Wednesday, March 16, 2022

3.15.22 Meeting Summary

Last night the Council discussed a few significant items:

The action plan to correct audit findings was presented.  The work is in early stages and still at the point where the work is being assessed and sized.  It seems like there is quite a bit of work ahead to resolve issues discovered.  We've been in contact with multiple outside parties to assist with this effort and when they are able to scope the work staff will reconvene with the budget and audit committee to inform of progress.  The plethora of issues we are facing are significant and wide reaching - from lack of monthly close procedures, to not being able to reconcile accounts, to challenges using our internal software.  I'm glad staff is working to address all of the issues and look forward to the next update.

We discussed the mid year budget review and while we are currently in the 9th month of the fiscal year (fiscal year ends in June), the mid year review was presented as of 12.31.21.  There appears to be several puts and takes, but nothing significant that would warrant action now.  We also agreed to create a new fund to tract ARPA dollars.

We engaged with a new contract City Engineer.  Previously we used a different firm, however at our last contract renewal the rates were less favorable so we moved to a new firm.

We got an update on the CEMEX reclamation plan revision.  The current plan calls for using a large portion of the quarry to fill in the pit that has been dug over the many years.  This would be a many decades long process requiring a high volume of earth moving, which would create an abundance of noise and dust, among other things.  The proposed revision would call for leaving more of the visible land in tact, digging a larger pit, and allowing rainwater to eventually form a lake in its place.  This was informational only as the quarry is outside the city - approval of the revision sits with the County.

We also saw a demo of a cloud based budgeting software package.  This software would move staff input from spreadsheets to the cloud, and put a front end UI to allow for data visualizations that could be accessed by staff and the public.  On a periodic basis, our actual data would be loaded and also viewable by the same parties.  The license cost of this application was proposed as $16,500/year with a three year contract.  The Council voted to move forward with application on a vote of 3-2.  Myself and Councilmember Diaz voted no.

While I think the application had a lot of utility, I voted against spending the near $50K for two reasons.  The first was related to the first item I discuss above.  There are a number of basic accounting functions that we need to shore up, or start doing.  Getting our basic operations up to speed to me is a higher priority than a tool that while better than our current process, doesn't address the fundamental issues within the finance group.  The team is small (two people) and there is a functional limit to bandwidth.  Until we get our basic operations on solid footing, I did not think it prudent to shift focus.

The second reason I voted against spending on this new software was based on information that we learned about ARPA funding.  Previously we were told that ARPA funding had a limited set of eligible uses, and a time window in which the funds needed to be used.  This meant that there were only a few different ways we could spend the money, if we didn't spend the dollars, at some point we'd lose them.  It is with this in mind that we created the Clayton Cares program to assist our local small businesses and residents most impacted by the pandemic.

Last night however, we learned the rules regarding ARPA funds have changed significantly.  Now, there is essentially no restriction on the types of eligible uses of funds, and no time limit upon which they must be spent.  Now, the ARPA funds (approximately $2.8M, of which $680K has been used) function more as general unrestricted fund balance.  This completely changes the character of the dollars and any spend of these dollars is more akin to spending down our reserves.  Whereas before there was both a time and use incentive to use the funds quickly, now I believe we need to evaluate spend more critically as we would any spending of reserves.  This is especially true given our structural deficits.  

Unfortunately it appears the City is treating the ARPA funds as a means to increase spending and as a way to plug various holes, as is suggested throughout the mid year budget review presentation.