MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Thursday, July 11, 2001

Council Chamber

Members Present:  Susan McLain (Chair), Carl Hosticka (Vice Chair), Bill Atherton, David Bragdon, Rex Burkholder, Rod Monroe

Members Absent:  Rod Park.

Chair McLain called the meeting to order at 2:10 p.m.

1.  Consideration of the Minutes of June 19, 2001, Budget and Finance Committee Meeting.

2.  Communication from the Chief Financial Officer.

Jennifer Sims, Chief Financial Officer and Director of the Administrative Services Department, presented information from the July 11, 2001, CFO Report, which is included as part of this record. She added that, as a result of Metro’s presentation on the Oregon Convention Center (OCC) refunding, Metro’s rating had been upgraded to a rating consistent with the AA+ rating from Standard & Poor’s. The closing on the OCC refunding for $47,095,000 resulted in over $4 million in savings to the taxpayers. Metro’s investment portfolio was currently earning at a little over 4.6%.

3. Resolution No. 01-3084 for the Purpose of Endorsing the Presiding Officer’s Authority to Enter into a Contract Regarding Council Transition.

Presiding Officer Bragdon spoke to the resolution, saying that the contract’s intent was to focus on the Council Office, assessing both the councilors’ expectations in terms of staffing and the existing capacity of Council staff. He reminded the committee that the Presiding Officer could enter into these sorts of contracts unilaterally, but that he was attempting to involve all of the councilors in this decision. An ongoing dialogue with the Executive Officer was addressing the broader phases of the transition. Once the Council issues were identified, the Executive Officer and his staff would weigh in on subsequent phases of transition, which would then be revisited with the entire Council. Presiding Officer Bragdon asked for an endorsement of the general approach, believing it to be consistent with the direction of the Council Office and the organization as a whole as defined at the retreat. He acknowledged that this contract was in no way a question of the Executive Officer’s authority. Chair McLain referenced a June 21 memo from the Presiding Officer and the Deputy Presiding Officer regarding the facilitator selection process and a July 9 memo to the Executive Officer reiterating the process and the Council’s understanding that it be a coordinated effort for ultimate success.

Councilor Atherton asked for a clarification of facilitator expense, study goals, and outcomes.

Presiding Officer Bragdon responded that the contract quote had been in the neighborhood of $12,500 with a subsequent provision for up to $17,500. In terms of study goals, the facilitators would provide first an assessment of the Council Office’s current capacities, and then an evaluation of the Council Office’s capacity for taking on additional duties. He said the evaluation would be a discrete piece with a debriefing to the Council in August. This report should lead to next steps, but there was no mutual obligation to continue the relationship.

Councilor Monroe asked for clarification regarding the contract’s cost, time span and recommendations.

Presiding Officer Bragdon responded that the original figure for the contract was $12,800, with budgeting for extra hours not to exceed $17,600. The work was to be finished by September 1, 2001. Recommendations would address current Council issues, as well as pointing towards any changes that would be needed for the future. Councilor Monroe questioned the value of currently assessing of Metro’s operations when significant changes would be occurring in the future. Chair McLain said that both the Presiding Officer and Council staff felt that a current assessment would be very helpful to prepare for major and minor changes in 2003 and that the Council needed to know where they were before they knew where they were going.

Councilor Monroe asked whether additional resolutions for transition contracts and funds would be brought before the Council before they were signed. Presiding Officer Bragdon acknowledged that the Presiding Officer didn’t need to bring issues of this type before the Council, but that his inclination was to involve the Council in further consultation. Councilor Monroe said it was appropriate to involve the Executive Officer and the entire Council before additional contracts were let. Councilor Burkholder agreed. He said he was comfortable with the proposal as it was, and that his concern was to maintain communication throughout the next phases.

Council Atherton asked if the proposal had adhered to agency bidding requirements. Chair McLain said legal staff had said due process was followed on the bids.

4.   CIP Status Report.

Karen Feher, Capital Improvement Coordinator, Financial Planning Division, Administrative Services Department, reported that the capital planning process had begun. She referenced a June 28 memo from the Executive Officer to the department Directors, instructing them to prepare their Capital Improvement Plan (CIP) submissions. The coming year’s CIP process should be similar to prior years, but with more user-friendly forms. Ms. Feher reviewed the timeline for the review of CIP requests, which was included in the Capital Improvement Plan Manual for FY 02-03 through FY 06-07 that had been distributed June 28, 2001.

During the fiscal year, Regional and Environmental Management (REM) was supporting a pilot project to move the CIP from a Microsoft Excel program to a database, in the interest of increasing efficiency and accuracy of the process. It was expected that the new database would be implemented agency-wide in FY 03-04. It was anticipated that Councilor Atherton’s task force would produce a set of capital asset policies and that the CIP process would explore the implications of those policies.

Councilor Burkholder asked for a Governmental Accounting Standards Board (GASB) 34 synopsis.

Don Cox, Accounting Manager, Administrative Services Department, said that GASB 34 required that Metro depreciate fixed assets for certain functions. In the past, depreciated assets included only proprietary funds. In the future, Metro’s depreciated assets would include the Zoo, parks, and general functions to more accurately reflect the total cost of the program. Councilor Burkholder asked if this new development would prevent maintenance from suffering at the expense of new projects. Tony Mounts, Financial Planning Manager, Administrative Services Department, responded by saying that the new information would give a general trend of the asset base. The next level down would be a facility condition assessment, which was not yet in place in all departments. Chair McLain added that Councilor Atherton’s task force would be developing policy criteria to address this.

5.   Report from Executive Office on Status of Audit Management Recommendations

Pete Sandrock, Chief Operating Officer, presented information contained in his letter to the committee, dated July 11, 2001, which is included as part of this record. He affirmed that all recommendations would be resolved. He said he anticipated working with Councilor Atherton’s task force regarding these issues.

6. Set up and/or Review Multi-Year Issues and Service Objectives

Chair McLain said her intent was to take action on these issues while the committee was between budgets.

6a. Long-Term Funding Needs – Discussion

Ms. Sims gave a brief overview of the Charter provision that allowed the Council to levy taxes, within a certain limit, that were not voter-approved. A tax study committee was required by the Charter to pursue such revenue. The only example of this had occurred in 1994, when a taxstudy committee was formed to look at effective use of current resources and then survey additional needs. After the need was determined, the committee surveyed potential funding sources and performed an assessment of how much could be levied at certain rates. From the committee results, the Council determined to pursue a construction excise tax. The tax was enacted and then subsequently repealed. Chair McLain reminded the committee that a similar process might need to take place when looking at long-term need. She said that the 1994 excise tax had received enough support to pass, but that the opposition had imposed enough pressure through the legislature to bring about its repeal.

Chair McLain emphasized three steps: 1) Assess efficiency of Metro’s current operations, 2) Perform a needs assessment, and 3) Create a task force to address the need assessment’s results.

Councilor Monroe reminded the committee that the failed tax was part of a package that created a new source to pay for planning while reducing the excise tax by the amount to be used for planning. When the package passed, the homebuilders asked for signatures only to refer the new tax, which was just half of the package. The loss of the excise tax was insupportable, and the Council repealed the package in January 1995.

Chair McLain asked for a needs assessment update before addressing long-term funding. Council Atherton asked for a fiscal philosophy that established a logical nexus between funding source and activity for funding. He asked whether the needs assessment was a first step or a clarification of a fiscal philosophy. Chair McLain responded that foundational goals and philosophy were already established and that it was time to look at replacement and long term capital needs of the system. Councilor Atherton expressed concern with addressing need without a funding scheme. Councilor Burkholder asked to segregate out needs and explore how to capture some of the value created by Metro. Councilor Atherton agreed. Ms. Sims asked what direction staff could take in assessing the needs of these three areas: Operations and Capital; Internal and External; Existing, Expanded and New. Chair McLain said that the structure laid out by Ms. Sims allowed the committee to look at choices more efficiently. She asked for a commitment to work with staff on the needs assessment. Ms. Sims proposed working further with Chair McLain and then bringing the next step back to the committee. Chair McLain asked for agreement from the committee to place this item on the next agenda. The committee assented.

6b. Long-Term Capital and Renewal/Replacement Needs – Discussion

6c. Systems Performance Task Force -- Discussion

Councilor Atherton said that his task force would be developing capital asset management policies by looking at renewal, replacement, and budgeting for maintenance. He said a detailed discussion of the task force would take place in the next two weeks.

Presiding Officer Bragdon asked if Metro was currently maintaining current assets. Councilor Atherton responded that the task force was looking at the status of specific facilities more closely than had been done in the past. Councilor Burkholder mentioned Environmental Action Team (ENACT), which had been working on sustainability issues and could possibly tie into capital asset maintenance assessment. He said he had asked the Presiding Officer to have the ENACT team present their results to the Council. Chair McLain said that, historically, the ENACT team was unable to make well-informed suggestions because the inventory was not complete. If the ENACT team were to be involved, both inventories would have to be complete, and a decision would have to be made on what kind of inventories were necessary. She said she believed the Task Force needed to identify the minimum inventories needed, as well as the possible inventories Metro could finance.

Councilor Atherton suggested that Mr. Mounts could give guidance on depreciation and functional obsolescence theory versus actual maintenance.

Chair McLain said that Task Force members would be contacted for potential times and dates of upcoming committee meetings, agendas, and scope of their work.

Councilor Atherton pointed out that a determination between existence of agency-wide operating standards versus department-determined operating standards was necessary.

7.   Councilor Communications

John Houser, Council Analyst, announced that he would be serving as the analyst for task force and that Cheryl Grant, Council Assistant, would provide support for the task force.

Councilor Hosticka reminded the committee that in the past week’s auditor retreat it had been agreed to meet before early August and look at information needs to be communicated by the Council to the Auditor’s Office.

There being no further business before the committee, Chair McLain adjourned the meeting at 3:40 p.m.

Respectfully submitted,

Cary Stacey

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF JULY 11, 2001

The following have been included as part of the official public record:

i:\minutes\2001\budget&finance/071101bdm.doc