MINUTES FOR CITY COUNCIL STUDY SESSION
Monday, November 16, 2009
Mayor Stromberg called the meeting to order at 5:30 p.m.
Councilor Navickas, Silbiger, Jackson, Voisin, Chapman and Lemhouse were present.
1. Look Ahead Review
City Administrator Martha Bennett reviewed the items on the Council Look Ahead.
2. Discussion regarding what ideas do the Mayor and Council have about the Fiscal Stability goal.
Financial Director Lee Tuneberg provided the staff report and shared information on the financial management polices that drive ending fund balances, contingencies, budgets, objectives as well as accounting methods, budgeting policies, debt service and how to move forward in the future. The management policies also addressed various fund balances, how the City deals with annual revenue, long-term revenue, annual operations and long-term infrastructure changes.
Council and staff discussed the definition of fiscal stability and that staff should identify the priority with Council prioritizing or making adjustments as necessary. The level of services to provide needed to be determined as well as funding the services. Staff clarified the City needed to decide what it was trying to achieve in the community and find out if the actual service provided supported the level of service required at an affordable price.
Council expressed concern regarding rate and property tax increases on the citizenry, the affect of Measures 5 and 50 across the State and the need to research rate structures that address the regressive nature of rate and fee increases. Other points discussed were living within the City’s means, providing too much service and knowing the actual cost of services in order to make educated decisions.
Staff explained the difficulty in quantifying actual costs of services in the budget process and how the loss of institutional knowledge due to staff turn over disrupted financial reporting and budgeting.
Council noted the City’s large debt service, building reserves, and used the City of Medford as an example of how maintaining cash reserves has enabled Medford to provide minimum services regardless of the economy.
Council thought the fiscal situation would get worse before improving and attributed it to major increases in both health care costs and the Public Employee Retirement System (PERS), sections of the budget where the only control was eliminating positions and eventual inflation and acknowledged the need to plan and have a strategy going forward. Other concerns expressed were the impacts to future community from delaying the capital and deferring maintenance.
Council and staff discussed having a future Study Session on the financial management policy.
Council directed staff to determine the percentage and justification for each fund and have Council make adjustments if needed.
3. Discussion regarding would the City Council review and update the current investment policy.
City Recorder Barbara Christensen explained how the current policy adopted in 1998 ensured cities had an investment policy in place that protected the investments as well as the person making investment decisions. Changes to collateralization, expanding diversification information in the policy to show percentage per issuers and banking institutions no longer having investment divisions prompted a review and update to the current investment policy.
Ms. Christensen clarified per policy, investors formerly in the investment divisions of banks now working for brokerage firms were no longer recognized as primary dealers. Revising the policy would allow the City Recorder to continue working with the same investors as long as they were a primary dealer of the Federal Reserve Bank, reported voluntarily to the Federal Reserve Bank New York or affirmed they have met the security dealers’ capital adequacy requirements.
Collateralization was further explained with upcoming changes to the law that will increase insurance coverage to collateralized securities from 100% to 110% making it more expensive for banks to participate.
Ms. Christensen explained how the Local Government Investment Pool has become riskier with investments valuing at a lesser value which brings the interest rate in the pool down.
Staff discussed with Council changing the annual review to every other year.
Meeting adjourned at 6:55 p.m.
Assistant to the City Recorder