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HomeMy WebLinkAbout10-13-14 CCC Open Session MinutesCOUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board /Committee: Cost Control Commission Meeting Date October 13, 2014 Location Mo'ikeha Building — Liquor Conference Room Start of Meeting: 1:30 p.m. End of Meeting: 2:48 p.m. Present Chair Arryl Kaneshiro; Members: Dirk Apao, Jan Hashizume, Sandi Sterker and Glen Takenouchi Also present: Board & Commissions Office Staff: Support Clerk Mercedes Youn and Administrator Paula Morikami; Invited Guests: Director of Finance Steve Hunt; County Engineer Larry Dill; Public Works Environmentalist Specialist Troy Tanigawa; and Budget /Fiscal Specialist James Matsushige Special Guest: The Honorable Mayor Bernard P. Carvalho Jr. Excused Vice Chair Laurie Yoshida and Commissioner Joanne Nakashima Absent SUBJECT DISCUSSION ACTION Call To Order Chair Kaneshiro called the meeting to order at 1:30 p.m. with five (5) members present to ascertain a quorum. Approval of Regular Open Session Minutes of September 8, 2014. Commissioner Sterker moved to approve the Minutes meeting minutes as circulated. Commissioner Takenouchi seconded the motion. Motion carried 5:0 CCC 2014 -09 Review and discuss the County of Kauai 2013 CAFR and the County's revenues — fees, rates, assessments and taxes for fiscal year 2014 -15. (Deferred on July 14, 2014) (b) Memorandum dated September 15, 2014, from Chair Arryl Kaneshiro Commissioner Sterker moved to accept item to County Engineer Larry Dill, requesting his presence to discuss solid CCC 2014 -09 (b), for the record. Commissioner waste /sanitation operations and expenses including reasons for the Apao seconded the motion. Motion carried 5:0 substantial budget increases from 2009 and 2013. Finance Director Steve Hunt — Mr. Hunt stated between fiscal year 2009 and 2013, the numbers reflect a full accrual as opposed to just a cash flow. Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 2 SUBJECT DISCUSSION ACTION He added in regard, to the modified accrual the largest change occurred between fiscal year 2011 and 2012, due to the following factors 1) an increase to depreciation expense of about $1.3 million; 2) increase to the long term liability about $1.177 million; increase to workers' comp claims about $45,000; 3) increase to capital asset adjustments of $596,000; and 4) an increase of expenditures from $1.38 million to $17.93 million. Additionally, Mr. Hunt stated although the actual expenditures in fiscal year 2012, was $12.6 million they are still trying to figure out the difference between the $12.6 million and $17.93 million and where the modified accrual of those expenses was being derived from. Mr. Hunt explained that with the 2014 CAFR still under way another adjustment would occur because the Kekaha Landfill gas collection system has been recognized as being a long term liability. He further explained that relative to the cap (which has to be accounted for) there will be another adjustment to the long term liabilities which will be reflected in sanitation (although not actually being paying it out) because the cost will be incorporated as part of the closure it will be booked in that period and will be added to the long term liability. Commissioner Hashizume asked whether the data reflected in the previous pie chart was based on a full accrual to which Mr. Hunt replied yes. Commissioner Hashizume then asked if the data in reflected in the current pie chart is based just on cash flow to which Mr. Hunt replied the numbers in the current pie chart reflect both cash flow and modified accrual. Commissioner Hashizume asked from what he just told her in 2012, the expenses based on modified accrual amounted to 12.6 million to which Mr. Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 3 SUBJECT DISCUSSION ACTION Hunt noted that the modified accrual actual amount was 17.928 million. Commissioner Hashizume then asked in fiscal 2011, if the modified accrual amounted to 12.6 million to which Mr. Hunt explained that the 12.6 million in 2012, was actual cash out of pocket and in fiscal year 2011, the actual modified accrual was 11.38 million. Chair Kaneshiro suspended the rules to accommodate Mayor Carvalho's resentation to the Cost Control Commission. Mayor Bernard Mayor Carvalho thanked the Commissioners for all the work they do for P. Carvalho Jr. the County of Kauai. Mayor Carvalho shared with the Commission about a discussion he had with all department heads on how to make government more efficient. On September 2, Mayor Carvalho said he delivered a directive to all department heads and their deputies to look at the operational piece within their organization on how to best manage ourselves internally and externally to ensure that the public and the employees in the County needs are met in an efficient and timely manner. To achieve this every department head and deputy will be required to develop a written organizational plan by November 1 on what their overall plan will be in order to 1) improve service to the internal and external customer (to be more responsive to co- workers & the public); 2) improve operational efficiency and effectiveness (doing it faster but doing it better); 3) reduce personal cost (this does not mean eliminating positions) by looking at alternatives such as consolidating, transferring, sharing functions between divisions and departments, breaking down silos, crossing over and sharing resources to help each other; 4) recommendations must be realistic and achievable (legally permissible and acceptable to the unions as well). Mayor Carvalho also shared with the Commission the Customer Service Mission Statement and County of Kauai Values Statement, which was developed internally by County employees. Continuation — Chair Kaneshiro called the meeting back to order at 1:46 p.m. Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 4 SUBJECT DISCUSSION ACTION CCC 2014 -09 Mr. Hunt stated as a true measure of cost the pie chart is probably correct but it's not an annual cost its' more of a term long cost and although it shows change year to year its booking long term obligations. Chair Kaneshiro asked if the County noticed any increases in actual operation costs to which Mr. Hunt replied, he believes the actual operation costs between fiscal year 2011 and 2012, increased from 11.4 million to 12.6 million. Chair Kaneshiro noted that he found it difficult to see the actual operational costs by just looking that the current pie chart because when the Commission looked at the previous pie chart it did not realize that it was based a modified accrual and that all of the increases was strictly related to the operational expenses. Chair Kaneshiro asked if the operating expenses in 2009 show that it was closer to the 11 million mark. Budget /Fiscal Specialist James Matsushige - Mr. Matsushige clarified in 2009, the total operating expenses was 8.96 million; in 2010 it was 12.74 million; 2011 atl 1.35 million; 2012 at 12.62 million; and in 2013 the total operating expenses reached 12.72 million. Chair Kaneshiro asked why in 2009, the numbers were so low to which Mr. Matsushige replied, he believes an adjustment was made but was unsure. Commissioner Hashizume asked if there was break in the total actual cost and what would be considered the largest cost to which Mr. Matsushige replied, probably the salaries and health insurance costs. Commissioner Apao asked how the department is doing with its year to year overtime expenditures to which Mr. Matsushige replied, in 2009, the approximate overtime expenditures amounted to $847,000, but 2013, the total overtime Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 5 SUBJECT DISCUSSION ACTION expenditures decreased to $191,000. County Engineer Larry Dill - Mr. Dill stated the Solid Waste Department made a conscience decision to reduce its overtime cost. He stated although the biggest ticketed item was transitioning from manual to an automated collection system, in the last 4 years, the department managed to decrease its cost to $680,000 annually. In addition, to reduce overtime cost the department decided to cut its transfer station operating hours from a 10 hour day to an 8 hour day. Mr. Dill stated as everyone is well aware the Solid Waste Department has been charging its customers a residence refuse collection assessment fee, but since then the number of customers have decreased which helped to reduce overtime cost. Mr. Dill stated he is remains hopeful that the trend will continue because they are aiming at completing an island -wide automated curbside refuse collection by July 2015. The intent is to encourage residents to engage in more recycling and waste diversion as well as reduce the amount of trash that goes into the landfill. Public Works Environmental Specialist Troy Tanigawa - Mr. Tanigawa stated in 2009, the Solid Waste Department budgeted $500,000 to process green waste, but the department has become a victim of its own success because they now have to hire contractors to process every cubic yard of green waste resulting in a 1.3 million budget increase making it the biggest contributor in solid waste. Commissioner Sterker asked if the increase is contributed to the no burn regulation to which Mr. Tanigawa replied, it is not all contributed to the no burn because the waste diversion numbers considers all types of diversions from Kauai recycles (traditional recyclables) being diverted such as green waste, tires, scrap metal, etc. In addition, there are other diversions that Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 6 SUBJECT DISCUSSION ACTION occurs without the County's subsidy which includes back hulling of cardboards from the bigger stores and outlets including the Department of Health recyclables He stated to keep track of the diversion numbers his staff would the Department of Health and other the businesses to get their back hull information, in turn his staff will compile all of the information to come up with an overall diversion number for the County of Kauai. Commissioner Sterker asked if the Solid Waste Department has a separate area to contain and dispose of all the hazardous waste materials to which Mr. Tanigawa replied, they do have a household hazardous waste collection program which, contributes to the diversions although it is not a large quantity. He stated although the materials that is diverted by the County's program is more toxic the diversion of these materials from the landfill reduces toxicity of what's in the landfill which in the long run will benefit the County by reducing liability in that respect. Mr. Tanigawa the participation rates have grown and the program itself went from once a year to twice a year at a cost of $120,000. Commissioner Takenouchi asked if the County gets any revenues generated by the recyclable program to which Mr. Tanigawa replied no. Chair Kaneshiro asked if there are other recyclable opportunities besides the automated trash collection the County is looking into to reduce cost to which Mr. Tanigawa replied, they are currently doing an internal review based on the Mayor's instructions. He stated although the discussions did not turn over any new revelations they are continuing to look for ways to become more cost efficient. Chair Kaneshiro stated as far as the landfill goes what type of financial outlook his department sees as a problem that would drive the cost up. Mr. Tanigawa stated unfortunately, the County still uses a low tech management method that is based on using heavy equipment and Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 7 SUBJECT DISCUSSION ACTION manpower which is causing a steady increase in labor cost. Mr. Tanigawa stated there are working other means to reduce the amount of materials going into the landfill which he feels will eventually contribute to some savings with respect to the cost of the landfill. He added although there are new technologies out there to manage waste it is always evolving and they are doing their best to keep abreast of everything. Commissioner Sterker stated from that she understands the mainland landfills are working to find different ways to use the methane. She asked if that was possible here. Mr. Dill replied yes, in fact, the County's vertical landfill expansion which was recently passed has a threshold that requires the County to install (inaudible) so, right now they are working with the Office of Economic Development on doing a feasibility study not just for extracting/processing the gas but how the County can turn it into compressed natural gas. He stated about a week ago, an RFI was issued (Request for Information) for anyone to submit in writing alternate means for disposing solid waste because it's no secret that the business of solid waste is an expensive costing the County an annual operating budget of 15 million of which half is funded by money the Solid Waste Department generates. He noted that the monies that they generate (from his perspective) to subsidize the County's General Fund should be the other way around. Commissioner Sterker asked for clarification on what an RFI is to which Mr. Dill replied, an RFI is non - committal and does not involve money. He stated the solid waste division have been talking with KIUC as a potential significant player. He stated Mayor Carvalho has executed a (inaudible) agreement for extending an MOU/MOA with KIUC to allow the Solid Waste Department and KIUC to work together to pursue other projects. He added if the County decides to build a waste energy facility it needs to Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 8 SUBJECT DISCUSSION ACTION ensure that the project is not detrimental to KIUC, but beneficial to both parties. Chair Kaneshiro asked if there are there other ways to use the methane including the materials that are in found in the landfill or would it be too dangerous. Mr. Dill stated that is something he is hoping the RFI would clarify. He noted that there are others who would say not only can they take your current trash they can also go into the landfill and process those things to see whether or not it can be used to generate energy. Commissioner Takenouchi asked what the deadline for the RFI is to which Mr. Dill replied January 15, 2015. Chair Kaneshiro asked if they have any programs coming up to help further encourage the diversion from the landfill such as recycling to which Mr. Tanigawa replied there are couple incentives that they currently pursuing, they had meetings with a couple of stakeholders (local businesses) to try to finalize an ordinance to establish mandatory business recycling. He stated if the proposed ordinance passes the County Engineer will then designate the target materials and the businesses will have to comply. However, there may be some misunderstanding because the County will not impose recycling on any type of materials that do not have local options available to the businesses to do the diversions. Commissioner Hashizume stated with the focus being on transitioning to automation and all of the recycling cost involved is the County anticipating increasing its manpower to which Mr. Tanigawa replied it would all depend on the service but as of right now, the County is trying to maximize its ability to use its workforce. He stated once that is in place they would have a lot more ability to control cost especially, overtime. Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 9 SUBJECT DISCUSSION ACTION Mr. Hunt stated of the one thing relative to the modified accrual that may not be reflected in the operational budget is the Solid Waste Fund which pays for the debt service because they had to refinance in 2010 which is fiscal year 2011 when the big jump occurred. They went to an AMT and because there was a third -party operator they can't be a municipal tax -free bond it has to a bond that has no tax exempt status. He stated a big portion of that increase in the operations was probably directly coming from the Solid Waste transfer into the Debt Service Fund which would not be necessarily reflected in their operational budget. With further discussion, all four gentlemen left the meeting at 2:36 p.m. Announcements Next meeting — December 8, 2014, at the Mo'ikeha Building in the Liquor Conference Room. Chair Kaneshiro asked when the Commission's Annual Report is due. Ms. Morikami stated because the Commission did not make any recommendations for this year, the Annual Report can reflect a summary of what the Commission had worked throughout the year. Commissioner Sterker stated that she would like a representative from the Parks and Recreation Department present at the next meeting to discuss the public's misuse of electricity from the County's park facilities. Chair Kaneshiro noted his only concern has to do with who is going to enforce the rules and regulations, if any. Commissioner Sterker asked whether the Commission will have an opportunity to do a site visit of the old Big Save building. Ms. Morikami noted rather than have a meeting in November she could make arrangements with Mr. Dill to have the Commission do the site visit. Chair Kaneshiro asked what the proper protocol's (relative to the Sunshine Law) needs to be met before the tour can take place. Ms. Morikami stated the site visit can take place by scheduling two Commissioners at half an hour Cost Control Commission Regular Meeting Minutes - Open Session October 13, 2014 Page 10 SUBJECT DISCUSSION ACTION intervals: 1:30 p.m. Commissioners Kaneshiro and Takenouchi 2:00 p.m. Commissioners Apao and Hashizume 2:30 p.m. Commissioners Yoshida and Nakashima After a lengthy discussion the Commissioners decided to place the following items on the December agenda: 1. Request for a representative from Parks and Recreation to discuss the public's misuse of the County's park facilities; 2. Possible up -date by County Engineer relative to the old Big Save space; 3. Discussion on the Cost Control Commission 2014 Annual Report Adjournment Commissioner Sterker moved to adjourn the meeting. Commissioner Takenouchi seconded the motion. Motion carried 5:0 At 2:48 p.m. the meeting adjourned. Submitted by: Mercedes Youn, Staff Support Clerk ( x ) Approved as circulated on December 8, 2014. ( ) Approved as amended. See minutes of meeting. Reviewed and Approved by: Laurie Yoshida, Vice Chair