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HomeMy WebLinkAbout04-20-2010 Council MeetingA regular meeting of the Canton City Council was held on April 20, 2010 in Council Chambers at Donald E. Edwards Way (formerly 50 North 4th Avenue, Canton, Illinois.) Mayor Kevin R. Meade called the meeting to order at 6:30 p.m. Roll Call -Aldermen Rick Reed, Eric Schenck, Craig West, Larry Sarff, Jorge Rivero, Gerald Ellis, Jim Hartford, Dave Pickel. Absent -None. Also present -Mayor Kevin R. Meade, City Clerk Nancy Whites, City Treasurer Aaron Anderson, City Attorney Chrissie Peterson, Deputy Chief Rick Nichols, Fire Chief Bonnie Cremer, Public Works Director Cliff O'Brien, Wastewater Treatment Supt. Joe Carruthers, Water Treatment Plant Supt. Greg Pollitt, Keith Plavec (City Engineer and Zoning Officer from Maurer Stutz Inc.), City Administrator Jim Snider, Video Services by Joe Ginger. In the audience was former City Treasurer Pat Wright, firefighters Tom Shubert & Tony Plumber, ESDA Director Phil Fleming, Sam Puelo, Jim Hocker and John Fry from Hocker & Fitzjarrald CPA's, news media of John Froehling from the Daily Ledger, Stacey Creasy from The Democrat, Kevin Sampler from Journal Star. PLEDGE OF ALLEGIANCE OPENED THE MEETING FOLLOWED WITH THE INVOCATION GIVEN BY CITY CLERK NANCY WHITES. CONSENT AGENDA Minutes of Council meeting April 6, 2010 Minutes of Clerical Committee April 13, 2010 Minutes of Recessed Council meeting April 13, 2010 Alderman Sarff made the motion to accept the minutes of April 6, 2010 as presented, and was duly seconded by Alderman Reed. The motion was carried by unanimous voice vote. BILLS. 1 Alderman Schenck made the motion all bills be paid as presented and the 2 add on bills, of $13,750.00 to SPRED Executive Director and also $4,489.94 to Timbuktech, and was seconded by Alderman West. Approval by roll call vote - AYES - Pickel, Hartford, Ellis, Rivero, Sarff, West, Schenck, Reed = 8 NAYS - 0=0 TREASURER'S REPORT. City Treasurer Aaron Anderson said one time we had a deficit in the General Fund of $217,753.00 and was cut down to $6,000 in March. Water & Sewer is at 49% of their budget due to one employee dropping health care. I will try to bring the Bond funds back locally. Alderman Schenck made the motion to accept the Treasurer's Report as presented, and was duly seconded by Alderman Rivero. The motion carried by unanimous voice vote. COMMITTEE REPORTS Finance -Alderman Schenck FY 2010-2011 Budget Review. Alderman Schenck went through the cuts in the General Budget - Deficit $336,122 Proposed Cuts $ 29,337 11 months of no Deputy Clerk $ 12, 925 11 months of no health insurance cost for Deputy Clerk position $ 34,814 6 months of no Fire Chief Salary $ 6,831 6 months of no health care cost for fire chief position $ 27,885 6 months of no FF Inspector position (if new Chief is app. from within) $ 6,831 6 months of no health care cost with one less FF Inspector $ 90,000 Cut SRV purchase, renovations & debt service from FF Budget $ 22,400 Cut one patrol vehicle from police budget $ 7,101 Reduced ESDA Budget ($26,534 to $19,433) $ 25,000 Cut Bike Trail Grant application from Administration budget $ 11,126 BCBS increase reduced to 20%from 21°~ 2 $ 122,920 Inc. in Sales Tax Revenue due to higher trend in 2010 $ (6,000) Public Safety Director cost $ (50,000) 2% Salary Inc. for Police & Public Works union members & 1% for non-union $ 5,748 General Fund Surplus Alderman Schenck said now is the time to have discussion as the Ordinance is on the agenda tonight for second reading. Alderman Hartford said he hates to see us dropping the SRV vehicle and the renovations. The fire department has worked years on this and now we're not going to pay for it. Alderman Schenck said you can make an amendment. Alderman Ellis ask Jim Snider what the dollar difference would be if the non-union employees were to receive 2% as opposed to 1%. Alderman Sarff mentioned that the mayor, city attorney and city administrator have forgo receiving any salary increase. City Administrator reported to Alderman Ellis the amount would cost $3,000 to add on 1% more for the non-union employees salary increase. Legal & Ordinance -Alderman Dave Picket Roofine license Ordinance (informational) City Attorney Chrissie Peterson said for those working for a profit must have a roofing application for a license from the city and you can get one from Maurer Stutz Inc. or the city clerk's office. Community & Industrial Development -Alderman Rivero None. Negotiations, Grievance & Personnel -Alderman Sarff 3 None. COMMUNICATIONS FROM MAYOR - Ice Cream Truck from Kathv Barker -Kathy said they have purchased a truck and they will be selling nothing over $3.00 and we plan on going to other communities and will have the Fulton County Health Department inspection. Mayor Meade said all they need is the license from the Health Department. Mayor Meade said now that spring is here we have our first 'Bright Spot'. The Canton High School has been chosen by the Master's Gardeners. They have planted flowers out in front of the school building. Next week will talk about recycling. We want to get going on this and will here options next week. Census done 70% in Canton and were in the better national average. Mayor Meade said there are openings on the Planning & Zoning Commission, and the Zoning Board of Appeals. Call the mayor if you are interested in serving. Mayor Meade said he did receive a retirement letter from City Clerk Nancy Whites effective May 31. Alderman Schenck made the motion to accept City Clerk Nancy Whites retirement, and was duly seconded by Alderman Sarff. The motion carried by unanimous voice vote. Mayor Meade read from a card he received from Donald E. Edwards. The card read that he felt honored receiving a street named after him. OLD BUSINESS: ORDINANCE -ADOPTING THE BUDGET FOR ALL CORPORATE PURPOSES OF THE CITY OF CANTON, FULTON COUNTY, ILLINOIS, IN LIEU OF AN APPROPRIATION ORDINANCE, FOR THE FISCAL YEAR BEGINNING MAY 1, 2010 AND ENDING APRIL 30, 2011. Second reading and read by title. Alderman Schenck made the motion to place the ordinance on its passage, and was duly seconded by 4 Alderman Reed. Discussion - Alderman Hartford made the motion to amend the budget to purchase the vehicle for $50,000 and $10,000 pay back to the loan and was duly seconded by Alderman Schenck Discussion -Alderman Ellis said if we buy that vehicle at $50,000 and we can't do the $35,000 in renovation it's going to sit down there and we have $50,000 in it. Mayor Meade asked firefighter Tony Plumer -what is the minimal amount to put the truck in service. Fire Chief Bonnie Cremer answered it depends on what we sell the other two vehicles for, and I believe we can then offer to do the renovation. The first thing it needs is air filtration. Mayor Meade said the concern is we pay for it when we pick it up in July. Unless we can amend the contract with them and basically pay them now, we do have the right of refusal and they can give our money back by our agreement. Approval of roll call vote onamendment - AYES -Schenck, West, Hartford = 3 NAYS -Reed, Sarff, Rivero, Ellis, Picket = 5 Motion defeated Alderman Ellis made a motion to amend the budget to give the non-union employees a 2% raise in salary at additional amount of $3,000. The motion died for lack of a second. Approval by roll call vote = to place the ordinance on its passage AYES - Pickel, Hartford, Ellis, Rivero, Sarff, West, Schenck, Reed = 8 NAYS-0=0 Motion carried Ordinance # 1204 Mayor Meade commented this is very impressive of what you're done to get this Budget balanced both by council and Mr. Snider. This has not been easy getting this to a balanced budget. It's what you have to do, and what government should be doing and that is living within their means. If we had state and federal government doing that we would be better off. You are to be commended holding the line. I thank all of you for what you've done. 5 NEW BUSINESS: 2008-2009 AUDIT REVIEW -Jim Hartford Jim Hocker I am a partner in charge of the city audit. I spent two to three weeks working with Pat Wright on the Fire/Police Pension funds. Most of all the other work was done by my colleague John Fry. He's here tonight in case there are any questions that need to be expanded on or clarified. In our office was the Greenwood Cemetery portion being done by Rhonda Vogel. Before I start my discussion, I do want to make a comment as well as from John Fry as we want to thank Nancy Whites. She has always been 100% cooperative with us and with her patience's. She makes sure we get the information we need. She has been wonderful to work with, and we have certainly enjoyed our relationship with her. And we really do appreciate her work as a good and faithful public servant. The Financial information is on the handout of page 2. The main operating funds of the City that being the General Fund and the Water & Sewer Fund. Your total revenues in 2009 were $7.5 million of your general fund. And 48.10% was state taxes and 37.3% was local taxes. So, about 86% of your local revenue comes from state tax or local tax. That is an interesting percent. Almost 70% of your total general fund is in payroll. The good news under the other information is that the unrestrictive fund balance was nothing more than your net asset. All your asset is on a cash bases of your fund. You subtract your cash bases liability and you come up with a net. That improved between fiscal year 2008 and fiscal year 2009 by $161,000. So that is always good, so that means your so called financial position is improving. Going back to the 66 page audit your cash was $7.2 million in the general fund which would cover 4 & 4 tenths % months for your operating expenses. If you received no money coming in you would be able to survive for 4 % months. That is a good thing, and we also hope it is three months at least. 6 The Water & Sewer funds, there has been some real progress there. Those funds were only short of covering all of its expense, all of its bonds, and interest payment, and only short $53,000 in operating revenue. Then you take the interest income earned on investments and they had a surplus of $487,000. So the interest income more than covered the $53,000 deficit. Jim asked the council members if there were any questions! The Council members did not ask any questions. The second part of my presentation is regarding internal control and compliance also. The Management Letter is an auditor's recommendation of the city area of problems that need to be corrected and improved. This past year's audit we had 19 recommendations of observations which is a very high number. I'll hit the ones we think are needing to be significantly in areas that need to be improved or potential compromise of internal control that increases your exposure to fraud, or audit risk, or inaccurate finance reporting. And of course Mr. Snider is very concerned for adequate reporting as he is trying to budget. Both he and the treasurer are to keep you posted on your financial position and what your cash flow is. You don't want to make cuts if you don't have too. The first item comes under the heading of inadequate training and experience in financial reporting in personnel. This is specifically the treasurer's position. The treasurer's position is simply an elected position and anybody can apply for it. There are no required education training or experience requirements. Whoever is unfortunate to win the election walks into a complicated arena of accounting. Any lay person who walks in here and has not been an accountant or CPA will have a difficult time. And of course that's what happened with the current treasurer. Several things you have to do when you walk in here is - if you have no background you will have to spend a lot of time on the job and it will be unpaid time. You have to get help from someone that has been here before to help that learning curve. There is over 160 bank and investment accounts you try to recognize for the City of Canton. The audit was not done on a timely basis as we indicated. We got here after April 2009 and the books had not been reconciled since December 08 to the end of the fiscal year and this caused problems resulting in accounting adjustments and delay in getting our work done. We would like to see reconciliation process of your payroll account. It is a good system and you have to make sure it reconciles back to the general ledger and balances out. You need to do this so you don't get the wrong amount on your budget line. And you have a potential of under reporting of your payroll taxes, which could cause penalties. Another area that expressly helps an auditor and is necessary to have a receipt module and it has all the details of the cash flow is through the general fund and other funds, as you need to know the trail of what is in the revenue account to make sure everything is classified. Some revenue streams have grants that need to be recorded, and the police department needs to know there grants. So this is a critical thing for accurate revenue reporting. The Federal Financial System you've had a lot of grants over the years. It's important to keep them tracked through the books, and especially federal grants. You have to know where your federal money is and what kind of grant it is, and how much it is. Once it reaches'/: million dollars that changes the whole scope of things on your financial report and federal reports for the city to be audited. We worked in here not knowing if you were at that $500,000 limit. It really hurts us trying to establish a scope of our audit, because it changes fairly significantly as we have to do a single audit. This is an area that was not tracked and needs to be tracked. Material Control Weakness -the original documents should be saved. Receiving faxes, photo copies of invoices, hand written notes, department heads giving copies is just not adequate. You can create documents now that really look real. This can create bogus expenditures. Accept only original documents and give to the city clerk's office to be filed in appropriate places. Sounds like a little thing and unfortunately it's not. It is something to keep an eye on. There is money waiting to be put in the city's account. The ITT you have to know they are there and you have to request the money and send in the proper documents to have it in the city's account, because it wasn't done resulted in accounting adjustments and headaches. This is a standard auditor management letter, and sometimes everything comes out. It's a thing called General Journal Entry. This is for paper entry. It can move dollars, and can conceal budget averages, which can also conceal fraud or misappropriation of money. It's important anytime you post in the journal and is s not reported to the books. Your situation is for Mr. Snider to review these journal entries, to see if they are valid, and when he sees the financial report they all tie together. Audit adjustments -there were 78 that resulted in those adjustments and the result was significant changes in the city's financial statements. That was not a happy moment. Jim said he will open up for questions. Alderman Sarff stated that the city is considering adding a position of Comptroller. Jim said absolutely - if the person has a background in government accounting. You had that with Kathy Luker. Pat Wright. Pat said that Carl Hill was the treasurer for 30 years and she was for 24 years. The city did not have much money in those times. Nobody could just walk in and do the job. Kathy Luker left in the middle of her term and the mayor could not find anyone to fill in. Julie Smick finally offered to work part-time plus she had afull- time job. The mayor contacted Aaron Anderson at the bank to be the treasurer. When he came in I knew no one was there to help him. I was limited to helping him. By the time the Locis people came, the books were two months behind in posting. He learned a lot on his own. There is always a lot to learn. I'm sure it would go smoother for auditors and if findings are better. In the past we talked about change as this is not a one person office. We need a bookkeeper and treasurer. Then the treasurer can be the treasurer. Then you would not have the turmoil. I hope you will think about what I've said. Treasurer Aaron Anderson read statement in response to the Audit Because I was absent last week and there have been some material misstatements regarding the fiscal year 2009 audit for the City of Canton, I feel compelled to make a statement tonight to clear up all of the misconceptions surrounding this issue. Before I do that, I would like to thank Pat Wright for being here tonight. Pat was a dedicated public servant with 24 years as City 9 Treasurer. She has been of great help to me and every other treasurer who has walked through the door since she retired. First of all, I think it is necessary to again point out that the audit we are discussing was for the period ended April 30, 2009. Therefore, as of today, this audit is 10 days away from being a year old. In times of economic uncertainty such as those this City is currently facing, year-old financial statements are useless. Times are much different in terms of the City's financial situation today than they were a year ago, especially given the situation with the volatility of the City's revenue streams and anticipated cuts in municipal revenue shares from the State. Furthermore, this has been a recurring problem with Mr. Rocker's firm since we did not receive the April 30, 2008 audit until March of 2009. Therefore, I was forced to sign off on the previously elected treasurer's numbers. Although I was very uncomfortable doing this, it had to be done so as not to further agitate any of the City's state grantor agencies. Several of these agencies had been putting increased pressure on the City to produce the 2008 audit. I knew that with any further delays, the City would've been in danger of these agencies taking action to recover their grant funds. Also, these year-old audits have cost the Canton taxpayer a significant amount of money over the past two fiscal years. Mr. Snider commented during last week's meeting that the bill for the 2009 audit of $30,950 was about $6,000 higher than normal because of the auditor's working with my office. This is false because of the 2008 audit payment, which you have in front of you, was $31,700. As you are all well aware, I was not in office at all during the 2008 fiscal year. There are a couple of ways to correct this situation going forward that I would like council to consider. First, there is the option of going out for bid for the 2010 audit, rather than awarding it to Mr. Rocker's firm. Mr. Rocker has been doing the City's audit for several years and it would not hurt to get an outsider's perspective on the City's financial situation. Second, perhaps we can create a system where my office corresponds with Mr. Rocker on a monthly basis and transmits City financial information on a monthly basis. Many businesses follow this type of system and it could not only save the taxpayer's money but it could also provide for a more timely receipt of the audit. 10 Regarding the issues cited in the management letter, I am more than willing to accept responsibility for the handful of items that are in direct relation to my being new in the office. I am not a person that refuses to be held accountable for my actions. However, I the mayor and City Council should also bear responsibility for these deficiencies due to the turnover in the Treasurer's Office during the 2009 fiscal year. Ms. Wright has already laid out the timeline of events for fiscal year 2009 but I am going to reiterate this because I feel that it is important in this situation. The City Treasurer, whom was elected in 2005, resigned to take a higher-paying position and because she was unhappy in the position. Do to the fact that she was unhappy, she failed to help transition the office for a change in personnel. This person was a political ally to the current mayor as well as the previous mayor, yet she failed to uphold the oath she took when she was elected in 2005. Therefore, she resigned the position effective tune 30, 2008. During that time, this council could not decide whether to keep the position full-time, or to make it part-time. Naturally, qualified applicants were not pounding on our door because of the uncertainty created by this discussion. All the while, the treasurer's office sat empty for 90 days. Anyone who balances their own checkbook knows that falling even one month behind can mean a great deal of work to get caught back up. Finally on September 22, 2008, Julie Smick stepped up to take the position, recognizing how important it was that the office should not stay empty any longer. I would like to commend Ms. Smick for doing this as she did the taxpayers a great service by stepping forward. However, there was only so much Ms. Smick could do as she already had full-time employment elsewhere, and our books were three months behind. As the auditors will agree, the City has approximately 160 bank accounts. As can be imagined, this meant a near impossible workload to catch up with on a part-time basis. Ms. Smick was able to balance the books through October 2008. Then, on December 2, 2008, I was appointed as City Treasurer. It wasn't until December 23, 2008, that I received training on the accounting system due to the software provider's scheduling constraints. Because of this, I was already 2 months behind on the books while I was trying to learn the system and get my arms around where all of the City's money was. Naturally, I did all I could to get caught up, but I wasn't caught up at April 30, 2009 and that is why the deficiency of checking and investment accounts not being reconciled appears in the 2009 management letter. Again, I would like to reiterate that I am more willing to accept responsibility for those internal control deficiencies that were products of my mistakes while learning the position. 11 However, the mayor and those members that were on the council last fiscal year should step up and take their share of the responsibility as well. Mayor Kevin R. Meade asked for any comments, and none were made. RESOLUTION - OF THE CITY COUNCIL OF THE CITY OF CANTON APPROVING A SEPARATION AGREEMENT AND GENERAL RELEASE BETWEEN THE CITY OF CANTON AND BONNIE CREMER. First reading and was read by title. Alderman Reed made the motion the resolution be adopted, and was duly seconded by Alderman Hartford. Approval by roll call vote - AYES -Reed, Schenck, West, Sarff, Rivero, Ellis, Hartford, Pickel = 8 NAYS - 0= 0 Resolution being #3920 RESOLUTION -HOME IMPROVEMENT GRANT WITH WIRC. First reading and read by title. Alderman Hartford made the motion the resolution be adopted, and was duly seconded by Alderman Reed. Discussion -Kevin Wiehardt said he will do the advertising for securing the contractors and they do not have to follow the minimum wage. City Attorney Chrissie Peterson asked if the contractors buy building permits and Kevin said he believed so. Chrissie asked if the homeowner could sale the house. Kevin said they have to stay in the home for five years, and if they sell the money goes to IDA. Kevin said they will do a title search on each property, and terminate inspection. Chrissie asked if they have to have homeowner insurance. Kevin said yes, and IDA holds those recaptures. The motion carried by unanimous voice vote. Resolution being #3921 The regular scheduled Council meeting convened for executive session at 8:05 p.m. EXECUTIVE SESSION - TO DISCUSS -POLICE AND PUBLIC WORKS CONTRACTS; AN ADDING ON LAND SALE. 12 The regular City Council meeting adjourned in open session at 8:24 p.m. Mayor Kevin R. Meade said there will be an open house at the maintenance building of Youth Acres at 1:00 p.m. Tuesday April 27t" for John Green. Alderman Sarff remarked that former Mayor Rod Heinze gave the Youth Acres a 99 year lease. ADJOURN Alderman Hartford made the motion to adjourn, and was duly seconded by Alderman Rivero. The regular scheduled council meeting adjourned at 8:26 p.m. Nancy Whites, City Clerk APPROVED: Kevin R. Meade, Mayor 13