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HomeMy WebLinkAbout2012-02-27 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING February 27, 2012 A meeting of the Finance-Accounting Committee was called to order by Director Kiley 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 Robert R. Kiley, Chair Ken Vecchiarelli, General Manager Director Phil Hawkins Stephen Parker, Finance Manager 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.1. Unaudited Financial Statements for Period Ending December 31, 2011 Mr. Parker presented the unaudited financial statements through December 31. He explained that while none of the numbers changed dramatically, this was a more complete picture of where the District is half way through the year. In addition, the accounting section was getting practice by completing all the items required during the audit process every quarter. He anticipated the smoothest audit process he has experienced here as a result of the work that was done to prepare the full- accural quarterly financial statements. Mr. Parker also pointed out that as a result of the Board authorizing an additional $100,000 from the employee liability reserve into the CERBT Trust, adding to the money that was budgeted from the actuarial valuations, that the Net OPEB Liability was now a Net OPEB asset. The Committee supported staff's recommendation to have the Board of Directors to receive and file these statements. 3. DISCUSSION ITEMS 3.1. December 2011 Debt Service Ratio Mr. Parker shared the December 2011 preliminary debt service ratio. He explained that because the District traditionally receives 55% of their revenues in the first half of the year, the 2.17% debt service ratio was going to be higher than it should be at the end of the year, but that the Distict is in a comfortable place with respect to being over our required 1.10% debt service coverage. Mr. Vecchiarelli added that Finance is being proactive and gathering this information throughout the year, which is a positive change from the condition that the District's accounting section was in when he took over as General Manager. At that time, the debt service coverage information was not looked at until after the auditors 1 were reviewing the books for the year. He stressed that this is one of many areas that have greatly improved in management of the District's finances. 3.2. Investment Report for Period Ending January 2012 Mr. Parker explained that the cause for the increase in portfolio yield in the investment report was not because of an increase in any of the investments — in fact, all investment yields went down. Instead, it was that the District significantly spent down its lowest yielding investment — the US Bank money market account associated with the 2008 COP Revenue fund. By decreasing the amount of invesments earning that 0.05% yield by over $1.4 million from the previous month, the District's yield for the month increased 0.03% to 1.03%. Mr. Parker explained how a reconcilation is completed quarterly to reimburse the operating funds (both water and sewer) for any capital projects they may have paid for, which were not initially charged to the capital funds. The reconciliations for the 2nd quarter of the year resulted in a little over $100,000 reimbursed to the Sewer Operating fund, and approximately $70,000 reimbursed to the Water Operating fund. The committee reiterated their desire to see information on the investments and yield that other local water districts' portfolios are earning. 3.3. January 2012 Budget to Actual Results Mr. Parker highlighted a couple of the larger changes that took place in the month of January, including training for class "A" licenses in the sewer area and the process of accounting for the transfer of the Lomas De Yorba facility to the City of Yorba Linda. Mr. Vecchiarelli explained that Mr. Parker spoke with the external auditors about the correct accounting for that transaction despite that the Lomas De Yorba facility was a water chlorination facility and not related to the sewer fund. The majority of the unusual items in the budget to actual results had been discussed in previous meetings, and the Committee had no other questions. 3.4. Draft Finance Department Budget Mr. Parker presented the draft version of the Finance Department budget for FY12/13. It included a decrease of $70,000 or 15% from the current year's budget. The largest items of change include a $25,000 decrease as a result of completing the cost of service and water rate study, as well as other decreases in communications, professional services, materials, travel and conferences and office expenses. The Committee inquired about the decrease in communications, and Mr. Parker explained that the postage costs for the District's water bills are decreasing as more customers receive their bills online. As that happens, contractual services will increase to pay for the cost of delivering that online bill, but in an amount lower than the decrease in communications. When asked about the decrease in travel and conferences, Mr. Parker indicated that the two important financial conferences were still in his budget, but that he cut 2 some lesser conferences that were previously in the Finance Administration budgets. 3.5. Preliminary 2013 Budget Numbers Mr. Parker explained the assumptions made in the first version of the FY12/13 budget. The majority of the supplies and services expenses were in from all the departments, so that area was mostly complete. The preliminary personnel expenses were complete assuming no changes are made in the MOU process, which has not yet begun. Mr. Parker mentioned that while the variable water costs were up over $700,000 with the upcoming year's assumptions, staff had not yet put the additional revenue that passing through those variable water costs would provide. Staff also made assumptions including the same amount of water purchased as the previous year's budget, with a water loss assumption increasing from 5% to 6% based on the prior fiscal year water loss data. 3.6. FY 12/13 Budget Calendar Update Mr. Parker presented the most recent calendar for the budget process. The Committee recommended scheduling the Budget workshop as well as another workshop related to Captial Improvement Projects prior to the Budget workshop. 3.7. Upcoming Pension Accounting Changes Mr. Parker described some of the changes that the Governmental Accounting Standards Board is recommending in the area of pensions. The results will be known around June 2012, but generally will result in a higher annual cost to the District as a result of changing assumptions used in future actuarial valuations. These changes, which are not fully known yet, would affect the District in the 2013/14 fiscal year. 3.8. Status of Strategic Plan Initiatives Mr. Parker gave an update on the current strategic plan initiatives for fiscal responsibility. The water rules and regulations and developer and customer service fee resolutions should be presented to the Board for adoption in March. In addition, there is still 3-5 weeks left in the implementation process for the Cal-Card. 3.9. Future Agenda Items and Staff Tasks • Provide information to the Committee on the investments and yield that other local water district's portfolios are earning. 4. ADJOURNMENT 4.1. The Committee adjourned at 5:29 p.m. The next meeting of the Finance- Accounting Committee will be held March 26, 2012 at 4:00 p.m. 3