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Minutes from the Finance Committee meeting on July 20, 2006.
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Finance & Administration Committee Minutes
Thursday, July 20, 2006
4:00 p.m.
Members Present were: Darrel Dover, Alec Farmer, Jim Hargis, Harold Perrin and John Street. Councilwoman Williams was unable to attend. Councilman Hargis left at 4:25 p.m.
PRESENTATION
Non-uniform Employee Pension Fund Report, Principal Financial Group: Ms. Rae Willis was present to discuss the City’s defined benefit plan, proposed changes to the plan and some alternatives. She stated to increase the pension multiplier from 1.5% to 1.75% it would cost an extra $133,936 for 2006. Councilman Dover questioned what determines how much the City has to contribute every year. Ms. Willis explained it’s made up of several factors, including the City’s earnings from investments, the makeup of the employee group and the benefit formula. Councilman Perrin noted the figures Ms. Willis provided would be the cost if all the variables stayed the same. Chairman Farmer was questioned how they came up with the percentage for the normal cost as a percentage of compensation. Ms. Willis explained they based it on the census for 2005. She further explained the normal cost as a percentage of compensation percentage means it will take the equivalent of 6.82% of the payroll in 2005 to fund the requirements for the current plan. She added to increase the multiplier it will take the equivalent of 7.89% of the payroll in 2005 to fund the requirements for the plan. Chairman Farmer questioned if Jonesboro’s plan is similar to those of other places of employment. Ms. Willis stated she could find some comparative data for defined benefit plan and what the average employer contributes to the plan. Chairman Farmer then questioned what the deficit is for the current plan. Ms. Willis explained the plan is not 100% funded and is in a deficit. She stated a change in census, such as adding younger employees, could help shrink the deficit. She added for the 2006 valuation, the deficit is $630,378. Councilman Dover questioned whether paying off the deficit would lower the required contribution. Ms. Willis stated part of the required contribution goes toward paying off the deficit. Ms. Willis then discussed freezing or terminating a defined benefit plan. She explained a soft freeze would keep the people already in the plan in tact, but would not allow anyone else in the plan. She added new employees would generally be put in a new defined contribution plan, while keeping the defined benefit plan open to the current employees. Ms. Willis explained there is also a hard freeze that will take everyone out of defined benefit plan and put them with all new employees into a defined contribution plan. Chairman Farmer questioned whether there is a lot of people going to defined contribution plans. Ms. Willis stated defined contribution plans are more prevalent than defined benefit. Ms. Willis then explained the City could also terminate the plan. She added the City would start a defined contribution plan, but roll over the defined benefit plan into the defined contribution over a period of time. Councilman Perrin stated each Council member gets the performance information every month concerning the plan, but there is more information sent out that they’re not receiving. Ms. Willis stated every month she sends out the raw performance number on the investments options that are available. She added the information has been going to Mr. Larry Flowers, but they can add people to that mailing. Chairman Farmer asked if the information could be sent to everyone. Ms. Willis stated the information won’t be specific to the City of Jonesboro, but will show what alternatives are making. Councilman Dover questioned what the least expensive option would be. Ms. Willis stated freezing a plan will have the minimal cost, but the City will have to amend documents to show the plan is frozen. Chairman Farmer asked for Councilman Perrin and Ms. Willis to work on some numbers for the alternatives and bring back them back to the committee in 30 to 60 days.
MINUTES
It was noted there was a change with the spatial study ordinance that had been approved at the previous Finance meeting. The City ended up contracting the work to ASAI Architecture because Whittenberg, Delony & Davidson, Inc. did not agree with the amount of the contract not exceeding $40,000. Councilman Street motioned, seconded by Councilman Hargis, for the approval of the minutes for the June 22, 2006, regular meeting as written. All voted aye. Copies were provided to all those in attendance.
ORDINANCES AND RESOLUTIONS
Resolution approving participation in the Outdoor Recreational Grant Program: Mr. Jason Wilkie explained they participate in the grant program every year and it’s a 50% matching grant. He added the application and the project list have been approved by the citizen advisory group and the Public Services Committee. Councilman Hargis questioned if the projects were listed in order of importance. Mr. Wilkie stated the projects are in no particular order and the price spent on each can be adjusted according to how much the City receives through the grant. Councilman Dover motioned, seconded by Councilman Street, to recommend the resolution to full Council. All voted aye.
FINANCE & AUDIT
Financial report: Mr. Davis stated he’s been working to reconcile the un-appropriated balance of the Capital Improvement Fund.
Mid-year budget adjustments: Police Chief Michael Yates expressed concern over having bills to pay with no money in some of the line items. He suggested suspending the rules and allowing department heads to exceed some line items so bills can be paid. Mr. Davis noted another department is running short in some line items and might be out by the end of the month. Ms. Misty Micenhamer stated the decision is up to the Finance Committee. She stated the committee could suspend the rules until the mid-year adjustments are worked out, which should take about a month. Chairman Farmer questioned why some accounts are behind. Mayor Formon stated some of the problems stem from fuel prices going up and the effect it’s had on the prices of other items like asphalt, which has increased the price of street contracts. Chief Yates stated if they just look at the bottom line things are fine, but the problems are in certain line items within the budget. Councilman Dover clarified the total budget will not increase, rather the money will just be moved around from one line item to another. Only the line items will increase within a department. Councilman Street motioned, seconded by Councilman Dover, to temporarily suspend the ordinance and authorize the Mayor and Finance Committee to sign-off. All voted aye. PENDING
2007 budget status: Mayor Formon explained they are not ready yet for the 2007 budget. Chairman Farmer stated he heard they were caught up through the end of February or March. Mr. Davis explained that’s what he’s been told, but he hasn’t had time to reconcile it yet. Mayor Formon stated it’s done through March 31st. Mr. Davis stated he wants to check it before he signs off on it. PENDING
Temporary positions: Mayor Formon recommended contracting with Mr. Mike Cameron to work on drainage projects for the hot spots around town. Chairman Farmer questioned who Mr. Cameron will be working under. Mayor Formon stated Mr. Cameron will be working under the direction of him and the Public Works Director. City Attorney Phillip Crego expressed concerns over contracting the work out to Mr. Cameron due to Mr. Cameron’s private business possibly wanting to work on some of the drainage projects. Mr. Crego stated Mr. Cameron could have a conflict of interest between his company and some of the projects. Mayor Formon stated Mr. Cameron indicated to him that he does not wish to bid on any of the projects. Mr. Cameron added State Statute 14-42-107 spells out exactly what he can and can’t do. Chairman Farmer explained there’s also a state statute that allows the City to pass something stating the City acknowledges the conflict and waives it. Mr. Cameron stated he would never ask the City to pass anything like that because the City does not need the appearance of anything like that. Councilman Street motioned, seconded by Councilman Hargis, to recommend the contract to full Council and the Public Works Committee with the stipulation that Mr. Cameron and Mr. Crego sign off on the contract if any changes are made. All voted aye. Ms. Micenhamer suggested adding wording to state Mr. Cameron does not intend on bidding on any of the projects. Mr. Cameron noted that his engineering company and any other engineering company he’s a part of are not eligible to take part in the projects.
It was decided to hold a special Council meeting immediately following the special Public Works meeting tomorrow so the Council can consider the contract with Mr. Cameron and the drainage projects. Councilman Street motioned, seconded by Councilman Dover, to call a special meeting of the City Council following the Public Works meeting tomorrow. All voted aye.
Mr. Crego explained the proposed contract for Mr. Cameron had a sum of money on it, but did not state where the money will be coming from. Chairman Farmer questioned what account the money would come out of. Mr. Davis explained he thought the money would come out of the Capital Improvement Fund. It was asked for that to be figured out before the special meeting tomorrow.
Councilman Hargis questioned why the Clearing Account is $200,000 in the hole. Mr. Davis stated he does not know anything about it and has never encountered the problem before. He added two of the people who could answer the question are gone, so he has to do a lot of research to figure it out. He explained he thinks it’s an entry that’s in the books, but isn’t affecting the accounts. Mr. Davis explained some people have turned in some information for the 2007 budget, but there’s not enough to work with yet.
ADMINISTRATION
Status of deed identification for city real property: Mayor Formon stated the project is ongoing and won’t be done until January. PENDING
City Clerk Donna Jackson presented the committee with a drainage easement that was received by her office, but there are no details with it. It was given to her by the Circuit Clerk’s Office and has already been filed with them. Mayor Formon stated he will look into it.
HUMAN RESOURCES
Finance Director position: Ms. Hackney informed the committee 10 applications had been received for the Finance Director position. She added she found out the Finance Director Association is meeting for their annual convention on July 28th and 29th and she posted the advertisement on a bulletin that will go out at the convention. She recommended allowing the Mayor to go ahead with interviews, but leave the advertisement open longer to allow people from the convention to apply. Councilman Dover suggested sending someone to the convention to try to find people for the position. PENDING
Part-time Police Officers: Ms. Hackney stated Chief Yates wants to hire some part-time officers. She added this is an excellent way to utilize people who are fully trained to work and they will work part-time at no more than 20 hours a week. She explained the money is in the budget so it will be budget neutral. Chief Yates added they will be used very sparingly at times such as when the regular officers are away at training. Councilman Street motioned, seconded by Councilman Dover, to approve the hiring of the part-time police officers. All voted aye.
INFORMATION SYSTEMS
Phone system update: Mr. Alan Young explained the system went live in the Justice Complex two weeks ago and is working well. They’re anticipating going live in the central fire station in two weeks. PENDING
Councilman Street explained he heard someone called and received a recording. Mr. Young stated there is a recording. Councilman Street questioned why there is a recording since there is a receptionist at the desk all the time. Mr. Young stated if the receptionist is on the phone or away from her desk then it’ll go to a recording. Councilman Street questioned whether it has to go to a recording because the consensus of the Council wanted a live person answering the phone. Councilwoman Furr explained she received the recording this morning and had no problems with it. Councilman Street stated the recording that came on said the phone was no longer taking anymore calls. Mr. Young explained if someone’s voice mail is full or disabled, then the message will say this mailbox is no longer accepting messages. Councilman Street noted he encouraged having a live person to answer the phone at all times. He then questioned whether everyone has their direct line. Mr. Young stated not everyone has one. He added they have the ability, but he’s following the Mayor’s direction with that.
CDBG
Ms. Gayle Vickers explained they have the bid in for the Patrick Street sewer project, but City Water and Light has an option for an 8-inch or 10-inch line. She added they have not gotten back with her about that.
It was questioned how many people are a part of the Continuum of Care. Ms. Vickers stated there are 25 members in the Continuum, but only 10 or 12 were in attendance at the recent meeting.
INTERNAL AUDITOR
Recommendations: Ms. Micenhamer explained she received risk assessments from the DFA web site out of Little Rock and sent them out to the department heads. She added she wants to make a general risk assessment of the department so she can categorize them and go from there. Ms. Micenhamer explained she found a quarterly management find on Fayetteville’s web site that will help measure performance and determine whether the department needs additional staff. She then discussed a visual asset manager program to help with inventory control. She added the basic package cost $3,000, but with the scanner and everything it will cost less than $15,000. She explained the software will help her keep track of what is in each department. Ms. Micenhamer explained she has roughly developed an audit schedule and has a pretty good idea on where she’ll start. But, it won’t be final until she gets the risk assessment. She also stated she would like to have a presentation with the department heads concerning how to lower risk. She then discussed what the presentation would be talk about.
ADJOURNMENT
With no further business, Councilman Street motioned, seconded by Councilman Dover, to adjourn. All voted aye.