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HomeMy WebLinkAbout15.b. Committee Minutes-Finance 09-22-20 Page 1 of 6 Item 15.b. CENTRALSAN SANITARYjdf A- hom CENTRAL CONTRA COSTA , . October 1, 2020 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARY OF THE DISTRICT SUBJECT: SEPTEMBER 22, 2020 - FINANCE COMMITTEE - CHAIR CAUSEYAND MEMBER NEJEDLY Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Minutes of 09-22-20 meeting October 1, 2020 Regular Board Meeting Agenda Packet- Page 99 of 104 Page 2 of 6 I CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: CENTRAL CONTRA COSTA MICHAELMCGILL President SANITARY DISTRICT TAD JPILECKI FINANCE COMMITTEE President Pro Tem PAUL H CA USEY JAMES A.NEJEDLY M I N U T E S DAVID R, WILLIAMS PHONE: (925)228-9500 92 Tuesday, September 22, 2020 FAx cent alsan. rg www.centralsan.org 2:00 p.m. Executive Conference Room 5019 Imhoff Place Martinez, California (All attendees participated via videoconference) Committee: Chair Paul Causey Member Jim Nejedly Staff. Roger S. Bailey, General Manager Katie Young, Secretary of the District Phil Leiber, Director of Finance and Administration Jean-Marc Petit, Director of Engineering and Technical Services Danea Gemmell, Planning and Development Services Division Manager Stephanie King, Purchasing and Materials Manager (joined during Item 4.d.) Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer Bryan McGloin, Management Analyst Laci Kolc, Risk Management Specialist (joined during Item 4.c.) Donna Anderson, Assistant to the Secretary of the District Amelia Berumen, Senior Administrative Technician (left after Item 4.b.) 1. Notice This meeting was held in accordance with the Brown Act as in effect under the State Emergency Services Act, the Governor's Emergency Declaration related to COVID- 19, and the Governor's Executive Order N-29-20 issued on March 17, 2020 that allowed attendance by Board Members, District staff, and the public to participate and conduct the meeting by teleconference, videoconference, or both. The agenda included instructions for options in which the public could participate in the meeting. October 1, 2020 Regular Board Meeting Agenda Packet- Page 100 of 104 Page 3 of 6 Finance Committee Minutes September 22, 2020 Page 2 2. Call Meeting to Order Chair Causey called the meeting to order at 2:00 p.m. 3. Public Comments None. 4. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred August 6, 2020 through August 31, 2020 Staff responded to a list of questions posed in advance of the meeting by Chair Causey and during the meeting by Member Nejedly regarding the expenditures listing. The Committee expressed satisfaction with most staff responses but requested additional information on the following item: Page 18— Check No. 229480 to Dig-Smart, LLC - $10,000 Mr. Mizuno stated that this payment was for an annual license for services provided by Dig-Smart in support of the Collection System Operations Division. Chair Causey asked how this service differed from USA North 811, the national call-before-you-dig phone number, to request the approximate location of buried utilities, which he believed the District also utilizes. Mr. Mizuno said he would report back at the next meeting after checking with Collection System Division Manager Paul Seitz. During the discussion, Chair Causey noted that the expenditures list included one or more payments related to contracts with Woodard & Curran, with whom he currently has a consulting contract on matters unrelated to Central San. Therefore, in an abundance of caution, he said he would be recusing himself from voting on approval of expenditures at the upcoming Board meeting. COMMITTEE ACTION: Recommended Board approval and follow-up information on one expenditure item as noted. b. Receive July 2020 Budget-to-Actual Financial Overview and Investment Portfolio Reports Mr. Mizuno explained that the July overview and reports were the first to be generated by the new Oracle Enterprise Resource Planning (ERP) system. In response to a question from Chair Causey, Mr. Mizuno explained that staff accrues amounts at the end of each fiscal year for work performed in that October 1, 2020 Regular Board Meeting Agenda Packet- Page 101 of 104 Page 4 of 6 Finance Committee Minutes September 22, 2020 Page 3 fiscal year for which invoices have not been received. Accruals are made for ongoing capital projects and other more general expenditures so the following year's expenses are not overstated. The accruals are reversed once the anticipated billings are received, which was the case for District Projects 7348 and 7351 in the amounts of$1.4 million and $673,000, respectively, as reflected in the July 2020 Financial Overview Report. Differences in initial estimates versus invoices received can temporarily result in negative balances in accounts. Member Causey inquired about the status of the new ERP system. Mr. Mizuno said the process was going as expected, with many minor issues to address. Staff has been working tirelessly to address these issues and it will take a bit more time to finish sorting through them. All in all, he said staff remains excited to have the new system in place and is looking forward to the advantages it will provide in terms of reporting and other efficiencies. Chair Causey said the Board also is excited about the new system and asked Mr. Mizuno to relay to staff that their dedicated effort is appreciated. Mr. Leiber noted that staff will brief the Administration Committee on the current ERP status on September 29. COMMITTEE ACTION: Reviewed and recommended Board receipt. C. Receive Pre-Audit Fiscal Year 2019-20 Capital Improvement Budget Year- End Status Report This item was heard out of order, after Item 4.d. Mr. Lopez reviewed the presentation included with the agenda material and staff responded to several questions from the Committee Members. COMMITTEE ACTION: Reviewed and recommended Board receipt. d. Review draft Position Paper to receive Fiscal Year (FY) 2019-20 Pre-Audit Year-End Financial Statement Summary Report; and consider alternatives for allocation of (a) $10.48 million FY 2019-20 favorable budget variance and (b) $1.25 million budgeted in FY 2020-21 toward employee-related unfunded liabilities This item was taken out of order, immediately after Item 4.b. Mr. Leiber reviewed the presentation included with the agenda material. Chair Causey asked if staff was expecting a shortfall in the Operations and Maintenance (O&M) fund owing to the FY 2020-21 Sewer Service Charge (SSC) Rate Relief Program. He suggested leaving the proposed $1.25 million budgeted for employee-related unfunded liabilities in the O&M fund in October 1, 2020 Regular Board Meeting Agenda Packet- Page 102 of 104 Page 5 of 6 Finance Committee Minutes September 22, 2020 Page 4 the event there is a significant reduction in SSC and property tax revenue due to the weakened economy. Mr. Leiber replied that the Rate Relief Program was factored into the allocation of the SSC for FY 2020-21. If SSC revenue from billings and collections go as forecasted, even with the Rate Relief Program in effect, the O&M reserve should end up as planned at the end of the fiscal year. Mr. Bailey opined that it is important that the Board remain steadfast in reducing employee-related unfunded liabilities. He recommended staying the course and allocating the budgeted$1.25 million toward the goal of further reducing pension obligations. Mr. Leiber noted that the staff recommendation also includes transferring $2.15 million of the favorable budget variances to the O&M Rate Stabilization Reserve Account. Member Nejedly pointed out that pension funding should be monitored as it gets closer to the full funding level given the issues that can arise in that situation. Chair Causey inquired about the Rate Relief Program for schools since remote learning has continued this school year. Mr. Bailey said staff will continue to monitor the situation and reassess at an upcoming financial planning workshop. COMMITTEE ACTION: Recommended Board approval of the staff recommendations for (a) utilization of the FY 2019-20 favorable budget variances and (b) allocation of the $1.25 million budgeted in FY 2020-21 for employee-related unfunded liabilities. e. Receive update on Fiscal Year 2020-21 Sewer Service Charge Revenues Mr. Brightbill reviewed the presentation included with the agenda material. Slide 3 of his presentation indicated approximately$0.9 million anticipated positive variance to date between the final FY 2020-21 SSC budget (after factoring in the Rate Relief Program) and the amounts billed on the tax roll and calculated on direct bills. Nevertheless, Chair Causey expressed concern about the potential for shortfalls due to economic pressures. It was noted that Central San is on the Teeter Plan, under which Contra Costa County provides all revenue to Central San and then handles collection of any uncollected property taxes and fees. Chair Causey said that he understood the Teeter Plan only pertained to residential customers, and he was also concerned about the potential for reduced ad valorem tax revenue. Mr. Mizuno indicated that the Teeter Plan covers charges for both residential and non-residential parcels. Mr. Brightbill said staff will continue to track FY October 1, 2020 Regular Board Meeting Agenda Packet- Page 103 of 104 Page 6 of 6 Finance Committee Minutes September 22, 2020 Page 5 2020-21 SSC revenues and ad valorem taxes and will provide a status report at an upcoming financial planning workshop. The Committee was very pleased to have received the update. Mr. Brightbill said it was a combined effort on behalf of staff, adding that personnel from the Contra Costa Water District had been very responsive and helpful in this endeavor. As a concluding remark, Chair Causey said he was concerned about how reductions in water consumption due to the COVID-19 pandemic in the current fiscal year will affect SSC revenue in the next fiscal year for non- residential customers. COMMITTEE ACTION: Received the update, provided input to staff, and recommended Board receipt. 5. Other Items a. Review Risk Management Loss Control Report as of September 4, 2020 In the absence of Risk Management Administrator Shari Deutsch, Ms. Kolc briefly reviewed the Loss Control Report with the Committee. COMMITTEE ACTION: Reviewed the report. 6. Announcements a. New Fixed Income Manager at HighMark Capital Management COMMITTEE ACTION: Received the announcement. 7. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items COMMITTEE ACTION: Received the list. 8. Future Scheduled Meetings Tuesday, October 20, 2020 at 2:00 p.m. Tuesday, November 17, 2020 at 1 :00 p.m. Tuesday, December 14, 2020 at 2:00 p.m. 9. Adjournment— at 3:17 p.m. October 1, 2020 Regular Board Meeting Agenda Packet- Page 104 of 104