Planning District Commission Finance-Executive Committee   9/17/2024

All right, we'll call this special executive committee meeting into order.

Yes.

Mr. Smith.

Mr. Smith, just let me know that he is unable to make it.

And then we need to read notice of the electronic meeting.

I'll go ahead and do that.

This meeting of the Thomas Jefferson Planning District Commission is being held pursuant to Code of Virginia subsection of 2.2-3708.3, which allows a public body to hold all virtual public meetings.

The meeting is being held via electronic video and audio means through Zoom online meetings and is accessible to the public.

The method for holding this meeting shall not change unless a new meeting notice is provided.

Should the electronics transmission fail, you may reach out to the TJPDC at remmerickatTJPDC.org.

Notice has been provided to the public through notice of the TJPDC offices to the media website posting and agenda.

The meeting is held personally to the remote electronic participation and all virtual meeting policy as adopted by the commission July 25th, 2024.

The meeting minutes will reflect that the meeting was held by electronic communication means and the type of electronic communication means by which the meeting was held.

Yes, the first item number two is just informational.

We would like as staff to request that Finance Executive Committee meets on a quarterly basis.

There's a number of items that will be coming up in this fiscal year that we would like to be running before you all before they go to the commission.

So I have listed in the agenda a November, February, and May date.

All of those will precede the existing commission meeting.

The pre-audit meeting, or not pre-audit meeting, the one where the draft audit is presented is the first one in November.

That'll be the hour before the November commission meeting.

And then the February and May meetings are each an hour and a half workshop.

Works for me.

Thank you.

No, that sounds good to me.

All right.

The pre-audit is just something that we had previously had on our calendars a year ago, and we are bringing them back in to kick off our audit season.

So David Foley is with us today.

Good afternoon, everyone.

So the purpose of the pre-audit kickoff meeting is a few things.

One, just to confirm everyone's understanding of the services that we'll be providing as part of the audit.

Two, to go over the audit schedule

And then kind of the third thing is it gives us a chance to have a conversation before we get started with the audit.

You know, it gives you all a chance if there's any concerns or any items that you all think

We need to look at or address while we're doing the audit.

It's good to talk about that stuff up front as opposed to just talking about everything at the end.

So those are kind of the three big reasons why it's good to have these pre-audit kickoff meetings.

And then we've got two documents here today to discuss.

The first is the audit engagement letter.

Can I share my screen?

You can.

So the audit engagement letter, really, again, this letter just confirms everyone's understanding of the services that we're going to be

Be providing the commission as part of the audit.

The engagement letter has a few different sections.

One is the audit scope and objectives of the audit.

Then it gets into our responsibilities as auditors and then discusses management's responsibilities in regards to the audit.

And then it also includes the fee for the audit.

So as far as the audit scope and objectives, really there's three main pieces of the audit that we do for the commission.

One is, of course, we audit the financial statements to make sure that the commission's financial statements are prepared in accordance with generally accepted accounting principles.

The other two pieces of the audit that we do are in accordance with government auditing standards.

One is in addition to just looking at the numbers themselves, the financial statement numbers themselves, when we're out doing the audit, we review and gain an understanding of the internal controls that the commission has in place over its financial reporting.

We do this to kind of directs our audit test and you know kind of lays out a blueprint of how we design our audit procedures based on what controls look like in place also as part of the audit in addition to just you know gaining an understanding of the controls we also

and places where it does look like controls are in place will actually perform a test of controls as part of our audit testing.

So again, looking at the controls just in addition to the numbers themselves.

And then the third piece of the audit is the single audit, the federal compliance audit.

So any time an organization expands over $750,000 in federal grant programs,

As part of your financial statement audit, you're required to undergo what's called a single audit.

And that's done in accordance with OMB's uniform guidance.

So when we're out doing the testing, part of the audit we do is for the major federal grant programs of the commission,

OMB provides a compliance supplement that lists all the compliance requirements that the commission has to comply with when it's carrying out and expanding its federal grant program.

So when we're out doing the audit, we'll take that checklist and go through and make sure that the commission is complying with those grant requirements.

So that's really the three main pieces of the audit that we do.

So when we meet in November to go over the draft audit report, you'll see that there's three different reports from us in the audited financial statements that covers these

three sections so that there be independent auditors report is where we issue our opinion on the financial statements again making sure that they're there in accordance with generally accepted accounting principles and then in the back in the compliance section of the report there'd be two different reports from us back there one is our will be our report over the Commission's internal control

over its financial reporting.

And there, if we're to note any significant deficiencies or material weaknesses, they would be reported in that report.

And then the third report would be the uniform guidance report from us that would

again, communicate if there were any findings, it would be included in that.

So there will be three reports to coincide with the three main pieces of the audit.

Again, the letter then goes into our responsibilities for all of the financial statements and single audit.

So we'll conduct our audit in accordance with generally accepted

Auditing standards, also in accordance with uniform guidance and government auditing standards, talks about the, gives a brief overview of the audit procedures we do over internal control and compliance.

And then down in other services, we just

List here that is part of the audit based on the clients, based on the commission's adjusted trial balance, we prepare the financial statements and see if the preparation is part of the audit report and management agrees.

That assumes all responsibilities for the financial statements and the fair preparation of those.

They also do a thorough review of the draft report that we send.

Also included as part of the audit, in accordance with the APA's audit specs,

One of the compliance things we have to look at is for VRS, the Virginia Retirement System.

So as part of the audit, when we're doing our testing, there's certain compliance things we have to look at and check related to the Virginia Retirement System, looking in the VNAB and doing certain tests there and making sure

Salaries are approved and agree with the records.

And then at the end of the audit we'll issue, we have to send to the state the report on the VRS compliance.

And then it gets into the management's responsibilities for the financial statements.

Again, management is responsible for the financial statements and

This just goes into the management's also responsible for the design of internal controls and also discusses here that the management will provide us with the information that we need to complete the audit.

And then the last section of the engagement letter

talks about is where we include the fee for this year's audit.

So that's the engagement letter again, just confirming the services we will provide.

The second item we have here is a proposed timeline for the audit.

So we've proposed conducting on-site field work the week of September 30th.

So we'll come on site for that week to perform our audit testing.

And then

We will have, after we get our audit field work complete, then we will issue the first draft of the audit report by October 21st.

This way, this gives management a chance to review the draft as well as part of the audit report.

There has to be an MD&A.

that's included that's written by management so that'll give them time to produce that statement and then we will once we get the feedback from management and the MD&A then we'll send a complete draft by October 31st which includes the MD&A and any recommended changes that management had

And then we will be there to present the draft audit to November 7th to report to the Finance Committee and Commission, go over the audit and the results.

and then after that presentation we will by November 30th have the final audit issued and then as well as upload and complete federal clearinghouse submission which is required anytime you have a single audit.

So that's the timeline for the audit.

Anybody have any questions, comments, concerns?

No, no, there's really, fortunately, there's no new standards this year that we have to worry about implementing.

All right.

Thank you, David.

Thank you, David.

At this time, we're going to move on to other topics, David.

OK. All right.

Yeah, you too.

So let's see.

Next up is the procurement policy, right?

Yes, so you will find in your packet a copy of a staff memo outlining the need for our procurement policy to be updated and a copy of the red line version of this procurement policy showing all of the changes in the second copy showing the changes incorporated.

The main reasons that we are bringing this update to you now

are that there have been a number of changes with VPPA over the years and also the TJPDC bylaws were amended in 2017 to increase the purchase threshold and authority of management to align with VPPA to $100,000.

But our procurement policy was not updated at the same time.

And with all of the changes that have happened with

The programs that we operate, we have found a need internally to streamline our procurement process and have that purchase authority for management increased to match VPPA.

Additionally, we've had staff going through procurement training through the state to help support our ability to do so.

The major changes that you will see in the policy

are adding a definition section which was not previously there it was just for clarity that purchase authority change and then the approval process for micro and small purchases that's things between about a thousand dollars and a hundred thousand dollars just being very clear for management and staff who approves what and then

Aligning the types of procurement listed in the policy with the VPPA.

What we had in our procurement policy previously included some of the approved procurement types, but not all of them.

And so it wasn't always clear to staff what methods were allowable to be used.

So, like I said, we're just trying to update it to align with VPPA and then also

Remove some administrative burden so that we can do what we need to do for business.

I like the addition of the definitions.

No, I don't have any.

Well, it's both.

It's within the policy.

It's being explicit about what the approval process is for micro and small purchases, who can authorize them.

But it's also allowing us to not use full blown procurement for purchases under $100,000.

Our procurement policy as it existed was significantly more restrictive than both the bylaws and the Virginia Public Procurement Act.

All right.

No, that makes sense to me.

Page three.

Item number three near the bottom of the page says allow purchases from $10,000 to $100,00.

Oh dear, I will fix that.

No problem.

So I will present this to the board for formal approval.

If you have a motion then.

So moved, would move to recommend adoption of the policy to the full board.

And then I am on my phone.

Do I need to turn my camera on?

Waiting for that pretty face.

There he is.

You're muted.

All right, there's a motion.

The chair votes aye.

Mr. Payne?

Okay, so moving on.

Hi, Mr. Chairman.

Laura and I are going to tag team on this one.

Similarly to your last item, we included in your packet a memo as well as a marked up and a clean version of proposed changes to the employee handbook.

The last time the handbook was adopted by the commission was eight years ago in 2016.

And since that time, there have been a number of changes.

in state law and regulation that are really driving the need to make some changes to the handbook, to make some additions.

There are also some changes that the commission has approved through policy or just practices at TJPDC over the past eight years that need to be added to the handbook as well.

This is actually the first of two times that we will be coming to you all with changes to the handbook.

This first round, as I said, are those things that are really necessitated by the changes in law or regulation or that we're doing now.

And then we will come back to you again in 2025.

with some other proposed changes that may have some fiscal budget impacts or that we just we need some more time to have some

analysis and discussion about.

So Laura is going to go through just a handful of some of the most significant changes.

I will say that we've worked very closely.

Thank you.

As David has mentioned, most of these are due to a just updating for statute in Virginia law.

So the first is the Virginia, I'm sorry, the Fair Labor Standard Act and language for the protected classes.

So that has a significant impact on a few of our policies for hiring and that section of our policy manual.

We have also identified that the Family Medical Leave Act, while the TJPDC is and does fall under the code and the act as an employer, none of our employees are eligible as we as an agency have less than 75 employees.

So our previous version had a wealth of information about the Family Medical Leave Act, what it covered, what it didn't, all of the terms and policies within.

And so most of those were eliminated from this version as they no longer apply.

No employee would be currently eligible for those benefits as the act required.

So those are two of the major.

We also added USERRA,

which was not in our previous version.

That language again comes directly from Versa, our insurance carrier.

Incorporated also our prior resolutions from the board, such as our holidays.

We had a Juneteenth that was approved in a prior resolution, but it was not included in our prior version, so we've added that.

We are also proposing that we have a half day before Thanksgiving, giving, excuse me, and that our flex days, we had two, one that was issued as a Christmas only or a winter holiday only, and now that is to be used throughout the year, proposed that it begins in July, so that was a change to our holidays,

14 and a half is our total and that aligns with the majority of our members of the commission.

The other is that we added our group term life insurance, our short term and long term disability plans.

They were not previously itemized in our last version.

Those are benefits that we do offer from the commission and we wanted to make sure those were included.

Those are probably the biggest highlights to make mention of for this review.

Does anyone have any questions about either the red line version or the completed version?

We will be looking at, you know, some of the grammar and or a legal counsel is going to be looking at it again.

So we will have some potential slight modifications for those reasons.

But any questions that I can open up to the

I have none.

Yes, the recommendation that we would like would be for you to recommend to the full commission approval with the proviso that staff has the flexibility to make changes.

They're clarifying in nature.

Motion's been made.

All those in favor?

Aye.

Aye.

Dermot's aye.

Motion passes.

And thank you for all your hard work on this.

I know it's a lot to cover all that.

A lot of changes.

Okay.

As I mentioned in the last commission meeting, I wanted to do a deep dive analysis on the local contributions.

We've been feeling a lot of pressure in a couple of our programs.

And so I wanted to detail through for you all the analysis that I did make a staff recommendation to you all.

and then request that this item actually become action for you all in making a recommendation to the full board and then go to them in October.

So I'm gonna share my screen.

I have a presentation prepared so it's easier for you guys to see that analysis that was done.

Is it sharing?

There, a little slow on the uptake.

Okay, full screen.

So here we go for local contributions.

So in addition to the per capita funding that we receive from all six jurisdictions, we receive direct contributions for six programs or services that we provide that are listed on your screen.

The table below is the table that's incorporated into every budget.

It's just the local contributions table.

And so what exists there is what is currently in the draft FY26 budget.

As you can see, for example, in solid waste, only the four

Jurisdictions that participate in our Solid Waste Planning Unit are assessed just like with the Rivanna River Basin Commission.

However, a lot of these contributions have remained static over time.

So what I did to do this overview is I first pulled copies of all of the approved budgets for the last 20 years.

I then analyzed locality population trends between 2005 and 25.

I looked at both historical inflation rates year over year,

I looked at cost of living adjustments year over year.

The first finding in doing this analysis is that the local contributions for several of our programs have not been adjusted at all since their inception.

Others have not been adjusted for many years.

So the table on your screen is the historical local contributions by year.

Anywhere where there's an orange highlight is where a decision or a policy change occurred that set that rate.

So for example, in the per capita column,

Those orange highlights are when the rate was changed, 60 cents, 62 cents, 64 cents, and so on.

In 2022, the commission adopted a two cent per year increase in the per capita.

So that one already has an escalation incorporated.

The other programs, as you can see, RideShare, Solid Waste, RRBC, some of them have not been changed in upwards of 10 to 20 years.

So one thing that we note is the workload has either remained the same or actually increased, but the amount of hours that staff has to complete the work has decreased over time.

The legislative liaison column, the orange highlight, that is when legislative liaison was converted over to a rate.

So that was changed from an annual amount to a per capita 40 cent per person amount.

And then both regional transit and regional housing have remained the same since they started.

So the recommendation that I have for this one is we recommend that the finance executive committee and the commission consider increases in the local contributions for several programs beginning for inclusion in the FY26 budget.

The next finding in doing that analysis is that local contributions for these programs have all been collected using fairly different methods over time.

So for example, as I noted, legislative services has a flat 40 cents per capita rate.

whereas Solid Waste and Rivanna River Basin Commission, it's a flat dollar amount year over year that's not adjusted for inflation or cost of living and is not proportionate to population.

It is just a static number that has remained the same over time.

So staff recommendation for this one is for consistency across all of our locally funded programs.

Staff would recommend converting all local contributions to per capita rates.

This will ensure that the contributions are proportionate to the population changes as they occur.

And I have a table for that one.

I'll leave this one up for a minute so you have a chance to absorb that.

If you look at the top table, you can see that the per capita already has the rate of 68 cents per capita and legislative already has a rate.

The other five programs are all static amounts, meaning they are not changing based on the population that we use the Welding Cooper Center estimates.

So in ride share, Charlottesville has paid always 7,331 regardless of the year.

What I would recommend is that we convert everything to a per capita rate.

So that's now in the orange row.

That takes the same contribution amount.

So it doesn't change the total amount that we are receiving, but it does recalibrate the contributions by jurisdiction so that it aligns with their proportion of the population within the planning district.

You can see that it has a nominal change

Okay, so finding number three and doing the analysis is that the local funding is not keeping up with our increasing costs for these particular programs.

All of these, except for one, are 100% locally funded.

The only one that is not is Rideshare, and that's 80% federal funds, 20% local.

The impact I've already shared is that oftentimes we're feeling very crunched in these.

If the amount hasn't changed over 20 years, but the workload has either stayed the same or increased, we're finding that we are asking staff to do the same amount of work with significantly less time to get it done.

Some analysis that we did in order to make a recommendation to you all because I created three different scenarios, all of them being five-year potential scenarios.

The first thing that I mapped out was looking at what would happen if we did a significant one-time percentage increase, so increase all funding by 10 or 20% to all programs and then recommend a nominal recurring flat rate increase, so that rate being

the per capita rate, and it would be a different rate for each one.

Scenario two was looking at a significant one time percentage increase, and then looking at a nominal recurring percentage rather than a rate increase to see what that would do over time.

And then the third scenario that I completed was, what if we just took a flat percentage rate across all programs for five years, with the exception of the legislative liaison?

And I'll go into that in a couple minutes.

So looking at those three different outcomes, staff determined that the third scenario offers the following benefits.

First, it spreads out the increases across five years.

It makes it much more palatable to our local governments to be able to budget over time rather than having one large increase one year and then maintaining a smaller increase each additional year.

It also reduced some unnecessary complexity.

In each of our programs with them each being a different rate, you couldn't do something as simple as let's increase them all by two cents per year because they would have vastly different effects depending on the amount of money that we're receiving.

And then the other benefit of scenario three is since it's a flat rate across several years, what the commission determines for this next upcoming budget wouldn't impact or affect the commission's determination for future years.

So here is the staff recommendation.

The very first row that says previous rate is what the contribution is as a rate if we convert it to that.

Then recommending in all programs except for legislative liaison, a 7% increase.

Legislative liaison is a 5% increase just because of the large amount.

That's the largest one and 7% was too aggressive.

So we're recommending that the commission consider the 7% increase for the FY26 budget with the exception of legislative services for 5%.

This is the impact of that recommended scenario.

So if you look in the first column, that is currently what would be an FY26 if no changes occurred.

The second column is if both the contributions were converted to a rate

and that rate increased by 7% except for legislative liaison at 5%.

And then you can see both the dollar increase by jurisdiction and the percentage increase by locality.

Because again, this recalibrates based on population.

Finding number four in doing this analysis is that across time, adjustments are being made to some programs but not to others.

And there's really no mechanism in place

to trigger looking at these local contributions other than the annual budget as conditions are changing.

So what staff would like to recommend is that the commission review and adopt projected local contributions every five years.

And that's similar to what you guys do for the per capita rate.

In 2022, the decision was made, let's increase by two cents per year for five years and then reanalyze.

Staff is recommending that the commission adopt that same process for all local contributions.

However, we're not at this time requesting action from the finance executive committee on a five-year plan.

Instead, we would rather just have you all make a recommendation on FY26 and then bring this additional analysis to the full commission for consideration in the April, May final budget so that you guys have time to digest.

We have time to answer questions, share additional analysis before any decisions are made on a five-year plan.

And so finally in conclusion, what we would like to recommend, and I actually amended this slightly as I was reviewing it, but staff is recommending that finance executive committee recommended the full commission and increase in local funds of 7% for all programs, except for legislative services at 5% for inclusion in the FY 26 budget.

And the only thing that I added to that recommended motion was, which includes the conversion of all contributions to per capita calculations.

for consistency across programs.

Well, I mean, the numbers look reasonable in terms of the dollar increase.

Then we would have

The same amount of funding that we currently do, and we would still feel that pressure in some of those programs.

Many of those programs, other opportunities have come up, but there just isn't the staff bandwidth.

As you can imagine, for example, the programs that are $10,500, if you look at the cost of salary fringe indirect, that's not very many hours for an annual program to be operated.

Yeah, no, I don't know if the three approaches you laid out, I'm not sure.

The third one is what I would choose, but in thinking about it, I feel like the biggest barrier would be, is there opposition from

you know some board of supervisors and that third approach would seem at least at first glance to be the one that might potentially upset them the least so I'm okay with that.

I guess the only question I have is I'm curious kind of with that adjustment if we adopted that third approach there's an $18,000 annual increase for the TJPDC how much does that cover kind of the existing deficit of

Where are the organizations at versus like how much staff time is going towards these programs?

Well, I can tell you what I, what I did is I went ahead and drafted a revised FY26 budget should the commission approve this increase in local contributions.

And it does close our gap.

So if you remember in the FY26 draft budget, there was a recommendation that we have to pull from reserve transfer in order to close that gap.

This would close that gap.

The other thing that this does, which isn't evident in my presentation, is for Rideshare, we're only asking for the increase in the local contribution.

If it were approved by the state, we would also get an increase in the state proportion as well.

OK. Did that answer your question?

Yes.

Yeah, I guess my, I mean, the dollar amounts to me aren't scary at all.

I know, obviously, Charlottesville City Council, I know fully understands the value and is okay with anything.

I think these dollar amounts aren't scary.

Yeah, and I think, you know, after doing,

The really deep dive analysis, and I've got all the spreadsheets to support it, is I felt that the other two options would have much larger sticker shock to some of our smaller jurisdictions.

Because that one time upfront increase to make up for the last several years where there have been significant increase in our cost, but no increase in our funding, I felt like that would be a lot less feasible to get support for than if we spread it out over several years in order to make it easier

I think so.

Well, I think it's maybe stating the obvious, just a recap in terms of all the changes that have occurred over the last five years, six years in terms of not just an increased cost, but the workload and so on.

You can do that.

Very good.

Questions are made and seconded by Mr. O'Brien.

All those in favor say aye.

Aye.

All right.

Nope.

Wonderful.

All right.

Thank you for your time.

Anybody else?

Anything else?

We go to the order?

Good.

Thank you, guys.

My pleasure.

Bye bye.

Thank you all.