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HomeMy WebLinkAboutFinance MINUTES 10-29-24Page 2 of 8 110ENTRAL SAN REGULAR MEETING OF THE BOARD OF DIRECTORS: MARIAHN LAURITZEN CENTRAL CONTRA COSTA President SANITARY DISTRICT MICHAEL R. MCGILL President Pro Tent FINANCE COMMITTEE BARBARA D. HOCKETT TAD J PILECKI FLORENCE T WEDINGTON MINUTES PHONE: (925) 228-9500 FAX.- (925) 372-0192 Tuesday, October 29, 2024 www.centralsan.org 2:30 p.m. Committee: Chair Mariah Lauritzen Member Tad Pilecki Staff. - Roger S. Bailey, General Manager Katie Young, Secretary of the District Greg Norby, Deputy GM — Engineering & Operations (arrived during Item 3.a.) Philip Leiber, Deputy GM — Administration Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Brennan Rogers, Accounting Supervisor Michelle Gonsolves, Accounting Supervisor Stephanie King, Contracts and Procurement Administrator Thomas Brightbill, Senior Engineer (left after Item 3.d.) Amal Lyon, Management Analyst Shari Deutsch, Risk Management Administrator Eileen Hansen, Deputy Secretary of the District Laci Kolc, Risk Management Specialist (joined during Item 4.b.) (left after Item 4.b.) Stacey Durocher, Administrative Services Assistant Call Meetina to Order Chair Lauritzen called the meeting to order at 2:31 p.m. 2. Public Comments None. November 7, 2024 Regular Board Meeting Agenda Packet - Page 34 of 40 Page 3 of 8 Finance Committee Minutes October 29, 2024 Page 2 3. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred, September 6, 2024 through October 17, 2024 Staff responded to questions posed in advance of the meeting by Member Pilecki. All staff responses were to his satisfaction. Check #313609 DG Investment Intermediate Holdings, Inc. $12,160.08 Mr. Mizuno explained that DG Investment Holdings is the parent company of Convergint, the District's security systems vendor/installer. The expense was for maintenance work being done on the security system to troubleshoot and modify programming to integrate the new alarm panels into the core software environment. Check #313767 KP Doors and Access LLC in the amount of $9, 712.59 Mr. Mizuno stated that this expense was related to the Solids Handling project. A subcontractor of C. Overaa damaged a roll up door and the cost to repair the door was credited back to the District by a change order. Mr. Bailey asked why the District was involved in the reimbursement. Mr. Lopez explained that the District hired another contractor to repair the door, and the cost will be reimbursed by C. Overaa with a change order. Check #313825, DXP Enterprises, Inc. in the amount of $36, 057.24 Mr. Mizuno explained that DXP Enterprises, Inc. provided two actuators and gear boxes and was charged to the maintenance supplies inventory account which has a generic description. He mentioned that supplies inventory purchases are not expensed but held as current inventory assets until issued to divisions for operational purposes. When inventory is issued for capital project -related work, it should be capitalized and charged to the sewer construction fund (fund 20). Check #203217 Royal Electric Company in the amount of $71,291.86 • Mr. Mizuno stated that the invoices are related to retention and not late payments. The system deducts five percent from each invoice and suspends the payment. Based on the way this is presented in the finance committee expenditure report, one could falsely conclude these retention releases are late payments. Mr. Lopez asked if there was a way to add a description to identify the payment as retention. Mr. Mizuno responded not at this time. November 7, 2024 Regular Board Meeting Agenda Packet - Page 35 of 40 Page 4 of 8 Finance Committee Minutes October 29, 2024 Page 3 Check #203253 MWH Constructors. Inc. in the amount of $54.066.36 Mr. Lopez stated that the payments were late due to administration issues with both parties and billing adjustments that were needed. Payments were also late due to the approval of the contract extension for the filter plant. Member Pilecki expressed his concern about work being done beyond the upper limit of the contract. Mr. Lopez stated that the contract was at the limit at that time. Future improvements are needed, including addressing administration support for projects. COMMITTEE ACTION: Recommended Board approval. b. Receive Budget -to -Actual Expenditure overview through the month of September 2024 Mr. Mizuno provided an overview of the Budget -to -Actual Expenditures for the Operations and Maintenance (O&M) and Sewer Construction Fund (SCF) through September 30, 2024. O&M: The total expenditures through September 2024 (first quarter) were approximately $22 million, which is less than the estimated year-to-date Budget by $2.9 Million or 11.6 percent. It was noted that there was a slight contraction from last months' variance of 15.3 percent although it is slightly higher than the variance through the same quarter last fiscal year (9.2 percent). As of September 30, 2024 the vacancy factor was at 6.6 percent. Due to the turnover rate and the changing labor market, Mr. Mizuno suggested it might be appropriate to increase the vacancy factor in next fiscal year's budget. In response to Chair Lauritzen's question regarding whether filling vacancies will continue to be a challenge, Mr. Mizuno said yes and explained that the District's overall headcount has increased, and a three percent vacancy factor is conservative. Mr. Leiber added that filling the newly added Limited Duration Positions has taken longer than expected and if filled by an existing employee, it creates a cascading effect leaving vacancies until all open positions are filled. SCF: The total adopted Budget for Fiscal Year 2024-25 was $80.7 million. When including unspent carryforward from the prior year less contingency, the total authorized spend for the current fiscal year is approximately $127.2 million. Mr. Mizuno emphasized that, as expected, the spending rate from August increased significantly from $1.4 million to $18.5 million for September, just shy of the targeted spend by $800,000 or 4.1 percent. Three large projects that accounted for most of the increased spending rate included the Solids November 7, 2024 Regular Board Meeting Agenda Packet - Page 36 of 40 Page 5 of 8 Finance Committee Minutes October 29, 2024 Page 4 Handling project, Aeration Basin Diffusers project and the Pump Station Upgrades, Phase 11 project. COMMITTEE ACTION: Recommended Board receipt. C. Receive Pre -Audit Fiscal Year 2023-24 Capital Improvement Budget Year - End Status Report Mr. Lopez provided an overview of the presentation provided in the agenda materials. Revenue In response to Member Pilecki's question regarding the City of Concord billing, Mr. Lopez confirmed the amount shown is the recent billing that went out in August, 2024 for FY 2023-24. Mr. Bailey expressed his concern regarding the carryforward amount and stated that the District has to be very careful when working with the City of Concord to make sure they do not have the perception that they are being over billed. A discussion ensued regarding billing the City of Concord in intervals throughout the year rather than once a year. Chair Lauritzen agreed that the perception that the City of Concord may have in regard to being overbilled is very important to address. Mr. Mizuno stated that he will continue to check in with the City of Concord regarding their billing preferences. Mr. Lopez informed the Committee that the construction budget for the Solids Handling project was approved with the State Revolving Fund (SRF) and the reimbursement process will begin shortly. Member Pilecki asked if billing will be done monthly or quarterly. Mr. Mizuno stated that billing quarterly is easier administratively. Expenditures: Expenditures for the FY 2023-24 approved budget were $142,750,454. The budgeted figure for each project excludes project closeout savings and includes carryforward and transfers from past fiscal years. He highlighted that the carryforward budget was reduced by $8.2 million, and the goal is to reach acceptable levels by next fiscal year. Staff answered all questions posed by the Committee. Staff advised the Committee that this item will be heard as one item to the full Board with the next item on the agenda. COMMITTEE ACTION: Recommended Board receipt as part of the Pre- Aduit Year End financial Statement Summary Report November 7, 2024 Regular Board Meeting Agenda Packet - Page 37 of 40 Page 6 of 8 Finance Committee Minutes October 29, 2024 Page 5 d. Review draft Position Paper to receive Fiscal Year (FY) 2023-24 Pre -Audit Year -End Financial Statement Summary Report and consider alternatives for handling various pre -audit budget variances Mr. Leiber provided an overview of the presentation provided in the agenda materials. He discussed various alternatives on where to allocate the excess reserves. Member Pilecki expressed concern about the discrepancy in the Sewer Construction Fund between Finance and Capital. Staff identified the problem and will correct the discrepancy in the consolidated report delivered to the Board next. Mr. Bailey stated that Financial matters should remain with Finance. Member Pilecki agreed. Mr. Leiber stated that there is a total of $5.8 million in budget variances, however $3.3 million of that has already been allocated. A total of $2.5 million remains to be allocated. A discussion ensued regarding the allocation options. Staff answered all questions posed by the Committee. COMMITTEE ACTION: Received information, provided input to staff and recommended Board consideration. 4. Other Items a. Receive update and impact analysis on the most recent Actuarial Valuations for Contra Costa County Employees' Retirement Association (CCCERA), and the anticipated savings from the 2021 unfunded actuarial accrued liability paydown transaction Mr. Mizuno provided an overview of the report included in the agenda materials. The Committee had no questions. COMMITTEE ACTION: Received the information. b. Receive Fiscal Year (FY) 2023-24 Risk Management Annual Report Ms. Deutsch provided an overview of the report included in the agenda materials. Within the Workers' Compensation program, she discussed medical only versus indemnity claims and the causes of injuries. The District has had 51 claims in the past five years, five were COVID related. The remaining 25 were strains and sprains which have always been a problem for the District. November 7, 2024 Regular Board Meeting Agenda Packet - Page 38 of 40 Page 7 of 8 Finance Committee Minutes October 29, 2024 Page 6 Ms. Deutsch mentioned that three of the Public Assistance (PA) Grants from the Federal Emergency Management Agency (FEMA) have been received. Member Pilecki asked how long it took to receive the money. Ms. Deutsch replied that work started on the applications back in 2020. Mr. Bailey asked if $806, 948 was the total amount that the District requested from FEMA. Ms. Deutsch stated that as of the date this report was assembled, $806, 948 was expected. As of October 28, 2024, the District received three checks totaling $768,105. One other project is still payable from the COVID-19 disaster declaration. In response to Member Pilecki's question regarding previous funds received and the process, Ms. Deutsch stated that the default option is to put funds received in the self-insurance fund. Mr. Mizuno also mentioned that since these funds were incurred over more than one fiscal year, the District is not subject to the single audit act requirements. The Committee had no further questions. COMMITTEE ACTION: Received the report and recommended Board receipt. C. Receive update of the Enterprise Risk Management (ERM) Program Ms. Deutsch provided an overview of the presentation included in the agenda materials. She provided some background information on the strategic risk inventory and mitigation plans. Mr. Leiber stated that the identified risks have evolved over time. Member Pilecki requested that this be made clear to the Board. A discussion ensued regarding whether the District was prepared and had necessary supplies to remain operational in case of an emergency such as an earthquake. Ms. Deutsch stated that Standard Operating Procedures are being developed to identify critical spares and minimum quantities of emergency supplies. All questions posed by the Committee were answered. Staff Recommendation: Received the update, provided input and recommended Board receipt. d. Review Risk Management Loss Control Report as of October 14, 2024 Ms. Deutsch discussed prior open claims through October 14, 2024 as well as new claims occurring since the previous report. November 7, 2024 Regular Board Meeting Agenda Packet - Page 39 of 40 Page 8 of 8 Finance Committee Minutes October 29, 2024 Page 7 Mr. Bailey requested that the dollar amounts for litigated matters remain blank until settled. Member Pilecki agreed and asked Ms. Deutsch to add a footnote for future Committee members. Staff Recommendation: Received the report and provided input to staff. 5. Announcements None. 6. Suaaestions for Future Aaenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items COMMITTEE ACTION: Received the list and provided input to staff. 7. Future Scheduled Meetings Tuesday, November 19, 2024 at 2:30 p.m. Tuesday, December 17, 2024 at 2:30 p.m. 2025 Committee Schedule TBD 8. Adiournment — 4:38 p.m. November 7, 2024 Regular Board Meeting Agenda Packet - Page 40 of 40