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HomeMy WebLinkAbout18.c. Committee Minutes-Finance 02-22-2022 Page 1 of 7 Item 18.c. CENTRALSAN jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT March 3, 2022 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: FEBRUARY22, 2022 - FINANCE COMMITTEE - CHAIR MCGILLAND PRESIDENT WILLIAMS Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Minutes of 02-22-22 meeting March 3, 2022 Regular Board Meeting Agenda Packet- Page 132 of 165 Page 2 of 7 r CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: DAVID R. WILLIAMS CENTRAL CONTRA COSTA President SANITARY DISTRICT BARBARA D.HOCKETT President Pro Tena FINANCE COMMITTEE MARIAHNLAURITZEN MICHAEL R.MCGILL TAD J PILECKI MINUTES PHONE: (925)228-9500 Tuesday, February 22, 2022 FAX.- (925)372-0192 2:00 p.m. www.eentralsan.org (All attendees participated via videoconference) Committee: Chair Mike McGill Member David Williams Guest: Seth Cole, Alliant Insurance Services, Inc. (left after Item 5.a.) Staff. Roger S. Bailey, General Manager (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 Edgar Lopez, Capital Projects Division Manager (joined during Item 5.a.) Kevin Mizuno, Finance Manager Olivia Ruiz, Accounting Supervisor Chris Thomas, Accounting Supervisor Benjamin Johnson, Internal Auditor Shari Deutsch, Risk Management Administrator Laci Kolc, Risk Management Specialist (left after Item 5.a.) Amelia Berumen, Assistant to the Secretary of the District 1. 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 January 13, 2022 via Resolution 2022-004. The agenda included instructions with options in which the public could participate in the meeting. 2. Call Meeting to Order Chair McGill called the meeting to order at 2:00 p.m. March 3, 2022 Regular Board Meeting Agenda Packet- Page 133 of 165 Page 3 of 7 Finance Committee Minutes February 22, 2022 Page 2 3. Public Comments No comments. Chair McGill announced Item 5.a. would be heard as the first item of business. 4. Items for Committee Recommendation to the Board Item 4.a. and the balance of the agenda was heard at the conclusion of Item 5.a. a. Review and recommend approval of expenditures incurred January 15, 2022 through February 10, 2022 Staff responded to various questions posed by the Committee during the meeting, with the occurrence of at-length discussions around procurement card (P- Card) processing, staff signature authority level considerations, claim settlement payments, and various selected expenditure inquiries. Items of particular note or requiring staff attention are summarized below. P-Card Expenditure Reconciliations — Chair McGill inquired whether additional reconciliations occur after presentation to the Finance Committee. For example, the Committee is aware that custom reports were generated to provide P-Card summary and detail reports for transparency and advisory. However, due to software processes versus timing of staff statements, the unadjusted P-Card report versus the US Bank account payments differ. It raised the question whether that difference is later reconciled to ensure the reconciling items were cleared. After a lengthy discussion, it was requested that staff prepare an update of the cumulative differences and the status of unresolved issues to date to advise the Committee how staff ensures any discrepancies are resolved. Claim Settlement Payment Reconciliations— Various questions were asked about claim processing payments. It was noted some payments were not easily tied to prior Loss Control Report updates. Ms. Deutsch suggested staff include the check number in the Loss Control Report as a cross-reference, especially when the actual payee's name may differ. Check Nos. 201156 - 201158, Emtec Consultinq Services, LLC — In response to Chair McGill's inquiry of the multiple invoices paid on three noted checks, Mr. Leiber explained it was related to the release of retention for various milestones of the Enterprise Resource Planning (ERP) system implementation. Payment of certain milestones had been withheld until a satisfactory deliverable of certain modules were attained. It had been agreed to release a share of what had been withheld, and those payments were reflected in the register. March 3, 2022 Regular Board Meeting Agenda Packet- Page 134 of 165 Page 4 of 7 Finance Committee Minutes February 22, 2022 Page 3 Membership Payment Descriptions (P-Card Summary, i.e., p. 72 of 202) - Chair McGill noted some descriptions include a name, others simply say membership and asked how it is known what membership belongs to whom. Mr. Mizuno explained the membership needs are maintained at the division level and is up to the division to track within their budgets, supervisory approvals, etc. Chair McGill requested that going forward, it would be helpful to have the membership holder included in the description. COMMITTEE ACTION: Recommended Board approval. b. Receive the Financial Overview through the month of January 2022 COMMITTEE ACTION: Due to time constraints, this item was deferred to a future meeting. C. Receive Quarterly Financial Review for quarter ended December 31, 2021 COMMITTEE ACTION: Due to time constraints, this item was deferred to a future meeting. d. Review draft Position Paper to approve updated administrative overhead and benefits rate of 169% for Fiscal Year (FY) 2022-23, a decrease of 8% from the current year Chair McGill noted the item was prepared consistent with the policy and had no questions. The Committee concurred on its recommendation to approve. COMMITTEE ACTION: Recommended Board acceptance. 5. Other Items a. Receive introduction to the California Sanitation Risk Management Authority (CSRMA) Excess Liability Program This item was heard out of order as the first item of business. Mr. Leiber and Ms. Deutsch reminded the Board of the challenges faced last summer in the insurance renewal process to obtain excess liability insurance. Mr. Leiber stated that increases in insurance costs over the last few years have been substantial. Ms. Deutsch added that since the commercial insurance market remains challenging, staff has considered alternatives to obtaining the needed insurance coverage. Last year staff presented one alternative,joining the CSRMA pooled program for General Liability and Excess Liability. Since firm quotes were not available by the Board meeting date, the Board directed staff to renew March 3, 2022 Regular Board Meeting Agenda Packet- Page 135 of 165 Page 5 of 7 Finance Committee Minutes February 22, 2022 Page 4 commercial insurance coverage under certain criteria and, if those were not available, then to join the CSRMA pooled liability program. If coverage was renewed in the commercial market, staff was asked to bring back more information about the CSRMA liability pool program for consideration at the next insurance renewal. Ms. Deutsch then introduced Mr. Seth Cole of Alliant Insurance Services, which manages the CSRMA pool. He remarked that public agencies have been hit particularly hard by commercial insurance premium increases, especially considering recent large settlements unlike those seen before. Mr. Cole then provided an overview of the CSRMA Pooled Liability Program and explained how it differs from commercial insurance. The pooled liability program buys coverage on a group basis rather than an individual basis, and the costs are shared as a group. CSRMA's pooled layer retains a portion of each claim and purchases excess insurance up to $250 million. A lengthy discussion of claims handling ensued, including pooled liability processing and current staff administered claims processing. This discussion is summarized below. Deductible versus Self-Insured Retention: With CSRMA, Central San would have a deductible instead of a self-insured retention. With the current self- insured retention, Central San handles its own claims up until they reach a threshold where the excess carrier needs to be involved. With a deductible, the insurer/pool would handle the claim and then invoice Central San for the settlement cost up to the amount of the chosen deductible. All settlements above the deductible are paid by the insurer/pool. Claims Administration: Since excess carriers underwrite the liability program membership as a group, they require some assurances that claims are managed consistently among pool members. CSRMA meets that requirement by using a third-party administrator(TPA) to handle liability claims. Ms. Deutsch noted that over time, the Central San Board's interest in controlling its claims has varied, from hiring a TPA to administer all liability claims to taking this function entirely in-house. With participation in the CSRMA pooled liability program, Central San would still manage initial contact with claimants, either through on-site response or as needed for incidents reported after the fact. Additionally, staff would retain responsibility for initial response costs required to stabilize the situation (i.e., clean-up coordination, hotel vouchers, etc.) before reporting and transferring control of the claim to the TPA. March 3, 2022 Regular Board Meeting Agenda Packet- Page 136 of 165 Page 6 of 7 Finance Committee Minutes February 22, 2022 Page 5 Mr. Cole added that members have a say in claims settlements consistent with the size of their deductibles. A member with a $500,000 deductible will be more involved than a member with a $10,000 deductible. Settlement Authority: Mr. Cole noted that claim settlements above $50,000 are referred to the CSRMA Pooled Liability Committee for approval. Member Williams observed that under such a process, Central San's concerns regarding any large settlement would be evaluated by staff from other sanitation agencies on the Board; essentially by its peers. Mr. Cole also advised that members may appeal a settlement decision that could go to the full Board, also made up of Central San's peers. Initial Commitment: Mr. Cole explained that in order to provide more stable pricing and consistent coverage to its members, the pool of members must be somewhat stable. As a result, a new member must commit to the program for an initial three-year term. Thereafter, a member may leave the pool with proper notice as defined in the Memorandum of Coverage. The commercial insurance market does not require this commitment. Final Remarks: Mr. Cole noted that unlike insurance companies, CSRMA does not have a profit motive even though it wants to be financially stable. The authority has and will continue to return funds to its members through a retrospective or dividend program. Staff and Mr. Cole responded to various questions posed by the Committee. Chair McGill stated he was inclined to get a more formal presentation to the Finance Committee (i.e., draft Position Paper and slides) as it would give the full Board concurrent access to the information. Staff will coordinate a more formal presentation for a future meeting. COMMITTEE ACTION: Received the information and provided input to staff. b. Receive the Highmark Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-trust Reports for the Fourth Quarter of calendar year 2021 COMMITTEE ACTION: Due to time constraints, this item was deferred to a future meeting. C. Receive Fiscal Year 2020-21 Risk Management Annual Report COMMITTEE ACTION: Due to time constraints, this item was deferred to a future meeting. March 3, 2022 Regular Board Meeting Agenda Packet- Page 137 of 165 Page 7 of 7 Finance Committee Minutes February 22, 2022 Page 6 d. Review Risk Management Loss Control Report as of February 8, 2022 COMMITTEE ACTION: Due to time constraints, this item was deferred to a future meeting. 6. Announcements None. 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, March 22, 2022 at 2:00 p.m. Tuesday, April 19, 2022 at 2:00 p.m. Monday, May 16, 2022 at 2:00 p.m. Chair McGill requested an additional meeting be scheduled to hear matters postponed from today's agenda prior to the next regularly scheduled Committee meeting. 9. Adjournment— at 4:05 p.m. March 3, 2022 Regular Board Meeting Agenda Packet- Page 138 of 165