Finance Committee

123 Madison Street Village of Oak Park Oak Park, Illinois 60302 www.oak-park.us Meeting Minutes Finance Committee Monday, June 20, 2016 6:30 PM Room 130 1. Call To Order Call to Order 6:30 p.m. 2. Roll Call Present were members of the Finance Committee President Anan Abu-Taleb and Trustees Robert Tucker and Glenn Brewer. Trustee Adam Salzman was absent. Others present were CFO Steve Drazner, Village Manager Cara Pavlicek, Village Clerk Teresa Powell, Deputy Village Manager Lisa Shelley, Village Attorney Paul Stephanides, Public Works Director John Wielebnicki and Dan Berg of Sikich LLP. 3. Public Comment There was no public comment. 4. Approval of Minutes ID 16-201 Motion to Approve the Minutes of October 12 and 22, 2015 Approval of minutes of the October 12 and 22, 2015 Finance Committee meetings was deferred to the next Finance Committee meeting. 5. New Business ID 16-193 Review and Discussion of the FY 2015 Comprehensive Annual Financial Report (CAFR) and Supporting Documents. Manager Pavlicek introduced the Comprehensive Annual Financial Report for fiscal year 2015, which will be presented to the Board on June 27 and filed with the State of Illinois the following day. Dan Berg, a partner at Sikich LLP, will review this report. President Abu-Taleb welcomed CFO Drazner to his new position as CFO. Village of Oak Park Page 1 Printed on 8/31/2016 Finance Committee Meeting Minutes June 20, 2016 Trustee Brewer requested that this report be distributed to the full Board before Thursday to allow sufficient time for review. Manager Pavlicek noted that it is now posted on Granicus. Mr. Berg explained the required communication to the Board. He noted that GASB 68 has been implemented, making a material change in the method for reporting pensions. Sikich finds no issues and had no difficulties or disagreements with staff in preparation of the audit. He reviewed the major adjusting journal entries and there were no questions. The Management Letter notes room for improvement in the tracking of fixed assets, and recommended that this be tracked at the end of the year. He noted a couple of accounts payable that had been overlooked. Tracking of grants is currently handled through separate funds for each grant; while this is easy to monitor. There should be a meeting with grant administrators on a quarterly basis to to review expenses and assure that all will be reimbursed, as the grant totals should always zero out. Accounting pronouncements coming up for the Village 2017 are # 74 and # 75, which require the Village to record a liability on the balance sheet for other post-employmentbenenfit (OPEB), primarily retiree health insurance costs. Accounting has changed for pension and other post employment benefits (primarily former employee health benefits). An actuary has calculated that the Village has a liability of $7.5 million for these expenses. Most municipalities do not fund this liability, however. Manager Pavlicek explained some of the details of this requirement. This will be part of the 2017 statement, but not this year. Tax abatements, especially property tax abatements, must be disclosed. Sales tax is not included in these rules. CFO Drazner noted that the State of Illinois now requires that business incentives be posted on the Illinois Department of Revenue website. The Management Letter will be posted on the website; the Communication of Deficiencies contains the significant deficiences and material weaknesses are sent to management and fall below the level required for board reporting, but are being shared with the Board in the interest of full disclosure. Comprehensive Annual Financial Report Mr. Berg introduced this draft document and noted that there may be small tweaks in the final version. He can provide a .pdf in advance of the paper copy. Village of Oak Park Page 2 Printed on 8/31/2016 Finance Committee Meeting Minutes June 20, 2016 The Statement of Net Position includes a prior period adjustment of negative $10 million which reduced governmental net position to negative $53 million. This is due to GASB 68 pension liability now posted the the balance sheet. Bond markets understand this change in principles and this new method is being used by all governmental units with pension plans. Trustee Brewer asked how GASB 68 affected this. Mr. Berg explained that in prior years the amount was a note disclosure in the CAFR. Now the pension costs are reported on the balance sheet. Bond markets were always aware of this from prior footnotes, and this simply changes how this is reported. Manager Pavlicek discussed how the actuarial calculations have changed since last year. In 2015 the Village changed actuarial services; the new actuarial service uses updated mortality tables which project longer life expectancies. The Board gets three actuarial numbers, one from the pension fund, one from a Village-hired actuary and the other from the Illinois Department of Insurance. The Board will decide next fall on the number to use and will have recommendations from staff at that time. Mr. Berg and Manager Pavlicek discussed the change in actuarial tables. This will be discussed in more detail at the July 25th Board meeting as well as other assumptions such as the discount rate. Mr. Berg noted several positive developments. He reported that the Parking Fund has fully repaid the loan from the General Fund ahead of schedule. The General Fund has a balance of $5.2 million. The Special Tax Allocation Fund dropped $6.2 million due to a write-down of property assets in the Downtown TIF to more realistic market values. Board members agreed that this change was overdue and agreed that it made sense. The Madison Street TIF Fund Balance was reduced by $4.6 million primarily due to the Village funding of an escrow account for the construction of the D97 administrative offices. The Water Fund had an increase in net position of $3.8 million although this is on an accrual basis. The Parking Fund increased by $800,000, by setting aside reserves for debt service as it is necessary to build up reserves in anticipation of the expiration of the Downtown TIF which is currently contributing toward Parking debt service payments. Village of Oak Park Page 3 Printed on 8/31/2016 Finance Committee Meeting Minutes June 20, 2016 Monthly financial reports are generally on a cash basis. The Village does not record assets capitalized and depreciation until they prepare for the audit. This year there was a net increase of $5.3 million of new capital assets in the water/sewer fund due to the central reservoir and new intrastructure and depreciated assets by $1.5 million. For example, on an accrual basis principal debt payments are applied against a liability account instrea of being shown as an expense. The Self-Insurance Retention Fund in a net deficit position of 2.6 million with the majority in long-term claims payable with $2 million as estimated by the Village Attorney and insurance companies. This amount has typically not been funded and has a deficit fund balance. The Health Fund has improved from a deficit position to a positive position of $500,000. 6. Old Business There was no old business. 7. Adjournment It was moved by Trustee Tucker, seconded by Trustee Brewer to adjourn the meeting. Ayes: All Nos: None The meeting was adjourned at 7:30 p.m. Village of Oak Park Page 4 Printed on 8/31/2016