Budget and Finance Committee

July 1, 2004

7:00 am

Present were: Kurt Behrenfeld, Chairman; Dr. Paul DiGiovanni, Vice Chairman;

Marilyn Brown: Newell Willcox; Danny Ross; Carol Tytler;

Others present: Paul Allen; Merwin Armstrong; Scott Schrader, County Administrator; Eric Mulvilhill, WXHC radio; Carletta Edwards, Clerk of the Legislature; John Carrol;

Members absent: Kay Breed

Chairman Behrenfeld called the meeting to order at 7:07 am.

Mr. Behrenfeld opened the meeting by explaining what needs to be accomplished by this

Committee is dealing with the day to day operations of the Treasurer’s Office and making sure the county is up to date on all operations needed to be in compliance. Mr. Behrenfeld stated the Assessment Committee is looking at the Comptroller’s Report to determine why the problems occurred and for solutions to the concerns of the report. Mr. Behrenfeld noted the Comptrollers Report identified it is a responsibility of the Legislature of assuring the daily operations are being done in a correct and timely procedure. Mr. Behrenfeld stated that inefficient operations might be putting the County into situations where ramifications could be costly.

Mr. Willcox asked if Mr. Whitt would be attending? Mr. Behrenfeld stated he thought Mr. Whitt would be here. He said Mr. Whitt has been instrumental helping the Assessment Committee understanding what will be needed to accomplish addressing the problems of the Treasurer’s Office. This committee might need his assistance in knowing how to deal with the day to day operations that arise that need to stay current.

Mr. Behrenfeld asked the committee for input as to how they feel they should address the report regarding the oversight.

Ms. Brown stated that Article #1 and #2 on Page 15 would be the place to start to set the goals.

Mr. Willcox asked if the Treasurer were to resign today would the show go on? Mr. Willcox asked how would the County operations be affected? Mr. Schrader responded the work would continue to be done. Mr. Schrader stated the Governor would intervene and appoint someone to fill in. Mr. Schrader stated if that were to happen, County operations would not be hurt in any way. Mr. Behrenfeld stated this committee does not want to put the County in jeopardy. Mr. Behrenfeld asked specifically how would the daily operations within the Treasurer’s Office be affected if there were a resignation? Mr. Schrader stated the office would be staffed from within. Mr. Schrader said he would most likely be assigned to oversee the daily operations. Mr. Schrader said the timing of what might happen could be affected.

Mr. Behrenfeld referred to Article #1, Page 15 of the Comptroller’s Report and asked how the committee sees this being accomplished. (The County Treasurer should establish a plan to provide needed direction to and supervision of his office staff. The goal should be to correct the current deficiencies in the accounting and reporting functions of his office.) Ms. Brown noted this committee has never seen a corrective plan prepared by Mr. Ferris. Mr. Willcox stated the Treasurer doesn’t think there are any problems so why would he do a corrective plan. Mr. Behrenfeld feels Mr. Ferris needs to provide the corrective plan to the committee for their review. Mr. Behrenfeld asked what they would like in the plan. Ms. Brown stated they need to know specifics in the plan and timing should be addressed also.

Mr. Ross stated he would like Mr. Whitt here to address the concerns of this committee and help them to work through the process of setting perimeters.

Dr. DiGivovanni reminded the committee there is a timing issue here. He stated it is the responsibility of the Treasurer to provide this committee with information that is requested and it is not the responsibility of Mr. Whitt to be determining what is needed or requesting that information.

Mr. Behrenfeld suggested that the Corrective Action Plan request the following information layout; areas to be corrected, corrective action plan to be taken for each area, and date or timing involved to implement action. He asked the committee if this was agreeable. Mrs. Brown stated she agreed with this. All committee members agreed this would be incorporated into a letter as a request for information from the Budget and Finance committee. Mr. Behrenfeld stated this would address Article #1 on Page 15.

Mr. Behrenfeld said the next issue is addressing Article # 2, Page 15. (The County Treasurer should provide the County Legislature with accurate and timely financial information after verifying that accounting records are posted up to date and cash balances have been reconciled before preparing financial reports.) Mr. Behrenfeld referred to copies of the letters from Mr. Steve to Mr. Ferris and from Mr. Ferris responding to Mr. Steve regarding financial information about bank reconciliation statements. Mr. Behrenfeld referred to the statement "a few journal entries that Carolyn needs to make so we can complete the requested reconciliation’s" meaning that it appears the Treasurer’s Office is not current. Ms. Brown stated the postings are still not being done timely even though statements by Mr. Ferris have been made to the Legislature and to the public that they are current. Ms. Brown commented on a current situation of a $10,000.00 check being mailed out in March and not cashed by the vendor and no notification being given to anyone of this information by the Treasurers’ Office. Mr. Ross stated there was a timing issue involved and had he not attended a meeting and being asked about the check it may have slipped by. Mr. Ross stated the problem was taken care of, a second check was issued and he and Mr. Steve had carried it to the vendor earlier this week.

Mr. Behrenfeld asked how the committee could and should address Article #2 concerns? Mr. Behrenfeld suggested they receive financial statements under GASB format. Mr. Schrader stated this is very unusual for government operation to do.

Dr. DiGiovanni asked Mr. Schrader if he stepped in and took over the office what would he provide that is different and how? Mr. Schrader stated that a report of all postings being current regarding revenue and expenditure accounts is a necessity to maintain an accurate accounting system throughout all County Departments. Mr. Behrenfeld asked if a report were to be issued every month would it help committee to be aware of timeliness on Treasurer’s Office? He asked what good would a report be if it was not very specific and how would committee know if accurate?

Mr. Schrader feels the Treasurer’s Office should be current on postings at all times and the report needed would be about what is not current. Mr. Schrader stated the report should include; what postings are behind, why they are behind, and what the financial impact to the County is. Mr. Schrader stated this has been a constant problem, not only since he has been here but also since the Treasurer has taken office. Mr. Schrader stated the Treasurer has never offered a Corrective Plan for this area, that he continually blames his office staff or the computer system for the shortfall. Mr. Schrader stated the Treasurer has never asked for extra time for his staff to address any of the concerns and as a Department Head has the ability to do just that. Mr. Schrader stated he believes the Treasurer’s Office has the ability to be current on postings with the proper management of the department. Mr. Behrenfeld stated because the committee is trying to deal with compliance of day to day operations they need to receive reports that have meaning with end results of operations, not just copies of runs from the system as Mr. Steve had received when the bank reconciliation’s were requested. Mr. Behrenfeld stated this committee could not get sucked into excuses or the blaming nonsense of why operations are not happening timely and accurately. He believes this committee must have a low tolerance to non-compliance of work performance or information requests.

Mr. Willcox asked what made him think the leopard is going to change his spots? Mr. Ross stated this committee needs to make it clear the Treasurer must make the changes necessary and the that the Treasurer’s Office must operate in a timely and accurate manner from now on. Mr. Behrenfeld stated this committee must set recourse for non-compliance to address the concerns for change to happen in operations. He referred to the mere fact that bills need to be paid on time and are not. Mr. Behrenfeld stated we are not there yet and the perimeters set within this committee can not allow for any non-compliance.

Mr. Schrader stated the finding in Article # 1, Page 15 was ultimately the most important one because with lack of direction to and supervision of his office staff, the Treasurer is not able to have the office perform in accomplishing the daily functions necessary for government to operate. He said the committee is aware of all the concerns and now needs to set the standards for compliance to happen. Mr. Schrader suggested the committee request the following financial information from the Treasurer’s Office; a cash flow analysis, a report on postings, a report of reconciliations, and a debt schedule( 2 times a year). Mr. Ross asked if any of the reports given would show outstanding checks? Mr. Schrader stated that one could. Dr. DiGiovanni wants to be very specific on what is being requested by this committee, how they are to be given and does not want just copies of runs sent up for them to have to search through for the answers to concerns. Mr. Behrenfeld stated if a report comes to them incorrect it would be considered an act of non-compliance. Mr. Willcox asked what would be the result of non-compliance? Mr. Behrenfeld said they still need to address that and will in the second half of this meeting.

Mr. Behrenfeld referred to Article # 3, Page 15 - (The County should form an audit committee or formally charge a standing committee to oversee County audits.) He suggested there be a sub-committee of Budget and Finance to do this. Dr. DiGiovanni stated he sees this being a charge passed onto the whole Budget and Finance committee as a recommendation of the Audit and Assessment Team as a Special Committee and doesn’t feel the need to split as a group to do it. He feels the charge will be better performed as a whole committee. Mr. Behrenfeld agreed and stated this committee will set perimeters as to how to perform these functions.

Mr. Behrenfeld referred to Article # 4, Page 16 - (The County Legislature should provide adequate oversight over the County Treasurer’s operation. It should ensure that monthly financial reports and other financial information submitted to it is timely and useful so that such information can be utilized in making timely and appropriate management decisions. When preparing the annual budget, the most accurate information should be used in projecting subsequent year activity.) Mr. Behrenfeld stated this was being addressed by the requests that will be made for reporting to this committee.

Mr. Behrenfeld referred to Article # 5, Page 16 – (The County Legislature should ensure that all County Employees who routinely use the County’s accounting computer system receive adequate training to reduce the number of computer-related questions posed to the Deputy County Treasurer.) Dr. DiGiovanni stated this refers to the lack of proper training for staff on the Munis System and that has also been a complaint of the Treasurer. He stated this was an area of discussion at the David Guido Strategic Planning Summit held earlier this year and believes a recommendation was brought forward for training issues on Munis to be addressed. Mr. Behrenfeld stated this directive may have been lost somewhere and feels it should be an issue being dealt with by the Personnel Committee and Mr. Corpora, Director of Data Processing. Ms. Brown stated the Treasurer should be directing concerns of training to the oversight committee requesting help and hasn’t done that. She commented despite all the complaints and excuses from the Treasurer, the requests for help or training have never come before this committee. Mr. Willcox stated it is easier to have a blame game than to request help to address problems.

Dr. DiGiovanni stated from the report he assumes when someone doesn’t understand the Munis System they are asking Ms. Kennedy, Deputy Treasurer, for help and this should not be the case. Dr. DiGiovanni stated Ms. Kennedy should not have to be in the position to train and the issue of training does need to be referred to Personnel. Dr. DiGiovanni would like to see this discussed at the July 14, 2004 Personnel Committee meeting. Ms. Tytler asked about the level of Munis training and how many of the County employees need to be familiar with and use this system within the function of County Government. Mr. Willcox asked if this would be under job descriptions when being filled or created? Ms. Tytler stated she feels Munis training needs to be addressed in job descriptions. She also believes the level of training or knowledge will differ depending on the position being held. Ms. Brown stated she would like to understand where the Munis problems arise, how many questions and from whom they come from are being asked to Ms. Kennedy. Dr. DiGiovanni suggested Ms. Kennedy could make a log of this information. Mr. Behrenfeld stated he thinks this may be time consuming to ask for. Mrs. Brown stated she thinks Ms. Kennedy should know the answer to where the problems are in lack of training and would just like the question asked of her.

Mr. Behrenfeld referred to Article # 6, Page 16 – (The County Treasurer should review procedures for entering payroll and real property tax receipts information into the County’s computer system to determine if alternative procedures can be developed to avoid unnecessary duplication of effort. He should also review operations done by hand such as the processing of certain types of disbursements to see if they may be computerized. Electronic filing of retirement reports would also enhance efficiencies.)

Mr. Schrader stated they are in the process of the trying to correct the system from being set up incorrectly. He stated there is resistance from the Treasurer to do the electronic transmission of data and it may take a directive by this committee to make the change but there are areas that need to be addressed before that should happen.

Dr. DiGiovanni stated this is a starting point to improve the County, not a process to set up procedures to fail so thought needs to be put into changes and procedures to move toward successes in operations. Mrs. Tytler stated she feels oversight of the Treasurer’s Office is a very fair way to start to move forward.

Mr. Behrenfeld stated at this time the committee should move on to the issue of reprimand for non-compliance issues in the future. Mr. Schrader stated this committee might recommend sanctions for non-compliance, which could include but not be limited to removal of office by the Governor or written reprimands. Dr. DiGiovanni stated he assumes there is a scale of reprimands and feels this committee should look at the beginning of the process. Mr. Schrader stated if this committee were to follow something similar to a Civil Service procedure it would start with a letter of reprimand and move forward from there. Mr. Behrenfeld feels a process needs to be established so the County is functioning correctly and in compliance. Mr. Behrenfeld asked if there is a serious offense of non-compliance would there be a time when the Treasurer could be told not to report to the office and that someone else would by physically assigned to his office or duties be assigned out of that office. Mr. Schrader stated the Legislature may assign some duties out to other departments and also could assign an interim office manager into Treasurer’s Office. He stated that some duties couldn’t be removed because of County Law. He feels 85% could be done.

Mr. Behrenfeld asked that Mr. Schrader and Mr. Whitt prepare a list of options for non-compliance and reprimands that could be issued.

Dr. DiGiovanni stated he would like to clear up a misrepresentation in the Cortland Standard by a statement the Audit and Assessment Team as a Special Committee had recommended the changing of the position of Treasurer from an elected office to an appointed office. He stated the committee is only setting the ground work now and asking for information that will allow them to make that recommendation if determined in the future and then be able to move it forward. Dr. DiGiovanni stated it should not be presumed this committee or the Audit and Assessment Team has made any decisions because both committee are only assuming and performing the charges needed to help get the County moving forward addressing the concerns that must be taken care of. Dr. DiGiovanni stated this committees will be setting up expectations and goals to allow corrective actions be taken and penalties are being established to make sure responsibilities are taken seriously and not ignored. Dr. DiGiovanni spoke to the statement in Paragraph 6, Page 6 "The County Legislature did not provide adequate oversight over the County Treasurer’s operations."

Ms. Brown stated the previous Legislature tried by asking for financial reports but there was no cooperation. She stated they did not have a Mr. Schrader or a Mr. Whitt to assist in these concerns. Dr. DiGiovanni stated that when the Legislature changed and moved into 2004, Chairman Steve asked for six months to allow areas to be brought into compliance and corrections be taken. Dr. DiGiovanni stated that has not happened and Chairman Steve is not satisfied and the time has come for the oversight committee to take action and move forward.

Mr. Behrenfeld was directed by committee to request the information for the Corrective Plan to be given on or before July 14, 2004 to Budget and Finance Committee according to the specifics given previously.

Mr. Behrenfeld stated the next Budget and Finance Committee meeting will be July 15, 2004 and they will take care of business first then revisit this issue.

Motion to adjourn at 8:20 am.

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