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Home My WebLink AboutFINANCE MINUTES 11-21-17Page 2 of 6 Jl Central Contra Costa Sanitary District REGULAR MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FINANCE COMMITTEE MINUTES Tuesday, November 21, 2017 2:00 p.m. Executive Conference Room 5019 Imhoff Place Martinez, California (-:nmmittaa Chair Jim Nejedly Member Tad Pilecki Staff. - Roger S. Bailey, General Manager Donna Anderson, Provisional Secretary of the District Ann Sasaki, Deputy General Manager Phil Leiber, Director of Finance and Administration Danea Gemmell, Planning & Development Services Division Manager Edgar J. Lopez, Capital Projects Division Manager (left after Item 3.d.) Thea Vassallo, Finance Manager Chris Thomas, Finance Administrator Anika Doria, Administrative Assistant Temp BOARD OF DIRECTORS: PAUL H CA USEY President JAMES A. NEJEDLY President Pro Tent MICHAEL R. MCGILL TAD J PILECKI DAVID R. WILLIAMS PHONE: (925) 228-9500 FAX- (925) 676-7211 www.centralsan.org Invited Guests: Vikki Rodriguez, CPA, Maze & Associates (left after Item 3.a.) Andrew Brown, Director, and Randy Yurchak, Highmark Capital Management (left after Item 4. a.) 1. Call Meeting to Order Chair Nejedly called the meeting to order at 2:00 p.m. Chair Nejedly stated that the agenda items would be considered in the following order after any Public Comments are made: Item 4. a., 3. d., 3. a., 3. b., 3. c., 4. b., 4.c. and 4.d. December 7, 2017 Regular Board Meeting Agenda Packet - Page 235 of 255 Page 3 of 6 Finance Committee Minutes November 21, 2017 Page 2 2. Public Comments None. 3. Items for Committee Recommendation to Board a. Review draft Position Paper to accept (1) the comparative audited Financial Statements for fiscal years ended June 30, 2016 and 2017 performed by Maze & Associates, and (2) the auditor's memorandum on internal control and required communications for the fiscal year ended June 30, 2017 - Invited guest: Vikki Rodriguez, Certified Public Accountant of Maze & Associates This item was taken out of order immediately following Item 3.d. Ms. Rodriguez, CPA, of Maze & Associates, presented the audited financial statements for fiscal years ended June 30, 2016 and 2017 and concluded that the District received a clean unmodified opinion again this year, which is the cleanest opinion the District can receive. The audit also implemented Governmental Accounting Standards Board (GASB) pronouncement number 74, which created two new financial statements for the Other Post -Employment Benefits (OPEB) Trust - Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position, along with new charts and footnotes. Ms. Rodriguez stated that all reporting was found to be in compliance, and the audit process was smooth, with accurate and timely responses from District staff. In addition, she commented that there were no material weaknesses or significant deficiencies noted as part of the auditor's internal control review relating to the audit process. COMMITTEE ACTION: Reviewed and recommended Board acceptance. b. Review draft Position Paper authorizing the General Manager to execute two contracts with (1) Public Financial Management (PFM) and its associated firms and (2) Sperry Capital, Inc. in amounts not to exceed $462,000 and $100,000, respectively, to provide financial advisory services over a period of five years Mr. Leiber reviewed the background information in the draft Position Paper, noting that the proposed contracts are in anticipation of bond offerings over the next few years. PFM and Sperry Capital will be able to assist Central San in making cost-effective and efficient financial choices in the future. The majority of the work will be done by PFM, with Sperry December 7, 2017 Regular Board Meeting Agenda Packet - Page 236 of 255 Page 4 of 6 Finance Committee Minutes November 21, 2017 Page 3 Capital serving as backup and advising on specialized topics. The specified dollar amounts for consulting work are not commitments; they are simply not -to -exceed limits of what could be spent. The dollar amounts for the bond advisory work of $150,000 anticipates three offerings over a five-year period. Member Pilecki suggested that the other four firms who responded to the Request for Proposal (RFP) be included in the Position Paper. He also asked if the proposed tax reforms are going to impact Central San's ability to sell bonds or raise rates. Mr. Leiber stated that it is too early to know what may be in any final tax bill, but as of now he is not aware of anything that would be too concerning for the District regarding new debt sales. As more is known, the effects will be assessed by Central San and the financial advisors. Member Pilecki said he was comfortable recommending Board approval. Chair Nejedly said he would not be voting in favor of the contracts because he does not support the use of bond funding. COMMITTEE ACTION: The Committee was split on this matter, with Member Pilecki in support and Chair Nejedly opposed, so it will be presented to the full Board for consideration with no Committee recommendation. C. Review Expenditures dated December 7, 2017 The Committee reviewed the expenditures included with the agenda materials, and staff responded to questions. COMMITTEE ACTION: Reviewed and recommended Board approval. d. Review October 2017 Financial Statements and Investment Reports This item was taken out of order immediately following Item 4.a. Ms. Vassallo reviewed the year-to-date budget variances for both Operations & Maintenance (O&M) and the Sewer Construction Fund, and staff responded to questions. Ms. Vassallo also pointed out that a new capital spending chart was added to the Sewer Construction Fund section of the reports as requested by the Committee at its September meeting. Edgar Lopez was present and discussed the S-curve trend and stated that December 7, 2017 Regular Board Meeting Agenda Packet - Page 237 of 255 Page 5 of 6 Finance Committee Minutes November 21, 2017 Page 4 with the new implementation of the Project Management Information System (PMIS) this information will be more accurate in the future. COMMITTEE ACTION: Reviewed and recommended Board receipt. 4. Other Items a. Review and provide input on Highmark Capital Management Governmental Accounting Standards Board (GASB 45), Other Post - Employment Benefits (OPEB), and Pension Sub -trust Quarterly Report (Third Quarter 2017) — Invited guests: Andrew Brown, Director, and Randy Yurchak, Highmark Capital Management This item was taken out of order, immediately following Item 2. Mr. Brown provided an overview of the report included with the agenda material. He reviewed investment changes that took effect in 2017 including transitioning to index funds for domestic equity, and moving to a separately managed fixed income portfolio run by the same managers and strategies. These changes are anticipated to save over $27,000 in expenses annually. He also complimented the Board's discipline in contributing to the OPEB Trust and new Pension Sub -trust. COMMITTEE ACTION: Received the report. b. Review September 2017 Procurement Card Statements Ms. Vassallo reviewed the Procurement Card Statements included in the agenda materials and responded to questions. COMMITTEE ACTION: Reviewed the Procurement Card Statements and provided input to staff. C. Review Moody's Annual Issuer Comment Report Mr. Leiber explained that staff was recently provided with an abbreviated annual ratings update from Moody's and they gave staff the courtesy of reviewing the update for factual accuracy. He said the report affirmed the District's favorable rating and is indicative of the strong oversight the Board has provided. COMMITTEE ACTION: Received the report. December 7, 2017 Regular Board Meeting Agenda Packet - Page 238 of 255 Page 6 of 6 Finance Committee Minutes November 21, 2017 Page 5 d. Receive list of Scheduled/Parking Lot items COMMITTEE ACTION: Received the list. 5. Announcements None. 6. Future Scheduled Meetings a. Tuesday, December 19, 2017 at 2:00 p.m. 2018 Meeting Dates To Be Determined 7. Suggestions for Future Agenda Items None. 8. Adjournment — at 3:08 p.m. December 7, 2017 Regular Board Meeting Agenda Packet - Page 239 of 255