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HomeMy WebLinkAboutFinance MINUTES 07-27-21 Page 2 of 6 I CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: TAD J PILECKI CENTRAL CONTRA COSTA President SANITARY DISTRICT DAVID R. WILLIAMS President Pro Tens FINANCE COMMITTEE BARBARA D.HOCKETT MARIAHN LAURITZEN MICHAEL R.MCGILL MINUTES PHONE: (925)228-9500 Tuesday, July 27, 2021 FAX: (925)372-0192 2:00 p.m. www.centralsan.org (As a provided option, some attendees participated remotely) Committee: (Participated in-person) Chair Tad Pilecki Member Mike McGill Staff. Roger S. Bailey, General Manager (participated in-person) Philip Leiber, Director of Finance and Administration Steve McDonald, Director of Operations Jean-Marc Petit, Director of Engineering and Technical Services Emily Barnett, Communication Services and Intergovernmental Relatons Manager Danea Gemmell, Planning and Development Services Division Manager Edgar Lopez, Capital Projects Division Manager Stephanie King, Purchasing and Materials Manager (joined during Item 4.a.) Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer (left after Item 4.a.) Shari Deutsch, Risk Management Administrator (joined during Item 4.a.) Benjamin Johnson, Internal Auditor Amelia Berumen, Assistant to the Secretary of the District (participated in-person) 1. Notice This meeting was held in-person with a virtual participation option in accordance with the Brown Act as in effect under the Governor's Emergency Declaration related to COVID-19 and the Governor's Executive Order N-29-20 that allowed attendance by Board Members, District staff, and the public to participate by videoconference or other electronic means. The agenda included instructions for options in which the public could participate in the meeting. August 5, 2021 Regular Board Meeting Agenda Packet- Page 256 of 262 Page 3 of 6 Finance Committee Minutes July 27, 2021 Page 2 2. Call Meeting to Order Chair Pilecki called the meeting to order at 2:00 p.m. 3. Public Comments No public comments. 4. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred June 14, 2021 through July 8, 2021 Staff responded to questions from the Committee posed in advance and during the meeting. Particular discussions of expenditures, some with future action, are summarized below. Check 302854, EVOQUA Water Technologies, $17,461.15. (p. 14/15 of 67) The numeric gallons description for "Other Chemicals"payments were confirmed to be purchases of a Bioxide calcium nitrate solution. Chair Pilecki requested staff include such clarification in the description for anything that has a large purchase amount to reflect what was bought. Mr. Mizuno said he would work with staff to include this information and may need to add another line item as applicable. Check 302873, IEDA, $12,349.41 (p. 18 of 67J In response to Member McGill's inquiry of these monthly payments for labor negotiations, Mr. Leiber explained it was a negotiated contract term to pay a monthly fee rather than to pay on an hourly basis. Mr. Bailey added that this alternative approach was less expensive and their services have since concluded. Ms. King confirmed the contract ended June 30, 2021; the last payment for services reflected in this register was for June. Check 302874, Jackie Howes, $54,039.76 (reimbursement) (p. 18 of 67) Ms. Gemmell explained this payment was a reimbursement to a property owner of which the property was subdivided within the last four years. Subsequently, an incorrect meter had been applied to the business. Staff initiated the refund request and is in discussion with the other property owner for reimbursement of the incorrect meter billing. Check 302925, Kathleen Yates, $14,065.20 (reimbursement) (p. 29 of 67) It was noted that the Medicare reimbursement appeared to be a steep amount. However, as there is no statute of limitations currently in effect on the timing of reimbursements, this payment represents a request for expenses that were incurred over a period of time. There was a brief August 5, 2021 Regular Board Meeting Agenda Packet- Page 257 of 262 Page 4 of 6 Finance Committee Minutes July 27, 2021 Page 3 discussion that a Medicare reimbursement policy for time limitations may be future topic of conversation. Check 302946, CDW Government, Inc., $9,208 (software licensing) (p. 50 of 671 In response to Member McGill's inquiry about the number of licenses procured, it was clarified that a prior request for a software licensing update was prompted around the use of DocuSign software; this software, noted as "Teams Licensing"on the report, differs from that. Mr. Leiber explained staff looks at the number of licenses needed when software is purchased and also reviews the licensing periodically. He stated he was uncertain as to the number of licenses at this time, but would report back at a future meeting. Update: Subsequent review after the conclusion of the meeting noted that this was not for Microsoft TEAMS software but, instead, for TEEM software which is used for conference room scheduling and badging. Check 302957, Emtec Consulting, $59,770 (overage hours) (p. 52 of 67) Emtec is the vendor under contract for the new ERPI system and ongoing technical support. Mr. Leiber explained the contract spans over three years and has a quarterly allotment of support hours included. That allotment has been routinely exceeded during the implementation and has gone over by about $100,000 to date. He anticipates it will level off over time, but may remain at a higher level initially. Staff will provide further explanation as part of an ERP update on the overall plan to be presented to the Administration Committee at a future meeting. COMMITTEE ACTION: Recommended Board approval. b. Receive May 2021 Budget-to-Actual Financial Overview Mr. Mizuno stated the May 2021 financials had no items of concern. He noted that the upcoming June 2021 financials also represent the final month of the prior fiscal year. Typically, the fiscal year-end financials are wrapped up in August for preliminary reports; however, as this is the first year in the new Oracle ERP system, staff anticipates some challenges to this timeline and report availability for the August Finance Committee meeting target. More information will be provided as necessary. He continued with an overview of the memorandum and report information provided in the agenda materials. Operations and Maintenance (O&M) Revenues are far beyond the year-to- date projection due to Sewer Service Charges (SSC) that were held in the Enterprise Resource Planning management system August 5, 2021 Regular Board Meeting Agenda Packet- Page 258 of 262 Page 5 of 6 Finance Committee Minutes July 27, 2021 Page 4 O&M fund in order to pay off the UAAL2 balance with CCCERA3, approved by the Board last month. Although the Board did approve a budget amendment for this action last month, it will be reflected in the June report accordingly. He noted with appropriations regulations, staff is required to stay within total budget appropriations approved by the Board, and the June budget amendment was necessary to meet this compliance. The Board was not asked to approve an amendment to O&M estimated revenues for the UAAL payoff as the prevailing rules are not as strict for budgeted revenues as they are for appropriations. Accordingly, the June financial report will likely report actual revenues in excess of the adopted budget without an actual budget amendment for revenues. O&M Expenses are underbudget through May by 11.8%. Finance staff works closely in collaboration with Engineering and other groups to close the books for the fiscal year and account for accruals through June. Mr. Mizuno noted the variance will tighten and it is still projected that expenses will close the year underbudget by$5.6 million, as estimated in the adopted FY 2021-22 Budget; therefore, it will not be as high as reflected in the May year-to-date. Even with the UAAL payoff, budgetary variances for expenses are still favorable. Year-to-date capital expenditures through May 2021 were 34.4% lower than estimated and a variance tightening is also expected in June following the year-end accrual process, albeit spending will fall short of the 90% target. Overall, staff anticipates a favorable June 2021 year-end closing. Mr. Mizuno stated the Auditors'report is anticipated for release sometime in October or November. Member McGill inquired about fund spending projections that continue to fall under target, and with rates set each year, how does the system adjust so there is no overaccumulation of underspending. Mr. Bailey stated that with a set budget, rates are set to fund 90% of projected expenditures of the Capital Improvement Plan (CIP). Any variance is added-to or deducted-from the reserve. Mr. Mizuno stated that the projected $5.6 million in underspending of O&M expenses for FY 2020-21 is embedded in the budgeted SSC split to the O&M and Capital budgets. Since O&M is designed to retain enough reserves to meet the policy required level (five-twelfths of the following year's budget), and any excess shifts to the Capital Program to fund a Ten-Year CIP, such variance becomes available to address unmet needs. For example, the Solids Handling Facility Improvements Project, which recently came in with 2 Unfunded actuarial accrued liability 3 Contra Costa Employees' Retirement Association August 5, 2021 Regular Board Meeting Agenda Packet- Page 259 of 262 Page 6 of 6 Finance Committee Minutes July 27, 2021 Page 5 bids much higher than estimated. This provides a way to ensure the O&M reserve fund does not grow to excessive levels. COMMITTEE ACTION: Recommended Board receipt. 5. Other Items a. Review Risk Management Loss Control Report as of July 13, 2021 Ms. Deutsch reviewed the report and provided a brief update on some claims since this agenda posting, of particular note: • Item B, a prior fiscal year claim regarding an overflow, was closed. • Item D was a claim that became a litigated complaint, legal counsel has been assigned. • Item H is a recent claim that is under investigation, which does not equate to litigation, but does start the clock administratively. COMMITTEE ACTION: Received the report. 6. Announcements Chair Pilecki mentioned CCCERA recently approved its pension contribution rates for the upcoming fiscal year, which would have been a higher figure for the District (at 34.5%, verified subsequently) had it not just paid off its UAAL debt, which was at a significant lower rate. The expenditure listing included in this agenda packet, that the Board will formally approve at its next meeting, includes this URAL payoff (Check 302836). He requested staff include an announcement in the upcoming Board packet of the good news and outcome of this recent action. 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, August 24, 2021 at 2:00 p.m. Tuesday, September 28, 2021 at 2:00 p.m. Tuesday, October 26, 2021 at 2:00 p.m. 9. Adjournment— at 2:55 p.m. August 5, 2021 Regular Board Meeting Agenda Packet- Page 260 of 262