Audit and Finance Committee (AFC) Meeting Notes November 9, 2018 8:30am Supervisors in Attendance: Staff in Attendance: Ms. Dorothy Jaeckle, Chairman Greg Akers Mr. Christopher M. Winslow Allan Carmody Dr. Joseph Casey, County Administrator Mary Martin-Selby Meghan Coates Matt Harris School Board Members in Attendance: Patsy Brown Mr. John Erbach, Chairman Steve Sanderson Dr. Javaid Siddiqui Jonathan Davis Dr. Merv Daugherty, Superintendent Donald Fairheart Christina Berta Rene Ewing Call to Order: • Ms. Jaeckle, sitting in for Mr. Elswick, called the meeting to order at 8:30 am. Opening Remarks: • Ms. Jaeckle thanked everyone for attending the meeting and for being invited by the School Board to attend the BRAVO awards the previous evening. JOINT ITEMS: 1. Committee Restructuring: Committee Members • Mr. Erbach: Acknowledged the importance of collaboration between the two Boards and agree that they should meet at least 4 times a year to discuss various topics that pertain to the Chesterfield County citizens. He agrees that both Boards should have access to one another’s staff members when needed, however; schools will have their own independent Audit and Finance Committee. He thanked Dr. Casey and the Board of Supervisor members for their continued cooperation. • Mr. Winslow: Welcomed the new Superintendent, Dr. Merv Daugherty. He stated that citizens are best served when the Boards can work collaboratively and was happy they were finding ways to work together going forward. 2. FY2018 Financial Audit: Patsy Brown, Director of Accounting • Ms. Brown reviewed the annual process of presenting the external auditor and introduced Mr. Rob Churchman, Partner, Government Services Group for Cherry Bekaert. • Mr. Churchman reviewed his Presentation to the Audit and Finance Committee*. Mr. Churchman provided the required technical disclosures for their audit of the Comprehensive Annual Financial Report (CAFR), noting they also audit the County’s Economic Development Authority and the Watkins Centre and Chippenham Place Community Development Authorities. During discussion of audit results, Ms. Brown clarified that the one late VRS payment identified in the report for Schools was 3 days late. • Ms. Brown followed Mr. Churchman and provided CAFR highlights, noting the report illustrates compliance with the County’s financial policies. Ms. Brown also described impact for new GASB disclosure requirements for Other Post-Employment Benefits (OPEB) liability. In response to Mr. Winslow’s inquiry how our OPEB funding compares to industry standards, Ms. Brown and Mr. Churchman explained this is only the second year for reporting OPEB this way and benchmarks are still developing. However, the County is ahead of many other localities from steps taken in 2007 to reduce OPEB levels and setup a trust for funding. Mr. Carmody added that a more detailed presentation to AFC for OPEB funding is planned for early 2019. 3. Audit Committee and Finance Discussion: Greg Akers, Director of Internal Auditor • Mr. Akers referred to the Policy 8-1 and 8-2 handouts* describing minor revisions proposed for the recent restructuring of the AFC Committee membership and separate School AFC. He asked the Board members to review and provide him with any input before presenting them for final approval. 4. County/CCPS SRP Annual Reports: Scott Zaremba, DCA, Community Operations/ Christina Berta, CFO CCPS • Mr. Zaremba introduced the topic and began the review of the Report of Supplemental Retirement Plans (SRP) presentation*. He noted that this was the first report generated with all the April 2017 School SRP design changes. Ms. Berta reviewed the net pension liability reduction ($83.2m to $57.2m) and funded ratio (22.59% to 32.85%) improvements for School SRP. Ms. Berta also shared School SRP forecasts for future funded status and required contributions through FY2023. Mr. Zaremba noted County SRP continues to be well funded with ratio improving from 97.86 to 99.8%. • Dr. Siddiqi noted the positive impact 2017 School SRP plan changes had for reducing the liability. Ms. Jaeckle thanked them for the report and said it is very helpful, from a layman’s perspective, to have these numbers to get a sense of where we are and where we are going. • After the SRP presentation was complete, Mr. Carmody briefly shared results for recent debt issuances. • Ms. Jaeckle asked about funding to acquire parcels adjoining School properties that are needed for future school build-outs, like Enon. Mr. Siddiqi and Mr. Erbach acknowledged this is a consideration, but not part of existing projects and would need to be separately funded. • Mr. Winslow thanked the School Board members and Dr. Daugherty for attending the Joint portion of the meeting and called a two-minute recess before reconvening for the remaining County items on the agenda. Mr. Erbach, Dr. Siddiqui, and School staff departed the meeting. Audit and Finance Committee Meeting Notes 2 November 9, 2018 COUNTY ITEMS: 5. Internal Audit: Greg Akers, Director of Internal Audit, Steve Sanderson Audit Manager, Internal Audit Mr. Akers noted recent improvements Internal Audit has made by posting audit reports on the Chesterfield.gov website immediately after distribution to the Boards and eliminating the need for the pre-meeting update memo. The hyperlinks to the reports discussed in the AFC meetings will be on the Agenda, as they were today with the following reports: • FY18 Fraud, Waste, and Abuse (FWA) Hotline Program Report, Mr. Akers reviewed highlights noting: o County and Schools have implemented the 5 key steps to decrease vulnerability to fraud. o Statistics for allegations received and how items are handled. o Summary results for investigations provided here were previously reported in AFC updates, and a new summary included for referral results. • FY18 Jail Canteen & Inmate Trust Fund, Mr. Sanderson reviewed highlights and thanked Sheriff Leonard and his staff for their cooperation and for attending the meeting today. Sheriff Leonard responded to Ms. Jaeckle’ s invitation to speak by clarifying that his office abided by the recommendation to hire a replacement for their financial record keeper, but the prison environment can make it difficult to obtain and retain employees. Ms. Jaeckle thanked him for his comments and cooperation. • FY2019 Audit Plan and Hotline Activity Update*: o Mr. Akers reviewed the handout and asked for any questions. o Mr. Akers updated committee on Commissioner of Revenue data breach discussed at October 16, 2018 AFC meeting. The Commissioner declined Internal Audit’s offer to assist them with an internal control assessment to help prevent future breaches. The Commissioner believes their own evaluation was sufficient. The County Attorney confirmed the Commissioner’s authority under State code to decline internal audit assistance. Ms. Jaeckle remarked she was disappointed the Commissioner did not accept Internal Audit’s offer of assistance to help ensure this isolated incident did not reoccur. Commissioner Hughes, in attendance, explained she had already provided a thorough report identifying 5 issues with solutions and controls to prevent reoccurrence. Ms. Jaeckle suggested an outside perspective may have been helpful. Ms. Hughes thanked her for her comments, but she takes full responsibility and feels confident that the situation is under control and her department did the right things to ensure this would not reoccur. Mr. Winslow assured Ms. Hughes that it was not personal, and the Internal Audit has a function for these types of situation that occur within local government. Ms. Hughes Audit and Finance Committee Meeting Notes 3 November 9, 2018 responded that she provided a sufficiently detailed account, and that she had prior audit training and is familiar with audit’s function and practices. • In response to Ms. Jaeckle’ s comment on the Chesterfield election issues and long lines, Dr. Casey discussed he and Matt Harris meet with Constance Tyler, General Registrar after the election last Tuesday to offer their assistance to help improve on customer service with line management, parking, etc. The Registrar was receptive to County assistance and accepted invitation to speak at the Board of Supervisors November 14th meeting (as part of Dr. Casey’s comments section). Sheriff Leonard added he was also working with Registrar and offered to join the County efforts to consider future customer service solutions. 6. Real Estate Assessment Department Update: Jonathan Davis, Director of Real Estate Assessor’s Office / Ashley DeBiase, Assessment Automation Manager, Real Estate Assessor’s Office • Mr. Carmody introduced Mr. Davis and congratulated him and his department for the upgraded website success. He mentioned some citizens used to the prior website were adjusting to the new format, but overall it has been a smooth transition and received well by the citizens. • Mr. Davis agreed with Mr. Carmody regarding the improved website functionality and online form accessibility. He also discussed the restructuring of the process of presenting real estate assessment figures so they could be presented in December instead of the normal reporting period in January. Mr. Davis introduced Ms. DeBiase and thanked her for the work she had done on the website. • Ms. DeBiase walked through the website’s upgraded features, illustrating available information and search features for parcels. Mr. Winslow commended the department for the great new features. 7. Next meeting/topics: Allan Carmody, Finance Director Before covering