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Minutes 08-23-10 MINUTES OF THE FINANCIAL ADVISORY COMMITTEE MEETING HELD IN CONFERENCE ROOM A AT THE LIBRARY, 208 S. SEACREST BLVD. BOYNTON BEACH, FLORIDA, AT 6:30 P.M., ON MONDAY, AUGUST 23, 2010 PRESENT : Don Scantlan, Chair Barry Atwood, Director of Finance Michael Madalena, Vice Chair Kurt Bressner, City Manager George Feldman James Cherof, City Attorney Glenn Jergensen Mayor Jose Rodriguez David Madigan Merline Pamplona Terry Lonergan, Alternate Absent : William Shulman Victoria Castello, Alternate I. Roll call Roll call was taken. Motion Mr. Feldman moved to allow the alternate Terri Lonergan to serve as regular member for this meeting. Mr. Jergensen seconded the motion. The motion passed unanimously. Self introductions were made for the benefit of the new members that were present and the audience. Attorney Cherof explained he was present to advise the members regarding the Sunshine Law. Mayor Rodriguez welcomed the members of the Committee and thanked them for their willingness to serve. Ultimately the purpose of the Committee was to review the organizational aspects of the City and the resulting finances. He stressed auditing the finances was not the goal of the Committee, rather improving the financial situation of the City of Boynton Beach with improved efficiencies. II. Approval of Minutes of August 9, 2010 Chair Scantlan requested a correction in the minutes on page four that indicated he had a background in pensions and retirement. The minutes should reflect Mike Madalena had the background in the pensions and retirement. 1 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Motion Mr. Jergensen moved to approve the minutes as corrected. Ms. Lonergan seconded the motion. The motion carried. II. Authorization for member of Financial Advisory Committee to participate by phone It was determined there was no need to address Item III. III. Presentation by City Attorney on Sunshine regulations and practices Attorney Cherof outlined other resources available on the Sunshine Law including the Florida Commission on Ethics that includes links to other sites. The First Amendment Foundation also has valuable information and the entire staff of Attorney Cherof’s law firm practices local government law and is available 24/7. The Sunshine Law originated from the Florida Constitution and a State statute implements the Sunshine Law and explains what it means to have government in the sunshine. Its purpose is for the citizens to understand not simply the outcome of the decision process, but see the process from inception to final conclusion. The Sunshine Law gives the citizen a clear view of every aspect of government including the advisory functions of discussion and ultimate recommendation to the Commission. It includes a provision that adequate notice be given, sufficiently in advance of the meeting, to allow the public to attend to observe the process. The limitations are imperative because a violation could result in a Commission on Ethics investigation resulting in sanctions against the individual or a criminal prosecution. The mere fact that training was given can be used against the individuals as proof of knowledge of the Sunshine Law, if a violation occurs and an investigation takes place. The Sunshine Law prohibits members from talking one-on-one with another member of the Committee except in a setting where minutes are being taken and the public has been given an opportunity to attend. There is a general distrust of government and any, even casual interaction between committee members, could result in the perceived notion that City business was being discussed. Communication through a third party is also not permitted and email communication is also prohibited. The first person into a blanket email would be allowed, but any response would be a violation. Communications that relate to the procedure of the meeting would not be prohibited. Issues that would be discussed or could foreseeably be discussed in the future cannot be discussed. Attorney Cherof emphasized the public is entitled to see each and every step of the process. 2 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Discussions with the City Manager are allowed and occur at all levels of City government. The burden on the City Manager is to be extremely careful and not act as a conduit of information. The Public Records Law is equally as open in Florida as the Sunshine Law. Every document prepared for your review by anybody on the Board or staff would be public record. The public has the opportunity to see any record upon request including emails and documents sent for inclusion in the agenda. Each individual board member has the responsibility to retain the record and not destroy the document. If documents are given for the City Clerk at the meeting, it becomes part of the record and the City Clerk becomes custodian of the record. If there would be any question regarding a record, Attorney Cherof recommended the item be turned over to the City Clerk to act as custodian of the records. Documents prepared for a meeting should include a copy for the City Clerk. The City Clerk’s responsibility to maintain records and destroy records according to law is well established. Attorney Cherof reiterated he was available to answer any questions and the Attorney General’s office has a division assigned to deal with Government in the Sunshine issues. He encouraged the Board members to contact him at any time that an issue may arise. Chair Scantlan questioned his relationship with member Glenn Jergensen in the Leadership Boynton program as well as other people in the Chamber of Commerce. Attorney Cherof advised both parties should maintain their high level of integrity and individual reputations. Chair Scantlan also cautioned against the use of Reply to All in emails. Attorney Cherof strongly urged all board members to respond only to the person sending an email and never use Reply to All. Mr. Feldman sought clarification on the use of emails to communicate with others. Attorney Cherof indicated there was no prohibition from other board members, staff, the public or the City Commission using emails to communicate with them. Only members of the Financial Advisory Committee cannot communicate with each other by emails. It was stressed the members had to be careful not to become a conduit for someone to pass information to someone else. City employees are discouraged, if not prohibited by City rules, from engaging in advancing a personal opinion or point of view if it has a business end to it. Anyone could contact the individual board members to discuss the board member’s personal thought process on an issue. There is a legislative privilege associated with the thought process and full disclosure is not required. Attorney Cherof would send more information to the members and thanked them for their attention. (Attorney Cherof and Mayor Rodriguez left the meeting at 7:05 p.m.) (Michael Madalena arrived at 7:06 p.m.) 3 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Mr. Madalena introduced himself and gave an overview of his background. IV. Presentation by Finance Director for 10 month financials – FY 2009-2010 Mr. Atwood distributed copies of the latest financials for FY 2009/10. The reports are created monthly for reporting to the Commission at their meeting. There is a review of the status of the General Fund and the Utility Fund being the largest single revenue item of the City. The revenues and expenses are monitored for both funds. The progress is measured in comparison to the prior year. Mr. Atwood discussed the flow of tax revenue into the General Fund to benchmark the revenue stream and address the details and make any necessary adjustments to the expenditures. This year the revenues are on target for the property tax monies and State shared revenues, particularly sales tax. The expenditures are more predictable. Mr. Bressner added the City is labor intensive and payroll is predictable. Over 70% of the expenditures are personnel related. Mr. Atwood noted the pension payments are now paid monthly and not accruing any interest charges to better control the expenditures throughout the year. Mr. Atwood cautioned the City has previously balanced the General Fund budget on transfers from other funds. It represents monies from the Utility Fund and surplus from other funds that was spread out over two years to meet the directive of the Commission for no tax increases. It represents $9 million of transfer funds that would not be available in fiscal year 2012. The surplus had grown up over the years as a cushion for the respective funds. Mr. Feldman inquired if the same scenario was anticipated with the property tax decreases. Mr. Atwood could not predict the tax dollars, but anticipated there would be a decline. He estimated the shortage would be approximately $15 million for fiscal year 2012/13. There has been a pay freeze for two years City-wide with concurrence of the bargaining units. Mr. Bressner interjected the City is contractually obligated to pay raises unless the union agrees to no raises. There has been discussion and the understanding is the unions are willing to extend the pay freeze for another two years representing over $2 million a year savings. Mr. Feldman suggested Kelly Days be discussed in the negotiations. Mr. Bressner explained the openers only allow the issue of wages to be re-opened in the Police and Fire contracts. Mr. Atwood also added most of the benefits are included in those union negotiations and Police and Fire involve State regulations. Mr. Atwood continued with the Utility Fund and recalled the Commission had raised the rates in May of 2009. The many complaints received resulted in the Commission reducing the rate increase. The net income has to cover the debt service of the bonds of the Utility debt by 110%. If not, the bond rating would go down and the interest rate charged would be higher. There are public service tax bonds secured by the public service taxes. The other bonds are secured by the Utility revenues as non ad valorem bonds. 4 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Mr. Bressner explained the previous utility rate increase was necessary to cover the bond issue and improve the relationship between the cost of producing water and the ability to provide water in the future. There was too much charge on the commodity side of the equation. There remains cost associated with the water even if none is used. The formula was changed to reflect the total cost of service with the emphasis on delivery rather than consumption. Mr. Madalena inquired about the rate structure and Mr. Bressner replied commercial and residential had different rates as well as those provided with water that live outside the City limits. Mr. Feldman requested a list of the municipalities using water provided by the City of Boynton Beach. Mr. Bressner responded water and sewer is provided to Briny Breezes and water only is provided to Ocean Ridge. Information on the rates and service area had been provided to the members. It would be difficult to compare with other municipalities because the systems and infrastructure vary greatly. Mr. Feldman inquired if other services could be offered to provide more revenue. If the capacity is available Mr. Bressner replied the service could be provided to other areas and there was a proposal to provide service to the Town of Manalapan. Mr. Atwood continued his presentation that although there is a proposed millage increase, the majority of homeowners in Boynton Beach would realize a tax decrease. A further analysis was being done by Mr. Bressner based on the more current information being posted on the Property Appraiser’s web page. The assessed valuation in the City dropped 16% this year and 18% last year. However, the tax rate did increase slightly. Those long-time homeowners with a Homestead Exemption could see a tax increase. V. Presentation by FAC member George Feldman on meeting with Chair of Delray Beach Financial Advisory Board Mr. Feldman had met with Mr. Ellingwood, an accountant, who acted as Vice Chair and Chair of the Delray Beach Financial Advisory Board. Basically Mr. Ellingwood echoed the remarks of Mr. Bressner from the previous meeting. As a result of Mr. Feldman’s meeting he reported that last year and this year the big line items were addressed in the General Budget that was accomplished by visitation with each Department Head. A report was written to the Board and presented at the meeting. City staff attended Financial Advisory Committee meetings then. After a while the practice was eliminated. The only person at the meetings now is a representative of the union for the Fire taking notes. At one point they got stuck two months on a problem with Waste Management. They were doing an audit and it wrapped up the whole committee. Another problem occurred when a Board member made a derogatory comment about a City employee and how he did not agree with him. It still is a lingering point and Mr. Ellingwood advised if meeting with staff not to talk about them at all, whether you care about them, don’t like them or they were uncooperative. All the meetings occurred twice monthly with a two hour limit. In the first year there were time overruns because of the complexity of the job. All departments were 5 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 interviewed. Golf and tennis revenues were questioned, but Delray did not get into that even though they have two golf courses and a big tennis complex. They found some operational issues in those enterprise departments and they were corrected. Mr. Bressner advised the City had investigated Homestead Exemption violations last year by tracking rental properties that are still listed with Homestead Exemptions and tracked them through water usage. The Code Compliance Department does a very good job of uncovering these types of properties and the information is turned over to the Property Appraiser’s office to pursue it. Mr. Feldman continued that City of Delray Beach Fire and Police pensions are underfunded by $52 million. Mr. Feldman inquired how much the City of Boynton Beach was underfunded and Mr. Atwood answered $90 million. Mr. Feldman continued that Mr. Ellingwood said even though jobs were sacred they have to focus on the possibility of eliminating jobs or asking departments for furlough days. Unions might be a problem, and he suggested Kelly Days could save dollars. If they could get the Kelly Days taken care of they could save $1 million. Mr. Feldman concluded politicking was ongoing and sticking to the agenda was the best suggestion. Mr. Bressner explained Kelly Days involved time off and if the minimum staffing is met for a day, time off is allowed. Mr. Feldman also reported that working on a vacation day and getting paid by the City also should be investigated. VI. Review of Committee area of interest (Homework- only two responses so far) Mr. Bressner distributed the responses he had received. He asked, as a group, that areas of interest be formulated to move forward. Information gathering was paramount at this juncture and it would be provided in a timely manner, but priorities need to be set. It was more about next fiscal year rather than this fiscal year. Staff would be working on the same issues. February of 2011 would be critical to determine the status of the budget. If revenues continue to be volatile, more budget cuts will need to be made this fiscal year with further reductions in force or other strategies. Mr. Feldman thought there should be time limits, separate each meeting, stick to the agenda and donate as much time on the outside as possible. Chair Scantlan felt a mission statement was needed that would include the Purpose and Duties section of the Ordinance establishing the Committee. Mr. Feldman suggested the mission statement be two sentences or at least considerably shorter. Chair Scantlan preferred to use the Code language. There was consensus that the mission statement be short and concise and that the members submit their suggestions for the next meeting and a final version could be agreed upon. Ms. Lonergan thought the first sentence of the Purpose and Duties section would be sufficient. Chair Scantlan advised there would be an agenda for each meeting and a time limit of two hours. 6 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Ms. Pamplona had reviewed the budget and wanted to look more into Development. The Children’s Schoolhouse Museum was another area of her concern based on the expenses compared to the revenue. The City provides some services. Mr. Bressner explained the structure had changed in the last year and there was an agreement for the Museum to now be totally responsible for their staff costs and the City is responsible for the maintenance of the building, utilities and infrastructure. The new arrangement would allow the Museum to seek more fundraising opportunities. A new Executive Director had just been hired and they are now considered a non-profit organization. The City’s responsibility is now as a landlord. The Library was another area Ms. Pamplona wanted to investigate eliminating more cost. Mr. Bressner noted that the addition to the Library did not increase the staff levels rather reductions had been made. The building is new and the systems were in place for energy conservation. Other reductions could be discussed such as operating hours; however, in depressed times the Library is a valuable source for those without means. Mr. Bressner would provide information on the reductions and improvements in efficiencies that have been made. Grounds was another example where significant cuts have been made by reducing irrigation to once a week in medians. There was a freeze on filling vacant positions since 2007, except those considered mission critical, resulting in a savings of approximately $300,000 this year. Selling the cemeteries would be a possibility. The cemetery was being re-platted and available space was minimal. The golf course is on property leased from Palm Beach County and could be contracted out. It does generate revenue of $200,000 to $300,000 a year as part of the transfer to the General Fund. There is nothing to sell. Mr. Feldman emphasized the golf course had a good reputation and it might be a good initiative to consider. Another area of interest was to merge the CRA function into the Development Department. It would be a policy option for the City to consider. It did not appear to be an option at this time. On the City side, Code Compliance may merge into Development to create one operation and consolidate staff. Staff was not added when development was growing. Contract personnel were utilized and as the economy slowed down the contracts were not renewed. Three layoffs were done this year and more consolidation of Engineering with Development and redevelopment activities are being merged with Development. The CRA is a separate entity and there would not be any efficiency to gain. Mr. Feldman recalled Wi-Fi had been offered throughout the City. Mr. Bressner explained it was a CRA initiative and the routers were installed. The system was operational for a period of time and it is no longer supported. The routers remain on the poles, but are not energized. He hoped to be able to use the routers to provide a Wi-Fi system for educational purposes in a portion of the community. The ownership of the routers is an issue. 7 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Chair Scantlan suggested any additional input should be sent to Mr. Bressner and he would forward the information to the members. Mr. Bressner stressed the goal was to look at revenue, cost savings and levels of services. Mr. Atwood would continue to give updates on the financial outlook for the budget. There may not be time to address some issues, but they should create a list to deal with them in a timely fashion. There are collective bargaining schedules that have to be considered and other moving parts. In regard to sweeping pension changes, the City of Boynton Beach should not be first, second or even third, until all the claims litigation has cleared and the legislative session discussion concluded. The issues need to be identified so lobbying could be done for changes to benefit the taxpayers. A study was done by the Town of Palm Beach resulting in three possible options. Mr. Bressner wanted to explore their decision to better understand the proposed changes. Mr. Madalena noted the Florida Retirement System (FRS) is making changes also and municipalities are transitioning to defined contribution type programs. The unfunded liability of pension is becoming too great. By adjusting the formula and using the entire work life earnings rather than the five highest years would reduce the benefit by 40%. Mr. Bressner cautioned that could not be applied to incumbent beneficiaries of the pension program. Mr. Madalena opined for the City to buy into the FRS it would be very expensive. Chair Scantlan indicated the employee would have to pay the difference for the conversion. Chair Scantlan suggested Mr. Atwood and Mr. Bressner present a three month plan to be presented at the next meeting. Mr. Bressner reiterated for every program to be cut there is a constituency that feels the program is the most important. The programs that are not economically feasible should be identified to assist the Commission. The viability of the Shopper Hopper and Molly’s Trolleys were discussed. Mr. Madalena questioned why either had to be City funded when it brought customers to businesses. Mr. Jergensen agreed it would be a good issue for the business community to consider funding some, if not all of the cost. The local business industry was struggling to get customers. However, it was noted the people using the Shopper Hopper and Trolley were not the customers spending money in the restaurants and shopping areas. The Trolley was providing transportation to and from work for some individuals. Mr. Jergensen contended there should be sharing of the cost by the riders and businesses. The operator of the Trolley does not seek grant funding because they chose not to follow the Davis-Bacon Act requirements for prevailing wage. 8 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23, 2010 Develop work agenda for the next three months Mr. Feldman noted Delray Beach advised they had a hard time getting off the ground and he wanted some work to do. He suggested a plan be devised to get everyone involved. Chair Scantlan wanted to hear from City staff what legitimate goals and targets should be. Motion Mr. Madigan moved to have City staff provide a working agenda covering the next three months. Ms. Lonergan seconded the motion. The motion carried. VII. Discuss meeting dates for September Mr. Bressner suggested the Committee meet on Monday, August 30 Mr. Feldman suggested the Chair be prepared to have some initiatives ready for the members to accomplish. Chair Scantlan felt it was important to get familiar with the components of the current proposed budget, the various funds and constraints. Mr. Bressner suggested the members review the budget impact statements to ascertain the budget cuts that have already been implemented. Chair Scantlan indicated the concept of a City survey had not been discussed. The previous meeting revealed cost data would be plentiful, but there is no value-site side data to know what the community wanted. He suggested the possibility of a community survey be considered. Motion Mr. Feldman moved to consider a survey. Mr. Madalena seconded the motion. The motion carried. Mr. Feldman recalled Delray had done a survey utilizing their utility bill and he would get further clarification. Chair Scantlan urged the members to attend the City Commission meetings or read the minutes to become familiar with the issues the Commission has had to resolve. Motion Mr. Madalena moved to hold the next meeting August 30, 2010 at 6:30 p.m. Mr. Madigan seconded the motion. The motion passed. 9 Meeting Minutes Financial Advisory Committee Boynton Beach, FL August 23. 2010 VIII. Adjournment There being nothing further to come before the Committee, Chair Scantlan adjourned the meeting at 8:28 p.m. 9J ? ~~,J1 f1-~,dV.}/(/U Il/) / udith A. Pyle, C Deputy City Clerk 10