FAIRHOPE, Ala. — Two councilmen-elect asked questions about the city’s rainy day fund and annual independent financial audit during an orientation meeting last week on city finances.

The Finance Committee members scheduled another meeting for next week and indicated there may be more regular meetings this fiscal year than occurred last year when the committee met two times.

The two newest members of the City Council, who will be sworn in with the three returning council members and mayor on Nov. 3, attended an Oct. 22 Finance Committee meeting for orientation on responsibilities and procedures regarding city finances.

Lonnie Mixon, who will replace Cecil Christenberry in Place 3 on the council, and Rick Kingrea, replacing Bob Gentle in Place 5, asked questions during the hour-long meeting about the city’s “rainy day fund,” or cash reserve accounts, annual financial audit and payroll expenditures.

Current Council President Gentle presided over the meeting, also attended by council members Mike Ford, Debbie Quinn, Dan Stankoski, City Clerk Lisa Hanks, City Treasurer Nancy Wilson and Financial Reporting Manager Rose Fogarty.

“The purpose of this meeting is to indoctrinate the new councilman, and to reindoctrinate or refresh those that stayed on the council, on the process that the city uses at present for its financial matters, from purchasing all the way through bill paying,” Gentle said. “What I’ll ask you to do is look at how things work today, and if you’re going to challenge things, let’s ask those questions later, and for questions on the budget, save those for the next meeting.”

At the end of the hour-long meeting, the council scheduled the next Finance Committee meeting for 8 a.m., Wednesday, Nov. 5, to discuss city finances and the FY 2008-2009 budget.

That will be the second Finance Committee of the new fiscal year, which started Oct. 1 — the same number of Finance Committee meetings that occurred during the last fiscal year, according to city records.

“My job number one is to safeguard the cash and assets of the city,” Wilson said. “The main control in regard to safeguarding cash is to segregate duties. I’m not the one that presents (information) on the financial statements. I don’t touch a bank record.”

Wilson stated that questions have been asked recently about the division of responsibilities in the offices handling city finances, and handed out a one-page summary of the duties of the treasurer’s office she heads, and the finance department led by Fogarty.

The summary sheet stated that the City Treasurer “(1) Is responsible for all funds of the city, as required by law; (2) Is responsible for receipt of all city funds; (3) Is responsible for all disbursement of city funds, including oversight of the Purchasing Department and processing of payroll checks. The Purchasing Department issues all purchase orders; (4) Is responsible for maintaining accurate records of all receipts and disbursements of City funds, including all checkbooks, journals, accounts receivable and accounts payable balances; (5) Oversees all warrant and debt issuances; (6) Is responsible for gathering information and making reports regarding disaster or grant reimbursements; and (7) Provides the City Council and Mayor with monthly reports of invoices paid, both in summary and detail, and cash available.”

Wilson said that her office also handles insurance on property and equipment and pays all debts and keeps all the receipts of the Fairhope Airport Authority.

“I take all the info that Nancy provides and gather all (other information) from revenue, human resource and utility departments and debt service and put it in the form of financial statements,” Fogarty said.

The summary sheet handed out by Wilson stated that the Finance Department: “(1) Gathers information from Treasury, Revenue, Human Resource and utility departments, as well as information regarding Debt Service, Capital Projects and Gas Tax funds;(2) Reconciles all bank statements; (3) Reviews and compiles financial information into the form of monthly financial statements. These statements compare current period actual amounts with budget and prior year amounts;(4) Presents one-page summary of current and year-to-date information of the general and proprietary funds; (5) Prepares a PowerPoint program for presentation at the second council meeting of the month; (6) Annually the city’s financial statements are audited by outside, independent auditors and a Comprehensive Annual Financial Report (CAFR) is issued; (7) Accompanying the CAFR is “Management’s Discussion and Analysis.” This report is prepared by the Finance Department, the mayor, other management personnel and gives an overview of the fiscal year, along with discussions of budget matters, capital assets, debt administration and economic projections and forecasts, in written and chart forms; (8) Oversees Accounts Payable, which matches purchase orders to invoices and shipping verifications, before forwarding to the Treasurer for payment; (9) Oversees preparation of the payroll tax returns.”

During the committee meeting, Kingrea asked whether the city or the auditor prepares the information contained in the city’s annual independent financial audit and was told that the city prepares that information and the auditor issues an opinion about it.

“Nancy and I do not color the city’s financials,” Fogarty said. “It is what it is.”

Mixon asked about the size of the city’s cash reserve account, also called the city’s rainy day fund.

“I can’t recall what the reserve balance is this year,” said Wilson, who said the cash reserve account is actually a “pooled account “ of 11 different accounts called the SuperFund Account. “I put some money in each month to pay various accounts.”

“Then it’s not really a reserve, if you pay from it, is it?” Mixon said. “How much would you say it is, ball park?”

After discussion with Fogarty and an assistant, Wilson said the amount was approximately $2 million.

“I would like to get it to 4 or 5 million dollars,” Wilson said. “It scares me not to have a healthy rainy day fund.”

Information provided by Wilson to the Fairhope Courier in September, regarding the city’s SuperFund Account, showed the following total amounts in that account since 2004: July 31, 2008, $1,806,570; July 31, 2007, $3,509,946; July 31, 2006, $4,431,897; July 31, 2005, $4,151,334; and July 31, 2004, $3,316,230.

During an interview at that time, Wilson said she did not like to refer to the account as a “rainy day fund,” preferring the term cash reserve, and wrote that “this account is used as a reserve account, for funds set aside for specific capital projects in the future, and to be used as need for emergencies or other operating needs.”

Mixon also asked about the amount of the payroll expenditure for the city (paid 26 times a year) and was told it was approximately $400,000.

At the end of the meeting, the members discussed when to schedule another Finance Committee meeting.

Fogarty said there had been interest in the past in having a more regular meeting, but that not happen last year. She said having regular meetings would enable council members to ask questions of her staff and Wilson’s on a more regular basis.

Other committee members stated that holding more regular meetings should be considered this year and scheduled the next meeting for 8 a.m., Wednesday, Nov. 5. The public notice indicates the meeting will discuss city finances and the FY 2008-2009 budget.

“I think a regular meeting would be very helpful,” Fogarty said.