March 1, 2018 minutes
REDWOOD CITY SCHOOL DISTRICT
Measure T Committee
March 1, 2018
Minutes of the Meeting
Location: District Office Board Room
750 Bradford Street
Redwood City, CA 94063
Present: Lori Bluvas, Michael Bolander, Richard Delfs, Elizabeth Flegel, Ellen Jacobson, Jeanne Panos, Carolina Webster and Rebecca Weekly
Richard Delfs arrived at 6:13 pm
Rebecca Weekly arrived at 6:25 pm
Lori Bluvas left at 7:00 pm
Others present: Olivia Acosta, Don Dias, Nathan Edelman, Will Mangrum, Mark Newton, Dennis McBride, Sean Mick, Hilary Paulson, Jorge Quintana, Wael Saleh and Ray Seo
Absent: Felix Gonzalez
1.0 Call to Order
Meeting was called to order at 6:08 p.m.; quorum not established
Michael Bolander requested to move Action Items before Information/Discussion as soon as a quorum is established due to one member of the committee leaving the meeting early.
• Quorum established at 6:13 pm.
3.0 Public Comment
At this time members of the public may address the CBOC on any items of interest to the public that are within the subject matter jurisdiction of the CBOC. Speakers are requested to limit their remarks to three minutes. No Committee action can be taken.
4.0 Information/Discussion
4.1 Review of “The Role of the Citizen’s Bond Oversight Committee” by the District’s bond counsel attorney
Sean Mick, Attorney At Law at Dannis Woliver Kelley provided the committee information on the role of the Citizen’s Bond Oversight Committee. Mr. Mick explained that the committee’s role is to make sure that expenditures are proper and accord to what was promised to the voters.
2.0 Approval of March 1, 2018 Agenda
(Lori Bluvas/Jeanne Panos; 7-0)
Per Michael Bolander’s request, Action Items were moved before the Information/Discussion items.
5.0 Action Items (Action Required)
5.1 Election of Vice-Chair for Measure T Committee
Jeanne Panos volunteered as Vice-Chair for Measure T Committee
(Lori Bluvas/Carolina Webster; 7-0)
5.2 Approval of June 1, 2017 Committee Minutes
(Jeanne Panos/Lori Bluvas; 7-0)
5.3 Acceptance of Measure T 2015-16 General Obligation Bonds Audit & Performance Report
Nathan Edelman, CPA, Vavrinek, Trine, Day & Co., LLP (VTD) reported that included in the audit report are the financial report, income sheet/balance sheet and an auditor’s opinion, as well as, Government Auditing Standards opinion. The income sheet/balance sheet show the ending equity on June 30, 2016 and June 30, 2017. Mr. Edelman stated that they are not looking whether or not the District has done a good job spending funds and/or agree/disagree with the use of funds. It is purely based on whether the information is there for the users of the financial statement. If deficiencies over financial reporting are identified in the audit, those would be reported to the committee. It is a clean unmodified opinion; the financial statement is fairly stated.
Mr. Edelman explained that the 2015/16 and 2016/17 Performance Audit is where the auditors look at the source documents, they look at the construction invoices, and compare the spent funds versus what the voters approved according to the project listing in the Measure T ballot. Mr. Edelman stated that both the 2015/16 and the 2016/17 Measure T funds were spent in accordance with the project listings in the Measure T ballot language.
Mr. Bolander asked if the $60 million bond includes the issuance costs. Mr. Edelman responded that the costs are under services and other expenditures.
(Elizabeth Flegel/Jeanne Panos; 8-0)
5.4 Acceptance of Measure T 2016-17 General Obligation Bonds Audit & Performance Report
(Carolina Webster/Jeanne Panos; 8-0)
5.5 Approval of CBOC Annual Report for 2015/16
CBOC Annual Report for 2015/16 approved with edits and to include the 2015/16 financial report from Accountability Colbi Software. Beginning year two of CBOC Annual Report for 2016/17 to include pictures in the report.
(Rebecca Weekly/ Jeanne Panos; 8-0)
4.0 Information/Discussion
4.1 Review of “The Role of the Citizen’s Bond Oversight Committee” by the District’s bond counsel attorney
Mr. Mick continued to explain the role of the Citizen’s Bond Oversight Committee.
The Measure T oversight committee should consist of eleven committee members. Currently, the committee has two vacant positions. The Board can approve the reduction in the number of Measure T committee members.
Mr. Mick explained that the Measure T funds are to pay construction, reconstruction, rehabilitation or replacement of school facilities. It is not to paying operating expenses such as teachers’ or administrators’ salaries, but there are exceptions to the rule. For example, a District employee who is a Program Manager of the Bond Program, a percentage of their salary can be paid with bond expenditures, but not the entire salary.
Mr. Delfs said that they were told the District can borrow from the Bond Fund to pay teachers’ salaries.
Mr. Edelman explained that school districts receive funds throughout the year and the district needs funds all year in order to pay salaries. There is a lot of cash in the Fund 21 Program (Bond) and some districts would like to temporarily borrow funds by transferring the funds into the general fund and pay it back before the end of the fiscal year. At the end of the year the bond program has no impact, money came in and out and did not impact the ability for any projects.
Mr. Mick added that borrowing funds from Fund 21 should be discussed between the County and District. It is not an ideal situation.
CBO Saleh added that the District does not have many State deferrals, therefore, borrowing is not needed. CBO Saleh said that there are other funds the District may borrow funds from those, and would do so first, before borrowing from Fund 21 (Bond). Borrowing funds from another fund is called inter-fund transfer, where the District must re-pay the funds within 120 days.
Mr. Mick explained that the committee must inspect school facilities to make sure the bond funds are expended in compliance with law, review any deferred maintenance proposals or plans the District puts forward and review efforts by the District to maximize revenues by implementing cost saving measures. Essentially, the committee has an audit function. The powers are reserved for the District. The Board makes the decisions on how bond funds are spent, which projects and timeline on project list, including, the timing in the issuance of the bonds.
Mr. Mick said a quorum must be established in order to approve action items. If quorum is not established, the committee may still meet and receive information.
4.2 Overview of the District’s planning progress to date
Mr. Newton provided a handout which provided an update on all the projects under the Measure T Bond Program. The intent of the District is to initiate a design for each school site. There are current designs for all sixteen sites, the intention was to not create any priority at any of the sites. Some of the projects are preceding at a more rapid rate than others. Mr. Newton added that the goal is to continue to design all of the projects until they receive all the approvals from the Division of State Architect.
Mr. Newton continued to explain that the projects have been split into two sets. One is the quick-start project. These projects may not have required as detailed review or any review by the State Architect. These projects included HVAC and lunch Shelter Projects. This work is complete.
Mr. Newton explained that the second part of the design process is broken up into 3 phases. The first phase is called Schematic Design. Schematic design is how the different parts and pieces inter-relate to one another. The next phase is the Design Development which is when decisions are made in regards to the sort of mechanical units or systems that will be used. The third phase is the Construction Document phase. This phase is when the physical detailing on the drawing is done, that clearly defines what needs to be built during the design phase.
Mr. Newton provided a second hand-out which showed the Design Progress phase at each site. Most projects have completed the Schematic Design phase. Mr. Newton stated that they have specifically identified to move forward with five projects on an aggressive phase. These five projects include Orion, McKinley, North Star, Kennedy New Administration Parking Lot and Hoover Gym project. These projects have been or soon will be submitted to the Division of State Architect. Soliciting quotes from contractors will begin and then moving forward into construction.
Mr. Newton explained that there are certain guidelines that have been created as part of the initial planning documents, which includes both an educational specification and technical specification. The purpose of these documents is, for example one Kindergarten class at one elementary school is the same as the Kindergarten class as a different elementary school. Also for example, the fire alarm systems are the same high quality systems at all sites.
Mr. Newton added that they continue to design at each and every school sites. In addition to, by getting the big projects done sooner, there is a savings on price escalation and are not prioritizing projects in any specific way.
Mr. Newton explained that Prop. 39 - Energy is an initiative that the voters approved, which is an incentive program created by the State to give funds to energy projects to allow schools to move forward. Currently, there are a series of Prop. 39 projects being developed across the District and are in the process of developing request for proposals to bid the work. The status of these projects will be reported to committee at next meeting.
Mr. Newton continued to explain that CEQA is the California Environmental Quality Act. Every project within the State of California is required to be in compliance for CEQA. The District has completed their CEQA compliance in all but three of the sites and doing additional due diligence in the three sites, including a preliminary environmental assessment and coordinating with the Department of Toxic Substance Control.
Mr. Newton added they are being very careful about verifying at each phase that the project is consistent with the budget established and there will be no impact in the budget of one project to another.
Ms. Flegel asked if a project is in the budget and then is funded by a State fund does this allow the District to do more with bond. Mr. Newton replied yes, they are keeping close records of anything that may have to be removed from the project due to additional funding.
4.3 Update on bond expenditure to date
CBO Saleh shared a hand out that provided the expenditure report. Mr. Saleh explained that Ray Seo reconciles the reports to the District’s financial system. The AccountAbility system is what the bond program uses to budget and input invoices, and the District financial system provides the actual checks and invoices that are filed with the State. Mr. Seo matches the program side to the District accounting side.
Mr. Saleh explained that the expenditure report is sorted by site, by project. The first column showing what is budgeted or set aside for the project and the Expenditure column showing the amount spent. This amount may change as payments are made for a specific project.
Mr. Saleh referred to page 5 where it shows the total budget of $205,706, 759, which not only includes the bond funds, but also the projected interest earned, impact fees (Fund 25), and Prop. 39 funds which are for energy efficiency. As of January 31, 2018, $8.5 million has been spent and $197.1 is the remaining against budget or what is available.
Mr. Saleh explained that any leftover funds from a project are placed back in the reserves and the Board will decide how to spend the funds.
Mr. Bolander asked how long does the District have to spend the funds after the bond issuance. Mr. Saleh responded 36 months and Mr. McBride added that District must commit to the funds within 36 months.
Mr. Saleh said that the District is expediting the program from 7 years down to 5 years, to save on costs and gain other benefits.
Mr. Bolander asked if the committee could receive the expenditure report by fiscal year to add to the committee’s annual report. Mr. Seo said it is likely to have the report broken down by fiscal year and will look into it.
Mr. Bolander asked if the District does not receive Prop. 39 funds would that remain as an expenditure. Mr. Saleh responded that the District has received $1.8 million. It is in year four of a five-year program. The State requires a very detailed study from the District to show return on investment. The State approved and therefore, the District has received the majority of the funds.
Mr. Dias said that in order to close out a project, a notice of completion is given to the Board. Then it is filed with the County in order for the retention to be released. Mr. Dias added that if the funds show the “remaining in the budget column” it does not mean it in under budget or not spent. It could mean that it is going through the approval process, therefore, the project will not show as an expenditure until the project is signed off by the State or filed with the County.
Mr. Bolander would like to add a footnote to show the sources of funds, for example the Prop. 39 funds, or any other funds that is not bond funds. Or perhaps a subtotal for bond related expenses in order to separate the expenses/costs from different funds.
Ms. Weekly asked if the District could add an appendix to describe the A-G, due to the overall contingencies, also include that there is planning and site totals and the sources of the funds to show that it is the bond funds plus Prop. 39 funds, plus other State matching funds; some of which District has and others in which District is expecting.
Ms. Flegel said to add that these funds are not what each site has contracted, but the invoicing that have been paid, for example, some sites would have additional work performed that have not been paid for that are still under contract.
Mr. Seo said that the expenditure report shows the invoicing amounts, all invoices that have been received fall under encumbered amounts and are labeled under “committed” in Account-Ability.
Ms. Weekly would like to see the column that shows all the work that has been done, to show the work that is not completed or have been invoiced yet.
Ms. Flegel said that showing the extra columns may be too confusing, as it is not necessarily work that has been done, it is work that has been contracted.
Ms. Weekly asked how much differential is there between what has been invoiced and how much work is under contract. Mr. Newton responded that it could be pretty significant.
Mr. Seo added that the budget column and that budget amount is factoring in the “committed” amount and the expended amount. Not all the amounts will be spent, in some cases it will be a lesser spent amount.
Mr. Saleh added that most of the time it does not include the contract amount, for example, the majority of the budget is not contracted and not committed.
Mr. Saleh said that they would bring multiple samples at next meeting for committee to decide how they would like to see the expenditure report.
4.4 Discuss future meeting dates
Next meeting dates:
Thursday, May 31, 2018
Thursday, September 6, 2018
Thursday, November 1, 2018
4.5 Meeting adjourned at 7:56 p.m.
(Jeanne Panos/ Elizabeth Weekly; 7-0)