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HomeMy WebLinkAboutMinutes - Finance Committee - 09/15/2014 -r C•Finance Administrationit0215N.Mason2FloorF’rt •LLi 970.221.6788 970 221 6782 fax fcgov corn Council Audit &Finance Committee Minutes 9/15/14 10:00 a.m.to 11:00 p.m. CIC Room Council Attendees:Ross Cunniff,Bob Overbeck,Mayor Karen Weitkunat Staff:Mike Beckstead,Megan Bolin,Karen Cumbo,Mike DeKock, Kelly DiMartino,Chris Donegon,Andres Gavaldon,Amy Sharkey,Larry Schneider,John Voss,Katie Wiggett Others:Danielle Nater,Feeders Supply;Kevin Jones,Chamber Approval of the Minutes Ross Cunniff moved to approve the minutes from the August 18 meeting.Bob Overbeck seconded the motion.Minutes approved unanimously. Community Financial Report Mike Beckstead explained that Financial Services has historically provided Council with a monthly “General Fund Finance Report.”The current report is primarily focused on General Fund Revenue with only a high level expenditure summary and does not include any other data on City operations beyond General Fund activity. Financial Services has developed a Financial Report that is comprehensive of revenue and expenditures across the entire City.Mike walked through a draft of the new report with Council Finance.The new report is organized by Governmental Activities and Enterprise (Utility)activities and includes revenue, expenditures and capital plus a recap of various economic activity indicators.With this report,Staff aims to provide Council and the community with a more holistic view of finances across the City.Staff proposes publishing the new report on a quarterly basis. Bob Overbeck noted that it would have been helpful to have sample information in the comments section,so Council Finance could see what type of information would be included there.Mike said that Staff would use the comments boxes to explain what was driving changes in each fund.Bob said that he liked that the new report showed all the funds. The Mayor said that the change to the proposed new report seemed appropriate.She also noted that the comments in the comment boxes would probably have the most significant impact on how the report was received. Bob Overbeck suggested that another page be added showing the current year compared to the previous year to show trends.The Mayor said that such a page might be more appropriate on an annual City ofFortCoLLins report rather than a quarterly report.Staff will look into the suggestion. Council Finance supports moving forward with the new report as the “Quarterly Financial Report.” Year End Appropriations Mike noted that the annual Year End Budget Adjustment Ordinance is scheduled to go to Council on October 21.The Budget Adjustment Ordinance covers appropriations of 2014 unanticipated revenues or the appropriation of unassigned reserves to fund unanticipated expenditures.Staff is bringing the three most significant of those expenditures to Council Finance for review. First,Staff is asking for $800K to be appropriated for Snow Removal.The budget for Snow Removal is based on the historical average annual costs.Due to the heavy snows in 2013 and early 2014,the entire snow removal budget of $1/3M for 2014 has been spent. As is anticipated in heavy snow years,additional funding will be requested within the Budget Adjustment Ordinance using existing Transportation Fund reserves.The Transportation Fund ended 2013 with a balance of $15M of which $5.1M is available for additional costs such as this.If the fourth quarter is light on snow, these funds will return to the Transportation Fund. The Mayor asked if Staff is buying deicer now.Larry Schneider answered yes;Staff stocks up in the summer to avoid shortage in the winter.Staff is currently prepared for October and November.Bob Overbeck asked how much the cost of deicer has gone up since last year.Larry answered about 5-6%.The City is locked in to a contract with a supplier and has a very good storage space which allows us to store up at the best times for cost. Second,Staff is asking for $1,850K from reserves in the Benefits Fund for medical claims.Medical claims grew approximately 6%a year from 2009 through 2012.In 2013,claims increased 9%over 2012.In looking at the first eight months of 2014,the growth in medical claims is trending toward another increase of 9%or more,compared to 2013.Claims expenditures are expected to exceed budget by $1.3M;additional funds are also needed to cover unanticipated increases in other employee benefits.If the additional appropriations requested are not expended,these funds will return to the Benefits Fund at year end. Mike noted that one way Staff is working to alleviate the growing cost in medical claims is the creation of a Wellness Clinic which is anticipated to slow the growth of claims.Amy Sharkey explained that staff hoped to get 50%participation from Staff in the first year of the wellness clinic and then see growth in participation from there.The Wellness Clinic will be available to all employees and their dependents. The Mayor asked if Staff has considered raising the budgeted amount for benefits in the 2015-2016 budget, to ensure that we don’t have the same problem two years from now.Mike answered that Staff is looking into the implications for 15-16 and should have that information before the budget goes to Council.Kelly DiMartino noted that the base offer for 15-16 has risen from 13-14’s budget. Last,Staff is asking for $SSSK for Risk Management to cover Workers Compensation claims and Property Liability claims.Workers Compensation claims and Property Liability claims are budgeted based on the average claims over the past several years,and claims vary significantly from year to year,making them difficult to forecast.Mike gave several drivers for the increase in Property and Liability claims including hail damage.The Self Insurance Fund ended 2013 with a $3.GM fund balance of which $2.8M is surplus. City ofFortCoLLins Additional funding of approximately $855K will be requested from the Self Insurance Fund and,if not expended,will be returned at year end. Mike noted that Staff has taken large steps toward fostering a culture of safety in the City and is aiming or a 20-30%reduction in claims by 2017 due to safety efforts. Council Finance supports the appropriation for snow removal,benefits,and Risk Management. Status of Auditor Findings Mike DeKock presented the status of auditorfindings from the 2013 financial and compliance audit which were presented by the City’s auditor’s McGladrey,LIP at the July 2014 Finance Committee Meeting.In connection with the City’s annual audit,the City receives a report on the financial statements,internal control and compliance over financial reporting and internal control and compliance over Federal Awards. Each report received by the City included an unmodified or “clean”opinion which is the highest rating the auditors are permitted to provide in accordance with professional standards.This result demonstrates that the City’s financial statements are free of material misstatement and appropriate oversight is in place to maintain compliance over laws,regulations,contracts,grant agreements and other matters. The report on the financial statements did not include any material misstatements,deficiencies or findings.However,the auditors did report three audit misstatements in a separate document issued to the City Council.Each of the misstatements was due to improper cut-off of revenue recognition and the auditors determined that they were not significant. The Report on Internal Control and Compliance over Federal Awards included one repeat finding relating to the timely reconciliation of CDBG program income.Mike explained that this is a previous finding from the 2012 audit and was still unresolved because the solution proposed by management in 2013 was deemed inadequate.In 2014,the Social Sustainability and Accounting Departments met with HUD to better understand the compliance requirements and developed a new process for reconciling program income for all City Federal programs.The auditors have accepted this response and the issue is deemed to be resolved as of March 31,2014.