Minutes for May 23, 2005
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DRAFT
Chairman Bruce Bolon called the meeting to order at 1:00 p.m.
Mr. Bolon requested a moment of silent prayer. Amen
Mr. Bolon led the Pledge of Allegiance.
Ms. Weglein called the roll. All Trustees were present. No legal counsel was required.
Yvonne Claiborne of Bray, Beck, & Kotter presented the audit for fiscal year ended September 30th, 2004. Florida Statute requires an annual audit. The Auditor General requires a certain presentation for Barefoot Bay, including the financial condition assessment. Ms. Claiborne gave the Board bound copies of the audit report and provided a public handout with a brief over view of the audit. The audit was conducted in accordance with GASB 34 (Government Accounting Standards Board). The two new statements concern net assets and activities. The statement of net assets provides the District with an unqualified opinion. Supplementary information that was prepared from audited information has not been audited.
The compliance report (page 37) deals with laws concerning compliance with laws, rules and regulations, and internal controls. Budget appropriations were exceeded by $122,000 because of the confusion at the end of the fiscal year. Normal budget processes where the budget was reevaluated for needed budget amendments did not take place. That was a compliance issue. Weakness in cash management controls allowed a period of time when the bank reconciliations were not performed. When they were subsequently performed it was noted that cash transactions were either doubled in the District’s general ledger or omitted completely. Ms. Claiborne recommended the district implement an oversight check. That insures the bank reconciliation is performed.
In the management letter (pages 39-42), comments on internal financial reporting basically repeat the compliance letter and say if you have cash transactions that are either digitated or not pasted into the general ledger, then the internal financial reports the Board has been receiving are meaningless. Regarding a physical inventory of capital assets, Ms Claiborne feels that there has not been comprehensive inventory taken in a while and no reconciliation list has been provided to the auditors.
Regarding general ledger posting to capital assets, the District has a policy that says [this] is what will be considered a capital asset, this is what the district will carry on its what the District will depreciate in accordance with GASB 34 . In Fiscal 2004 there were many small money transactions that were really repair and maintenance.
The District needs to get good meaningful data on specific budget line items, and ensure the District is getting a handle on specific budget capital purchases (ex: specific improvement to a building). When the auditors extracted meaningful data from the capital outlay account, they found $ 20,000 budgeted for an improvement on “A” Building but $50,000 spent. Capital outlay is an easy way to spend more than anticipated on improvement because the buildings are 30 years old. The District needs to identify where the additional funds to complete the repairs are coming from.
For fiscal year 04-05, the District budgeted a certain amount out of reserves to balance the budget. At the end of fiscal year 2004 the District did not have enough in reserved unencumbered funds to meet that requirement. The District needs to implement some immediate cost controls in order to keep the District from a state of financial emergency. The District has had the cash flow to carry the hurricane expenditures thus far. Presently, the District does not have an adequate cash reserve cushion it will need on an on-going basis. Ms. Claiborne commented the District needs to develop a reserves policy that the District will keep a certain amount of months in our unreserved and restricted fund balance at all times. As our contingency fund, create specific circumstances under which the reserve can be dipped into. When the district uses the money, there needs to be a plan to replace it so the financial health of the District is ensured.
The Debt Service fund holds the bulk of the cash balances to service repayments of the bonds (loans). The Recreation fund is holding $447,300 this year which is down from last year. The Stormwater fund contains $167,000 worth of funds collected and not expended. The District intends to use the Stormwater fund for the weir project. The general fund balance is within $100.00 of last year.
The most notable change is the Recreation fund. The difference in the year-end balance is the primary reason for the deteriorating financial condition comment unless the District has a plan to replace the fund balance. Ms. Claiborne advises the Board to keep in mind that while some of the fund balances may look healthy, some of them are restricted [i.e., the Stormwater fund and the Shopping Center]. Only 19% of the District’s assets are unreserved; 47% are designated to the debt service. 68% of the Governmental revenues come from the District assessments. Services represent 16 %; Membership 5%, and miscellaneous revenues are about 11% of the Governmental revenues.
In Governmental expenditures, the chart illustrates spending from FY 2003 compared to FY 2004. Debt service stayed consistent, capital outlay is a little less, recreation spent a little more, public safety was about the same. Government had the largest increase in expenditures.
Mr. Bleau asked if the reserve fund could be used for hurricanes. Ms. Claiborne replied the reserve fund could be used for catastrophic events like replacing the restaurant in the Shopping Center. Traditionally the District will maintain a contingency fund and a reserve fund separately. Ms. Claiborne advised the Board to designate these funds so they don’t become a “slush fund” for a future Board. Mr. Glashauser asked if undesignated funds were like savings account. Ms. Claiborne explained that in accounting terms they’re a bank account. But when [you] look at the accounting terminology and all the bills that have to be paid, and all the legal restrictions that have to be met on that cash [such as bills that are already incurred], the district may have $500,000 cash but $400,000 is for bills, which leaves only $100,000 for emergencies. Mr. Nunez asked if there was a budgeted unencumbered, unexpended fund at the end of the fiscal year, could 80% of those funds be automatically rolled over in a hurricane and/or capital fund? Ms. Claiborne responded the 80% rule would not apply anymore because once the [fund] is funded, it can be used only if the requirements for its use are met. Mr. Nunez asked if there would be benefit if the financial officer categorized invoices as they came in so accounts payable would know where to enter them in the system. Ms. Claiborne responded that if the officer has time and ability to do certain analyses on the capital outlay account. This should be analyzed in detail no less than quarterly.
Mr. Glashauser asked if using the “bank account” for unexpected repairs such as might occur in Building A would require a resolution from the Board. Ms. Claiborne responded that unforeseen circumstances should be built into the 5-year capital outlay plan. Anything having to do with the “bank account” [savings that dealt with Tallahassee] requires a resolution. Mr. Bailey asked about procedures that are legal that would avoid having to deal with a resolution in order to use that money for construction. Ms. Claiborne responded there should be supplemental documents supporting the long-range plan showing the project was already in the current budget by adoption. If a project needs funding that wasn’t in the original budget, new revenue must be found.
Mr. Bolon commented that in past years contingency funds were used for other purposes. The time has come for this Board to change that. Ms. Claiborne commented that other special districts in Florida were experiencing much the same process as Barefoot Bay. She offered to contact the other special districts and get copies of the new resolutions and ordinances they are formulating to handle it. She said she would bring the information to Mr. Hunt in hopes it would help the District quickly implement the Board’s intent. Mr. Bolon commented that currently the District is solvent. Ms. Claiborne responded that FEMA takes an average of 16 to 18 months to pay claims. This is not the best way to fund cash flow.
Mr. Bleau asked if [the audit report] had been presented to the State. Ms. Claiborne responded that once the audit report has been accepted, it must be filed with the State within 45 days of [our] meeting today. Mr. Bleau referenced page 2, general revenue assessments. Ms. Claiborne responded that the number that should be there is $2,695,102. She will replace that page. The number appears correctly on page 5.
There was a general discussion of the IMS software. Ms. Claiborne advised the Board that it was time to replace IMS because its capability does not reflect the requirements of the District’s accounting system.
Mr. Bolon entertained a motion to adjourn the audit portion of
the meeting. Mr. Glashauser made the motion to adjourn Second Mr. Bailey. The
audit portion of the meeting was adjourned at 1:43 p.m.
The budget portion of the Barefoot Bay Recreation District commenced at 1:55 p.m. Mr. Bolon requested Ms. Weglein to call the roll. All Trustees were present. No legal counsel was required. Mr. Bolon stated this was a workshop to discuss the proposed 2005-2006 budget, and that audience participation would take place in the budget meeting on Monday, June 6th at 7:00 p.m.
Mr. Hunt commented the workshop was primarily for the purpose of making changes to the budget according to the Board’s intent. Mr. Bailey asked if the $7.50 raise in the assessment fee would encompass the CIP’s that were needed. Mr. Hunt replied the breakdown is $1.00 for operations and $6.50 for capital in this particular budget. Mr. Nunez felt the Board needed to discuss capital outlay funding overall. He commented if the tennis courts were not being refurbished this summer, it might as well wait until July 2006. Mr. Bailey pressed for a definite schedule to pinpoint the beginning dates of each project, including Pool One. Mr. Bolon explained the purpose of the $6.50 increase is to make facilities ADA compliant, Pool One renovations, and the golf course maintenance facility. Mr. Bailey commented the seawall needs to be done first. Mr. Nunez asked if the seawall actually had an impact on Pool One. Mr. Hunt replied that some of the Pool One repairs, such as the electrical system and the piping, are the result of the structure being 30 years old. Mr. Bleau (tape unclear) . . . . . . . Mr. Hunt responded that he had put $125 [thousand] into this year’s budget, and $125 [thousand] into next year’s budget. Mr. Nunez addressed revenues for a contingency fund. Mr. Hunt responded that a capital improvements fund can be established with a line item that states “reserved for contingency” and give it a restriction that says money can be accessed only by vote of the Board or resolution. Ms. Weglein concurred the seawall should come first, Pool One next. Ms. Weglein urged that the assessment fee increase be held to a minimum because of residents on fixed incomes. Mr. Smith commented that the projects need to be done now with the FLC loan to avoid inflated costs in the future that might require additional funding. Mr. Nunez asked if the budget would include the total amount of money the pier would cost to rebuild or just the $50,000? Mr. Hunt responded the total amount is included in the budget, and $200,000 is expected from FEMA. The District is responsible for the engineering portion of the project. Mr. Helmerich commented that to repair the seawall and Pool One core boring will be necessary. He feels that these two projects alone will cost an “astronomical” amount of money. Mr. Bleau commented that revenue would also have to be found to hire a competent project manager. Mr. Bolon commented that somewhere in last year’s budget there had been approximately $35,000 designated for the dune crossover. Mr. Glashauser asked since that money had not been used for the dune crossover, did it go back into undesignated funds? Mr. Hunt responded the undesignated fund balance, which the auditors identified as approximately $335,000 left at the end of 2004, is any money appropriated for a capital project and would fall back into that account. Last year staff budgeted $342,000 for operations. There was no effort made to restrict funds so they couldn’t be rebudgeted and accumulated.
Discussion ensued regarding priorities. Mr. Bolon commented the Board needs to move forward one project at a time, and at least get started instead of bogging down in the immensity of all that needs to be done. Mr. Carillion commented that even when projects are started “nothing” gets finished. Mr. Bleau commented that priorities 1-5 on the survey were going to cost $1,000,000. Mr. Hunt asked the Board if it wished for him to come back with a separate, itemized capital improvements budget. The Board responded “yes”.
Ms. Weglein referred to the ADA compliance asking if Mr. Hunt was aware of any ADA equipment that can be rented. Mr. Hunt replied he was not aware of temporary equipment. Ms. Weglein commented on the swim tickets and Lounge cover charge concept. She feels the assessment fee increase should take care of that. Ms. Weglein stated that the pool host position needs to be kept in place. Mr. Glashauser concurred. Ms. Weglein asked how much other parks like ours were charging? Mr. Hunt agreed to find out that information for Ms. Weglein.
Mr. Bolon commented that many renters don’t get badges. He feels that as long as the Bay is a deed restricted community, everyone who lives here should have a badge and be able to show it at any time.
The discussion turned to cost of living increases. Presently the rate is 2%. Ms. Weglein asked Mr. Hunt if, when he surveyed other districts, he could get a breakdown of what their fees covered. Mr. Nunez suggested a relief rate for residents on a really low fixed income. Mr. Helmerich commented it would be difficult to ascertain which residents were truly low income. Mr. Hunt responded there may be a statute that requires the same assessment for everyone.
Mr. Bolon entertained a motion to adjourn. Mr. Glashauser made the motion to adjourn. Second Mr. Bleau. The meeting adjourned at 3:00 p.m.
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