Children’s Services Council Finance Committee Meeting Thursday, March 31, 2016, 4:00 p.m. AGENDA / MINUTES Welcome and introductions Finance Committee Members: Tom Lynch, CSC Finance Committee Chair Thomas Bean, CSC Finance Committee Vice‐chair Greg Langowski, Chair Children’s Services Council Tom Weber, Vice Chair Children’s Services Council Paul Dumar, Director Financial Services, Solid Waste Authority John Marino, Volunteer CSC Staff: Lisa Williams‐Taylor, CEO Bill Cosgrove, CFO Jen Diehl, Controller Tom Sheehan, General Counsel Elsa Sanchez, Senior Executive Assistant Agenda Items: 1 Minutes February 25, 2016 2 Budget Workshop Summary (March 10, 2016) 3 February 29, 2016 Financial Statements 4 Budget Scenario 2016‐2017 5 Investment Policy Review 6 Procurement Policy No Quote Spending Threshold 7 Change to Fund Balance Policy 8 Other 9 Adjournment 1
Transcript
Children’s Services Council
Finance Committee Meeting
Thursday, March 31, 2016, 4:00 p.m.
AGENDA / MINUTES Welcome and introductions Finance Committee Members: Tom Lynch, CSC Finance Committee Chair
Thomas Bean, CSC Finance Committee Vice‐chair Greg Langowski, Chair Children’s Services Council Tom Weber, Vice Chair Children’s Services Council Paul Dumar, Director Financial Services, Solid Waste Authority John Marino, Volunteer CSC Staff: Lisa Williams‐Taylor, CEO
Bill Cosgrove, CFO Jen Diehl, Controller Tom Sheehan, General Counsel Elsa Sanchez, Senior Executive Assistant Agenda Items:
1 Minutes February 25, 2016 2 Budget Workshop Summary (March 10, 2016) 3 February 29, 2016 Financial Statements 4 Budget Scenario 2016‐2017 5 Investment Policy Review 6 Procurement Policy No Quote Spending Threshold 7 Change to Fund Balance Policy 8 Other 9 Adjournment
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Children’s Services Council
Finance Committee Meeting
Thursday, February 25, 2016, 4:00 p.m.
AGENDA / MINUTES Welcome and introductions Finance Committee Members: Tom Lynch, CSC Finance Committee Chair, Present
Thomas Bean, CSC Finance Committee Vice‐chair, Present via telephone Greg Langowski, Chair Children’s Services Council, Present Tom Weber, Vice Chair Children’s Services Council, Present Paul Dumar, Director Financial Services, Solid Waste Authority, Not Present John Marino, Volunteer, Present CSC Staff: Lisa Williams‐Taylor, CEO, Present
Bill Cosgrove, CFO, Present Jen Diehl, Controller, Present Tom Sheehan, General Counsel, Present Elsa Sanchez, Senior Executive Assistant, Present Agenda Items:
1 Presentation of Comprehensive Annual Financial Report (CAFR) by Caler, Donten, Levine, Cohen, Porter & Veil, P.A. Mark Veil presented the CAFR to the Finance Committee. There was a clean or unmodified opinion and no material weaknesses or significant deficiencies were identified. There were some questions about the changes in the administrative expenditures over the years which is attributed to how costs are allocated to direct services, support services and administrative services. There was a request for journal entries to be sent to the finance committee in the future.
2 Minutes January 28, 2016, Approved unanimously 3 January 31, 2016 Financial Statements, Approved unanimously 4 Budget Assumptions 2016‐2017, To be discussed in more detail at the Finance
Committee Budget workshop on March 10, 2016 5 Other 6 Adjournment
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CHILDREN’S SERVICES COUNCIL – FINANCE COMMITTEE
AGENDA ITEM
MARCH 31, 2016 TITLE: Budget Workshop Summary CSC STAFF: Jennifer Diehl, Controller SUMMARY: Attendees: Tom Lynch, Tom Weber, Thomas Bean, Greg Langowski, Tom Sheehan, Bill Cosgrove, Lisa Williams‐Taylor, Kasha Owers, Elsa Sanchez As a review, the following proposals were made during the Finance Committee Budget Workshop on March 10, 2016:
The Fund Balance Policy will be reduced to 27.5% from 30% of the total budget.
Millage will be increased to .6865 for FY16/17 (may change slightly depending on updated budget scenario with more accurate figures).
Projections will be based on an 8% increase of the property tax base rate. Other matters to consider:
Any new programs or initiatives identified by CSC will be brought forth to the Planning Session for further discussion with estimated costs.
The following items will be brought to the Finance Committee on March 31: o Fund Balance Policy change to 27.5% from 30% of the total budget (referenced
above) o Policy change for purchasing approval from $1,000 to $2,500 o Newest budget scenario reflecting the items referenced above o Financial Statements o Change in Warrants List process – warrants pending Council approval to be
identified as such
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AGENDA ITEM: 3 TITLE: Financial Statements – February 29, 2016 (Unaudited) STAFF: Jennifer Diehl, Controller, Children’s Services Council of Palm Beach
County
SUMMARY:
The financial statements are presented reflecting the estimated operating results of the General Fund and Special Revenue Fund (Prevention Partnerships for Children, Inc.) for the five months ended February 29, 2016. The audit of the Council for the fiscal year ended September 30, 2015 has been completed and the applicable figures represent audited numbers.
Balance Sheet:
As of February 29, 2016 the Council had $100,451,777 in cash and investments. Of this balance, $30,000,000, net of unamortized discounts and premiums, was held in federal government bonds, $65,848,934 was held in a public funds money market account, and $150,843 was held in the Morgan Stanley Institutional Liquidity Prime Advisory Fund #8341. The remainder of the funds was on deposit in the Council’s operating accounts. The Capital Assets and the Investment in Capital Assets for $19,554,398 represent the costs associated with furniture and fixtures, equipment, and building costs. Statement of Revenue and Expenses: The budgeted expenditure rate at February 29, 2016 is 41.67%. The estimated expenditure rate for Children’s Programs at February 29, 2016 is 36.68%. RECOMMENDATION:
I recommend the Finance Committee propose that the Council accept the February 29, 2016 Financial Statements as submitted.
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CHILDREN'S SERVICES COUNCIL OF PALM BEACH COUNTY
BALANCE SHEET (Unaudited)
February 29, 2016
General Fund Total All Funds
Assets
Cash & Investments 100,438,719$ 13,058$ 100,451,777$ Accounts Receivable 1,892,058 4,987 1,897,045 Interest Receivable 28,937 - 28,937 Advances to Agencies 4,880,774 - 4,880,774 Prepaid Expenses 351,512 - 351,512 Due From - General Fund - 174,734 174,734 Capital Assets 19,554,398 - 19,554,398
Total Assets 127,146,398 192,779 127,339,177
Liabilities & Fund Balance
Liabilities
Allocations to Children's Services Programs 7,314,800 184,923 7,499,723 Deferred Revenue 415,240 - 415,240 Accounts Payable 296,377 7,856 304,233 Due to - Special Revenue Fund 174,734 - 174,734
Total Liabilities 8,201,151 192,779 8,393,930
Fund Balance
Nonspendable: Prepaid Expenses 351,512 - 351,512 Assigned: Reserved in accordance with fund balance policy 33,491,795 - 33,491,795 Unassigned: 65,547,542 - 65,547,542
Total Fund Balance 99,390,849 - 99,390,849
Investment in Capital Assets 19,554,398 - 19,554,398
Total Liabilities and Fund Balance 127,146,398$ 192,779$ 127,339,177$
Special Revenue Fund
Prevention Partnership for Children, Inc.
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CHILDREN'S SERVICES COUNCIL OF PALM BEACH COUNTYSTATEMENT OF REVENUE AND EXPENSES CHANGES IN FUND BALANCE
FOR THE FIVE MONTHS ENDED FEBRUARY 29, 2016
Approved Budget Actual Approved Budget Actual Approved Budget Actual
2015/2016 Through Through Variance % 2015/2016 Through Through Variance % 2015/2016 Through Through Variance %
Reserve for Uncollectible Tax 5,108,848 5,628,586 6,116,155 6,196,063 6,272,758 6,349,543
Total 124,471,046 128,036,421 132,851,568 134,469,670 136,085,191 137,701,454
Items included in projection: Promotional increases in salaries (.5%) Capital ‐ new computers 16/17
Added 10% health insurance increase Programs based on projection plus cost drivers of 3% salary increase and 10% health insurance increase
Merit increases in salaries (3%) Policy briefs subject to Council approval
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CHILDREN’S SERVICES COUNCIL – FINANCE COMMITTEE
AGENDA ITEM
MARCH 31, 2016 TITLE: CSC Investment Policy Review CSC STAFF: Bill Cosgrove, Chief Financial Officer SUMMARY: The Council adopted its Investment Policy on March 2, 2015. The policy contains the provision that the policy will be reviewed by the Finance Committee and the CFO on an annual basis. Although the policy was adopted in March, CSC did not execute a contract with its investment advisor, Davidson Fixed Income Management, until May 1, 2015. A provision of the Investment Policy concerning maturity and liquidity requirements is that the Council’s “Core Funds” shall not have a term that exceeds three (3) years and the duration of the funds as a whole may not exceed two (2) years. The determination of how much to be considered Core Funds, although not stated in the policy, was tied to the current Fund Balance Policy requiring 30% of the annual budget to be the fund balance “floor”. Based on the 30% requirement, the floor was considered to be $36,000,000. Due to market and interest rate performance only $30,000,000 of the $36,000,000 has been placed in longer term investments as follows: Security Description Trade Date Par Value Maturity Date Federal Farm Credit Bank 08/25/15 $6,000,000 07/03/17 FNMA Agency 09/04/15 $6,000,000 02/27/18 Federal Natl Mtg Assn 10/09/15 $6,000,000 06/26/18 Federal Home Loan Banks 08/27/15 $6,000,000 08/14/18 US Treasury Notes 11/23/15 $6,000,000 06/15/18 Considering cash flow projections through the end of calendar year 2016 and the proposed reduction to the Fund Balance Policy which will lower the fund balance floor to 27.5%, it appears that $30 million is currently the appropriate amount to have invested in two to three year securities. To provide for liquidity in its current operating needs, the Council has the majority of its remaining funds invested in a Public Funds Money Market Account paying .45 basis points. As of February 29, 2016, approximately $65.8 million was on deposit in that account. An additional $4.5 million to $5 million is maintained in the Council’s operating accounts.
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CSC staff has twice recently requested feedback from its investment advisor, Davidson Fixed Income Management, regarding any changes they propose making to CSC’s Investment Policy. To date, no feedback has been received regarding any changes. It is anticipated that any proposed changes they might suggest would focus on the types of investments permissible under the Investment Policy. When the Investment Policy is reviewed again in March, 2017 or at any time between now and then, it may be more appropriate to consider adopting and implementinng changes at that point. RECOMMENDATION: Based on the determination that CSC’s core funding is at the appropriate amount with the earliest maturity date being 07/03/17 and that it would be hard to determine the gain/or loss from any early maturity of the core funding investments, I recommend that those investments remain as they are. I also recommend leaving the current operating funds invested as they are in accordance with Davidson Fixed Income Management’s previous recommendations.
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CHILDREN’S SERVICES COUNCIL – FINANCE COMMITTEE
AGENDA ITEM
MARCH 31, 2016
TITLE: Procurement Policy: “No quote” Spending Threshold CSC STAFF: Bill Cosgrove, Chief Financial Officer SUMMARY: At the February 25, 2016 Finance Committee meeting, Mark Veil from CSC’s independent auditing firm, Caler, Donten, Levine, Cohen, Porter and Veil, P. A., presented the committee with a letter to the Finance Committee which contained two recommendations. One of the recommendations was concerning the Council’s procurement policy. Currently, the Council’s procurement policy requires three written quotes or a CEO waiver for purchases between $1,000 and $35,000. In performing the audit, CSC staff could not provide documented support to the auditing firm to demonstrate that a bid process had taken place in the selection of a temporary staffing agency. In his presentation of the item, Mr. Veil suggested that the $1,000 amount in the procurement policy may be too low and that the Council should consider increasing that amount. As a result of Mr. Veil’s suggestion, CSC staff surveyed seven governmental entities regarding their purchasing thresholds. All thresholds associated with informal quotes and formal bid requirements were in line with the majority of governmental agencies. CSC’s management approval threshold for purchases less than or equal to $1,000, fell within the mid‐range of other entities. CSC’s Procurement Team is recommending increasing the “no quote” spending threshold to $2,500. A revision to the CSC Procurement Policy will be presented to the Council at the April meeting. RECOMMENDATION: This item is being presented for your information only. A recommendation to amend the Council’s procurement policy to reflect the $2,500 “no quote” spending threshold will be presented to the full Council for a decision at the April 28, 2016 Council meeting.
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CHILDREN’S SERVICES COUNCIL – FINANCE COMMITTEE
AGENDA ITEM
MARCH 31, 2016
TITLE: Change to CSC Fund Balance Policy CSC STAFF: Bill Cosgrove, Chief Financial Officer SUMMARY: At the March 10, 2016 Finance Committee budget workshop, CSC’s Fund Balance Policy was reviewed by the Finance Committee. The Committee reviewed the current policy’s requirement that the fund balance should be at a floor of 30% of the subsequent year’s annual operating budget. The requirement was reviewed to determine the impact of reducing the requirement to 27.5% would have on: 1) the cash flow requirements for the first three months of CSC’s fiscal year, 2) the need for contingency funds, and 3) ad valorem revenue and associated millage rate projections. Based on the review, Committee members agreed that reducing the 30% requirement to 27.5% would provide CSC with an adequate reserve balance based on current needs. The language in the policy that currently reads: “The term “sufficient funds” as stated above is interpreted to represent a floor of 30% of the proposed annual operating budget for the subsequent year”, will be revised to read: “The term “sufficient funds” as stated above is interpreted to represent a floor of 27.5% of the proposed annual operating budget for the subsequent year.” All other language in the policy will remain unchanged, other than the date of this revision being added at the end. FISCAL IMPACT: The reduction of the floor from 30% to 27.5% will provide a projected additional $3.2 million in funding from the fund balance in the estimated 2016/2017 Total CSC budget and a corresponding reduction in the need for ad valorem revenue as well as a reduction in the projected millage rate to support the budget. REECOMMENDATION: I recommend that the Finance Committee approve the suggested change that was made at the budget workshop to reduce the fund balance “floor” from 30% to 27.5%.
