McHenry County MHB Finance and Audit Committee met May 15.
Here is the minutes provided by the Committee:
I. Call To Order – Sam Melei called the meeting to order at 5:03 p.m. Roll Call was taken.
There being only two members present, quorum was not established. No formal meeting was held and no action was taken. Attendees held discussion of items related to the Committee’s agenda.
II. Public Comment – none.
III. Approval Of Minutes - For Action
The Minutes of the February 20, 2018 Finance and Audit Committee will be approved at the next regular meeting of the Finance and Audit Committee.
IV. Treasurer's Report - For Discussion / Recommendation
Jane reported on the Treasurer's Report for the Period Ending April 30, 2018. The Treasurer Report will be go directly to the Regular Board meeting for approval.
Packet page 6 - Light and Power is high this month due to fluctuation in the coverage periods and billing dates of the bills.
Land Improvements was due to the Gewalt study for the drainage project and the city permit needed. Packet page 7 - A Way Out program is at 54% through March of the year. There was a higher utilization the first 3 months but there are no additional prior authorizations.
Staff have attempted to follow up with SEDOM to determine why they have not billed the MHB. SEDOM has submitted data but not the affidavit for the program that was phased out after 2 months. Sam asked for clarification on Transfer Out Debt & County Support. Jane explained that this is the debt payment and it does include transfers out yet. *Jane will show later in the report how this matches with the figure on the last page of the FFS Report.
On the FFS Report a number of providers are over utilizing, including Thresholds and Turning Point. Scott pointed out that all FFS contracts are capped but projected figures demonstrate what continued billing at the current rate would look like if agencies were able to bill over their cap. Jane added that NISRA shows under-utilization but usually ramps up for their summer programs.
Scott added that in total when the MHB allocated funding for this fiscal year there was about $27,000 left available for grants to agencies besides the $500,000 abatement. MHB will not have the ability to allow for overage of FFS billing as done last year.
Jane noted agencies projecting over at this point totals $255,692. If MHB does not pay for those who are over projecting the bottom line would be a -$1.477M instead of -$1.733M, using up fund balance as anticipated but not to the full budgeted amount.
Scott noted that a few providers have stated they have seen an increase in unfunded clients.
*On the last page (Packet page 14) of the Treasurer’s Report, Jane explained that in the second section Debt Payments is $342,367.50 and ties back to amount on Packet page 7 – Transfers Out Debt & Cnty
Sup. Jane also noted that when the MHB transfers dollars to the County for amounts billed quarterly under the IGAs for IT and County Maintenance Services, the amounts in the YTD column will be the sum of these 3 on Packet page 7 but be split to three lines on Packet page 14. (NOTE: In follow up to this discussion about the transfers out, Jane later provided a correction via email to all Committee members/staff in attendance. “The transfers out for the Intergovernmental Agreements (IGA) for IT and Facility Maintenance are done semi-annually, not quarterly.”)
V. Old Business - For Discussion / Recommendation / Approval
A. ERP Update
Jane reported that the committee had a Status meeting today. They are experiencing difficulty bringing new data migration from the old to the new system (3 years of historical data) and should have it done this week. They are working on the position forecast portion for personnel information and are reviewing a solution design document. They will begin acceptance testing of the budget portion and hope to train-the-trainer the week of June 4 and training of end users the week of June 11 with the intent to enter in the FY19 budget.
Scott added discussion of the abatement process to Old Business. The County just did a journal entry reducing the MHB’s actual budget by $500,000. At the time the MHB considered the abatement, the MHB had many open discussions regarding the abatement process. The MHB drafted a budget for the full of the $10.9M levy and sent a letter stating our willingness to participate in the abatement by way of abating $500,000.
The County passed the ordinance stating the levy was $10.9M and then they did a resolution to abate the taxes, which also included a reduction of the budget in the same resolution. In theory the MHB requested their budget in full as MHB was concerned about the future budgets. The County has done a journal entry to reduce the MHB budget by the $500,000 making our budget appear as $10.4M. MHB has not done this to our books and still shows the $10.9M budget. MHB action provided a budget of $10.9M, there has been no MHB action to reduce this further. MHB is leery of taking formal action to reduce the budget.
Legal counsel states that there is no formal reference on the mechanics of the action taken by the County and the County provides little instruction which provides no clarity on whether or not the MHB takes action. MHB is taking the position that it will not formally adopt any change in budget. Sam suggested that the MHB should note on Balance Sheets and Financials regarding the discrepancy and not reduce the budget because the Board does not know the impact of “abatement” for the future. Based on MHB legal counsel’s research there is no legal opinion on the matter. MHB Staff will discuss this with its Auditor and follow up with legal counsel. A formal agenda item will be included in the future for follow up to the Committee.
VI. New Business - For Discussion / Recommendation / Approval
A. Vendors/Categories pre-approved for check release (revised 5/1/18)
Jane reviewed changes to Vendors/Categories pre-approved for check release during the Treasurer’s Report.
B. Draft FY19 Budget
Scott referenced Packet page18 of the 2019 Budget Summary showing the Psych Loan Reimbursement increase as directed by the Board. After subsequent discussion with representatives from Mathers, this program will not work out for them. The funds could be moved back to Client Services within Community Funding at a later date where it can be spent on community service. Scott also referenced Packet page 20 Utilization of Fund Balance includes the $2M for early Debt payoff and $750,000 going to Client Support and Services. At this time that leaves a little over $200,000 remaining of fund balance beyond reserve policy and designation that can be used at a later. Scott also noted an exemplary reduction in Administrative Expenses.
C. Bond Redemption
Scott met with Peter Austin and Ralph Sarbaugh and Eric Anderson to discuss the process.
Two step process:
1. MHB makes final $342,000 final payment in December 2018, qualifying for the bond subsidy related that payment.
2. Pay off remaining of approximately $2M
This is the County debt so the resolution and the call notice have to come from the County. The process for what MHB has to do still has to be determined. Scott believes that all the MHB has to do is direct the County to create the Resolution.
At this month’s Board meeting, the full Board will discuss post payoff building use. Scott is working with legal counsel and Bob Ross, Chief County Assessor regarding building use and subsequent tax exempt status.
Other: Jane mentioned changes at county: The County Auditor retired. The County appointed a new Auditor and reassigned duties effective in June. The Auditor will no longer be responsible for development of the County Annual Financial Report, and general accounting will now be overseen by Finance and Administration. If duties within Administration/Finance are not segregated properly it could result in County audit findings that could trickle down and result in audit findings for MHB over which MHB has no control, as MHB’s accounting flows through the County system. It was noted that the County Auditor intends to continue to do County internal audits on a regular basis as a prevention to such findings.
VII. Public Comment – none.
VIII. Adjourn – the meeting adjourned at 5:40 p.m.