Finance Committee Meeting Minutes Wednesday, June 19, 2019
For your consideration, please read the minutes from the Finance Committee Meeting held on Wednesday, June 19, 2019 at 1:00 p.m.
Finance Committee Minutes 6-19-19 with Attachments
To read the minutes please open or download the pdf from the link above, or you may see more below.
Brunswick-Glynn County Joint Water & Sewer Commission
1703 Gloucester Street, Brunswick, GA 31520
Commission Meeting Room
Wednesday, June 19, 2019 at 1:00 PM
FINANCE COMMITTEE MINUTES
MEMBERS PRESENT:
Steve Copeland, Committee Chairman
Donald Elliott, Commissioner
Tripp Stephens, Commissioner
Andrew Burroughs, Interim Executive Director
ALSO PRESENT:
Ben Turnipseed, Commission Chairman
John Donaghy, Chief Financial Officer
LaDonnah Roberts, Senior Financial Analyst
Janice Meridith, Executive Commission Admin.
MEDIA PRESENT:
Taylor Cooper, The Brunswick News
Pamela Permar-Shierling, The Islander
Chairman Copeland called the meeting to order at 1:00 PM.
PUBLIC COMMENT PERIOD
There being no citizens that wished to address the committee, Chairman Copeland closed the Public Comment Period.
APPROVAL
- Minutes from May 15, 2019 Finance Committee Meeting
Commissioner Elliott made a motion seconded by Chairman Copeland to approve the minutes from the May 15, 2019 Finance Committee Meeting. Motion carried 2-0-1. (Commissioner Stephens abstained due to not being present at that meeting.)
2.Fiscal Year 2019-2020 Rate Resolution Approval – L. Roberts
LaDonnah Roberts presented the FY2020 Rate Resolution draft to the committee for approval to forward the recommendation for acceptance to the full Commission. She explained the process that was used in calculating and preparing the rates for the Rate Resolution, and provided that last year’s Rate Resolution was used as the basis for redlines for this year. Overall, there were two main types of revisions proposed. First there were housekeeping changes to the document to include grammar, spelling, references to undefined terms, and basic clean-up, and the second involved clarification and some additions of language and terminology clean up. Mrs. Roberts reviewed each of the revisions that were applied to the redlined draft copy of the proposed FY2020 Rate Resolution. Commissioner Copeland provided that he had requested legal counsel to review the entire document to confirm that all is acceptable from the legal standpoint, and it was. After discussing the revisions in the main section of the document (pages 1 through 7), Mrs. Roberts then continued to review and explain the various edits made on Appendices A, B and C. She noted that the statement was added under Appendix A Delinquent Account Fees that “Late fees will not be charged while an account has active payment arrangements.” Andrew Burroughs provided that this change was well received at the City Commission meeting, the JWSC Town Hall meetings, and also by customers, and is intended to provide some relief for those on payment arrangements in that they are paying for actual usage rather than late fees. The 5/8 meter size was added under Capital Improvement Fees in Section IV on page 4 of 7 and also within Appendix A. This smaller meter size offers the customers a more cost effective solution for residential meters. The committee questioned why on Appendix A was the 5/8 inch meter installation for irrigation $15 more than the 1 inch meter. Mrs. Roberts advised that these numbers would be recalculated and confirmed immediately after the meeting. Regarding the Truck Inspections Fee on Appendix A, Commissioner Stephens inquired if a caveat could be added to footnote that this is available “based on resource availability” since Angela Walker is the only JWSC staff licensed to do the inspections and may or may not be available. Upon completion of the review of the drafted FY2019-2020 Rate Resolution, a motion was made and a vote taken.
Commissioner Elliott made a motion seconded by Commissioner Stephens to move that the Finance Committee recommend to move this forward to the full Commission providing staff confirms the irrigation meter fee calculations and adds the resource availability statement under Truck Inspections on Appendix A. Motion carried 3-0-0.
- SR27 Resurfacing Contract Agreement – A. Burroughs
Andrew Burroughs provided that in July 2018 JWSC entered into a MOU with the Georgia Department of Transportation (GDOT) for the SR27 Resurfacing Project with the initial GDOT cost estimate of $77,250. The cost estimate as provided was lower than the actual bids received by GDOT for the project. The revised cost is $101,928.59, resulting in a budget increase for JWSC of $24,678.59 for which staff is seeking approval to move forward with.
Commissioner Elliott made a motion seconded by Commissioner Stephens to move that the Finance Committee amend the SR27 Resurfacing Project funding to a total amount of $102,000.00 and that this project funding approval be forwarded to the full Commission for approval contingent upon Facilities Committee approval. Motion carried 3-0-0.
- Mainland Smoke Testing Project Budget Approval – A. Burroughs
Mr. Burroughs recalled for the committee that the recent smoke testing on St. Simons Island (SSI) yielded very beneficial results for JWSC. He noted that smoke testing is a cost effective way of giving an overall understanding of the system condition. On SSI flow monitoring was done prior to the smoke testing for direction on which basins would require smoke testing. Staff is requesting a project budget for smoke testing on the mainland without the flow monitoring (which costed over $300K on SSI). Staff has reviewed pump run times in dry weather versus rain events on the mainland, and staff is able to determine which basins should be smoke tested without doing the flow monitoring. Mr. Burroughs provided a map of the proposed basins which will be tested in the Brunswick District and the North Mainland District. This recommendation is for approving the budget for this project and Mr. Burroughs was able to provide a cost estimate for this project based on the recent project costs. The smoke testing will provide an understanding as to the condition of the mainland system. Mr. Burroughs was asked to estimate a “Return on Investment” for this project.
Commissioner Stephens made a motion seconded by Commissioner Elliott to move that the Finance Committee approve project funding in the amount of $325,000.00 for the Mainland Smoke Testing project and that this project funding approval be forwarded to the full Commission for approval contingent upon Facilities Committee approval. Motion carried 3-0-0.
- Sludge Hauling Truck Purchase – A. Burroughs
Mr. Burroughs presented the recommendation for purchase of a sludge hauling truck to the committee. He recalled for the committee that a couple of months prior approval had been granted for the purchase of a sludge hauling truck and roll-off containers for hauling sludge from the three wastewater treatment plants to the landfill. Mr. Burroughs commented that seven proposals were received, and he provided those company names, price bids, and maximum lead times for the Commissioners review. He noted that the decision was not made solely based on the cost of the truck, but also on the lead time which was important due to the third party hauling services are costing $10,000 per month while waiting for the vehicle. As per his calculations based on these considerations, the offer from Rush Truck Center became the lowest total cost. Republic is going to increase the tipping fee at their landfill by JWSC using their own truck, but Mr. Burroughs advised his plans to research what other landfills may be available. Maintenance will be handled the same as the other fleet vehicles.
Commissioner Stephens made a motion seconded by Commissioner Elliott to move that the Finance Committee recommend to the full Commission that the Brunswick Glynn County Joint Water & Sewer Commission award the purchase of one (1) Sludge Roll-Off Truck to Rush Truck Center in the amount of $164,664. Motion carried 3-0-0.
- Financial Policy – J. Donaghy
John Donaghy presented the draft of the revised Financial Policy and reviewed all of the revisions that were made to the document. He explained the section covering debt and debt service coverage ratio, along with how that relates to the ratings as established by the credit rating agencies such as Moody’s. JWSC targets a 1.70 debt service coverage ratio to maintain an “A” rating. Commissioner Elliott brought up the question of can JWSC get better interest rates by maintaining the levels of reserves it does and going out for a loan as an entity, rather than going through GEFA to get a loan and having to get agreements with the City and County to support our requirements? He added that enough research has not been done to be able to answer that question, and that if GEFA can meet JWSC’s needs, then maybe not as much needs to be held in reserves. He suggested that the finance staff do some research on all the information available and come back to the committee to provide options with the pros and cons of either system. Mr. Donaghy noted that the debt service ratio is only one of the considerations affecting bond ratings. The review and discussion continued on to the relatively new section on Reserve Management, as well as other revisions made throughout the Financial Policy document. Mr. Donaghy provided some of the changes that have recently been made in the finance department regarding separation of duties and internal controls. He commented that due to the size of the staff, there will likely be some cross over at times especially in the case of an absence. Commissioner Elliott remarked that there was nothing requiring that only finance staff handle the duties, just that there is a separation of duties. He recommended that there be an internal document to be referenced when there are not enough financial persons available for completion of a certain task, and that provides documentation for a plan that is followed and will satisfy requirements for auditing purposes. Mr. Burroughs agreed and included the provision of a workflow map explaining what those changes would be and this would be made a priority. After completion of the review of the revised Financial Policy draft a motion was made and a vote was taken.
Commissioner Elliott made a motion seconded by Commissioner Stephens to move that the Finance Committee accept the financial Policy as revised and to recommend its approval by the JWSC Commission. Motion carried 3-0-0.
DISCUSSION
- Verizon Tower Contract – J. Donaghy
John Donaghy discussed the tower contracts with Utility Management Services (SUEZ) that manages all of the various carriers’ antenna leases on towers. All but one carrier on one tower is carried within that group agreement. In the past, Verizon did not wish to be a part of the group management agreement previously, however does wish to become a part of that management agreement now. JWSC needs to cancel the exiting contract with Verizon for that tower rental contract, and SUEZ will need to add them to their agreement. JWSC needs to reimburse Verizon for the prepaid amount of the contract remaining and SUEZ will add Verizon to the group management contract. The cost should come out on breakeven for JWSC. Commissioner Elliott commented that he does not want to see a decrease in the revenue for the towers on the agreement. Commissioner Elliott requested a spreadsheet with a breakdown of the entire contract with SUEZ, the revenue stream from all the towers, and what the revenue stream is projected for in 2019 and 2020. Mr. Donaghy will prepare this information for the committee.
- Financial Statements Month Ending May 2019 – J. Donaghy
Mr. Donaghy presented the financial statement and commented that JWSC is doing fairly well at this time. He reviewed the Balance Sheet and the Supplemental Schedule of Cash Balances. Mr. Donaghy also mentioned the bad debt expense at year end of an estimated $655K on the Combined Revenue Statement, and noted that it was expected to be around $600K which was anticipated and budgeted for.
He commented that on a regular basis throughout the year there are a number of accounts on the balance sheet that are not adjusted at the time of reporting, but will change once the final numbers are received, and those changes are made only once per year. In general the Overtime Report looks good and is estimated to be $100K under budget for FY2018-19. However, the Wastewater Treatment Division remains over budget in the YTD actual. Mr. Burroughs provided that the shifts were changed to reduce the overtime and some of the employees in that division chose to leave the organization rather than adjust their shift and reduce overtime. Due to this shortage of operators, it was necessary for this division to work overtime until more staff was brought in. Commissioner Elliott clarified with Mr. Burroughs that actual licensed operators left due to the reduced overtime and the new shift schedule that was created in order to reduce the overtime costs. Commissioner Elliott requested staff attempt to gather the reasons why those staff left and if possible where did they relocated their employment to. Mr. Donaghy then reviewed the Project Report and followed with the Investment Account Report explaining the five accounts and various income and fees paid out. Commissioner Elliott requested notation on expenditures being spent at the last moment to make it in the budget for 2018-19, and Mr. Burroughs provided that he was approving all the purchase orders over $5,000 and any that were no necessary or would not be completed and paid out by the end of the budget year would not be approved. Commissioner Elliott asked Mr. Donaghy to provide for the next finance committee meeting a list of all the banking services and products JWSC is currently receiving for review and use in preparing a new RFP for banking services.
Mr. Burroughs provided that a couple of customer attended town hall meetings held the prior week and they supported the services for auto-pay on their bills. He added that staff is currently working with BB&T Bank on this and there would be a fee cost to JWSC, however it should not be as much as the credit card processing fees.
There being no further business, Chairman Copeland adjourned the meeting at 2:28 p.m.