During the Feb. 13 Holbrook City Council meeting, City Manager Ted Soltis updated the council on the progress of the leak on Eighth Avenue. Because the city workers haven’t been able to locate the leak, Soltis said they are going to go purchase the leak detection equipment necessary to do so. Soltis explained that although it’s in the area of $22,000 it will save time and money. “I think it’s going to be worth it, it’s just something we need to have. Our pipes are old. We need a better way to figure out where our leaks are,” said Soltis.
He also gave a brief overview of his plans to improve safety around City Hall. The old gutters at City Hall and the Machusak Recreational Center across the street from City Hall are being worked on to prevent ice from falling and causing harm. Soltis said they will also be adding lights to the outside of the two buildings as an additional safety measure for traffic flow of both buildings.
Soltis also explained that the city is in the process of replacing all lights throughout city facilities. They’ll be replacing the lights that are currently being utilized with more cost-effective LED lights. “The lights will pay for themselves in a very quick fashion,” said Soltis.
Soltis said there were also a few changes made at the city’s fitness center, noting that the old water dispensers were traded for a new water fountain. Soltis also announced that the city will longer be contracting with outside entities to do the repairs on the gym equipment. “We had an equipment repair contract; we’re going to be doing the work ourselves, in-house. The contract folks coming out of Phoenix was very expensive. Last year we spent about $8,000 on that,” said Soltis.
Soltis also announced that a new restaurant will be coming to Holbrook where the old Roadrunner Café used to be located on the north end of Navajo Blvd. Although Soltis did say that other businesses are preparing to come to town but was unable to comment until paperwork was finalized. “Holbrook is on the map. Investors are investing in our community. It’s very exciting,” he said.
Soltis noted that he recently attended the Rural Arizona Health Group Conference and informed the council that insurance rates will be increasing for the employees of the city. “The City of Holbrook is one of the founding members. They put this group together in 2002 and there are about a dozen members. The trust was formed to reduce cost through healthcare promotion and shared costs,” said Soltis. He explained that the group was formed around that time when health insurance costs were rising, and it was proving difficult for smaller communities to afford the rates.
“Unfortunately, due to high medical costs, rates will be increasing, deductibles will be going up, co-pays will be going up, pocket expenses will be going up, the city costs will be going up around 10.56 percent; that’s around $67,000. Last year there was no rate increase, the year before was about four percent, the year before that was zero percent. Due to very high medical costs of a number of individuals, they have to increase the rates,” clarified Soltis.
CPA Scott Graff was present to report his findings on the audit he performed on the city finances and that the city received a “clean audit” although there were some findings.
He explained that they perform what they call “risk-based controls,” which is basically finding those areas of improvement that could be problematic and suggesting more diligent practices. “So, as we find areas of improvement, we report them to management. Sometimes they are significant enough that they are required to be reported in your audit report.”
Graff explained the first finding was in cash disbursement. “Previously there were some weaknesses in how the city was doing their process of paying invoices,” said Graff. Saying that, it’s best to authorize only select individuals of administration that can approve and have access to funding. That issue has already been rectified as the council voted to designate City Manager Soltis and Mayor Merrill Young as the only appropriate individuals to authorize payments that would still require both signatures.
The second issue presented was the reconciliations. “Bank reconciliations are being done. However, a good internal control is to have somebody that is not doing the bank reconciliation to be the one to review the bank reconciliation. Typically, that’s even more important when the person that is doing the bank reconciliations has the abilities to access accounts and reconcile and record transactions into the accounting software. This allows somebody else to look at reconciliation,” said Graff. According to Graff, this has also been rectified since the audit.
The third issue in his findings was mis-entries. Graff explained that mis-entries basically mean that there are entries put in places out of their category, which affects the reconciliation. He suggested that this now be monitored and rectified, which he believes is already in the process of being done.
His fourth finding was policies and procedures. “It’s time to get the city’s policies and procedures up to date. It’s good to have good written policies and procedures of how you do things that way when positions change, it’s the procedure and policy in place that dictates how things will go.”
He explained that there are many federal and state regulations with grants that need to be met that should be included in procedures to see that all monies are handled and recorded accurately. He further explained that is necessary to have separate policies to ensure that the city is aware of when they are to have an additional single audit once they’ve received grants totaling $750,000 a year.
Also, in new business, Finance Manager Randy Sullivan was present to give a brief overview of the 2019-2020 fiscal year’s statements. He showed the council how funds are categorized and allocated and delivered some good news to the council concerning the city’s debt.
During the July 23, 2019, meeting, it was explained that the current one percent sales tax is responsible for approximately $983,000 in revenue, with $450,000 of that going back into the wastewater treatment plant loan payment, according to Sullivan.
The last payment on the plant was to be made in June of 2020 and if the one percent additional tax were to go away after the payments are complete, it would mean a fiscal loss of $920,432 based on Fiscal Year 2020 revenues.
Sullivan announced, “In September we looked at our cash flows and we knew that in July of 2020 the bond was going to set on our wastewater treatment plant, so we had one last principle payment and one last insurance payment. Me and (Human Resource Director Pat Nichols), looked at our numbers. We had cash in the bank at that time, we went ahead in September and paid that bond off. Just by paying that bond off early we saved the city $5,366 in interest.”
He explained that the loader, which was purchased later in 2019, was paid for in cash thanks to increase in Highway User Revenue Funds, which contributed to Sullivan’s efforts to avoid accruing any further debt.
Sullivan also mentioned that state funding investment savings have increased. “On June 30 our investments in state funding savings was $430,753. As of December, it was $436,484. So, we’ve increased our investments in state LGIP (Local Government Investment Pool) by $5,731 just since June.”
“I have worked very hard to try to get the city out of debt the last couple of years, making payments early and that kind of stuff. So, as of September of 2019, the city is debt free,” said Sullivan. Soltis clarified that PSPRS (Public Safety Personnel Retirement System), which consumes a considerable amount of funds and is considered debt, is not included in that statement.
Sullivan who is also the water/wastewater supervisor, closed by crediting his crew members who he says have contributed greatly to making the necessary changes within their department to help reduce costs in areas such as light replacement, pump replacement and repair among many other changes being made in the water/wastewater department.
“My guys have been working really hard to try to improve a lot of our stuff. I’m really excited with the direction we’re headed, as far as my department goes. I really appreciate my guys I don’t know if I said that enough last meeting. It’s not me, it’s all of us,” said Sullivan.
