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08/14/2012 Finance CommitteeFINANCE COMMITTEE MEETING MINUTES August 14, 2012 Councilmembers Present Public Present Councilmember Buckshnis Ron Wambolt Councilmember Yamamoto Roger Hertrich Bruce Witenberg Staff Present Dave Preston, Port of Edmonds Commissioner Shawn Hunstock, Finance Director Jeannie Dines, Recorder Councilmember Buckshnis called the meeting to order at 6:27 p.m. The agenda was reordered to accommodate staff who were presenting at other committee meetings. 1. Financial Statement Audit Mr. Hunstock distributed an email summary from the State Auditor's office. The attachment to the report, the Financial Statement Audit Report, is available online. There were no findings for the 2011 financial statement audit and the outstanding items from the 2010 audit are considered resolved. He highlighted minor items noted by the State Auditor's Office. Action: Schedule on Consent Agenda, information only. E. Banking Request for Proposals Mr. Hunstock explained it has been several years since the City issued an RFP for banking services. When this was done in Tukwila, they stayed with their existing bank but via the process, saved money in banking fees. Consideration is also being given to diversifying the City's investment portfolio beyond the State investment pool where the City currently earns 0.2 %. He explained the Public Deposit Protection Commission in Washington requires banks that accept public deposits to be 100% collateralized. Action: Schedule on Consent Agenda. F. June 2012 Quarterly Financial Report Mr. Hunstock explained the separate monthly financial report and quarterly report have been combined into one report. Automation allows staff to produce the quarterly report on a monthly basis. All the City's accounts are contained in the reports. He highlighted revenues that are at 52% and expenditures that are at 46 %. Councilmember Buckshnis suggested moving the General Fund information to the beginning of the report. Action: Schedule on Consent Agenda. G. 2012 August Budget Amendment Mr. Hunstock explained this budget amendment implements the reserve policy adopted by Council, consolidating the $1.9 million Emergency Financial Reserve Fund and $1.3 million Public Safety Reserve Fund into a newly created reserve fund, Contingency Reserve Fund. As part of establishing the new reserve fund, $2 million is moved from the General Fund into the Contingency Reserve Fund so that this reserve fund contains all the monies considered to be the City's reserves. A balance of over $3 million remains in the General Fund for operating expenses and cash flow purposes. The reserve policy established a target of 16 %, this $5.2 million in the new serve fund meets that target. Finance Committee Minutes, Page 2 The previous budget amendment moved $244,000 into a Risk Management Reserve Fund, a separate reserve fund for claims and litigation and related expenditures. The balance in that fund does not yet meet the 2% target. The reserve policy previously adopted by Council removed the emergency restrictions on use of the $1.9 million reserve. The Contingency Reserve Fund can be used for any purpose Council deems necessary; however, it still requires Council appropriation. Mr. Hunstock explained the contract for Main Street Decorative Lighting was not included in the 2012 budget. This budget amendment funds that project at the amount of the engineers estimate. If bids are higher than the estimate, another budget amendment may be required. Action: Schedule for full Council agenda. A. Interlocal Cooperation Agreement For Public Safety Boat Maintenance And Repair Services Between The City of Edmonds And Snohomish County Fire District #1 Committee members had no questions regarding this item. Action: Schedule on Consent Agenda. B. Authorization to Sell One (1) 2002 Dodge Stratus Committee members had no questions regarding this item. Action: Schedule on Consent Agenda. C. Authorization to Sell Unit 047 -STR (1973 Asphalt Tack Wagon) Committee members had no questions regarding this item. Action: Schedule on Consent Agenda. D. Authorization to Contract With James G. Murphy Auctioneers To Sell Surplus City Vehicles Committee members had no questions regarding this item. Action: Schedule on Consent Agenda. H. Public Comments Ron Wambolt, Edmonds, commented the new reserve policy will require more discipline as previously the $1.9 million was not considered part of the 8% target. In previous years the Council utilized a portion of the 8% to balance the budget. He appreciated Mayor Earling's interest in balancing the budget annually. Mr. Hunstock clarified the $1.9 million was included in the General Fund fund balance although it was in a separate fund. Mr. Wambolt relayed an offer he received from American Express Bank for .85% interest. Mr. Hunstock explained the City's investments must be approved by the Public Deposit Protection Commission. Roger Hertrich, Edmonds, inquired about REET revenue this year and obligations paid via the REET fund. Mr. Hunstock explained the City has two REET funds, one is used primarily for debt service (REST 2) and the other for construction type activities (REET 1). The REET 2 fund balance Finance Committee Minutes, Page 3 has increased from $436,000 to $722,000 and the REET 1 fund balance has increased from $225,000 to $464,000. A brief discussion followed regarding the use of REET funds for road projects. Councilmember Buckshnis requested scheduling a discussion on the September Finance Committee agenda about reducing the amount of REET revenue that can be used for roads from $750,000 to $500,000. Bruce Witenberg, Edmonds, expressed his appreciation for the Council scheduling a presentation by WCIA. Mr. Hunstock advised a 30 minute presentation will be made to the Council next week regarding the City's coverage, WCIA's policies and processes, etc. The WCIA's electronic presentation will be included in the Council packet. Mr. Hertrich asked whether there have been any discussions at the RFA planning meetings regarding the cost of an RFA. Mr. Hunstock relayed their intent is to ask each City Council and Fire District Board to pass a resolution this year authorizing the RFA Planning Committee to continue negotiations /discussions. Adjournment — The meeting adjourned at 7:03 p.m.