Board Members present: Susie Smith, Jeff Osanka, Mike Dyer, Sandra Bishop, and Dorothy Anderson.
Others present: Randy Berggren, Tom Buckhouse, Marty Douglass, Roseanna McArthur, Garilyn Crowley, Cathy Bloom, Scott Spettel, Everett Jordan, Mat Northway, Dave Koski, Garry Kunkel, Gale Banry, Debra Wright, Ken Beeson, Dick Varner, Dick Helgeson, and Krista Hince of the EWEB staff; Peter Bartel; and Kim Kunkel, Minutes Recorder.
President Smith called the meeting to order.
1999 BUDGET AND WORK PLAN
Referring to a series of overhead displays, copies of which were distributed to the Board, and a memorandum that was included in the meeting agenda packet, Corporate Services Director Roseanna McArthur presented an overview of the recently organized Corporate Services Division, which is comprised of the following program areas:
Ms. McArthur identified the following as issues, priorities, and events driving the 1999 Corporate Services Division Budget:
Referring to a summary of budget variances that was attached to the aforementioned memorandum, Ms. McArthur stated that with respect to the Corporate Services Division overall, the 1998 budget will exceed the 1998 budget estimate by approximately $1 million, and the 1999 budget will exceed the 1998 budget estimate by approximately 5 percent ($460,000). Ms. McArthur attributed the $1 million overspending of the 1998 budget to unplanned year-2000 expenses, increases in benefits and workers compensation, and various unbudgeted items.
Ms. McArthur reviewed the budget summary relative to each program area under the Corporate Services Division, highlighting identified budget variances.
With regard to the Information Resource Management program area, Vice President Osanka inquired as to how this program area might more effectively maximize the useful life of hardware and software by updating rather than replacing equipment. Ms. McArthur responded that a strategy exists with regard to timing equipment purchases in order to secure the lowest price possible. She said EWEB makes every effort to anticipate necessary upgrades of its hardware and software in order to ensure its ability to consistently provide high-level service.
(Commissioner Bishop joined the meeting at 6:15 p.m.)
With regard to the increase in employee benefits costs under the Human Resources program area, Vice President Osanka inquired as to whether a pattern exists in terms of utilization of benefits. Ms. McArthur said that although some benefits-related data tracked by staff is confidential, one example of a pattern is the above average utilization of prescription medication by EWEB retirees. She said that as part of an effort to offset above average utilization of medical benefits, EWEB has instituted a wellness program designed to promote employee health.
Mr. Berggren stated that during the next six months, he wants to put effort and resources into challenging the amount of the PERS (Public Employees Retirement System) benefits increase. He said EWEB currently has a 51 percent funded liability and the utility's benefits carrier wants EWEB to increase its funded liability to 100 percent. Mr. Berggren said 100 percent funded liability is unusual and he is not sure how the carrier arrived at that amount. PERS notified EWEB, in writing, a few days prior that EWEB's contribution will increase to voer 21%. Adding the 6 percent employee pickup raises the figure to almost 28%.
Commissioner Dyer said he thinks an increase to 100 percent funded liability is beyond absurd. He said that he has never experienced an employer's pension fund contribution approaching 28 percent of salaries. Commissioner Dyer suggested that EWEB make a clear statement to PERS that the increase is unacceptable.
President Smith inquired as to whether, given the emphasis on the year-2000 and containment of the budget, there are pieces of work that were sacrificed to achieve other priorities. Ms. McArthur responded that EWEB will postpone the development of some information systems, contract some of the work out, and decrease the number of training opportunities.
Referring to a memorandum that was included in the meeting agenda packet, Fiscal Services Supervisor Dick Varner reviewed the budget summary of the Financial Services Division, which is comprised of the following program areas:
Mr. Varner reviewed the budget summaries specific to each program area and highlighted the identified variances.
Vice President Osanka inquired as to whether the Financial Services Division would handle any litigation costs related to the year-2000. Mr. Varner said the Risk Management program area of the Financial Services Division would handle such litigation costs. He said EWEB legal counsel and staff have been discussing a number of issues, including what level of information the utility should provide the public, and what representations should EWEB make that will not mislead customers about what the utility can deliver.
Referring to a document that was distributed to the Board, Facilities Services Director Tom Buckhouse reviewed the budget of the Facilities Services Division, which is comprised of the following program areas:
Mr. Buckhouse reviewed the budget summaries specific to each program area, and highlighted the variances between the 1998 and 1999 budgets.
Referring to the higher-than-expected cost of the Midgley's Building renovation, Commissioner Dyer inquired as to the total cost of the renovation project. Mr. Buckhouse said EWEB spent approximately $2 million on the project.
Vice President Osanka inquired as to why the actual cost of the Midgley's Building renovation differed substantially from the estimated cost. Mr. Buckhouse responded that what was thought to be salvageable, via consulting engineers' opinions, was discovered to be unsalvageable during the demolition phase of the project.
President Smith requested a debrief of the Midgley's Building renovation project. She stated that had the Board known the actual costs associated with the project, it may not have voted in support of the proposal. Commissioner Bishop noted that according to her understanding of the Board's process related to the renovation, the Board supported the renovation, in part, in response to the community's opposition to leveling the structure and significantly altering the street scape.
The meeting adjourned at 7:30 p.m.