HomeMy WebLinkAbout04/25/2011
----B A K E R S F I E L D staff: +'/~ t e d Teglia Assistant to the City Manager Committee Members: Russell Johnson, Chair Sue Benham Ken Weir . ----------~--------~ ~ -~ -AGENDA SUMMARY
REPORT REGULAR MEETING OF THE BUDGET AND FINANCE COMMITTEE Monday, April 25,201 1 12:OO p.m. City Hall North -Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 Tkmee+i~wascaHedto-orderaf
1-2:OOPM 1. ROLL CALL Committee members present: Councilmember Russell Johnson, Chair Councilmember Sue Benham Councilmember Ken Weir Staff present: Alan Tandy, City Manager Ginny Gennaro,
City Attorney Steven Teglia, Assistant to the City Manager Andrew Cadriel. Accounting Clerk Nelson Smith, Finance Director Bob Bivens, Police Captain Other present: SarahJames, Fm-Rdy;
Salm ~h"ck-~l(aid@,-5S21~ ui Gretchen Wenner, Bakersfield Californian lrvin Lucero 2. ADOPT FEBRUARY 1,201 1 AGENDA SUMMARY REPORT Adopted as submitted with the extraction of "by $5,000"
on the bottom of page two.
-----------------------------------AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Monday,April 25,201 1 Page 2 3. PUBLIC STATEMENTS None 4. NEW BUSINESS A. Discussion Regarding
Contract Ceiling Policy -Tandy /Smith . . . . . . . . . . . . . . . . . . . . -------------------------. ---------Finance Director Nelson Smith provided a summary regarding the guidelines
of contract ceilings as addressed in the Bakersfield Municipal Code (BMC). Committee chair Russell Johnson stated that he would like to see additional checks and balances on departmental
agreements to avoid contracts from exceeding the contract ceiling and avoid bringing the contract to the attention of Council after additional debt has been incurred. Committee member
Sue Benham asked if there was a way to build in a contingency plan to avoid exceeding the amount of a contract. City Manager Alan Tandy stated that there are many different kinds of
circumstances where this issue may arise. One such example relates to field construction change orders; when situations arise that are outside of the contract scope, the contrat~ -_contjngencyallow-s
for-a-threetofourstep processiriclu~ngn egotiation of the cost with the contractor, to continue with the construction project which would necessitate an after-the-fact change order to
be approved by the Council. Other options include having the contractor stop the construction, which could turn out to be more costly, provide Council with a high instantaneous change
order at a Council meeting and then try to negotiate with the contractor, which could cause the contractor to believe that they have authorization for the higher amount. A contract contingency
amount is included in all construction project contracts and staff tries to stay within that limit. Another example is a utility conflict identified on the construction plan which is
dealt with in the field. Committee member Sue Benham asked what was the percentage of contracts for construction projects where an after-the-fact change order is presented to Council.
City Manager Alan Tandy stated approximately five percent. City Attorney Ginny Gennaro stated Council could eliminate departmental contracts and have all contracts approved _by-Councial
t a meetingwithaninflatedddlar valuer ~h~mbremMiith-fhk-istchoentractor will think that they may have the inflated dollar value to charge and this will also encumber each department's
budget which will cause a large line item that will roll over to the next fiscal budget. City Manager Alan Tandy stated that the process of departmental contracts is a controllable item
with each department monitoring each of their contracts. Reminders are provided to each department to ensure that the contracts are not exceeding the contract ceiling.
------AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Monday, April 25,201 1 Page 3 Committee member Ken Weir asked if auditors have ever made an issue about the process.
Finance Director Nelson Smith stated that auditors have not questioned the process. City Manager Alan Tandy stated an additional condition can be written into the contrec_t o alert vendorsort
depafimentul agreements ofthe po'tenfial liabilifyand problems associated with exceeding the $40,000 contract ceiling. Committee chair Russell Johnson requested the City Attorney include
the additional verbiage on department contracts and submit the example to the Committee for approval. Chair Johnson thanked staff for clarification on the policy. B. Discussion Regarding
Long Term Financial Plan -TandyISmith Finance Director Nelson Smith provided the Committee with an overview of four different scenarios where interest earnings might escalate over time.
The estimated earnings and cash balances assume that no funds are withdrawn during the 30 year accumulation period and that interest compounds annually in each scenario. Committee me.
m. ber Ken Weir asked if someone had a discussion with Councilmember -C ~ ~ h f _ $ ~ _ C I a r ~ f ~ c a f o n ~ a n d -~ e ~ j f i ~ s ~ n h i ~ ~ ~ f ~ ~ ~ ~ ~ ; ----City Manager
Alan Tandy stated Councilmember Couch's concept is to explore options to place the City in a financial position where it's interest earnings can offset as much of it's operation budget
as possible. Councilmember Couch wants to establish a plan to try to increase the capital amount in the reserves. Committee chair Russell Johnson asked how much interest income is built
into the budget every year. Finance Director Nelson Smith stated it fluctuates. The interest earning for each fund is based on their allocated cash balance. Committee chair Johnson directed
staff to prepare a list of interest earning and what the different sources are and if a fund were established what would it look like if a certain percentage of the interest income where
left in the reserve every year. None 6. ADJOURNMENT The meeting adjourned at 12:57 PM