Minutes: June 20, 2019
Call to Order
The regular meeting of the Vernon Township Municipal Utilities Authority (VTMUA) of the Township of Vernon was convened at 7:02 p.m. on Thursday, June 20, 2019 in the Vernon Municipal Center, 21 Church Street, Vernon, New Jersey.
Statement of Compliance
Adequate notice of this meeting had been provided to the public and the press on February 21, 2019, as well as posted on the bulletin board in the municipal building in accordance with the Open Public Meetings Act, N.J.S.A. 10:4-6.
Salute to the Flag
Pronouncement of a Quorum
We have a quorum.
Roll Call of Professionals
Tom asked if Brandon was ready to swear in Angela. Brandon stated that he would have to look up the wording as he wasn’t aware of having to swear her in. Tom was not sure of the wording or protocol for swearing Angela in. Tom didn’t have access to the previous swearing in of John Auberger.
Tom asked the recording secretary if she had the minutes from a few meetings ago whan John Auberger was sworn in.
Recording secretary stated that John was sworn in before the meeting, not at the meeting. He was sworn in in the office of the executive director.
Kristen-Angela, the mayor didn’t swear you in privately?
Angela-No he didn’t. Only for land use board.
Tom-We’ll just proceed as Brandon is trying to get the information. When he has the appropriate verbiage, we’ll go ahead and continue that.
Let’s have roll call.
We’ll proceed until we have official verbiage and then we’ll consider her an official member.
Ed Seger made a motion to open the meeting for public comments.
Seconded by Paul Kearney.
All were in favor.
Seeing no one come forward, Ed Seger moved to close the meeting to the public.
Seconded by Dave McDermott.
All were in favor.
Resolution #19-26: Transfer Resolution
Motion by Ed Seger.
Seconded by Kristen Wheaton.
Kristen-Clarification of what transfer is for.
$25,000 Purchasing to go to finance.
$40,000 Tom-Moving from Capital Improvement Fund to Administrative-Engineering Fees because of more attorney activity.
Kristen & Rob-Didn’t have this transfer resolution at the last meeting.
Tom-Part of budget still. Money not going outside our budget. Where the $25,000 is not going outside-going to the town?
Tom-Eventually when they transfer the funds.
Kristen-Do we know ow the resolution was initiated? Was it John Perry who initiated it?
Rob-I imagine probably the CFO may have made mention of that. Keeping expenditures within the budget.
Kristen-Trying to get some understanding of whether we budgeted incorrectly. Is this going to leave us short someplace down the road?
Rob-The $25,000 is what was agreed on for extra services for the town. For the extra purchasing services that we would have had in the salaries. We had to account for additional professional services. It’s just shifting the money. Looks like it wouldn’t affect rates or anything. More of a shifting of funds.
Paul-It’s rather vague considering the finance people aren’t here to explain it in full. It’s something that should be thought about in the future. For more of an explanation when these types of situations arise. We’re here saying we think it’s this or that, but it’s not.
Tom-We can certainly table the resolution until the next meeting for further qualification.
Paul-Is that going to create any problems with the bill paying?
Dave-That’s what I was thinking.
On the last page I see an additional request for Hatch Mott MacDonald & Interlocal Funds. This might be something we need to get an explanation on from the CFO.
Probably a good idea.
Tom-These additional requests on the last page are basically all in house expenditures. Not for a vendor or anyone we will be paying.
Rob-Hatch Mott is an in house. Might need a bit more explanation.
Tom-We could have the CFO come to these meetings. She’s willing to come. There’s been no communication with the CFO, not sure if John did in reference to this.
Ed-I thought we talked about the Capital Improvement Fund moving last meeting or meeting before. Talked about moving money out of there. Just didn’t have a resolution for it.
Rob-That may have been.
Tom-There are copies here.
Last meeting, we did two resolutions. Resolution #19-23 & #19-24. One of them was a resolution authorizing VTMUA to execute shared services and approval of minutes was held off until next meeting. Shared services for $25,000, that’s how much it is. The additional $40,000 is really just shifting from our capital projects to engineering.
Tom-Really it’s just moving from one category to another. Not spending it.
Rob-Bottom line is just shifting funds, it wouldn’t impact rates. My best guess is maybe it’s related to Hatch Mott.
Tom-We’re not doing anything capital. We put money there just in case. We’re not doing that so we’re moving it to a category where we are spending more. We’re spending more on legal fees. It appears as though the $25,000 is directly related to the resolution #19-23 from the last meeting.
If you put it there and don’t like it, you can change it.
You can change it. It’s not going anywhere. You’re just putting it in that category.
You have to approve bills to be paid before it can go someplace.
From a control end you don’t want to overspend.
Tom-Can we take a vote. If it passes it’ll pass. If not, we’ll come back and visit it next meeting for further explanation.
Roll Call Vote:
Resolution #19-26 did not pass.
Tom-At this point, prior to dealing with Resolution #19-27, we are prepared to swear in Angela.
At this point Brandon reads the oath to Angela.
Tom welcomes her to the VTMUA.
Resolution #19-27: Payment of June 20, 2019 Bills
Motion made by Kristen Wheaton.
Seconded by Paul Kearney.
Tom-My question would be are there sufficient funds for the additional requests on the bills list without approving the previous resolution?
Rob-That would be a Donelle question.
Tom-To be able to pay the bills less the additional request so that all the other venders could be paid, that would be one approach.
Rob-The one that would be affected would be the engineering.
Tom-Since they are delineated and that being an additional request, if we can approve the disbursements in the journal without the additional requests to be sure that, in fact we have funds to cover that. If not we’ll have to do the same with this resolution.
Kristen-Would we have to modify this resolution for approval?
Tom-This is just discussion. We can handle it that way or we can straight heads up and see if everyone feels comfortable approving the additional request.
Kristen-I think the motion would be amended to say that we approve the payment of the bills with the contingency that if there is sufficient funds that that would come form the Professional Services and Engineering Services categories until we resolve this resolution. That we would not pay those funds if there was insufficient funds it would come out of those categories.
Correct. Which is basically the additional request page of this.
Since the other disbursements are all labeled under the general fund pages
Kristen-I guess it’s just that we don’t know for sure that there’s insufficient funds?
Rob-Approving the bills assuming the funds are available. The first resolution is more internal housekeeping depending on shuffling line items not necessary as long as the funds are there.
Tom-Second to Kristen’s amended motion.
Roll Call Vote:
Ayes-Tom Buchney, Angela Erichsen, Ed Seger, Kristen Wheaton, Paul Kearney, Dave Mcermott
The 2018 reports are done.
Passed around resolutions to be considered. More of a housekeeping item.
Passed around resolutions that we have to publish due to the audit. More of a housekeeping. Certain require each year to file these reports. One is a synopsis of the audit. It will take care of the certification end of it.
Put the resolutions out there to be considered.
As far as the audit report, I would like to point out one financial statement gives a synopsis of how VTMUA did during the year. Unfortunately, this year I can’t do this, I have to do this in two financial statements because it was a bit of a strange year.
Page 14 is your statement of revenues/expenses/income statement. Shows revenues minus expenses that we physically outlaid or payable or set aside to pay. When you look at that we actually started the year with a net worth of $46,000 that increased by $88,000 to end the year at $135,000 in net worth. Form an accrual point we had a good year. However if we go to the next page it’s not exactly true. That page is a statement of cash flow. This tells the cash side rather than the accrual side. You’ll see here in the 2018 column, 2nd line down we had one big area missing. That is the amount received from Mountain Creek. Which in 2018 was noting. You can see how we went from $583,000 in cash down to $198,000 at year end. We’re still anticipating these funds coming in. A lot of this is contingent on when things can be settled. I know that is an ongoing issue. It’s something as we continue into 2019 we have to keep this in mind right now for expenses which services the town can afford will eventually have to be paid. It’s something I need to make mention of and it’s something I know you are aware of. Something we also highlight in the report, in the financial statements is that this is still out there. It hasn’t been resolved yet. We haven’t seen cash in hand from this amount.
As far as the opinion of finished audit reports, any definite kind of audit report, we’re getting three opinions. You’re getting an opinion on the financial, whether it’s according to current accounting standards. I’m happy to report that the financial are in accordance with current accounting standards.
We also report on the internal controls of the entity. We also report on compliance matters. We did have on the internal control side, we did have one compliance finding this year which relates to a local public contract law. This compliance issue was discussed a few months ago.
Towards the end of the report, page 38, is a schedule of fundings and custom costs. It’s part of the area we have the funding, it’s part of the procedure. The NJ Administrative Code. The authorities require us to come up with a corrective action plan, we did. We’ve changed purchasing procedures in the last few meetings so this is something in 2019 that won’t be an issue. But we still have to go through and file a corrective action plan with the state. Just mentioning that, this was corrective action. Hopefully, in 2019 this won’t be a repeat finding.
Ed-That’s not the issue here. This says at least two competitive quotes. We got two quotes. Our purchasing department thought they had two competitive quotes. How do you keep someone not falsifying the quotes?
Rob-They didn’t actually have those quotes.
Ed-They made it look like they had it, right? So, I don’t know how you can do a corrective action on something like that. You’re almost saying they didn’t have it. Like we didn’t have it when we were going out. It’s like, wait a minute, we did ask for it and we did have it before they were going to go out. They just questioned it. They did the right thing.
Paul-Only corrective action that could have been taken was taken.
Rob-Drafted corrective action in the resolution. Take a look. We can reword this. This is your corrective action not ours. I worded it in general. I would say if you want to change it I’d be happy to do it. Let me know next month.
Ed-Did we purchase something above the threshold? I thought it got caught. Were there other instances?
Rob-We had the quotes.
Ed-We didn’t do the purchase until we went back. It didn’t actually occur. Our system worked. We got lucky.
Rob-It’s a fair point from the audit side. It’s something we felt we had to mention.
Paul-Was something done retroactively?
Rob-This related to the ones that were brought up.
Dave-The way I interpreted it was that he falsified a bid, but when they did an investigation they found something that was purchased.
Rob-It was another question.
Dave-Something other was questioned that might have been over the threshold. That’s what I’m thinking about.
Rob-For this we are trying to be diplomatic. We need to make it known we did modify the purchase.
Ed-Was there an an act? Did it occur? We caught it, it didn’t occur. We didn’t go out and purchase something above the limit. We didn’t do that right?
Rob-That’s a fair point.
Ed-What’s your opinion from a legal standpoint?
Brandon-I will have to review it more and discuss it with Rich and confirm it.
Ed-I’m not saying, maybe there’s a policy that we have. Training was in place.
Paul-Policy was in place. Policy wasn’t followed. E took care of that. The issue was corrected.
Rob-Wasn’t an outlay. There was an attempt to purchase.
Kristen-But this says purchases were made. I apologize for not being at those meetings where that was discussed.
Paul and Dave-The quotes weren’t valid. Purchases were not made on the bogus information.
Ed-We can get further clarification on this.
Paul-I don’t think we need it.
Rob-From what I’m hearing is we’re looking at this from an independent set of eyes when something like this pops up. We like to get help there. It’s something there we can revisit the wording.
Ed-You did a good job catching it and didn’t go through the system and the person that did catch it was good.
Rob-Yes that’s true. The purchase was essentially made, but when it came time to actually pay this the voucher certified funds. That’s when our controls caught up with it.
Ed-It didn’t go out of house, it stayed in house. Went to purchasing people.
Tom-I’m not sure and rather than sit here an discuss, we’re aware of it. We can decide to look into it further.
Ed-At this point not voting. Taking another look at it.
Rob-As far as the report we’re not in agreement with. Nothing in concrete.
Ed-Rob how did we modify our purchasing procedures to correct the situation? Somebody wanted to dig into detail, that sounds good, but what did we do?
Rob-We switched over to the township handling. From authority internally handling this to the town handling that.
Dave-The town CFO does the purchasing?
Ed-That may not always stay with the town, It may come back to us. Not something that we can’t do, we can do it. I’d hate to put it in writing saying we have to go through the town so we don’t screw it up. We can do it correctly.
Paul-Reword it. Noted that doing on an interim type of thing, it shouldn’t be set that way as a standard.
Dave-That would be my concern.
Ed-We need to rethink that. I just don’t agree because it didn’t happen, we didn’t go after the fact. The contractor wasn’t already here doing the job. We didn’t pay. He never got the order.
Paul-Checks and balances did the job.
Rob-Like I said, it’s a conversation I’ll need to have with the CFO.
My impression was that it was something that was, work wasn’t done and it was essentially agreed to before needed funds.
Ed-I see what you’re saying.
Rob-We look at it from a pool, from accounting. Entering into this we’re saying it’s OK, we’re going to hire you from a pool. Don’t consider it a cash outlay necessarily.
Ed-There ought to be at least a purchase order. He didn’t get a purchase order.
Ed-I see where you’re coming from. I understand what you’re saying is that we had control over purchasing, we were ready to purchase it but accounting caught it because of the funds and questioning things. It didn’t get out the door. Somebody caught it. I don’t know how you prevent that. You have action going to the town.
Rob-It’s more the remedy.
Ed-We have rules. People know the rules. They’re trained in the rules. If they choose not to follow the rules. How do you remedy that. This moving to the town I don’t think does that. I’m having trouble with it.
Rob-That’s a fair point. Our controls did catch that. Something worth mentioning. We can have further discussion on that.
Tom-We have to be sure about the wording under conditions section. Whether they actually were or were not paid. Those can be discussed with the CFO to see exact sequence of events and what occurred prior to making that statement. Discussion needs to be had possibly modify wording.
Rob-No other items. Need more discussion of the resolutions.
Ed-For the board, is that the only part of this report tat’s an issue?
Dave-I was thinking out loud. In the description you could change it to “there were irregularities in request forms.”
Tom-We need to review with the CFO and come back with more appropriate statements. Are there any deadlines in regard to this being submitted?
Rob-Yes. For authorities’ audits, from the statute side it’s four months after year end. Everyone has been put on extension from the state as there are current accounting standards. Automatically extend deadlines that being said, the reason we are discussing this in June and not April ha to do with Mountain Creek side. Not so much these other outside factors. State would send letter about report being late to which we respond we are dealing with an ongoing issue. Whether it’s accepted this month or next month this won’t seem an issue. Better to have a definite answer sooner than later.
Tom-This portion of it isn’t going to extend the late file.
Rob-No matter what, all authorities in NJ are all past the four-month deadline. Waiting for next month is OK. Further discussion I’ll reach out to CFO beforehand.
Tom-Not sure of any discussion between CFO and John.
Ed-What you’re considering wasn’t from executive director that was the purchasing person. You’re considering the act was John Scerbo. Never went outside.
Rob-When we draft these findings we try to be diplomatic.
Ed-It really didn’t happen so there’s no corrective action for it, except for changing the guard.
Rob-That was the corrective action.
Kristen-What do we say board taking appropriate corrective action with personnel?
Ed-That’s independent of this action. This action has occurred.
Tom-Can we get some further clarification from the CFO on wording of the first section and revisit it at our next meeting?
That’s the conclusion of Rob’s report.
Tom-At this point would everyone like to further review the report and proposed resolutions and communicate with John and myself with any additional questions you may have or comments or wording of resolutions for next meeting?
Tom-At this point there being no additional resolutions, we won’t act on that. Sorry I did miss an item in the agenda. That’s #10-approval of minutes. Can we back up in the agenda?
Approval of Minutes
Motion to approve the minutes of March 21, 2019 made by Ed Seger.
Seconded by Paul Kearney.
Ed-Like to make a comment-On page 2 the $25 should be $25,000 and the $52 should be $52,000
Roll Call Vote:
Ayes-Tom Buchney, Ed Seger, Paul Kearney, Dave McDermott
Abstain-Angela Erichsen, Kristen Wheaton
No executive session minutes from March 21, 2019.
Executive Director Report
WHEREAS, the Open Public Meetings Act N.J.S.A. 10:4-6 permits the exclusion of the public in certain circumstances; and
WHEREAS, this public body is of the opinion that such circumstances presently exist.
NOW, THERFORE, BE IT RESOLVED by the Vernon Township Municipal Utilities Authority of the Township of Vernon as follows:
- The public shall be excluded from discussion of and action upon the hereinafter specified subject matter.
- The general nature of the subject matter to be discussed is litigation.
Motion made at 7:50 p.m. by Ed Seger to go into Executive Session to discuss potential litigation.
Seconded by Paul Kearney.
Roll Call Vote:
Ayes-Tom Buchney, Angela Erichsen, Ed Seger, Kristen Wheaton, Paul Kearney, Dave McDermott
Motion to adjourn meeting made by Paul Kearney.
Seconded by Dave McDermott.
Roll Call Vote:
Ayes-Tom Buchney, Angela Erichsen, Ed Seger, Kristen Wheaton, Paul Kearney, Dave McDermott Nays-None.