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05/22/1995 - Budget Minutes TIGARD WATER DISTRICT BUDGET COMMITTEE MEETING May 22, 1995 MEMBERS PRESENT: Lou Ane Mortensen, John Haunsperger, Norman Penner, Beverly Froude, Carol Callway, Linda Fox, Rod Kvistad, Eleanor Quimby, Fred Rosebraugh STAFF PRESENT: Wayne Lowry, Mike Miller The Tigard Water District Budget Committee meeting was called to order at 7:10 p.m. Budget Officer, Lou Ane Mortensen gave the budget message. Chair Mortensen stated that included was the proposed budget for the fiscal year 1995/96. This budget is similar to the budget adopted for the 1994/95 fiscal year. The Tigard Water District budget,used to include all operations and debt service of the entire water system, however, due to the withdrawal of City from the District in January of 1994, the remaining Tigard Water District budget only includes the activities of the Tigard Water District Board and the unincorporated areas share of the remaining debt service. All other water activities now included in the City of Tigard annual budget. The proposed budget includes as it's main source of funding an estimated beginning balance of $24,000, revenue anticipated during the year are estimated at $9,200 which provides a total of $32,200 in resources at the discretion of the Board. The proposed budget provides for attorney services and engineering services if needed. It also includes charges from the City of Tigard for staff time spent on the Tigard Water District business. The proposal includes a final levy for the Tigard Water District general obligation bonds. The property levy is just over $34,000 and is estimated to result in a rate just over .6/1000. The Budget Committee must make two motions before the budget is sent on to the Board for adoption. First is a motion to approve the property tax levy in the amount of ,$34,200 for 1995/96 debt service. The second motion is to approve the proposed budget in the amount of $63,145 as amended by the Budget Committee. Once approved by the Budget Committee, the budget will be advertised and be presented to the Tigard Water District Board at a hearing in June for final adoption. Wayne Lowry stated that he had distributed a proposed budget last week. Mr. Lowry stated that he had inquiries from Budget Committee members questioning whether funds were spent from some of the categories. Mr. Lowry stated that some categories had not been spent (Engineering Services, Board Per Diem). He stated that he had put this budget together similar to the way it was adopted last year, on the assumption that there will be the same sort of activities as last year. Mr. Lowry stated that this was just a proposal and any changes can be made by the committee, as long as there is a motion and a vote taken. If changes are made to the budget, there are two things to be kept in mind; a) $30,560 is the total amount of funds appropriated, b) $33,200 is the total amount of revenues or resources. Mr. Lowry stated that this proposed budget proposes to approve appropriations somewhat less than resources. There is $2,640 in unappropriated ending fund balance and local budget laws does not allow this amount to be touched during the fiscal year. Mr. Lowry discussed the property tax (second page). This is real consistent with last years budget. The debt service on those bonds goes up a little each year, which accounts for the debt service to increase. The assessed value went up quite a bit more than in some areas. The tax rate is lower than anticipated (anticipated 7.73/1000 and it was 5.6/1000). Of all the jurisdictions in the water system that levied this tax, Tigard Water District had the greatest gain in assessed value. For this year, Mr. Lowry has estimated 6.4/1000 even though the dollar amount to be levied is higher than last year. Mr. Lowry stated that he included a page of expenditure details as he did last year. The only changes in dollar amounts were the staff support per hour figure. Beverly Froude questioned the staff support figure being increased and it was stated that those figures have increased. Rod Kvistad stated that the figures for the staff support do not balance (Wegner and budget). Mr. Lowry questioned what the appropriate figures for Wegner would be ($997.44) and the budget figure ($997.44) for a total of $7,128. Mr. Lowry stated that behind the budget message that was read by Lou Ane Mortensen, there is a income statement balance sheet for the District through this date. The District has spent approximately $12,300. On the back side,is a:statement that shows the detailed expenditures. Carol Callway questioned on the second page, Special Districts Association Insurance and what this covers? Mr. Lowry stated that the Tigard Water District belongs to a Special District Association and the District obtains its liability insurance through this association. John Haunsperger wanted to discuss the Board per diem and the projected ending fund balance being appropriated into the contingency fund so that the Board will have access to these funds if an emergency arises (last years and this years). Ms. Mortensen questioned whether this should be brought up for discussion in July when Tigard Water District Budget Committee - 5/17/95 Page 2 the new Board member takes office and then move other then? Mr. Lowry stated that this could be done either way. He did state that there was a vote on per diem for the current budget which was that the Board would not be accepting per diem, assuming that the policy would continue, the funds could be moved to contingency and if that changes the Board could vote to change that. John Haunsperger made a motion which stated that the moneys in the Board per diem and the moneys in the projected ending fund balance be moved in the contingency fund for the proposed budget for 1995/96. The motion was seconded by Norman Penner. Eleanor Quimby questioned the reason for having an unappropriated ending fund balance? Mr. Lowry stated that some entities use it to capture their reserve that they want to show will be available for the following fiscal year. John Haunsperger stated that in the past, the contingency funds were set aside and when building projects came up, the funds were available to cover those expenditures. Ms. Mortensen also stated that these funds were used to pay invoices prior to receipt of property taxes in November. Mr. Lowry stated that this Board has not encountered that problem since the only tax revenues were from debt service and also the Water District has a cash flow from the water charges. John Haunsperger questioned when the debt service ends. Mr. Lowry stated that is in January of 1996. A voice vote was taken on the motion which moved the $3,000 down to the contingency which made the contingency $8,640 and the total general fund is $33,200, and passed unanimously. Eleanor Quimby questioned the proposed attorney's fees of $6,300 which is 23% of the personnel expenditures and couldn't a portion of this also be placed in the contingency fund and if needed, be taken out? Beverly Froude stated that last year which was the first year since the merger and they had spent a lot on attorney fees. John Haunsperger stated that in the past we had spent a lot of time negotiating contracts which accounted for the higher attorney fees so placing some of these funds into the contingency would be a good idea. Mr. Lowry stated that there is no limit to the amount that can be placed in the contingency fund but there is a limit to what can be taken out of that fund. Mr. Lowry stated that he would verify what this amount is. Tigard Water District Budget Committee - 5/17/95 Page 3 Commissioner Penner questioned some of these funds being reallocated to the category of advertising and publicity since there will be a need for public education and awareness on water concerns. Mr. Lowry stated that advertising and publicity line item only includes legal advertising and public notices. Eleanor Quimby stated that as a loan officer, when looking at a spreadsheet that was top heavy with attorney fees it posed some question. Mr. Kvistad stated that it is his past experience that people do not like the idea of having a lot of funds in a category with no direct intent for its use. He also questioned hearing that the Board does not anticipate using all the budget funds, and this does not look favorable. He also stated that he is not in favor of placing some of the attorney fees into the contingency. He would prefer reducing the budget that amount. John Haunsperger stated that the District does have limited resources with only receiving 1 % of the water sales within the unincorporated area as revenue. If there is some unfordseen expenditures come up, there are no resources to acquire more funding. Commissioner Mortensen questioned whether there were any fees associated with the closure of the debt bond? Mr. Lowry stated that once that is done, that is it. Mr. Lowry stated that the delinquent taxes on the last two years levy will continue to trickle in for the next few years. Mr. Lowry stated that the limitation on the contingency which limits the amount to be transferred to 15% of the total appropriations budgeted in the fund. This law states that totals which exceed 15% may be made only after adoption of supplemental budget which is a little more involved process than a resolution. Mr. Lowry stated that last years budget was not adopted by line item but instead by the bottom line. Mr. Haunsperger stated that to be kept in mind for this next year is the fact that we are still involved with negotiations for water sources and where we are headed at this point is unknown. Ms. Froude stated that for the unincorporated area in terms of education, funds will be needed to send information to those users in the unincorporated area. It was questioned, whether it would be appropriate to begin designating funds for long term water supply? Mr. Haunsperger stated that there are not a lot of funds available. Tigard Water District Budget Committee - 5/17/95 Page 4 It was stated that it makes more sense to label expenditures specifically than making other line items greater than needed. The beginning fund balance is $24,000 and the total expenses through May 26 are half that amount which makes it appear that the line items include a lot more money than is expected to be spent. Ms. Quimby discussed not having control over some of the costs such as engineering, cost of staff, attorney fees, and Boundary Commission dues. The matter of placing some additional funds into travel, food and lodging to cover three members attendance at conferences versus two was discussed. The Committee discussed placing the funding into the area that is most expected that the funds will be needed. Discussed additional funding for long term water supply in terms of advertising and informational flyers provided for the unincorporated area (approximately 2,000). Mr. Lowry stated that if this is a foreseen cost a new category can be added. Commissioner 1-launsperger stated he did not see a need for this purpose since the issue of long term water supply will be a joint effort by the Intergovernmental Water Board to inform all the District which will include the unincorporated area as provided by the IGA. Linda Fox questioned what happens to the funds not expended at year end? Mr. Lowry stated that the $24,000 figure is basically the actual revenue in the current year and the actual expenditures netted out and becomes the beginning fund balance. Mr. Lowry stated that the $24,000 figures is the estimate of what the beginning fund balance will be at the beginning of the 1995/96 fiscal year. Committee discussed the cost of doing a mailing for 2,000 households in the unincorporated area and where those funds would need to be budgeted. A motion was made by Norman Penner that the Committee establish a new, line item called Public Relations and move $4,000 from the Attorney's fees line item (which would be reduced to $2,300) be transferred to it. This motion was seconded by John Haunsperger. A voice vote was taken with all members in agreement with one no vote (Linda Fox). Committee discussed the difference between advertising/publicity and public relations being the advertising which include public notices. The Committee discussed changing the advertising/publicity line item to state meeting notices. One of the Committee members questioned the cost of insurance which totals $2,928 (actual expenses) and the proposed budget amount is less is there an expected decrease? Mr. Lowry stated that it is not expected to be reduced. Mr. Lowry stated that the $487.00 has been paid ahead and will not be included in next years budget Tigard Water District Budget Committee - 5/17/95 Page 5 ($2,400). Linda Fox moved to change the insurance line item to $2,600 and reduce the contingency line item by $200 ($8,440). This motion was seconded by John Haunsperger and voice vote was taken which passed unanimously. One of the Committee members questioned the Boundary Commission Dues and Mr. Lowry stated that the Boundary Commission is the entity that deals with annexations and urban growth boundaries. This entity is self supported by charging other governments within their area a certain fee per capita. This fee is paid by the City, County and Special Districts. Committee members discussed the debt service line item which is higher and Mr. Lowry stated that is due to the being the final year and it was not a level debt service so it climbed slightly and secondly, the District's assessed value has increased more than some of the other jurisdictions in the Water District which is what has been used to determine the debt split between the other entities. Mr. Lowry discussed that the City is in negotiations for a long term water source. The City has been talking with the City of Lake Oswego which could involve a large cost to expand their treatment plant and their intake facility on the Clackamas River which would entitle the District to a water source. This has not been discussed in great detail at this time to determine how this project will be financed. According to the City of Lake Oswego this project is approximately $40,000,000 and the City of Tigard would incur about $16,000,000 - $18,000,000 of that cost. The possibility of funding with a G/O bond or a revenue bond have not been discussed. These capital costs will not be reflected in the Tigard Water District budget, but will appear in the City of Tigard's budget, and will eventually affect all rate payers. Mr. Kvistad questioned the possibility of transferring the staff support correction on the expenditures which results in a $582.00 reduction, and Mr. Lowry's recommendation was to leave these figures as estimated. With further discussion the Committee decided to reduce the staff support line item by $58'2 by placing that dollar amount into the contingency fund which places that amount to,$9,022. Discussion was held on COLA increases. Mr. Lowry stated that TPOA (Tigard Police) have included in their contract the amount of their July COLA, OPEU is not scheduled for an increase since their extension did not include a COLA, and the management has requested a 3% increase which has not been voted on by Council at this time. These COLA's are based upon the CPI. Budget Officer Mortensen stated that the reason for the increase over last years budget amount in staff support has the added support of Mike Miller. Tigard Water District Budget Committee - 5/17/95 Page 6 The Committee questioned whether the expenditure detail a published document'? Mr. Lowry stated that this expenditure detail is public record although it does not get submitted to the County. Based upon the income statement for Contractual Services and by the end of the fiscal year all the funds will be expended, will the balance of the expenditure detail ($7,710) a realistic amount to be spent in the future for contractual services, Mr. Lowry stated that the $7,710 is a erroneous amount and should be $7,128 although he stated another figure could be used. Carol Callway made a motion to change the figure for Staff Support to $7,800 from $7,710. This motion was seconded by Beverly Froude. This motion was amended to state that $90 would be withdrawn from the Contingency to support the request for the $7,800 rounding of Staff Support to the budget. A voice vote was taken which passed unanimously. At the request of Beverly Froude an update of what the Committee changed so far was: • Addition of line item above Attorney fees - Public Relations $4,000 • Attorney Fees - $2,300 • Finance Review - 0 • Boundary Commission Dues - $3,400 • Election Costs - 0 • Meeting Notice - $600 (changed title) • Board Per Diem - 0 • Special District's Associated Conference - $400 • Travel Food and Lodging - $650 • Special District's Association Dues - $100 • Insurance - $2,600 • Engineering Services - $2,500 • Meeting Staff Support - $7,800 • Miscellaneous - $500 With a total of $24,850 and a Contingency of $8,350 which will account for the final total of $33,200. Commissioner Mortensen questioned the percentage used for the anticipation for collection of property taxes? Mr. Lowry stated that was 94% which has increased over the last four to five years from 91 % Mr. Lowry stated that $4,980 can be used by a simple Board resolution and anything more than that would require a supplemental budget. Tigard Water District Budget Committee - 5/17/95 Page 7 At this point with no more further deletions, additions or changes, Mr. Lowry stated that to forward this budget on as the approved budget, the Tigard Water District board needs to make two motions. One motion is needed to deal with the property tax levy which is one of the main functions of the budget committee to approve tax levies (once approved by the Committee, the Board cannot change that). The second needed motion is to approve the proposed budget in the amount of $65,785. Board Member Penner made a motion to approve the property tax levy in the amount of $34,210 for 1995/96 debt service, this motion was seconded with a voice vote taken and passing unanimously. A second motion was made by a Committee Member to approve the proposed budget for 1995/96 in the amount of $65,785 as amended by the Budget Committee. This motion was seconded with a voice vote taken and passing unanimously. Mr. Lowry stated that he would advertise the budget as amended for a budget hearing to be held at the next Tigard Water District Board Meeting on June 26, 1995. Mr. Lowry stated that this would be a public hearing. There will be two notices, one with some special budget forms that outline the budget proposal and a follow up ad eight to fourteen days prior to the meeting. He also stated that the Budget Committee has the ability to change the budget 10% from any fund but cannot change the tax levy without going through the re-publishing process. Mr. Lowry stated that if there were any questions between now and the next meeting, that he could be contacted. Mr. Haunsperger wanted to express his appreciation to the Budget Committee for their time put into this endeavor. Paul Johnson a resident from the Walnut triangle stated that he appreciated being allowed to attend and observe the process. The meeting adjourned at 8:30 p.m. keth y\twd\b udg et.twd Tigard Water District Budget Committee - 5/17/95 Page 8