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HomeMy WebLinkAboutFinance Committee Agenda - February 13, 20121 This Finance Committee is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that the Finance Committee’s agenda be posted at least seventy-two (72) hours in advance of each regular meeting and that the public be allowed to comment on agenda items before the Finance Committee and items not on the agenda but are within the subject matter jurisdiction of the Finance Committee. The Finance Committee may limit public comments to a reasonable amount of time, generally three (3) minutes per person. It is the intention of the City of Newport Beach to comply with the Americans with Disabilities Act (“ADA”) in all respects. If, as an attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, the City of Newport Beach will attempt to accommodate you in every reasonable manner. If requested, this agenda will be made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation thereof. Please contact the City Clerk’s Office at least forty-eight (48) hours prior to the meeting to inform us of your particular needs and to determine if accommodation is feasible at (949) 644-3005 or cityclerk@newportbeachca.gov. CITY OF NEWPORT BEACH FINANCE COMMITTEE AGENDA Council Conference Room, 3300 Newport Blvd., Newport Beach Monday, February 13, 2012 – 2:00 PM Finance Committee Members: Staff Members: Keith Curry, Council Member, Chair Leslie Daigle, Council Member Mike Henn, Council Member Dave Kiff, City Manager Dana Smith, Assistant City Manager Tracy McCraner, Finance Director Dan Matusiewicz, Deputy Finance Director ____________________________________________________ 1) CALL MEETING TO ORDER 2) ROLL CALL 3) PUBLIC COMMENTS Public comments are invited on agenda and non-agenda items generally considered to be within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments to 3 minutes. Before speaking, we invite, but do not require, you to state your name for the record. The Finance Committee has the discretion to extend or shorten the speakers’ time limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all speakers. As a courtesy, please turn cell phones off or set them in the silent mode. 4) APPROVAL OF MINUTES Approval of minutes of the Finance Committee meeting of December 12, 2011. 5) CURRENT BUSINESS A. Review Finance Committee Roles & Responsibilities: The resolutions authorizing the purpose and responsibilities of the Finance Committee were last updated by Resolution No. 2007-21, as adopted April 10, 2007. This item will offer the committee an opportunity to review the authorizing documents and confirm the Chairperson for calendar year 2012. B. Quarterly Financial Status Report as of 12/31/2011: The Finance Director will review the financial status of the current fiscal year 2011-12 through quarter ending 12/31/2011. This item will also include the final audited financial data for FY 2010-11. 2 C. State Mandate Reimbursement Claims: The Revenue Manager will provide an overview of a consultant agreement with Maximus Consulting Services, Inc. to allow Maximus to file reimbursement claims, on behalf of the City, with the State of California for a variety of State Mandated Actions. This item will allow Finance Committee an opportunity to review the potential revenue from these state reimbursements and also review the consulting costs Maximus will charge in order to prepare and file these claims for the City. D. 2012 Finance Committee Calendar: This item will review the 2012 Calendar of all Finance Committee issues in the new calendar year. 6) FINANCE COMMITTEE ANNOUNCEMENTS OR MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM) 7) ADJOURNMENT All documents distributed for this meeting are available in the administration office of the Administrative Services Department 1 CITY OF NEWPORT BEACH CITY COUNCIL FINANCE COMMITTEE MINUTES The Finance Committee met at 2:00 p.m. on Monday, December 12, 2011, in the Council Conference Room, 3300 Newport Blvd., Newport Beach, California 92663. I. ROLL CALL Present: Council Member Keith Curry (Chair), Council Member Leslie Daigle and Mayor Mike Henn Staff present: City Manager Dave Kiff, Assistant City Manager Dana Smith, Finance Director Tracy McCraner, Deputy Finance Director Dan Matusiewicz, and Administrative Coordinator Tammie Frederickson Members of the Public: Jim Mosher, II. APPROVAL OF MINUTES The minutes for the Finance Committee meeting of November 7, 2011, were approved as submitted. III. PUBLIC COMMENTS Mr. Mosher thanked Council Member Daigle for coordinating the online posting of contracts approved within the last 30 days and he suggested it would be helpful to include Council approved contracts along with staff approved contracts. He added that in the interest of accountability, it would further be helpful to indicate the authority by which a contract was approved. IV. DISCUSSION/ACTION ITEMS A. PERS – Part II Finance Director McCraner commented that at the December Finance Committee meeting questions were raised by the Committee during the review of the PERS 6/30/11 actuarial valuations. She noted this item addresses more specifics with regard to how previous City Council approved actions in the direction of pension reform impacted the PERS valuation. She noted the City has always paid the PERS calculated Annually Required Contribution (ARC) and even then there is an unfunded liability of $256 million on a market value basis which is about a 60% funded status for pensions. Ms. All documents distributed for this meeting are available in the administration office of the Administrative Services Department 2 McCraner confirmed that new GASB rules under consideration will require the unfunded liability to be valued at a lower discount rate in financial reporting. Council Member Curry clarified that the new rules affect the representation of the liability amount but it is not a change in terms of a financial liability to the City. He added that GASB has determined to use a different way than was previously used of calculating future returns for financial reporting. The Committee discussed estimated pension costs based on the latest valuation. Ms. McCraner pointed out the chart in the staff report reflects the most conservative view with only six months of employee paid contribution in 2012 and no contribution in 2013 and 2014 for public safety members because the public safety 3.5% contribution of base pay is set to expire 12/31/2011. Further ideas were discussed for revisions to the chart for clarity and accuracy. Mayor Henn suggested using a run rate concept as of a given date with annualized information. Council Member Curry pointed out the purpose of this discussion is to show how much progress has been made in cutting pension costs. Mayor Henn and Council Member Curry said the information should be presented in an easy to understand manner with certainty that it accurately that it reflects the current situation. Ms. McCraner stated the primary factors for why the costs and unfunded liability are going up are attributed to enhanced benefits without cost sharing and the market losses in 2008-09. She added the impact of the Early Retirement Incentive Program was significant cash savings of $3 million to the City but also a correlated increase to the rates and liability as the result of 51 people retiring early. It was noted that in January the miscellaneous employees, excluding miscellaneous employees in public safety, will be paying 8% cost sharing. City Manager Kiff explained the miscellaneous employees cost sharing and discussed where future negotiations may result in further cost sharing. Mr. Mosher agreed that the information on the charts is hard to understand and confusing. He suggested revisions to the chart to show taxpayer burden. Council Member Curry concluded the information is important and necessary to make informed negotiations policy decisions so it must be presented accurately. B. “Top 3” Revenue Forecast through mid-December Ms. McCraner shared information on the Top 3 revenue categories with a notation that the December apportionment and County estimates are not available yet. She said the trend analysis of property taxes looks that it will come in at budget. Deputy Finance Director Matusiewicz said the property tax role total increase was 1.13% assessed valuation. All documents distributed for this meeting are available in the administration office of the Administrative Services Department 3 Ms. McCraner said a review of sales taxes shows us trending slightly under budget but she added that our consultant however projects sales tax to come in about $1 million over budget. She commented that restaurants are the top sales tax earner, beating out auto sales. In response to a question raised by Council Member Curry, Ms. McCraner said the year over year increase is budgeted to be 6%. Hotel taxes (TOT) are trending high and exceeding pre-recession levels due to the opening of the Pelican Hill Resort. She noted that Pelican Hill is the top hotel operator. She projected TOT will come in about $1 million over budget. C. Administrative Procedure on Fraud/Ethics Deputy Finance Director Matusiewicz said this policy was drafted in response to an audit comment that the organization should have a formal policy against fraud and unethical behavior. It is an effective internal control procedure to have and is proposed as an administrative policy. Mayor Henn questioned what is the cost of having a fraud hotline administered by an outside, independent entity. Mr. Matusiewicz replied quotes came in for $1,500 to $3,000 annually but there would be additional cost of a City resource as the principal entity, such as Human Resources, to follow up on reported fraud. Mayor Henn suggested and Council Member Curry agreed it would be better handled by the legal department. Council Member Daigle commented that employees in fear of retribution might be more inclined to report suspected fraud anonymously on an independent entity hotline versus going to their supervisor. Mayor Henn agreed and said there should be a materiality threshold. He added the policy should also cover theft of information. After further discussion it was agreed to further work through a proposal with the City Attorney and return to the Finance Committee on a future agenda. IV. MATTERS WHICH A COMMITTEE MEMBER MAY WISH TO PLACE ON A FUTURE AGENDA Council Member requested an update on performance measurement and performance based budgeting, and a follow up on the IT plan. V. ADJOURNMENT The Finance Committee adjourned at 3:26 p.m. All documents distributed for this meeting are available in the administration office of the Administrative Services Department 4 Filed with these minutes are copies of all material distributed at the meeting. Attest: Tracy M. McCraner Date Finance Director Agenda Item 5C CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT February 13, 2012 ABSTRACT: The City may be entitled to reimbursements from the State of California, for costs associated with unfunded state-mandated costs during the periods of July 1, 2009 through June 30, 2010, and for July 1, 2010 through June 30, 2011. The Finance Department would like to ensure that these claims are filed appropriately and timely. Maximus Consulting Services, Inc. (“Maximus”) is able to file the reimbursement claims on behalf of the City, and has agreed to compensation based on actual reimbursement from the State. The City should net approximately $253,000 if the State pays both claims. Finance would also have Maximus file the Mandatory Reimbursement Process claims for 2012 and net the City $206,000. RECOMMENDATION: Staff recommends 1) City Council authorize the Mayor and City Clerk to execute a Professional Services Agreement with Maximus in substantially the same form as attached (Exhibit “A”) authorizing Maximus to file the State Mandate reimbursement claims for July 1, 2009 through June 30, 2010, and for July 1, 2010 through June 30, 2011, and to also file a claim for 2012 related to the City’s Mandatory Reimbursement Process claim; 2) That Council waive Council Policy F-14 and authorize the City to engage Maximus for these services on a Single Source basis without obtaining competitive proposals. TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE FROM: Finance Department Tracy McCraner, Director 949-644-3123, tmccraner@newportbeachca.gov PREPARED BY: Evelyn Tseng, Revenue Manager APPROVED: ______________________ TITLE: Agreement with Maximus Consulting Services, Inc. to File State Mandate Reimbursement Claims Agreement with Maximus Consulting Services, Inc. to File State Mandate Reimbursement Claims February 13, 2012 Page 2 FUNDING REQUIREMENTS: There is no expenditure of funds required with this action. DISCUSSION: Each year, the State reimburses local agencies for the costs of mandated State programs. A local agency receives reimbursement if: 1. The Commission on State Mandates determines, through a review process of “test claims” submitted by local governments, that a mandate exists; and 2. The local government submits claims for reimbursement each fiscal year. Since 1998, Maximus has prepared test claims on the City’s behalf and pursued resolution of these claims with the State Commission on State Mandates. Maximus prepared and submitted documents for the following test claims: Administrative License Suspension, Domestic Violence Arrest Policies and Standards, Domestic Violence Arrests and Victim Assistance, Health Benefits for Survivors of Peace Officers and Firefighters, Open Meetings Act, Peace Officers Procedural Bill of Rights, Rape Victim Counseling Center Notices, Crime Statistic Reporting for the DOJ and Identity Theft. The total amount charged by Maximus for this work is $316,955 (invoice detail attached as Exhibit “B”). Pursuant to its 1998 agreement (attached as Exhibit “C”), Maximus’ compensation was conditioned upon a determination of a reimbursable mandate for any portion of the costs that parties mutually agreed to pursue. To date, Maximus has not been compensated; however, the Commission on State Mandates has issued Statements of Decision, approving reimbursement for each of the test claims listed above. Maximus is willing to prepare and file claims for reimbursement for these mandates for 2009 – 2010, and for 2010-2011. Provided the City receives funds from these claims, the City will pay Maximus for 75% of the test claim preparation work between 1998 and 2010, or $237,716. Maximus estimates that the City will receive approximately $491,000 from these claims, netting the City $253,000. In addition, Maximus will also file the Mandatory Reimbursement Process claims for 2012. If the State pays for these claims, the City may receive approximately $285,000. If the City receives these funds, City will pay Maximus the remaining 25% of its invoice, or $79,000 from these funds, so the City will net $206,000. In accordance with the Administrative Procedures related to Council Policy F-14, Authority to Contract for Services, single source contract award without obtaining competitive proposals is permitted when the procurement process is either impossible or impractical. Due to the short timeframe before claim submittals are due and Maximus’ extensive work history and familiarity with the City’s reimbursement claim Agreement with Maximus Consulting Services, Inc. to File State Mandate Reimbursement Claims February 13, 2012 Page 3 process, staff requests that Council authorize a single source contract award with Maximus. The chart below summarizes the potential revenue to the City and contingent payment to Maximus. Mandate Full Name FY 2009-10 Estimated Claim Amount FY 2010-11 Estimated Claim Amount Potential Reimbursement from State Payment to Maximus Contingent on receipt of Funds MRP I Test Claims Payment to Maximus Contingent on receipt of Funds Potential Revenue to City Administrative License Suspension $11,700 $13,500 $25,200 $25,200 Domestic Violence Arrest Policies and Standards $7,200 $8,250 $15,450 $15,450 Domestic Violence Arrests and Victim Assistance $2,700 $3,000 $5,700 $5,700 Health Benefits for Survivors of Peace Officers & Firefighte $22,500 $25,500 $48,000 $48,000 Open Meetings Act $40,500 $45,000 $85,500 $85,500 Peace Officers Procedural Bill of Rights $4,500 $5,000 $9,500 $9,500 Rape Victim Counseling Center Notices $900 $1,000 $1,900 $1,900 Crime Statistic Reporting for the DOJ $225,000 $25,000 $250,000 ($237,716)$12,284 Identity Theft $45,000 $5,000 $50,000 $50,000 MRP I Test Claims $0 $285,260 ($79,239)$206,021 Total *$360,000 $131,250 $491,250 ($237,716)$285,260 ($79,239)$459,555 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: _____________________________ Tracy McCraner Finance Director/Treasurer Attachments: See February 14, 2012 City Council Staff Report for attachments