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HomeMy WebLinkAboutFinance MINUTES 10-26-21110ENTRAL SAN REGULAR MEETING OF THE BOARD OF DIRECTORS: TAD J. PILECKI CENTRAL CONTRA COSTA President SANITARY DISTRICT DAVIDR. WILLIAMS President Pro Tent FINANCE COMMITTEE BARBARA D. HOCKETT MARIAHN LAURITZEN MICHAEL R. MCGILL MINUTES PHONE: (925) 228-9500 Tuesday, October 26, 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 Katie Young, Secretary of the District (left during Item 5.a.) Philip Leiber, Director of Finance and Administration Steve McDonald, Director of Operations Jean -Marc Petit, Director of Engineering and Technical Services Danea Gemmell, Planning and Development Services Division Manager Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Olivia Ruiz, Accounting Supervisor Christopher Thomas, Accounting Supervisor (left during Item 5.a.) Amelia Berumen, Assistant to the Secretary of the District Dee Dee Barrett, Administrative Services Assistant Notice This meeting was held virtually in accordance with the Brown Act provisions stipulated in Assembly Bill (AB) 361 and adopted by the Central San Board of Directors on September 30, 2021 via Resolution 2021-05Z effective for the month of October 2021. The agenda included instructions for options in which the public could participate in the meeting. 2. Call Meeting to Order Chair Pilecki called the meeting to order at 2:12 p.m. Finance Committee Minutes October 26, 2021 Page 2 3. Public Comments None. 4. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred September 18, 2021 through October 14, 2021 Staff responded to questions on various expenditures, to which the Committee was satisfied with the responses provided. Items of particular note or needing further staff attention are summarized below. Check 100047, Edrington, Schirmer & Murphy, LLP, $99.75 (p. 1 of 66): Member McGill requested more information on this payment as he did not recognize the firm name. Mr. Leiber explained there was a change in counsel for a claim. Following further discussion, Chair Pilecki requested this item be included on the next Loss Control Report that is brought before the Committee. Check 303745, NRC Environmental Services, Inc., $80,386.19 (p. 11 of 66): Chair Pilecki noted that the payment was for invoices over two years old. Mr. Mizuno explained the payment was for retention. There was a delay in receiving the certificates of disposal from the destination site for the waste hauling provided by this broker. Certificates are required for each manifest; staff has the ability to hold a 25% retention to receive the certificates, which took longer than expected to receive. Staff will look at other alternatives in the future for these services. Check 303769, Alta Fence Company, Inc., $1,248 (p. 16 of 66): The description noted a repair of 20-feet of barbwire fence, which the Committee considered to be a high cost for a minimal length fence. Mr. Mizuno explained the invoice also included the cost of installation as well as material. Following some discussion, the Committee requested staff keep an awareness of similar future repair costs. Member McGill stated that the various changes made to these reports over the course of the year, especially with descriptions, have been helpful. Chair Pilecki concurred that the changes implemented have made the review process easier and fewer questions are being asked. COMMITTEE ACTION: Recommended Board approval. Finance Committee Minutes October 26, 2021 Page 3 b. Receive Fiscal Year 2020-21 Pre -Audit Capital Improvement Budget (CIB) Year -End Status Report Mr. Lopez presented the information provided in the agenda materials. He highlighted some clarifications to the presentation during the course of the discussion. On slide 2, Mr. Lopez mentioned the State Revolving Fund Loan Proceeds line item reflects a zero -dollar actual expenditure for last fiscal year. This was due to the rejection of bids for the intended project, thus, no construction expenditures were incurred. However, with the original project being repackaged to a smaller scope of work, the expenditure projections will be reflected in the next CIB update. Mr. Lopez provided an overview of each of the Capital Improvement Programs pre -audit expenditures (slide 3). The Collection System and Recycled Water programs are on target and moving along. The Treatment Plant Program experienced some delayed construction starts, project changes, and other equipment receipt delays that impacted the spending estimates. He noted the General Improvements budget spent a lot of carryover funds attributed to the Enterprise Resource Planning (ERP) implementation. Lastly, he mentioned the contingency budget was adjusted and would maintain one million dollars in the Sewer Construction Fund. Overall, expenditures were at approximately 80% with an approximate 65% spent when including carryforward budgets. Mr. Lopez highlighted the following clarifications updated in the presentation: • Slide 4 regarding the Large Diameter Pipeline Inspection project, a contractor had been hired. However, the actual inspection was delayed which impacted the project. Staff is awaiting the final inspection results. • On slide 5, the condition assessments for the Steam and Aeration Blower Systems Renovation Project are complete and funds are available in the FY2021-22 CIB. Chair Pilecki noted he had difficulty trying to reconcile the variance figures as presented. Mr. Lopez explained there are other figures spread out amongst all the other projects in the CIB and once all added up individually should be reconcilable. Chair Pilecki requested staff check the figures of the variances amongst the larger projects prior to Board receipt. COMMITTEE ACTION: Recommended Board receipt. Finance Committee Minutes October 26, 2021 Page 4 C. Review draft Position Paper to receive Fiscal Year (FY) 2020-21 Pre -Audit Year -End Financial Statement Summary Report; and consider (a) alternatives for handling various pre -audit budget variances and (b) $1.25 million budgeted in FY 2021-22 toward employee -related unfunded liabilities Mr. Leiber presented the information provided in the agenda materials and noted he would focus this discussion on what to do with the various pre -audit variances moving forward. Of the recommendations that the financial advisor, PFM, has made to date, he noted Central San has accomplished most, such as the OPEB, liability paydown and setting up a Pension Prefunding Trust fund. A discussion about the potential variance recommendations followed. Chair Pilecki inquired about whether the use of rate stabilization should have been used to paydown the UAAL2. He also inquired whether the Pension Trust could be dissolved and monies placed in a rate stabilization fund for greater flexibility than in an account that is restricted. Mr. Leiber responded that the downside is that any funds in the rate stabilization account are limited to investments allowed by the California Investment Code and it was worthwhile to keep the Pension Trust fund. Member McGill inquired about the wording used in the draft Position Paper under the Financial Impacts section. He asked why staff used the phrase "generally in line" with the recommendations provided. Mr. Leiber replied that a good portion has already been anticipated and it is recognized to transfer $5.2 million to a rate stabilization fund. Member McGill opined that the wording could instead be reflected to say the recommendations "are in line." Staff will update the final Position Paper accordingly. Chair Pilecki inquired about the last sentence in the Background section that could imply a concern of the OPEB Trust Fund becoming overfunded. Mr. Leiber stated there is no concern about OPEB overfunding as there was about Pension Plan overfunding and that the statement was intended to recognize there was a plan to draw down from the OPEB trust at some point, and the District did reach that threshold. After further discussion, staff indicated they would rephrase that statement. The Committee concurred with recommendations presented. OPEB defined as Other Post -Employment Benefits 2 UAAL defined as unfunded actuarial accrued liability Finance Committee Minutes October 26, 2021 Page 5 Member McGill added that the pension payoff has been well received within his liaison communities. He suggested presenting to the Contra Costa Taxpayers Association, Lamorinda, and Walnut Creek of what Central San is doing. Mr. Bailey concurred. COMMITTEE ACTION: Provided input to staff and recommended Board consideration. 5. Other Items a. Receive update on planned transition to quarterly financial reporting to Finance Committee and Board of Directors Mr. Mizuno reviewed the information provided, recapping that at the September Committee meeting staff discussed discontinuing the monthly Financial reports due to the Oracle system post -go -live challenges, at least for a few months if not indefinitely. At that meeting, the Committee recommended staff bring forth an item for formalization, which this agenda item provided. Mr. Mizuno opined that the new quarterly reports are more robust and recommended moving towards a quarterly approach as the monthly financial reports are labor intensive and do not provide much additional value. He stated that staff is also working on a new budget Board Policy that will be presented to the Administration Committee and will include reporting frequency. Member McGill stated with the information provided in the memo he supported moving to the proposed quarterly report frequency. Chair Pilecki stated he was not opposed to a quarterly structure as a trial, with one caveat. There are two items in the monthly financial reports that he finds useful, which are the graphs depicting the Operations and Maintenance (O&M) budget-to-actuals and the Capital budget-to-actuals. He stated these two summary reports should be easily produced on a monthly basis since it is also provided for internal use. He concurred the detail in the reports could instead be provided quarterly. Mr. Mizuno countered on the production of the data and a lengthy discussion ensued. At its conclusion, Chair Pilecki reiterated his request for the summarized information to continue on a monthly basis as described above. Mr. Mizuno indicated he would provide some material to further elaborate on the issue. COMMITTEE ACTION: Received the update and concurred with moving to a detailed quarterly report with a monthly O&M and Capital budgets - to -actual summary report. Finance Committee Minutes October 26, 2021 Page 6 b. Receive update on submission of Claim to State of California Department of Finance for Reimbursement of COVID-19 Related Costs and receive update on status of FEMA claims process Mr. Leiber provided an overview of the actions to date. Staff had been tracking costs incurred during the pandemic and submitted a claim prior to the October 15 deadline. He discussed items that were and were not eligible for reimbursement and that anything the District anticipated from FEMA3 were not included. He explained that the level of reimbursement will depend on the total of claims submitted by special districts as compared to the $100 million funding availability level. COMMITTEE ACTION: Received the update. 6. Announcements Mr. Bailey stated his appreciation for the staff efforts and great team performance of those that responded to a storm event this past weekend. 7. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items Member McGill noted that the COVID-19 reimbursement update provided today satisfied the future agenda item listing. Staff was directed to instead modify the future agenda item to report an update of the actual reimbursement received when available. COMMITTEE ACTION: Received the list and provided input to staff. 8. Future Scheduled Meeti Monday, November 22, 2021 at 2:00 p.m. Tuesday, December 21, 2021 at 2:00 p.m. 9. Adjournment — at 3:53 p.m. 3 FEMA defined as Federal Emergency Management Agency