MINUTES
BOARD OF FINANCE
MARCH 18, 2008
A REGULAR MEETING of the Board of Finance was held on Tuesday, March 18, 2008 in the Council Chambers.
Those in attendance included Mayor Ryan J. Bingham, members of the Board of Finance Daniel Farley, Laurene Pesce, Mark Bushka, Thomas Scoville, Wendy Traub, and James Zeller, Corp. Counsel Ernestine Yuille Weaver, and Comptroller Alice Proulx.
Mayor Bingham called the meeting to order at 5:00 p.m.
MINUTES
On a motion by Mrs. Pesce, seconded by Mr. Farley, the board, with the exception of Mr. Farley who abstained, voted to accept the minutes of the regular meeting held February 26, 2008.
OPEN TO THE PUBLIC
On a motion by Mrs. Traub, seconded by Mr. Scoville, the board voted unanimously to open the meeting to the public. There was no public participation.
PRESENTATION OF ANNUAL AUDIT #020
Comptroller Alice Proulx indicated that the independent audit for the City of Torrington for fiscal year 2006-07 was completed by UHY, LLP of New Haven, CT, and that Bill Sawicki, CPA was the lead auditor.
Ms. Proulx reported that the city was issued a clean, unqualified opinion. Page 3 - 13 contains a summary document issued by the City’s management identifying significant changes in the city’s financial condition. Page 14 - 19 contains the combined financial statement of all governmental funds, including government and business type activities (WPCA). Page 20 is the statement of revenues, expenditures and changes in the fund balance - General Fund. It shows a $3.4 M increase in the Undesignated Fund Balance. The primary reasons for the increase include:
1) Higher than anticipated revenue from investment earnings and other fees.
2) An audit of the Vogel Project which resulted in retainage and other costs that were returned to the city.
3) Refunding of bonds.
4) Unexpended balance of departmental budgets including the BOE.
Pages 21-23 show financial statements for the proprietary funds, including the Internal Service Fund, which contains all the activity for the employees’ self insured health insurance plans. Pages 24-25 are the financial statements of the Fiduciary Funds including the City Employees and Police & Fire Pension Funds. Pages 26-56 includes the “Notes to Financial Statement,” which provide an overview of accounting policies and their impact on financial reporting. Pages 57-73 contains all the supporting schedules that tie into the financial statements.
Ms. Proulx indicated that the city is required to retain an independent auditing firm to complete a Federal and State Single Audit, which was completed by UHY, LLP as well. It provides detailed schedules of all state and federal funding provided to the City of Torrington as well as any deficiencies in internal controls in an accounting for those funds.
Mr. Scoville thought raising the undesignated fund balance by $3.4 M while decreasing taxes last year, spoke well of the City of Torrington. He asked how much of the $3.4 M came from actual surplus.
Ms. Proulx indicated that the Board of Education had a surplus of almost $500,000.00, $900,000.00 was from the audit of the Vogel Project, and the city had reduced payments of nearly $850,000.00 between bonding and residuals on some of the expenditure budgets from different departments.
Mr. Sawicki indicated that they also conducted the Single Audit from which there were no findings or deficiencies in terms of internal control or internal weaknesses reported. As the city’s auditors, they make suggestions through a Management Comments Letter. They noted that the accounting software has the capability to produce all of the reports that you see within the audit. The financial statement audit encompasses three types of accounting methods. Under the GASB 34 method which took effect three years ago, the city is required to pick up all liabilities, i.e., long term debt, compensated absences, leases payable, clean water fund notes, etc. This method treats the city as any normal business with all the various accruals. That’s quite a feat to accomplish and it couldn’t
be done without the assistance of Ms. Proulx and her office staff and the finance people at the Board of Education.
Mr. Sawicki reported that the city’s software has the capability of preparing information and reports on the modified accrual and full-accrual basis, in addition to the budgetary basis in use now. The overall reporting process would be enhanced if the financial staff was trained and the module implemented. His recommendation is that management set aside the resources to allow for this improvement in overall reporting to occur.
Mr. Farley asked Mr. Sawicki if it was his recommendation to go to a full accrual basis rather than a modified accrual basis.
Mr. Sawicki said it was not his recommendation to change the city’s accounting method. He noted that the city has the capability of presenting financial information in more than one method.
Mr. Zeller inquired about the minor issues that had come up in the past.
Mr. Sawicki said they must have been cleared. Otherwise, they would have been repeated in this audit. He noted that very strict standards will be forthcoming and they will have to rely on the client and management for help.
PURCHASE OF SALT #485
On a motion by Mr. Scoville, seconded by Mr. Zeller, the board voted unanimously to authorize the use of “up to” $64,000.00 from Contingency for the purchase of salt, but will only use $35,000.00 at the present time, based on current need. (1,100 tons of salt X $58.18 per ton = $64,000.00)
Mrs. Pesce asked if that price was contingent upon the city purchasing the entire amount and expending the entire $64,000.00.
Ms. Proulx indicated that it was not.
Mr. Bushka was concerned about having only $77,000.00 left in Contingency.
Ms. Proulx noted that many direct reimbursements from Homeland Security were yet to come, which will increase the amount in Contingency.
Mrs. Traub asked if Mr. Lizotte expected to require $35,000.00 for the remainder of the winter.
Ms. Proulx said Mr. Lizotte was purchasing only what he thought he absolutely needed to end the season. She also noted that a transfer of
$18,000.00 to the Salt line Item was forthcoming.
EMERGENCY OPERATION CENTER #630
On a motion by Mrs. Traub, seconded by Mr. Farley, the board voted unanimously to authorize “up to” $1,800.00 from Contingency to be used for homeland security upgrades to the Emergency Operation Center. The city will be reimbursed from the remaining 2006 grant funds.
BUS: MAYOR & MEMBERS #700
On a motion by Mr. Scoville, seconded by Mr. Zeller, the board voted unanimously to consider business by Mayor Bingham and members of the Board of Finance.
Mr. Farley inquired about the Energy Settlement for $30,000.00 as noted on Page 7 of the Federal and State Single Audit.
Ms. Proulx said she believed it came from the Board of Education.
Mr. Farley inquired about the federal identification number that the city was unable to determine, as noted on the Schedule of Expenditures of Federal Awards on Page 8 in the Federal and State Single Audit. The audit had a number (1) in front of it, but no reference to the number (1).
Ms. Proulx said she would have to ask Mr. Sawicki.
Mr. Scoville inquired whether the city could compare its undesignated fund balance with other comparable towns.
Ms. Proulx said she could check the list of economic indicators for different municipalities and report back to the board. She noted that some municipalities designate a portion of their undesignated fund balance for capital projects.
Mr. Scoville stated that one of the goals for increasing the undesignated fund balance is to look for a stable, attractive bond rating.
Ms. Proulx indicated that the bond rating agencies look more at the “trend” than the “percentage.” They want to make certain towns are not using their fund balance to cover general operating expenses on a regular basis.
Mr. Scoville asked if that feeling was maintained if it gets to a certain percent or did they look more favorably on using the fund balance for budget expense at a certain point. He thought this should be discussed in the future.
Mayor Bingham said a small portion of the fund balance might be used this year to upgrade the Police Department’s booking area, which is being mandated through the state. He said the City of Torrington is very diligent in making sure its undesignated fund balance is not used for operating expenses.
Mrs. Traub inquired about phones and cell phones.
Mayor Bingham indicated that everyone in the city is now using Sprint Nextell and the use of walkie talkies is encouraged. Policies and directives have been issued in regard to the use of cell phones, and it’s just a matter of following up on them. They’re looking for a significant savings.
Mrs. Traub indicated that the Budget Committee will be presenting their recommendations to the Board of Education tomorrow.
Mayor Bingham noted that the Board of Education, the Budget Committee, and the city are all on the same page in terms of the city being able to obtain information from the Board of Education.
ADJOURNMENT #1105
On a motion by Mr. Scoville, seconded by Mrs. Traub, the board voted unanimously to adjourn at 5:40 p.m.
ATTEST: JOLINE LeBLANC
ASST. CITY CLERK
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