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HomeMy WebLinkAboutFinance MINUTES 11-19-24Page 2 of 10 110ENTRAL SAN REGULAR MEETING OF THE BOARD OFDIRECTORS: MARIAHN LAURITZEN CENTRAL CONTRA COSTA President SANITARY DISTRICT MICHAEL R. MCGILL President Pro Tem FINANCE COMMITTEE BARBARA D. HOCKETT TAD J PILECKI FLORENCE T WEDINGTON MINUTES PHONE: (925) 228-9500 FAX.• (925) 372-0192 Tuesday, November 19, 2024 www.centralsan.org 2:30 p.m. Committee: Chair Mariah Lauritzen Member Tad Pilecki Guest: Vikki Rodriguez, Maze & Associates (left after Item 3.d.) Staff. Roger S. Bailey, General Manager Katie Young, Secretary of the District Greg Norby, Deputy GM — Engineering & Operations (left during Item 3.c.) Philip Leiber, Deputy GM — Administration Benjamin Johnson, Internal Auditor/Diversity, Equity & Inclusion Officer Kevin Mizuno, Finance Manager Brennan Rogers, Accounting Supervisor Michelle Gonsalves, Accounting Supervisor (joined during Item 3.a.) Stephanie King, Contracts and Procurement Administrator Sasha Mestetsky, Senior Engineer (left during Item 3.e.) Shari Deutsch, Risk Management Administrator (arrived during Item 3.d.) Amal Lyon, Management Analyst (joined during Item 3.a.) Eileen Hansen, Deputy Secretary of the District Stacey Durocher, Administrative Services Assistant Call Meeting to Order Chair Lauritzen called the meeting to order at 2:30 p.m. 2. Public Comments None. December 5, 2024 Regular Board Meeting Agenda Packet - Page 259 of 274 Page 3 of 10 Finance Committee Minutes November 19, 2024 Page 2 3. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred, October 18, 2024 through November 7, 2024 Staff responded to questions posed in advance of the meeting by Member Pilecki. All staff responses were to his satisfaction. Check #313996 Bartley Pump PM $19,100 • Mr. Leiber stated that this purchase was to repair a mechanical seal. The pump was out of service and the repair to the seal was considered maintenance. An overhaul was done at the same time because in order to do the seal repair, the pump had to be disassembled. The amount shown was for labor to remove the pump and ship out for servicing. In response to Member Pilecki's question regarding where O&M assets are managed, Mr. Norby stated that the basic information is captured in the asset management information system. A discussion ensued regarding where the assets are managed. Mr. Leiber stated that staff will review this item to make sure it was applied correctly. Check #313999 Brand Services of California $26, 411.22 Mr. Leiber stated that Brand Services recently started a coating division and was contracted to do touch-up painting on skimmer arms at the waterline, and under the catwalk to address specific areas of corrosion. Brand bills its customers on a weekly basis. Therefore, two separate weekly invoices were submitted for this project. Check #314026 KIS Computer Center $101, 932.20 Mr. Leiber stated that this purchase was for Arctic Wolf Managed Detection and Response (MDR) software. This security application monitors the District's computer network for anomalies. It detects network traffic that is out of the ordinary, and if so, Information Technology (IT) staff will be notified and will investigate the issue for a possible threat. Chair Lauritzen asked how often this gets billed. Mr. Leiber stated it is billed annually. Check #45 PG&E $387, 771.26 • In response to Member Pilecki's question regarding Pacific Gas & Electric (PG&E), Mr. Leiber confirmed the cost was due to Cogen being shut down for an extended period of time to perform maintenance. December 5, 2024 Regular Board Meeting Agenda Packet - Page 260 of 274 Page 4 of 10 Finance Committee Minutes November 19, 2024 Page 3 Check #90 MSA Safety Incorporated $29, 908 • Mr. Leiber explained to the Committee that this amount was for a new hydrogen sulfide monitoring system to replace the existing non- functioning system. Odor removal efficiency will be enhanced with a fan on a variable frequency transformer (VFT) to save energy as identified by the District's PG&E Energy Efficiency Program. Member Pilecki asked if item should be capitalized. Mr. Leiber responded yes. Procurement -Card (P-card) Expenditures: The Committee had the following questions: Expense Report 000137559722 $4, 564.24: Mr. Leiber stated that this expense was for the replacement of an older professional grade camera from 2016 used for high -resolution photography and 4k videography in the District's newsletters, training videos, and other outreach. COMMITTEE ACTION: Recommended Board approval. As requested by staff, Chair Lauritzen announced that Item 3.d. would be heard as the next order of business. b. Receive Budget -to -Actual Expenditure overview through the month of October 2024 This item was heard immediately following Item 3.d. Mr. Mizuno provided an overview of the Budget -to -Actual Expenditures for the Operations and Maintenance (O&M) and Sewer Construction Fund (SCF) through October 31, 2024. He noted a favorable variance of 10.8 percent for the O&M fund and a spend rate of 76 percent for the Capital program. O&M: Total year-to-date expenditures through October 2024 were $29 million compared to the year-to-date budget estimate of $32.5 million resulting in an interim favorable timing variance of $3.5 million or 10.8 percent. This variance reflects a slight retraction of the favorable variance from September at 11.7 percent or $2.9 million. It was noted that the actual spend is expected to contract by the end of the fiscal year. December 5, 2024 Regular Board Meeting Agenda Packet - Page 261 of 274 Page 5 of 10 Finance Committee Minutes November 19, 2024 Page 4 SCF: The total year-to-date expenditures through October were $24.3 million compared to the target of $27.7 million equating to a spend rate of 7.6 percent of the year-to-date budget. Following the post 1st quarter projection estimate collection process, year-end capital spending is now anticipated to be $104.2 million, which is shy of total targeted spend of $114.5 million. The Committee had no questions. COMMITTEE ACTION: Recommended Board receipt. C. Receive Quarterly Financial review for the first quarter of Fiscal Year (FY) 2024-25 ending September 30, 2024 (unaudited) Mr. Mizuno provided an overview of the presentation included in the agenda materials. O&M Total expenditures for the O&M fund through the first quarter were $22 million which is approximately $2.9 million or 11.7 percent less than the estimated year-to-date budget of $25 million. The favorable variance is largely attributed to lower than projected year-to-date spending in supplies and materials, salaries and wages, and purchased property services. Total year-to-date revenues in the O&M fund for the first quarter were approximately $1.3 million with a very minor negative variance of $457 indicating revenues are right on track through the first quarter overall. SCF Total expenditures for the SCF fund were $18.5 million or 22.9 percent of the adopted budget of $80.7 million which includes carryforward project appropriations from the prior year of $50.3 million. The total adjusted budget for FY 2024-25 is $131 million with a modest year-to-date favorable variance of $3.9 million or 17.4 percent. It was noted that the significant budgetary carryforward was initially caused by global supply -chain difficulties and delays on the Solids Handling project. Total year-to-date revenues for the SCF fund for the first quarter were $2.7 million with a modest year-to-date favorable variance of 6.1 percent. The Committee had no questions. COMMITTEE ACTION: Recommended Board receipt. *d. Review draft Position Paper to accept (1) the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2024 audited by Maze & Associates, and (2) the independent auditors' memorandum on internal control and required communications for the Fiscal Year ended June 30, 2024 December 5, 2024 Regular Board Meeting Agenda Packet - Page 262 of 274 Page 6 of 10 Finance Committee Minutes November 19, 2024 Page 5 This item was heard immediately following Item 3.a. Mr. Mizuno provided an overview of the presentation provided in the agenda materials. He stated that the independent audit was completed by Maze & Associates and was conducted in accordance with Generally Accepted Auditing Standards (GAAS) to ascertain whether Central San's financial statements were presented fairly in all material respects in accordance with Generally Accepted Accounting Principles (GAAP). Ms. Rodriguez provided a brief synopsis of this year's audit results as outlined in the audit opinion letter and the Memo on Internal Control (MOIC) as well as the role of the independent auditor. She stated that this year's ACFR did not detect any material deficiencies and that Central San would be receiving a clean (or "unmodified') audit opinion. Mr. Mizuno mentioned several key financial and operational updates. He stated that the net position of the District increased by $72.4 million or 7.5 percent to $1.035 billion largely driven by a growing capital program. Non - operating revenues and expenses such as secured ad valorem property taxes and investment income also increased the District's net position by $35.7 million. In response to Member Pilecki's inquiry about restricted funds, Mr. Mizuno stated restricted funds are comprised of the Section 115 Pension Trust and the net Other Post Employment Benefits (OPEB) plan asset. Ms. Rodriguez further explained that whenever the OPEB is a net asset versus a net liability it is restricted for OPEB benefits. A discussion continued regarding restricted funds and how these are tracked and accounted for. In response to Member Pilecki's inquiry on Page 170 of 230, of the agenda packet, regarding why there are two different numbers for the District's pension liability, Mr. Mizuno explained that there are two annual actuarial reports produced by Contra Costa County Employees' Retirement Association (CCCERA) and the differences are due to the basis of accounting on the ACFR (market basis) versus what is tracked for budgeting (actuarially smoothed basis). A lengthy discussion ensued regarding how the information is captured on the actuarial reports as well as the timing and market fluctuations. In closing, Mr. Mizuno informed the Committee that the District received the Certificate of Achievement for Excellence in Financial Reporting Award for the Fiscal Year 2022-23 ACFR. He noted that this is the 24t" consecutive year receiving this award COMMITTEE ACTION: Reviewed and recommended Board acceptance. December 5, 2024 Regular Board Meeting Agenda Packet - Page 263 of 274 Page 7 of 10 Finance Committee Minutes November 19, 2024 Page 6 Following this item, the agenda reverted to the original order with Item 3.b. as the next item of business. e. Review draft Position Paper to approve proposed Resolution 2024-xxx to amend the Central Contra Costa Sanitary District 401(a) Plan to reflect the terms of the amendment to the Employment Agreement with the General Manager approved July 25, 2024 The Committee reviewed the draft Position Paper provided in the agenda materials and had no questions. COMMITTEE ACTION: Reviewed and recommended Board approval. 4. Other Items C. Review Risk Management Loss Control Report as of November 4, 2024 Ms. Deutsch provided a brief overview of the report included in the agenda materials. She stated there were no new claims to discuss. Staff Recommendation: Received the report. 5. Announcements • Mr. Leiber announced that staff encountered a problem with the Oracle Permitting and Licensing (OPAL) software with the payment history. Therefore, only emergency permits were issued while Oracle is working to resolve the problem. 6. 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 and provided input to staff. 7. Future Scheduled Meetinas Tuesday, December 17, 2024 at 2:30 p.m. 2025 Committee Schedule TBD 8. Adjournment — 3:58 p.m. * Attachments December 5, 2024 Regular Board Meeting Agenda Packet - Page 264 of 274 Handout Item 3.d. Central Contra Costa Sanitary District Demographic and Economic Statistics Contra Costa County Last Ten Fiscal Years Fiscal Year Ended June 30 2014 Population* 1,110,971 Personal Income* $71,164,468,000 Per Capita Personal Income* $64,056 Average Annual Unemployment Rate** 6.2% 2015 1,126,027 77,914,957,000 69,195 5.0% 2016 1,138,645 82,204,425,000 72,195 4.4% 2017 1,147,439 87,810,279,000 76,527 3.8% 2018 1,150,215 94,900,003,000 82,506 2.7% 2019 1,153,526 98,423,318,000 85,324 7.9% 2020 1,152,333 106,318,748,000 92,264 5.3% 2021 1,161,413 115,342,618,000 99,312 6.4% 2022 1,156,966 109,965,993,000 95,047 3.5% 2023 1,155,025 119,219,394,000 103,218 4.1% * U.S. Department of Commerce, Bureau of Economic Analysis. Estimates for 2022-2023 reflect county population estim; ** State of California, Employment Development Department (EDD), annual calendar figure. 73 December 5, 2024 Regular Board Meeting Agenda Packet - Page 265 of 274 Handout Item 3.d. Central Contra Costa Sanitary District Ratios of Outstanding Debt Last Ten Fiscal Years Fiscal Year Total Per Capita Ended Outstanding Personal June 30 Debt* Income* 2014 $40,577,245 $64,056 2015 36,543,385 69,195 2016 34,160,134 72,195 2017 31,682,377 76,527 2018 29,095,000 82,506 2019 21,806,631 85,324 2020 19,447,392 92,264 2021 75,912,452 99,312 2022 65,403,313 95,047 2023 62,269,988 103,218 Debt as a Percentage of Per Capita Personal Income 0.158% 0.189% 0.211% 0.242 % 0.284% 0.391% 0.474% 0.131% 0.145% 0.166% Population** 1,110,971 1,126,027 1,138,645 1,147,439 1,150,215 1,153,526 1,152,333 1,161,413 1,156,966 1,155,025 * Includes lease and SBITA liabilities payable as reported at June 30. The District began reporting these numbers in FY'22 ** U.S. Department of Commerce, Bureau of Economic Analysis. Estimates for 2021-2022 reflect county population estimates available as of November 2023. Debt per Capita 36.52 32.45 30.00 27.61 25.30 18.90 16.88 65.36 56.53 53.91 69 December 5, 2024 Regular Board Meeting Agenda Packet - Page 266 of 274 Handout Item 3.d. Customer City of Concord 1. Contra Costa County General Services First Walnut Creek Mutual Park Regency Apartments Second Walnut Creek Mutual Apts Sun Valley Mall Branch Creek Vista Apartments Kaiser Foundation Hospital Bay Landing Apartments Archstone Apartments Muirland @ Windemere Apartments John Muir Health Bishop Ranch City Center Willows Shopping Center San Ramon Unified School District Total Customer City of Concord 1. San Ramon Unified School District Contra Costa County General Services John Muir Health First Walnut Creek Mutual Park Regency Apartments Second Walnut Creek Mutual Apts Sun Valley Mall Branch Creek Vista Apartments Kaiser Foundation Hospital Archstone Apartments Bay Landing Apartments Muirland @ Windemere Apartments St. Mary's College Bishop Ranch City Center Willows Shopping Center Central Contra Costa Sanitary District Sewer Service Charge Ten Largest Customers Last Ten Fiscal Years 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges $12,892,945 1 14.38% $13,913,960 1 14.18% $13,851,253 1 13.37% $14,973,623 1 13.46% $15,205,292 1 12.63% 451,567 2 0.50% 638,608 2 0.65% 547,943 2 0.53% 556,782 2 0.50% - - 417,050 3 0.47% 439,850 3 0.45% 462,650 3 0.45% 487,350 3 0.44% 521,550 2 0.43% 391,588 4 0.44% 412,996 4 0.42% 434,404 4 0.42% 457,596 4 0.41% 489,708 3 0.41% 329,250 5 0.37% 347,250 5 0.35% 365,250 5 0.35% 387,750 5 0.35% 411,750 6 0.34% 299,697 6 0.33% 283,613 6 0.29% 298,005 7 0.29% 354,208 6 0.32% 453,512 4 0.38% 175,600 7 0.20% - - 194,800 9 0.19% 205,200 9 0.18% 219,600 10 0.18% 158,848 8 0.18% 186,232 10 0.19% 186,281 10 0.18% - - 244,180 9 0.20% 158,040 9 0.18% - - - - - - 153,650 10 0.17% 153,650 10 0.17% - - - - - - - - - - 218,919 7 0.22% 322,601 6 0.31% 278,589 7 0.25% 413,900 5 0.34% - - - - - - 315,106 7 0.26% 206,210 9 0.21% - - 188,828 10 0.17% - - 215,044 8 0.22% 225,339 8 0.22% 247,766 8 0.22% 266,550 8 0.22% $ 15,581,885 17.37% $ 16,862,681 17.18% $ 16,888,526 16.30% $ 18,137,692 16.31% $ 18,541,148 15.40% 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges $ 14,923,591 1 11.52% $ 15,048,782 1 11.80% $ 16,086,801 1 11.93% $ 17,700,461 1 12.21% $ 17,882,586 1 12.12% 283,631 9 0.22% 215,229 10 0.17% - - - - 1,856,000 2 1.26% 733,416 2 0.57% 740,223 2 0.58% - - - - 1,518,877 3 1.03% 391,245 6 0.30% 362,718 6 0.28% 404,989 5 0.30% 434,624 5 0.30% 621,924 4 0.42% 537,700 3 0.42% 537,700 3 0.42% 593,750 2 0.44% 621,300 2 0.43% 590,900 5 0.40% 504,872 4 0.39% 504,872 4 0.40% 557,500 3 0.41% 583,368 3 0.40% 554,824 6 0.38% 424,500 5 0.33% 424,500 5 0.33% 468,750 4 0.35% 490,500 4 0.34% 466,500 7 0.32% 373,171 7 0.29% 339,061 7 0.27% - - - - 279,929 8 0.19% 226,400 10 0.17% 226,400 9 0.18% 250,000 6 0.19% 261,600 6 0.18% 248,800 9 0.17% - - - - 222,277 8 0.16% 225,383 10 0.16% 241,655 10 0.16% 198,876 10 0.15% 228,900 8 0.16% - - 225,000 7 0.17% 235,440 7 0.16% 218,750 9 0.16% 228,900 9 0.16% 335,017 8 0.26% 242,777 8 0.19% Total $ 18,733,543 14.46% $ 18,642,262 14.62% $ 19,226,694 14.26% $ 21,010,476 14.50% 24,261,994 1. Contract with the City of Concord to treat and dispose of wastewater for the cities of Concord and Clayton. The City of Clayton contracts with the City of Concord for the maintenance, operation, and capital replacement/improvement of its sewage collection system, which runs through the City of Concord. Source: Central Contra Costa Sanitary District Environmental Services Division 16.45% December 5, 2024 Regular Board Meeting Agenda Packet - Page 267 of ZT4