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Admin Committee Minutes 1998 11-10-98 i ' UNITED CITY OF YORKVILLE Committee Minutes - Administration Date of Meeting: November 10, 1998 Time Convened: 6:35 P.M. Location: Ill W. Fox Time Adjourned: 10:35 P.M. Attendees: Richard Sticka Stephen Topolinski John Weber Dan Thul Richard Scheffrahn Doug Baun John Bradstreet Jim Nanninga Art Prochaska Rose Spears Jeff Spang Valerie Surd Mike Anderson Mike Englehardt Discussion: 1.) Additional Audit Review /Audit Management Report - Our auditors are here to answer questions that came up at a COW and City Council meeting. For questions 1 - 3, Topolinski said the difference is in the long term debt group. We need to accept a final copy of the financial statement, but we have only received a draft copy. Spang understands that the figures have changed. Weber said that the figures have not changed. Usually when we vote we vote on a final not'a draft. Footnotes have been added. Some of the beginning balanced were adjusted. Spang thinks there should have been a correction made to the EDC loan of about $60,000. Toplinski feels it was about $50,000. When you find corrections that need to be made, the mistake may have been made in previous years. This year we sent out a letter to the banks requesting beginning and ending balances, and payments that were received. Then they reconciled them to what they should be. When you make payments, the come out of the debt service fund. The debt service fund is basically a holding fund. Nobody had an amortization schedule, so nobody really knows where money was applied. The bank should send a statement. An amortization schedule is a common thing to have on a long term loan. The City should have been sent one. Usually one per year. 96 -97 audit closed, prior to that payments were made but did not surface that year. Books are closed April 30, the audit was probably not completed until October 31. The paper work from the bank may not have gone through or they may not have responded to our request. Weber said it does bother them when the ending and beginning balance does not match. They do not like to make prior period year adjustments, but he feels this is a case of the City not really knowing specifically what their debt service actually is. Drafts are issued for review, to review the numbers and to know if they are ok. Payments zoo XV3 8T:6T 86 /TO /ZT Administration Page 2 made in the debt service fund at year end then adjustments did not get recorded in the debt service fund. We need to request a statement monthly. Question 5, debits and credits do not match. Pandolphi wishes they knew why so they could answer that question. There are some one sided journal entries. The City debited without crediting. Some entries reflect to correct cash. Due to Audit and Due from Audit basically is a catch all. Stuff that got put there were items that the bookkeeper did not know where else to put them. There were entries posted to the account with no explanation. There are several debits that they did not know where or to what account /funds these entries actually belong to. Most of these entries are manual entries. They could not come up with an actual number. Some entries are one sided. Corrections are made manually. Interfunds do not usually balance within the year, but they will balance and tie out at the end of the year. All journal entries have been made now. Weber feels that we are paying a clerk and she is doing a very good job. We are not paying an accountant to do an accounting position. He feels that we have software problems. Weber and Topolski feel that a lot of the mistakes are made by a person. Weber wishes that when there is a concern on where an entry needs to be applied that someone would call and ask. Debits should equal credits. The accountants feel that it is a combination of human error and software problems for the figures not to balance. If things are caught earlier it is much easier to isolate that month. The City was lead to believe that a new accounting system was set up last year. It would have helped to have someone come in monthly or every two months and look over the books. Pandolphi was not able to locate and correct all of the entries. All the fund should have put into the general fund until they were set up. We would have to go back to the journal entries to track the first payment into new accounts. A new fund will have a zero balance. There is not just one answer here. If the funds were looked over, mistakes would be easier to locate. With governmental accounting you do not depreciate. In 1997 we did not budget MFT, but in 1998 we did budget it. Special revenue funds were added within the year. The south sewer fund has funds that exceed the fund balance so it should have a deficit. There was money transferred in. Prochaska said we should have received revenue to cover that deficit. You can over spend on budgeted items as long as there is revenue to cover it. It is the responsibility of the City Council to provide documentation to our auditors. We need to look at a policy to make sure that that information is provided. Pandolfi had several meetings with Nanninga and Scheffrahn. All problem accounts were discussed, met again got all the journal entries. They met four or five different times. Pandolfi did issue a clean opinion on the cash sheet. Cash ties out to the banks and bank reconciliations. Balance sheet is looked at as a day in time. Prochaska asked if we have gone through the interfund borrowing? Parks owe the general fund $2,000. This is a permanent transfer. There needs to be a trail of where the £OOn XHd 8T :6T 86 /TO /ZT Administration Page 3 money comes from. Land Cash Fund, how can we track what the developers pay and how is it distributed? Does it go into the general fund and then to the parks? Subdivision are separated out now. We did not do this in the past. What is in the audit is what was collected this fiscal year. Up until a few years ago we would have needed to go through all the building permits. Money needs to be spent for parks. Just in the last few years we have documented where the money comes from. We are showing $100,000 of interest, what are we collecting this on, or do we really have development fees laying around? You would not really know without going through the ledgers. The money could be from several funds. Maybe payments coming in before it is being paid out. We received money for 50 building permits. Amounts break down to 43 permits. The library breaks down to 50 permits. Accountants did not make any adjustments to this account. Nanninga will ask Kim to check into this. 2.) Tax Levy - We'are looking at a 4.2 percent increase. This increase does not require truth and taxation. If we were to go over five percent then we would have to include truth and taxation. The tax cap applies to existing growth. It does not include all new and existing, five percent would only include existing. Rate of inflation this year is at 1.7 percent. The EAV went up .616 percent. This means that we are still allowed to use the 1.7 percent. There were a couple of major business that had a decrease in their EVA. We are able to hold the levy at .9909 which is lower then the tax cap allows. Basically we are only gaining the amount of money to cover the pay increases. Take to COW. 3.) Management Letter Recomm endations - Tabled. 4.) Review Pay Schedules for Committee Meeting Minute Takers - Currently the City pays $35 per meeting and $8.50 per hour to transcribe the minutes. Nanninga suggest to increase transcribing to $10.50 per hour and $35 per meeting up to three hours. If the meeting goes beyond three hours, then the minute taker would get an additional $10 per hour. If the meeting only last three and one half hour then the person would be paid for the full hour. Take to COW. 5.) Capital Inventory - Tabled. 6.) Accountant Assistance - There were some problems but Pandolphi has been able to make adjustments on most of the items. There are still a few problems, but they think they know what they are. Kim is working with the software people. Pandolphi is doing a six month check up. They have been checking monthly. Problems with two different reports that should show the same balances. We do need to look into this because it could cause bigger problem later on. Thul is trying to find out why things do not balance. Kim has been asked not to post anything to interfund borrowing accounts. We need to do something with our software because it is not Y2K compliant. Nanninga stated that too In XV3 9T: 6T 86 /TO /ZT Administration Page 4 we should have some new hardware on Friday, then we should be able to get the software. If we were to go back and re -enter everything then we should be able to isolate problems. Then Pandolphi would have to come back in and audit the new numbers. Pandolphi can not give a fixed rate for re- entering. They would charge an hourly amount. ByY not being able to figure out where the money came from still bothers people and makes us look inept. If you correct the software and train the operator then we are hitting both issues. What is the value of re- entering? Is it worth a squad car for two? 7.) Health Insurance - There was only a gatekeeper question. The question was did we have any claims over $10,000. There was one claim. It is an ongoing condition that will require ongoing care by specialists. NYL care has been purchased by Aetna. The course of treatment might change. If we were going to have people decide they are not happy with HMO and change to PPO then that could change things. If you choose an HMO there are more benefits and it cost less money. With the police contract we can not take away or limit it more. There could not be any benefit changes. Comparing NYL to Blue Cross, but you can not compare because you can not go out of the HMO. Police have set levels of contributions. The employees seem to prefer this plan over our current plan. We have had some unpleasantness with NYL Care. Englehardt feels that a lot of the problems is not understanding the plan. The employees really need to understand how to use the plan. All the claims are being worked out. Some of the claims were processed incorrectly. If an employee receives a bill at home then it is the Physicians fault. Englehardt has not had any problems with Blue Cross. When an employee gets a bill at home they call NYL Care and they should really call the Physicians office. Aetna does not currently have doctors in Kendall County. American Health Care Providers do not use brokers. They include most of the doctors in this area. They deal with a lot of Municipalities. We need to make a decision for everyone not just one company. Englehardt has had problems getting a quote from American Health Care. Spang thinks that we should check into them. Englehardt thinks that Blue Cross is the best choice for the money. There is no real cost savings and no extra benefits. Come May 1, Englehardt will be handed one renewal and there will not be any choices. We will have until May to decide on this. If we push this off, the $3,600 savings with Blue Cross will go away. Englehardt will try to get some benefit information from Aetna. At least just to see. Englehardt has ten quotes from different companies that will not be competitive with the networks in our area. Take to COW. Seems that we got into some side issues that Englehardt has taken personally. He is not here just to get our business and walk away. He feels that Blue Cross is the best selection. He is trying to help us make a good educated decision. S.) Tower Ordinance - Tabled. 500 [n XV3 8T :6T ?6/TO/UT Administration Page 5 9.) Flag Update - Tabled. 10.) Additional Business - Longevity Pay - Most of the City Council still has not seen a copy of the police contract. Very few communities do this, and if they do then it is only with a group or so. Aurora offers it to their fireman. We have always said we would try to offer employees something comparable. Bring back. Minutes by: Mollie Anderson I i I 9001n XV3 9T :6T 96 /TO /ZT