Rough transcript-listen to the audio for exact wording.
Auditor: Okay, i'm going to go over a few things and I'm not going to go over the financial statement in detail .. but.. if you ever want me to sit down with you and go over the financial statements in detail, I will do it at any time but I think when we do it we cannot have a quorum because it won't be a regular meeting. ... Remember, I work for you. The first thing I want to bring your attention to is p 39a. Kevin got a letter from the Texas Water Development Board .. this law, this section.. looks for 15-20 years and now they're enforcing it. It's a statement saying that the money and fees that you collect from the sale of (??) is only used for utility purposes, the protection and distribution of water . I'm showing them we collected $481,000 in water fees and we spent a total of 1.7 million, which included depreciation of $866,000. It really went up because we capitalized the water distribution system and the water treatment plant after the net infiltration system was completed. So now you do not have any construction in progress on the books. Let's go to page 21 and 22. If you look at the bottom of page 21, last year we had $32 million in construction progress down to 1.92 now That 32 millioin was moved from construction progress into capitalized assets. Most of it went into the water treatment plant and the distribution system. If you ever want to see a breakfown of that, I have a detailed appreciation schedule. That increased your depreciation several hundred thousand dollars, I can't think of the exact figure. depreciation expense if you look on page 22 59,607 is direct expense park and recreation and 866,361 is direct expense of water and sewer. There's another 184,500 that's not allocated to anything, just general depreciation. When we capitalized the water treatment plant and the distribution system, we spent all the money we got from the Texas Water Dev Board. That money's been spent. All we have now is the water line extensions. We do not need the capital projects fund anymore. My recommendation is we close the capital projecs fund and all construction be run through the general fund. That's the way it's done. If the school passes a bond issue to build a school that's done in the capital projects fund, once that's completed they no longer use the capital projects fund. If there's any money left.... that goes into debt service to pay off the debt. .. If you don't need a fund like the capital projects fund, you close it out. .. the way I would do it, we can do it either way, close it out right now, have a little of the capital projects fund .. the only expense we're going to have out of the capital projects fund is the water line extensions.
Board: Next agenda item, to close the account
Board:What if we got to a point where we're going to build another pump station. water tower
Auditor If we did like we did the Texas Water Development Board, we open up a new capital projects fund. You can have one, you can close it, it's just like a school. They build one school it's complete, they don't have the capital projects fund, they build another school , we have a new capital projects fund.
Board: If you built it out of your reserves would you open it up or would you use general, capital improvement account in your general fund.
Auditor:If you do it out of your reserves, you coudl do it out of your general fund, but if we're talking about something other than water line extensions, catch it and show it in the capital projects fund. That's your choice. But you remember when you borrowed money from the Texas Water Development Board, I was at that meeting and I asked one question. "Do you want this accounted for in a capital projects fund, debt service fund" and they said yes. I got a clarification from the TWDB of how they wanted it recorded. If it's your local money, you can make the decision of whether you want to use capital projects or not, if you're talking about that type of construction, I thought it would use capital funds.. just to track it easier.
Auditor: page 8 Your water revenue increased $155,697; in 2015 it was $325,000, increased to $481,000 in 2016 and that's due to net increase of water customers.
Auditor: We're going to talk about (gap?) in 68. I didn't do a very good job of explaining that last year. We had a lot of questions last year.. pension. Look at page 11, district's assets and liabilities. This include the general fund, debt service and capital projects fund. Deferred outflow related pensions $150,705. You look down below that, we got a net pension liability of $40,235. YOu see both of those numbers? ..Deferred inflow related pensions. Those are the 3 numbers we're going to talk about. . These 3 accounts have to do with your retirement accounts. not on the fund statements. Remember last year was the first year we implemented .. very long note. Starting on page 24, the 2 important things you need to realize on this, we're reporting on the financial statements ending 9/30/2016. The pension accounting that we're reporting on is Dec 31, 2015. That's why we have the deferred recent inflow and the deferred outflows. p 27, change to pension liability. Start out Dec 31, 2014, net pension liability was $846, 674 and fidicuary net position which is an asset which is in the pension plan and 40,586 was our net pension liability last year. Then you see all the transactions from Dec 31 2014 to Dec 31 2015, the pension liabilty increased, assets also increased and we still have a net pension liability.
Board: WE're the fiduciary in this example.
Auditor: That's right. This is different than teacher retirement. There's only 2 entities that contribute to your pension plan. That's the employees and the water district. The school districts have the employees, the school district and the State of Texas. We just have two which makes it cleaner. Remember we're doing our financial statements as of Sep 30, 2016, this is Dec 31, 2015, we have contributions that the district and the employees made that's not in this figure here
Board: If you had to sum it up, you get down to the bottom of 2015 and everything stopped today, everybody retired and we quit paying in, there's benefits in the plan for $910,000
Auditor: No, that's all we owe. There's benefits in there of $870,000.
Board: Benefits to the employees are 910 (auditor: That's right) and what we owe is $40,000 if it stopped today (Auditor: If it stopped Dec 31 2015) As a fiduciary responsbility, if we closed the doors and everybody took their paycheck and went home in retirement, we would have to pay in 40. (Auditor: Tha'ts right) Some of this lag is time frame, some of it's earnings, once they start earning more
Auditor: The market affects this because the money's invested.
Board: So would you say as an accountant if you used round numbers and we have a liability of $900,000 and we're about 5 percent underfunded.. so this retirement fund is only about 5 percent underfunded.
Auditor: Really, y'all are in good shape compared to a lot of school districts
Board: To be under 10 percent or less is exceptional
Auditor:... we had one of your vendors had a credit check and we filled it out recently ... they were talking about them getting paid, that's what they were worried about. This water district is managed by people of integrity, I'm talking about you, Kevin, Kim and John and your employees. I don't think you have any problem with your credit .. I feel like this entity is managed very well. That's a credit to you and Kevin and the board before y'all.
Board: This is a prerogative that we could make whether we pay this in regularly
Auditor: No, if you'll let me finish. Remember that's December 31, your financial statements are on Sep 30. So there's about a 9 month lag. Look at page 30. deferred outflows, deferred inflows.Outflows going out to pension funds on your behalf. Inflows are liabiliies .. this fluctuates, I don't know if we could pinpoint this unless we shut the doors.
Boards: keep gap as low as possible.Lots of variables.
Board: Is this a prerogative to put this 40,000 could we withhold this and show this as a debt?
Auditor: I think you have an obligation.
Board: Why isn't this the same liablity as if we owed the bank?
Auditor: Because others are underfunded. They go to bankruptcy court and court lets them out of it.
Kevin: We're using TCDRS rules. They're funded 95 percent statewide. We're right on their average. They make us fund it 95 percent. They're so big that they created their own retirement fund.
Board: Employees put in 7 percent, district puts in a little more
Auditor: Only debt that you have is what you're paying back to TWDB. Federal govt owns a lot of these lakes/dams, lease all these down. TWDB collects feesthat way and that's the money they loaned out to you.
Board: I'm certainly glad to know that our pension fund is intact
Motion to approve audit as presented.
Agenda item: close out capital projects account, move into the general fund.
Kevin: We might build another pump station and water tower, no other capital improvements on the horizon.
Motion for above.
Auditor: Think about how you want to do it. Close it today,
Kevin: Proposing as of today, but as far as booking it will take it back to October.
Careflight. Taken off as action item. All of our rural customers, give a free membership to Careflight, we pay a dollar for them. Careflight has not done a really good job of letting people know. Had to gotten to be a lot of paperwork for Kim, juice wasn't worth the squeeze. Jim Schwartz came in last week and he offered up a way to manage the careflight enrollment, only list of customers once a year, going to pay for a number rather than a list of people. Everybody that is a customer of ours is covered. If customer of Somervell County Water District, (residential), going to cost $400 a month, more of an expense when we first started.. I think July is when we renegotiate. A lot of people see it as a real benefit. Have had 6 claims against our plan since we started. Not that expensive, didn't want to do away with it but too much work for Kim, have now solved that. Costs us a dollar a month per family. $50 a family per year if you do it on your own, we're able to provide it for $12,. New customers realized it, will start putting it on your bill, don't forget you're a customer of careflight. Agreement is whoever is the customer is covered, have to prove they're a customer. Only 6 claims in 5 years.
I called up and asked Kim about this. IF there are rural Somervell County residents that are customers, ie, using Somervell County water and get billed, the Careflight is a nice perk.
Water lines: Bid it out every year, unit price contract, different line items (4" pipe, 6 " pipe" in sand, etc, every scenario contractor might encounter in the county). ..
Motion to go with McIneer (spelling)
Board: notice of line locates on 318 and 56? 6 trucks there, marks on the road?
Kevin: We just follow the county holidays. Almost every December we get a call asking to take off that week, when we started selling water, we stopped. I hate to close the week between Christmas and New Years without it being an action of the board.
Board: What would you do about emergencies? time and a half to run the plant, somebody on call. ... I propose you close the park too and let those people have the week off. Dead week anyway. Incredible value by affordable water, and key is being efficient with our employeess. Close at Christmas Eve at noon and not open until after New Years. Minimal cost to us, so what if someone can't come in and pay their bill, we need to train em off so they pay their bill easy for us. We don't have to be a convenience store. We're in the business of providing affordable water and maybe some of the cheapest water in the State of Texas. Make it a unique place to work, make it unique for our employees.
Board: How many walk in customers do you have to pay? Kim -2. Most convenient way to pay is credit card.
Board: Ought to be pushing everybody to do this.
Kevin: We do have almost 500 customers but still our cutoff list is not so big that Kim can't get on the phone and call 'em all. (Kim-had 2 people had to cut water off last month and that's high)
Board: Didn't we raise the fee? So that should get their attention a little bit maybe.
Kevin: We've only had that new fee paid twice and it was the same person both times.
Board: What size water bill was it that had to have it cut off? (Kim: About 50 dollars)
Kevin: So they ended up paying a $100 penalty on a $50 bill.
Kim: And I go through and contact everybody cause I hate turning people off and even contacting them, they still
Board: I don't think a week's closing hurts out customers and I think it's a great benefit to our employees.
Karen: How many people come into the park during that time?
Kevin: They always get Christmas Day. Between 30 and 40 days came in that week last year. We collected 70 dollars. We didn't have boaters. Doesn't matter to me. If we shut everything down, we can just close the front gate.
Board: WE'll try it and if we get a lot of complaints...
Motion to close Christmas Eve and open the day after New Years Day, when it's appropriate.
Kevin: Intent is to be closed that whole week.
TIPS interlocal agreement. Govt purchasing program. TIPS like BuyBoard but different. Need interlocal agreement to participate. State organization.
Water Line extensions. Still hung up in the Oaks. Gotten quite a way, 75 percent finished with pipe, 6th , a quarter of it water going to customer. Loop around done, southernmost southeastly tip to be done. Good project for us. Picked up a couple of new move-ins.
CR 2007 underway as well. TXDOT have to permit crossings, can take 3-4 weeks. Actually have the TXDot permits already. With county allows us to just cut 'em. State Highway ahve to bore the case.
Bank statement balances. Most of tax money in. Wes says have 95% collected. Next time see report capital projects X will be gone, money moved to general. Maintenance and trust, haveing problems with the compressor, may be project that's not budgeted.
Board: Only allowed to hold so much from sale of water.
Kevin: When TWDB loans money, can only spend money towards other water improvement uses, rule intended more for cities, don't want to loan money and city uses on baseball park or road fund, making cities reuse revenue in water department, more targeted for other than water districts.
Board: Helpful to keep maturity dates of CDs. Reflects interest that's been rolled in through the years.
Kim: Most of these 1.5 million
Kevin: We can add a line item for original principle and anotehr interest so you can see how much is interest. Interest accrued, for total for all 5.
Board: Question on depreciation. What does he have set up for all of our stuff
Kevin. All of it's being depreciated now. General rule, 15 years on everything. I can't remember, I'll find out. Not 15 years, more than that, 30 or 50.
Water Usage Report-sold a lot of water for January. Comprae to last year we sold 12 million gallons, this year we sold 14 mllion gallons.
Karen: Picked up commercial customer? Who was that?
Kevin: Heading 144 S, Ryan Whitlock added some cabins, set commercial meter. He's going to build 5 more.
Park report, not a lot of usage for January.
Board: Now that we're all legal on ACLS, TCEQ, what would it take for us to become a superior water supply. That would be something we could put up signs for.
Karen: Time period to do testing for, three years.