Thompson: OK. We have Chris and Tom from the Auditor’s Office, as well as Jeff. We all have our documents, the drafts of the… Should we just start right at the beginning and run through?

Horne: Give a little background. We had a work session with the Board. I drafted these originally back in June. We had a work session July 10 with the Board on changing these. Then, the changes that are in, you can see the edited version, which came from the Auditor’s Office.

Thompson: Jeff, I used this document that showed the changes.

Horne: Yes.

Thompson: Is there anything different from this to the clean draft?

Horne: The clean draft is our original draft.

Thompson: OK.

Stutsman: But it should be the same.

Horne: Tom did do a clean draft of it with the changes included, too.

Stutsman: But the one with the strikeouts is the draft that we reviewed, plus their changes, then Tom submitted a clean without the strikeouts in it.

Horne: That’s right.

Thompson: Well, should we just jump right in?

Horne: I don’t know what level. Did you guys want to go over these one by one or just talk about a couple?

Thompson: I had a few things. For the most part I felt that the changes made it more clear and easy to understand. Also, by taking out duplication it will make it easier to keep track of in the future, because we won’t have to remember multiple citations if we make adjustments. But, I did notice some differences that I wanted to ask about. One is in number 2 on the annual audit. When the Board discussed it, we said that the independent auditing firm, the selection should be evaluated at a minimum of every 3 years and it has been changed to 5 years. Is that just because the Code says 5?

Horne: That is my understanding of what I was told.

Thompson: OK.

Horne: We would have to do it per the Code anyway.

Thompson: Does anyone on the Board still think it should be more frequently?

Lehman: I thought discussion at our discretion.

Thompson: I think we could make it more frequently at our discretion, but it has to be at least every 5 years.

Horne: Right.

Thompson: So, our policy meets the minimum from the Code, if we have 5. I don’t have strong feelings one way or another.

Lehman: We’re in compliance with the Code and if there was some reason we have the power to call for a special audit.

Thompson: We could do it any time during the 5 years. We just have to review it. On the 2nd page, the budget, the thing that talks about departmental budgets.

Lehman: There was item one under the (inaudible). I had some questions, too.

Stutsman: Number 2, Carol?

Lehman: It had to do with projection will include a hold the line budget adjustment allowing growth for new revenue sources without increasing taxes or local government pricing index, whichever is lower. I thought that might be somewhat restrictive. The part without increasing taxes with the…

Neuzil: You’re looking at page 2, number 1?

Lehman: Yes.

Thompson: Yes. I can’t find it on the other draft, but I had concerns about that, too. I am not sure that the restatement actually mirrors what the Board intended in our discussion at the work session.

Stutsman: I feel the same way. I am comfortable…

Lehman: I think that is our goal, but there may be some times when our hands are tied and restricted where we wouldn’t be.

Stutsman: It seems like it takes that flexibility for extenuating circumstances or changes in economy.

Lehman: It’s a good reminder type thing.

Stutsman: Yes, right, a good policy.

Thompson: So, what we were saying was that the Budget Coordinator would take into account these specific items, the estimated valuation, the roll back, the projected cost of labor and the projected State and local government price index in determining this projection that we would give to the department heads. That is a more neutral statement than the revision.

Stutsman: Yes.

Horne: I wouldn’t have a problem the last sentence in the above not precluding. It’s OK to state that.

Thompson: Yes, our statement indicated that we would tell the department heads what we thought we had available and then leave it up to them to consider their odds of success if they propose something new.

County Auditor Tom Slockett: The idea behind it was that you give them specific guidelines for preparing a hold the line budget. It doesn’t necessarily mean that’s the one that will be adopted. But, one of the numbers that should be looked at and as an exercise, departments ought to make a projection that recognizes available funds or sticks within a cost of living calculation. Then, if the departments can justify more than that to the Board, that is what the budget process is all about. But, at least there would be an exercise showing what the budget would look like if it was crafted without raising taxes, that is essentially. Or even below that if the tax availability was above the cost of living.

Thompson: Our statement doesn’t deny that. We are just looking in our little list that is crossed out there at estimated valuation, roll back, and costs that are built into the following years’ budget. It doesn’t say anything about holding the line. It just leaves the decision about whether to ask for something up to the department head. But, it gives them guidance. For example, if we say, next year we project a 2% increase in available funds, and we know our union expenses are going to be 3%, a smart department head probably won’t ask for much else. But, if those projections are reversed, then they know there is some room there to be thinking of ways to expand their department budget.

Slockett: Well, here is the method. The original method doesn’t really focus on taxation and the whole thing going on with taxes. For example, if one department benefited from the change in the law, or interest rates or something like that, and they didn’t have to do any additional work, but the checks they received were larger because of the change in the state law. They would be allowed to change their budget.

Thompson: No, the estimation that we are asking the Budget Coordinator to do is for the whole County, not for any department singly.

Stutsman: I prefer the verbiage we had, just because the other sentence seems to make a political statement and I don’t want to include a political statement in here. I’m not ready to put a political statement into these policies.

Slockett: I really don’t have any objection if you keep the language. I certainly object that there is anything political in it. It is just a representation. It’s just focusing…

Stutsman: I think basically we’re saying the same thing, I just like the way the original statement was made.

Slockett: That’s fine.

Stutsman: Ready to move on?

Horne: Did you want to leave the last sentence in?

Stutsman: Yes, I have no problem with the last sentence.

Thompson: Should the list of things that we include… You included rollbacks, what about the thing that happens on the alternate year?

Horne: The equalization.

Thompson: The equalization, should we include that in there? Is there a way that you can know that before the budget time?

Horne: I’m not sure how much change it would have relative like the valuations and stuff like that. I mean, it would have some, but…

Thompson: OK.

Horne: You’re talking about more…

Slockett: Figured into accounts and the part that calculates the affect on the taxes.

Thompson: OK, so rollback is enough to have in here. OK.

Lehman: It could be in retrospect. It could be a year later. If you don’t have time for one year you’re going to have to figure it’s impact the following year, because it is every 2 years.

Stutsman: This is kind of a grammatical thing. I need to just ask if it needs to be clarified. Whenever we say, department heads, do we also want to say elected officials?

Horne: I certainly can.

Stutsman: It’s not a big deal, but just so that… I know there are always… I get double messages about whether elected officials want to be called department heads and if just both of them are spelled out then there is no confusion.

Horne: Sure, I can do that.

Slockett: There would be a lot of extra work. From an editing point of view you might want to maybe define department head somewhere.

Horne: It could mean either elected or appointed.

Thompson: Some of these things will apply to department heads but not to elected officials.

Stutsman: Well, that is what I want to make sure. When we say department heads, is that a blank statement to anybody that runs a department in the County, which also includes department heads or do we need to make sure that we are saying department heads and elected officials when it applies or just department heads when it applies?

Thompson: I think you should do a search and review each occurrence of the department head term and just see if we need to clarify.

Horne: Just see if there is any reason why the 2 of them should be split off.

Thompson: Yes. Like in the review of user fees, I don’t think the Board can dictate to elected officials how they set their user fees if they have any. That is just an example. So, that one would be appropriate to say department heads. There were some other places, I can’t state specifically, where it would be important to say both department heads and elected officials’ offices.

Lehman: Might want to put a page or 2 at the end of definition and terms.

Thompson: Right. So you could maybe go through it and check each one.

Horne: OK.

Thompson: On number 4 on page 2, our original sentence was that the budget document prepared by the Budget Coordinator would include the monthly report plus an annual summary of key issues. That got deleted. I don’t know if that was…

Stutsman: I’m sorry Carol. I was…

Horne: That just pertains to the annual budget document, not the monthly reports.

Thompson: OK.

Horne: The monthly reports would be…

Thompson: So, you think it’s OK like it is now.

Horne: Yes. There is a statement about me presenting the…

Lehman: It’s a different area.

Horne: (inaudible) in the County Auditing and Financial Reporting Policy. Will review monthly budget reports and make monthly reports to the Board of Supervisors.

Thompson: OK.

Horne: Number 1, 7.

Thompson: Anybody have any comments about page 3?

Horne: Yes. Number 11 was taken out and that to me was a Board policy you decided on in the first meeting and I wanted you to review it.

Thompson: It shows up somewhere else though.

Horne: It does?

Thompson: I marked it, too, and then later on as I was reading I found it in another place and I don’t think we need to have it in there twice. But, I should have written down where I found it next.

Stutsman: I wonder if it is under debt.

Thompson: Is it in the Treasurer’s policy?

Horne: No, it would be under…

Stutsman: Debt policy.

Deputy Auditor Chris Edwards: I think it is number 6 on the debt policy.

Thompson: OK, on page 8.

Horne: Oh, I see what you’re saying. OK.

Thompson: So, it shows up in there again. On page 4, after long discussion at our work session, the Board stated that we would try to set aside a minimum of $800,000 to the Capital Project fund annually. I see that taking it out makes the policy more universal. But, what does the Board think about that?

Slockett: I would like to just say that one of my pet peeves, and partly I think it may be because I had a little bit longer to construct it maybe than some of the Supervisors. When you put numbers in documents like this, it is hard to change them. They are out of date the second you put them in. They can become a minimum and a minimum can easily become a maximum as well. I guess if you want to put an amount in there to discipline yourselves I would rather see a percentage of something so that it is updated. For example, if you say 3.3% of the annual expenditures of the General Fund, that would be approximately $800,000. Then, it would update it every year. If you had a budget crisis it would go down a little bit. If you decided to spend quite a bit it would go up a little bit. I would prefer that. Mainly I just wanted to give you the flexibility. For example, this year’s budget, you started off at a half a million dollars more than you thought you would have. I predict that will be in excess of a million or more than you expect at the end of this budget year, significantly in excess of that. Unless you (inaudible) the budget and spent more money than you anticipated doing. You might well want to put some of that into this area. If you have an amount even though it’s a minimum it might be harder to put it in there. If you are going to put in an amount I would like to see you put one in that adjusts because it may be there for 25 years. It might be difficult to get it out.

Harney: I see what you are saying where it could become the maximum for the future. What the Board was trying to get at there was we were trying to put in a minimum to meet the needs that haven’t been met for a long time and trying to catch up. It’s a commitment that we have to make somewhere and you are probably right. Maybe that isn’t the place to do it. The Board needs to make a commitment to upgrade our facilities and our needs and demands that are out there. We just need to find a way to do that to make that commitment.

Thompson: It’s hard to deal with it when you delay things and then they’re costly.

Stutsman: I guess I would agree with what Tom is saying. I want that flexibility because there are times when we just simply can’t afford it. As much as we want and our intentions are good… I think the Board does have a commitment to keep the infrastructure up as long as we do. I’m not willing to put down an amount and realize that we are going to short something else that I think is equally as…

Neuzil: We’ve had this argument before. In fact that’s how we came up with the $800,000 number. We compromised on that number. As well, I don’t want to see a number in there also just in case we do get into a situation where we have to decide between potentially employees or capital improvements. Its going to make it much more difficult if we’ve got it in the policy here.

Thompson: How do you feel about a percent?

Neuzil: I’m not comfortable with that either quite frankly. I think that’s to be determined by the Board of Supervisors as far as how much money to put in those kinds of things.

Stutsman: I think it’s improvement that we even include a statement that annually we’ll determine the amount to be levied to capital projects fund. We never even used to do that before at all. I think we’ve made strides to the fact that we do consider this every year. That its just part of the budgeting to make sure that we do have money for this.

Harney: Part of that issue though, and I’m the same way, I don’t like tying that dollar amount in there but the County hasn’t kept up with the demand and the need for their facilities. In some way we need to address that. We have buildings that are having heating, cooling and air quality problems. Somewhere we need to continue to put dollars in. It’s very easy to cut those dollars for capital projects and then you are just further back the next year and the year after and the year after.

Stutsman: Then hopefully you’ll have a good year the following year and you can put even more in.

Harney: That hasn’t happened.

Stutsman: I know but I guess I agree with Terrence. It comes to laying off people or cutting back services or the quality of services versus a building. It’s part of the budgeting process. It’s all priorities. We make the best effort to recognize the ongoing needs but there are times when the money is just simply not there.

Lehman: Well it may be kind of wishy washy, not to criticize Tom but I think he’s got a good suggestion. Approximate gives you some flexibility. He’s suggesting an approximate percentage. It gives you a target. It doesn’t hold you to it like the $800,000 did.

Thompson: I agree with that. I think the percentage is a good idea.

Lehman: Our history has always been that we put so much money aside and we come down to crunch time and pull it out of the capital.

Thompson: It’s too easy.

Lehman: It’s a quick fix all.

Thompson: I think our reason for putting in the 800,000 was to kind of hold our feet to the fire to make sure that every year we appropriate a good amount of money for that.

Lehman: Our past history is we know that’s what we need and some of our targets that we know we’re going to need for our future needs is going to need to beat that much. Its either going to be dribble it out and hit the grand slam later on, which may not be realistic whatsoever.

Stutsman: I’m going to support number 5 the way it is written in the amended form. The Board of Supervisors will annually determine the amount to be levied for capital projects fund. I’m just putting that on the table so we can move on and make a decision. How many are supportive?

Neuzil: I’m supportive of that.

Stutsman: OK there are 2 of us.

Lehman: Do you want anything stronger like Tom had suggested?

Thompson: I would like to have it at least be another sentence that says the starting point will be 3% of the available funds.

Lehman: The target.

Thompson: The target. Yes some word like that.

Lehman: A realistic target would be approximately 3%.

Stutsman: Are there 3 people?

Lehman: Because that’s been the history.

Slockett: 3.3 would be about 800,000.

Stutsman: Pat are you supportive of that?

Harney: Yes I think that’s fine.

Stutsman: OK. Then there are 3 for that.

Horne: So you want me to change it to a percentage?

Stutsman: Yes. Add that extra.

Thompson: 3.3% of the…

Slockett: Of the total of the General and Supplemental Fund expenditures. That’s also kind of a positive statement towards doing it because it’s a pretty small number. It’s kind of a positive statement about doing it.

Lehman: Were we going to use the word approximate there?

Thompson: Now it will say the Board of Supervisors will annually determine the amount to be levied for Capital Projects Fund. The target will be 3.3% of the General and Supplemental Fund expenditures.

Lehman: I think that’s a good guideline.

Thompson: Ready to move on? On page 5 of the cash handling policy it says that physical separation of duties between custodial cash handling and record keeping will be maintained whenever feasible. I’d like to take out whenever feasible. I think we ought to figure out a way to maintain it one way or another. I think that’s an important concept to assure responsible handling of cash.

Stutsman: Is there cases where it is difficult?

Thompson: A one person office would be the example.

Slockett: For example at the Board of Health they have 2 cash boxes and sometimes someone will be on vacation, the person who normally handles it. It is best to have it.

Thompson: I don’t think we should leave any wiggle room. I think we should train our department heads to have a backup when the person who usually does it isn’t there. This set of policies is going to require a good amount of training anyway so we could just put that in.

Stutsman: I’m comfortable with that. This is one of those sections where there is a lot of references to department heads. Pat and Tom do you have any problems with including and elected officials in this?

White: I don’t.

Slockett: No.

Thompson: So we change all of those to and elected officials.

White: But I don’t speak for the other elected officials.

Stutsman: Well we’ll tell them that if they don’t agree to blame it on Pat and Tom.

Slockett: Well the elected officials are department heads.

White: Yes but Sally is right. That has been the topic of discussion. In fact when the elected officials meeting started we spent a couple of meetings debating exactly that point. When and under what circumstances they wanted separate status or reference. I think you do get mixed signals.

Stutsman: I think especially when Carol pointed out there are some situations where we cannot tell elected officials where we have jurisdiction over department heads. To be consistent I think its better to delineate whether its both or just one.

Thompson: I’m really liking the new #2 the training. I think that’s an important part we haven’t done as well as we need to in the past. I did have a question about #7. It says funds owned by employees like coffee funds would be kept separate from County funds and department heads will annually report the amount on hand to the County Auditor. How would a department head know if the employees were keeping that fund separate?

Slockett: They would just go count it. It’s a coffee fund just so we get some idea of what is going to happen. We ask for that now.

Thompson: Is it any of our business?

Slockett: Well I just think if there is money there from employees I think we need to pay attention. Its not really any of our business but that’s the idea. I think it doesn’t hurt to have someone just in case there is a $1,000 bill in there or something like that. I guess if you want to take it out you can take it out. But it just seems to me it’s totally separate from County funds but at the same time it’s happening in our work places and it doesn’t hurt for a department head to have some kind of awareness about what is going on.

Stutsman: This may seem a little silly but I guess I would say leave it out. Just because when you first looked at that, funds owned by employees. Do employees think I have to report my IRA’s. I guess I just…

Thompson: To me the important part of this is that you don’t commingle private finds with County funds.

Slockett: Well and there was a problem with that in the Ambulance Department for example.

White: And Secondary Roads.

Slockett: There was an audit and Secondary Roads.

Thompson: But the issue was the commingling of funds, not that there was a separate coffee fund for the employees.

Lehman: I think Tom’s point is that there needs to be some type of policy in place to address it if it does…

Stutsman: But it shouldn’t be commingled at all. They’re just separate. There is never tax dollars used for coffee for departments or for any kind of extra events.

Slockett: Its sort of a hear no evil, see no evil, do no evil versus keeping your eye on the ball. We have for several years though asked that those be reported just so we don’t get surprised that we’re aware of what exists. The amount is just an add-on to what has been existing policy. We haven’t had any strenuous objection to that. That was a policy that we established because we got surprised a couple of times by the existence of funds. We were trying to figure out what they were and so the Board decided, its been a number of years back, that we were better off if we had departments and employees just report the existence of those funds to minimize the risk that something happens.

Lehman: You would have a record in case something was questioned.

Stutsman: Should we just leave out the amount then and just say the departments will annually report the existence.

Slockett: That almost seems more vague. There it seems like you are asking them to do a report on it or something. To us just the simple amount was the least intrusive way.

Thompson: The reason I ask is that when I was a department head the way I handled this was that I was never on the coffee fund committee. I never had my name on the bank account, I always required that employees have full control of that money therefore I never knew how much the bank account was worth.

Slockett: This would ask you to go count it if there is a can there once a year just to see what's there.

Stutsman: But if its not tax dollars do we have any business being involved with it at all, even counting it? Because a sunshine fund is what I remember where we used to buy cards or going away gifts. I guess I would rather have it completely… Part of my fear too is that public documents and the public right to know. Something comes up that the department of human services has a $300 sunshine fund. Will there be confusion with tax payers thinking $300 of mine is going to buy going away gifts for employees?

Slockett: Let me give you an example of the sort of thing that has happened. The vending machine funds went to zero, and the employee funds went up a lot. It would be if you noticed some correlation between there is no copier fees received and the coffee fund had a large amount of money in it, it would just trigger your ability to ask some questions.

Thompson: Wait there are 2 issues there. Copying money that belongs to the County. That’s a fee that employees pay for using the County copier. That should be kept track of by the department head. That doesn’t fall under this because that money isn’t owned by the employees. That’s a County revenue.

Slockett: That was my point.

Stutsman: He’s looking for a trend.

Slockett: If you see a bunch of money there it triggers what is happening to the County.

Thompson: Maybe somebody is sick in the department and people have just given more money. I don’t see it as good economy to have department heads spending a lot of their time fooling around with… If your wife gets pregnant does she get a present when the baby is born versus it has to be the employee that is pregnant that gets the present. It can be very time consuming.

Slockett: We’re just talking about counting the amount once a year. Really it’s an insignificant amount of money. It’s $10.

Thompson: That’s why I think it’s not worth spending a lot of a department heads time on. Also the fact that you are going to be looking at it implies that the department head has some control over it. If it is employee owned funds it should be theirs and they should manage it and we should expect them not to get in fights about it.

Slockett: It just shows a department head is paying attention to what is going on in his or her department.

Lehman: I think Tom’s point is do we need some type of statement that they are aware that there is other activities? Its not that we need to monitor and count it and log the IOU’s in the coffee fund or anything like that but we need to acknowledge that that relationship exists. I don’t drink coffee so I don’t know.

Thompson: To me the important thing is that the department head keeps the tax funds separate.

Stutsman: And is totally accountable for the tax dollars.

Lehman: But isn’t it responsible of us to at least have a statement acknowledging…

Stutsman: I don’t have a problem saying that we want to know the existence of county owned funds.

Lehman: Do you go to the next step and avoid any confusion like in the past somebody questions it, well here’s a record of what it was last month and the month before is this?

Neuzil: You just do it once a year.

Slockett: Yes. Once a year.

Thompson: What if your employee says no? Are you going to go through grievances?

Lehman: Pull the plug on the coffee pot. That’s all there is to it.

Thompson: I did that once when people couldn’t get along about it. Pat you look like you are thinking. Do you want to make a comment?

White: I don’t think it’s that significant to count it and report it. I think its important to report it so there’s a record of the existence of the fund so that if and when a question arises we’re not then trying to figure out whether its County money or employee money. If for some reason our coffee fund, instead of notes circulating that we’re out of money, and this would be a nice time for people to contribute, if it for some reason had a couple thousand dollars in it I would want to know why. What was happening that drove it up that high.

Stutsman: I’d be more concerned with the opposite. That there was nothing in it and there was no coffee.

White: That’s usually what happens in this case.

Thompson: I guess I don’t see the difference here. It seems to me that that’s the same as asking an employee why they suddenly have more money in their checking account. If the money belongs to the employees…

White: The difference is it’s money in the work place.

Thompson: Not necessarily, sometimes it’s in a bank account somewhere else.

Slockett: For example one of the things that employees can’t do, is they can’t show favoritism because somebody gave them candy under $3 or flowers under $3. They can’t give better service because someone threw a $5 in the coffee fund or something. So there are reasons why you might want to know if there was a large amount of money in there.

Stutsman: But then you’re asking to keep track of how much everybody puts into the fund. I think it’s too complicated. I guess I’m…

Slockett: No. Once a year you’re going to count it. You’re not asking for…

Stutsman: OK. What’s everybody?

Thompson: I’d like to put the period after at all times. So funds owned by employees will be kept separate from County funds at all times.

Stutsman: Do we want to say that there just will be a reporting of the employee funds meaning just…

Thompson: Whether there is one.

Stutsman: Yes, the existence of a fund and not…

Horne: Department heads will annually report the existence of funds to the County Auditor.

Stutsman: Which funds exist or whatever.

Thompson: That would be OK with me.

Stutsman: OK. I’m OK with that. Terrance you need to weigh in on this.

Neuzil: I’m not going to loose any sleep either way folks.

Thompson: Mess with people’s coffee fund.

Neuzil: I’ll pick my fights in other words.

Thompson: Page 6, Page 7. I noticed the whole cash management policy was removed. Is that because it’s included somewhere else?

Horne: Well some of it overlapped with the investment policy. There’s no doubt about it.

Thompson: Page 8.

Horne: No big changes, just some verbiage changes. I know they talked to Tom Kriz about the changes in the investment policy.

Neuzil: He’s OK with those?

Thompson: On the investment policy on page 9, the Board added the County Attorney to the list of people who would get copies of the investment policy. That was taken out. Do we care?

Horne: No, I can put that back.

Thompson: Tom was there a reason why you took that out?

Slockett: We didn’t.

Thompson: It’s not in there now.

Slockett: It must not have been in the original.

Neuzil: Yes, because I don’t see it in.

Horne: I can certainly add that.

Stutsman: Good eyes Carol.

Thompson: We also on page 10 at the second paragraph where it says the Treasurer and all Deputy Treasurers are authorized to make investments. Under that we had added a sentence that said review monthly by the Budget Coordinator. Does anybody else remember this better then I?

Stutsman: No.

Horne: I forget the number.

Slockett: It wasn’t there when we…

Horne: Yes, I don’t…

Thompson: It says delegation of authority. Now why would we have that reviewed by the budget coordinator? I just wrote that in there from our discussion on the…

Stutsman: I don’t have that written in there Carol. This is mine.

Harney: I thought we discussed that, but decided not to put that in.

Thompson: As I thought about it I didn’t see how it would fit there, but I remembered that we talked about it. Page 11, 12. OK. We got us a document.

Horne: I’ll make the changes you asked for and present a clean copy next week in the formal agenda for approval.

Thompson: So this will be on for next week Thursday?

Horne: I’ll have a resolution.

Thompson: OK. Thank you.

Horne: Thank you.

Stutsman: Good discussion.

Thompson: Yes. Thanks Tom and Chris for coming up.

Stutsman: Thanks.

(Continued in Part 3)