MINUTES OF THE ADMINISTRATIVE AND FINANCE COMMITTEE MEETING
Nov. 8, 2006
1. CALL TO ORDER
Chair Dixon called the Special Administrative and Finance Committee meeting to order at 1:32 p.m.
2. ROLL CALL
Committee members present were Chair Dixon, Vice Chair Dailey and Directors Bowersox, Brammell, Knutson, Muir, Price, Steiner, Watton and Williams. Committee members absent were Vice-Chair Tu, Directors Johnson and Parker, and Representative Slater-Price. Also present were Directors Bond, Croucher, Linden, Petty and Pocklington. At that time, there was a quorum of the Committee. Staff present was General Counsel Hentschke, Deputy General Manager Lanspery, Director of Finance/Treasurer Brust, Director of Water Resources Weinberg, and Accounting Supervisor McBroome. Also present was Debbie Harper, Manager, Lance, Soll & Lunghard, LLP.
3. PUBLIC COMMENT
There were no members of the public who wished to address the Committee.
4. CHAIR’S REPORT
Chair Dixon had no items to report.
5. FISCAL YEAR 2005-2006 AUDIT RESULTS
Chair Dixon welcomed Debbie Harper of Lance, Soll & Lunghard, LLP. Debbie Harper presented the results of the audit for the fiscal year ended June 30, 2006. She stated that there was an unqualified audit opinion and there were no material weaknesses or reportable conditions noted. She stated that there was one recommendation to management to tighten internal controls on grants so that all grants go through the Finance Department. Ms. Harper expressed appreciation to staff for their cooperation during the audit. She stated that she expects the Water Authority to receive another award for excellence in financial reporting.
Director Dixon asked if a protocol had been established to address the recommendation concerning grants. Ms. Brust responded yes; a written policy is being established.
Director Brammell asked on which report he could find the results of how close we got to zero when balancing out revenues and expenses. Ms. Harper responded that the information could be found on the Statement of Revenues and Expenditures; however, the amount would not be zero because the Water Authority accrues assets each year. Ms. Brust stated that the information would be in the Comprehensive Annual Financial Report, in the budgetary statement. She stated that the financial statements include current assets, current expenditures, long-term liabilities and long-term assets.
Director Muir asked if conservation was incorporated into the water sales forecasting formula. Mr. Weinberg responded yes.
Director Watton inquired as to what would be in the budget that would not be reflected on the audit. Ms. McBroome responded that the audit does not show payments against the balance sheet (capital) and payments against debt.
Director Petty stated that the trend on the defined benefit pension plan seems to be going to a higher unfunded liability. He asked what the ramifications were. Ms. Brust responded that the largest impact on the Water Authority is that CALPers lags two years and that it had principal losses in its investments. CALPers amortized the previous losses over 20 years, so the Water Authority will continue to pay over 20 years. She stated that CALPers manages the plan and has reported that it is now achieving the interest rate that it expected.
Director Pocklington asked how the Water Authority handled wet years such as 2005. Ms. Brust responded that the Water Authority ended up selling a little less at the end of this fiscal year than it thought it would, and last year it took a significant draw from the rate stabilization fund into operating.
Director Pocklington asked if the Water Authority has ever had multiple wet years. Mr. Weinberg responded that in the mid 1990s the Water Authority had a couple of wet years. He stated that when there is a wet year, there is a two-year affect on water sales because the local reservoirs fill up and there is suppressed demand during the wet year and the following year the member agencies draw on the local reservoirs.
6. REVIEW AND APPROVE THE AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2006.
Director Watton moved, Director Williams seconded and the motion carried unanimously to approve the Audited Financial Statements for Fiscal Year ended June 30, 2006.
Vice-Chair Dailey asked if the Board could get information before the next round of employee negotiations on post-employment benefits funding. Ms. Brust responded that page 54, note 10, shows the Water Authority’s obligation. She stated that staff is in the process of preparing a solicitation for an actuarial valuation and should have a report by Spring.
7. ADJOURNMENT
There being no further business to come before the Administrative and Finance Committee, Chair Dixon adjourned the meeting at 1:58 p.m.
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Jesse Dixon, Chair
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