Loading...
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. 11 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. 2 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 3 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