire Department from 2008 as an example of the older, standardized template.
Rosenthal said he doesn’t believe templates are necessary and that presenting accomplishments are a waste of time as they are in the book and what needs to be focused on is what the differences are between fiscal cycles. He said challenges and key things need to be considered and that he doesn’t believe that certain departments need as much times as others and that departments should be scheduled more appropriately.
Kanner questioned if all departments need to do a presentation at all.
Lucas noted that the visual graphs are helpful.
Gates agrees with Kanner that some departments don’t need to present and would like to see bigger departments with more information be allotted more time as well as agreeing with the need for additional metrics and graphics.
Voisin left the meeting at 7:12 pm
Q&A on the financial report
Tuneberg gave an overview of the 3rd
quarter financial report.
Furuichi asked a question about System Development Charges (SDC’s) and if it was more income. Tuneberg explained that SDC’s are payments that developers pay when they want to build something. Furuichi questioned the 75.6% increase. Kanner said this was from SOU. Tuneberg noted that these are unpredictable and it is good for members who don’t understand portions of the reports to ask questions.
Moran referred to minutes of the May 2015 meeting and his question to Mark Holden regarding the Ashland Fiber Network (AFN) and how he can justify an increase of 11% in projected sales for AFN and noted that there is now 34.4%. He asked if there was any specific reason or is it due to a slowdown in the internet side or other parts of the business. Kanner said they anticipated revenue would accelerate after the first 6 months of the biennium because they would introduce new products and services and new rate structure which was introduced in January of this year. Kanner said they are actually right on track in terms of the predictions and this will reconcile over the biennium.
Moran referred to the 71% capital outlay in the Capital Improvements Plan (CIP) for Information Technology and noted a lot of it was front loaded for 2016. He went on to ask if that reflected that front loaded expenditure. Kanner confirmed that there were a lot of projects that needed to be done up front and assured that they won’t exceed that $250,000.
Furuichi asked what new services will be rolled out. Kanner couldn’t give specifics, but answered that they have been rolled out and the city has hired a new consultant to improve visibility and they are underway.
Runkel asked about a large amount of money in the bank and asked about the policy for keeping money in the government pool and city investments. Tuneberg explained that investments are managed by city recorder who over sees banking and treasury. He said the city has a 12 or 13 page investment policy which says what the city can and can’t invest in and what the cities goals are in liquidity and yield. They also look at what is the right amount to have in the general checking account and the rest of the money is placed in local government investment pool in investments not to exceed 18 months. Runkel asked if the city could buy back their own bonds with those investments. Tuneberg responded, yes, in theory. He went on to explain what is on that page is where money currently sits and that cash, liquidity and protection are high goals.
Runkel asked Tuneberg to explain the $291,000 increase in the checking account. Tuneberg explained that the city is moving into construction period and there are large demands on cash flow and that this isn’t an unusual increase.
Gates questioned Kanner about Health Benefit Fund (HBF) claims and noted they are high and asked about the underwriting. Kanner explained that there is less cash because the city paid half off of the loan from the reserve fund and assured that the HBF is well within budget.
Gates referred to one significant claim Kanner mentioned in previous meetings that was quite costly and Kanner made note that that particular person is no longer covered by the HBF.
Gates asked if the major CIP such as the reservoir and bridges are still going forward. Kanner answered that the city is just now going into construction season and couldn’t verify which projects are starting at that time, but they are out for bid and will be underway shortly.
Furuichi asked about the Insurance Services Fund (ISF) and noted that its $1.1 million dollars higher than last year and asked the cause. Kanner stated that it’s actually lower but because additional funds were transferred into the fund in the BN 2013-15 in anticipation for an increase in PERS rates but it never happened. Furuichi agreed to talk to Kanner in private about this matter.
Runkel referred to page 2 of the financial report and asked about personnel services noting that the city is only slightly above where it was in the previous biennium budget. Tuneberg noted there are various reasons for this, one being open positions and unsettled labor contracts.
Runkel questioned the decrease of $12 million budgeted for materials and services and noted that the city is actually spending more than the previous budget. Tuneberg explained that for the whole biennium they budgeted $92 million and it was $80 million actual in the prior budget so we are actually up $2 million.
Steff asked about the Library Administration increase to 118% use. Kanner said they had money left over from the Library levy and noted the city can only spend that on things that are allowed by that levy. As a result they thought the amount that was going to be left in that program was $47,657 but when the books closed and the city reconciled, what was actually there was $56,587. So even though they budget amount $47,657 they transferred $56,587.
Financial policies/Accounting methodologies (updates)
Tuneberg noted that while this is informational, he would like these updated before the next biennium budget. He explained the two documents and pointed out that there are some overlap in the two documents and that some of the changes correct that. Tuneberg focused on the Accounting Methodology book and said that he has cleaned up the language a bit and explained that as per Generally Accepted Accounting Principles (GAAP) and by Government Accounting Standards Board (GASB), it is required to say what methods are used when doing the city’s accounting. He reiterated this is a requirement not a policy.
Rosenthal left the room at 7.44pm.
Tuneberg went on to explain that in both documents there is a section for component units. Recent changes may change the method of accounting.
Tuneberg explained that the changes in the Financial Management Policies book are mostly clean up to align with the biennium budget process. He said he did highlight Fund Balance Policies which are set by a resolution and he highlighted a total of three items that he will take to council; updating of the Financial Management Policies and Account Methodologies; update of the GASB statement 54 required by GASB; which is the identifying End of Fund Balance EFB categories in different funds. He explained that the ending fund balance resolution is what the city thinks it needs to have as an operating balance to be fiscally viable. He explained that funds that have a history of susceptibility are targeted to have a certain minimum balance. These numbers are reviewed by rating agencies Moody's, Standard & Poor's, who measure the fiscal viability of funds. Tuneberg noted that the city is now a AA3 good rating.
Tuneberg pointed out another change would be the Parks Discretely Presented Component Unit which is now a Blended Component Unit. He also noted that there was a change in the fund policies because the component unit “Capital Equipment” has been split and there is a now a CIP Equipment Fund and this now has to be treated as an internal service fund.
Marsh pointed out that the budget states that there are changes in the documents and now there are changes in the current one being brought forward that aren’t in the budget document. Tuneberg explained that the policies were still under review when we did the budget. Marsh agreed to forward any questions she had to Tuneberg via email.
Furuichi asked if we comply with all of the GASB statements. Tuneberg said yes and added that the auditors assist with staying compliant. Furuichi asked if the GASB statements that we are asked to be compliant with could be referenced. Tuneberg suggested Furuichi reach out to him for any questions about compliance.
APPROVAL OF GRANT PROCESS AND ALLOCATIONS
To accept the Subcommittee recommended Economic, Cultural, Sustainability & Tourism Grant allocations as presented.
Marsh expressed her need to leave the meeting and it was that due to lack of a quorum, the committee would re-visit “Overview of major revenue streams” at the next meeting to be held on September 1st
That the meeting of the Citizen’s Budget Committee be adjourned.
The meeting was adjourned at 8pm.
Kristy Blackman - Administrative Assistant.