January 22nd, 2014 Minutes

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City of Alpine
Regular City Council Meeting
January 22nd, 2014
9:00 A.M.

1. Call to Order, Invocation and Pledge of allegiance to the flag – Mayor
Rangra called the City Council meeting to order.

2. Determination of a quorum and proof of notice of the meeting – Mayor
Rangra, Councilors Bermudez, Gonzales and Castelli were present.
Councilors Davidson and Fitzgerald were absent. Notice had been posted
at 11:45 A.M. on January 15th, 2014. Jim Stateczny with HCSS, Erik Zimmer,
CM and Molly Taylor, CS were present.

3. Presentations, recognitions and proclamations – None

4. Reports – None
City Mayor’s Report –
City Attorney Report –

City Manager Report –
City Staff Updates –

5. Citizens Comments (on agenda items) – None

6. Public Hearings – None

7. Consent Agenda – (Minutes, Financial reports, Department Written
Reports, board appointments, etc.) – None

8. Information or Discussion items –
A. Workshop for Council to help understand how the new Hill Country
Software System works by Jim Stateczny, Chairman of the Board of
HCSS. (A. Bermudez) – Jim Stateczny said he wanted to give the Council
some background about the system. He said the system was written
initially in 1982 with the assistance of the Kendall County Auditor. He
said he had back surgery for a ruptured disk and he was not going
anywhere so computers saved his sanity. He said this software has
evolved since 1982 and it is in probably 100 county offices and probably
a dozen city offices in the state of Texas. He said when they initially
wrote it, in 1982,1983, and 1984, the State of Texas at that time had what
they called the Red Book. He said this book was recommended
accounting procedures for Texas County Government. He said at the
same time a few years later they came out with a Blue Book and that is
what we would have here. He said it was about an inch thicker than the
Red Book. He said it was suggested accounting procedures for
Municipal Government. He said he worked with the people at the
Comptroller’s office. He said Tom Nielsen was probably the main guy at
that time. He said a team of people who helped write this book were
county treasurers and county auditors and some city financial people.
He said when the book was completed, all said and all done, we pretty
much had an evaluation of the book being worthless. He said there were
some things in the book that were good. He said there were some
concepts that they came up with that HCSS followed since those days
but a lot of the stuff that was in there does not mean much. He said
basically the way the system works is that everything revolves around
the general ledger. He said back in 1985, the City of Alpine would have
wanted his accounting system. He said the State of Texas would have
come out here and converted the city for free. He said that is how much
they wanted people to use the system. He said that did not last too long
and that kind of went away. He said the critical part of the system is the
general ledger and it is getting the chart of accounts set up properly so
that everything else can revolve around it. He said looking back at the
time we spent converting from the old system to this system, most of the
time was spent on the general ledger because your old general ledger, to
be polite, was a shambles. He said it was the biggest mess ever known
to man. He said an example was the 31 and ½ million that we were off
and we were off inside of Fund 70 which is your capital assets fund and
the only reason it was off was because the chart of accounts inside of
Fund 70 was not set up properly. He said they were not categorized
properly. He said as soon as we categorized the accounts properly, the
31 and ½ million went away just that quick. He said everything that we do
with this system is focused around the general ledger. He said the good
thing about it is when you get the general ledger set up right as your
people do their work, they very seldom work with the general ledger. He
said the general ledger is updated constantly. He said if you were to sit
at a screen today and look at your books and you wanted to see what a
budget line item looked like, you would know that it is current as of this
very minute. He said everything posts automatically to the general
ledger. He said now as a Council what does this mean to you? He said
this means that during the month the staff will perform their jobs and it is
going to keep the general ledger updated currently so that when it
comes time for a council meeting, the reports that the council will be
provided, to evaluate, you will know that they are current reports. He
said he thinks he asked a few council members about the previous
system and how you folks could sit up here and make intelligent
decisions when the reports you were being given, were at the very least
45 days old and they were very confusing to read. He said the
information the council was asked to work with, prior to that stuff that
was awful. He said now, you will have up to the moment information and
you are going to know that you can follow and ask for the status of any
line item to Erik or any of his people and you will know that information
is up to date. He said the thing the State of Texas did when they came
out with the Red Book and the Blue Book, was that the payment of bills
revolves around the city council meeting or the Commissioner’s Court
meeting. He said theoretically, according to the red book, no bill can be
paid without your approval. He said that does not mean you have to
approve every check because payroll for instance, at the time you hired
the employee, you have approved that employees benefit package. He
said you do not have to approve every pay check that comes out. He
said he actually had one account he went into years ago because the
Commissioner’s felt that they had to look at every pay check and give it
the official approval before they go out. He said the other bills have to be
approved by the council and so the strategy that is going to be employed
here, is when you receive your packet, 2 or three days prior to the
Council meeting, it will include two things, 1 – a financial report that will
show the council the budget and the things that Erik and his staff want
them to see. He said the second thing that will be included is a list of all
the claims that you are going to be asked to approve. He said the thing
they need to get into the habit of doing. He said your council meetings
are on a Tuesday night and it means you are getting your packet on
Friday. Jim said at the council’s leisure during the weekend especially
go over the list of cases and list your complaints and make sure
everything looks right to you. The City manager said if something does
not look right, don’t wait until the Council Meeting to bring up a question.
He said come up before the council meeting so they can research it and
give the right answer, and know if it is the right answer and if something
was wrong they have the opportunity to fix it before the council meeting
actually occurs and then after the council meeting they go back to the
HCSS Software and tell the software in most cases that all claims were
approved. He said then in a matter of minutes the checks were printed
and the appropriate people began to start signing their names. He said
that is the way the overall system is supposed to work. He said it is
really pretty straight forward. He said he is here today to show the
council and to answer questions. He said the conversion they previously
went through did not occur at the best of times. He said there was a lot
of sign activity going on that the folks have been asking questions
about. He said that is what he wanted to show them today. He said what
the accounting system is designed to do. He said we should expect that.
He said if you look at some of the other surrounding systems you have
your capital assets and that is pretty obvious. He said as of today we
have not converted the capital assets from the old system to the new
system. He said the reason we have not is we have started evaluating the
capital assets. He said the priority was to get your cash under control.
He said we have started to evaluate your capital assets as with the rest
of the old software, the capital assets are not in that good of a shape and
it is almost to the point where we may consider starting over to where we
go on and get some good tags and just repeat the process. He said when
he asks a question “Can you show me a list of tag numbers and what
they represent so I can try to cross reference it into the capital asset data
base?” we have not done that for quite a while. He said that project is
pretty much being handled by your outside auditors. He said that is fund
7 and that is where the large amount of capital assets is that this small
city has. Jim said he was surprised at the large amount of capital assets.
He said to have $70 million dollars in assets and to be a city of this size
is quite amazing to him. He said when you look at the land and the
buildings that the city owns, it all makes sense. Councilor Gonzales
asked about the amount of Capital Assets. Jim said he believes it is up
around there. He said that is not exact but around that amount. Mayor
Rangra said that is probably the appraised or catalog value. Jim said
then you have your depreciation too. Mayor Rangra said this building
could be appraised at one million or one and one half million. Jim said
the 70 million could be wrong. He said he had too many numbers floating
around in his head. Jim said another contributing system is your
accounts payable system. He said that is pretty obvious to everyone. He
said that is where all of your bills are fed into. He said that is where they
are prepared and processed and getting ready to be presented to the
council for approval or disapproval. He said the payroll system handles
your payroll. He said the big difference between the old software and the
new software is that in the old software you had a fund 2 which was the
payroll fund. He said that fund is gone away and now all of your payroll
is departmentalized which means it is charged to the appropriate
department so that you know how much payroll is coming from the gas
company and how much payroll is coming from the sewer and your
different departments. He said fund 2, the old payroll fund, is pretty
much phased out. He said he thinks there are still numbers in there but
they should be gone from there shortly. He said your receipt system is
how we bring money into the system. He said whenever someone brings
money to the city, a receipt is issued. He said the receipts that come in
via the gas company, via utilities all come into the system via receipt. He
said right now at the end of the day or first thing in the morning a receipt
is issued into the system that represents the previous day’s activity so
we know how much came in for this and how much came in for that. He
said when we get around to redoing the utility system, and replacing it
with another piece of software, that action will be automatic. He said you
will get the flow directly from the utility systems into the general ledger.
He said your financial people will have to oversee that. He said that is
the way that the package wraps us. He said there are five systems that
are working together. Councilor Gonzales said he would like to ask a
question about the payroll system. He said he understands that there
was a discrepancy in being able to tell vacation, sick leave or comp time.
Jim said he thought we pretty much accounted for the difference
between vacation, sick and comp. He said it took him a little while to
figure it out but he thinks that was all accounted for properly. He said
and then the one report that the Mayor asked him (Jim) to write, and it
turns out that the timing of this report was pretty much perfect. He said
he has to believe that these auditors who come in and audit you, whether
they are auditing a city or they are auditing a county, have to be certified
by the state of Texas to be able to do this. He said he has to believe that
every year the state comes out with something that want them to focus
on and for some reason the focus in the past year or two has been
payroll and overtime. He said he took the report that he wrote for Mayor
Rangra back to the users conference back in November. He said the rest
of his customers saw it and it was like “where has this been?” and “why
have we not had this before now?”. He said he told them that nobody
had asked for it before. He said the Mayor of Alpine asked for it. He said
apparently that has become a sensitive issue and the thing is it is
attached to these homeland security grants. He said not that anybody
here in Alpine would do it but these deputies, depending on how they
work is charged, to the city or to a grant, it is a different way to pay. He
said these guys will figure out how to make sure they are getting the
higher rate of pay for the overtime. He said he thinks that is where the
focus has come from, from the state of Texas. He said he thinks,
Councilor Gonzales, in order to answer his original question, he thinks
when it is all said and done, he thinks we had payroll, comp and
overtime pretty well covered before. He said Megan can answer that
question better than he can. He said he thinks we have it pretty well
under control. Councilor Gonzales, said he understood that the previous
audits did not include the payroll. He said they were not looking at that.
Jim said he really did not know. He said he was sure they did because,
especially Shaw’s group, his company audits around 20 or 30 of his
customers and he is pretty thorough. He said he does not know for sure
what he focused on here or what he did. Mayor Rangra said so what he
hears from Jim is that the state directs the auditors to focus on certain
things. Jim said that was his opinion, yes. Jim said another example of
this came about 10 or 15 years ago. He said the state came down on
counties and cities and said there were too many checking accounts. He
said there were too many checking accounts being managed by people
who should not be managing them. He said they were not focusing on
one group in particular, but we can look at JP Court and Municipal Court.
He said the JP’s had their own checking account and they were putting
money in it and taking money out of it. He said the state said no, no, no.
He said there is only one person in the county that manages the money
and that is the treasurer. He said there is only one person in the city that
manages the money and that is your finance people. He said to give an
example to what has gone on in the county with Jerry Sotello, who is a
big JP, he actually has his own checking account but all he can do is put
money into it. He cannot reconcile it and he cannot write a check. He
said he actually does write a check but the treasurer has to sign the
check. He said about 5 years ago, the state issued one of these
suggestions as he calls them, because the counties and cities were
getting sloppy and were fading back to what they used to do. He said
they were instructed to go in and clamp back down on this and get this
back under control. He said that is why he thinks, he knows that
happened, because Shaw told him that they had been asked to go in and
do this. He said he has to believe that the state, since they pretty much
control these outside auditors, because they have to certify them, give
them focus points. Jim said again that is his opinion. He said another
issue they have with the conversion is that the transaction history in the
old software lacked a whole lot to be desired. He said there were areas
where it was almost impossible to go back and figure out what was
going on. He said what he did was set up a line item and it was called the
conversion reconciliation account and what we did was things we
couldn’t account for or explain, we posted that against that account, with
the idea that as we moved forward, as time for more research became
possible, that as we found out what these items were, we would then go
back and un-post them against the account. He said this is a strategy
that he used in some other places where they had to convert a mess,
similar to what we had here. He said the whole idea is that when it was
all said and done everything comes back to zero. He said in the other
two places that he used them, that has occurred. He said he is not that
optimistic here because he thinks there are things the way the
transactions were kept. He said you had a self destructing accounting
system and at the end of each month there was a reason they did not
close the month until the 2nd or 3rd week because once you did, you lost
it. He said there was a reason at the end of the year that they did not
close the year until two or three weeks into the year because when you
closed that year all the transactions went away. He said the thing we
were never able to find was a backup somewhere that he still believes
had to have been made, that would have had a copy of these files at the
end of each fiscal year. He said having that and trying to decipher what
was wrong was quite a challenge. Mayor Rangra asked if anyone had
talked to Ricky to ask him to decipher some of these problems. Jim said
indirectly. He said he never spoke to him directly but he did not figure
that it was his place to confront him directly. He said then Chuck left and
what happened after that he does not know. Mayor Rangra said Shaw
Skinner was the city’s auditor for years using this system which you
(Jim) said was a mess. Mayor Rangra asked if Shaw had any idea about
this and some of these problems. Jim said yes. He said what happened
was, when Shaw would get ready to audit the city, Ricky would go to his
office and install the system on his computer, which had everything for
the year, right there. He said that was part of what Shaw used to do the
audit. He said whenever he was through with that, he destroyed that stuff
because he figured it was over here. Mayor Rangra said “Shaw did
that?” Jim said it was Shaw’s computer and he deleted it when he was
through with it, because it was not his place to keep it. He said he
assumed it was kept over here. He said looking back we wish he had not
done that, but that is more water under the bridge. Jim said that is what
that account is all about and he thinks that we have the money pretty
much under control and he thinks Erik and Megan can show us that. He
said we will never know for sure about everything that went on. He said
Ricky was asked to help but was non-cooperative, and wanted to be paid
for it. Erik said he thought, and this is just his opinion, if Ricky gave back
information it could have made him more vulnerable in the future. He
said he thought his non-cooperation was predicated on that. He said that
is not based on fact. He said that is just based on why people do or don’t
do the things that they do historically. He said the guy who held the keys
to the bus and the only set of keys is not going to relinquish those when
he is being indicted. Erik said Ricky was asked. Mayor Rangra said when
he put Ricky on paid leave, he visited Shaw and Shaw said the Mayor
had made a mistake to put Ricky on paid leave. The Mayor asked why
and Shaw suggested to him that he should bring Ricky back to work. The
Mayor said no, but Shaw had faith in Ricky. The Mayor said the whole
system is bad. He said we had an auditor looking at and auditing our
books and how was he able to look at all the numbers properly. Jim
talked about the checks and the safety finish on the checks themselves.
Jim said they use a magnetic toner so that we are actually putting the
numbers along the bottom of the check. He said those numbers all have
to check out. He said you do not go in and white out. Mayor Rangra said
he had a question on duplication. He said he heard a person got two
checks in refunds and a vendor got two checks. He said one was a
$50,000 check to pay the fuel. He said it was the same invoice and same
number. He said we should be able to flag that something is wrong. Jim
said somebody can always find a way to try to slip something by you but
eventually it is going to show up. Jim said it will show up. Erik said there
are some key changes. He said number 1, in his opinion going to a
vendor that is not a member of the city staff to provide software. He said
the vendor before was Ricky and his partner Dearing. He said that would
have been and was a red flag. He said the auditor who was used got into.
the same cycle (he said he did not know Shaw Skinner but would
recognize him if he walked into the room, but does not know him
personally). He said it is healthy to take the auditing function and leave it
to an outside entity. He said then it was migration to a budget variance
methodology where every month we are looking at expenses, provides
further checking at the department head, city manager, finance director
etc. He said all those things combined really tightened up the process
for us. Jim said another thing that this software does is that whenever
money moves, whether it be entering an invoice or entering a check or
entering a receipt, correcting an invoice or making a budget adjustment,
a transaction is logged. He said it is logged on this date by this
employee who caused this transaction to happen. He said once this
transaction is in the system, it is there for the rest of time. He said you
cannot delete it or alter it. He said you can enter another transaction to
offset it but as he had years ago, a customer he just installed called him
and said they had a big problem. He said she told him that they had a
bad transaction. He said they had a transaction for a million and one half
dollars. He said she put the invoice in and instead of putting in $1,500 it
came out one million and one half dollars and then she went back and
fixed it but the two transactions for a million and one half are still there.
Jim said that is right. He said those two transactions are there for
everybody to see for the rest of time. He said they do not go away. He
said even in the court systems, whenever money moves, there is a
transaction and you will not steal from his software. He said you might
get away with something temporarily but they will catch you. He said that
is how tight the system is. He said the other difference between HCSS
and the system the city used to have is that the old system was written
in what was called DB5 was which was an old general purpose data
based system. He said the only problem was that you could go into the
DB files and you could modify them. He said HCSS files are more
proprietary which in some ways is good and in some ways is not but the
good thing about it is that you cannot go in and mess with it. He said
they are encrypted and you cannot go in and do that. He said they have
gone into a lot of links to make sure that the system is as air tight as it
can be. Jim said as Erik was saying, everything revolves around the
budget. He said as he tells people there are only two things that count in
government accounting, cash in the bank and the budget and nothing
else matters. He said that is what it is all about. He said what they are
trying to do is give the city better reporting to monitor the budget and
monitor the cash flow. He said the other report that the city has given
him the idea to write, the cash flow analysis report, has gone over really
big with the rest of their customers as well. He said a lot of times, you
guys that sit up here, are more interested in how much money do we
have instead of how we stand with the budget. He said they are both
equally important but sometimes it is just easier to look at what do we
actually have in this checking account. He said they know what they
have in the budget to spend but what do they actually have in their
checking account. He said he thinks this system will give all of that
information. He said the other trick is to make it as concise and brief as
they can so the user does not wear themselves out trying to go through
and figure something out and where the information you want is more
readily available to you and you do not have to wade through a bunch of
other paperwork to get it. The City Manager said that is part of the goal
from Megan and himself. He said it is to take profit loss analysis and
cash flow variances and provide that on the second Tuesday of every
month but there will be a cover sheet or two with bullet points and
highlights that will allow you to understand those pages. He said you
can dig into these as much as you want. He said we need to be sure that
we are giving you the bullet points and highlights. He said Jim has
worked with them on the budget variance reports. He said if you had a
duplicative $50,000 check, we would see that immediately from a budget
variance perspective. Mayor Rangra said that is a big difference and we
were negative at one point and the Council was asked to borrow money
from the bank. The City Manager said in the Airport Enterprise Fund a
$50,000 duplicate would put you from the black to the red. Mayor Rangra
said we did not have to borrow money from the bank after all. Jim said
now better things are going to happen. Mayor Rangra asked if we were
now using the HCSS system exclusively or were we still working with the
old system and this one. The City Manager said we will still go into the
old system and pull data out as we have a need and we think we can find
it. Mayor Rangra said we started with HCSS in 2013 in October. The City
Manager said the old system conversion was in July of 2013. Jim said
this fiscal year is totally in this system. He said 2012 and 2013 is split
between the old and the new. Councilor Castelli asked how that would be
reflected in the audit. Jim said they will have to audit both sets of books.
Councilor Castelli said that won’t be an excuse for poor performance,
will it? The City Manager said we sat down with Craig Gibson (our
auditors) for about an hour and went over all of the things that we had
gone through last summer, what we went through during conversions,
where we had problems, where the issues came up and basically what
we did and how we came up to where we are. He said he thought Craig
basically understood everything. He said they have more questions
every day but that is fine. He said he thinks they have it totally under
control. Jim said they seem like a pretty nice group of people. The City
Manager said Craig had three ladies here who were very sharp and very
data detail oriented and they were hard diggers. He said they were really
digging into this data. He said that is all they do, twelve months out of
the year. Councilor Gonzales said he had a picture in his mind about
what is going on here and he wanted to be corrected if he is wrong. He
said there has been a group of expenditures and we have broken it down
to actual accounts. He said he is assuming that over here in this group
of payments that have been made, you cannot match them to the
expenditures. He asked if that was correct. He said the reason he asked
that is because here is money that has been directed to be spent for a
certain purpose and over here you have another group of things that
have been spent but we do not know where it fits on the overall picture.
He asked if this was true and if it was true was this money equal to the
amount of money that is missing over in the other column. He said Jim
said something about that we do not have any money missing involving
spending by the city. He asked if we were still trying to match. The City
Manager said we have not uncovered anything that says the money was
spent on anything other than the city. He said what we saw in 2011, not
so much CO 2011 because that was just allocation dollars, but the 2011
was pervasive through all the different funds out there, the lack of
documentation. He said you may budget or allocate on paper dollars to
certain line items but when the expenses actually come through, you
may have no documentation or it may be partially allocated to one item
or partially to another and they do not always match up. He said because
when you close out a month and close out a year in the old software
those transactions go poof! He said recreating them requires us to try to
find paper documentation somewhere in our archives or go back to the
bank and pull checks and then try to piece that back together about what
seems logical. He said that is why in your packet you saw these checks
that went out to the individual groups but not necessarily hard copies of
what this invoice was for and the detail behind it because that was not
kept in a clear concise filing manner and so you got the picture. He said
you allocate over here and you budget over here and then spending over
here is like a free for all with no documentation and then now we are
trying to say that the furniture is really listed as a roof and where does it
go to and literally there are hundreds if not thousands like that. He said
he is not trying to embellish this. He said there are probably thousands
of transactions like that. Mayor Rangra asked what we are doing to try to
avoid this from happening in the future. The City Manager said now we
have a stong finance director that is working with Abel and Grisell on
items that are coming in, in categorization of the items plus the magic to
it is when you get into the budget variance process where departments
have their individual budgets and if you have material in a supply line
item and you go over, now with the software here, Abel or Grisell will
open up that line item and say “here are your twelve transactions” and if
there was something that was miscoded they could go in and say “you
know what, this really was an item that should have been coded over
here”. He said Megan has to give approval on the re-categorizing of the
expense and if it is a large dollar amount then she will come to the City
Manager. He said we have this process of structure in place that is really
looking at it. He said we are going through this process every month so
that when we come to the end of the year we have a discussion with
Craig Gibson, the auditor about the audit, he is getting much cleaner
data. He said the good thing about this too is the on-site and the support
from HCSS to ensure that we are entering the transactions correctly and
that we are getting appropriate output. Mayor Rangra offered a
suggestion. He asked if we could scan our checks and put them in the
archives and in this way we can go back and forth to check them. He
said we can look and see if they have been miscoded. The City Manager
said the Mayor was talking about his utopian world and yes, he would
like to get there. Mayor Rangra said when Chuck came on board that was
one of the things that they talked about. He said he thought that might
help us. He said the City can even scan checks and make a deposit from
City Hall. The City Manager said he spoke with Linda Lassiter and we are
going to enable that capability. He said what would be better for us is if
they would deploy a drop box or a lock box program where people who
are mailing in their checks, mail it to a PO Box and then the bank
deposits it and provides us with a scan and then Jim writes the code that
allows the lockbox up-code into the system. He said that way we save
labor but West Texas National Bank does not do a lockbox product right
now. He said he thinks the lockboxes will take a little longer. Mayor
Rangra said he would talk to the bank. The City Manager said it is helpful
for us to have a bank branch here because we need to have someone
who has a branch here because we are in and out. Councilor Bermudez
asked who signs checks now. The City Manager said primarily himself
and Molly Taylor, the City Secretary. He said we still have four
signatories on the checks, including Mayor Rangra and Mayor Pro Tem
Davidson. Mayor Rangra said he does not have any problem signing
checks now since the system is in good shape. He said he had a
problem before when he tried to get information and it was not available.
He said if he was needed to sign checks, he would be more than happy
to. The City Manager said he reviews the payroll when we have the first
run. Jim said HCSS can sign the checks for you. He said that function
has been disabled as of now but it is still out there. He said right now
you have a hodge podge of equipment in the City starting with the server
that is actually on loan to us from Mark Hannan. He said once we can
redo the hardware and put in a scanner or two, we can scan every
invoice. He said you can attach an image to any kind of record inside of
the software, be it a payroll record, check record, capital asset record
and it is very simple to do if we have the super structure set up in place
to handle it. He said then if you have a question on an invoice, instead of
having to go back to the storage building and get it out it is ready and
available to you on the screen. He said there are a lot of more things we
are going to be able to do once we get the hardware situation under
control. He said right now the network here is kind of weak. He said it
goes down for no reason at all sometimes and it all needs to be redone.
He said we have been visiting on how to get that done as well. He said
there is a lot of potential in this software that we have down the road as
soon as we have the proper facilities to use it. Councilor Gonzales said
as far as items that are sitting in that special fund, we do not know where
they go. He said you can come up with a number but Jim is saying that
we are not missing any money and that it has all been spent but we just
can’t put it in the right spot based on totals. He said in one place it looks
like we are missing money and do not have money here. The City
Manager said if you look back historically in the city you overspent your
revenues. He said that money had to come from somewhere. He said the
overspend was on city related items and when you ingest, like with the
CO 2011, ingest 1.2 million in, and you take a budget of 10.5 million and
spend 10.8 or 10.9 million and your revenue is only 10.2 you have to get
that $600,000 from somewhere. He said the $600,000 came from CO 2011.
He said you spent it on city items that were not categorized as CO 2011
and that is where you saw that $500,000 delta in your sheets. He said
that delta occurred because that money was spent using other things to
operate the city. He said whether it was equipment purchases or
something else. He said as you walk through the warehouse you see a
lot of things that maybe we did not need but we spent $100,000 in
equipment there. He said when he is digging through trying to figure out
when was this purchased and why was this purchased and what account
was it taken to, sometimes you are able to find them and you’ll see that it
was taken to the water department material. He said it is a fact that your
revenues were less than your expenses and the money had to come
from somewhere. Mayor Rangra said the Council had information
available in a timely fashion. He said an item came before the council to
purchase something and what happened in the past is they looked at the
manager and asked if they had the money and he said we had the
money. Mayor Rangra said he would also take the responsibility. He said
when we want to spend “x” number of dollars in the water department
and we are looking at if we have the money in the water department. He
said if we do not have the money in the water department we should
transfer money from another account with permission from the council
so the council will know what is going on. Mayor Rangra said we have
not had that in the past. The City Manager said there will not be an
approval without a specific line item that will be used to address that. He
said 99% of the time it is going to be a required transfer. He said if a
$7,000 expense comes up that is necessary in the public works
department and we are running low on our expenses in the
administrative fund so the council could vote on covering the expense
out of the administrative fund. He said the council would be voting on if
they wanted to transfer the money over to cover the expense. He said we
will also be getting the budget variance every month that the council can
look at and say the administrative fund is running light on their expenses
in that line item so it does make sense. He said that is when, as a
council, you have to be educated as to what is happening from the
financial piece so that you can make a decision based on that
information. He said that is his responsibility to deliver it that way. Mayor
Rangra said he liked the wiring system. He said that is what he does in
his business, transfer money from one account to the other. He said if he
has to borrow money from his personal account for the business it goes
there. He said how can the deposits exceed the revenues. The City
Manager said there are fund sheets that will come out every month. He
said some of that money is not ours, like hotel motel and INS. He said it
is not ours theoretically but we are the guardian of it. He said the whole
notion of throwing everything in the general fund, you cannot throw
other people’s money into your own account. Mayor Rangra said this will
be able to address quite a few concerns that the council has on what you
saw when you were transferring the data from the old system to the new
HCSS. He said nothing is perfect. Jim said what you are going to have
now is equality in your chart of accounts which the City Manager can
control and when you get these funding issues like a CO you can set up
the chart of accounts properly to reflect the information. He said you did
not have that before. He said before you just asked Chuy if we had the
money, yes or no, and you had no clue. He said plus the reports that
you were getting from them were at least 45 days old. He said so how
you could sit up there and make a decision when all you had to rely on
was, did you have the money, yes or no. He said that is all you had. He
said the council has to approve every transfer and expenditure. He said
that is your job. He said if he is going to be able to give you the
information you need to look at to intelligently make that decision
correctly plus the charter. The City Manager said there were transfers
made consistently that did not have the approval of the Council. It was
discussed that a few transfers occurred after Chuy. City Manager
Zimmer came in 6 weeks into the fiscal year. He said this year is a good
indication of where we will be. He said 2015 will be a much better
reflection of where we are going. Councilor Gonzales said he had
another question. He said we are four months into the new software. The
City Manager said we are going to do a budget revisit but we put the
brakes on even more as far as spending goes. He said there were a lot of
expense line items that were trending much lower. He said looking into
them and not being able to go back, we do not have the visibility to
always go back. He said we will be building the budget from scratch. He
said we will be looking at the trend but then saying what is it that we
really need. He said we are putting the brakes on 2014. Councilor
Gonzales said he understands that but we are using this year to
determine what next year will look like. Councilor Gonzales asked what
the repercussion would be if you exceeded your budget. The City
Manager said if it was blatant mismanagement, they will be terminated
for overspending their budget. He said if you are given $15,000 in a line
item and you spend $28,000 and you spend $1,600 to buy sweet smelling
perfumes to put into the sewer plant then we have a big problem. He said
he is mixing some theories with some actual items. Councilor Bermudez
said if they think they need to exceed their budget they need to come to
the City Manager to be advised. The City Manager said that is the beauty
of looking at their budget every month so they can understand where
they are further out. He said we should not pay unemployment in most
circumstances. He said the second thing is the purchase order process.
He said there was not a purchase order process and people would just
go to True Value and would call the office and get a purchase order
number and buy a bunch of stuff. He said now department heads are
authorizing purchase orders. He said then they have to bring in that
authorization sheet with the invoice to our finance department. He said
they also know what their line item is and they have to put the line item
that is to be charged there. He said we are pushing more accountability
with department heads instead of just calling and asking if they can
spend money on something. He said really what you have done is that
there is no level of accountability for department heads. He said now
there is, which is why he was asking the question a few minutes ago.
Councilor Castelli asked what we did when an enterprise fund loses
revenue in the amount of $7,000 per quarter. The City Manager said we
should see that happen but right now with our gas
department…..Councilor Castelli said our new software cost quite a bit
of money. He said we had received a report that we can talk about but if
we do not do our jobs as council people and just look at that report and
just pass it though and wait for our next trip to Austin, where is that
going to take us? He said that is the situation that we have. He said we
have had that report for two and one half weeks and not a word has been
said. He said and here is the business that we took over because it was
going to be a cash cow for the city and now we have lost $157,000 in a
quarter and nobody on the council talks about it. The City Manager said
systematically what he can see happening with the gas department is
losing money. Councilor Castelli said this is our responsibility. The City
Manager said he appreciates the comment. He said he sees that and he
is concerned about the gas department. He said we are losing money at
the gas department and we should be making money. He said what is
going to happen over the next several months and what will absolutely
happen in 2015 is there will be allocations of his, Molly’s and Megan’s
wages to the enterprise fund department. He said we do not do that
currently. He said what you see on paper from a profit and loss
statement is actually a better representation of where we are at. He said
because he makes decisions for the gas department and the water
department, Molly has a certain amount of accountability and the finance
director. He said he has reviewed that with Mick and he has always
allocated the chief administrative salaries across the different
departments. He said the city of Alpine has not done that. He said the
profit looks higher than what it is or the loss is lower than what it is. He
said when we start doing even more allocations we are going to see
many of these enterprise departments maybe operating in the red. He
said we have to correct that. He said the gas department has lower rates
and whoever made the decision to go from where it was to down here
where it is and you had several hundred thousand in reserve and had
customer deposits that came in and they all got spent. He said we have
$100,000 in reserve in the gas department and we have $160,000 in
liabilities for customer deposits because we do not even have that in
reserve. He said you’re operating in the red on top of it and that is not
even taking all of your allocations of expense to that enterprise unit. He
said the nice thing about working with Mick McKamie is that he has
worked on these different kinds of rate increases in the past and we are
buttoning down that information to come together and say what do we
need to do. He said part of that also is tightening down expenses. He
said some of your overage is also related to inappropriate spending.
Mayor Rangra said when we approved this current year’s budget, monies
from different departments were allocated for the purpose that Erik
mentioned. He said it was for his salary and Molly’s salary and Megan’s
salary. He said the salaries had to be proportionately allocated. He said
they had discussed that at the Water Development Board and they had to
assure the board that this would happen and that we were doing that. He
said now actually what we have done is take “x” number of dollars from
the police department, gas department, city hall and we have not done
that. He said it is not the City Manager’s fault but that is the kind of thing
that the council needs to be aware of. The City Manager said he would
mention that in the gas department, the number one item in revisiting the
budget is that there was a representation of a 13% increase in revenue.
He said that stuck out to him like a sore thumb. He said how do you
increase revenue in a stagnant account. He said that is what was
presented and that is what was approved. He said there will be a
retraction on that in what you see. He said you cannot fictitiously raise
revenues and show this reallocation to cover police, public works and
administration. He said you cannot do that. He said the revenue has to
be real and it has to be real estimates. Councilor Bermudez said there
were quite a few items. Mayor Rangra said look at the expenses and
revenues. He said we are $100,000 in the red. The City Manager said that
is to Michael’s point. He said it appeared on the budget that it was going
to be positive but that was predicated on fictitious revenue assumptions.
Mayor Rangra said if you look at the revenues and expenditures that
were given to us and look at the budget critically, it is $100,000 already in
the red. He said that is beside the point. Mayor Rangra asked when the
council would be able to get the monthly statements and reports from
the new software. The City Manager said we will be looking at the profit
and loss statements and the budget variance on the second meeting of
every month starting in February. He said that does not give him any
time to close out January. He said that is why he will give a one or two
page bullet summary up front because otherwise you will get 70 pages of
back up. He said it is his job to narrow that down. Mayor Rangra said
maybe we can use I-pads to have all of this information available to the
Council. He said that would be wonderful because then the council
would have the information and we would not have to make copies for
everybody. The City Manager said nothing would please him more than
to see the council members with I-pads. Mayor Rangra said he would
rather have this electronically. He said he takes the information that the
City Manager gives him and puts it in his own spreadsheet. Jim said we
might want to look at things other than an I-pad. He said Microsoft
surface, the way they structured it, is much easier to use. He said it has
its own keyboard that can fold down. He said if you just want to use it as
a tablet, you can pop the keyboard off and the price is probably less
expensive than an I-pad. He said the I-pad is still the most expensive
tablet you can buy. He said he has the new style that Microsoft
introduced with the Microsoft Surface is far superior and you will like it a
whole lot better. He said there are two versions of the Surface. He said
one is a tablet and one is a full blown computer. He said with the
computer you can put anything you want on it. He said with the tablet
you are pretty much limited to what you can work through the internet.
He said Microsoft has a new version of the office. Councilor Castelli said
you need to have a personal computer and you need to have a city
computer and you cannot mix the two. He said the city computer does
not allow you to use it for personal uses. The City Manager said what we
are looking at are overall networks right now. He said we have spent a lot
of money over computer hardware and software over the last 3 or 4
years and we really do not have anything to show for it. He said we need
to have good network connections between our offices. He said we are
right now addressing Google’s product suite for government. Scanning
and archiving documents was discussed. The City Manager said the nice
thing with Hill Country Software is that on invoices or checks or images
tied to an invoice we can load it in to that item. He said the reason why
that is critical is when we are looking for an overspend or under-spend
to a particular line item we not only have the dollar amount and when the
check was written but we also have the back-up invoice already in the
software. Mayor Rangra asked about software for billing. The City
Manager said as we integrate our water and gas we will address that. He
said these projects take us time and money and right now there are just
not enough hours in the day. Councilor Castelli said he wanted to make
a point and he wished that all five council people were here. He said
going back to when he sat out in the audience as a citizen, the red flags
that he saw about Chuy and Ricky have not changed and we are still in
the same position. He said he sat out there and nothing has changed and
he cannot get anybody to hear him. He said there was an item on the
agenda about Big Bend Softball league who wanted to put in some
softball cages and they asked Chuy if we had the money. He said Chuy
said we did have the money. He said Chuy did not know how much
money it cost. He said there was no red flag. He said then the lady came
to the podium from the Softball league and said the league was not
asking for the Council to pay for this. She said they were only asking for
permission to build it and that they were going to fund it themselves. He
said the council said good and they just went on about their business.
He said red flags and nobody asked Chuy why he said we had the money
or did not have the money but nobody knew what it cost. He said the
public is saying look at these idiots up there approving things and let’s
go to the next thing on the agenda. Councilor Castelli said here we are
today. He said the City Manager has been providing the council with an
unpaid invoice report since July. He said this was under the new system.
He said he is the only person who ever asks a question about an item on
the report so what good does that report do? He said the City Manager
provides us with a quarterly report that shows $157,000 loss to the gas
company. He said the council members do not even ask a question. He
said that is a red flag. He said all of these wonderful reports but as a
council, the council is failing in their responsibility to the taxpayers to
this city. He said he wants somebody to take responsibility for that and
he does not want to be the only person time in and time out to ask about
an invoice item and then have one or two denigrate him for asking the
question. He said he is doing the job that they are not doing and he has
been very frustrated listening to this today because the council keeps
saying what else can you do for us? He said he is the citizen saying
when are you going to do something for me? He thanked the council for
hearing him out. Mayor Rangra said that is true. Councilor Castelli said
he did not want a response from the Mayor. He said of all people he did
not want a response from the Mayor. Councilor Castelli said what he
would like is to not be the only person watching the city. Councilor
Bermudez said as you know she is not an accountant and sometimes
she looks at the reports and does not see everything. She said after the
new reports are generated she hopes to be able to see things more
clearly. She said the only thing is that no other members of the council
ask questions either. She said none of the other council members ask
questions about the unpaid invoices at council either. Councilor
Bermudez said she knows other things that maybe the other council
members do not know. Mayor Rangra said each council member is
elected and represents a ward. He said each council member has the
right to ask questions. He said if one person asks questions and the
others don’t it doesn’t matter. He said when he was on the council he
asked a lot of questions and he was accused of micromanaging. He said
the Mayor does not have the authority to stop the process. He said the
Mayor can give the chance to the council to speak and he never worried
about other people asking questions. He said concerning the budget he
was the only one who was prepared. He said he stayed up all night
looking at the budget the night before. He said he has asked plenty of
questions when he was a council member and now that he is Mayor. The
City Manager said there are significant problems that have grown and
significant issues that relate to how money has been spent and
allocated. He said with a strong system we still have to have a strong
output and people who are looking at it and giving an assessment. He
said he has a trained eye but there are things that he will not pick up on.
He said there are things that we need to challenge ourselves to push the
City ahead. He said the notion about approving things without
specifically understanding them has to stop. He said it is his
responsibility to help the council understand what the expense is and
validate it. He said sometimes he will not have a solution. Mayor Rangra
said the council has to approve every expense above $500. The Council
thanked Jim for his information and help.

9. Action Items to be accompanied by a brief statement of facts, including
where funds are coming from, if applicable. (Action items limited to 15 per
meeting.) – None
10. Citizens Comments (limit 3 minutes) – none

11. Council Member’s Comments and Answers – none

12. Executive Session – none

13. Action – Executive Session – none

14. Adjournment – Meeting was adjourned.

I certify that this notice was posted at 11:45 A.M. on January 15th, 2014, pursuant to Texas
Open Meetings Act. (Texas Vernon’s Annotated Civil statutes, section 551.043 Texas Government
Code.) This facility is wheelchair accessible and accessible parking space is available. Requests for
accommodations or interpretive services must be made 48 hours prior to this meeting. Please
Contact the city secretary’s office at (432) 837-3301 or fax (432) 837-2044 for further information.
Dr. Avinash Rangra, Mayor
Margaret “Molly” Taylor, City Secretary
I, Margaret “Molly’ Taylor, City Secretary, do certify that this notice was posted at 11:45 A.M. on January
15th, 2014, and remained so posted continuously for at least 72 hours preceding the scheduled time of
said meeting.
Margaret “Molly” Taylor, City Secretary

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