Budget & Finance Committee Meeting

Summary

Meeting Overview

The Urban County Council's Budget & Finance Committee met on January 27, 2009, at 1:00 p.m. at the Government Center, with Kevin Stinnett presiding. The committee addressed three agenda items during the session, including the election of a committee chair, which was approved. Two additional items were presented on an informational basis: Financial Discussions led by Koch and Internal Audit Reports presented by Sahli. The committee took two motions to a vote and heard six public comments during the meeting.

Attendance

The following individuals were present at the meeting on January 27, 2009:

• Jim Gray
• Linda Gorton
• Chuck Elfinger
• Ed Lane
• Kevin Stinnett
• George Myers
• Andrea James
• Julian Beard
• Peggy Henson
• Bruce Sahli
• Kina Koch

No members were absent or late.

Votes and Decisions

Motion to Nominate and Elect Kevin Stinnett as Chair of the Budget & Finance Committee 1:00

Motion by Ed Lane, seconded by Tom Blues. The motion passed unanimously. All nine members voted in favor: Jim Gray, Linda Gorton, Chuck Elfinger, Ed Lane, Kevin Stinnett, George Myers, Andrea James, Julian Beard, and Peggy Henson. No votes were cast against the motion, and there were no abstentions.

Motion to Appoint Ed Lane as Vice Chair of the Budget & Finance Committee 1:00

Motion by Kevin Stinnett. The motion passed unanimously. All nine members voted in favor: Jim Gray, Linda Gorton, Chuck Elfinger, Ed Lane, Kevin Stinnett, George Myers, Andrea James, Julian Beard, and Peggy Henson. No votes were cast against the motion, and there were no abstentions.

Budget and Financial Actions

The meeting addressed three financial items requiring budget amendments and purchases:

Audit of Community Corrections Purchasing Activities An amendment was approved to provide funding to the Office of Internal Audit for an audit of Community Corrections purchasing activities. [Specific dollar amount not specified in meeting materials]

Security Audit of Jail Management System An amendment was approved to fund a security audit of the jail management system, to be conducted by the Division of Computer Services. [Specific dollar amount not specified in meeting materials]

Kronos Timekeeping System Implementation A purchase was approved for implementation of the Kronos timekeeping system through Kronos Inc. [Specific dollar amount not specified in meeting materials]

Public Comment

Six speakers addressed the committee on January 27, 2009, raising questions about audit transparency, procurement practices, purchasing policy compliance, and financial reporting.

Audit Report Transparency

Andrea James requested that full audit reports be included in future committee packets rather than summaries only, to ensure transparency and public access to complete information. 53:50

Procurement and Oversight Concerns

Julian Beard expressed concern regarding a $120,000 jail management system (JMS) project awarded to the JMS developer in 2005. He questioned whether the project was subject to a bid process and noted the lack of oversight surrounding the award. 1:04:39

Purchasing Policy Compliance

Linda Gorton asked whether divisions other than Community Corrections were exempt from standard purchasing policies. She was informed that no divisions are exempt from these policies. 45:25

Internal Audit Process

George Myers inquired about the process for recommending changes to ordinances or policies. He was told that such recommendations are made through internal audit reports submitted to the council. 1:05:10

Financial Reporting

Peggy Henson requested a breakdown of year-to-date expenditures for each division. The committee confirmed that such reports are available through PeopleSoft reports. 29:51

Agenda Suggestions

Jim Gray suggested adding International City/County Management Association (ICMA) updates to the regular agenda to track progress on fixed and variable cost analysis. 30:29

Appointments

The following appointments were made during the meeting:

• Kevin Stinnett was appointed to serve as Budget & Finance Committee Chair
• Ed Lane was appointed to serve as Budget & Finance Committee Vice Chair

Contested Items

Lack of Competitive Bidding for Jail Management System

Council members raised significant concerns about a $120,000 project that was awarded to a small local developer in 2005 without a competitive bidding process. The heated discussion centered on the appropriateness of this approval, particularly given that the decision was made without IT expertise review or formal contract evaluation. Council members questioned why such a substantial expenditure proceeded without standard procurement procedures designed to ensure accountability and value for public funds.

Discretion in Community Corrections Account Management

An audit uncovered that the Community Corrections director held substantial discretion over high-volume accounts, prompting heated discussion about accountability and transparency in fund management. The audit findings raised concerns about the extent of individual authority over these accounts. However, the director claimed to have requested the audit specifically to establish proper controls and safeguards, suggesting the review was initiated in good faith to address potential gaps in oversight procedures.

Election of Committee Chair

1:00

Ed Lane moved to nominate Kevin Stinnett as Chair. The motion passed unanimously, and Stinnett assumed the position.

Following his election, Stinnett appointed Ed Lane as Vice Chair.

Financial Discussions - Koch

Kina Koch presented financial data covering November and December 2008, detailing both revenue and expenditure performance 2:01.

Financial Performance

Koch highlighted strong revenue performance during the period reviewed. However, she warned of several upcoming financial risks that could impact the organization's fiscal position.

Identified Risks and Challenges

Koch identified two primary concerns: - Potential refunds resulting from business returns - A projected drop in payroll withholdings due to retiree payouts

Administrative Actions

In response to anticipated budget pressures, the administration implemented immediate cost-control measures: - A freeze on professional services expenditures - A freeze on food expenditures

The organization is also preparing for significant budget reductions in FY10 (Fiscal Year 2010).

Participants

The discussion involved multiple stakeholders, including Andrea James, Jim Gray, Linda Gorton, Chuck Elfinger, and Julian Beard, in addition to Koch's presentation.

Outcome

This agenda item was informational in nature, with Koch providing the board and administration with current financial data and advance notice of anticipated challenges and the measures being taken to address them.

Internal Audit Reports - Sahli

Bruce Sahli presented findings from an internal audit of the Division of Community Corrections 32:37. The audit identified several areas of concern requiring management attention and oversight improvements.

Key Findings

The audit revealed a lack of oversight in three account areas: - Phone accounts - CAP (Community Accountability Program) accounts - PAF (Pretrial Assessment Fund) accounts

Additionally, the audit identified risks associated with the jail management system that required addressing.

Recommendations

Sahli's audit recommendations included: - Closing the phone account - Moving funds to the general fund - Implementing a new IT system to address jail management system risks

Management Response

Director Bishop confirmed that actions were already underway to address the audit findings. Bishop emphasized the importance of transparency and oversight in responding to the identified deficiencies, indicating a commitment to implementing the recommended changes and strengthening internal controls.

Participants

The discussion involved multiple stakeholders, including Bruce Sahli, Director Bishop, Linda Gorton, Andrea James, George Myers, and Julian Beard.

Outcome

This agenda item was presented as informational, with the audit findings acknowledged and management's commitment to remedial action confirmed during the meeting.