HomeMy WebLinkAboutO-2007-3000 Passed
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REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: June25. 2007
Requested By: Michael G. Dolbv. CPA r
Department: Finance
Appropriation
Source of Funds:
Account Number:
Report:
Resolution:
Ordinance: X
Amount Budgeted:
Exhibits: Ordinance
Amount Requested:
Exhibits: Interlocal A2reement
Budgeted Item:
YES
NO
Exhibits:
SUMMARY & RECOMMENDATION
The City of La Porte would like to participate with the North Central Texas Council of Governments (NCTCOG)
through an interlocal agreement for cooperative purchasing for actuarial shared services. The city will be able to
obtain an actuarial study of its annual required contribution to fund health insurance for retirees as recommended for
implementation of Governmental Accounting Standards Board statement number 45 (GASB 45). The NCTCOG has
gone through the bid process and selected an actuarial firm. If the city participates in the cooperative purchasing
program, the city will able to obtain an actuarial study at a reduced fee.
Action Required bv Council:
Recommend that the Council receive and approve the interlocal agreement with NCTCOG.
Oa'e II
ORDINANCE NO. 2007-~():K)
AN ORDINANCE APPROVING AND AUTHORIZ ING AN INTERLOCAL AGREEMENT
BETWEEN THE CITY OF LA PORTE AND NORTH CENTRAL TEXAS COUNCIL OF
GOVERNMENTS, FOR COOPERATIVE PURCHASING FOR ACTUARIAL SHARED
SERVICES, MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE
SUBJECT, FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW, AND
PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council hereby approves and authorizes
the contract, agreement, or other undertaking described in the
title of this ordinance, a copy of which is on file in the office
of the City Secretary.
The Interim City Manager is hereby
authorized to execute such document and all related documents on
behalf of the City of La Porte.
The City Secretary is hereby
authorized to attest to all such signatures and to affix the seal
of the City to all such documents.
Section 2. The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject
matter thereof has been discussed, considered and formally acted
upon. The City Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
Section 3. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
PASSED AND APPROVED, this ~Sth day of June, 2007.
By:
~y OF LA ~E
~~~V~
Alton E. Porter, Mayor
ATTEST:
~~~4'(f
City Secretary
APPROVED:
Cl~~i~ ~
~ssistant City Attorney
INTERLOCAL AGREEMENT
FOR
COOPERA TIVE PURCHASING
FOR
ACTUARIAL SHARED SERVICES
ORIGII~L
THIS INTERLOCAL AGREEMENT ("Agreement"), made and entered into pursuant to the Texas Interlocal
Cooperation Act, Chapter 791, Texas Government Code (the "Act"), by and between the North Central Texas Council of
Governments, hereinafter referred to as "NCTCOG," having its principal place of business at 616 Six Flags Drive,
Arlington, Texas 76011, and the City of La Porte, a local government, created and operated to provide one or more
governmental functions and services, hereinafter referred to as "Participant," having its principal place of business at:
604 W. Fairmont Parkway, La Porte, Texas 77571.
WITNESETH
WHEREAS, NCTCOG is a regional planning commission and political subdivision of the State of Texas operatin~
under Chapter 391, Texas Local Government Code; and
WHEREAS, pursuant to the Act, NCTCOG is authorized to contract with eligible entities to perform governmental
functions and services, including the development of a standard approach for acquiring actuarial services; and
WHEREAS, in reliance on such authority, NCTCOG has a cooperative purchasing program under which it contract~
with eligible entities under the Act; and
WHEREAS, Participant has represented that it is an eligible entity under the Act, that by Administrative Action hm
authorized this Agreement on June 25, 2007 and that it desires to contract with NCTCOG on the terms set forth below;
NOW, THEREFORE, NCTCOG and the PARTICIPANT do hereby agree as follows:
ARTICLE 1: LEGAL AUTHORITY
The Participant represents and warrants to NCTCOG that (1) it is eligible to contract with NCTCOG under the Act
because its a local government, as defined in the Act, and (2) it possesses adequate legal authority to enter into this
Contract.
ARTICLE 2: APPLICABLE LAWS
NCTCOG and the Participant agree to conduct all activities under this Agreement in accordance with all applicable rules,
regulations, and ordinances and laws in effect or promulgated during the term of this Agreement.
ARTICLE 3: WHOLE AGREEMENT
This Agreement and any attachments, as provided herein, constitute the complete contract between the parties hereto, and
supersede any and all oral and written agreements between the parties relating to matters herein.
ARTICLE 4: BILLINGS
Billings will be generated for the Actuarial Shared Services through Gabriel Roeder Smith & Company and will include
an Administrative Fee of $100 per valuation cycle (annually or biennially) payable to NCTCOG.
ARTICLE 5: CHANGES AND AMENDMENTS
This Agreement may be amended only by a written amendment executed by both parties, except that any alternations,
additions, or deletions to the terms of this Agreement which are required by changes in Federal and State law 01
regulations are automatically incorporated into this Agreement without written amendment hereto and shall become
effective on the date designated by such law or regulation.
NCTCOG reserves the right to make changes in the scope services offered through the Cooperative Purchasing Program
to be performed hereunder.
THIS INSTRUMENT HAS BEEN EXECUTED IN TWO ORIGINALS BY THE PARTIES HERETO A~
FOLLOWS:
* Denotes required fields
NOTE: Facsimile cODies of this document shall not be acceDtable as ORIGINALS.
Jnterstate vI rev. 10/05
* City of La Porte
Name of Participant (local government. agency, or non-profit
corporation)
North Central Texas Council of Governments
616 Six Flags Drive, Arlington, Texas 76011
*BV:~~
* 604 W. Fairmont Parkway
Mailing Address
* La Porte
City
Tx
State
77571
ZIP Code
Signature of Authorized Official
* Monte Mercer
Typed Name of Authorized Official
* Director of Administration
Typed Title of Authorized Official Date
7/11/07
* Interim City Manager
Typed Title of Authorized Official
6/26/2007
Date
c
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: June 25. 2007
Appropriation
Requested By: .John .Joerns
Source of Funds:
Department: Administration
Account Number:
Report:
Resolution:
Ordinance:
Amount Budgeted:
Exhibits: Emails from Clark Askins
Amount Requested:
Exhibits: Email from Phvllis Rinehart
Budgeted Item: YES NO
Exhibits: HR 2365 Synopsis
Exhibits: HB 2365 Full Version
SUMMARY & RECOMMENDATION
At the June 11 City Council meeting Council asked staff to secure additional information regarding HE 2365 (now
signed by the Governor and effective immediately) and GASB 45. More specifically Council asked for information
on the potential effect on bond ratings if Cities do not perform the actuarial studies and report according to GASB
45 standards.
Attached are these emails;
. Two from Clark Askins after a similar question was raised at the last Chapter 172 meeting
. One from Phyllis Rinehart noting her conversation with the City's current auditor, Null-Lairson
We have contacted our Financial Advisor and asked if they could determine how the bond rating agencies would
respond if a city elected not to follow GASB 45. As of this writing we do not have any input from the Financial
Advisor.
We have invited both the City's Auditing Firm and Financial Advisors to attend the June 25 workshop.
As directed at the June II meeting, the two items tabled are returned for consideration.
Action Required bv Council:
Consider approval of the agenda items tabled at the June 11,2007 City Council meeting.
· CONSIDER APPROVAL OR OTHER ACTION REGARDING AN ORDINANCE
APPROVING AND AUTHORIZING AN INTERLOCAL AGREEMENT BETWEEN THE
CITY OF LA PORTE AND NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENTS,
FOR COOPERATIVE PURCHASING FOR ACTUARIAL SHARED SERVICES
· CONSIDER APPROVAL OR OTHER ACTION APPROVING AND AUTHORIZING AN
AGREEMENT BETWEEN THE CITY OF LA PORTE AND GABRIEL, ROEDER,
SMITH & CO.; TO PERFORM ACTUARIAL CONSULTING SERVICES
A
&hO~7
Date I ( .
Page 1 ot 1
Joerns, John
From: Clark T. Askins [ctaskins@swbell.net]
Sent: Friday, June 08,20079:48 AM
To: Joerns, John; Welch, Neal; Swanagan, Robert
Subject: GASB 45
Folks:
In light ofthe question raised at last night's Chapter 172 meeting regarding GASB 45, I reviewed HB
2365, which at this point is on the governor's desk for signature. Under this bill, both the State and
political subdivisions of the state may, if they choose, opt out of GASB 45 accounting requirements. In
the words of an article I found, "The bill establishes a 'statutory modified accrual basis' of accounting
that 'recognizes revenue when it is measurable and available to finance current expenditures and
recognizes expenditures when they are normally expected to be liquidated...' The bill specifically
addresses accounting for other postemployment benefits by providing 'To the extent that generally
accepted accounting principles require accounting or reporting of other postemployment benefits at the
government-wide or fund level on any basis other than pay-as-you-go, this state and its political
subdivisions may account for or report those other postemployment benefits in accordance with the
statutory accounting principles in this chapter.'
In other words, this bill would allow the City to follow pay-as-you-go accounting principles laid out in
the new law, in lieu of following the GASB 45 regulations. Therefore, assuming this bill becomes law, it
is my opinion that the City of La Porte could choose to bypass GASB 45 and stick with pay-as-you-go.
However, as has been pointed out, this would come at the possible expense of our bond rating,
depending on the approach outside auditors, accountants, etc. take the absence of GASB 45
information. (On this note, I would mention that the bill allows an entity that opts out of GASB 45 to
nonetheless indicate the value of its non-pension retiree obligations (health, life, dental) as a footnote, on
its financial statements.
The Texas Attorney General had previously opined that the State is not legally compelled to follow
GASB 45. It is not mandated by Congress on the states, nor does GASB have independent powers of
enforcement. This being the case it looks like the Legislature took a rather bold move, and one that may
be followed by other states.
Clark
6/19/2007
Joerns, John
From:
Sent:
To:
Subject:
Clark T. Askins [ctaskins@swbell.net]
Tuesday, June 19, 2007 3:09 PM
Joerns, John; Swanagan, Robert; Welch, Neal
HB 2365 / GASB -45
Folks:
In case you didn't already know, the Governor signed HB 2365, pertaining to right of state
and political subdivisions of state to opt out of
GASB-45 reporting requirements for non-pension retiree benefits, on Friday, June 15th. The
law is effective immediately.
Clark
1
Page 1 of]
Dolby, Michael
From: Rinehart, Phyllis
Sent: Thursday, June 14, 2007 7:54 AM
To: Joerns, John
Cc: Dolby, Michael
Subject: response from auditor
Mr. Joems,
Here are my notes from a telephone conversation with Tom Pedersen with Null-Lairson:
City can have the actuarial study done. GASB 45 does not require the City to fund the liability. What
will be reported in the audit report as a liability in the government wide financial statements will be the
difference between the actuarial annual required contribution and any amounts paid in the current year.
This amount will be reported in the government wide financial statements as a liability. No GASB 45
liabilities will be reported on the fund financial statements. The city will most likely then be issued an
unqualified opinion.
If the city chooses not to have the study done as permitted by State law, then it should follow the rules
as set forth by the state comptroller once the law has been passed and the comptroller has established
rules. If the city follows the rules promulgated by the Comptroller's Office, then the auditors may issue
an unqualified opinion on the financial statements prepared on a regulatory basis of accounting. The
opinion would include a paragraph which explains that the financial statements were not prepared in
accordance with generally accepted accounting principles. If the City chooses this option and does not
follow the rules established by the Comptroller's Office, the auditor's would have to issue either an
adverse or qualified opinion.
If the City chooses not to implement GASB 45, then there is not any certainty how the City's bond
ratings will be affected (if any) or how the city' participation in the GFOA certification program will be
affected.
Tom Pedersen and Chris Breaux are available for questions and can ::I1so attend the city council if
necessary .
Phyllis
6/19/2007
Meetings Act. In addition, the bill provides that notice of an emergency meeting or supplemental
notice of an emergency item added to the agenda to address the emergency must be given to
members ofthe news media not later than one hour before the meeting.
Other Bills
H.B. 1 - State Budeet / Parks: this is the state budget bill. Of interest to cities, local parks grant
funding will be affected as follows: (1) the allocation of sporting goods sales tax revenue to the
local parks grant account will increase from $5.2 million per year to $15.5 million per year; (2)
total general fund revenue to the local parks grant account will increase from $0.8 million for the
biennium to $16.7 million; and (3) $16.7 million oflocal parks grant funding will be "earmarked"
for eighteen specific local park projects. (Total funding will increase from $11.3 million to
$47.658 million per biennium.)
H.B. 11- Alcohol and Tobacco Taxes: improves the state's procedures relating to the filing of
alcohol and tobacco sales reports with the state comptroller, and is estimated to generate roughly
$5 million in municipal revenue statewide in fiscal year 2008 and $17 annually by fiscal year
2012.
H.B. 730 - Certificates of Oblieation: extends from 14 to 30 days the required time period
between the first newspaper notice of a city's intention to issue certificates of obligation and the
meeting date at which the city council authorizes their issuance.
H.B. 1268 - Attorney's Fees: provides that a governmental contract for general construction, an
improvement, a service, a public works project, or a purchase of supplies, materials, or equipment
may not provide for the award of attorney's fees to the governmental entity in a dispute unless the
contract provides for the award of attorney's fees to each other party to the contract.
H.B. 1456 - Annual Financial Statement: extends from 120 days to 180 days the time period,
following the last day of a fiscal year, for a city to file the annual financial statement for the fiscal
year with the city secretal1:"
H.B.. 1560 - Liabilitv: expands the definition of recreation to include "paint ball use," and
provides that a city must post a sign containing specific language on any premises that a city
owns, operates, or maintains on which certain recreational activities are conducted.
>feH.B. 2365 - Postemplovment Benefits/GASB 45: provides that: (1) a city's accounting and
financial reporting system must be consistent with state law and may not misrepresent financial
activities; (2) a city may follow the "statutory modified accrual basis" method of financial
accounting; (3) any generally accepted accounting principles that require reporting of
postemployment benefits in any method other than "pay as you go" do not have to be used by
Texas or its political subdivisions; and (4) "other postemployment benefits" must be disclosed in
a city's annual financial statement in the detailed manner laid out in. the bill. (Note: finance
officers and auditors should carefully review this bill. It will take effect immediately when
it is signed by the governor.)
H.B. 2438 - Hotel Occupancy Taxes: authorizes a city to use hotel occupancy tax revenue to
own or finance a transportation system that transports tourists from hotels to the commercial
center of the city, a convention center, other hotels, or tourist attractions in the city. This bill also
12
80R9368 MXM-F
By: Truitt
4
k
H.B. No. 2365
A BILL TO BE ENTITLED
AN ACT
relating to financial accounting and reporting for this state and
political subdivisions of this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) state and local governments provide essential
services funded by statutorily authorized taxes and fees and not by
cost recovery-based rate or price models;
(2) state and local government operations derive
authority from and are regulated by the Texas and federal
constitutions and statutes; and
~
(3) financial a~counting and reporting should accurately
reflect government acti vi ties and not mislead or misinform the
public.
SECTION 2. Subtitle F, Title 10, Government Code, is amended
by adding Chapter 2264 to read as follows:
CHAPTER 2264. FINANCIAL ACCOUNTING AND REPORTING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2264.001. APPLICABILITY. This chapter applies to this
state and to each political subdivision of this state.
Sec. 2264.002. APPLICABILITY TO COMPONENT UNITS.
To the
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H.B. No. 2365
extent an entity is reported on the financial statement of the
state or a political subdivision as a component unit, the statutory
accounting principles and reporting standards in this chapter apply
to that entity.
[Sections 2264.003-2264.050 reserved for expansion]
SUBCHAPTER B. FINANCIAL ACCOUNTING AND REPORTING STANDARDS
Sec. 2264.051. REQUIREMENTS FOR SYSTEM OF ACCOUNTING AND
REPORTING.
The system of accounting for and reporting the
financial activities of this state and its political subdivisions:
(1) must be consistent with state financial laws;
(2) may not misrepresent the nature, scope, or duration
of the financial activiti~s of the state or political subdivision;
and
(3) must follow the statutory standards in this chapter
when other accounting bases conflict with state law.
Sec. 2264.052. STATUTORY MODIFIED ACCRUAL BASIS.
(a)
A
statutory modified accrual basis is a comprehensive basis of
accounting that recognizes revenue when it is measurable and
avaiiable
to
finance
current
expenditures
and
recognizes
expenditures when they are normally expected to be liquidated with
current financial resources regardless of when they mature.
(b) This state and its political subdivisions may account for
and report selected types of financial activities on a statutory
modified accrual basis for government-wide and fund-level internal
and external financial statement reporting.
j:;
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Sec. 2264.053. COMPLIANCE
WITH
H.B. No. 2365
ACCOUNTING PRINCIPLES.
Compliance with the statutory accounting principles of this chapter
by the state or a political subdivision satisfies another statute
that requires accounting and reporting according to generally
accepted accounting principles.
Sec. 2264.054. ACCOUNTING FOR OTHER POSTEMPLOYMENT BENEFITS.
(a) In this section:
(1) "Other postemployment benefits" means employee
benefi t programs for which coverage or eligibility extends to
retired employees. The term does not include pension benefits.
(2 )
"Pay-as-you-go"
means
benefit
plan
financing
generally made at or about the same time and in or about the same
amount as benefit payments and expenses become due.
(b) To the extent that generally accepted accounting
principles require accounting or reporting of other postemployment
benefits at the government-wide or fund level on any basis other
than pay-as-you-go and in accordance with the statutory accounting
principles in this chapter,
those accounting or reporting
requirements do not apply to this state or its political
subdivisions.
SECTION 3. Section 112.002(c), Local Government Code, is
amended to read as follows:
(c) Except as provided by Chapter 2264, Government Code, a
[A] regulation adopted under this section may not be inconsistent
with generally accepted accounting principles [~O cot~bliohcd by
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H.B. No. 2365
the Co~ernment~l ~ecounting St~nd~rd8 Bo~rd].
SECTION 4. The changes in law made by this Act apply to
financial accounting and reporting by a governmental entity subject
to Chapter 2264, Government Code, as added by this Act, beginning
with the governmental entity's first fiscal year that begins on or
after the effective date of this Act.
SECTION 5. This Act takes effect immediately if it receives a
vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2007.
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