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DeKalb County, Illinois |
Minutes of the
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The Administrative Services Committee of the DeKalb County Board met Wednesday, June 2, 2004 at 7:00 p.m. at the DeKalb County Government Administration Building Conference Room East. Chairperson Sue Leifheit called the meeting to order. Mr. Stephen Faivre, Mr. Jeff Metzger, Mr. Dennis Sands, Mr. Roger Steimel, Ms. Ruth Anne Tobias, Mr. Frank Van Buer, were present. Mr. Joseph Wiegand and Mr. John A. Wilson were absent. Also present were Ms. Patricia Anderson, Ms. Joan Berkes-Hanson, Mr. Ray Bockman, Mr. Ken Campbell, Ms. Julia Fauci, Ms. Julia Fullerton, Mr. Gary Hanson, Mr. John Holiday, Ms. Christine Johnson, Ms. Karen Kahl, Mr. Steven Kuhn, and Mr. Ronald Matekaitis. APPROVAL OF MINUTES Mr. Steimel moved, seconded by Mr. Sands to accept the minutes of May 5, 2004. Motion carried unanimously by a voice vote.
APPROVAL OF AGENDA Mr. Frank Van Buer moved, seconded by Ms. Tobias to approve the agenda. Motion carried unanimously by a voice vote.
PRESENTATION OF FY2003 AUDIT Chairperson Leifheit called on Mr. Hanson to introduce Mr. Fred Lantz, a CPA and partner with Sikich Gardner & Co., LLP who prepared the County’s audit. He also introduced Ms. Christine Johnson, County Treasurer, Ms. Pat Anderson from the Business Office at the Rehab & Nursing Center, and Ms. Karen Kahl, Accounting Supervisor, all who contributed their work in the audit process. The members were requested to bring their copy of the documents with them to the meeting. As Mr. Hanson welcomed him, he informed the committee that the auditors have been with the County for seven years and praised Mr. Lantz for his actual presence at the County as well as his firsthand knowledge of the County’s audit. Mr. Lantz thanked the chairperson and members of the committee for inviting him to the meeting. He reviewed the County’s CAFR (Comprehensive Annual Financial Report) for fiscal year ending November 30, 2003 with the committee. He reported a total of nine documents were issued of which two were offered for the committee’s review and approval. Mr. Lantz complimented the County and the entire County staff on the work they have done. The County was required to implement the GASB Statement #34 (Governmental Accounting Standard’s Board) policy which completely changed the reporting as done in previous years. It was a big challenge for the County but was completed on time, within the time frame, within or under budget and put together a very good, accurate set of financial statements for the County as a whole. He urged the committee to read pages 3-16 which discusses the overall County’s financial position and has a lot of very usual information. Using the Table of Contents, he reported creating two new sets of financial statements: 1)The Basic Financial Statements including Government wide (Assessments & Activities) which consolidates all the County’s funds and account groups in two columns and 2) Fund Financial Statements which offers traditional information historically. He reported from the Financial Section, that the "Independent Auditor’s Report" gave a clean unqualified opinion on the financial statement of the County and has been prepared in accordance with general accepted accounting principles. He also noted that there were no major weaknesses in the overall internal control over the financial reporting and no reportable conditions over grants and regulations of which the County should be proud. Mr. Lantz next guided the committee through the Statement of Net Assets. This is the first time a set of consolidated financial statements for the County as a whole is on a one page, three column report resulting from GASB Statement #34. Governmental Activities includes the County’s Governmental Funds, plus the Internal Service Funds, plus Forest Preserve District, plus the Public Building Commission. The Business Type is the Nursing Home Fund. The Total column is a true consolidated total for the County as a whole. As of 11/30/2003 the reported total assets on a county-wide basis showed more than $102 million on an annual basis. The biggest change is the Capital assets which depreciates and retroactively depreciates roads, bridges, and storm sewers, using historical costs not replacement costs. From a historical cost standpoint, some of the county roads have very low cost value due to age. Likewise some of the land right-of-ways, have nominal values because at the time the land right was acquired, the low dollar value or as in some instances, the County doesn’t own the land beneath the road. The key focus to at look is Liabilities and the Net Assets. The County ended the year with $17,181,500 in unrestricted net assets, which is a very good position for the County to be in. Conversely, the State of Illinois reported $30 billion...in brackets. The eight restrictions under the Net Assets are third-party legal restrictions as to what can be done with the funds. Mr. Hanson noted that the Capital Assets refers to the next item on the agenda, the Capitalization Policy. Overall, Mr. Lantz reported it was a very good year for the County from an economic research standpoint as well. Next, he translated the new Income Statement. It was developed by state governments back in the 1970's but wasn’t really ever accepted. GASB has brought it back and reinvented it. It shows the total cost of all fixed assets. The only department that generates any revenue from their operations is the Nursing Home. The key line on page 19 is the Changes In Net Assets. It tells you if the County is economically better or worse off as a result in the transaction entered into this last year. He stated, that the County is doing very, very well and in sound financial condition. Most members were familiar with how the information was historically presented in the past and he briefly showed them where they could find those documents. He took the opportunity to go over the three primary pension funds: IMRF for Non-uniformed County Employees IMRF for Forest Preserve District Employees Sheriff’s Law & Enforcement for uniformed employees He informed them of the key column (Fund Ratio). The contribution rate is less than 1% of covered payroll which is an incredibly low contribution rate but it is because of using up reserves. The rates will be much worse for the next five years because of the stock market performance. IMRF did much better this year reporting about a 13% return and cautioned that another five years would be needed. He concluded his presentation and offered to address any questions the chairperson or the committee might ask. He followed up with the Recommendations for Improvement. There were no reportable conditions for the County.
FIXED ASSETS CAPITALIZATION POLICY Mr. Hanson presented the committee with the policy that had been drafted August of 2003 (a copy of which will be placed on file along with these minutes in the Finance Office). He reported holding off formally adopting the policy until the issues in the audit were covered that they needed to identify. He provided an overview of criteria that went into building up the capitalization in the audit, values for the fixed assets, some of the assumptions they made, and the thresholds they used. He wanted the committee to note Item #5 which is the dollar threshold. It eliminated lots of things that they would have had to depreciate otherwise by setting it where they did. This is the policy they used this year. Mr. Sands said he would have liked to have reviewed the material before the meeting. Chairperson Leifheit stated that they do have two weeks to go over the information. Mr. Bockman added that the policy is subject to review and modifications by the board at anytime. Pat Anderson commented that the Nursing Home follows a different policy. Mr. Hanson suggested adding Item #14 stipulating the Nursing Home out of this policy, stating their governing board already had a policy in place.
FY2005 BUDGET CALENDAR Mr. Hanson, provided the committee with the FY 2005 Budget Calendar (and is attached to these minutes as Appendage #1). He created the calendar as in past years just modifying the dates as they change. He described the calendar as proactive. It moves forward until there is an interjection for change. Opportunities for change are available at that point. By November 17, 2004 the budget will need to be approved along with a tax levy ordinance, recommending adoption of the Budget Calendar.
ADJOURNMENT Chairperson Leifheit thanked everyone and then heard a motion to adjourn.
Respectfully submitted,
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_____________________ DEKALB COUNTY GOVERNMENT FY 2005 BUDGET CALENDAR June 2, 2004 Administrative Services Committee adopts budget calendar and format. July 1, 2004 Budget request forms distributed to all departments. County Board members also receive a form to submit for areas that they feel should be specifically addressed and/or studied. This allows five weeks to return forms. July 8, 2004 The County Administrator and Deputy County Administrator begin to meet with County Board members (one at a time), for those who so desire, to discuss the budgets for their Committees and any special areas of interest. Aug 5, 2004 All budget request forms from Board Members and Department Heads are due back to the Finance Office. Aug 9, 2004 The County Administrator and Deputy County Administrator begin to meet with each of the departments, if necessary, to discuss potential budget changes that are needed in their departments because of legislation or service needs. Sep 1, 2004 Budget Work-Books distributed to County Board Members. This workbook would include copies of all documentation submitted by Departments. Sep 1, 2004 The Administrative Services Committee receives a recommendation on the entire budget from the County Administrator and Deputy County Administrator. The proposal will include recommendations for department line-items which could be changed through an appeal process open to both Board members and Department Heads. Sep 2, 2004 Board Committees begin budget discussions. Focus will be primarily on areas which are appealed from the Administrative recommendation. Sep 16, 2004 Last day for Board members or Department Heads to file an appeal concerning Staff budget recommendations. Appeals will then be reviewed by the appropriate Board Committee. If the Committee concurs with the appeal, it will then be forwarded to the Administrative Services Committee for a decision. (This cut-off may require special meetings during September.) Sep 30, 2004 Board Committees complete reviews of any appeals which were filed concerning budgets for which they have over-sight. Oct 6, 2004 Administrative Services Committee makes final recommendations before placing the budget on file for public inspection. Oct 20, 2004 County Board places budget on file for public inspection. Oct 26, 2004 Publish notice of public hearing on proposed budget and tax levy. Nov 3, 2004 Administrative Services Committee hosts public hearing on the proposed Budget and on the Tax Levy Ordinance. Any final budget adjustments are made at this time. Nov 17, 2004 County Board adopts Annual Budget and the Tax Levy Ordinance prior to the start of the fiscal year December 1, 2004.
Appendage 1 DEKALB COUNTY GOVERNMENT FIXED ASSETS CAPITALIZATION POLICY June 16, 2004
1. The primary purpose of this Capitalization Policy is to (a) provide direction to staff for handling discretionary areas within generally accepted accounting principles for governmental entities as applied to fixed assets, and (b) to inform the public and readers of the County’s financial statements of decisions made and implemented where such discretion is allowed within the accounting standards. 2. The intent of capitalizing assets owned by the County is to spread the cost of an asset over the useful life of the asset rather than show the entire acquisition cost as an expense in the year it was acquired. 3. The capitalization of an asset is accomplished by (a) recording the full value (cost) on the balance sheet, (b) showing each year, as an expense (depreciation), that part of the asset which is used (consumed) during a particular twelve month period, and (c) tracking on the balance sheet the sum of the annual expenses (accumulated depreciation) charged since the asset was first acquired and placed into service. 4. Fixed Assets with a value at or over $500 and an anticipated useful life in excess of one year will be tracked on the County’s computerized inventory system and an inventory tag will be applied, where practical, to those items. 5. Fixed Assets will be capitalized if the expected useful life exceeds one year and the value is at least $10,000, except where the value must be at least (a) $30,000 for computers and related equipment, or (b) $50,000 for traffic control signals per pole, or (c) $50,000 for land improvements. 6. Fixed Assets exceeding the capitalization parameter will be reported on the County’s Fiscal Year-End Financial Statements by increasing the value of total assets based on the historical cost in the year acquired. If an item is donated, it will be recorded at its estimated fair value at the time of the donation. 7. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life will not be added to the value of the asset. 8. Fixed Assets with a value under the applicable capitalization parameters will be expensed in the year purchased and recorded as such on the financial statements.
DeKalb County Government
9. Fixed Assets that are capitalized on the Financial Statements will be depreciated starting with the fiscal year following acquisition. 10. The straight-line method of depreciation will be used. 11. The projected useful life of the asset is set forth in Attachment A. Said attachment may be amended from time to time by the Finance Office. 12. For purposes of depreciating assets, no salvage value will be anticipated. 13. Definitions and Assumptions are set forth on Attachment B. 14. The DeKalb County Rehab & Nursing Center is exempt from this Capitalization Policy to allow passage of their own policy which better conforms to their specific industry standards. Appendage 2
Attachment B June 16, 2004
DEKALB COUNTY GOVERNMENT FIXED ASSETS CAPITALIZATION POLICY
DEFINITIONS AND ASSUMPTIONS
1. A bridge is defined as a structure over a waterway where the length is 20 feet or more and is capitalized separately from roads. 2. A culvert is defined as a structure where the length is less than 20 feet and the cost is capitalized as part of the cost of the road. 3. Driveways along a road are included as part of the cost of the road. 4. Curbs are included as part of the cost of the road. 5. The amount of land carried on the balance sheet for roadways may appear low for the number of miles of roads maintained. However, the land for most roads and road right-of-ways is used by the County under easement agreements and the land itself is owned by adjoining land owners. 6. Interior roads and parking lots are treated as Land Improvements and depreciated as such.
R E S O L U T I O N
WHEREAS, the Governmental Accounting Standards Board issued Pronouncement #34 which requires governmental entities to capitalize and report Fixed Assets on the annual audited financial statements, and WHEREAS, the Fiscal Year ending November 30, 2003 was the first year that this requirement was in effect for DeKalb County Government, and WHEREAS, it is desirable to adopt a Capitalization Policy so that readers and users of the County’s financial statements will be aware of the decisions made regarding the accounting for all fixed assets especially in the areas where the accounting standards allow for discretion, and WHEREAS, the Administrative Services Committee has reviewed a Capitalization Policy and now recommends that the County Board adopts said policy; NOW, THEREFORE, BE IT RESOLVED by the DeKalb County Board that the attached Capitalization Policy is hereby adopted and that all audited financial statements, beginning with the November 30, 2003 fiscal year report should reflect the parameters of this policy.
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