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HomeMy WebLinkAbout2011-11-28 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING November 28, 2011 A meeting of the Finance-Accounting Committee was called to order by Director Collett at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E. Miraloma Ave, Placentia CA 92870. COMMITTEE STAFF Director Ric Collett, Chair Ken Vecchiarelli, General Manager Director Robert R. Kiley Stephen Parker, Finance Manager 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.1. Financial Statements for Quarter Ending September 30, 2011 Mr. Parker presented the first full-accrual quarterly financial statements prepared for the Board's review. The format was changed to include a balance sheet and look similar to the audited financial statements. The Committee recommended additional revisions to include budgeted information and comparisons on the income statement, and to include a comparative column on the balance sheet. 2.2. OPEB Liability Pay Down Mr. Parker explained that this action item of depositing money with the California Employees' Retirement Benefit Trust (CERBT) was the same as the District did in the prior fiscal year, but with one difference related to the timing of the deposit. The Resolution the Board authorized in January 2011 allowed the District to pre-fund the CERBT with the entire budgeted amount, and then draw down the actual retiree costs from the fund. This recommendation is to do that for the current fiscal year - fund the entire budgeted amount, and draw down for reimbursement future expenses paid by the District. This will allow the District to utilize a preferable interest rate on the money held with the CERBT during the year. The Committee supported staff's recommendation and requested staff place the matter on the action calendar at the next Board meeting. 2.3. Purchasing Card Recommendation Mr. Parker spoke about staff's research of 10 potential vendors to come up with the recommendation for a purchase card program. He explained some of the benefits that separated staff's recommendation - the CAL- Card program through US Bank - from others. The Committee spoke about some of the benefits of using a purchasing card program. Mr. Parker identified that the District could easily add additional cards to the 1 current plan in the future, but identified that the CAL-Card program allowed the majority of purchases to still be approved by the Board before the vendors were paid by credit card. Mr. Parker identified that once the program was up and running, he anticipated the District would receive in excess of $9,000 annually by implementing this program. He also explained that there were no fees to the program under any circumstances. Lastly, he clarified that the contract the District would sign would not be through US Bank directly, but would add the District to many other vendors already added to a contract between the State of California and US Bank. The benefit to this would be that the District could opt out at any time with no penalty. Mr. Parker added that legal counsel had just been submitted the contract information, and the recommendation on to the entire Board would be pending that legal review. The Committee supported staff's recommendation and requested the item be placed as an action item on the next Board meeting available after legal counsel's review. 2.4. Adopting a Public Investment Policy Mr. Parker presented the Committee with a revised investment policy. He explained that the two largest changes made to this version were removing a dollar limit to investments in LAIF, CalTRUST and the Orange County Treasurer's Commingled Investment Pool as well as adding an investment item the District had previously invested in - Negotiable Certificates of Deposit. In addition, some small clean up language was made in the Obligations Issued by Federal Agencies paragraph. Mr. Parker explained that the changes made all abided by the California Government Code. The Committee asked who would review the District's policy to ensure it is appropriate. Mr. Vecchiarelli explained that the auditors annually review the District's investment policy to ensure it is in compliance with the California Government Code as well as ensuring the District is in compliance with their own investment policy. In the FY 2010/11 audit, their review determined that the District was not in compliance with one of its policies that was more restrictive than the California Government Code, and presented the District with a recommendation for making a correction - either to the policy or to the practice of having investments over $10 million in CalTRUST. The Committee requested that future investment policies be presented with tracked changes to make reviewing the differences easier. Staff agreed to that practice and indicated this would be done in the future. The Committee supported staff's recommendation pending a review by legal counsel. 3. DISCUSSION ITEMS 3.1. September 2011 Debt Service Ratio Mr. Parker shared with the Committee the September 2011 debt service ratio. This figure was delayed pending the completion of the full-accrual unaudited financial statements. The 246% provided was well above the 2 110% floor. Mr. Parker pointed out that as a result of approximately 33% of the District's water sales occurring in the first 25% of the year, September would always have an inflated debt service coverage ratio. The Committee discussed potentially offering a level-pay type plan to even out the revenues over the course of the year. Mr. Vecchiarelli said that was something that could be looked into, but it was pointed out that in the District's current circumstances, we receive more revenue early in the fiscal year when our water purchase expenses are typically higher, while a level-pay program would reduce that revenue early on. 3.2. Investment Report for Period Ending October 31, 2011 Mr. Parker shared the information from the monthly investment report. He explained that the reduction in CaITRUST's portfolio yield was the main driver for the decrease in overall yield from 1.08% to 0.99%. Mr. Parker also identified some reserve balance changes and noted that overall reserves had increased by $473,000. 3.3. October 2011 Budget to Actual Results Mr. Parker presented the October budget to actual results to the Committee. He shared that there were not too many changes from the previous month's results. Water revenue was trending below budget, variable water costs were higher than operating revenues as a result of purchasing more import water prior to a January 1, 2012 increase, other operating revenues were higher than budgeted due to the unbudgeted Vista Del Verde project coming through, and supplies and services expenses were all trending below or on budget, with the same exceptions as in the previous month. The Committee asked a question about a negative expense in the Water Fund's Data Processing expense line item, and when Mr. Parker could not speak to it, requested that he provide that information to them at a later point. Staff determined afterwards that the negative expense was attributed to a rebate on a copier lease. 3.4. Status of Strategic Plan Initiatives Mr. Parker went through the strategic plan items listed under the Fiscal Responsibility area. There was some discussion pertaining to the January workshop, as a number of the strategic plan items would be addressed in that workshop. The Committee requested that a comparison be made of the District to other of Orange County entities as it relates to fixed costs and rate structure in the January workshop. The Committee pointed out that the Multi-Year Financial Plan item should be moved to the current tasks. 3.5. Future Agenda Items and Staff Tasks • The Committee requested that future investment policies be presented with tracked changes to make reviewing the differences easier. 3 • The Committee requested that Mr. Parker explain a negative expense in the Water Fund's Data Processing expense line item, the explanation of which was forwarded later that evening by e- mail. • The Committee requested that a comparison be made of the District to other of Orange County entities as it relates to fixed costs and rate structures in the January workshop. 4. ADJOURNMENT 4.1. The Committee adjourned at 5:16 p.m. The next regular meeting of the Finance-Accounting Committee is scheduled for December 27, 2011 at 4:00 p.m. 4