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HomeMy WebLinkAboutMIN 02.22.2011 CC-WGeorge - Garver presiding. - 7rGMZ7UUtoTTn, i exas, met in Keguiar Session on the above date With Inayor Council Present: Council Absent: Patty Eason, Gabe Sansing, Danny Meigs, Bill I All Council Present Sattler, Pat Berryman, Dale Ross, Tommy Gonzalez ........... -- ------------ -- -------- -- Staff Present: Paul E. Brandenburg, City Manager, Mark Sokolow, City Attorney; Jessica Brettle, City Secretary; Micki Rundell, Chief Financial Officer; Laurie Brewer, Finance Director; Lorie Lankford, Controller-, Chris Foster, Chief Financial Analyst, Jim Briggs, Assistant City Manager; Elizabeth Cook, Director of Commu!?Lity�D"v lopment; Glenn Dishong, Utility Director; ,I M 1,h:ute,, t�, Discussion of the Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2010 -- Laurie Brewer, Finance Director and Lorie Lankford, Controller With a Powerpoint presentation, Laurie Brewer said the Comprehensive Annual Financial Report (CAFR) is the most important document produced out of the accounting department each year. She said staff believes this document will qualify for the Government Finance Officers Association (GFOA) certificate of distinction. She noted the City has been given this award for the past 22 years. She said the presentation will include a highlight of operations as well as the audit reports. She said this financial reporting is required by state law, the city charter and bond covenants. She said there is a time limitation in filing this report as well. She said the City Council hired new external auditors this year. She noted the auditors provide the oversight of financial operations and added they also issue an opinion on the financial statements. Brewer said the purpose of financial reporting is to present fairly the financial results of operations, disclose compliance with the budget bond covenants and other policies. She said the financial reporting is also used by governmental accounting professionals and bond rating analysts to determine credit worthiness. She noted the presentation is not focused for the average person as the information is geared more toward financial professionals. She explained to Council what the acronyms GAAP and GASB means. She said GAAP stands for "Generally Accepted Accounting Principals'" and GASB is "General Accounting Standards Board." She noted GASB is the governing board for accounting standards. She said the financial rules from governments are different than that private sector. She said CAFR stands for "comprehensive annual financial report', which is broken up into sections, and it is in front of council today. She said, within the CAFR, there is a transmittal letter, auditors report, managements discussion and analysis, government -wide financial statements, fund financial statements, supplemental schedules and a statistical section, which is not audited but is reviewed. She said govemment-wide statements are separated into two functions: governmental activities and business -type activities. She described what each of those types include. She noted the business -type activities include the utility funds as well as the airport fund. She said the government -wide statements include two statements: statement of net assets and statement of activities. She said the statement of net assets is similar to a balance sheet and statement of activities is similar to an income statement, Lankford referred to the statement of net activities. She said the net assets for the City is $418 million, $334 million of which is the value of investment in capital assets. She said $2.3 million is reserved for general debt service fund, $21.3 million is reserved for capital projects and $51.7 million is unrestricted and includes contingency and fund balances for uncompleted projects and GIP projects. She described what is included on the statement of activities and said there is a total of $123.7 million of program expenses, which includes depreciation. She said there are $97.6 million charges for services, $11 million of which are governmental charges, $86.6 million of utility revenue and $408,000 of operating grants. She described what is included in the operating grants. She noted there is also $7.6 million of developer donated infrastructure and added the pass through grant for Williams Drive widening resides there. She said the change in net assets is $4.8 million in governmental activities and capital contributions and $12.2 million for business type activities. She said the staff, for the streets, does a modified approach where depreciation is not recognized. She said the modified approach was adopted in 2005 which is an option reporting the condition of the infrastructure. She said the council approved a Payment Condition Index (PCI) rate to help go toward maintaining the city streets. She said the PCI is re-evaluated every three years. She continued to speak about the PCI. She gave Council an overview of the various funds in the budget and noted the city has several types of businesses, called "funds," that are distinct separate reports such as the general fund, storm water fund and utility fund. She noted the citizens own each one of these funds and the city council sits as the elected board for each one of those funds. She said the general fund had a $9.8 million fund balance at the end of 2010 and she reviewed the balances in the other funds as well. She said Council's debt service fund was considered a major fund for 2010 because of the large amount of debt service funds made. She reviewed the proprietary funds and said they include enterprise funds, which provide revenues to fund cost of operations. She said the other major proprietary funds are the electric fund and water services fund and she described the components of those funds. Mayor asked and Lankford said, whenever the city does a depreciation, they do a straight line depreciation. She described how the city does the electric depreciation. She reviewed the highlights of the 2010 fiscal and budgetary policy and described the utility debt times coverage ratio and contingency reserves. She said, for the budget,all expenses were within appropriated amounts for the 2009/2010 annual budget. She spoke about the audit reports from the past year. She reviewed the auditing standards and said they are risk based audit standards. She noted the hired auditing and accounting firm, Clifton Gunderson, reviews the city's numbers and evaluates controls. She noted the city received a "clean opinion," which means the CAFR fairly represents the City's financial conditions. She said the report on internal controls states there were no instances of non-compliance or other matters that needed to be reported to the governing body. Lankford introduced Dave Phillips of Clifton Gunderson, LLP. the external auditor. Phillips said that was a good summary presentation of the CAFR. He guaranteed that they are bringing council an independent and unqualified opinion. He said the financial statements in the CAFR are fairly stated. He referred to the internal control report and added there were no deficiencies or weaknesses that should be reported to the governing body. He said there were some housekeeping items that they passed on to the staff but there was nothing that arose as a control deficiency, He repeated that the auditors use risk based standards. He continued to describe how they scope their audits and said they have required communications. He said it is the auditor's responsibility is to perform the audit and form an opinion on the financial statements as a whole in accordance with Generally Accepted Accounting Principles (GRAS). He said, in addition to he financial audits, they also look at supplemental information as well. He said there are accounting estimates provided by outside firms that are in these financial statements and he described those estimates. He noted there are no sensitive disclosures and added there were no difficulties in the performance of the audit He noted there were no disagreements with management and there was great cooperation with staff. He thanked Rundell and staff for being so accommodating. Rundell recognized the staff members who spent a lot of time and effort on this project B Update on the City's Sales Tax revenue profile including historical information as well as sales tax revenue projections -- Chris Foster, Chief Financial Analyst and Micki Rundell, Chief Financial Officer With a Powerpoint presentation, Foster showed the Council a chart breaking the sales tax in the City into different categories. He said retail is the city's biggest sales tax revenue maker. He noted the sales tax in Georgetown is now about where it was back in 2007. He said the city could be considered almost fully recovered. He said the retail sales did not move that much, but underground economy such as manufacturing and wholesalers is moving up. He spoke about the retail only sales tax and said Wolf Ranch alone represents 21 % of the city sales tax. He said the federal reserve breaks the economy into many different segments. He reviewed the sales tax segment changes from FY09 to FYI 0 and he described the segments that are growing the fastest including healthcare and manufacturing. He reviewed the economic forecast model the city uses. He spoke about inflation and how it has affected the city over the past year. Num 1wplamel Mayor asked and Brandenburg said staff is trying to absorb the inflation costs within each division. He said some of the discussions that have taken place internally mentioned $50,000 that must be made up. He said the City has looked into, at mid year after reviewing the financials of the city, doing bonus payments for non civil service employees as well as possibly giving some funds to the Arts and Culture Board. He noted he knows December was a good month, but staff would like to see how the sales tax trends continue over the next few months He said, right now, looking at gas increases and fuel increases, the City is expecting an extra $50,000 shortfall to make up. Gonzalez asked and Rundell said the city is limited by how far ahead it can make fuel purchases. She said the City has fuel tanks in which the City stores fuel. She said the City is continuing to look at alternatives for fuel services as well. She noted the staff will be bringing back a more involved analysis of this in the near future Recessed to Executive Session under Sections 551.071, 551.072 and 551.087 -- 4:48PM Returned to Open Session and adjourned -- 6:01 PM The City Council Meeting Minutes/ Page 3 of 3 Pages • was adjourned at 06-01 PIVI.