Committee Minutes

FINANCE DEVELOPMENT STANDBY COMMITTEE
July 22, 2009 - - 4:00 p.m. - - A101
Minutes


Present: Christensen, Gershman, Glassheim, McNamara
Absent: None

Christensen called the meeting to order at 4:00 p.m. He stated that the agenda would be altered to allow for discussion of the Comprehensive Annual Report first, as Joe Martin and Janelle Mulroy of Brady Martz & Associates, P.C. were here for that item.

1. The Comprehensive Annual Financial Report (CAFR) of the City of Grand Forks for the period ended December 31, 2008 and the Independent Auditor’s Report.

Joe Martin, Brady Martz and Associates, P.C., stated that they have completed the annual audit of the financial statements of the City of Grand Forks and have issued a clean opinion which means that in their opinion the statements are presented fairly under government accounting standards. He encouraged Council to read the Letter of Transmittal, as well as the Management Discussion and Analysis (MD&A) section, which provides a summary of all the detailed information presented in the document including comparison to prior years.

Jerath stated that in the handout provided today is a breakdown of the transfers, due to/due from transactions, and advances to other funds, all of which are included in summary form in the CAFR and referred them to page 58 and 59.

Christensen inquired where statements for the Enterprise Funds are located. Martin stated that balance sheets are page 30/31, income statements are page 32/33 and statement of cash flows is page 34/35.

Consensus of the Committee was to review the CAFR individually and forward questions to Jerath and she would contact Martin to attend the Council meeting to address the questions.

Christensen asked where more information on undesignated funds as discussed on page 1 of the MD&A could be found. Jerath referred him to Page 22 and then to page 88-91 for a further breakdown of the Special Revenue undesignated amount. Jerath explained that the money is undesignated within the individual special revenue funds. Christensen asked whether there is any ability to move money from any of these funds to the general fund. Jerath stated and Martin concurred that in some cases some of the money could not be transferred out of its fund, however there may be some ability to move some money, as long as it went for a similar use. For instance, money could be moved from the Highway User Fund to the General Fund for use in a street repair project. When allowable a transfer would require vote of the Council.

Martin stated that also presented today is the Independent Auditor’s report on use of Federal Awards, which is also a clean opinion and no areas of concern noted.

Martin stated that the third document for discussion tonight is the Management Letter, which contains information on any suggestions for changes that the auditors have recommended to management and managements response. He explained that they had noted five areas for improvement this year – four related to the Alerus Center, one with Human Resources and one in the Information Technology department. In all cases management has been responsive and agreed to implement changes.

Martin stated that the situations noted were:

Alerus Center –

1) A vehicle was purchased without going through the bid process. Management has agreed to follow the bid process in the future.

2) Travel of a nonemployee was paid and was not in adherence to City travel policy. Management has agreed to follow the travel policy for future travel.

3) There is a conflict between the bond covenant and City Code and auditor’s advise working to resolve the conflict between the two documents. Gershman noted that Council is aware of the conflict, however will take a vote of the public to eliminate the conflict and are looking at way to do that and if successful would be able to get funds paid back to the City that have gone to the Alerus in the past.

4) That the Alerus Center should provide financial reports to the City monthly and noted that they have already worked with Alerus staff on this and monthly balance sheet, income statement and cash flow statements are now being provided.

Human Resources –

It was noted that there is inconsistent communication between Human Resources and Information Technology related to new employees, change of employee positions, and terminations of employees, in that sometimes notification is verbal, sometimes by email, sometimes written and not always same notification time. Management of both departments have worked on a system to follow regarding notifications.

Information Technology –

Martin stated that this year the auditor’s put a focus on the IT area and no large areas of concern, but recommendations were more best practices to follow. Management has responded to all items.

McNamara requested more information on the vehicle purchase and travel items related to the Alerus Center and how exactly they were resolved. Kreun stated that the vehicle purchase was actually a lease that became a purchase and had not been bid and staff has now been advised how to proceed for future purchases of vehicles. The travel item, an individual was sent out to do research and was not an employee, but paid the travel expenses including airfare and staff did not obtain prior approval for the travel. Staff will adopt a travel policy in line with that of the City and follow that for future travel. This will include travel being preapproved.

Glassheim moved to recommend approval of the Comprehensive Annual Financial Report and accompanying documents and to authorize payment of the invoice for audit services, pending final acceptance by the State Auditor. Second by McNamara. Aye: All. Motion Carried.

Christensen stated that he had also requested that Martin research the concept of charging ourselves interest on money borrowed between funds. He distributed a handout with information to the Committee Members and there is no requirement that interest be charged. Martin explained that while it is not required that interest is charged, it is a common practice to charge the fund borrowing the money an interest rate based on the loss of opportunity to earn interest on those funds for the lending fund and that typically a pooled interest rate is used. He continued that a policy could be adopted that no interest would be charged if the borrowing was of a short term nature, but that when long term rate is charged and terms of what that would be.

Jerath stated that staff will work on drafting a policy for borrowing of money between funds and bring back to Committee for discussion. Kreun commented that he would like to see included in the policy the ability to deviate from the norm if a circumstance arises where Council feels that would be appropriate.

2. Renaissance Zone.

Richards stated that with the redevelopment of the Civic Auditorium area Council had requested that staff prepare plans to extend the renaissance zone two blocks to include the property to be developed. She explained that only the privately owned half of Block 18 and the block now labeled Block 23A were previously excluded due to the fact they were publicly owned, and that regulations now would allow for a large increase in the area of the renaissance zone, but what we are looking at now is to make the small boundary change to include all of Block 18 and the previously excluded Block 23A, and look at policy change and potential further boundary change later.

Motion by Glassheim to approve expansion of the Renaissance Zone to include all of Block 18 and Block 23A. Second by Christensen. Aye: All. Motion Carried.

Motion to adjourn by Glassheim, Second by Christensen. Meeting adjourned at 5:00 p.m.

Respectfully submitted,


Sherie Lundmark
Admin Spec Sr.