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HomeMy WebLinkAbout2002 01-29 SpecialMeridian City Council Special Meeting January 29, 2002 The special meeting of the Meridian City Council was called to order at 5:30 P.M. on Tuesday January 29,2002 by Mayor Robert Corrie. Members Present: Tammy de Weerd, Keith Bird, Bill Nary, Cherie McCandless, and Mayor Robert Corrie. Others Present: Stacy Kilchenmann, Bill Nichols, Mike Worley, Janice Smith, and Will Berg. Item 1. Roll-call Attendance: X Tammy de Weerd X Bill Nary X Cherie McCandless X Keith Bird X Mayor Robert Corrie Item 3. Discussion and Review of the 2000/2001 Fiscal Year Audit by Balukoff, Lindstrom & Company: Corrie: (inaudible) Okay, are we ready? Okay, I’ll call the notice of the special meeting of the Meridian City Council, Tuesday January 29, 2002 at 5:30 P.M. The City Council will meet for the following items, discussion review of the 2000/2001 fiscal year audit by Balukoff, Lindstrom and Company. At this time I will invite the representative. (inaudible discussion amongst staff) Corrie: Pardon? I’m sorry, let the records show that everyone is here and present. (inaudible discussion amongst Council) Anderson: Mayor and Members of the Council, I’m Kevin Anderson from the firm of Balukoff, Lindstrom and Company. We did the audit of the financial statements for the year ending September 30,2001. Some of the things that I want to talk about and I’ll entertain questions at any time. So, if you have anything feel free to ask them. I’ll answer the best I can. We did the audit of the financial statements. On the first page, page one is our opinion, page one and two. It's an unqualified opinion. It’ll be in the financial statement, which is this thicker part here. (inaudible discussion amongst Council) Bird: That’s your disclaimer? Meridian City Council Special Meeting January 29,2002 Page 2 of 11 Anderson: Yes that’s our opinion. I’ve got to tell you --. Well, I better not. It's a tough time to be a CPA and have a last name of Anderson. All joking aside. But our firm name is not Anderson. (inaudible discussion amongst Council) Anderson: I’ve been having a little grief or whatever over that. Fortunately we’re not the same firm or whatever. So, we will stand by our work. Bird: You don’t have any shredders? Anderson: No, we’re not shredding documents either even as we speak. A clean opinion on the financial statements, unqualified which is the best you can get. Basically what we say is we’ve audited the financial statements and they present fairly the financial position and results of operation for the City for the fiscal year 2000/2001. As part of our audit, we did a couple of things that auditing standards require. One is we considered the City’s internal controls over financial reporting to determine basically the procedures that we would perform. The better the internal controls, the more we rely on those and we don’t do as many, what is called substandard procedures. The City has good internal controls from that. We don’t do a detailed review of those but we do take a look at those to determine what we feel like are the necessary audit procedures that we perform. We also perform procedures to determine whether the City is in compliance with laws and regulations that may have a material effect on the financial statements. Obviously we are not attorneys but we do look at those things that we feel like might have a material impact on the financial statements. The objective of our audits is to provide reasonable assurance that the financial statements are fairly stated. The key word being reasonable assurances, not absolute. But, you know we do, do the best that we can there. As far as the audit goes, we issued an unqualified opinion, as I said. We also issued a report on compliance with laws and regulations and internal controls. That’s contained on page 35 and 36 of the financial statements. Basically, we did not note anything that needed to be reported to Council as far as any kind of deficiencies in the, or reportable conditions in the internal controls or in your compliance with laws and regulations. We issued a letter to the Council and the Mayor, which is this one right here that many of you got that basically covers some things that we are required to report under auditing standards. It's basically telling you that we did implement a new accounting policy this year. There’s a statement No. 33 that we implemented and as a result of that statement, developer contributed to water and sewer lines is now recognized as (inaudible). Is that me? (inaudible discussion amongst Council) Anderson: The sewer lines and water lines that are contributed are recognized as revenue rather than as contributed capital as they have been in the past. We note that there were not disagreements with management, no issues where Meridian City Council Special Meeting January 29,2002 Page 3 of 11 management consulted with other independent accountants or we encountered no difficulties in the audit. We also issued a management letter talking about some things that we felt like there could be some improvements made. It's this one here, management letter. I think we issued that to the Mayor and to the Finance Director Stacy. They have a copy of that in there. Some observations on the financial statements. Again, this year your expenditures were less than budgeted amounts. So, you’re in compliance with state law there, which is always a good thing. Your general fund balance is at 13 and a half million dollars now. Because of governmental accounting and I apologize that it has to be presented this way. I don’t make the standards I just have to kind of report them. But, basically that, you need to subtract from that fund balance, the amount you have to pay on the police building, a debt of about four million dollars there. So, really you have nine and a half million dollars that you can look at that’s available. That is on page two of the financial statements. We’ll just go there a little bit. Sorry, not two, five and six of the financial statements. On page five, is the general fund. At September 30, 2001 there’s 5.8 million dollars of unreserved fund balance available. So, we have some park improvements that we have a reservation of and police center construction and fire truck purchases and the overpass construction that we have reservations of fund balance. But, basically, we have unreserved of 5.8 million. You take the four million dollars of debt out of that and you’re down to an unreserved balance of about 1.8 million. Bird: Excuse me. Kevin, I think the reserve for the police construction, 3.6 million is up there already. Anderson: Yes. Bird: So, you wouldn’t take that out of the five? Anderson: Well, -- Bird: Would you? Anderson: I suppose, yes that’s correct. There is 3.6 million reserved for the police center construction debts. Bird: (inaudible) when I went through that I did the same thing. I thought holy cow; we’re down (inaudible). (inaudible discussion amongst Council) Anderson: The other thing about fund balance, I don’t know if you read in the newspaper here a while back. But I think Ada County kind of took it a little bit on the chin a little bit as far as their --. I don’t know. There was a comment made that the fund balance was getting a little too high or whatever. So, it's one of those that you’ve got to manage both sides, you know. You can't get it too low Meridian City Council Special Meeting January 29,2002 Page 4 of 11 and you can't get it too high. That means you’re never right kind of thing. You guys have never been in that situation I’m sure, kind of thing. But basically, it is one of those things that you probably need to kind of take a look at. You’ve done very well over the past years of building that fund balance up. I’ve said in past Council meetings that it's been a very conservative Council and built that up or whatever. But, also you know with say now be careful about continuing to build it up too high because you know you could have the same comment made at some point down the road or whatever. Again, it's one of those that you know I don’t know that I’d worry about it too much. But, if we continue in the next two or three years building fund balance like we have it, it could become very much and issue for you. Net income, on page seven of the general fund, if we can call it. That was 2.8 million dollars. Four million of that was actually debt and again, you have to recognize in governmental accounting, debt is recognized as revenue, which makes no sense. That’s the way it is. You transferred out 2.1 million dollars and most of that went to --. That went to the capital projects fund based on the ordinance that we have in place to transfer excess to that fund. Enterprise fund is also in good financial condition. Again, page five and six. You have 33 million dollars of retained earnings there. 87 million total equity but most of that is developer contributed sewer and water lines. So, 33 million dollars and the enterprise fund had net income of 9.8 million, which sounds a lot higher than it has been in the past. It looks like that on paper but again, we had donated water lines and connection fees, which is that new accounting change that we just talked about on the (inaudible) statement. That was seven million dollars of it. So, it makes it look quite a lot higher or whatever. The guys in the ivory white towers, I don’t know. Sometimes I wonder about --. We do have one new accounting statement out there. Many of you may have heard about but it's called Gasby’s statement 34, which is getting a lot of press. Basically it will change --. We have to start reporting infrastructure assets, which for the City of Meridian is not too bed. We’re really pretty --. We really don’t have much in the way of infrastructure. If you’re Ada County Highway District, what that means is they have to go figure out the cost of all their roads and put that on the balance sheet kind of a thing. They’ve expensed those in the past. But as far as the actual accounting goes for the City of Meridian, it won't change things a lot. What will change is the look of the financial statements. We’re required to implement that statement for the City in the fiscal year ending 03. So, we have two more years before --. We won't implement it in 02 unless there’s a --. I think Stacy is probably is saying no, no. We’re not going to do it in 02. So, unless there’s an overriding reason of somebody wanting to do that from the Mayor and Council perspective, we’re going to look to 03. That will take us some additional time to implement that. I was just telling Stacy that I was today reviewing my first Gasby 34 implementation. CCDC is implementing that. That thing is kind of a bear, just the look and the feel of the financial statements are totally different than they have been. So, we’ll probably implement that unless we get any objections from any of you when it's required rather than early implement next year. De Weerd: We’ll let you work the bugs out first. Meridian City Council Special Meeting January 29,2002 Page 5 of 11 Anderson: Thank you. We get to practice on CCDC – (inaudible discussion amongst Council) Anderson: --and Boise City first or whatever which we will be doing this year. Then we get another year to kind of work some more out. So, that’s probably a good strategy. (inaudible discussion from staff) Anderson: We’re going to take a dry run at it. But it will be off of the statements. We won't actually put it there but we’re going to kind of take a look and see, you know make sure there’s no issues or whatever. Bird: Sewer lines, water lines, stuff like that, is that infrastructure? Is that covered under that? Anderson: It's technically already on the balance sheet right now. I mean, infrastructure is stuff that really got expensed but not included on the balance sheet anywhere. Bird: Okay. Anderson: So, technically no Councilman Bird. That’s already accounted for. Again, as far as infrastructure goes, you’ve got most of everything on the balance sheet already. So, it's just a matter of making sure it's in the right place. We’ll start pulling it together into one column instead of breaking it out into two. Let me illustrate that point. If you go to page two and three on the financial statement, there’s a column titled general fixed asset and general long term debt, as you see on page six. Lets got to page three and four. I’m sorry. Three and four, there’s two columns called general fixed asset and general long-term debt. Basically what would happen is those two columns will be combined with the general fund column and the capital projects to form one column that will be called governmental activities. Then we’ll have the proprietary activities, which are already the enterprise fund. So, it will change how the financial statements look. Actually it will bring the general fixed assets into the general fund which is probably where they belong anyway. I’m open for questions. Are there any that you have from reading the financial statements? They are fairly similar to what they have been in the past as far as foot notes go and the disclosures that we make. There really aren’t any significant changes there. Bird: Mr. Mayor. Corrie: Mr., Bird. Meridian City Council Special Meeting January 29,2002 Page 6 of 11 Bird: Kevin, we discussed this earlier but I would like to --. You know, on page seven we’ve got under miscellaneous revenues 183,000 -- Anderson: Right. Bird: -- dollars. I just can't imagine that there’s that much, that there’s miscellaneous to that. It’s got to be under some kind of a revenue. Anderson: And it is, you know we kind of struggled as I looked at that after you made that comment in the hallway Councilman Bird. We kind of struggle with how much detail to put onto the financial statement. We may have 11, 11193 – 11,193,000 in revenue and you know we could probably keep going and list that you know down --. Bird: But, under that miscellaneous couldn’t we just kind of, just kind of list under there two or three items that it's under because --? Anderson: Yes. We probably could and – Bird: I mean, you know that’s a very small percent of the 11 million. I looked at that too and – Anderson: Yes. Bird: But in the same token that is a pretty large sum – Anderson: Number – Bird: -- for somebody to look at – Anderson: --and say what is that? Bird: You know that’s a lot more money than I make in a year and you’re getting these revenues in and they’re miscellaneous. Now what are they covered under? Are they this or --. If we could list two or three categories --. We don’t have to categorize them, put them all under miscellaneous. But under there put some parenthesis and say – Anderson: Right. Bird: -- such, such and such. De Weerd: Just general terms. I hate miscellaneous. Anderson: Okay. I’ll make a note of that. Meridian City Council Special Meeting January 29,2002 Page 7 of 11 (inaudible discussion amongst Council) Bird: As you said, we wouldn’t get away with this on our personal taxes. (inaudible discussion amongst Council) Bird: We’ve also got it under expenditures too. (inaudible discussion amongst Council) Anderson: Yes, we can do that. We’ll do that next year in the audit. Bird: Kevin I think that would definitely help us. Anderson: Okay. Bird: In the budgetary time to know that last year we got x amount, you know these three or four sources we received 183,000. Is the economy going to allow us to receive 183,000 this year? Anderson: Yes. Bird: Or 100,000 or what? You know, we can do it within the budget. Anderson: Okay. (inaudible). (inaudible discussion amongst Council) De Weerd: Mr. Mayor. Corrie: Mrs. de Weerd. De Weerd: I don’t know who this question is to, Stacy or our attorney. I noticed in the 2001 column on page 11 donated land. Didn’t we get Bear Creek Park last year? Bird: I thought we got it in 2000. (inaudible discussion amongst Council) Anderson: Okay. This would be just for the enterprise fund. This is – De Weerd: Oh. Bird: Oh, that’s the enterprise? Okay. Meridian City Council Special Meeting January 29,2002 Page 8 of 11 Anderson: Yes. That donation only covers what's in the water and sewer fund since that’s all the statement covers. De Weerd: Do we have one for the general fund that you track that too? Anderson: Not that would be broken out. It's probably miscellaneous. Nichols: Mr. Mayor. Corrie: Mr. Nichols. Nichols: Mr. Mayor, Members of the Council. The Bear Creek Park deed was received by the City just prior to the end of December 2001. So, it won't show up until the next coming one. Anderson: Until fiscal year 2002 audit. Okay. De Weerd: Thank you very much. Corrie: Any other questions? Bird: No. Just compliment again on the nice job these people have done for us the last three four years. It's sure a change over what I came onto my first couple of years on the Council. I for one certainly appreciate it Kevin and all the work you guys do and the work our people do. Anderson: They do a good job too. My hat is off to them for the job that they’re doing for you because they do, do a good job. They are very conscientious. You know, we ask for information and they get it for us or find and answer questions. We probably torment them a bit during the process or whatever but they were very good about it. De Weerd: They looked very hairy this time. Bird: You guys do a great job and we appreciate it. Corrie: Thank you. Anderson: Thank you. De Weerd: Just one other question I guess. You do give the letter to Council every year. As a follow up to those recommendations, have they been implemented? Have you seen progress in those areas? Anderson: Yes we do see progress in the areas that we do make recommendations in. I suppose the one that I think I would like to probably re- Meridian City Council Special Meeting January 29,2002 Page 9 of 11 emphasis is contracts getting to accounting. They just don’t, you know sometimes they don’t get all the copies that they need to make sure that the recording gets done. I’m not really pointing fingers at any one person or whatever kind of a thing. But they do need to get that so that they can make sure that there are issues that they can address them from accounting and get those recorded. It's mainly in the water assessment agreements, latecomer agreement, those that are --. Bird: Hopefully those will be history. Anderson: -- anything that relates to grants or accounts payable type things. That’s one I would probably plug on but you know we make comments and people are very conscientious about, I guess to rectify the situation that caused the comment. De Weerd: I appreciate that. Bird: Thank you very much Kevin. Corrie: Thank you Kevin. I appreciate it. Council, it has been requested that we go into executive session just for a few minutes. The police department would like to give you a personnel update. So, can we get you down there in my office? McCandless: DO you want to pick me up and carry me? Corrie: I’ll do anything you want. You have the biggest guy in the --. No, I’ll take that back. I may be (inaudible). We’ll get you there. De Weerd: Glen is still here. Bird: Mr. Mayor. Corrie: Yes? Bird: I would move that we go into executive session as per Idaho State Code 672345-A. De Weerd: Second. Corrie: C. Bird: C. Corrie: We need to do a roll call please. Roll-call: De Weerd, aye; Nary, aye; McCandless, aye; Bird, aye. Meridian City Council Special Meeting January 29,2002 Page 10 of 11 MOTION CARRIED: ALL AYES Executive session Corrie: Council, I will entertain a motion to come out of executive session. De Weerd: So moved. Bird: Second. Corrie: Okay. Motion made and seconded to come out of executive session. All those in favor say aye. MOTION CARRIED: ALL AYES Corrie: Okay, I’ll entertain a motion to close the special meeting on the discussion and review of the fiscal year audit. McCandless: So moved. Corrie: Do I hear a second? De Weerd: Second. Corrie: Motion made and seconded to – Bird: Discussion? Corrie: -- to close the – Bird: Do we not have to pass on accepting that audit? Corrie: We did not do that, did we? Bird: We didn’t do that. Corrie: Okay, yes we need to. Bird: With that Mr. Mayor I would move that we approve the financial audit by Balukoff, Lindstrom and Company for the fiscal year ending September 30,2001 and make it available to the public. De Weerd: Second. Meridian City Council Special Meeting January 29,2002 Page 11 of 11 Corrie: Motion made and seconded to approve the review of the fiscal audit for the year 2000/2001 and to make it available to the general public. Any further discussion? Hearing none, all those in favor of the motion say aye. MOTION CARRIED: ALL AYES Corrie: Now, I did entertain a motion earlier for the closing of the Public Hearing. Is there any further discussion? Hearing none, all those in favor of the motion say aye. MOTION CARRIED: ALL AYES MEETING ADJOURNED AT 6:29 P.M. (TAPE ON FILE OF THESE PROCEEDINGS) APPROVED: / / ROBERT D. CORRIE, MAYOR DATE APPROVED WILLIAM G. BERG, JR., CITY CLERK