# Special Meeting - Council Budget and Finance Committee - December 10, 2013 > Auto-transcribed civic record · December 10, 2013 - **Permalink**: https://meetings.lexingtonky.news/meeting/3182 - **Source video**: https://lfucg.granicus.com/player/clip/3182?view_id=14&redirect=true - **Date**: 2013-12-10 - **Last revised**: July 15, 2026 - **Length**: 3,651 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget & Finance Committee met on December 10, 2013, at 2:00 p.m., with Ellinger presiding. The committee addressed three agenda items during the session, which included approval of the previous meeting's summary, an informational presentation on the Comprehensive Annual Financial Report (2013 CAFR), and consideration of items referred to the committee. The committee took three votes during the meeting and heard three public comments. One agenda item—the November 19, 2013 Committee Summary—was approved, while the presentation on the 2013 CAFR was received for informational purposes. The Items Referred to Committee were deferred for future consideration. ## Attendance The following individuals were present at the meeting on December 10, 2013: * Ellinger * Stinnett * Gorton * Kay * Ford * Beard * Farmer * Scutchfield * Mossotti * Henson No absences or late arrivals were recorded. ## Votes and Decisions The committee took three votes during this meeting, all of which passed by voice vote with no opposition. **Approval of the November 19, 2013, Committee Summary** [timestamp: 0:02:00] A motion was made by Beard and seconded by Massadi to approve the November 19, 2013, Committee Summary. The motion passed by voice vote. The following members voted in favor: Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Farmer, Scutchfield, Mossotti, and Henson. No members voted against the motion, and there were no abstentions. **Removal of the Solid Waste Task Force from the Committee Agenda** [timestamp: 0:20:30] A motion was made by Stinnett and seconded by Henderson to remove the Solid Waste Task Force from the committee agenda. The motion passed by voice vote. The following members voted in favor: Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Farmer, Scutchfield, Mossotti, and Henson. No members voted against the motion, and there were no abstentions. **Removal of the Debt Management Policy from the Committee Agenda** [timestamp: 0:20:30] A motion was made by Stinnett and seconded by Henderson to remove the Debt Management Policy from the committee agenda. The motion passed by voice vote. The following members voted in favor: Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Farmer, Scutchfield, Mossotti, and Henson. No members voted against the motion, and there were no abstentions. ## Budget and Financial Actions The meeting addressed funding for the 2013 Comprehensive Annual Financial Report (CAFR) and the associated audit process. No specific dollar amount, vendor information, or resolution identifier was documented for this financial action. ## Public Comment Three council members provided comments during the meeting. **Vice Mayor Gordon** [timestamp: 0:16:09] expressed appreciation for the Finance Department's timely delivery of the Comprehensive Annual Financial Report (CAFR) before the holiday break. Vice Mayor Gordon noted this represented a significant improvement over previous years, when the CAFR had arrived in February. **Council Member Kaye** [timestamp: 0:13:29] asked about the health insurance reserve and claims experience. Council Member Kaye confirmed that the $2 million reserve is based on actuarial projections and indicated that the reserve will be updated after calendar year 2013 claims are processed. Council Member Kaye noted this update is expected by late February. **Council Member Beard** [timestamp: 0:23:36] raised a concern about potential legal obligations related to the Ben Ally case and the Arts Center. Council Member Beard noted that legal obligations may require maintaining certain revenue streams for the Arts Center and suggested that a legal review be conducted to address this matter. ## Contested Items **LexArts Financial Support and Downtown Arts Center Revenue Retention** A significant disagreement emerged regarding the financial arrangement between the city and LexArts, specifically concerning whether to reduce financial support to LexArts in exchange for allowing the Downtown Arts Center to retain program revenue. The core dispute centered on two main concerns. First, participants debated the legal obligations tied to any reduction in city funding to LexArts. Second, there was disagreement about the distinction between operational support and arts fund support, with questions about how these different funding categories should be treated under the proposed arrangement. The debate reflected broader questions about how to balance the city's financial commitments to LexArts against the Downtown Arts Center's need to retain revenue from its programs. Some participants expressed concern that reducing support to LexArts could create legal complications or violate existing agreements, while others saw potential benefits in allowing the Downtown Arts Center greater financial autonomy through revenue retention. The item resulted in a split vote, indicating that council members or committee members were divided on the appropriate course of action. This division suggests the proposal did not achieve consensus, with some members supporting the revenue retention arrangement and others opposing it based on the legal and financial concerns raised during discussion. ## November 19, 2013 Committee Summary The committee reviewed and approved the summary from the previous meeting held on November 19, 2013. [timestamp: 00:02:00] **Key Speakers** - Beard - Massadi **Discussion** The committee examined the meeting summary document and identified a minor typographical error that required correction before final approval. **Outcome** The committee approved the November 19, 2013 meeting summary with the noted correction applied to the document. ## Comprehensive Annual Financial Report (2013 CAFR) Bill O'Mara presented the 2013 Comprehensive Annual Financial Report (CAFR) to the board [timestamp: 0:03:05]. The report had received a clean opinion from auditors on November 15. **Key Financial Information Reviewed** The presentation covered fund balances across multiple funds, including: - General Fund - Urban Services Fund - Sanitary Sewer Fund - Additional funds as part of the comprehensive financial overview **Topics of Discussion** The board's discussion focused on several areas: - Reserve levels across the various funds - Pension funding status - Health insurance funding **Concerns Raised** During the discussion, participants identified a need for better communication with project managers regarding financial matters. **Participants** The agenda item involved remarks and discussion from O'Mara, Stinnett, Kaye, and Gordon. **Outcome** This item was presented for informational purposes. ## Items Referred to Committee [timestamp: 00:16:43] During this agenda item, the council discussed several matters that had been referred to committee. The following items were addressed: - Solid Waste Task Force - Purchasing task force - Activity-based costing - Affordable Housing Trust Fund - Franchise fees - Debt management policy - Urban services refund policy - Parking fines - LexArts financial support Key speakers during this discussion included Schoeniger, Stinnett, Kaye, Ford, Clark, and Beard. Most of the items under review were deferred or removed from consideration at this time. The council indicated that updates on these matters are expected to be provided in January. **Outcome:** Deferred --- ## Decisions - **Motion** — passed: Approval of the November 19, 2013, Committee Summary - **Motion** — passed: Removal of the Solid Waste Task Force from the committee agenda - **Motion** — passed: Removal of the Debt Management Policy from the committee agenda --- ## Full transcript . guitar solo Thank you. Thank you. Good afternoon. According to my watch and my phone, it's 2-0-1, so we will begin our special budget and fines committee for December 10th. We have three items on the agenda, and the first item is the November 19, 2013, committee summary. Do I have a motion to approve? I have a motion by Council Member Beard and a second by Council Member Massadi. Any discussion? All those in favor, say aye. Chief Scott, aye. And all those opposed? Wait, wait, wait, wait, wait. Vice Mayor, did you have a question? I was thinking there was one typo in the summary that needs fixed. It's on work session now. Okay. Okay. All those for? Say aye. Aye. All those opposed? Say nay. That passes. The next item on the agenda is the Comprehensive Annual Financial Report, the 2013 CAFR, and we have Mr. Commissioner O'Meara here. Welcome. You have a short PowerPoint for us, it looks like. Yes, we do. Thank you, Chair. We do have the Comprehensive Annual Financial Report ready to present just on abbreviated form, and the first thing that I would like to say is that we were issued a clean opinion on November 15th of this month for the 2013 CAFR. So we're proud of that and also proud of the date. So we gave it our best efforts to do it as quickly as possible. Now the single audit, or the A133, will be completed after that. They have an estimated completion date of December 31st. We hope to have the auditor available for your January Budget and Finance Committee if the agenda has room for that. If not, it would be February that the auditor would come and make a complete presentation about the review with management and their review. We'll put it on the agenda, so just have them plan on being here for January. All right. Thank you. So in this year's CAFR, just to talk about the different major funds, the first is the Urban Service Fund, and that's found on page 34. That fund balance is $28.6 million. The Sanitary Sewer Fund, which is found on page 44, has a total fund balance of $60 million, 42.4 of that. Just to remind Council, the fee that is assessed for sanitary sewer, part of that fee is dedicated to the actual operational expenses, but is also supposed to support the capital demands of that system. And we have a reserve of $42.4 million. Commissioner Director Charlie Martin and I talk frequently to see how long that will last. There is a very aggressive construction schedule, and we will be monitoring the use of those capital reserves for that construction build-out to see when we may need to go to the bond market in order to supplement that capital spend over the next 10 years. Now, due to the bonds that are already issued, we have bond covenants that require us to have a debt service reserve of $8.8 million and a capital replacement and maintenance reserve of an additional $9.5. So that equals the total reserve of 60.7, but only 42.4 of it is available for us to use on those capital projects. If you look at the landfill fund, again, that's on page 44. We have a fund balance of $14.5 million. And also on page 44 is the water quality fund. Their total fund balance is $10.1 million. Now, within the enabling ordinance for the Water Quality Fund, there is an incentive program that is supposed to be 10% of revenues. And so we have those in place but not yet spent, these incentive programs. And so there's a $4 million reserve to fund those, which leaves an unrestricted fund balance in water quality of $6.1 million. And then for the general fund, which we may have spent a few minutes discussing so far this fall, so I'll kind of recap, but we have many different categories, but within those, the first is non-spendable. That's $1.4 million. Those are things like prepaids and inventories. And then we have what's below that is restricted. The one that qualifies for that is based on federal grant. the TARP program for the energy improvement, and there's a little over $400,000 reserved for that. Then the next category is committed, and those are ordinance-related usually. The economic contingency total balance is $23.3 million. Our 27th payroll accrual is sitting at $5.5 million. And then other funds that are combined into this general fund category in the CAFR equal another $1.1 million, which leads us to the assigned balances. We have a total of $5.5 assigned to a litigation reserve. We have a total of $2 million assigned for a health insurance reserve. We assigned a pension reserve of a little over $2.8 million. and then there are $8.1 million of projects that are assigned dollars that are committed to be used, which leaves an unassigned fund balance of $4.3 million for the general fund. I felt like those were the highlights of the CAFR. It's about 156 pages. It's great reading if you have insomnia at night or if you have a reference assignment. There's a whole lot of statistical information at the back, And I'd be glad to take any questions. Thank you. We have a couple people. It's starting to fill up here now. Council Member Stennett. Thank you, Chair. Mr. O'Meara, thank you for the brief overview of the CAFR. Given that we already have it published now and before the Council, the budget amendments for the fund balance are proceeding forward now. We're ready to approve them tonight. That's correct. And we have it all lied out. We have projects assigned to each one of those projects. We have the budget ready to be approved. Each of the managers of those projects have been notified to say that those dollars are available, and we're ready to support all of those projects between now and the end of the year. You've got communication down. That was the key factor I was going to ask. Have you notified the project managers or directors that the money will be coming and available? We have done that. Good. Thank you. That saves us a step because normally in the past we haven't done the best job of doing that. On this list of assignments, the one that troubles me the most is the pension reserve, $2.8 million. What are we doing? I asked this question back when we had the fund amounts discussion so that we don't have to have a pension reserve going forward and we budget the correct amount into our pension. Have we revised our number going forward from $20 million to the $23-ish million? I did not bring a schedule, but part of the information that we asked from Kavanaugh McDonald to the actuaries was to give us a projected amount for the next 20 or 30 years. And it varies depending on where they are on the funding, but based on the current staffing levels, to support that is $22 million to $20 million a year. And I can get with Scott Shapiro. We can share that schedule with you. Yeah, maybe we can do it in January, but see what the pension schedule should be. The other big factor of that is when we hire a new police officer or firefighter, do we know what amount we'll have to set aside in that pension so that we calculate that in the hiring process? So every officer we add, we know this obligation exists on the pension? Well, I intend to have that information at the tip of my tongue to make that known every time we have that conversation throughout the budget process. Because I think it's one of the key things we've lacked over the years as we hire them. It's nice to put 30 officers in the budget, but we don't also account for that pension obligation. That's how we got so far behind. Go ahead. Well, just to say, we now have a predictable way of putting a number to that. Before, when we had this huge catch-up, we now have the plan. We now have the change in the plan for both the participants as well as the government. So that number, which was very, very hard and almost impossible to predict, is predictable now, and we plan on doing that. Okay, so if we could have that in January, the pension discussion, so we don't maybe want to have a pension reserve going forward. And then on the health insurance, when do you anticipate doing that reset on the health insurance reserve to see if we need that $2 million? Is that a calendar year or budget year? Because the health plan is a calendar year. So, you know, I know I'd like to get us on that budget year as a health plan because I think it makes more sense. Well, we meet monthly and monitor the self-funded plan, and it's a moving target. One month we're behind, one month we're ahead, and so we're meeting monthly. And this is for fiscal year funding, even though it is a calendar year plan. So it's half a year at last year's plan, half a year at this year's plan, if you're talking about the health fund. But this number is for our financial reporting, which is the July through June. So we meet with BIM monthly and go over those projections. And they have an actuarial projection in there that says where they were projected to be. But then as the year goes by, we get closer to that. This was upon their recommendation based on where we were. And we'll just have to see what our experience shows throughout. Will we have the calendar year 2013 experience claims in January then? I think it takes them about 60 days for those claims to work through, so I think it's more the end of February before we'll know the 12-month of December. You'll be able to report back to this committee, hopefully, give us an update on the claim history so we can. That'll be good. All right. Thank you, Chair. Thank you. Council Member Kaye. Thank you, Chair. Bill, to follow up on the question about the health insurance reserve, that number is estimated to be able to cover the liability beyond what is in the present budget. Is that correct? That is correct. That's on the employer's side, our amounts that we have per enrolled person, as well as it's reflective of last year's experience. So we're waiting to see if this year is anywhere like last year in the actual experience of the claims on the plan. Okay, so is it also fair to say that what that covers is the high-end estimate of what the liability might be so that we are covered within the budget? Well, I wouldn't want to use the high-end estimate. I don't think we're that far covered, but it was based on a discussion with our consultants as to what would be a prudent amount to hold in reserve. Okay, and we will know whether that is all needed two, three months after January when we get... It'll be after June 30 when we actually have the expenses to pay. This is for the fiscal year expenses of our self-insurance plan. Let me try to clarify. The fiscal year which ended July, June 30. This is for the year that will end, June 30 of 2014. What Council Member Stenet was asking me for was the results of the calendar year health plan that ends December 31. We have a funding that is different 12 months than we have the experience plan. Okay, that helps me. I have one other question. I think back on the sanitary sewer fund. The capital replacement and maintenance reserve, again, can you explain a little bit more about it? I'm assuming that that's not about present budgeted projects, but it's a reserve for contingencies of things that, as it says, cap replacement and maintenance. Can you say a little bit more about it? If I could, I would like to send a follow-up email because it's actual words from the loan documents or the bond documents that are out there now. It's a calculation, and I can't quote you exactly how that's, but we can get you that explanation of how we calculate it. Okay, that would be helpful. Thank you. Thank you, Chair. Thank you. Vice Mayor Gordon. Thank you, Mr. Chair. Commissioner, thank you so much for your report. I don't have a question. Oh, great. What I wanted to say is how much I appreciate the work that you have done and your folks have done with the auditors to get the CAFR to us before we go on break. We, I know, had a couple years when you were not the commissioner, but when we received it in February. And this way we have it before we get into the budget season. and I just want to say thank you for the work to get that done. Well, I appreciate that, and I do want to thank all the finance, but specifically our accounting division and Director Cooper. They did a real yeoman's job in order to meet this. Thank you. We all appreciate it. Any further questions for Commissioner Romare? Seeing none, thank you very much. And then the last item on the agenda is items referred to committee. And Mr. Schoeniger, if you could go down through this and see where you stand. I'd be happy to, Council Member. The first item, Solid Waste Task Force, I think Council Member Stennett is going to wrap up in spring, end of the winter. We're going to reconvene in January and then hopefully wrap up by April. The next three items are relating to purchasing, and your task force is wrapping up. Right, yeah. Mr. Slayton is going to be giving us a letter here that we should be able to move forward hopefully in February with that. The activity-based costing, I just indicated to you in a private conversation that I'd be ready to talk about all these. This next item, the activity-based costing and financial efficiency, Councilman Lane is not here. I don't know what this, I don't really have anything to comment about this. We'll meet with him in the interim and see what he wants to do. I know he wants to keep this in committee. The Affordable Housing Trust Fund report that was referred by the Vice Mayor, I believe we're waiting on the homelessness issue. Council Member Kaye, could you kind of give us an update of what we can expect from that? The status of that has not changed. We're waiting for the report from the consultant and the recommendations from the administration about the best way to proceed. And then we'll know more about when it needs to be on this agenda. But it will come back. I mean, it's being held until we have that additional information. And then, Council Member Ford, we've kind of lumped these two in here. Are you good with waiting until that comes back then? I guess so, Council Member Kay, Council Member Elliger. I guess the only issue I want to be clear as to the Affordable Housing Trust Fund's impact on this committee is simply the funding source. It's simply the funding source. I can maintain patience and deference in the interim of the study that the mayor's office is doing and the Office of Homelessness. But when we, as a budget committee, discuss this issue, it's solely for how we would fund it. And I know every year they always have a timetable by, and I think it's March, is it not, that they have to have it to the Department of Revenue, so by July 1st, I think. So if we push that envelope again, we have to be cognizant of that. I think that's right. And I think, yes, sir. Councilman McKay. If I can add one other thing. Because the recommendation that came from the Mayor's Commission on Homelessness incorporates the Affordable Housing Trust Fund, I believe it will make sense to look at the more encompassing proposal first, because it may answer the question of funding for Affordable Housing Trust Fund as well. And depending on the status of that, we may want to look simply at the Affordable Housing Trust Fund. Thank you. Thank you. Ms. Schoeninger. The franchise fees, which was referred by Council Member Gordon, and I'm going to let the Vice Mayor speak to it. I thought you were done. I think we're finished with this, aren't we? I move to remove it. We have a motion to remove, and we have a second by Council Member Farmer. Any discussion? All those in favor, say aye. All those opposed, we will remove that one. Thank you. The debt management policy review of this committee and then the full council adopted the policy. I don't know if you wanted to keep it in the committee or if there was still some information this committee was looking for. Council Member Stenet, I will be reading that out today and we'll be hopefully passing that in the work session. Do I hear a motion to remove? We have a motion to remove by Council Member Stenet, a second by Council Member Henderson. Any discussion? All those in favor, say aye. Aye. All those opposed, that passes. We'll remove that one. The refunding urban services property tax issue that was again referred by Councilmember Stenet, the administration is supposed to come back to this committee in January with some information about policy revisions. The increasing of certain parking fines, this was referred by Councilmember Gordon, but it was an issue from Councilmember Myers, I believe, and the parking authority has provided some information on what action they took, and they are prepared to discuss this with the committee in January, if you so desire. And then this last issue, again, referred by Gordon, but I think referred by one of the links, the reduction or elimination of LexArts financial support in exchange for allowing the Downtown Arts Center to keep program revenue. I'll be honest, I haven't had any time to spend on this issue, But I'm sure a conversation or two with Mr. Clark or his successor. Vice Mayor? And if I could ask a question, I quite honestly don't remember which link. Was this the General Services? General Gov? Was that our link? Yes. Oh, okay. It's been a while. And just when we talk about this, it occurs to me that the financial support, the main chunk of the financial support we give to LexArts is the arts fund, not operations. So we have to be sure and figure out what we mean by this. Council Member Clark, do you want to give some input on this? Yes, let me try to explain. and I think the idea was that Lexar is giving the government part of their revenue. So the idea was not to give them part of our budget, but let them keep their revenue. And that was the idea. But at the same time, with the resignation of Jim Clark, I think it's something that we need to continue to discuss probably outside this committee until we have a new person in that position. And if I might add, if we do get around to discussing this, if we can keep separate the support we give them for operations versus the chunk of money we give them to give other organizations, the arts fund. They're two separate things. Thank you. Thank you. Council Member Beard. Thank you, Mr. Chair. This thing has been going around in circles for years. It seems like this whole thing about Arts Place and the downtown Arts Center and such. I thought there was a requirement, and maybe, Bill, you may know something about this, a requirement as relates to the whole Ben Ally mess, the courts. You're taking it way back. Yes, it goes way back. As to, we worked with the state on some type of a situation. It was long before I was even involved in government. I was just aware of that through my involvement with the Fund for the Arts, actually. But there is a, and maybe the law needs to dig this out, there is a requirement that the monies, net monies that we're involved with as it relates to their ticket sales and such, that we can't cut them off. I think it's something we can research, but I think we have fulfilled our obligation, and I think the last one was the Cultural Center, and I think we certainly can have Paul do the historical background, see if there's anything that we have obligations to. That's fine as far as we're concerned, but is it going to be that fine as far as the state is concerned? Oh, no, we'll certainly make sure that we stay within what the state we've required to do. Do you have any input to that? No, it goes back to Mayor Basler and Mayor Miller, so there has some years to it. I would have to ask law to research that and see where we are. If you two could kind of get together and do that, we'd appreciate that. All right. Thank you. Anything further? With that, I will entertain a motion to adjourn. We have a motion and a second. Any discussion? All those in favor, say aye. All those opposed, we stand adjourned. Thank you. Thank you.