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02-02-1983 - Special ~ ~ u ~ CITY OF EDGEWATER CITY COUNCIL SPECIAL MEETING FEBRUARY 2,1983 MINUTES Mayor Richard McKillop called the Special Meeting to order at 7:00 P.M. in the Community Center. ROLL CALL Mayor Richard McKillop Present Councilman David Ledbetter Present Councilwoman Gigi Bennington Present Councilman Neil Asting Present Councilman Jack Spencer Present Also present were Mr. John Vodenicker and and Ms. Connie Kinsey, Finance Director. City Attorney Jose' Alvarez City Clerk Nancy Blazi Police Chief Earl Baugh Excused Present Present Mr. Ted Serbousek, representatives of May, Zima, Mayor McKillop stated the purpose of the meeting was for the presentation and review of the 1982 Audit Report and to consider and act upon a request from May, Zima to retain the firm for 1983-84. Mayor McKillop suggested the Council change from the regular seating arrangement to around the large table.in the conference area. Council agreed and the meeting was recessed briefly to make this change in seating. The meeting was then turned over to the auditors. The Council and the auditors reviewed the audit report page by page. Councilman Asting questioned if a physical inventory was taken by a member of the auditing firm of the materials for the water and sewer departments or if this was a figure taken by an employee. Mr. Serbousek advised a physical inventory was taken and was observed by them. On enterprise funds, Mr. Vodenicker stated that the revenues were $20,000. over the ,previous year and the operating expenses had increased $84,000. over the previous year. The operating expenses increased a lot higher than revenue with an operating loss of $107,611. Councilman Asting asked if this includes contractual services and Mr. Vodenicker said yes. Councilman Asting asked if in the current fiscal year this should increase or decrease, and Mr. Vodenicker stated that it has the potential of increasing because operating expenses that have been budgeted are higher, plus the drought and conservation program, which was the reason for no growth in operating revenues except for new customers. Mr. Vodenicker stated that utility taxes are necessary in the water and sewer operation but a lot of cities have moved that to a general fund revenue. Discussion followed regarding the utility tax. Councilman Spencer questioned the water/sewer fund net operating loss of $107,000. but with additional revenue to compensate for the loss. He asked if the fund should be self- liquidating. Mr. Vodenicker said it should be a user charge fund. Mr. Vodenicker pointed out comparisons for 1981 and 1982 for water and sewer rates. Mayor McKillop questioned if capital outlay of $229,000 was a one time thing and would 1983 be looking at another $230,000. He also asked at what point we are going to be using all the utility tax revenue and still be forced into a rate increase. Mr. Vodenicker said that we are using all the utility taxes now. Councilman Ledbetter stated he feels that some of the overexpenditure is a departmental problem within and he thinks that would be a place for Council to address. Discussion followed regarding hiring the temporary crew to work on the water line extension program in Florida Shores. Mayor McKillop noted that on page 32 and 33, personal services, from 81 to 82 went up by $61,000. Ms. Kinsey stated that it is not just for payroll, that is benefits, etc. Mayor McKillop asked if the deficit would grow so large at the top, would we have to go to the general fund to bail it out. Mr. Vodenicker stated that the first thing to go to is the budget for the water and sewer fund. Councilwoman Bennington pointed out the construction in 1982 was extremely slow and is going back up and we should consider the projected growth for the next year or so. ~ ~ Mr. John Wharton questioned the accounts that do not pay at all, like the paint works. Councilman Ledbetter said that only the restrooms for the employees were to be hooked up and he pays so much per employee because he cannot dump the wastewater from the factory because of contamination. Councilman Spencer suggested we need a special session on the water and sewer fund and how it is to be treated and to explore the personnel involvement and what is ahead of us for projects, etc. Councilman Asting stated it would have been helpful if we had a draft ahead of time to perhaps better understand them. Mr. Walter Gross asked how the pilot sewer program costs are charged. Councilman Ledbetter said that nothing has been spent with that yet, just engineering fees. Mr. Gross asked if we are investing surplus money wisely. Mr. Vodenicker said yes. Mr. Gross asked if a physical inventory was taken in the figure for water and sewer. Mr.. Vodenicker said yes. Mr. Gross said that a committee had investigated the pipe and they total over $200,000 for water pipe that are still in the racks. Mayor McKillop questioned who the committee was. Mr. Gross replied it was Dana Armstrong, Carl Cochran, Bill Muller, and maybe a councilman. They checked bills in City Hall and came up with over $200,000. in bills. Councilman Ledbetter thought it was a figure of $87,000. or $89,000. in pipe plus the fittings are separate. Mr. Wharton questioned the $15,000. deficit in the general fund. Mr. Vodenicker stated primarily all the investments are accounted for in the general fund and if you have them in the general fund the cash account is going to show a deficit but you have to take the investment account minus the deficit to come up with position. Mayor McKillop called a five minute recess at 8:25 P.M. for the auditor to review this item with Mr. Wharton. The meeting returned to order at 8:31 P.M. Mayor McKillop stated he had asked the City Clerk for a PFS 3 and 4,which are run every month by about the 15th, to be moved up this month to get a picture of the City as to how it stands for the first four months. Ms. Kinsey said they would try to furnish it as soon as possible. Mayor McKillop stated that when the information is out he'll give the Council a couple of days to go over it and then he would call a workshop. Mr. Vodenicker reviewed the management letter and reminded us that there are 20 days in which to respond to the auditor general. He feels the most significant weakness in internal accounting is in the purchasing for the past year. There were circumventions of the City Charter and purchasing ordinance regarding purchase orders that were greater than $1,000. which should have been approved by Council prior to signing of the purchase order. Purchases in excess of $2,000. should be let out for bids and lastly, there were situations where a single supplier had more than one purchase order issued and these totaled over $1,000. Councilman Spencer questioned if other cities of similar size have limitations of $1,000. for council approval and $2,000. for bids. Mr. Vodenicker answered that there are various limits and some have in the charter that they must go out for competitive bids at $1,500. to $2,000. Councilman Spencer stated he was more interested in the $1,000. going to Council, is that in line. Mr. Vodenicker said there are some cities that have that requirement. He said we have a Charter requirement and purchasing ordinance and these were not done right. A lot were done properly but these are the ones that they came up with during testing which were not in accordance with the purchasing ordinance or the City Charter. It is their recommendation that 1) we require a policy where two signatures of approval are on the purchase orders for purchases less than $1,000. and 2) on purchases over $1,000. that the City Manager, administrator, Finance Director, or Mayor should be required to sign. Ms. Kinsey said that this has been instituted. Mr. Vodenicker stated that under management comments, the second paragraph, that those asterisked are items that were commented on in 1981 and they are still making these recommend- ations. Under cash, bank reconciliations are not reviewed by an official who is not responsible for the receipt and disbursements of cash, and making sure receipts are properly going into the bank and disbursements are proper. Ms. Kinsey advised this has been done. Councilman Spencer asked who does this reconciliation and Ms. Kinsey replied that Karen Rickelman does and then she reviews and initials its. Under personal disbursements, paid for by the City, Mr. Vodenicker stated that the way other cities do it, the elected officials are held accountable to the electorate and the City employee is held accountable to the City Council, and these types of items should be approved by Council prior to, rather than after, the fact. Councilman Ledbetter questioned if this was like a disbursement for mileage after a trip. Mr. Vodenicker said this is a policy decision. -2- Special Council Meeting Minutes February 2, 1983 .. '-> <.) Under incorrect coding, Mr. Vodenicker said that some expenditures are being miscoded into other accounts and he felt that this was being done because they didnlt want to come back and amend the budget. He advised it was a simple thing to correct and the budget can be amended. On receiving reports, some were not signed or dated by the individuals that received the goods or services and steps should be taken to correct this. Ms. Kinsey said that this has been instituted. . Councilwoman Bennington asked if all the items have been instituted. Ms. Kinsey stated there was a preliminary meeting on that and some were resolved at that point. Councilman Asting asked if there was a series of memos or notes. Mr. Vodenicker said they had gone over a draft of this with the City administrator and the Finance Director and this is generally done to give them the opportunity to say if we interpreted something wrong. The letter frpm the City Attorney held them up or they would have done this much earlier. Councilwoman Bennington asked on purchase orders being signed by more than one person, whose two signatures they are getting. Ms. Kinsey said Nancy Blazi and myself and we are not going over .$1,000. for any reason. On invoice checking, there should be some indication of someone doing that and what most cities and businesses do is put a stamp there for proper approval. Ms. Kinsey stated we now have a stamp that includes those items. On charges for services, Councilwoman Bennington asked if this is now being done. Ms. Kinsey stated it is corrected now. On payroll, regarding employee authorizations for payroll deductions, this would be W-4, insurance, credit unions, Christmas Clubs, whenever there is a deduction from a personls salary. Ms. Kinsey stated two of the fo.ur have been done, W-4 and Christmas Club. On Accounting Procedural Manual, this has been required since 1972. Councilman Spencer asked if there are standard ways of doing this. Ms. Kinsey replied yes, she has the standard part. Under Cash Management, the City is investing their money but the cash should be into the bank sooner. and hold up paying of bills until the actual due date. Councilwoman Bennington questioned if we get a percentage discount if paid earlier. Mr. Vodenicker said yes but you have to evaluate that to determine the size of the discount. Councilman Asting questioned if the money deposited daily goes to checking or passbook. Ms. Kinsey answered the checking. Regarding banking services, Mr. Vodenicker said some cities are investing their overnight money in the cash account each night which is called a repurchase agreement. Councilwoman Bennington asked the advantage to the City. Mr. Vodenicker said they did a cash management study for a county and they are investing on an annual basis 110% of their money because they can invest the flow. Councilman Spencer asked if they are saying we should consider entering into a banking agreement or going out for bids on that. Mr. Vodenicker said yes. Councilman Spencer also brought up residents paying their utility bills at banks. Under investment services, Mr. Vodenicker said we should look at what the money is in, C.D. IS, a state system, U.S. Treasury bills, etc., to maximize the interest earnings. Under budget, they are cautioning us on the amount of money left that was not brought for- ward and we had to use some of that surplus. Mr. Vodenicker said that as we look at 183, we look down the road for 5 years to see what our needs will be so we are not coming up with a large capital outlay in one year. On Building Permits, a discussion followed regarding the checking of the building permits amounts. Mayor McKillop suggested that it seemed to him the person most likely to have the expertise or be trained would be the girl in the Planning Department. Mr. Vodenicker said we need to look at water and sewer. The situation is utility taxes are collected and these generally do not have any relationship to water and sewer and most cities are now using those over in the general fund. It is a revenue source and the City should consider some .over in the general fund to ease the pinch there. The general fund has a strong fund balance with the exception of what is to be done with the road paving program. The picture in the general fund will not be as good if we have to finance it internally.. -3- Special Council Meeting Minutes February 2, 1983 v u Councilman Ledbetter stated that Florida Power and Light had just been given a big increase and Southern Bell also had a big increase and we should pick up in the utility tax there. Councilman Spencer asked if on an overall basis that fund worked out terrific in 1982. Mr. Vodenicker said that's right. Item two on the agenda was a request to consider and act upon a request from May, Zima to retain the firm for 1983-84. Councilman Ledbetter made a motion to TABLE this. Council- woman Bennington seconded. Motion CARRIED 3-2. Councilman Spencer and Mayor McKillop voted NO. Councilman Ledbetter made a motion to accept the audit of May, Zima. Councilman Asting seconded the motion. Motion CARRIED 5-0. Councilman Ledbetter made a motion to adjourn. Meeting was adjourned at 9:35 P.M. Minutes submitted by: Lura Sue Koser ~~# 4~ COUNCILMAN ~. ~&7/7. L CQUN"Ct0JOMAN ~ COUNCIL-:l?-<<~~ b'y COUNCILId2~ Yc'"3 ~ ~ jt'.p4- ATTEST: V Iz~ r- ~. CITY CLERK - ~ APPROVED THIS~ I DAY OF ;f~ ,1983. -4- Special Council Meeting Minutes Februa ry 2, 1983