City Council Finance Committee Meeting

FINANCE COMMITTEE MINUTES September 20, 2018 The City Council Finance Committee of the City of Norman, Cleveland County, State of Oklahoma, met at 4:00 pm in the Municipal Building Executive Conference Room on the 20th day of September, 2018, and notice and agenda of the meeting were posted in the Municipal Building at 201 West Gray and the Norman Public Library at 225 North Webster 24 hours prior to the beginning of the meeting. PRESENT: Chair Castleberry, Members Bierman, and Wilson ABSENT: Member Carter OTHERS PRESENT: Anthony Francisco, Director of Finance Kim Coffman, Budget Manager Jeff Bryant, City Attorney Gala Hicks, Director of Human Resources Item 1, being: DISCUSSION REGARDING FYE 2018 YEAR END PROCESSES. Anthony Francisco gave the update. He stated that the books have been closed out for fiscal year 2018, but the figures presented today are unaudited figures. We did underspend our budget for the fiscal year. Chair Castleberry stated that he wanted the Committee members to look at the categories and see if they have any questions. His first question pertains to the $100,000 that was budgeted to spend on the Center City TIF. Francisco stated that most of that was spent in the previous fiscal year. City Council Member Hickman asked where the Emergency Reserve Surplus funds that were not spent last fiscal year were put. Francisco stated they went into the General Fund balance. City Council Member Hickman asked if the City Council could make a policy requiring any appropriations within the General Fund above 10% of the original budget have to be approved by the City Council. Francisco stated that this could be implemented by Council. $4.27 million was appropriated from the UNP TIF Fund to the General Fund to balance the over-apportionment. The net difference at the close of fiscal year 2018 is revenues exceeding expenditures by $5.6 million, including the reapportionment from the UNP TIF Fund. He also stated that we are fully reserved, with $3.4 million in “excess” reserves in the General Fund. The Rainy Day Fund is $183,000 above the targeted 4.5% Rainy Day balance. We are also $1.2 million above the minimum Rainy Day balance of 3%. If the proposal goes through in regards to the Rainy Day Fund, we would still be exceeding that minimum balance by $536,000. Once the audit is finished, we might suggest to the Council that we make a $168,000 deposit to the Rainy Day Fund from the General Fund to keep us at our full targeted Rainy Day balance. Finance Committee Minutes September 20, 2018 Page 2 Item 1, continued: This fiscal year, we estimate that our General Fund expenditures will exceed our revenue by about $2 million, which will cause us to draw down that fund balance. If this trend continues, by the end of fiscal year 2021 we would have a negative fund balance in the General Fund. This is illegal. Member Bierman stated that this proposal bothers her because it is not addressing the overall problem with the General Fund. Chair Castleberry stated that if we can pass a stormwater utility that pays the full cost for stormwater services then we do not have to keep spending $3 million out of the General Fund. Member Bierman stated that she would like to stop the reallocation of sales tax to the UNP TIF, and then later if we also pass a stormwater utility we would be in even better shape. Chair Castleberry stated that he agreed. Francisco stated that we project that we will spend down all of the Public Safety Sales Tax (PSST) Fund by the end of the next fiscal year and end the year with a negative balance. When all of the critical capital needs Capital projects authorized in the PSST Fund are completed, this fund will be in trouble. Under the ordinance that was passed for the PSST, once the capital projects are complete the operations move into the General Fund. He also stated that the auditors will be available for questions in the November Finance/Audit Committee meeting. Items submitted for the record: 1. Fund Summaries for Actual Fiscal Year Ending June 30, 2018 ***** Item 2, being: DISCUSSION REGARDING THE FYE 2019-2020 BUDGET PROCESS. Chair Castleberry stated that the provided Budget Calendar is the same process that has been used for the past few years. Member Wilson and Member Bierman stated that they believe this Budget Calendar should be sent as a separate memo to the rest of the City Council. City Council Member Hickman stated that he believes that more changes should be made to the budget process. He thinks we should have a more thorough discussion of the budget process and we should have the discussion much earlier in the year. Francisco stated that this is completely up to Council. The public could be invited to speak at all three Study Sessions in which the budget is discussed in order to get input if the Council would like. Member Bierman suggested swapping the Study Sessions for the Enterprise and the Capital Funds. Afterwards we can have a public hearing about both Funds. City Council Member Hickman stated that we could have a “town hall” style public forum where we discuss the process and budget department by department for about an hour and then we leave the last hour Finance Committee Minutes September 20, 2018 Page 3 Item 2, continued: for public discussion. We could try this year, and if no one shows up then we can discard this type of meeting next year. Member Bierman stated that discussing the budget department by department will give us a better idea of the actual problems we are facing. By Committee consensus, it was decided to add an additional public hearing to the budget process. Chair Castleberry stated that we have not talked about the $9 million obligation to the Senior Center in any of the Funds. This will need to be addressed. Items submitted for the record: 1. FYE 2020 Budget Calendar ***** Item 3, being: SUBMISSION OF THE REVENUE/EXPENDITURE REPORTS. Chair Castleberry stated that our revenue is up for this fiscal year. We should have about $1 million of revenue that is not budgeted if the growth continues. City Council Member Hickman asked if Anthony Francisco could send him a report on any money that has been collected this year for the Center City TIF. Francisco stated that he could do this. Chair Castleberry stated that the new development excise revenues for residential were 30% below projected and 35% below projected for commercial. This is a good indicator of growth in Norman. Francisco stated that the Water Fund will need to be voted on if we go to the “blending” process for the ground water wells. That is projected for 2022. The Wastewater Fund may need a review in about 2 or 3 years as well. Items submitted for the record: 1. Summary of Major Fund Revenue Sources vs. Budget FYE 2019 as of August 31, 2018 2. Summary of Major Fund Expenditures vs. Budget FYE 2019 as of August 31, 2018 3. Appropriations from Fund Balance FY18 4. General Fund Transfers over $50,000 between Expenditure Categories FYE 19 August 2018 5. Norman Forward Sales Tax Financial Reports ***** Finance Committee Minutes September 20, 2018 Page 4 Item 4, being: SUBMISSION OF THE REPORT ON OPEN POSITIONS City Council Member Hickman asked about the status of the positions on hold. Hicks stated that the City Manager stated that he would be releasing the CDBG Admin Tech but he did not plan on releasing any of the other positions on hold. Hickman stated that there are some big projects coming up within the City, and being short-staffed will be a problem. Items submitted for the record: 1. City of Norman Position Vacancy Report dated 9/13/18 ***** Item 5, being: MISCELLANEOUS COMMENTS None. ***** The meeting adjourned at 5:25 pm.