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Home My WebLink AboutMinutes - 10/11/2000 - Finance and Personnel Committee FINANCE AND PERSONNEL COMMITTEE �, MINUTES October 11, 2000 Committee Members Present: Chairperson Alderman Murgatroyd, Alderman Baird and Alderman McClatchy Others In Attendance: City Clerk Atthoff, City Administrator Lobaito, Assistant Administrator Maxeiner, Mayor Cuda, Aldermen Bolger and Glab, Senior Account Clerk Lanphier, and Auditor John Eder of Eder, Casella 8a Company. Chairperson Alderman Murgatroyd opened the meeting at 6:30 p.m. He stated the purpose of this Finance and Personnel Committee meeting was to obtain a review of the City of McHenry 1999-2000 audit from City Auditor John Eder of Eder, Casella& Company. City Auditor John Eder and recently hired Senior Account Clerk Lanphier were introduced. 1999-2000 AUDIT REVIEW City Auditor, John Eder provided the committee with a brief review of the 1999-2000 audit. He noted the following highlights: On Page 6 the Combined Revenues/Expenditure Statement compares the �, revenues and expenditures for all the Governmental �znd types from 1999 and 2000. Mr. Eder noted the Capital Outlay line item was reflective of the City's recent capital project activity. In 1999 the expense was only $1.06 million and in 2000 the expense was $2.70 million. Concurrently the Fund balance in 1999 was $1.4 million and in 2000 was $.70 million. He also noted the creation of a Special Service area for the Route 31 traffic lane improvements and signal installation increased 2000 revenue totals by$455,000. Mr. Eder noted the 1999-2000 audit did not provide a comprehensive overall picture as the City of McHenry was involved in numerous on-going capital projects. Page 8 of the Audit is the Combined Revenues/Expenditure Statement which compares 1999 and 2000 revenues and expenditures for the City's proprietary and fiduciary funds. Mr. Eder noted the Police Pension fund includes investment revenues [mutual funds and T-notes] which are based on a fair market vatue. He explained unrealized gains aren't readily visible and the fund does experience some fluctuation depending on current market conditions. He also noted it was the intent of the Police Pension Board to invest these monies over a significantly long period of time. Mr. Eder also noted the City of McHenry sold the River Road property in � Finance Carr�mittee Minutes ,� Octaber 11, 2000 �'age Two 1999. This revenue is noted in the Entetp�ise F'und a� a NonOper�ting Income line item. The detailed statements of each fund begin on page 31 with the Sspecial Revenue Fur�d detail starting on pag� 34. Mr. Eder also noted the IIlinois Municipal Reti3rement and Social Secu�ty Fund concluded the fiscal year with a credit balance. Although the credi� amount w�s small, he suggested consicleration be given to a levy reallocatian. The de�cit was noted in Footnote #14 on Page 29. Spec�c financials for the City of McHenry's Proprietary �,tnds begin on Page S 1. The Water and Sewer Balance S�.eet includes �nancial, breakdowns by individual. funds including Operarions and Main�enance Bond and Ir�terest Depreciation Capital Development Special/Project Assessment. Mr. Eder referenced page 61, Statement of Revenues and Expenditures in L.. the Folice Pension �nd. He noted the actual unreaiized lnsses tutaling $316,252, explaining the 'T'reasu�y Note investments experienced significant maxket fluctuations. Market fluctuations of this nature can affect the Police Pension actuariai study. Mr. Eder Clarified fur�her, if �nvestments are 1�eld to maturity there would be no �realized losses. Cansideration should be given to adjusting tax levy amounts if the Police Pension Fund continues to experience market losses. Mr. Eder also nvted, the City df McHenry's Pension Fund is currently in a very healthy condition. MANAGEMENT LETTER Mr. Eder referenced his management letter. He noted the Project Assessment Fund was estabiished for the collection of funds and repayment af deht for the construction of the Mci-ienry s�hores project. It is their opinion a fund shortage vvill be experienced p�ior to the �nal ioan payment. He cited a vaarietty of reasons for the shortage; including loan prepayment by participating residents as well as the investment of Ioan repayments at a lower rate than the funding rate level. Mr, Eder xecommended the City determine the actual �hortage figure aand develop a comprehensive plan to address this financial shortfall. �-- The management letter also addresses the lack of a foxmal documented accounting policy and pxocedures manual. Chairpez�son Alderman Murgatroyd noted the change in personnel, staffing xesponsibilities and Finance Committee Minutes � fJctober 11, 2000 Page Three Computer upgrades have made the completion of this manual a complex and Iengthy process�. He stated conversations with staff have resulted in the development of a six-month time frame to complet� a substantial pQliey and procedures draft manual. The completed manual will �e �n place prior to next year's audit. The management letter also notes uncollateralized depc�sits of$85,998. Mr. Eder noted this problem had been subsequently addressed. Lastly the manag�ment letter notes interest on certain bank accounts and property tax interest were not being allocated among the individual funds invo�ved. This issue has also been subsequently addressed and corrected. Overai� Mr. Eder noted all previously noted probiems during the 1998-99 audit had been addressed and corrected. He noted the bank stat�ements had been reconciled and updated. He opined the City ��nx'3r?; financial accounting process was in good s�i�pe. L- Some discussion followed regarding executing a services a$reement in addition tot he standard audit agreement as per past practice. Mr. Eder noted his firm previously had an on-going services agreer�ent with the City to provide �upport, make audit adjustments, conduet a six-mOnth review of bank statements, �eeonciliations and fund balanees. Addition�lly, a review and adjustment, if necessazy, of the Police Pension investment account(s) would be provided. It was the consensus of the committee to direct staff to pursue a service agreement for additional support services with the firm af Eder, Casella 8� Company �n an amount not to exceed $2,50Q. Assistant Administrator Maxeineer distributed a financial proposal to correct the P�roJeet Assesament F'und shortf�ll. He noted some adjustment to this year's budget must be made to accammodate his proposal. It was the cor�sensus of the committee to address this propdsal at the flctober 1$� Finance Committee Meeting. MOT4R FUEL TAX AND 1990 C�E11i�R11L 4BLIGAT�QN Bt?ND REFINAN�INQr ISSUE Assistant Administrator Maxeiner infoxzned the committee a five year �- Streets Improvement Program Motor Fuel T� Bond Is�ue and the 199l� Municipal �uilding Construction General Obligation Bond Refinancing were presented for bid today by Fi,nancial Consultant Harold War�+en. Finance Committee Minutes � October 11, 2000 Page Four Assistant Administrator Maxeiner presented the following bid results: 2000 Series A Bonds $3.5 Million Motor Fuel Tax Bonds FINANCIAL INSTITUTION NET INTEREST CC?ST% William Hough 8v Company 4.9228% Robert Baird 4.9286% Harris Bank/Woodstock 4.9519% A.G. Edwatds 4.9650% Griff`in, Kubik, Stephens 8s Thompson 5.0110% Soloman, Smith Barney 5.0600% U.S. Bank Corporation No Bid 2000 Series B Bonds $1.4 Million 1990 General Obligation Bond Refinancing FINANCIAL INSTITUTION NET INTEREST COSTS % William Hough 8v Company 4.6000% Bernaxdi Securities 4.9030% Harris Bank/Woodstock 4.9200% � Griffin, Kubik, Stephens 5.0499% A.G. Edwards No Bid Soloman, Smith Barney No Bid Assistant Administrator Maxeiner noted the maturity schedule and principal payment amount for the 1990 General Obligation Bond Refinancing will remain the same. The estimated refunded sa.vings over the next five years is approximately $77,000. Assistant Administrator Maxeiner explained execution of a bid contract with the low bidder, William Hough Sv Company will insure retention of the interest rates as presented. Motion by Baird, seconded by McClatchey to recommend to full council the Mayor's execution of a bid contract with William Hough 8v Company for the financing of the $3.5 Million Motor Ftiiel Tax Streets Improvement Bonds and the $1.4 Million 1990 General Obligation Bond Refinancing subject to the verification of the 4.9228% and 4.6000% respective interest rates. Voting Aye: Baird, McClatchey, Murgatroyd Voting Nay: None Absent: None Motion carried. � OCT. 30. 2000 11 :4bAM PM TAX NQRTHFIELD 847 646 2460 N0. 5420 P. 2 � Finance Committee Minutes October l l, 2000 Page Five Finance Chairperson Alderman Murgatroyd also explained consideration and discussion regarding supervisory salary adjusttnents originally scheduled for che October l8��nance Cornmittee Meeting will be postponed to a futu�re date. It was the consensus of the committee to reschedule thc October 18� �nance Committee Meeting to 7:Ot}p.m, as opposed to 6:30 p.m. as only one item will be cvnsidered. �1+Iotion by McClatchey, seconded by Baird to adjourn the meeting at 7:20 p.m. Voting Aye: Baird, McClatchey, Murgatrayri Vvting Nay: None A.bsent: None Motion carried. The meeting was adjoumecl at 7;20 p.m. � "/ h�.naz�zce Committee hairp on Murgatroyd �