Budget and Finance Committee

September 20, 2007 at 7:30 am

DRAFT MINUTES

Corrected

Members: Ron Van Dee, Chairman; John Troy, Vice Chairman; Sean Clark, John Daniels, Danny Ross and Newell Willcox

Others Present: Scott Schrader, County Administrator; Carol Tytler, Legislator; Sandy Price, Legislator; Richard C. Van Donsel, County Attorney; Katrina Spicer, Secretary to Administration; Don Ferris, County Treasurer; Carolyn Kennedy, Deputy County Treasurer; Dennis Whitt, County Auditor; William Cinquanti, Real Property Tax Services; Richard McNeilly, Corey Preston, Cortland Standard; John Carroll, Jennifer Gofkowski and Mary Clare Pennello

Absent: Dan Tagliente

Mr. Van Dee called the meeting to order at 7:30 a.m.

Mr. Troy moved adoption of the minutes of the August 16, 2007 meeting; seconded by Mr. Clark. All members present voted in favor; none opposed; minutes approved as printed.

DISCUSSION:

Audit Committee - Committee meeting as Audit Committee to receive and review Single Audit Draft for year ending December 31, 2006 - Single Audit Report – Rick McNeilly, CPA.

1. Presentation/Discussion of the Draft Single Audit, Richard McNeilly –The Audit Committee accepted and reviewed the Draft Single Audit Report provided by Richard McNeilly, CPA. Mr. McNeilly distributed a draft copy of the report and explained there may be changes due to the fact that it is just a draft. He requested that the copies distributed be returned to Mr. Whitt to avoid having unofficial copies floating around.

Mr. McNeilly explained that the General Fund was increased by $2.9 million and added that this is mainly because of a reduction in expenditures and budgetary control. He explained that the ending balance for 2006 in the General Fund is $12.7 million and added that this balance is steadily increasing.

Mr. McNeilly discussed the Tobacco Securitization Fund on pages 14 and 17 and also explained that on page 48 shows the General Fund and the County Road Fund. He pointed out the 2006 Solid Waste Fund on pages 20 – 22. Mr. McNeilly explained that in past years this was blended into the General Fund and starting January 1, 2006 it is reported separately. He did state that Worker’s Compensation and Health Insurance are blended in the General Fund.

Mr. McNeilly explained the GASB 34 Statement on pages 10 – 13. He explained that basically they show total County operations on a full accrual system. He further explained that the GASB 34 Statement makes municipal operations appear similar to that in the private sector. He went on to explain that the total column on page 11 shows all County operations. Mr. McNeilly expressed that it was noteworthy to mention the County having $18.5 million in cash and $30 million in assets and equity.

On page 13 Mr. McNeilly pointed out the Statement of Operations and discussed at the bottom under total, shows a $4 million net profit for the year on a profit basis. He further explained changes this year in the manner in which things were reported and things that were not looked at in the past.

Mr. McNeilly explained that on page 47 of the draft he is awaiting input from the County Attorney’s Office in regards to summary judgments and monetary damages. Mr. Willcox asked the County Attorney if he had an estimate to what the damages might be. Mr. Van Donsel expressed that he had spoken with some attorneys in regards to settlements and estimated the settlement cost being approximately $192,000. He added that this is a high estimate. Mr. Willcox asked if Mr. Van Donsel thought $200,000 was a high estimate. Mr. Van Donsel expressed that he did think that $200,000 was a high estimate. Mr. Whitt explained that a letter was sent to the County Attorney in regards to this and he is waiting for his response to include in the audit. Mr. Whitt added that he is not as optimistic about the settlement prices as Mr. Van Donsel is. Mr. Whitt explained that he would rather prepare for the worst-case scenario in regards to this. Mr. Van Donsel inquired about how Mr. Whitt could state that this is not the worst-case scenario. Mr. Whitt briefly explained that this litigation can go on and on and further stated that a letter is needed from the County Attorney in regards to this for the purpose of publication. Mr. Van Donsel again stated that he did not know what Mr. Whitt was talking about. Committee members discussed further the worst-case scenarios.

Mr. McNeilly went on to discuss the financial end and federal compliance. He additionally explained that the only issue that arose in regards to this compliance was one file out of 25 files audited in the area of Home Energy Assistance Program (HEAP). He further added that the cost was a total of $425 involving this one file. He also stated that any non-compliance issue must be reported.

Mr. McNeilly went on to discuss the four items that were considered significant last year. 1. Capitol Project Funds – Mr. McNeilly explained that all this has been corrected and now there are budgets and a recording of the project and added that all bank accounts have been reconciled. 2. Departmental Bank Accounts and lack of central control – Mr. McNeilly explained that the policy and procedure had been changed to take care of this. 3. Monthly Bank Account Reconciliation – Mr. McNeilly stated that all bank accounts had been reconciled at the end of 2006. 4. Lack of Procedures for Delinquent Property Tax Payment Installment Agreements – Mr. McNeilly explained that this has not been corrected and it relates to someone setting up a set of procedures in regards to how things are handled with installment agreement payments. Mr. McNeilly further discussed the current status of accounts and the need to balance them on regular basis.

Mr. McNeilly explained that he could come back to the next meeting of the Budget & Finance Committee or he would take phone calls if anyone had any questions. Mr. Van Dee expressed that he thought this was worthwhile and would like Mr. McNeilly to come back.

Mr. Whitt explained that there is a great deal of work involved in this draft report. He briefly discussed the GASB reporting and stated that the final version of the Single Audit would be published in a timely manner. Mr. Whitt went on to state that overall, 2006 was a very good year with substantial improvements being made. He also discussed the improved bond rating, financially sound handling of government and the County being in budgetary control. Mr. Van Dee expressed that he felt Mr. Schrader and Mr. Whitt did a good job in regards to the financial status of the County. He added that the Budget & Finance Committee and others also did a good job.

Mr. Willcox inquired if the amount of money the County had would have a bearing on the County’s bond rating. Mr. Whitt answered, absolutely! Mr. Whitt briefly discussed the affects on the bond rating. He added that this is the responsible way of government. He also added that this group, Budget & Finance Committee, has proven last year that it can be done.

Mr. Schrader discussed two changes in the Single Audit Report; 1. GASB 34, accounting for infrastructure value and the cost to bring it up to par, and 2. GASB 45, a requirement to show past retirement benefits. Mr. Whitt explained these changes being requirements of the government and added that they are not useful at the local level. He also stated that the reason for the changes is that many governments were not reporting them and also liabilities were unreported previously. He added that this is basically full disclosure. Mr. Willcox inquired as to how this was policed by the state. Mr. Whitt explained that it is basically reported in Mr. McNeilly’s report and if Cortland County does not comply and report its findings, then the State can withhold funds

Mr. Van Dee thanked Mr. McNeilly for his report.

BUDGET & FINANCE COMMITTEE RESOLUTIONS:

1. Amend 2007 Budget Grow Cortland Program – Mr. Troy moved adoption; seconded by Mr. Clark. No discussion occurred regarding this resolution. All members voting in favor; none opposed, resolution adopted.

2. Resolution of the Legislature of the County of Cortland, Extending Taxes on Sales and Uses of Tangible Personal Property and of Certain Services, and on Occupancy of Hotel Rooms and Amusement Charges, Pursuant to Article 29 of the Tax Laws of the State of New York – Mr. Daniels moved adoption; seconded by Mr. Troy. Mr. Willcox inquired if there were any changes made to the percentages. Mr. Schrader explained that there were not. Mr. Van Dee expressed that this is what was agreed upon. All members voting in favor; none opposed, resolution adopted.

3. Local Law No. 1 for the Year 2007: A Local Law To Impose A Mortgage Recording Tax – Mr. Daniels moved adoption; seconded by Mr. Troy. Mr. Willcox inquired if the estimate is that this will raise $300,000 annually. Mr. Schrader explained that it is. Mr. Van Dee, Mr. Troy, Mr. Clark, Mr. Daniels and Mr. Ross voted in favor; Mr. Willcox was opposed, resolution adopted.

4. Abolish/Create Real Property Tax Services Assistant Real Property Assessor (21 hrs/wk)/Real Property Assessor (21 hrs/wk) – Mr. Troy moved adoption; seconded by Mr. Clark. Mr. Willcox inquired as to the reasoning behind this. Mr. Cinquanti explained that currently the individual assesses for three towns and next year will be assessing for a fourth town and therefore there is a need to change her title. All members voting in favor; none opposed, resolution adopted.

5. Authorize Agreement Assessment Services (Real Property Tax Services) – Mr. Ross moved adoption; seconded by Mr. Troy. No discussion occurred regarding this resolution. All members voting in favor; none opposed, resolution adopted.

6. Authorize Agreement Town of Homer (Real Property Tax Services) – Mr. Troy moved adoption; seconded by Mr. Clark. Mr. Cinquanti explained that this is another reason for the prior resolution. Mr. Schrader explained that currently the County does assessing for three towns and added that this is to add the Town of Homer to that list. He explained that this contributes to the need for an upgrade to the Assessor position with an increase in hours and expansion of services. He explained that the revenue created by this would cover the costs of the County with about $4,000 in the black. Mr. Schrader further discussed eventually obtaining some equalization to the rate and added that countywide assessments will delete the equalization rate. Mr. Willcox inquired about the grievance process. Mr. Schrader explained that the process would remain the same it will only be the faces that change. All members voting in favor; none opposed, resolution adopted.

7. Appoint Director Real Property Tax Services Office - Mr. Daniels moved adoption; seconded by Mr. Troy. Mr. Schrader explained that this is to reappoint Mr. Cinquanti for another term and added that he has completed Mr. Cinquanti’s evaluation and requested to go into Executive Session to discuss it.

Mr. Willcox made a motion to go into Executive Session to discuss a Personnel matter; seconded by Mr. Clark. All members voting in favor; none opposed; Budget & Finance Committee went into Executive Session at 8:08 a.m. to discuss a Personnel matter.

The Budget and Finance Committee returned from Executive Session at 8:18 a.m.

All members voting in favor; none opposed, resolution adopted.

Mr. Van Dee introduced the Consent Agenda Items 8 through 15.

No requests were made to remove any items from the Consent Agenda to be acted upon separately.

Mr. Daniels moved adoption of the Consent Agenda, with no exceptions; seconded by Mr. Clark.

CONSENT AGENDA

Referred from General Services Committee: None

Referred from Health Committee:

8. Authorize Agreement Mental Health Department Locum Tenens for Temporary Psychiatry Services

Referred from Highway Committee: None

9. Authorize Agreement with NYSOGS GCP-19 Tire Shred Highway Department/Landfill

10. Amend Budget/Transfer Funds Highway Department/Recycling

Referred from Judiciary & Public Safety Committee: None

Referred from Human Services Committee:

11. Amend Budget Area Agency on Aging (Supplemental Nutrition Assistance Program)

12. Accept Grant/Amend Budget Department of E&T Grant Administration Disability Program Navigator

13. Amend Budget Department of Social Services (Transfer)

14. Amend Budget Department of Social Services (Transfer)

Referred from Personnel Committee:

15. Create Information Processing Clerk County Historian

Referred from Agriculture/Planning/Environment Committee: None

All members voted in favor; none opposed; consent agenda adopted.

Committee members discussed the wording in Agenda Item No. 14 and asked Mr. Schrader to clarify it. The consensus of the Budget & Finance Committee was to have Mr. Schrader clarify the wording in Agenda Item No. 14.

Committee members discussed Agenda Item No. 15 needing a change; the last line should read “Increase” not “Decrease.” The consensus of the Budget & Finance Committee was to change the last line to read “Increase” instead of “Decrease” in Agenda Item No. 15.

Ms. Tytler requested that the process in which checks are cut and released be looked at because there was a lengthy hold up of a check recently due to the fact that one person was out for a couple of weeks. Ms. Tytler suggested that this be looked at to see if there was another person to help out in these situations and avoid these lengthy delays.

DISCUSSION:

2. Appraisal Services, Letter of Engagement – Mr. Schrader explained that he is seeking Committee approval in regards to the retention of appraisal services in the matter of the Elm Street property being obtained in the eminent domain process. Mr. Willcox inquired about the possibility of this being done in house. Mr. Schrader explained that the Courts would want to see and independent assessment completed. Mr. Ross inquired if the County Attorney received only one proposal. Mr. Schrader explained that this was handled through the County Attorney’s Office and Mr. Van Donsel would need to answer that question. Mr. Schrader further discussed the need for justification to the Court on the evaluation of the property once it has been condemned. Mr. Schrader further discussed a conversation he had with Russ Ruthig, property owner’s attorney, regarding the owner selling to the County absent of eminent domain. He explained that Mr. Ruthig stated that he would discuss this with the property owner and get back in touch with Mr. Schrader. Committee members agreed that obtaining the property absent of eminent domain would be a better option. Mr. Schrader expressed that an appraisal is needed either way. Mr. Willcox inquired about using any assessors here in Cortland County. Mr. Cinquanti explained that there are three assessors here in Cortland County; Mr. Tupper from the Town of Cortlandville, Mr. Briggs from the City of Cortland and himself from the County. He added that an appraisal done by either of these people would not be independent. Mr. Van Dee asked Mr. Cinquanti if the fee seemed reasonable. Mr. Cinquanti expressed that it was a healthy fee and further discussed that this individual is from Syracuse. Mr. Van Dee, Mr. Troy, Mr. Clark, Mr. Daniels, and Mr. Willcox were in favor of approving the retention of appraisal services, Mr. Ross expressed that he was opposed.

3. Health Insurance, Third Party Administrator – Mr. Schrader explained that the Personnel Committee recommended that this be discussed here in Budget & Finance Committee. He provided a copy of the Cortland County Executive Summary, Request for Proposal (RFP), Health Care Program Administrator prepared by Benefit Consulting Group (BCG) to each member. Mr. Schrader explained that RMSCO is the current Third Party Administrator (TPA). Mr. Schrader explained that the County has their own Health Plan and this RFP would be to administer the County’s plan. He added that there are approximately 710 employees and retirees are covered under the County’s Health Insurance. He explained the three components used to analyze the best TPA: 1) cost of administration, 2) the cost of claims due to the fact that each TPA has different rates, and 3) the saturation of in-network TPA participating providers. Mr. Schrader explained that five responses were received from the RFP and added that only two of those five are competitive. He explained that they are POMCO and RMSCO. He added that POMCO could provide the County with a $122,000 savings over RMSCO. Mr. Schrader also explained that out of 108 most utilized providers with RMSCO, only 79% are providers under POMCO. He explained that 12 providers currently utilized under RMSCO would not be providers under POMCO and added that this means the employees would need to change providers or pay 20% for utilizing a provider not in the network. Mr. Schrader explained that the potential savings for switching to POMCO would be $122,000 but did state that there would be a substantial impact on employees. Mr. Schrader also explained that he needs to discuss this with Union representatives and has scheduled that meeting for September 25, 2007. He also stated that since this was announced at the Personnel Committee meeting last week, Legislators have been inundated with phone calls as well as the Personnel Department. Mr. Schrader expressed that if it is the desire of the Legislature to switch he will need to know. He also stated that he has asked BCG to go back to RMSCO and POMCO and ask them to sharpen their pencils. He also added that RMSCO has stated that they plan to renegotiate their agreements with providers in 2008. Ms. Tytler expressed that the 108 providers are for most utilized services and addressed her concern regarding the “orphan services,” those services less utilized. Mr. Schrader expressed that the Health Insurance Plan is established by the County and that would not change. Mr. Schrader also explained that POMCO is short of providers but that could change. Ms. Tytler inquired if the County knows the providers covered under RMSCO and not POMCO. Mr. Schrader expressed that he is in the process of obtaining that information but did state that employees are calling their doctors themselves and asking the question. Ms. Tytler expressed that the cost savings is significant and added that other aspects also need to be looked at. Mr. Schrader discussed briefly that a change would be disruptive administratively and also be disruptive to employees. Mr. Willcox inquired about the self-administering of the County’s Health Insurance plan. Mr. Schrader expressed that the cost of $190,000 to administer the plan by a TPA would not even be close to what it would cost the County to administer the plan ourselves. Mr. Schrader did discuss Health Insurance costing approximately $6 million for the County and the $122,000 savings is a 2% savings.

4. Budget Review – Mr. Schrader explained that he has been meeting with Department Heads in regards to their budget requests and stated there has not been any big surprises, except for DSS. He further stated that he is planning on printing the 2008 Tentative Budget the week of October 22, 2007 and would release it at the Legislative meeting on October 25, 2007. Mr. Schrader explained the need to schedule budget hearings and Mr. Van Dee expressed that this could be done later in October. Mr. Schrader also explained the process involved in regards to the budget and stated that currently he plans on presenting the 2008 Adopted Budget at the November 29, 2007 Legislative meeting and having a Public Hearing on November 20, 2007.

Mr. Daniels made a motion to adjourn the meeting; seconded by Mr. Troy. Mr. Van Dee adjourned the meeting at 8:51 a.m.