08/19/1997 Meeting Minutes - Laserfiche WebLink

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Council Minutes of 8/19/97 2) The Finance Department has received the "signing bonus" that AT&T Wireless Media paid on the signing of their contract. The $75,000 has been placed within the Recreation Fund pending a determination by the administration and Council on where that money is to go and who is to spend it. 3) Last year, when we went to Moody's for the bond rating, one of the things we walked in with was what is called a GAAP fund balance, which had a deficit of $389,000. A GAAP fund balance is not the same as cash. The reason for this is primarily under accounting rules you cannot recognize all the revenues that you might under normal accounting circumstances. If it has not been collected, you cannot recognize it. However, expenses such as pensions and employment for vacation pay have to be recognized. The GAAP fund balance is basically a comparison of assets and liabilities and whether or not assets exceed liabilities or not based on the accounting principles involved. We told Moody's at that particular meeting that by 1998 we would have our GAAP fund balance on the plus side. We actually did that on the draft statements that we prepared for 1996-- our GAAP fund balance was a positive, $170,000. This issue is being brought up because during the audit the Auditor of State's office has changed their position on the recognition of revenue from income taxes. The effect this is going to have on our financial statements is it is going to increase our GAAP fund balance by $724,000. So, we went into Moody's in 1995 with a $389,000 deficit saying we were going to have it fixed by 1998. We came into 1996 under the rules consistent with what we had done for 1995 with a positive balance of $170,000. With this adjustment that the Auditor of State has asked us to make, we will come out of this with an $890,000 positive GAAP fund balance for 1996. Mr. Musial asked what this would mean to the city's bond rating. Mr. Burns said that he had instructed our underwriter to pursue some feelers with Moody's to see whether or not it would be worth our while to ask for our rating to be re-examined this year. He has not completed that process yet. One of the problems is the analyst that was on our case last year has been reassigned and is no longer handling North Olmsted. Basically, every target that we said we were going to meet, we have--and surpassed. The Finance Director feels, as does probably the administration and Council, that the rating given to the city was not warranted by the facts that were presented. He believes that, if we were to go back this year to readjust the issue with them, that they would adjust our rating, especially since they have changed the classifications within their rating system by adding two slots in the A category. For the record, Mayor Boyle wanted to be sure that everyone understood that GAAP expenses were also those not yet paid as the revenues were those not yet received. We know we will have the expenses, but the due date has not yet arrived. Mr. Burns agreed and gave as an example the payment of the city portion of PERS for the fourth quarter of 1996. This was a liability for the city as of December 31, 199b, but it did not have to be paid until February or March of 1997. Mrs. Saringer, Chairperson of the Recreation, Public Parks and Buildings Committee: 1) The committee met on August 12. Present were committee members Nashar, Limpert and Saringer; Councilman O'Grady; P & A Director Wilamosky; Safety Director Kasler; Recreation Commissioner Dolansky. The following items were discussed: 4 ..:.~IVb+b~.R'iM'9tMVt'~p"'.. tic4YM. .:.... .. _ M....~....... ..~.._,~...'.r[:c:'~^'h ~:Y~i}Y~irN1`H!Y _.~..n.,..-. ,. .i.. .,... .... _..,