Finance and Human Resources Joint Committee Meeting Minutes Wednesday, December 18, 2019

For your consideration, please read the minutes from the Finance and Human Resources Joint Committee Meeting held on Wednesday, December 18, 2019 at 1:00 p.m. in the Commission Meeting Room.

Finance-Human Resources Minutes 12-18-19 with Attachments

To read the minutes, please open or download the pdf from the link above, or you may see more below.

Brunswick-Glynn County Joint Water & Sewer Commission

1703 Gloucester Street, Brunswick, GA 31520

Commission Meeting Room

Wednesday, December 18, 2019 at 1:00 PM 

FINANCE & HUMAN RESOURCES

COMMITTEE MINUTES

MEMBERS PRESENT:        

Steve Copeland, Finance Committee Chairman

Donald Elliott, Human Resources Committee Chairman

Tripp Stephens, Commissioner

Cornell Harvey, Commissioner

Wayne Neal, Commissioner

Andrew Burroughs, Executive Director                                               

ALSO PRESENT:                 

Ben Turnipseed, Commission Chairman

Bob Duncan, Commissioner

John Donaghy, Chief Financial Officer

LaDonnah Roberts, Senior Financial Analyst

Todd Kline, Director of Engineering

Janice Meridith, Executive Commission Admin. 

MEDIA PRESENT:               

Taylor Cooper, The Brunswick News                                         

Chairman Copeland called the meeting to order at 1:00 PM. 

PUBLIC COMMENT PERIOD

There being no citizens that wished to address the committee, Committee Chairman Copeland closed the Public Comment Period. 

APPROVAL

  1. Minutes from November 20, 2019 Finance Committee Meeting

Commissioner Elliott made a motion seconded by Commissioner Copeland to approve the minutes from the November 20, 2019 Finance Committee Meeting.  Motion carried 2-0-1. (Commissioner Stephens was absent for the vote.) 

  1. Minutes from December 5, 2019 Human Resources Committee Meeting

Commissioner Neal made a motion seconded by Commissioner Harvey to approve the minutes from the December 5, 2019 Human Resources Committee Meeting.  Motion carried 3-0-0.

  1. Worker’s Compensation Insurance Renewal – Jeffrey Singletary, T.S.I. / Jarrett Bridges, Turner and Associates

Jarrett Bridges provided that for the past ten years JWSC has used Zenith for Worker’s Compensation Insurance.  He obtained proposals from four carriers for the coverage for 2020, and noted that the lowest cost proposal was from Bitco at $251,765.00.  The renewal quote from Zenith was the second lowest at $257,231.00, which is a reduction of $973.00 from 2019.  The difference between Bitco’s quote and Zenith’s quote was $5,466.00.  Mr. Bridges commented that Zenith has provided Defensive Driver Training annually for 100 JWSC employees per year at a value of $2,035.00.  JWSC also started using Zenith’s training portal, Zenith Solution Center Platform, from which all JWSC employees obtained sexual harassment training this year, and he added that the value of using their portal training is $18,600.00 for the first year.  The additional services and training portal are provided to JWSC from Zenith at no cost to JWSC, but have a combined value of $20,635.00.  Mr. Bridges noted that Bitco does provide risk management services, however he has not worked with Bitco, and he commented that he is not sure if they provide defensive driver training nor how detailed their portal is.  Jeffrey Singletary from TSI provided that JWSC’s staff is also using The Zenith’s portal for safety and other types of training as required every twelve months, and he added that all JWSC new hires will be required to take certain training on the portal during their orientation.  Mr. Singletary commented that he was not able to access any of the material from Bitco in order to compare, but the training offered on Zenith’s portal is very solid.  He has not worked with Bitco, nor have any of TSI’s other seventy-plus clients.  He noted that in his opinion, he has found Zenith to be the best company to work with as far as the services and the adjusters.  Mr. Singletary added that when JWSC has a claim he already knows who the adjuster will be, and Zenith quickly processes the claims.

The Commissioners asked a few questions regarding Bitco, their risk management services, their rating, services, etc. and requested to learn more about Bitco.  Mr. Bridges discussed the rates and calculations in the proposals, explained the base and net numbers, and noted that the net rates are really the bottom line number.  He noted the base is the starting point and the net includes the credits, experience mod, and all the components.  Mr. Bridges agreed to bring more information for the Commission meeting on the next day as requested by the Commissioners.  Commissioner Elliott commented that the presentation should not be about low cost, but should be about best value, and asked Mr. Bridges to justify between Bitco and Zenith why one is the best value over the other.

Commissioner Elliott made a motion seconded by Commissioner Copeland to defer this item until the Commission Meeting on December 19th.  Motion carried 4-0-1.  (Commissioner Stephens was absent for the vote.) (This item pertained to both Committees.)

Commissioner Stephens arrived to the meeting at 1:25 p.m. 

Charlie Dorminy stated that he would not be at the Commission Meeting, but his partner Dan would be in attendance and could speak on his experience with Zenith having had a long standing relationship with Zenith and is very happy to do work with them.  Mr. Dorminy noted that his firm has never worked with Bitco, that Zenith is one of their larger “comp” clients, and they have a lot of local businesses throughout the southeast that utilize Zenith.  Commissioner Elliott questioned if Bitco was offering a “low-ball” bid.  Commissioner Copeland commented that they are offering a low bid, but their rating is high.  Mr. Bridges responded that the concern he has is that Bitco is offering 26% schedule credit which is pretty aggressive, and we have ten years of equity built with Zenith who is offering 20% schedule credit.  He stated that his concern would be if a change was made over a $5,000 difference and then we had a catastrophic year, we would be looking for a new carrier next year, the stability is gone, and we are going through this process of trying to find the right partner for you again.

Mr. Dorminy then asked Mr. Bridges to confirm if the AM Best Rating has to do with the carrier’s financial strength and not the satisfaction of their customers.  Mr. Bridges confirmed that the rating has nothing to do with customer satisfaction, only with financial strength.  He then explained the reason that Bitco has a higher AM Rating is that Bitco is owned by Old Republic who is a national carrier like Travelers that has regional offices and a huge client base in different sectors, whether it be logging, construction, municipality, etc.  They write various lines of other insurance from property to liability and auto, so they are bigger because they are in more spaces.  Zenith is just a worker’s compensation carrier.  They don’t write auto insurance, general liability, or property.  All they do is worker’s compensation.   Commissioner Elliott asked Mr. Bridges to present all the factors the next day at the Commission meeting.  

  1. Banking Services Recommendation – L. Roberts

LaDonnah Roberts presented the recommendation for Banking Services to the Commissioners.  She provided a brief synopsis that the three banking services needed were bundled previously, and the challenge was made to find the best overall value.  Mrs. Roberts commented that there was a diverse evaluation team who did interface with or utilize the services directly within our organization.  Different people had different focuses within our organization so that is why some of the scores are varying within the scoring categories.  All of the six participants were scored in each of the scoring categories for the three different services.  She provided that the recommendation was made to remain with BB&T for the banking services and the merchant services, but the scores did show overall that Synovus would be the one to provide the best overall value for the investment services.   Mrs. Roberts highlighted some of the reasons that the recommendation was based upon, and explained that the contracts would be for one year contracts with options for four renewals on each.  She did comment that one very important factor was that there was no disruption to the customer base and staff wanted to be sure that customers can continue to continue to utilize those services without having to go through a transition unnecessarily.  In this particular case they did not believe that a transition was needed and that BB&T was providing the best value in the banking services and merchant services.  Mrs. Roberts then explained that the decision for the investment services came down to money and Synovus was more competitive with their rates which was the primary reason for the recommendation to change, and added that as far as changing those services the evaluation team discussed the fact that they believed investment services was the simplest one to separate from the three.  Transitional costs and implementation costs would be minimal.

Commissioner Elliott inquired about Synovus and what kind of securities are they going to put us into? Mrs. Roberts responded that our market is limited because of our organizational structure.  She said a question had been asked as to why were there so few people that wanted to bid on our investment services, and then referred to when the financial policy was passed was that there are only certain types of investments that JWSC can make as an organization so that limits the abilities of anyone who bids on those services.  JWSC’s financial policy follows Georgia Code.

Commissioner Stephens made a motion seconded by Commissioner Elliott to forward this item to the full Commission for review and approval to enter into a contract with BB&T for banking and merchant services and a contract with Synovus for investment services.  Motion carried 3-0-0.

  1. SPLOST V IGA – A. Burroughs

Mr. Burroughs provided that JWSC’s final remaining SPLOST V funds in the amount of $178,595.00 have been allocated and reserved by the County for the completion of the SPLOST V Water Line Rehabilitation Project.  JWSC has existing infrastructure repair/replacement needs to the water system serving Sea Palms East.  Mr. Burroughs stated that the proposed IGA would allow the County to distribute the remaining funds to facilitate that project, and he added that if this IGA is not done then the project will have to be bid out by Glynn County in order to move forward.  He noted that this item is also on the Glynn County agenda the next day.

Commissioner Elliott made a motion seconded by Commissioner Stephens to move that the Finance Committee recommend entering into an intergovernmental agreement with Glynn County for remaining SPLOST V funds in the amount of $178,595.00 for water repairs to Sea Palms East.

Mr. Burroughs commented that this will be the last of the SPLOST V funds from Glynn County that were for water and sewer projects.

Motion carried 3-0-0.

  1. Ridgewood Water Production Facility Contract Award – A. Burroughs

Mr. Burroughs advised that bids were recently received for the Ridgewood Water Production Facility that is a current fire well in the North Mainland District, and is an Upper Floridian well that staff is asking to convert into a production well.  A ground storage tank and treatment capacity will be added to provide additional water production capacity that can be used for drinking water purposes.  He noted that five bids were received with the low bid being from Southern Civil, LLC., in an amount just below $1.4M.  Mr. Burroughs recalled that this project was scoped back in 2014, so the budget that was put in at that time is no longer appropriate.  JWSC staff has been discussing with the engineer of record since the project has been restarted and the project did come in under the engineer’s estimated cost.  He stated that staff is requesting to award the contract to Southern Civil, LLC. to do this work, as well as an additional $650,000.00 to the budget for the completion of this project, and the additional funds will come from the R&R Reserve.

Commissioner Copeland asked about the reasoning for the difference of $650,000 between 2014 budget and the current budget.  Todd Kline responded that construction costs have increased since 2014.  He noted a comparison to the Hampton Project in 2015 which was a much smaller project and it came in at about one million dollars then.  Mr. Burroughs commented that this requested amount covers the cost of construction plus a $75,000 contingency for incidentals that might occur during the project.

Commissioner Stephens made a motion seconded by Commissioner Elliott to move that the Finance Committee recommend to amend the existing Ridgewood Water Production Facility project budget by $650,000 to a new total of 1,650,000, and I further move that the Finance Committee recommend entering into a contract with Southern Civil, LLC., in the amount of $1,398,532 for the construction of the Ridgewood Water Production Facility.  Motion carried 3-0-0. 

DISCUSSION

  1. Potential Pension Changes – A. Burroughs

Mr. Burroughs recalled that the pension plan has been discussed in Human Resources Committee Meetings and a Finance Committee Meeting where there was discussion of grandfathering in the current employees and creating a date when new employees would come under the new plan which would fall under the same GMA calculation for retirement benefit except the new plan would include a 3% contribution by the employee and a matched 3% from the Commission, instead of the Commission paying the full 6%.  Mr. Burroughs provided that in discussions with GMA, it would take about 90 days to make any changes to the current pension plan.  He commented that the recommendation that has been discussed is to grandfather in the current employees as the costs decrease as new employees come on to continue to pay off the unfunded portion quicker, and he added that the unfunded portion will be paid off in roughly half the time if the same amount that has been contributed is continued as new employees come on to the new plan.

Commissioner Copeland questioned if the new employees that were paying in their 3% decided to leave JWSC would they be entitled to receive their 3% portion back, and Mr. Burroughs response was yes.  Commissioner Copeland then asked if the offset included the new employees’ portion staying in the funds, and Mr. Burroughs replied no that it did not include that, and he added that the market value of our pension plan is around $5M and it is unlikely that one employee would contribute enough prior to being vested to significantly impact the amount of money in that plan at 3% of their salary.  Commissioner Elliott asked if when the employees are vested, would they receive their portion plus our portion, and Mr. Burroughs commented yes but that that amount would stay in the pension plan fund and at retirement age they would get whatever benefit that is due them because of being vested.  The question was raised concerning employees being partially vested at 3 years and the amount they would receive.  Mr. Burroughs commented that under the new plan employees would not become vested until 10 years of employment for vesting rights on the program. Mr. Burroughs stated that today this was a discussion to consider which way the Commission wanted to go.  It was also an opportunity to answer the questions raised by both the Human Resources Committee and the Finance Committee which was the reason for having this combined meeting and to get a more complete picture of  the direction they wanted to move forward in.

Commissioner Stephens suggested that this is such a large item with long term implications for the financial health of the Utility as well as an immediate impact and a long term impact on the team members.  He commented that he would like for someone who has expertise, but doesn’t sell pensions, to come in and discuss pensions with the Commissioners and do an evaluation of JWSC’s plan to see what our long term sustainability is.  Commissioner Copeland commented he agreed and what he would like to see considered among other alternatives would be for existing employees the option is keep the plan, for brand new employees there could be several options, and he named several alternatives.  After some continued discussion on pensions and options, all agreed more information was needed and a presentation by an expert should be arranged.

  1. Health Care Plan Staff Feedback – A. Burroughs

Mr. Burroughs noted that at the previous two Human Resources Committee Meetings the upcoming renewal of the health insurance plan was discussed with Catina Tindall of First Coast Benefits.  Options were discussed as to why the costs for JWSC have increased, and the types of plans offered have changed such as higher deductible plans.  The entirety of the cost changes made with the last renewal was placed on the employees.  Mr. Burroughs noted that looking at the claims history for the last nine months, JWSC appears to be in better shape as far as renewals, but that cannot be determined until the time is closer for renewal.  He provided that at the last Human Resources Meeting he had discussed meeting with a focus group made up of randomly selected staff members to see how the changes made for 2019 impacted the ways in which the employees have used their health insurance.  Two staff members from each division were randomly selected to participate in this group discussion.  Mr. Burroughs stated that the discussions included the high costs for the insurance, wellness programs and incentives, and the question was asked if the higher deductible amount prevented them from going to the doctor and for the vast majority of the staff in the group the answer was yes.  Employees were not going to the doctor because if they thought it was going to cost too much then they could not afford to go unless it is a major situation.  Mr. Burroughs stated that the discussion included the health reimbursement account that the Commissioners had previously discussed where potentially if employees went to the H.S.A. the Commission would contribute the second $2,500 to that plan.  The employees were asked what their concerns would be with that type of plan, and their concerns were about how they would come up with the first $2,500.  Catina Tindall will be gathering the information for the 2020 renewal and will be presenting that to the Commission in January.  The Commissioners indicated they would like to review the health renewal information in a combined Finance and Human Resources Committee Meeting in January.

  1. Financial Statements Month End November 30, 2019 – J. Donaghy

Mr. Donaghy reviewed the financial statements for the month ending November 30, 2019 with the Committees.  He noted that on the Balance Sheet the Bond Sinking Fund showed just below $2.2M at November month end, however there was a bond interest payment due on December 1st which is paid from that account.  Mr. Donaghy also discussed the Accounts Receivables decrease.  After a brief review of the Balance Sheet, he continued on to review and discuss the Supplemental Schedule of Cash Balances, Combined Revenue Statement, the Project Report, and the Detail Revenue and Expense Report with the Commissioners and provided explanations and responses to their questions.  There was an extended discussion pertaining to investments and SPLOST funds.

EXECUTIVE SESSION

Commissioner Stephens made a motion seconded by Commissioner Harvey to enter into Executive Session to discuss Litigation and Property with no vote to be taken after.  Motion carried 5-0-0.

Commissioner Stephens left the meeting at 2:45 p.m. during Executive Session.

Return to Regular Session.

Commissioner Elliott made a motion seconded by Commissioner Neal to return to Regular Session.  Motion carried 4-0-1. (Commissioner Stephens was absent for the vote.)

There being no further business, Chairman Copeland adjourned the meeting at 3:00 p.m.