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HomeMy WebLinkAbout18.d. Committee Minutes-Finance 09-28-21 Page 1 of 7 Item 18.d. CENTRALSAN jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT October 7, 2021 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: SEPTEMBER 28, 2021 - FINANCE COMMITTEE - CHAIR PILECKI AND MEMBER MCGILL Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Minutes of 09-28-21 meeting October 7, 2021 Regular Board Meeting Agenda Packet- Page 165 of 200 Page 2 of 7 ArILAi CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: TAD J PHECKI CENTRAL CONTRA COSTA President SANITARY DISTRICT DAVID R. RHLIAMS President Pro Tent FINANCE COMMITTEE BARBARA D.HOCKETT MARIAHN LAURITZEN MICHAEL R.MCGILL MINUTES PHONE: (925)228-9500 Tuesday, September 28, 2021 FAX: (925)372-0192 2:00 p.m. www.centralsan.org (All attendees participated via videoconference) Committee: Chair Tad Pilecki Member Mike McGill Staff.- Roger S. Bailey, General Manager (joined during Item 4.a., left during Item 5.b.) Katie Young, Secretary of the District Philip Leiber, Director of Finance and Administration (joined during Item 4.a., left during Item 6.a.) Steve McDonald, Director of Operations (joined during Item 4.a.) Danea Gemmell, Planning and Development Services Division Manager (left during Item 5.b.) Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Stephanie King, Purchasing and Materials Manager (joined during Item 4.a.) Thomas Brightbill, Senior Engineer (left after Item 5.a.) Benjamin Johnson, Internal Auditor Olivia Ruiz, Accounting Supervisor Chris Thomas, Accounting Supervisor Shari Deutsch, Risk Management Administrator Amelia Berumen, 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-19, and the Governor's Executive Order N-29-20 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 7, 2021 Regular Board Meeting Agenda Packet- Page 166 of 200 Page 3 of 7 Finance Committee Minutes September 26, 2021 Page 2 2. Call Meeting to Order Chair Pilecki called the meeting to order at 2:00 p.m. 3. Public Comments None. 4. Old Business a. Follow-up on various matters discussed at the prior Finance Committee meeting held on August 24, 2021 Mr. Mizuno reviewed the memo provided in the agenda material in extensive detail. The following items represent clarification to items in the memo or require further staff action. Question 1 regardinq Hazmat Costs: Member McGill noted the last full sentence on p. 1 of the memo was unclear. Staff noted that, in short, the sentence omitted the County as the subject and should have reflected that the County is the Certified Unified Program Agency (COPA) responsible for the hazardous waste regulation oversight. Question 3 regardinq P-Card Expense Reports: Member McGill stated a recent change in the report structure was easier followed this month. He inquired about the last Committee review of a P- Card policy or process audit (i.e., who is issued a card, purchase limits, approval process), and, if not done recently, such review may be warranted. Mr. Leiber stated a P-Card transaction audit had been recently completed and discussion had occurred to conduct a broader audit as a subsequent step. He continued that it was not currently in the workplan, but could be added if it is a strong desire of the Committee. Mr. Mizuno noted there is a P-Card User Guide for cardholders, which he finds helpful. In response to Member McGill's restatement of information sought (noted above), Mr. Leiber stated staff will provide an agenda item memorandum on P-Card program parameters and controls to review with the Committee at a future meeting. Question 4 pertaining to Year-End Closing/Oracle Transition: Mr. Mizuno stated that staff has concluded there should not be any adverse impacts to the annual audit due to delays in the year-end closing process caused by the Oracle system transition. However, due to several challenges, such as the Oracle transition and divisional changes, management wishes to transition from a monthly to a quarterly financial reporting for at least the next six months, but possibly the foreseeable future. He noted that non-quarter interim months, such as July and August, do not add much value as October 7, 2021 Regular Board Meeting Agenda Packet- Page 167 of 200 Page 4 of 7 Finance Committee Minutes September 26, 2021 Page 3 spending is quite low in the beginning of a fiscal year and the bulk of revenues are only received in a few months of the year. He stated it would be helpful for staff to move towards more robust quarterly reports rather than provide monthly financial overviews, at least for a short-term for staff to get caught up and focus on current critical tasks, such as various audits currently underway, as well as the implementation of a new accounting pronouncement (GASB' 87). After some discussion, it was the Committee's preference to memorialize the request in a short memo for Committee approval at a forthcoming meeting. Question 5 related to particular recoup/reimbursement of Sewer Service Charges: Ms. Gemmell and Mr. Brightbill provided further clarification to the matter. The issue was caused when a parcel was split and the water meters were incorrectly assigned to the resulting parcels. Ms. Gemmell added that staff worked with District Counsel who confirmed that Central San is able to bill the parcel which had been underbilled. In response to questions posed on the length of time allowable to collect back payments, Mr. Brightbill explained that if Central San overcharges a customer, District Code states the customer is entitled to a refund up to four years of overpayment. Collecting back charges due to under-billing of customers is not addressed in the District Code. He noted that in staff's review of the issue with District Counsel, there were several sections of state law which could be applied. In the end, the decision was made to bill for three years under Code of Civil Procedure 338 (d). The Committee inquired if this was an issue which occurred frequently and if District Code should be revised to address the issue. Mr. Brightbill replied that he could not remember such a situation occurring within the time he has worked for Central San. Mr. Brightbill opined that if this issue were to occur again, perhaps a District Code update would be warranted. With that said, he stated he would revisit with District Counsel. This agenda item was discussed in great detail and length. The Committee appreciated the information provided and discussion. Member McGill stated he was appreciative, and is not critical, of all the work performed, but also wants to ensure that everything is operating properly as well as his own understanding. It is important to him that the Committee is providing very suitable oversight of the fiscal operations, especially during the challenges of the new system implementation. COMMITTEE ACTION: Received the update. GASB defined as Governmental Accounting Standards Board October 7, 2021 Regular Board Meeting Agenda Packet- Page 168 of 200 Page 5 of 7 Finance Committee Minutes September 26, 2021 Page 4 5. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred August 13, 2021 through September 17, 2021 The Committee was satisfied with staff responses to questions posed on various expenditures. No follow-up action was required. COMMITTEE ACTION: Recommended Board approval. b. Receive Quarterly Financial Review (unaudited) for quarter ended June 30, 2021 Mr. Mizuno thoroughly reviewed the (unaudited) quarterly report and its Executive Summary, as provided in the agenda materials. Staff is working through minor issues and will provide a summary of changes, if needed. He advised that the pre-audit year-end variances and report updates that are historically provided to the Committee, and subsequently the Board, will be provided next month. As it pertained to the City of Concord portion, Mr. Mizuno highlighted the reimbursement was significantly below 4.8%, and the difference directed to savings realized in the Operations & Maintenance (O&M) account expenses. He added that the Concord flow rate also decreased from 34.1% to 32.3%, compared to the prior year. Ms. Gemmell noted that the Concord Main Meter capital project was completed last year which changed the main meter to a more accurate mag- meter. She added that the City was pleased with Central San's initial study that was conducted which led to the project to upgrade the meter. Mr. Lopez concurred that the new meter is more accurate, but cautioned at looking at the flow rate percentage difference at this time. He stated that there had not been any big rainfalls since the meter was commissioned. Without major rains, it is hard to properly calculate or compare last year to this year. Thus, he advised to give the comparison more time in order to better understand any hard difference. Chair Pilecki noted concern on p. 1 of the overall report summary, in that some of the comparison figures are misrepresented. In particular, the one- time, unusual charge of$70.8 million to pay-off the UAAL2 payment distorts the comparison to other years. By taking out that one-time payment, the real budget percentage difference is in the range of 9.3 rather than the 4.8 figure shown for actual comparison. 2 UAAL defined as unfunded actuarial accrued liability. October 7, 2021 Regular Board Meeting Agenda Packet- Page 169 of 200 Page 6 of 7 Finance Committee Minutes September 26, 2021 Page 5 Secondly, he mentioned the recent Board decision to reject all bids for the Solids Handling Facility Improvements (Solids Project) and the significant expenditures that will now not occur next year. He asked that the monthly financials reports reflect the actual spending that will occur for capital projects with the removal of the Solids Project. Mr. Lopez stated he is working on new projections. Chair Pilecki inquired about the design expense for the Solids Project that was charged to capital and whether it would now be expensed to O&M. Mr. Leiber noted this was a good question that has started to be assessed. He explained that typically, when a capital project is cancelled, the costs would be expensed to O&M. However, he provided a few factors that will be considered in the Solids Project final assessment. Some design work remains of value to proceed separately and needs to be weighed. Moreover, with the 2020 regulatory accounting policy that was adopted, the Board could elect to treat O&M as Capital and vice versa. He stated staff will look at all options to see what is appropriate for the Solids Project expenses incurred to date. COMMITTEE ACTION: Recommended Board receipt. 6. Other Items a. Receive annual update on Strategic Risk Inventory/ Enterprise Risk Management (ERM) Program Ms. Deutsch reviewed the presentation and reported that the ERM Team made few changes in the scoring or ranking of strategic risks since its last meeting. Chair Pilecki expressed an interest in a subsequent review of strategic risks to consider how the decision to modify the Solids Project approach, the impact of recent supply chain concerns and economic volatility, as well as vaccination and return to work issues may affect Central San. Member McGill concurred. COMMITTEE ACTION: Received the update. b. Review Risk Management Loss Control Report as of September 13, 2021 Ms. Deutsch reviewed the report provided and noted the addition of two new claims. One is more of a construction project punch-list item rather than a claim, but the property damage will be remedied. COMMITTEE ACTION: Received the report. October 7, 2021 Regular Board Meeting Agenda Packet- Page 170 of 200 Page 7 of 7 Finance Committee Minutes September 26, 2021 Page 6 7. Announcements None. 8. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items The Committee reviewed the unscheduled items section on the list and concurred to remove the first two items listed since sufficient information has been provided in subsequent updates since initially requested. COMMITTEE ACTION: Received the list and provided input to staff. 9. Future Scheduled Meetings Tuesday, October 26, 2021 at 2:00 p.m. Monday, November 22, 2021 at 2:00 p.m. Tuesday, December 21, 2021 at 2:00 p.m. Member McGill confirmed he would not be able to attend the November and December Committee meetings and that Member Hockett would attend as an alternate. 10. Adjournment— at 3:46 p.m. October 7, 2021 Regular Board Meeting Agenda Packet- Page 171 of 200