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HomeMy WebLinkAboutMinutes 05-15-2009 CITIZENS’ BUDGET COMMITTEE Meeting Date: May 15, 2009 Conference Room 3 Meeting convened at 7:30 a.m. MEMBERS PRESENT: Carl Hensley, Chairman Bobby Rodriguez Edward Lounds Craig Mundt Nathaniel “Nate” Wells Patricia “Pat” Ferrick Edith Hepburn Randy Ezell Jay L. McBee (7:33) MEMBERS ABSENT: Dan Kurek Thomas Hickey Bill Casey Richard Pancoast John Culverhouse Steven Messer OTHERS PRESENT: Faye Outlaw Lee Ann Lowery Marie Gouin Jennifer Hill Bill Hammer Don West John Ferrick Laurie Case Mark Satterlee Kathryn Hensley Diana Lewis Garry Wilson Debbie Brisson Carl Holeva Robert O’Sullivan Jeff Furst Sophia Holt Shai Francis Michelle Franklin Roger Shinn Beth Ryder Joseph Smith CALL TO ORDER Mr. Hensley called the meeting to order at 7:30 a.m. APPROVAL OF MINUTES th Mr. Lounds made a motion to approve the April 17 meeting minutes. It was seconded, and the minutes unanimously approved. INVESTMENT – CLERK OF THE COURT, JOSEPH E. SMITH Citizens’ Budget Committee May 15, 2009 Page 2 Clerk Smith gave a PowerPoint presentation (see attached) to advise the Committee on how the investments are doing. Mr. Lounds asked how Clerk Smith monitors the money. Clerk Smith answered that the Board’s Investment Policy is first. Safety is number one. They go with U.S. Treasuries and U.S. agencies first as stated in the long-term investment policy. The long-term money managers come in each quarter on a rotating basis to talk to the committee. They also receive emails and postings. He sometimes relies on the hairs-on-the-back-of-his-neck test. Shai Francis is a Certified Public Accountant (CPA), and he will have an office near hers so they can spend more time together. He is making sure they are qualified, good financial stewards of the people’s money. Mr. Lounds asked how often he reports to the County. Clerk Smith answered they send reports quarterly or as events warrant. When there was a problem, he made appointments with the Commissioners to discuss Florida Local Government Investment Trust (FLGIT). Mr. Wells asked about the Federal Deposit Insurance Corporation (FDIC) insurance. Ms. Francis explained that it is different from personal FDIC insurance. There is no limit on FDIC Corporate Obligation. Mr. Wells asked about the seven to nine year return. That is what the money manager from the State Board of Administration (SBA) told municipalities to expect. The reason is that there are so many non-liquid assets. They get an email every few weeks that says there is an amount available if they would like to take it. They always like to take it. The amounts range from $15,000 to $80,000. Mr. Wells asked if Clerk Smith was comfortable with the transparency of the SBA. Clerk Smith said they are locked in and will keep adding to their withdrawals until they get $5.7 million balance. If they do not hit that number in seven to nine years, they will have to ask more questions. They will keep track and work to get the principal back. st Ms. Ferrick referred to the March 31 Investment Report. It showed there was $3,570,000+ in cash. Ms. Francis explained the reason it was not on the current report is that it is cash left in the bank to cover outstanding checks. The presentation is covering funds that are invested. Ms. Ferrick asked about bank ratings. Ms. Francis handed out TheStreet.com Ratings and copies of a letter from Alex Sink (see attached). Clerk Smith has not been able to find an A rated bank. Under the Qualified Public Depository Program the dollars are collateralized. The money placed in local banks is covered by obligations so the banks can pay out whatever is put in. The Clerk and staff have to do their best to get some interest. Mr. Ezell added that in the Qualified Public Depository Program the weaker the bank rating, the higher the collateral the bank has to leave. If the bank is very weak, they have to collateralize as much as 150 to 200%. That is the safe guard. If the bank gets kicked Citizens’ Budget Committee May 15, 2009 Page 3 out of the program, it is time to go. Clerk Smith said they are not doing so badly on Certificates of Deposits (CDs). They are collecting about 6% on one investment, Capital Guardian. Even in the current economy, with the money managers’ guidance, they are making as much interest as possible on the taxpayer dollars. They are working hard. Mr. McBee asked about the range on CDs. They are all laddered. They go from one and one-half to two years. About every other month a CD matures, so they continue to purchase. Mr. Rodriguez asked how they choose which banks to use. Clerk Smith answered that it is the bank’s choice to bid. Some do not want to go through the collateralization process. Mr. Mundt asked about the corporate obligations. Ms. Francis answered that it is specific bank debt. It is not a mutual fund. The bank issues the debt. Mr. Ezell added that it is bank debt but it is FDIC guaranteed. The government decided banks have to have liquidity. They did not in the Great Depression. The government guarantees the debt if the bank qualifies for the program. It is not just corporate paper with normal risk. It is bank guaranteed debt. Mr. Mundt asked about the money markets. Clerk Smith answered that J.P. Morgan Chase is the current fund manager. There is one manager for all the money markets. Mr. Mundt asked for the names of the members of the Investment Committee. Howard Conklin is chair. Todd Bevan, Mike Dillman, T.J. Buckley and Chris Fogal are the other members. Mr. Lounds asked about the company for the investment portfolio. Clerk Smith answered that there are three; Public Financial Management (PFM), Capital Guardian & Sawgrass. Mr. Lounds asked how often they report to the Clerk. They send information once each quarter. They come in and sit down with the Investment Committee every nine months. Mr. Lounds asked if they can move the money where they think the investment would be the greatest. When Clerk Smith answered yes, Mr. Lounds asked how you know it doesn’t get moved to an inappropriate place. Clerk Smith said there is a policy with them that states the types of funds allowed. Mr. Lounds asked if money would be available if it was needed for an emergency like a hurricane. Clerk Smith said the dollars are there. There are CDs in local banks that we could probably get first. With long term investments, we can get them for what they are worth on that day. Mr. Lounds asked about how the Clerk’s office pays the bills. Ms. Francis answered that they do take discounts. The County has good policies in place. The Finance Department’s turn-around time is very quick. Clerk Smith added that the Finance Department serves in a pre-audit position. They make sure the payments are based on Board policy and have correct authorization signatures. Mr. Lounds said the Finance Citizens’ Budget Committee May 15, 2009 Page 4 Department is the check and balance to keep the funds from being disbursed in an untimely manner. Clerk Smith added that there are security measures at the bank. Mr. Lounds said a lot of citizens don’t understand that the County does not write the checks. He thinks it should be explained. Clerk Smith said it is not currently on the website but should be in the next few weeks. Mr. Lounds said more visibility and transparency as to how the system works would take doubt out of people’s minds. Clerk Smith and Ms. Outlaw are working on understanding where the other person is on the issues. Clerk Smith is thankful for a good working relationship with the Board. Mr. Lounds said it is his responsibility. Mr. Mundt asked if they use just one bank for disbursements. Clerk Smith answered Seacoast National Bank. Clerk Smith thanked the group for the invitation and asked them to call anytime he is needed. ECONOMIC STIMULUS – Faye Outlaw & Marie Gouin Ms. Outlaw showed the group the Economic Stimulus PowerPoint presentation that is attached. The Current State of Affairs numbers have increased since they were listed in January. The 10,000 foreclosures in St. Lucie County have grown to about 20,000 and unemployment is up from 10.5 to about 12.8%. It is a very slow process of federal stimulus money trickling down to local governments. We have not seen significant dollars. The program is between $25 and $30 million. The projects will be approved by the Board and go through a Public Hearing process. The list of currently approved projects completed the presentation. Ms. Outlaw handed out information on the Local Preference and Local Economic Stimulus ordinances (see attached). Mr. Wells asked if the jobs were full-time equivalency. Ms. Outlaw said the jobs were related to the project. When the project is completed, the job would be done. Mr. Lounds said anything that puts people to work is great. His concern is that it is temporary. He asked if the Economic Development Council (EDC) is working with the County to look for longer term job opportunities. Ms. Outlaw answered that they are working on a deal. The job growth incentive grant and the ad valorem tax abatement the company needed were completed, so they could be submitted to the State. Hopefully, the State will bring their money to the project. Then she can go to the Board with a Letter of Intent. There are a number of jobs tied to it. She has a meeting scheduled with Mr. Pelton on Monday to discuss another company. They are meeting on a weekly basis to continue efforts. The EDC does the lead on recruiting. They work hand-in-hand and that has gone Citizens’ Budget Committee May 15, 2009 Page 5 well. Mr. Hensley asked how much of the $30 million for projects is federal money. Ms. Outlaw did not have the percentage with her. It is a combination. Ms. Outlaw walked the Committee through the Local Preference Ordinance 09-005 chart and explained Palm Beach County’s reciprocity program. St. Lucie County is not included. The Local Preference Ordinance is targeted to the company or firm. The Local Economic Stimulus Ordinance 09-008 is focused on the workers, sub- contractors and suppliers. The January 2008 date is to help businesses who had made an investment in the County. Mr. Rodriguez asked if the information is on the St. Lucie County website. Ms. Outlaw answered that it is. He asked that as the program continues, will there be opportunities for businesses other than construction. Ms. Outlaw said there will be construction and professional services projects. We do quite a bit of business through quotes. There is a team checking the current process for getting quotes. It will be modified to allow other companies to quote. Those projects will typically be under $50,000. Two or three of those projects would help a struggling company keep employees on the payroll. Mr. Lounds tried to tie the two ordinances together. Ms. Outlaw explained they are separate. The preference ordinance does not have the 75% threshold tied to it. It is focused on the location of the company. The stimulus ordinance does have a preference component. Mr. Lounds asked why we couldn’t use the stimulus ordinance to ensure employment in good times. Ms. Outlaw explained that it is a policy decision the Board could make. The preference program will be incorporated into the Purchasing Manual. The stimulus program was adopted by ordinance. The Board will look at it in six and twelve months to decide if they want to sunset or continue it. Mr. Lounds complimented the design of the ordinance. It puts the St. Lucie County people to work first. He thinks we should do it forever. Mr. Wells asked about qualifications for the contracts. He reminded the group that he brought up the issue at the original Local Preference meeting. Some local companies are not able to do the work and over-run projects with change orders. Ms. Outlaw explained that change orders that increase the cost of the project, must go back to the Board. There is always a concern about a company placing a low bid and having a large number of change orders. Staff checks to see if valid. Mr. Wells asked if there is a red flag if a bid is too low. Ms. Outlaw said there is not a written policy. She gave an example of a low bid a few weeks earlier and how staff made certain the company was bidding on the same things and understood. It must be done on a case by case basis. Mr. Rodriguez asked if a contract can be voided if the company continues to change the Citizens’ Budget Committee May 15, 2009 Page 6 work orders. Ms. Outlaw believes it will not be voided on the number of change orders. But it will be a problem for them if they submit a bid in the future. The County does not always approve all change orders. Mr. Rodriguez asked if the County had encountered a company with a problem of many change orders. Ms. Outlaw answered they have in the normal business of construction, some are legitimate, some are not. The Board scrutinizes change orders. They do not like to see them. Staff wants to be able to stand firmly behind the necessity of a change order before they present it. They are the ones that will be grilled. The last year, the Board has required a list of prior change orders when a new one is presented. They try to avoid them; but they must be responsible if the change order is needed. Mr. Rodriguez asked if the County will look at minorities. Ms. Outlaw answered that this program is based strictly on price. The County does not have a minority program on their books. Mr. Lounds asked about St. Lucie County being their own contractor. Ms. Outlaw answered that it is done on some County facilities. Under Florida statute, projects over $300,000 must be put out to bid. Mr. Lounds asked if the County could override a bid. Ms. Outlaw did not know the legal answer. The County Attorney has held them to the $300,000 amount. Mr. Furst answered that you don’t want to do that. If a private company comes in lower, it is because they have lower labor and benefit costs. Mr. Lounds said the bigger the project, the more a labor source and buying power comes into play. Mr. Mundt confirmed that the County can do a no-bid contract up to $300,000. Ms. Outlaw said they can do it internally depending on the type of work. Mr. Shinn’s department focuses on buildings. Mr. Mundt gave the example of an agenda item the past week. Ms. Gouin explained how the engineering firm was determined. It is by rotation. Mr. Shinn explained that the building being discussed is a Parks and Recreation project. Mr. Mundt expressed his concern about the cost. Mr. Shinn gave more information on the project. Mr. Hensley asked if Ms. Outlaw had any idea how much federal stimulus money she could expect the next couple years. She explained that the government is still defining how it will be administrated, through the States or directly. We did receive a portion through the Transportation Planning Organization (TPO). She believes the amount was $2 million. Any amount helps. The County has to apply to the State to get the alternative energy piece. A formula was applied for the amounts given to the Cities. It is hard to predict what the total amount will be. $37 million of State stimulus money is being spent on State Road 70. Even though the money was not sent to the County, we will benefit from it. Mr. Hensley asked if there was a person on staff watching. It would be a big job. It is part of the Grants Director’s job. He is being assisted by our lobbyist. Ms. Ferrick thanked Ms. Outlaw for the information on the banks. OTHER ISSUES Citizens’ Budget Committee May 15, 2009 Page 7 Mr. Lounds asked if the improvements at the jail medical wing is a dead issue since the Board withdrew money from the project to put into the Research and Education Park. The need is still there. Ms. Outlaw said they are continuing to look for stimulus funding for the jail medical wing. There will be further discussion as part of the upcoming budget reviews. Staff is taking a detailed look at the Phase One Plan for the Research and Education Park to confirm the sequencing of improvements and dollar amounts, so they can tell the Board the cost to meet the goal of having the infrastructure in the ground by December of this year. A portion of the $3.2 million may not be needed. There may be some money available for the design of the medical wing if that is the Board’s choice. Other funds may be identified during the reviews. They have expressed support for having the medical wing built. She thinks it is a matter of timing. It has not been forgotten. Mr. Lounds said there would be 12 to 14 - month job opportunities and in the long run, save the County money. Mr. Mundt asked Ms. Hensley if the legislature adopted an option for increase in sales tax for schools. She explained what they did last year to balance the budget. He asked if they were going to need an increase this year. She said they will have to go any place they can find money. Ms. Outlaw went back to the question of how much of the stimulus projects were federally funded. She had been advised the federal projects cannot be done under the stimulus program because of restrictions. Mr. Wells asked Chief Deputy Wilson about the Federal and State prisoners. Chief Deputy Wilson answered that they were averaging mid-60’s of Federal inmates. That does provide additional income that helps offset overtime costs. Two years ago the Board gave them 70 new positions. Because of the downturn in the economy, 50 of the positions were frozen. Close to 40 were detention and law enforcement deputies. That forces them into an overtime situation. The State Violation of Probation inmate number has gone down a little. There are between 400 and 430 inmates in custody that are technically State prisoners. Everybody has tried to work with the State to secure reimbursement. Mr. Wells said the inmates come with medical issues that would help to justify why we need State support. Ms. Outlaw agreed. Chief Deputy Wilson said the federal inmates are moved quickly if there is any significant medical or discipline issue. Mr. Lounds asked about next month’s agenda. Ms. Outlaw answered the proposed budget would be the topic. Mr. Mundt asked about the delinquency on taxes. Ms. Outlaw said she would follow up with Mr. Davis. Mr. Furst said Mr. Davis will sell the tax certificates. Ms. Outlaw said Mr. Davis has a high collection rate. Mr. Lounds said he has mixed emotions about taking the money from the Jail Medical Wing and putting them into the Research and Education Park. The better the facilities at the Jail, the more money will be saved keeping inmates out of Lawnwood. She believes Citizens’ Budget Committee May 15, 2009 Page 8 the Board understands. They are struggling with competing priorities. Ms. Outlaw said she plans to bring the proposed budget to the June meeting for the Committee to review before it is presented to the Commissioners in their reviews in July. She asked the Committee to consider canceling the July meeting. The Committee agreed to cancel. Mr. Mundt asked for the dates of the Budget Reviews with the Commissioners. Ms. Gouin th answered they are the week of July 13. Ms. Outlaw thanked the group and said they had very good questions. Mr. Lounds complimented Ms. Outlaw on the Local Preference and Local Economic Stimulus charts. ADJOURNMENT Mr. Hensley adjourned the meeting at 9:01 a.m. Respectfully submitted by: Brenda Marlin