HomeMy WebLinkAboutMinutes - 01/11/2016 - Finance and Personnel Committee (2)FINANCE & PERSONNEL COMMITTEE
MEETING REPORT
January 11, 2016, 5:30 PM
McHenry Municipal Center
In Attendance: Committee Members: Chairman Alderman Wimmer, Alderman Curry and
Alderman Condon. Absent: None. Also in Attendance: City Administrator Morefield, Deputy
City Administrator Hobson; Chief of Police Jones; Public Works Director Schmitt; Economic
Development Director Martin; and Deputy City Clerk Geraghty.
1. Call to Order: Chairman Alderman Wimmer called the meeting to order at 5:30 PM.
2. Public Input: None
3. Discussion and Motion to recommend to City Council the adoption of an expanded Fund
Balance and Reserve Policy.
Chairman Wimmer asked City Administrator Morefield to begin the discussion on the draft
policy. Administrator Morefield acknowledged the committee's desire for the development
of a purchasing policy and explained the policy is still in development. Pending review by
City Attorney McArdle, it will be presented to the committee at the next meeting in March.
Administrator Morefield then provided background on the purpose of establishing an
expanded Fund Balance and Reserve Policy. He stated the Government Accounting
Standards Board (GASB) is responsible for setting generally accepted accounting principles
(GAAP) that prescribe how governments should report their financial information with their
annual audited financial statements. All the city's financial statements are prepared in
accordance and in conformance to these standards, which has allowed the city to maintain
its high bond rating lowering the city's overall borrowing costs.
In 2009, the GASB issued Statement 54, Fund Balance Reporting and Government Fzcnd
Type Defcnatcons, which is intended to enhance the usefulness of fund balance information
by clarifying and improving the consistency of fund balance classifications and provide
additional guidance for governmental fund type definitions; and in 2012, the city adopted a
Resolution establishing fund balance policies as required by GASB 54. Although city audits
have been conducted based on the GASB 54 guidelines, staff is recommending the city's
existing fund reserve policy be expanded to include the addition of specific language for
establishing and maintaining fund balance reserves. The proposed expanded policy defines
fund balance amounts as defined by GASB classifications:
1. Non -Spendable: amounts for assets that are not in a spendable form such as inventory or
prepaid items.
2. Restricted: amounts constrained for specific purposes by external entities usually a
higher level of authority such as the Federal government or the State of Illinois.
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Examples include revenues reported in MFT Fund restricted for certain street and
infrastructure improvements in accordance with IDOT.
3. Committed: amounts constrained by the city for a specific purpose and must be
designated by Council through formal action.
4. Assigned: amounts constrained fora specific purpose and designated by the Finance
Director with advice and consent of the Finance & Personnel Committee
5. Unassi�rred: the remaining fund balance amounts reported within the Governmental
Funds that are not assigned to one of the previous four categories.
To classify fund balance categories other than "unassigned," GASB Statement 54 requires
formal approval by the City Council of a Fund Balance and Reserve Policy. Administrator
Morefield explained the draft policy provided to the committee this evening provides
specific information concerning the designations and categorization of fund balance for the
city's governmental funds and achieves the criteria as identified in GASB Statement 54.
Administrator Morefield noted information is also included in the meeting packet that
identifies current fund balance levels and the impact adoption of this policy may have on
them.
Chairman Alderman Wimmer opened the floor for questions.
Alderman Curry asked why we have separate funds for band and pageant. Director Lynch
explained accounting procedures recommend the establishment of a fund when fees are
charged; as with the Alarm Board fund from which the city receives revenue. In the past,
the city levied the Band Fund however it really is not necessary today.
Alderman Curry asked about Hunterville and why it is over budget. Director Schmitt
explained that the annexation of the Hunterville subdivision, which began at the request of
its residents, included the extension of water and sewer and the establishment of a special
service area (SSA) for water. The City Council awarded a bid to a contractor who began to
purchase equipment for the project. Not known to the city, the subdivision held a backdoor
referendum and voted the SSA down. The equipment purchased by the contractor had to be
paid for by the city, which is reflected as a negative balance in the Hunterville fund.
However, the good news is the city was able to put the equipment to good use by trading -in
some of the pumps purchased for Hunterville for pumps that suit the city's needs and are
still in use today. Alderman Curry suggested the $180,000 deficit be transferred to the
General Fund.
Alderman Cuny said he would prefer to see the fund balance based on the previous year's
actual expenditures rather than the budget expenditure amount adding we seem to be
holding more than we need. He also suggested that a 4-month fund balance be the target
with action required if it hits a 3-month level.
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Alderman Condon agreed there should be something to flag spending that may need to be
addressed. However she stated that she would rather have more reserves than less and is
agreeable with what is presented tonight.
Chairman Alderman Wimmer called for a motion.
Alderman Condon made a motion, seconded by Chairman Alderman Wimmer to forward
the Fund Balance and Reserve Policy as presented to the full City Council for consideration.
Voting Aye:
Voting Nay:
Absent:
Motion carried.
Condon, Wimmer;
Curry.
None
4. Discussion regarding the Draft FY 16/17 — FY 20/21 Capital Improvement Program (CIP)
Chairman Alderman Wimmer asked City Administrator Morefield to lead the discussion on
presentation of the Draft FY 16/17 — FY 20/21 CIP.
Administrator Morefield told the Committee that typically a more developed CIl' document
is presented to the committee however tonight staff is seeking feedback regarding the
projects presented prior to preparing the document in its final form. Administrator
Morefield informed the committee that prior to the meeting, Alderman Curry emailed
suggestions and questions regarding the CIP, including a suggestion that staff use more
realistic dollars when presenting projects in the first year of the program. Administrator
Morefield said he agrees and added that tonight he will convey the needs as identified by the
Directors for the first year of the CIP and in the future staff will provide more realistic
numbers.
Administrator Morefield noted that the Streets/Sidewalks category is usually the city's first
priority in the CIP. The proposed CIP for 2016/17 list has already changed with the recent
award of an additional $500,000 from the Council of Mayors for the Bull Valley/Curran
Road improvements project. Every project proposed in the five-year CIP is included in the
document presented tonight along with a summary for Year 1 projects. All Year 1 projects
are ranked with "A" as the highest priority.
Alderman Curry stated now that he understands the process staff uses to determine the CIP
and that Year 1 numbers will now be more realistic, he has no further questions or
suggestions about the process used to develop the CIP.
Alderman Condon stated she thinks the projects proposed in the first year of the plan are
good.
Alderman Curry said he is aware capital budgets are tough to develop and everyone
involved did a nice job. Administrator Morefield said credit should go to the Directors,
Superintendents and Commanders who worked hard to provide the information. He also
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said he will respond to the list of suggestions and questions posed by Alderman Curry and
forward his responses via email to the committee. Administrator Morefield summarized by
stating as the committee and staff move into the budget process, the CIP will be a good
reference to use.
Chairman Alderman Wimmer asked if there was any new business to discuss and there was
none.
Adjournment:
Motion by Condon to second by Curry to adjourn the meeting at 6:10 PM.
Voting Aye:
Voting Nay:
Absent:
Motion carried.
Condon, Curry, Wimmer.
None
None
Reviewed and Approved:
Date: ,/%%/1-�1 ✓�/ � 5, , 2016
Alderman R. Wimmer, Chairman