September 21, 2006 at 7:30 am
DRAFT
MINUTES
Members: Ron VanDee, Chairman; John Troy, Vice Chairman; Sean Clark, John Daniels, Danny Ross, Dan Tagliente and Newell Willcox
Others Present: Marilyn Brown, Chairman of the Legislature; Scott Schrader, County Administrator; Richard C. Van Donsel, County Attorney; Dennis Whitt, County Auditor; Rick McNeilly, Independent Auditor; Carol Tytler, Legislator District 3; Carol Tytler, Legislator District 13; Katrina Spicer, Secretary to Administration; Don Ferris, County Treasurer; Carolyn Kennedy, Deputy County Treasurer; Corey Preston, Cortland Standard; Eric Mulvihill, WXHC; and John Carroll
Mr. Van Dee called the meeting to order at 7:31 a.m.
Mr. Troy moved adoption of the minutes of the August 17, 2006 meeting;
seconded by Mr. Daniels. All members
present voted in favor; none opposed; minutes approved as printed.
Audit Committee - Committee meeting as Audit Committee to receive and review Single Audit Draft for year ending December 31, 2005 - Single Audit Report – Rick McNeilly, CPA.
Committee Chairman Van Dee informed the Committee that Mr. Richard M. McNeilly was present to discuss the draft of the Single Audit Report for year ending December 31, 2005.
Mr. McNeilly began discussions of the Draft Audit Report of the 2005 Finances to the Budget and Finance Committee sitting as the Audit Committee. Mr. McNeilly informed the Committee that he would review the handout with them. Additionally, he informed Committee members that he found no audit problem but did have some reportable conditions that he would save and discuss last.
Mr. McNeilly discussed the Financial Statements from the draft audit and pointed out notes to the financial statements in the report. Mr. Willcox inquired about the actual fund balance. Mr. McNeilly pointed out that the fund balance is the unrestricted net assets found on page 10 and additionally discussed the restricted net assets found on page 10 also. Mr. McNeilly discussed and explained that on page 46 and 47 show the amount budgeted for, all amendments and what actually happened. Mr. Willcox inquired about what the percentage of the entire budget, as a whole, is the fund balance. Mr. McNeilly explained that he did not have the exact percentage but it could be calculated by taking $10.8 million divided by $73 million, and it is approximately 15%. Mr. Ross inquired if that is a sufficient amount to have in fund balance. Mr. McNeilly explained that the Comptroller’s Office recommends a fund balance of at least 5% of the total budget.
Ms. Breed questioned, why a copy of the draft audit was provided to the media prior to being sent to Legislators? Mr. Schrader and Mr. Whitt explained that Ms. Spicer sent an electronic copy of the draft report to all Legislators and the Media simultaneously. Ms. Breed discussed the receipt of the report. Ms. Tytler expressed that she received an electronic copy of the report and was in the office a few days later and asked for a hard copy and was provided with one.
Ms. Breed further discussed a previous audit and expressed that no problems were indicated. She further inquired about what internal controls are in place and what the County Auditor is doing in regards to the Treasurer’s Office and the audit report. She went on to discuss the New York State Comptroller’s recommendations. Ms. Breed additionally questioned, why the report had not been sent to Legislators in a timely manner? She expressed that the draft report was received by the County on August 17th and was not sent to Legislators until September 18th. Mr. Schrader stated that the report was timely and was sent to the first regularly scheduled Budget & Finance Committee meeting following the receipt of the report. He added that this meeting is the first regularly scheduled meeting and the first opportunity for him to present it to the Audit Committee, which is the Budget & Finance Committee.
Mr. Van Dee asked if anyone had any questions for Mr. McNeilly at this point. He asked Mr. McNeilly to continue. Mr. McNeilly continued to discuss and explain the draft copy of the audit report. He expressed that there were no federal problems found, no material weaknesses and no compliance issues. He went on to explain reportable conditions and that if anyone has any further questions after the meeting they may call him, he provided a phone number for them to call. Mr. McNeilly explained the definition of a reportable condition and that it is further explained on page 3 of the report. He explained that there are four conditions that he has found as reportable conditions.
Mr. McNeilly explained that there are two reoccurring conditions; lack of proper management in regards to capitol projects and lack of procedures for delinquent property tax payment installment agreements. He also mentioned that there are two other reportable conditions that are new conditions: lack of reconciliation of bank accounts and lack of control of some departmental bank accounts.
CAPITOL PROJECTS – Mr. McNeilly reported that he found a lack of proper management in regards to the accounting of capitol projects. He further added that this has been an ongoing problem since the switch to MUNIS. He further discussed problems with the MUNIS software and the accounting practices of Cortland County.
Some committee members and others
present pointed out that pages were missing from their copy of the draft of
the Single Audit Report for year ending December 31, 2005. Copies of the
missing pages to some of the draft handouts were made and provided for those
present at the meeting.
LACK OF RECONCILIATION OF BACK ACCOUNTS – Mr. McNeilly explained that there are problems with the reconciliation of the bank accounts. Ms. Kennedy discussed some problems with checking accounts dating back to 2004. Chairman Brown inquired about checking accounts being reconciled correctly on a monthly basis. Ms. Kennedy discussed some reporting procedures in the Treasurer’s Office. Mr. Ferris discussed new accounting procedures and added that he does not expect them to be a problem. Mr. Ferris discussed that if there are problems they will be addressed harshly. Mr. Willcox inquired if these problems would trigger a state audit. Mr. McNeilly expressed, no.
CAPITOL PROJECTS (Continued) – Mr. McNeilly further discussed problems with the capitol projects, tracking of money and annual close out of MUNIS. He additionally discussed manually setting up new budget authority. Committee members discussed entering capitol budget information in MUNIS and the Treasurer’s Office entering the information. Mr. Ferris discussed the numbers not matching up and his attempts to coordinate with the Highway Department to bring this project up to date. He further expressed that over the last few years he has not received the needed information from Highway Department in a timely manner.
Committee members discussed that these issues need to be brought to the attention of the Committee and the County Administrator. Mr. McNeilly discussed accounting procedures and that control needs to be kept in the Treasurer’s Office from beginning to end. Chairman Brown discussed Legislative responsibility and oversight. She added that the Legislature couldn’t do so if they are not informed of these problems and conditions. She further discussed the history of this issue and the changing of software over six years ago. Mr. Schrader explained that a capitol project is a project that will take over a year to complete but less than five years to complete. Committee members further discussed that the Treasurer’s Office is responsible for automatically reappropriating funds in regards to capitol projects and that MUNIS does not implement that feature in its program. Mr. McNeilly expressed that these problem are not present in all capitol projects but were present on some. He also addressed the issue that some major projects do not have a break out of accounting and that this is a lack of control.
Mr. McNeilly suggested that more communication come from the Treasurer’s Office to the County Administrator and Departments in regards to these projects. He discussed further the control factors and lack of information and dates in regards to the capitol projects.
Mr. Ferris discussed the need for communication from Highway Department in regards to full accounting. He further discussed resolutions lacking needed information as to what the source is of the revenue. He explained that he just receives the lump sum. Chairman Brown asked Mr. Ferris if he had requested further information from the departments. Mr. Schrader expressed his concerns about the blaming of the Superintendent of the Highway Department for these issues. Committee members discussed the issues further. Chairman Brown inquired as to why Mr. Ferris has not informed the Committee of these problems and issues earlier in the year and that he was not receiving appropriate information from the departments. Mr. Ferris explained that he had tried and added that he will begin to do reports on everything in the future. Chairman Brown expressed that she is attempting to find a solution and it is obvious Mr. Ferris does not need to write a report for everything. She added that there are some issues that need to be brought to the attention of the Committee.
Ms. Breed inquired if Mr. Whitt was aware of these problems and if so why hasn’t the Committee heard from him. Mr. Whitt stated that his role does not allow his involvement with the daily actions between the Treasurer’s Office and Departments. Mr. Whitt further discussed that the Audit department had experienced problems with other departments and stated his department continues fixing those problems. Additionally, he discussed that departments do not always need to bring every little issue to the attention of the Committee. Ms. Breed stated that this was a systemic issue.
Mr. McNeilly explained that it would not be difficult to correct the problem with capitol projects reporting. Mr. Van Dee inquired if monthly reporting from the Treasurer’s Office would assist in this area. Mr. McNeilly agreed that it would be a good idea, at least until the Committee is satisfied with the progress made to correct the errors and problems. Mr. Van Dee requested that Mr. Ferris report to the Budget and Finance Committee on a monthly basis, in writing, as to the progress made to correct the problem conditions, as reported in the draft 2005 Single Audit Report, in the Treasurer’s Office. Mr. McNeilly also suggested that Mr. Schrader be involved in this also.
BANK ACCOUNTS NO UNDER CENTRAL CONTROL – Mr. McNeilly explained that there are bank accounts in departments that are not being controlled through the Treasurer’s Office. He further explained that some accounts are mandated by the state but also added that they should be controlled through the Treasurer’s Office. He added that someone besides the department needs to be looking at these accounts and they are currently being controlled at the department level.
Mr. McNeilly discussed that some of these accounts he does look at through various departmental audits the he conducts separate from this audit but he does not look at all of them. Mr. Tagliente inquired as to what the Treasurer’s Office would need to take care of this problem. Mr. Ferris explained that his office can handle this but there is no policy in place for the departments to provide his office with reconciled bank statements. Committee members discussed department bank accounts. Mr. Ferris expressed that he needs a policy establish by a resolution. Mr. Van Dee inquired about a resolution being drafted for the next Budget and Finance Committee meeting in October. Mr. Whitt explained that the Committee can request an internal report be done quarterly or at the mid year point to provide further internal control on these issues. Mr. Daniels expressed that he would like time to consider this. Committee members discussed internal auditing and looking at department accounting books. Mr. Schrader recommended that a policy be established that gives departments no authority to open any bank accounts. He further discussed this and various reasons why he recommends it be done. Mr. Schrader added that this reportable condition could be corrected by a resolution at next months Budget and Finance Committee meeting. The consensus of the Committee was to have Mr. Schrader draft a resolution for their consideration at the October Budget and Finance Committee meeting.
LACK OF RECONCILIATION OF BACK ACCOUNTS – Mr. McNeilly discussed the lack of reconciliation on some bank accounts and added that subsequent to his findings Ms. Kennedy has made corrections to this condition. He further discussed the lack of reporting on the General Ledger and explained that they are not simple operations and discussed the need for them to be done. He specifically mentioned that the Health Insurance and Payroll accounts were not reconciled. Chairman Brown asked if there are any accounts not yet reconciled. Mr. Ferris explained that there are and further discussed some problems in his office and measurers that have been taken to correct them. He added that he believes that everything is being caught up. Chairman Brown inquired about Mr. McNeilly coming back in a certain period of time to review these reportable conditions and see if the proper measures have been taken to correct them. Committee members discussed an appropriate time period to have Mr. McNeilly back to review these reportable conditions. The consensus of the Committee members was to have Mr. McNeilly return in three months to review the areas he has marked as reportable conditions and report if proper measures have been implemented to correct these problems. Mr. Van Dee thanked Mr. McNeilly for his report to the Committee.
BUDGET & FINANCE COMMITTEE RESOLUTIONS:
1. Authorize Cancellation Of Delinquent Tax Lien – Mr. Daniels moved adoption; seconded by Mr. Troy. All members present voting in favor; none opposed; resolution adopted.
2.
Sales Tax Agreement – Mr.
Daniels moved adoption; seconded by Mr. Troy. Mr. Daniels discussed the Town
of Cortlandville and its burden of expansion for growth and their generation
of additional sales tax revenue. Mr.
Van Dee expressed that Mr. Tupper understands.
Chairman Brown expressed that the County is helping Cortlandville and
it is the County that provides policing services to those areas. Mr. Troy
asked for clarity regarding the time frame.
Chairman Brown explained that it is for six years but can be reopened
in four years if there is a municipality that so desires. Mr. Willcox inquired
about how much money the County would be loosing. Mr. Schrader explained that
for every 1% of sales tax revenue that is lost is equivalent to approximately
$220,000. Mr. Willcox expressed his concerns with the potential to increase
property taxes in 2009. Mr. Van Dee expressed that the difference is that we
are aware of money that the County will be loosing by giving additional sales
tax revenue to other municipalities so we can plan ahead for this. Mr. Daniels
explained that this agreement puts us back to where we were prior to the
current agreement we are under; correcting what we did. Mr. Tagliente
expressed that if the County kept additional sales tax revenue then the entire
County would benefit from this and the County still maintains control. Ms.
Tytler addressed her concerns about the City of Cortland and if additional
sales tax revenue is not provided to them it will have a negative impact on
the City as a whole. Mr. Schrader explained that if the County took it all, the
County could reduce taxes by 50% but the municipalities would need to raise
their taxes equivalent to less than the County’s reduction of taxes. He went
on to explain that the City would result in raising their taxes to a rate
which is hire than the County’s reduction. Mr.
Van Dee, Mr. Troy, Mr. Clark, Mr. Daniels, Mr. Ross and Mr. Tagliente voted in
favor; Mr. Willcox was opposed; resolution adopted.
3. Awarding Proposal for the Administration of the Cortland County Internal Revenue Code, Section 457 Deferred Compensation Retirement Plan and Authorizing Agreements with Nationwide Financial Services Inc. and Nationwide Trust Company in Furtherance Thereof – Mr. Daniels moved adoption; seconded by Mr. Troy. All members present voting in favor; none opposed; resolution adopted.
Mr. Van Dee explained that he was going to consider the Consent Agenda next.
Mr. Van Dee introduced the Consent Agenda, Items 4 through 13, and asked if there were any items to be pulled for discussion.
Chairman Brown requested that Consent Agenda Item No. 6 be removed and acted upon separately.
Mr. Willcox requested that Consent Agenda Item Nos. 6 and 13 be removed and acted upon separately.
The following agenda items were removed from the Consent Agenda to be acted upon separately: Consent Agenda Item Nos. 6 and 13.
Mr. Troy moved adoption of the Consent Agenda, with the exception of items 6 and 13 that were removed by request of Chairman Brown and Mr. Willcox to be acted upon separately; seconded by Mr. Daniels.
CONSENT AGENDA
Referred from Buildings and Grounds: NONE
Referred from Health Committee:
4. Authorize Agreement/Accept Funds/Administration/Special Programs Breast & Cervical Cancer Early Detection Program
5. Authorize Agreement/Accept Funds Indoor Radon Grant
Referred from Highway Committee:
6. Pulled to be acted upon separately
7. Soil and Water Conservation District Clean-up
8. Transfer Funds
Referred from Judiciary & Public Safety Committee: NONE
Referred from Human Services Committee:
9. Amend Budget (Expanded in-Home Services for the Elderly Program – EISEP)
10. Amend Budget (Nutrition Program Contracts)
11. Amend Budget (Title IIIE)
Referred from Personnel Committee:
12. Establish Rules and Regulations for County Health Insurance Program
13. Pulled to be acted upon separately
Referred from Ag/Planning: NONE
All members voted in favor; none opposed; consent agenda adopted.
The following items were pulled from the Consent Agenda to be acted upon separately.
NON -CONSENT AGENDA:
6.
Authorize Project to Construct
T-Hangar - Mr. Daniels moved adoption; seconded by Mr. Troy. Mr. Schrader
explained that it is likely that the County will receive no Federal funding
for this project but State funding is likely.
He added that the answer has not been finalized yet regarding state
funding. He went on to explain
that regardless of the Federal or State funding, this project would pay for
itself in fifteen years. Additionally, he explained that the current T-Hangars
are about thirty years old and he suggests that this project can stand on it’s
own with or without any additional aid. Mr. Willcox expressed that he has a
problem paying for this out of fund balance and inquired if this would qualify
as a capitol project. Mr. Schrader further explained that, in addition to the
rent revenue this will create, we need to also factor in the fuel purchase and
usage. He further explained that six of the ten individuals on the wait list
are currently from outside of Cortland County. Mr. Willcox explained that he
is not anti-hangar he is just opposed to the way it is being paid for. Mr.
Schrader further explained that in 2007, if Highway Department bonds for
equipment, this could be included in that bond. Mr. Schrader further explained
that this type of project is what fund balance should be used for.
He added that fund balance should not be used for reoccurring expenses.
Mr. Schrader also explained that the County should not bond for projects that
are on such a small scale as this one is. Mr.
VanDee, Mr. Troy, Mr. Clark, Mr. Daniels, Mr. Ross and Mr. Tagliente voted in
favor; Mr. Willcox was opposed; resolution adopted.
13. Extend Temporary Appointment – Safety Officer - Mr. Daniels moved adoption; seconded by Mr. Troy. Mr. Willcox requested a brief history on this resolution. Mr. Schrader explained, for insurance reasons, the County needs to have a Safety Officer, which greatly reduces the County’s liability costs. He added that a Safety Officer is to conduct inspections and trainings. All members present voting in favor; none opposed; resolution adopted.
Mr. Ross inquired about taking care of this position through the end of the year. Mr. Schrader explained that he is re-evaluating this position along with the Budget. He further discussed the politics of this positions and the County Safety Officer conducting inspections and trainings. Ms. Tytler discussed the Safety Officer and the Department of Health along with other regulations. Mr. Schrader agreed and further discussed the Safety Officer and the expansion of his responsibilities, licensing and certifications. Mr. Schrader stated that the position is important and does not feel that it should be eliminated, just re-evaluated.
DISCUSSION/REPORTS:
1. County Attorney: Property Litigation – Mr. Van Donsel requested that the Committee going to Executive Session to discuss a litigation matter. Mr. Troy made a motion to go into Executive Session to discuss a litigation matter; seconded by Mr. Willcox. All members voting in favor; none opposed; motion carried.
The Committee went into Executive Session at 9:02 am.
The Committee returned from Executive Session at 9:11 am.
2. Audit Committee - Committee meeting as Audit Committee to receive and review Single Audit Draft for year ending December 31, 2005 - Rick McNeilly – Mr. Whitt clarified that the draft report Mr. McNeilly discussed was not a published report yet; it was just a draft. He explained the process required for review of the Single Audit Report; including review of it by the Audit Committee. Mr. Whitt explained that the management analysis section will be added to the report before publication and that certain other things need to be done to finalize the 2005 Single Audit Report and publish it timely. Mr. Van Dee requested that Mr. Whitt ensure that the Single Audit Report is published in timely manner. Mr. Whitt agreed.
RECONCILIATION OF ACCOUNTS - Mr. Van Dee discussed the reconciliation of accounts and added that the Treasurer’s Office should not wait three months to have them balanced; this should be done as soon as possible. Mr. Van Dee also discussed Mr. Ferris reporting back to the Budget & Finance Committee in a month. Chairman Brown directed Mr. Ferris to work with Mr. Whitt regarding these issues (reportable conditions). The Committee members were in agreement with Chairman Brown’s directive. Mr. Tagliente discussed the capitol projects condition and added that this seems to be problematic year to year. Mr. Schrader explained that there is no direct problem with the cash flow. He further discussed project revenue being recognized and went on to discuss Highway Department capitol projects. Mr. Daniels further discussed problems with accounting procedures with capitol projects and money management.
Mr. Tagliente made a motion to adjourn the meeting; seconded Mr. Daniels. Mr. Van Dee adjourned the meeting at 9:15 a.m.