Loading...
HomeMy WebLinkAboutMinutes_Miscellaneous_02/26/1999_Finance & Administration Committee P T VILLAGE OF TEQUESTA Post Office Box 3273 - 250 Tequesta Drive - Suite 300 o Tequesta, Florida 33469 -0273 - (561) 575 -6200 Fax: (561) 575 -6203 Do VILLAGE OF TEQUESTA FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES FEBRUARY 26, 1999 I. CALL TO ORDER AND ROLL CALL The Tequesta Finance and Administration Committee held a regularly scheduled meeting at the village Hall, 357 Tequesta Drive, Tequesta, Florida, on Friday, February 26, 1999. The meeting was called to order at 9:00 A.M. by Chair Carl C. Hansen. A roll call was taken by Betty Laur, the Recording Secretary. In attendance were the following Committee members: Chair Carl C. Hansen, Co -Chair Joseph Capretta, and Co -Chair Ron T. Mackail. Also in attendance were Village Manager Thomas G. Bradford, Village Clerk Joann Manganiello, and Department Heads. II. APPROVAL OF AGENDA Co -Chair Mackail made a motion to approve the agenda as submitted. Co -Chair Capretta seconded the motion. The vote on the motion was: Carl C. Hansen - for Joseph N. Capretta - for Ron T. Mackail - for The motion was therefore passed and adopted and the agenda was approved as submitted. III. COMMUNICATIONS FROM CITIZENS (NON-AGENDA ITEMS) FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 2 ------------------------------------ Hattie Siegel, 498 Dover Road, questioned the amount of expenses for code enforcement and the amount of revenue from ,building permits. The response was that code enforcement was included as an expense of the Police Department, and the amount received from building permits was included in Licensing and Permits on page 94 of the audit and was $284,140, which also included occupational licenses. Co- Chair Capretta inquired whether the Community Development Department was making a profit. Village Manager Bradford explained they were making a profit and the profits accumulated in retained earnings. IV. REVIEW OF AUDIT REPORT FOR FISCAL YEAR ENDING 9/30/98. DANIELA' RUSSELL, CPA; N0WLSN HOLT & MINER Edward Holt and Daniela' Russell were present, and Mr. Holt made a presentation. Mr. Holt explained that the audit report as presented was a draft, pending receipt of an attorney's letter regarding how to treat a certain transaction as well as minor typing changes. Mr. Holt reported the financial statements were fairly presented for the fiscal period ending 9/30/98. Since no one could predict what would occur in the year 2000, an exception for the year 2000 had been included, which was currently standard in all municipal audits. Format used was the same as in prior years. Mr. Holt explained that approximately $1,059,000 within the General Fund was undesignated fund balance, and the total General Fund balance was $1,286,790, with some of that balance designated for certain projects. Mr. Holt indicated that the $1,059,000 was.a healthy fund balance, since it was recommended that at least two months of general expenses, or 12%-14W, should be on hand, and this was approximately 20 %. Co -Chair Capretta commented his general thrust in this audit was to compare it to last year's audit, which was not a normal year, and to determine if the trend was toward improvement, and if all of the problems from the prior year had been resolved. Mr. Holt FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 3 explained that the fund balances were approximately the same as a year ago, and that the amount of fund balances was set by the municipality. Statements comparing budget to actual showed General Fund expenditures approximately $200,000 more than revenues; however, transfers were $216,000, and the $200,000 was in line with the amount budgeted. Mr. Holt pointed out that the enterprise funds had operating income before non - operating revenues of $630,841, and that the focus in a governmental fund was to have user charges that would support the cost of the system. Net income for the enterprise funds increased approximately $846,934, the bulk of which was from the water enterprise fund. Mr. Holt explained there had been a change in the accounting method used for tangible personal property in that the fixed asset capitalization threshold had been increased from $500 to $750, allowing more time in accounting for fixed assets. Another accounting change described by Mr. Holt was implementation of GASB Accounting and Financial Reporting for Certain Investments and External Investment Pools during 1998. This was a required change in governmental standards, and would change the accounting method for all investments to fair market value instead of cost. The beginning retained earnings as of October 1, 1997 were restated to recognize the net unrealized appreciation. Chair Hansen commented most variances were stable, and from his business experience he would have expected to see only approximately 50$ favorable to indicate proper budgeting, so that he wondered whether the Village was being too conservative in their budgeting process. Mr. Holt responded the village had many years experience in going through the budgeting process so that they had a good idea of what their revenues and expenses would be; however, if an event was anticipated that would result in an unfavorable variance Administration should go to the Village Council to request a line item change before that unfavorable event occurred. During ensuing discussion, Daniella Russell commented the village budget was on a fund level, not a line item level FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 4 ------------------------------ - - - - -- where changes could be made to line items, and that the fund must balance. Mr. Holt commented the budget was within 98% of what had been anticipated which indicated a lot of time had been spent in the budget process. Mr. Holt confirmed that the budget process was being done correctly and nothing needed to be changed, and explained that unfavorable variances would mean money had been spent that had not been appropriated, which would be a serious problem. Co -Chair Capretta questioned what budgeted projects had not been done, to which Village Manager Bradford responded those were the Police and Fire facilities and the Village Hall. Mr. Holt called attention to new notes to financial statements. Note 27- Subsequent Events, was a new financial statement note. The three events listed in Note 27 were the refunding of the Jupiter water increase charges, the contract to purchase a portion of Tequesta Plaza from JMZ Properties, and the NationsBank line of credit obtained to finance capital projects and to refinance the current line of credit. Mr. Holt explained that activities of the General Fund at the department level were presented in more detail and compared to the budget starting on page 76 of the audit report. A statistical section was included in the report in order to qualify for a certificate of financial reporting. Mr. Holt reported that in the section titled Other Reports comments had been made to comply with the requirement to report on compliance and internal control. No compliance problems had been encountered during the course of the audit. In the management letter, the following problems had been noted. A problem regarding internal control was inadequate segregation of duties (a recordable but not a material condition), mainly resulting from the small staff size. The auditors recommended that another person perform checks on procedures relating to bank reconciliations and recordkeeping functions for investments, which could be FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 5 ------------------------------------ another employee or a Village Councilmember. Another problem was with collection procedures, and the auditors recommended that an automated system be used to eliminate duplicate efforts. The auditors recommended an individual be designated to oversee all grant activities. Co -Chair Capretta stated an action item list was needed to resolve these issues, and requested that Village Manager Bradford report at the next meeting of this committee what would be done. Mr. Holt explained that the balance of the management letter in the audit covered compliance with Florida statutes. Mr. Holt commented that segregation of duties was very important, and the village should have a plan and procedures to address all the cycles of cash, investments, revenues, expenditures, and risk management and to check the most important items - -cash and investments- -more frequently. Mr. Holt advised the final audit report would be submitted after receipt of the attorney's letter. Financial Director Connie Holloman reported changes had been made regarding increased security, with the Police Department now making bank deposits. Duties had been segregated in regard to investments in that the Finance Director could only initiate and transfer to Village accounts, and the village Manager had been designated to make transfers to accounts outside the village. Finance Director Holloman explained that it was anticipated the new computer system would resolve other issues in regard to segregation of duties, and would contain automatic collection procedures by modem transfer at night to the Finance Department. Planner Kara Irwin had been designated to oversee grant activities. Village Manager Bradford commented he was thinking about contracting grant coordination with a Jupiter firm because that was really a full -time job if grants were actively pursued. Co -Chair Capretta commented that since the village was now in a FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 6 position to provide matching funds, more grant money could be sought. The amounts of grants received during the past year were noted by Ms. Russell. Ms. Russell commented it was a full -time job to pursue and monitor grants because if a grant was found to be out of compliance the money would not be funded. Chair Hansen commented no grant money had been considered when Stormwater Utility projects were planned, and the village would be able to achieve more with grants. Chair Hansen recommended an outside agency or additional staff to handle grants full -time. Village Manager Bradford explained that the drainage project on Tequesta Drive was not closed because the contractor had not made the final list of all payroll information required for compliance. Mr. Holt advised grants all had different rules and regulations, so if a new staff person was hired they should be experienced in grants or an agency should also be hired until that person had been fully trained. Mr. Holt commented that the Palm Beach County staff was fully trained in grants. village Manager Bradford advised if final items for the audit report were received in time that the report would be presented to the Village Council at their next meeting. Ms. Russell explained that the attorney's letter needed was to come from the Village's attorney, stating an opinion on whether the pension fund should be recorded as one fund or three funds. V. STATUS REPORT ON FINANCE DEPARTMENT, DANIELA' RUSSELL, CPA, NONLEN, HOLT & XINER Ms. Russell explained that comments in last year's management letter had now been dropped, since those items had been resolved. Ms. Russell reported she spent 120 accounting hours working on the 1997 audit and only 17 accounting hours during the 1998 audit. Ms. Russell commended the Finance Department for their work, and stated FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 7 the difference in accounting hours had saved the Village $12,000. Ms. Russell explained that Finance Director Holloman had reorganized the staff, and reported on Ms. Holloman's hard work on the water refund. Ms. Russell reported several differences which had been found during this years audit as opposed to last year, including that the books had been closed as of that day, February 26, 1999, for year end 9/30/98; and that in the previous year the books were not closed until late April. At this time, cash had been reconciled through October, 1998, which was three months ahead of last year. Ms. Russell stated she believed the Financial Department was now on the right track. Finance Director Holloman reported that only village staff had been used in getting the water refund checks out, and they had worked late. Ms. Holloman reported a letter had been sent to all delinquent accounts advising their refund checks were being held until their accounts were up -to -date, but that the accounts would just be credited for those not up -to -date by the next week. Approximately 200 -250 checks had been returned, for which staff was in the process of finding current addresses and re- mailing. Approximately 30 checks were being reviewed by the Village Attorney because the recipients were deceased or could not be located. Ms. Russell commented that the Finance Department was short one staff person besides Ms. Holloman during this project. Chair Hansen stated the Committee was pleased to hear the many positive changes which had been made in the Finance Department and complimented Finance Director Holloman on her work. Co -Chair Mackail commented on the great improvement over a year ago when the financial records had been in such a mess, and recommended the auditors be hired to perform random reviews on investments. Mr. Holt responded his firm would be willing to perform that service for items listed by the Village Council and would be able to propose a price after formulating procedures for each control cycle that the FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 8 ------------------------------------ village wanted checked. Mr. Holt advised that the checks would be done on a surprise basis and recommended the focus be on cash and investments. Co -Chair Mackail agreed the concentration should be on investments and cash. Co -Chair Mackail commented the Village had been criticized in the newspaper as fiscally unresponsible and not being in control of their finances. Co -Chair Mackail reported he had spoken with Finance Director Holloman, who had answered his questions, and he was satisfied the village was in control of their finances. Co -Chair Mackail stated the variances were within 2 %; the tax base had grown from $229 million when he had become a Village Councilmember to $410 million; there had been a 12W decrease versus inflation in the ad valorem tax rate; and stressed the importance of providing this financial information to the public. Co -Chair Mackail commented the Village had the ability to meet current debt obligations and the current Village debt was very low, although the village Council was constantly criticized for spending a lot of money, and Village spending was below the average of other municipalities. Mr. Holt commented the Village had almost no debt. Co -Chair Mackail commented he would like the facts brought out because he had heard comments the Village was out of control. Co -Chair requested at the next Village Council meeting that an overview be presented to answer those comments, highlighting such items as the tax base, income per capita, and ability to meet future debt. Co -Chair Mackail commented he wanted the Village Council to realize they had the information available to defend the village. Co -Chair Mackail expressed concern that since over the years the Village had been very conservative with employment, and with the current growth more employees might be needed, which would also help with segregation of duties, and requested these issues be addressed. Co -Chair Mackail commented he did not agree the undesignated fund balance should contain only two months operating expenses, but recommended it be $700,000 to $800,000. Co -Chair Mackail suggested that when the FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 9 financial information was delivered to the community, Public Safety facilities should be discussed, and stressed that the community must be assured that the village's ability to meet obligations was very, very good. Co -Chair Mackail stated he was very interested in planning for five years ahead, and that the Village must move forward in the planning process. Co -Chair Mackail expressed congratulations to Finance Director Hollomon and stated he was delighted to see that only $2,500 had been needed for accounting services for the audit report this year as opposed to $14,000 last year. Co -Chair Capretta expressed concern that the current political campaign painted a picture of the Village being deep in debt. Co -Chair Capretta commented there would be big growth with the completion of the rental apartment project, which was anticipated to bring approximately 1,000 residents, and the village was in a position to look forward because they now had revenue for projects. Co -Chair Capretta questioned the percentage of revenues and income the Village spent on debt service, to which the response was that it was very low. Co -Chair Capretta stated the public needed to know that the Water Department and the Village were two separate entities, and the Water Department's debt was not a problem. Co -Chair Capretta requested the potential growth of the Village be projected over five years to determine the amount of debt service the Village could accommodate. Co -Chair Capretta commented if he were now running for a Village Council seat he would run on the platform of decreasing taxes every year. Co -Chair Capretta suggested the village could buy the old hardware store to be used for Village Administration. Co -Chair Capretta stated he wanted to know how much money was available in order to help the Village Council decide on projects or to lower taxes, that the Planning Department should be allowed to plan, and that a 5 -year plan was needed. Co -Chair Capretta expressed his opinion the public must be shown the Village was financially responsible. Co- Chair Mackail commented that December 1998 was the first FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 10 time the village had had an interim financial statement, which could help enormously in planning, and planning would help the Village Council make decisions. Co -Chair Capretta stated the Village had not done a good job of communicating, as evidenced by a current candidate running on a platform of the Village being deeply in debt. Chair Hansen commented people were saying Tequesta's taxes were too high and residents could not afford them, but he only paid approximately $400 in taxes to Tequesta, and the village's taxes were not high and no one needed to move out of the Village because they could not afford taxes. Suggestions were made regarding how to get the message out to the public. Co -Chair Mackail made a motion to accept the audit report for fiscal year ending 9/30/98 contingent upon receipt of the attorney's letter which mould change some of the numbers and that a synopsis of discussion from this meeting be presented at the next village Council meeting to provide an overview of cash, ad valorem taxes, etc. Co -Chair Capretta seconded the motion. The vote on the motion was: Carl C. Hansen - for Joseph N. Capretta - for Ron T. Mackail - for The motion was therefore passed and adopted and the agenda was approved as submitted. Vi. ANY OTHER MATTERS Co -Chair Capretta requested a list of action items from this meeting and that the audit firm come up with a list of procedures from which the village could choose for random checks. Chair Hansen thanked the auditors for their report. FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES February 26, 1999 Page 11 ------------------------------------ VI. ADJOURNMENT Co -Chair Mackail made a motion to adjourn the meeting. Co- Chair Capretta seconded the motion. The vote on the motion was: Carl C. Hansen - for Joseph N. Capretta - for Ron T. Mackail - for The motion was therefore passed and adopted and the meeting was adjourned at 10:34 a.m. Respectfully submitted, Betty Paur Recording Secretary ATTEST: Joann Manganiel Village Clerk DATE APPROVED: OF