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HomeMy WebLinkAbout02.07.2023 Finance Committee Amended Agenda PacketCity Council Finance Committee Agenda February 7, 2023 Page 1 SARATOGA CITY COUNCIL FINANCE COMMITTEE FEBRUARY 7, 2023 4:00 P.M. REGULAR MEETING AMENDED AGENDA • 02/07/2023 ITEM 2 FEE STUDY RESULTS PRESENTATION SLIDES ADDED Teleconference/Public Participation Information - Special Meeting The Regular Meeting will be held in-person and by teleconference pursuant to amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when a local official has recommended social distancing. City Council Finance Committee members and the public may participate in person at the location listed below or via the Zoom platform using the information below. Members of the public can view and participate in the meeting by: 1. Attending the meeting in person in the Linda Callon Conference Room located at 13777 Fruitvale Avenue, Saratoga CA 95070 2. Accessing the meeting through Zoom * Webinar URL https://us02web.zoom.us/j/81997124594 * Webinar ID: 819 9712 4594 * Calling 1.669.900.6833 or 1.408.638.0968 and pressing *9 to raise their hand to speak on an agenda item when directed by the Chair Written Communication Members of the public can send written comments prior to the meeting by commenting online at www.saratoga.ca.us/fc prior to the start of the meeting. These emails will be provided to the City Council Finance Committee and will become part of the official record of the meeting. Public Comment Members of the public may comment on any item for up to three (3) minutes. The amount of time for public comment may be reduced by the Chair. Meeting Recording Information In accordance with the Saratoga City Council’s Meeting Recording Policy, the City Council Finance Committee Meetings are recorded and made available to the public following the meeting on the City website. City Council Finance Committee Agenda February 7, 2023 Page 2 CALL TO ORDER ROLL CALL Public Comment AGENDA ITEMS 1. Finance Committee Minutes Recommended Action: Review and approve the minutes for the January 10, 2023 meeting. Finance Committee Minutes 2. Fee Study Results Review Recommended Action: Receive the 2022-23 Comprehensive Fee Study Project results and provide input on City staff’s cost recovery recommendations. Memo - Fee Study Results Review Fee Study Results Presentation Slides 3. Request for Proposals for Independent Auditing Services Recommended Action: Approve the request for proposals for independent auditing services for the fiscal year ending June 30, 2023. Memo - 2023 Audit Services RFP 2023 Audit Services RFP 4. November Finance Committee Meeting Recommended Action: Cancel the Finance Committee’s November 28, 2023 regular meeting, schedule a special meeting the week of November 27th. Memo - November Meeting Cancellation 5. City Council Financial Policies and General Financial Operating Policies Review Recommended Action: Receive report on the annual financial policies review and update for fiscal year 2023-24. Memo - City Council Financial Policies & General Financial Operating Policies Review Attachment A Policy Summaries Attachment B General Financial Policies Attachment C Fund Balance Reserve Policy Attachment D CIP Project Process Policy ADJOURNMENT City Council Finance Committee Agenda February 7, 2023 Page 3 CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT I, Gina Scott, Administrative Analyst for the City of Saratoga, declare that the foregoing agenda for the meeting of the City Council Finance Committee of the City of Saratoga was posted and available for public review on January 31, 2023, at the City of Saratoga, 13777 Fruitvale Ave., Saratoga, CA 95070, and on the City’s website at www.saratoga.ca.us. Signed this 31st day of January 2023 at Saratoga, California. Gina Scott, Administrative Analyst In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to the Committee by City staff in connection with this agenda, copies of materials distributed to the Committee concurrently with the posting of the agenda, and materials distributed to the Committee by staff after the posting of the agenda are available on the City website at www.saratoga.ca.us and are available for review in the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, California. In compliance with the Americans with Disabilities Act and the Governor’s Executive Order, if you need assistance to participate in this meeting, please contact the City Clerk at bavrit@saratoga.ca.us or call 408.868.1216 as soon as possible before the meeting. The City will use its best efforts to provide reasonable accommodations to provide as much accessibility as possible while also maintaining public safety. [28 CFR 35.102-35.104 ADA title II] City Council Finance Committee Minutes – January 10, 2023 Page 1 MINUTES SARATOGA CITY COUNCIL FINANCE COMMITTEE MEETING JANUARY 10, 2023 CALL TO ORDER The meeting was called to order at 4:05 p.m. ROLL CALL Present: Mayor Kookie Fitzsimmons, Council Member Page Also Present: James Lindsay, City Manager Nick Pegueros, Administrative Services Director Agnes Pabis, Finance Manager Gina Scott, Administrative Analyst REPORT ON POSTING OF THE AGENDA The Administrative Analyst reported the agenda for this meeting was properly posted on January 9, 2023. AGENDA ITEMS 1. Finance Committee Minutes Recommended Action: Approve the minutes for the November 29, 2022, Finance Committee Special Meeting. PAGE/FITZSIMMONS MOVED TO APPROVE THE MINUTES FOR THE NOVEMBER 29, 2022 FINANCE COMMITTEE SPECIAL MEETING. MOTION PASSED BY VERBAL ROLL CALL. AYES: PAGE/FITZSIMMONS NOES: NONE. ABSTAIN: NONE. 2. 2023 Regular Meeting Schedule, Tentative Agenda Topics, and Draft 2023-24 Budget Calendar Recommended Action: Adopt regular meeting schedule and tentative agenda topics for 2023 Receive Draft 2023-24 Budget Calendar Administrative Services Director Nick Pegueros presented the 2023 Meeting Schedule, reviewed Agenda Topics, and introduced the Draft 2023-24 Budget Calendar. 3 City Council Finance Committee Minutes – January 10, 2023 Page 2 PAGE/FITZSIMMONS MOVED TO ADOPT THE REGULAR MEETING SCHEDULE AND TENTATIVE AGENDA TOPICS FOR 2023 WITH CLARIFICATION THAT THE COMMITTEE MAY SCHEDULE ADDITIONAL SPECIAL MEETINGS AS NECESSARY. MOTION PASSED BY VERBAL ROLL CALL. AYES: PAGE/FITZSIMMONS NOES: NONE. ABSTAIN: NONE. ADJOURNMENT PAGE/FITZSIMMONS MOVED TO ADJOURN THE MEETING AT 4:24 PM. MOTION PASSED BY VERBAL ROLL CALL. AYES: PAGE/FITZSIMMONS. NOES: NONE. ABSTAIN: NONE. Minutes respectfully submitted: Gina Scott, Administrative Analyst City of Saratoga 4 Memorandum DATE: February 7, 2023 TO: Finance Committee FROM: Gina Scott SUBJECT: Fee Study Results Review City staff seeks Finance Committee direction to move forward with preparing the 2023-24 Fee Schedule based on feedback from the review of the draft Comprehensive Fee Study project. On September 7, 2022, City Council approved staff’s recommendation to use Matrix Consulting to conduct a Comprehensive Fee Study project. The study’s purpose was to document the full cost to perform services as listed in our current fee schedule and identify any opportunities to increase or expand fee-based cost recovery. The last fee study conducted by the City was completed in 2006. Courtney Ramos from Matrix Consulting will provide a draft summary of the results of their findings. She will include a brief outline of the methodology used, the project scope, and also identify options to achieve the City Council’s desired cost recovery. 5 Cost of Services (User Fee) Study Results Overview CITY OF SARATOGA, CA 6 Cost of Service (User Fee) Overview 2 •Documents fee-related services and service level assumptions, while detailing the full cost associated with each unit of service. •Study Process: Establish time estimates by position accounting for current services Develop fully burdened hourly rates •Benefits / Uses: Streamlines fee schedules to eliminate outdated fees or ranges and incorporates new fees and services. Ensures compliance with State (Prop 218 and 26) and local laws 7 3 Met hodol ogy 8 Bottom -Up Approach –Fee Calculation Methodology 4 Avg staff time by position title per permit / application Fully Burdened Hourly Rate Full Cost Fee 9 Staff Time Estimates 5 Fee Name Intake / Counter (Hrs ) Plan Review Time (Hrs ) Inspection Time (Hrs ) Total Time (Hrs ) Water Heater Replacement 0.50 0.50 0.75 Retaining Wall –Masonry 0.50 1.00 0.50 2.00 New Construction -$25,000 Valuation 1.75 2.50 4.25 Time is meant to reflect averages (not the easiest or the most complex). Time includes travel times as well as any re-reviews or re-inspections needed in the baseline approval of the permit. 10 Fully Burdened Hourly Rate 6 •FY23 Budgeted Salaries and Benefits assigned at the position level.Salaries & Benefits •Total available hours subtracting average sick, vacation, holidays, etc. Productive Work Hours •Services and supplies such as internal service charges, fuel charges, etc. Services & Supplies Overhead •Administration divisions,supervisory,and clerical staff support.Departmental Overhead •Finance,Human Resources,and other general city support.Citywide Overhead 11 Cost Recovery Limitations 7 Some fees cannot exceed State set amounts (i.e., Returned Checks, Public Information Requests, Notary fees) State Some fees, such as rentals, are limited by what the market will bear, and what community members will pay for offered services Market Some fees, such as Historic Reviews, are set at the discretion of identified policy makers Policy Ordinance / Outside Agency Some fees within Code Compliance can be set based upon municipal code / ordinance and / or by the Sheriff’s office. 12 Cost Recovery Considerations 8 Individual •Planning & Zoning Approval •Building Inspections •Engineering Development Review Individual & Global •Recreation and Community Services •Fire Prevention Global •Police •Fire Suppression Primarily funded by user fees. Mixture of taxes, user fees, and other funding sources Primarily funded by tax revenue 13 9 Fee St udy Resul t s 14 Fee Schedule Streamlining 10 •Eliminating 14 fees due to restructuring of fees or services no longer being applicable. •Expanding valuation-based fees to a high of $10,000,000. •Adding 8 fees to more transparently account for existing or new services offered by the City (i.e., SB9 and OTC permits). •Reorganizing master fee schedule to move Business Regulation Permits from Finance to Code Compliance. 15 11 Cost Recovery 16 City Revenue Policies 2022-23 Adopted Budget pages 23 and 453 12 •The City’s overall goal is to establish user charges and fees at levels that fully recover the direct and indirect activity cost of providing a service or product. •Fees have varying level of general taxpayer support: Individual Benefit = Full / High Cost Recovery “For example, Community Development’s planning and building fees strive to achieve full cost recovery for certain land uses and improvements that benefit the property owner”. (pg. 23) Community Benefit = Partial / Low Cost Recovery “However, other services provide a greater community-wide benefit and City Council policy sets a lower cost recovery for those services. Examples include code compliance and event permits.” 17 Cost Recovery Policy Direction 13 Program Benefit Category Target Cost Recovery Building Individual High Code Compliance Community -wide Low Planning Individual & Community-wide High to medium cost recovery Engineering Individual & Community-wide High to medium cost recovery Finance Community -wide Lower cost recovery Market rates and charges levied by other municipalities (of similar size) for like services are taken into consideration when establishing rates, fees, and charges. Some services have partial cost recovery objectives; therefore, cost recovery ratios will vary in accordance with policy objectives. 18 Cost Recovery by Program 14 Program Typical Cost Recovery Current Cost Recovery Est. Maximum Reduction in Taxpayer Subsidy City Staff Recommended Cost Recovery Building 80% -100%74%Up to $500,000 90% Code Compliance 50% -70%78%$2,000 Unchanged Planning 50% -80%63%$330,000 75% Engineering 70% -100%96%$37,000 Unchanged Finance 20% -40%48%$22,000 Unchanged The City’s overall goal is to establish user charges and fees at levels that fully recover the direct and indirect activity cost of providing a service or product. 19 Comparative Survey 15 •Most of the fees surveyed showed that the City’s current fees are below what other jurisdictions are charging. •Most jurisdictions have not conducted a fee study in at least five years. 20 Cost Recovery Potential 16 •Building: The majority of the department’s deficit relates to valuation -based permits. Increasing cost recovery for these permits would help significantly reduce the current deficit. •Planning:The majority of the department’s deficit relates to Technical Review and Design Application review, both of which have high annual workload, and per unit deficits that range between $500 and $4,000. •Engineering, Finance, and Code Compliance:With minimal annual deficits, minor fee adjustments (if appropriate) can be made in order to achieve full cost recovery. •Facility and Field Rentals:Given the impacts of Covid-19 on rentals, the City should monitor both community interest in rentals, as well as the market before making major adjustments to rental rates. 21 17 Recommendat i ons and Next St eps 22 Recommendations and Next Steps 18 •Immediate full cost recovery? •Which fees need to be phased in? and why? •Identify if all fees are applicable or if there are exceptions. •Evaluate the revenue impacts of not going to full cost recovery. 3/7 Finance Committee: Recommended Fees •Determine overall departmental cost recovery goal(s). High: 80-100% Medium: 50-80% Low: 0-50% 2/7 Finance Committee: Cost Recovery Policy Input •Present July 2023 fee schedule for adoption and implementation. 4/19 City Council: Fee Schedule Adoption Identify recommended and proposed fees. Target Cost Recovery used as basis for recommendations. Adopt fees based upon council feedback and policy goals. 23 Memorandum DATE: February 7, 2023 TO: Finance Committee FROM: Agnes Pabis SUBJECT: 2023 Audit Services RFP City staff requests approval from the Finance Committee to issue the Audit Services RFP, as prepared, or provide staff with amendments to the proposal request. The timeline below lists the bid timeline which denotes the time sensitive request for direction. RFP Issued February 10, 2023 Question Submittal Deadline March 1, 2023 RFP Submittal Deadline March 10, 2023 Finalist Interviews March 20, 2023 Award of Contract April 19, 2023 ATTACHMENT 2023 Audit Services RFP 24 City of Saratoga RFP – Professional Auditing Services Page 1 of 9 CITY OF SARATOGA Request for Proposals (RFP) TO: All Interested Parties SUBJECT: RFP for Professional Auditing Services DATE: February 10, 2023 INTRODUCTION: The City of Saratoga is seeking proposals from qualified Certified Public Accountant firms to audit City financial statements for the three (3) fiscal years ending June 30, 2023, 2024, and 2025, with options to renew for each of the two subsequent fiscal years ending June 30, 2026, and 2027. During the evaluation period, the City reserves the right to request additional information or clarifications from proposers or to allow corrections of errors or omissions. At the discretion of the City, firms submitting proposals may be requested to make oral presentations as part of the evaluation process. To be considered, proposals must be received no later than 12:00 p.m. (noon) on March 10, 2023. Proposals will not be accepted after the date and time stated above. Proposals will not be opened and read publicly. TENTATIVE RFP SCHEDULE: Dates for interviews and award of contract may be subject to change. RFP Issued February 10, 2023 Question Submittal Deadline March 1, 2023 RFP Submittal Deadline March 10, 2023 Finalist Interviews March 20, 2023 Award of Contract April 19, 2023 RFP SUBMITTAL: Five hard copies and one electronic copy of the proposal are due by 12:00 p.m. (noon) on March 10, 2023, to: City of Saratoga, Administrative Services Department Attention: Nick Pegueros 13777 Fruitvale Avenue Saratoga, CA 95070 25 City of Saratoga RFP – Professional Auditing Services Page 2 of 9 Any proposal received after this time will be rejected. A proposal shall constitute an irrevocable offer for 60 business days following the deadline for its submission. It is anticipated the selection of a firm will be completed by April 12, 2023. Following the notification of the selected firm, it is expected the contract will be executed between parties in early April 2023. All questions and correspondence shall be conducted by email and directed to Nick Pegueros, Administrative Services Director. The question and the answer will then be forwarded to all firms that provide an e-mail address and posted on the City’s website. All questions must be submitted no later than 5:00 pm, March 1, 2023. BACKGROUND: The City of Saratoga is located 50 miles south of San Francisco and approximately 10 miles southwest of Downtown San Jose. Saratoga is an attractive residential community known for its high quality of life, excellent schools, unique businesses, and small-town vibe. The City of Saratoga was incorporated in 1956 and operates under a Council/Manager form of government with a 5-member Council. The City of Saratoga’s budget for Fiscal Year 2022-23 is $57.2 million, including an Operating Budget of $32.4 million, and a Capital Budget of $24.7 million. Saratoga is a contract city with limited services. Detailed information on the City and its fund structures can be found in either the most recent Annual Budget or Annual Comprehensive Financial Report, both located on the City’s website. The City has been awarded the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for many years. NATURE OF SERVICES REQUIRED: A. General The City of Saratoga requests the auditor to audit the City’s financial activity and express an opinion on the fair presentation of it basic financial statements in conformity with generally accepted accounting principles. B. Auditing Standards To Be Followed Audits shall be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits in the U.S. Governmental Accountability Office’s Government Auditing Standards, the provisions of the Federal Single Audit Act of 1984 (as amended in 1996), and the U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations. C. Reports To Be Issued 1. The auditor shall prepare the Annual Comprehensive Financial Report (ACFR) to ensure the financial statements comply with GASB pronouncements and the ACFR meets the requirements of the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting program. 26 City of Saratoga RFP – Professional Auditing Services Page 3 of 9 2. The auditor shall prepare a Single Audit Report, if necessary. 3. The auditor shall prepare a Transportation Development Act (TDA) Report. 4. The auditor shall prepare a report on the review of the City’s Gann Limit computation. 5. The auditor shall issue a management letter that indicates recommendations for improvements in internal controls considered non-reportable conditions. 6. The auditor shall prepare the Annual Financial Transactions Report (AFTR). The audit firm shall provide ten (10) bound copies, and electronic versions in .docx and .pdf format, of each issued audit report. D. Special Considerations 1. The Schedule of Expenditures of Federal Awards and related auditors’ reports, as well as the reports on internal controls and compliance are not to be included in the Annual Comprehensive Financial Report but are to be issued separately. 2. The firm shall provide a reasonable amount of technical assistance upon the City’s request throughout the year, not to exceed 8 hours per year, at no additional cost. SCOPE OF WORK: The City of Saratoga desires the auditor to express an opinion on the fair presentation of its basic financial statements in conformity with generally accepted accounting principles. The following items serve as the Scope of Work for the professional auditing services contract. 1. Financial Audit: Annual Comprehensive Financial Report: The audit firm will perform an audit of all City funds and prepare the Annual Comprehensive Financial Report (ACFR) and its component financial statements for the City of Saratoga. The audit will be conducted in accordance with auditing standards generally accepted in the United States and Government Auditing Standards, issued by the Comptroller of the United States. The ACFR is to be in full compliance will GASB. The audit firm will render their auditors’ report on the basic financial statements, which will include both government-wide financial statements and fund financial statements. The City plans to submit the ACFR to GFOA for review in their Certificate of Achievement for Excellence in Financial Reporting Program. 2. Single Audit Report: If applicable, the audit firm will perform a single audit on the expenditures of federal grants in accordance with OMB Circular A-133. The audit firm will issue a report on compliance and on internal control over financial reporting based on an audit of financial statements performed in accordance with government auditing standards. The external auditors will also issue a report on compliance with requirements applicable to each major program and internal control over compliance in accordance with the OMB A-133. The audit firm will issue an “in relation-to” report on the Schedule of Expenditures of Federal Awards. 3. Transportation Development Act (TDA) Report: If applicable, the audit firm will perform an audit on TDA Fund financial statements in accordance with government auditing standards and issue a report on compliance. 27 City of Saratoga RFP – Professional Auditing Services Page 4 of 9 4. GANN Limit: The audit firm shall perform agreed-upon auditing procedures pertaining to the City’s GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance. 5. Management Letter: The audit firm shall provide a Management Letter that notes any issues regarding the internal control structure; items concerning compliance with laws, rules, and regulations; opportunities for more effective and efficient use of the City’s resources; and other matters of interest to the City Council and management that may be included in this letter. The letter shall also include the status of prior year reportable conditions, if any, and other audit findings. The Management Letter shall be addressed to the City Manager. 6. Annual Financial Transaction Report (AFTR): The audit firm will issue an Annual Financial Transaction Report from the information City’s management will provide to the audit firm and will submit the final AFTR electronically to the state. 7. West Valley Clean Water Program Authority (Authority) Audit Services: The Authority works to control the discharge of polluted stormwater into local creeks and San Francisco Bay on behalf of the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos. Saratoga provides the Authority with financial services under contract. Historically, the Authority has utilized Saratoga’s independent audit services contract to complete its annual financial reports. The Authority may elect to contract with the firm selected by the City. The selected firm shall extend to the Authority at a minimum, the same hourly rates negotiated by the City of Saratoga for the duration of the City’s agreement. 8. Monthly Progress Reports: The audit firm will be responsible for submitting monthly progress reports with the Administrative Services Director on the progress of the auditor’s examinations and on preliminary findings and recommendations. 9. Audit Kickoff and Submission of Audit Plan: The audit firm shall be responsible for scheduling an audit kickoff meeting with the Administrative Services Director and other key department personnel to discuss prior audit concerns, fieldwork schedule, due dates for the City to provide worksheets and other requested data to the auditor, and other matters. The audit firm shall also present all final reports to the Administrative Services Director by the due dates outlined in this RFP. The audit firm may also be asked to present the final reports to the City’s Finance Committee and the City Council. 10. Internal Controls & Compliance Reports: The audit firm shall communicate any reportable conditions found during the audit in the required reports on compliance and internal controls. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 28 City of Saratoga RFP – Professional Auditing Services Page 5 of 9 Reportable conditions that are also material weaknesses shall be identified as such in the report. Non-reportable conditions discovered by the auditor shall be reported in a separate letter to management, which shall be referred to in the reports on internal controls. The reports on compliance shall include all instances of non-compliance. The audit firm shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware of to the City Manager, City Attorney, and Administrative Services Director. 11. Working Paper Retention and Access to Working Papers: The audit firm shall retain all working papers and reports at the auditor’s expense for a minimum of five (5) years unless the firm is notified in writing by the City of Saratoga of the need to extend the retention period. The working papers are subject to review by federal and state agencies and other individuals designated by the City of Saratoga. Accordingly, the working papers shall be made available upon request by the following parties or their designee: - A majority of the Saratoga City Council - Saratoga City Manager or designee - Saratoga City Attorney or designee - Parties designated by the federal or state government or by the City of Saratoga as part of an audit quality review process - Auditors of entities that make grants to the City of Saratoga Additionally, the audit firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers. 12. Deliverable Deadlines: The audit firm will be expected to comply with the deadlines below. Audit Fieldwork By the third Monday in October Final Draft Audit Due By the first Monday of November ACFR and Final Reports Due By the last Monday of November Management Letter Due By the first Thursday of December Single Audit Report Due By the first Thursday of December GANN Limit Report Due By the first Thursday of December AFTR Report Due By the second Thursday of January 13. Availability of Prior Reports and Work Papers: Chavan & Associates, LLP of Morgan Hill, California, conducted the City’s audits for Fiscal Years 2013-14 through 2021-22. The work papers of the previous audits are the property of the previous auditor and can be reviewed by the successful proposer. 14. Assistance Provided to External Auditor: Administrative Services Department staff will be available during the audit to assist the firm by providing information, documentation, and 29 City of Saratoga RFP – Professional Auditing Services Page 6 of 9 explanations. The retrieval and re-filing of documents for test samples will be the responsibility of City staff. The preparation of confirmations will be the responsibility of the auditor. The City will provide the audit firm with reasonable workspace, desks, and chairs. The City will also provide the audit firm with access to the City’s accounting system, wireless internet, and photocopying machines. RFP PROPOSAL CRITERIA: All proposals should include the following information. Proposals should be concise and to the point. 1. Cover Letter: Briefly summarize the proposal and include an overview of how the desired objectives, Scope of Work, and anticipated timeline will be satisfied. 2. Table of Contents: Include a clear identification of material by section and page number. 3. Firm Information: The following information about the firm must be included in the proposal. - Firm name, address, telephone, and e-mail address - Name and telephone number of the primary contact person for the proposal - A list of the firm’s principals with experience, background, academic training, and registration - List of personnel providing audit services, including experience, background, academic training, registration, and anticipated role, and how the staff would be organized - All audit field staff shall have at least one (1) full year of audit experience. - Statement of what especially qualifies your firm to perform this work, including a description of similar projects that the firm has performed previously 4. Approach: In the proposal, include a description of all required tasks to complete the work and specify how your firm will achieve the Scope of Work outlined in this RFP. The firm should demonstrate the qualifications of the firm. 5. Work Plan: The proposal should set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in the Scope of Work. Proposers will be required to provide the following information: - Include a full description of major tasks and subtasks to be performed. This section of the proposal shall establish that the proposer understands the City’s objectives and work requirements and documents the proposer’s ability to satisfy those objectives and requirements. Clearly describe the proposed approach to providing the required scope of services and meeting the City’s time schedule. - Level of staff and the number of hours to be assigned to each task and subtask of the engagement. Key engagement members shall be identified by name, position, and specific responsibilities on the engagement. Resumes of key personnel shall be included. - Approach to be taken to gain and document an understanding of the City of Saratoga’s internal control structure. - Approach used to assess control risk in local government. 30 City of Saratoga RFP – Professional Auditing Services Page 7 of 9 - Approach to be taken in determining laws and regulations that will be subject to audit test work. - The extent to which statistical sampling is to be used in the engagement. - Type and extent of analytical procedures to be used in the engagement. - The communication process the firm will use to discuss issues with City staff and management. 6. Price Proposal: The proposal shall include pricing for all services. Pricing should be inclusive unless indicated otherwise on a separate pricing sheet. The all-inclusive price to be bid is to contain all direct and indirect costs, including all out-of-pocket expenses. The proposal shall itemize all services, including hourly rates for all professional, technical, and support personnel, and all other charges related to the completion of the work shall be itemized. 7. Partner, Supervisory, and Staff Qualifications and Experience: In the proposal, identify the principal supervisory and management staff that will be assigned to the engagement and the approximate number of hours they will spend on the engagement. Please indicate which supervisory and management staff members are licensed to practice as a Certified Public Accountant in California. Also, provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three years, and memberships in professional organizations relevant to the performance of this audit. Indicate any complaints against supervisory and management staff that have been leveled by the State Board of Accountancy or other regulatory authority. If applicable, please indicate any corrective actions that have been taken by the firm with respect to these individuals. Provide as much information as possible regarding the number, qualifications, experience, and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff will be assured over the term of the agreement. Describe the firms’ policy on staff and management rotation or continuity on audit engagements. Indicate the principal supervisory and management staff, including engagement partners, managers, and other supervisors and specialists, who may be changed during the course of the agreement. The City of Saratoga reserves the right to approve or reject replacements. Other audit personnel may be changed at the discretion of the proposer, provided that replacements have substantially the same or better qualifications or experience. 8. Contract Termination: If firm has had a contract terminated in the last five years, describe incident. Please specify if the contract was terminated for default or early termination. Termination for default is defined as notice to stop performance due to vendor’s non-performance or poor performance and the issue of performance was either a) not litigated due to inaction on the part of the vendor, or b) litigated and such litigation determined that the vendor was in default. 31 City of Saratoga RFP – Professional Auditing Services Page 8 of 9 Submit full details of the terms for default including the other party’s name, address, and phone number. Present the vendor’s position on the matter. The City will evaluate the facts and may, at its sole discretion, reject the proposal on the grounds of the past experience. If the firm has not experienced any such termination for default or early termination in the past five years, please indicate this. 9. License to Practice in the State of California: The proposer must be properly licensed to practice as a Certified Public Accountant in the State of California. The proposal should include a statement indicating whether the proposer is properly licensed in the State of California. 10. Business License: The audit firm selected must obtain a City of Saratoga business license for the duration of the contract term and any applicable extensions. 11. Independence: The proposer should provide an affirmative statement that it is independent of the City of Saratoga as defined by the current U.S. Government Accountability Office’s Government Auditing Standards. 12. Standard Agreement: Include a statement that the proposer agrees to provide services pursuant to the terms of the City’s standard services agreement (attached) and identify any proposed revisions to that agreement. 13. References: Provide at least 3 customer references. References should be California cities and similar in size and nature to the City of Saratoga. Provide reference name, title, organization, address, phone number, and email address; relevant work experience, such as updating a Safety Element or a similar project. 14. Supplemental Materials: Include supplemental information, if any, such as a firm brochure, fees for additional services, etc., at the end of the proposal 15. Insurance: Proof of insurance which would include obtaining insurance amounts identified in the Standard Agreement and include Commercial General Liability, Auto, Worker’s Comp, and Professional E&O. SELECTION CRITERIA: The City will establish a screening committee inclusive management and two City Councilmembers designated by the City Council’s Finance Committee that will review and rank all the proposals received. The City may decide to invite only the top-ranked firms to interview with and present to the screening committee. The City may invite the most qualified firm to refine its proposal and negotiate a consultant services agreement. The City Council Finance Committee shall make the final recommendation to City Council for award of contract. 32 City of Saratoga RFP – Professional Auditing Services Page 9 of 9 Below is the list of key criteria that the City will evaluate when selecting the consultant or consultant team: - Firm’s ability to meet the requirements established in this RFP - Firm’s expertise and experience, special consideration will be given to firms with experience providing audit services to cities of similar size and character to the City of Saratoga - Firm’s understanding of the City of Saratoga’s desires and general approach to the project - Firm’s ability to perform quality work, control costs, and meet time schedules - Firm’s technical ability, capacity, and flexibility to perform the Scope of Work - Total cost of the proposal - Clarity of proposal DISCRETION AND LIABILITY WAIVER: There is no expressed or implied obligation for the City of Saratoga to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. The City reserves the right to reject all proposals or to request and obtain from one or more of the businesses submitting proposals, supplementary information as may be necessary for City staff to analyze. At the discretion of the City, firms submitting proposals may be requested to make oral presentations as part of the evaluation process. The City may require proposers to participate in additional rounds of more refined submittals before the final selection of a vendor is made. The City may negotiate with one or more firms and may contract with one or more firms as the City deems appropriate. By submitting a response to this RFP, proposers waive all rights to protest or seek any legal remedies regarding any aspect of this RFP. Although it is the City’s intent to choose the most qualified proposal, the City reserves the right to choose any number of qualified proposals and to reject all proposals. PROPOSAL INQUIRIES: All questions regarding this RFP should be directed to: Nick Pegueros, Administrative Services Director (408) 868-1221 npegueros@saratoga.ca.us Attachment A: City’s standard services agreement 33 Memorandum DATE: February 7, 2023 TO: Finance Committee FROM: Nick Pegueros SUBJECT: November Finance Committee Meeting When City staff presented a recommended regular meeting schedule to the Finance Committee at their January 10th meeting, I did not highlight the later than custom date for the November 28th regular meeting. The meeting is later in the month because City staff and the independent auditor are working to complete the Annual Comprehensive Financial Report which is the primary topic in November. After the Finance Committee’s approval, staff learned of a scheduling conflict on November 28th. City staff recommends that the Finance Committee cancel the November 28th regular meeting and schedule a Special Meeting the week of November 27th. 34 Memorandum DATE: February 7, 2023 TO: Finance Committee FROM: Nick Pegueros SUBJECT: City Council Financial Policies & General Financial Operating Policies Review BACKGROUND The City budget documents a wide range of financial policies, from those that guide staff in their daily operations to City Council policy documents on specific topics. As part of the annual budget process, City staff works with the Finance Committee to identify and propose amendments to the adopted policies to reflect Governmental Accounting Standards Board guidance, best practices, and operational changes. DISCUSSION This memorandum transmits City Council’s adopted 2022-23 financial policies for Committee review and suggested modifications to City Council in May. City staff requests Committee members provide recommended additions, deletions, and clarifications to the policies by February 27 to allow for a conversation at the Committee’s March 7 meeting. Reserve Policy In preparation for the February 10 City Council retreat, we want to highlight existing reserve policies (Attachments A and C) as areas previously identified as opportunities to smooth the near- term impact of anticipated budget deficits to allow time for structural service level modifications. Previously identified options include using the working capital reserve in part or whole to help balance the 2023-24 budget. Staff also recommends consideration of a new reserve to provide funding stability for secure community grants. Next Steps City staff will return to the Finance Committee on March 7 with input received from City Councilmembers and recommended edits from staff. After the Finance Committee considers the policy modifications at their March 7 and April 11 meetings, City staff seeks the Committee’s recommendation for City Council adoption of 2023-24 financial policies in early May. ATTACHMENTS A. Policy Summaries B. General Financial Policies C. Fund Balance Reserve Policy D. CIP Project Process Policy 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67