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HomeMy WebLinkAbout02/27/2020 FC MinutesFINANCE COMMISSION MINUTES February 27, 2020 Village Hall Building 50 S. Emerson, Mount Prospect, IL 60056 3rd Floor Executive Conference Room I. Call to Order Meeting called to order at 7:07 p.m. Commission members present: Pam Bazan, Trisha Chokshi, Vince Grochocinski and Tom Pekras. Staff present: Director of Finance Amit Thakkar and Assistant to the Village Manager Alexander Bertolucci. II. Approval of Minutes a. Commissioner Chokshi, seconded by Commissioner Bazan moved to approve the minutes of the Finance Commission regular meeting of October 23, 2019. Vice -Chair Grochocinski called a voice vote. Yea: 4; Nay: 0. Motion Carries. b. Commissioner Pekras, seconded by Commissioner Chokshi moved to approve the minutes as revised of the Finance Commission regular meeting of January 23, 2020. Vice -Chair Grochocinski called a voice vote. Yea: 4; Nay: 0. Motion Carries. III. Citizens to be Heard None. IV. Old Business Discussion of 2020 Work Plan and Finalization Director of Finance Thakkar recommended an addition of two agenda items for the March 26 meeting. An update on Elk Grove Rural Fire Protection District and South Side Annexation, and a review of funding sources for storm water capital improvements. Staff will be presenting these items also at the First Quarter Review with the Village Board. Motion by Commissioner Chokshi, second by Commissioner Bazan to adopt the revised 2020 Work Plan. Vice -Chair Grochocinski called a voice vote. Yea: 4; Nay: 0. Motion Carries. V. New Business a. Parking Garage Accounting Director of Finance Thakkar explained the Village's two parking funds. These funds are proprietary funds, but have not been sustainable on their own and should not be proprietary funds. The Maple Street parking garage is being built with a loan, and the garage will never generate enough revenue to be a self-sustaining fund. Even before building the Maple Street parking garage, these parking funds required subsidies from other funds. A change from a proprietary fund to a governmental fund is an accounting change. It would require a change to the Village Code approved by the Village Board. Staff provided the following in response to comments from the Finance Commission: Finance Commission Page 1 of 3 02/27/2020 There would be separate account codes, but it would be a part of General Fund activity. These funds will not be self-sustaining because parking revenue is constrained and is not able to support Parking Fund debt service. The Water and Sewer Funds are also proprietary funds; however, revenues support maintenance and capital improvements. The Village would need to make a transfer to the Parking Funds to meet fund balance requirements. Motion by Commissioner Pekras, second by Commissioner Chokshi to convert Parking Funds from proprietary funds to governmental funds with the General Fund. Vice -Chair Grochocinski called a voice vote. Yea: 4; Nay: 0. Motion Carries. b. New GASB Implementation Director of Finance Thakkar provide an overview of several Governmental Accounting Standards Board changes. GASB 83 — Certain Assets Retirement Obligation For GASB 83, assets with future retirement dates and anticipated retirement costs, would need money set aside to pay for the estimated costs of retirement. The Village does not have any major assets that qualify; however, an example could be capping a deep well. Staff provided the following in response to comments from the Finance Commission: • If there is no end of life scenario, then it is not possible to estimate costs associated with retiring that asset. • There will be more information available by the end of the year, and we will see this requirement in our financials this year. GASB 87 — Leases GASB 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right -to -use an underlying asset. We would book the lease as an asset and a liability and amortize both of them. This would require some changes in our accounting system and staff is waiting for further clarification on this statement. iii. GASB 84 — Fiduciary Activities GASB 84 is a reporting requirement with no financial cost. It establishes criteria for identifying fiduciary activities of all state and local governments. The Village offers 457 plans to employees so can put money aside tax -fee. The Village deducts desired amount out of employees' pay to place into their 457 plans. The Village is an intermediary and that is our fiduciary activity. The Village sponsors the plan so we have to report the assets of the funds as a liability. The Village has no roll, but an obligation to report. Finance Commission Page 2 of 3 02/27/2020 Staff provided the following in response to comments from the Finance Commission: • The Village offers ICMA and Nationwide 457 benefits. There is no obligation on the Village. • Waiting for clarification on if reporting is at a fair market value or on a historical basis. • Employee picks the investments. The Village is just a pass through entity. c. Return on Pension Investment Director of Finance Thakkar provide an overview on the Village's pension investments. At the end of 2018, the police and fire pensions lost $8.5 million combined. There was $20.7 million added to pension portfolio by end of 2019. This is a phenomenal number. He reviewed expected savings from pension consolidation, which is happening now with first savings coming in 2022 and 2023. One savings opportunity is through revised training requirements for pension board trustees to lower training costs. In addition, a consolidated pension fund could make $1 million a day in investments over a small pension fund. Mr. Thakkar explained the tier 2 pension changes that came along with the pension consolidation legislation. VI. Any Other Business None. VII. Finance Director's Report None. Director of Finance Thakkar shared staff is designing new monthly financial report. VIII. Next Meeting: Thursday, March 26, 2020, 7:00 p.m., Village Hall, 3rd Floor Executive Conference Room IX. Adjournment: Motion by Commissioner Bazan, seconded by Commissioner Chokshi to adjourn the meeting. Vice -Chair Grochocinski called a voice vote. Yea: 4; Nay: 0 The meeting adjourned at 8:10 pm. Alexander Bertolucci Assistant to the Village Manager Finance Commission Page 3 of 3 02/27/2020