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HomeMy WebLinkAbout16.a. Committee Minutes-Finance 11-16-20 Page 1 of 6 Item 16.a. CENTRALSAN jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT December 3, 2020 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: NOVEMBER 16, 2020 - FINANCE COMMITTEE - CHAIR CAUSEYAND MEMBER NEJEDLY Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Minutes of 11-16-20 meeting December 3, 2020 Regular Board Meeting Agenda Packet- Page 100 of 106 Page 2 of 6 ,or76— I CENTRAL SAN CENTRAL • ■ • COSTA . IMHOFF PLACE, MARTINEZ, CA 9AS53-A37 SPECIAL MEETING OF THE BOARD OF DIRECTORS: CENTRAL CONTRA COSTA MICHAELMCGILL President SANITARY DISTRICT TAD JPILECKI FINANCE COMMITTEE President Pro Tem PAUL H CAUSEY JAMES A.NEJEDLY M I N U T E S DAVID R, WILLIAMS PHONE: (925)228-9500 Monday, November 16, 2020 FAx 3�2-oI92 www.cententralsan.org 1:00 P.M. Executive Conference Room 5019 Imhoff Place Martinez, California (All attendees participated via videoconference) Committee: Chair Paul Causey Member Jim Nejedly Guests: Andrew Brown, CFA, Director, Senior Portfolio Manager, HighMark Capital Management (left after Item 6.b.) Angela Tang, Client Services Coordinator, PARS (left after Item 6.b.) Staff. Roger S. Bailey, General Manager Katie Young, Secretary of the District Phil Leiber, Director of Finance and Administration (left after Item 8.) Jean-Marc Petit, Director of Engineering and Technical Services (left after Item 8.) Stephanie King, Purchasing and Materials Manager Kevin Mizuno, Finance Manager Teji O'Malley, Human Resources and Organizational Development Manager (left after Item 8.) Todd Smithey, Finance Administrator (left after Item 8.) Shari Deutsch, Risk Management Administrator Christina Gee, Management Analyst (left after Item 4.a.) Donna Anderson, Assistant to the Secretary of the District 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- December 3, 2020 Regular Board Meeting Agenda Packet- Page 101 of 106 Page 3 of 6 Finance Committee Minutes November 16, 2020 Page 2 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. 2. Call Meeting to Order Chair Causey called the meeting to order at 1:00 p.m. 3. Public Comments - None. 4. Old Business a. Receive update requested by Committee at October 20, 2020 meeting on the Employee Engagement Survey This item was heard immediately after Item 6.b., which was taken out of order. Ms. Gee reviewed the information in the memorandum included with the agenda material, noting that the Employee Engagement Survey was launched just prior to the onset of the COVID-19 pandemic. A number of the responses received reflected the pandemic crisis rather than what goes on at the District during normal times. For that reason, Mr. Bailey said the decision was made to pause the survey. It will be re-launched when the timing is more appropriate. COMMITTEE ACTION: Received the information. 5. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred October 3, 2020 through November 5, 2020 Staff responded to 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 staff's responses. Two noteworthy items were as follows: Check No. 300890 to E-Builder for$104,610.2 One of Member Causey's questions was the annual licensing fee for 75 users of E-Builder software. Mr. Leiber explained that this software service has been used at the District for several years and is presently being used heavily for the Solids Handling Facility Improvements, District Project 7348, December 3, 2020 Regular Board Meeting Agenda Packet- Page 102 of 106 Page 4 of 6 Finance Committee Minutes November 16, 2020 Page 3 and other capital projects. Mr. Petit said the software is used by staff, design engineers, contractors, subcontractors, and construction managers. It is also being used with increasing frequency by staff in support of the Collection System. Mr. Leiber said a lot of thought went into how many licenses were needed, and if the District were to use fewer licenses, the cost per license would increase. Check No. 300908 to Neilsen Merksamer(Special Counsel for Transition to Division-Based Elections) for$94,154.30 Member Causey requested a tabulation of the estimated total cost of the transition to division-based elections, including outside legal counsel, demographer, staff time, Board stipends, etc. Mr. Leiber said the tally of costs to date was approximately$245,000, not including the demographer's fee (estimated to be approximately$15,000), attorney fees after October, and recent staff time. Member Causey requested that the Board be made aware of these costs at the upcoming public hearing on the transition scheduled for later in the day. During the discussion, Chair Causey noted that the expenditures listing included one or more payments related to contracts with a consultant 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. b. Receive Quarterly Financial Review for Quarter ending September 30, 2020 Mr. Mizuno summarized highlights of the Quarterly Financial Review, the report for which was generated for the first time by the new Oracle Enterprise Resource Planning (ERP) software. In response to a question from Member Causey regarding the apparent $645,000 shortfall in Sewer Service Charge (SSC) revenue for the quarter, Mr. Mizuno said it was a normal timing issue and not indicative of any projected shortfall in SSC revenue. Member Causey asked if the same was true for commercial customers and schools. Mr. Bailey said the amounts due from customers who are billed on a volumetric basis are placed on the property tax rolls for collection and covered by the Teeter Plan. The schools are billed directly by the District using water consumption data from the prior year. Member Causey said he was most curious about revenues from schools, particularly next year. COMMITTEE ACTION: Recommended Board receipt. December 3, 2020 Regular Board Meeting Agenda Packet- Page 103 of 106 Page 5 of 6 Finance Committee Minutes November 16, 2020 Page 4 6. Other Items a. Review Risk Management Loss Control Report as of November 10, 2020 Ms. Deutsch reviewed the presentation included with the agenda material. COMMITTEE ACTION: Received the report. b. Review Highmark Capital Management Government Accounting Standards Board (GASB) 45 Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-trust Reports for the Third Quarter of calendar year 2020 This item was heard out of order, immediately following Item 3, after which the agenda order reverted to Item 4.a. After a brief introduction by Ms. Tang, who represents PARS, the trust administrator for Central San's OPEB Trust and Pension Prefunding Trust, Mr. Brown, who manages the investments for both funds, provided an overview of the 2021 economic forecast. He said the recession will most likely end during the fourth quarter of 2020 after a period of 30% growth in the third quarter and 5% growth in the current quarter. Gross domestic product (GDP) growth is currently positive in the range of 3.4%-4.8%. Interest rates are expected to remain low, probably for the next two to three years. He expects modest GDP growth next year, provided there is continued progress in terms of therapies for COVID-19 patients and manufacturing and distribution of vaccines. He also reviewed returns for both the OPEB Trust and Pension Prefunding Trust, details for which were included with the agenda material. COMMITTEE ACTION: Received the update. C. Receive information on Contra Costa County Employees' Retirement Association's (CCCERA) valuation as of December 31, 2019 and 2020 GASB 68 Financial Valuation Highlights Mr. Mizuno introduced the information contained in the memorandum included with the agenda material, stating that this exercise is done annually to review portfolio reports for funding valuation (an aggregate valuation for all CCCERA participants which establishes required contribution rates for the next fiscal year) and reporting valuation (a GASB 68 valuation which allows participants to close out their books in their audited financial statements). Mr. Mizuno said the CCCERA funding valuation for calendar year 2019 reflected a very good return of 14.4%, significantly higher than CCCERA's December 3, 2020 Regular Board Meeting Agenda Packet- Page 104 of 106 Page 6 of 6 Finance Committee Minutes November 16, 2020 Page 5 long-term assumed earnings rate of 7.0%. He then provided a brief overview of the information included with the memorandum. The Committee had no questions, but Chair Causey commented that the unfunded pension liabilities had been reduced over the last eight years from $142 million to $64 million, which was great. He said Central San is on track to assure employees are well covered in terms of their retirement. COMMITTEE ACTION: Received the information. 7. Announcements a. Mr. Bailey announced that staff will be making a presentation to the full Board on November 19, 2020 about an emergency situation that recently arose when a sewer force main was damaged in Orinda. b. Chair Causey expressed his sincere gratitude to staff, both new and old, for their support during his tenure over the last eight years at Central San. He said it has been a joy and pleasure to be involved with the Finance Committee. He has learned a great deal and wished to commend staff for their dedication and knowledge, and express appreciation for their assistance and support over the years. C. Member Nejedly concurred with Chair Causey, noting that the Committee has asked some difficult questions and staff has never failed to respond. His experience as a Member of this Committee has been fantastic, thanks in large part to staff. 8. 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. 9. Future Scheduled Meetings Tuesday, December 15, 2020 at 2:00 p.m. 10. Adjournment— at 2:01 p.m. December 3, 2020 Regular Board Meeting Agenda Packet- Page 105 of 106