PLEASE NOTE: This and other city meetings may be audio and/or videotaped for broadcast, transcription and/or archival purposes. As set forth in the Americans with Disabilities act (ADA) of 1992, the City of Duluth government does not discriminate on the basis of disability in the admission or access to or treatment of employment in its programs or activities, and complies with the requirements contained in section 35.107 of the Department of Justice regulations. Any requests for reasonable accommodations required by individuals to fully participate in any open meeting, program, or activity of the City of Duluth government should be made seven days prior to the event. Inquiries should be directed to the ADA Coordinator in the Planning Department, located at 3167 Main Street, Duluth, GA. 30096, telephone (770) 476-1790.

Nancy Harris, Mayor Marsha Anderson Bomar, Post 1

Kirkland Carden, Post 2

WORK SESSION AGENDA MAYOR AND COUNCIL

CITY OF DULUTH, GA 3167 Main Street Duluth, GA 30096

Billy Jones, Post 3 Kelly Kelkenberg, Post 4

Greg Whitlock, Post 5

MARCH 26, 2018 CITY HALL – COMMUNITY ROOM 5:30 pm

The leaders and staff of the City of Duluth are dedicated to ensuring that Duluth is: an Attractive Destination, a Quality Community, a World Class Government,

and promotes a Sustainable Economic Environment.

5:30 - PM CALL TO ORDER I. PUBLIC COMMENTS Five minutes per person, maximum 6 speakers. Sign-up sheet available. 30 min II. PRESENTATIONS

1. 2018 CITIZENS BUDGET REVIEW ADVISORY COMMITTEE REPORT CBRA Co-chairs 30 min In February the Citizen Budget Review Advisory Committee (CBRA) met three times to discuss the City's budget. Co-Chairs Manfred Graeder and Amy Fuchs will present recommendations from the committee. The committee is comprised of the following individuals: Alana Moss, Manfred Graeder, Eva Kuhn, Richard Meehan, John Howard, Denise Auger, Amy Fuchs, Jim Adkins, Chantal Scantlebury, Stephanie Wright, Anmaar Habib, Greg LaHatte, Susan Porteous, Charlie Dorlich, Dan Rabinovitch and Ashley Mosteller. The recommendation of the committee will be discussed by the Mayor and Council during the budget work sessions. The first budget work session is scheduled for April 30th at 5:30 pm in the Duluth City Hall Community Room.

III. DISCUSSION ITEMS

1. ANNUAL EMPLOYEE INSURANCE RENEWAL SUMMARY: Finance Committee member Susan Porteous will present the request. Staff met with the City's insurance broker, Matt Bidwell with MSI Benefits Group, to discuss the annual renewal of its health, dental, life and disability

M&C Work Session Agenda March 26, 2018

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insurance. Mr. Bidwell reported that Blue Cross Blue Shield (BCBS) is offering a 7.5% increase premium renewal for health insurance. Mr. Bidwell also provided renewal information on dental, life and disability insurance that is offered to employees. This information was presented to the City's Finance Committee at their March 20th meeting. The Finance Committee is recommending Council approve a change from BCBS to Cigna for health and dental insurance and a change from Greater Georgia Life to Metlife for Life and Disability Insurance. Approval of this item on the April 9th agenda would authorize the change to be effective June 1, 2018.

IMPACT TO BUDGET: overall savings over current year premium

2. ANNUAL SALARY SURVEY REVIEW

SUMMARY: The annual salary survey classification pay plan study as conducted by Human Resources Manager Ed Johnson was reviewed by both the Executive Pay and Benefits Committee and the Finance Committee. The HR Manager researches and compares salary ranges in the City of Duluth with 15 other local jurisdictions in order to determine the prevailing pay range for each position in the local market area. This annual survey helps ensure that the City can attract and retain qualified and competent employees; avoid overpaying or underpaying employees; and keeps the salary structure technically up-to-date. COLA increases are vital in keeping the pay competitive and reduces the need to re-grade jobs. The study also reviews the classification of various duties performed to determine if they have been placed in the appropriate pay range compared to other cities.

This year, 17 positions were recommended to the Finance Committee for a change in pay grade (i.e., re-grade). These positions, if approved the changes would be effective July 2, 2018 to coincide with the adoption of the FY19 Budget and first pay cycle of FY19 at a total cost of $25,403. The Finance Committee recommends approval of the Job Titles as presented, effective July 2, 2018. IMPACT TO BUDGET: $25,403 in FY19 budget

3. FISCAL YEAR 2017 AUDIT REPORT

Finance Committee member Susan Porteous will present the City's annual audit report. The audit was presented to the Finance Committee by Joel Black with Mauldin & Jenkins at the committee's meeting held on March 20, 2018. The audit report includes the City as a whole, the Downtown Development Authority, and the Urban Redevelopment Agency. The auditor issued an unqualified or clean opinion on the City’s financial statements. The audit report included no findings related to the financial statements. However, the report does include two management comments related to segregation of duties and a property tax allowance for uncollectable taxes. The Finance Committee and staff recommend that Council accept the report as presented on the next Council consent agenda.

4. SR120 SIDEWALK PROJECT AUTHORIZATION

SUMMARY: The SR 120 sidewalk project is part of the 2014 Joint City/County SPLOST list. The section from Buford Highway to Claiborne Drive is complete in terms of design and right of way acquisition, and is ready for construction. Staff has developed a bid package that is ready to advertise and requests approval to advertise in the Gwinnett Daily Post and on the State Procurement Registry for 30 days starting on 4/13. Bids would be due 5/16.

This project will be funded 81% by Gwinnett County and 19% by the City. If we move forward at this time, it is anticipated that the project would be substantially complete by the end of this calendar year. Staff requests Council approval for advertising for contractor bids for this project. Once the bids are received and evaluated, staff will request budget amendment based on bids, contingency, and CE&I costs. IMPACT TO BUDGET: TBD

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5. TRAFFIC SIGNAL – SR 120 AT GEORGE ROGERS AVENUE/DULUTH HS SUMMARY: The City has been trying to get approval for a signal at SR 120 and George Rogers / DHS for many years. Several studies have been completed, many meetings have been attended, and multiple solutions have been discussed. At a recent meeting with the State Traffic Engineer, the City was finally granted permission to move forward with the signal as all other options have been exhausted. Staff has directed our previous traffic engineers to submit a complete and final traffic study to GDOT for approval. Staff has also engaged the services of an on-call traffic engineer to design the signal to GCDOT and GDOT's specifications. Wolverton & Associates has provided a fee of $10,329 for signal design services. This includes all necessary coordination with previous traffic engineer, DHS plans for the new driveway, Gwinnett County DOT, Georgia DOT general office and district office, and the City. It is anticipated they will begin design in mid-April (after a budget amendment for this project is approved by Council) and complete design within three months. Staff will then request Council approve construction funds. This project is on our current approved joint City/County SPLOST list and will be funded 81% by Gwinnett County and 19% by the City. Staff will request a budget amendment at the next voting meeting on 4/9 to move adequate funds into the budget to continue the project. Request will include $10,329 for designer, 10% design contingency, and funds for the City Engineer's time to manage and deliver the project.

IMPACT TO BUDGET: requires budget amendment

6. COMPREHENSIVE PLAN STEERING COMMITTEE

SUMMARY: Over the next several months, the Planning staff will be working on a required five (5) year update to Duluth's Comprehensive Plan, Plan 2040. In accordance with Chapter 110-12 of the Rules and Regulations of the State of Georgia, the City must form a Steering Committee to guide the development of the Plan update. The Steering Committee must contain a member from the elected governing authority. The other members will be made up of the Duluth Planning Commission and Duluth Planning staff. Staff is seeking a volunteer from Council to join the Comprehensive Plan Steering Committee. The Steering Committee will meet at least three (3) times between April 2018 and January 2019 to develop the Plan update. IMPACT TO BUDGET: n/a

7. MULTI-FAMILY HOUSING INSPECTION PROGAM

SUMMARY: As discussed at the February work session, Staff will provide a presentation on the Duluth Neighborhood Outreach Work (NOW) initiative for Multi-Family Housing Inspections. Staff will be seeking Council feedback on items identified within each presentation.

IMPACT TO BUDGET: n/a

8. PLANNING AND DEVELOPMENT UPDATE

Planning staff to provide the Mayor and Council with an update of land use cases and permits for the month of March.

IMPACT TO BUDGET: n/a

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IV. MATTERS FROM COUNCIL

V. ADJOURNMENT The next scheduled meeting of the Mayor and Council is April 9, 2018 at 7:00 p.m. in the City Hall Council chambers.

Summary

1

• Continuing with the current plans the City would see an annual increase of $118,527. Proposed changes to Cigna and MetLife will reduce the annual cost to the City by $2,567.

Annual

Premium

%

Increase

Employee

Cost HRA Cost

Net Annual

Cost

Net %

Increase

Annual

NET

Difference

MEDICAL

BCBSGA

Current $1,704,362 $178,059 $80,000 $1,606,303

Renewal - Revised$2,500 $1,832,186 7.50% $191,413 $80,000 $1,720,773 7.13% $114,470

CIGNA

Option - $1,000 / No HRA $1,820,570 6.82% $190,200 $0 $1,630,370 1.50% $24,067

Also reviewed Aetna (declined), Kaiser (25% below current) and asked UHC to review (declined)

DENTAL

BCBSGA

Current $179,406 $31,526 $147,881

Renewal $179,406 0.00% $31,526 $147,881 0.00% $0

CIGNA

Option $153,712 -14.32% $27,008 $126,704 -14.32% -$21,177

BASIC LIFE AND DISABILITY

GGL

Current $80,909 $0 $80,909

Renewal $84,966 5.01% $0 $84,966 5.01% $4,057

MetLife

Option $75,452 -6.75% $0 $75,452 -6.75% -$5,458

Supplemental life insurance lower under M etLife

To: Finance Committee Date: 3/20/2018 From: Ed Johnson, HR Manager Subj: 2018 Pay Survey Results for implementation July 1, 2018 (FY2019) Following a survey of 15 local jurisdictions1, the following 16 job titles are recommended for a one-grade increase, and one job is recommended for a 2% increase within current grade. Current incumbents in these jobs will be given a 2% increase, at a cost of $25,403. It is noted that several of the surveyed jurisdictions updated their pay charts after several years of no increases while other jurisdictions brought jobs back in-house that had been outsourced to CH2M Hill. Police Fleet Assistant From Grade 17 to Grade 18 Events Coordinator From Grade 20 to Grade 21 Marketing Coordinator From Grade 20 to Grade 21 Maintenance Mechanic From Grade 21 to Grade 22 Administrative Records Manager From Grade 22 to Grade 23 GIS Specialist From Grade 24 to Grade 25 Sr. Planner From Grade 26 to Grade 27 Building & Development Inspector From Grade 27 to Grade 28 Clerk of Municipal Court From Grade 27 to Grade 28 Human Resources Manager From Grade 28 to Grade 29 Parks & Recreation Director From Grade 32 to Grade 33 Public Works Director From Grade 32 to Grade 33 Planning & Development Director From Grade 33 to Grade 34 Information Technology Manager From Grade 33 to Grade 34 Finance Manager From Grade 34 to Grade 35 City Clerk From Grade 35 to Grade 36 Deputy City Clerk Pay increase of 2% within grade – managerial judgment due to

uniqueness of job duties which do not lend well to pay surveys, and the need for pay to stay in line with other Business Office managers. We are looking at a change in job title to more accurately reflect her duties and responsibilities.

Respectfully submitted, Ed Johnson, HR Manager 1Jurisdictions surveyed: Johns Creek, Suwanee, Lilburn, Roswell, Alpharetta, Chamblee, Norcross, Brookhaven, Dunwoody, Gwinnett County, Lawrenceville, Milton, Peachtree Corners, Sandy Springs, and Snellville.

Presentation of 2017 Audit Results

City of Duluth, Georgia

June 30, 2017

1

Agenda

Engagement Team

Results of the 2017 Audit

Financial Ratios

Comments, Recommendations, and Other Issues

Questions & Comments

2

Engagement Team

Mauldin & Jenkins, LLC; General Information Founded in 1920.

Large regional firm serving the Southeastern United States.

Offices located in Macon, Atlanta, Albany, Bradenton, FL , Chattanooga, TN, Birmingham, AL and Columbia, SC with firm governmental leadership positioned in the Atlanta (and Macon) office(s) employing approximately 260 personnel.

In addition to our governmental practice, we have large banking, healthcare, not-for-profit, benefit plan and tax practices.

Mauldin & Jenkins, LLC; Governmental SectorLargest specific industry niche served by the Firm representing 25% of Firm practice.

Serve more governmental entities in Georgia than any other certified public accounting firm requiring over 80,000 hours of service on an annual basis.

Approximately 100 professional staff persons with current governmental experience.

Current auditor for over 300 total governments in the Southeast, including approximately:

90 cities (including 7 of 10 largest cities in Georgia);

45 counties (including 6 of the 10 largest in Georgia);

45 school systems(8 of the 10 largest in Georgia);

40 state entities; and,

80 special purpose entities (stand-alone business type entities, libraries, etc).

Engagement team leaders for the City of Duluth

Joel Black, Engagement Partner

Josh Carroll Engagement Manager

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Results of 2017 Audit

Our Responsibility Under Auditing Standards Generally Accepted in the United States of America (GAAS)

– We considered the internal control structure for the purpose of expressing our opinion on the City’s basic financial statements and not providing assurance on the internal control structure.

– Our audit was performed in accordance with GAAS and Government Auditing Standards.

– Our objective is to provide reasonable—not absolute—assurance that the basic financial statements are free of material misstatement.

– The basic financial statements are the responsibility of the City’s management.

Report on 2017 Basic Financial Statements

– Unmodified (“clean”) opinion on basic financial statements.

– Presented fairly in accordance with accounting principles generally accepted in the United States of America.

– Our responsibility does not extend beyond financial information contained in our report.

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Results of 2017 Audit (continued)

Significant Accounting Policies

– The significant accounting policies used by the City are described in Note 1 to the basic financial statements.

– The policies used by the City are in accordance with generally accepted accounting principles and typical government organizations.

– In considering the qualitative aspects of its policies, the City is not involved in any controversial or emerging issues for which guidance is not available.

Management Judgment/Accounting Estimates

– The City uses various estimates as part of its financial reporting process – including valuation of accounts receivable, actuarial assumptions for pension liability, and valuing donated infrastructure assets.

– Management’s estimates used in preparation of financial statements were deemed reasonable in relation to the financial statements taken as a whole. We considered this information and the qualitative aspects of management’s calculations in evaluating the City’s significant accounting estimates.

Financial Statement Disclosures

– The footnote disclosures to the financial statements are also an integral part of the financial statements and the process used by management to accumulate the information included in the disclosures was the same process used in accumulating the statements. The overall neutrality, consistency, and clarity of the disclosures was considered as part our audit.

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Results of 2017 Audit (continued)

Relationship with Management

– We received full cooperation from the City’s management and staff.

– There were no disagreements with management on accounting issues or financial reporting matters.

Audit Adjustments

– No audit adjustments were proposed to the records of the City besides ones provided to us by management during the audit process. There were no passed adjustments.

Management Representation

– We requested, and received, written representations from management relating to the accuracy of information included in the financial statements and the completeness and accuracy of various information requested by us.

Consultation with Other Accountants

– To the best of our knowledge, management has not consulted with, or obtained opinions from, other independent accountants duringthe year, nor did we face any issues requiring outside consultation

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Results of 2017 Audit (continued)

Significant Issues Discussed with Management

– There were no significant issues discussed with management related to business conditions, plans, or strategies that may haveaffected the risk of material misstatement of the financial statements.

Information in Documents Containing Audited Financial Statements

– Our responsibility for other information in documents containing the City’s basic financial statements and our report thereon does not extend beyond the information identified in our report. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, we must be provided with printers’ proof for our review and approval before printing. You must alsoprovide us with a copy of the final reproduced material for our approval before it is distributed.

Auditor Independence

– In accordance with AICPA professional standards, M&J is independent with regard to the City and its financial reporting process.

– There were no fees paid to M&J for management advisory services during fiscal year 2017 that might effect our independence asauditors.

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General and Special Revenue Fund Balance Ratio to Expenditures

Source: The City’s respective financial reports

96% 91%

77%67% 63%

0%

20%

40%

60%

80%

100%

120%

140%

2013 2014 2015 2016 2017

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General Fund Budget to Actual Results – Fiscal Year 2017

Revenue came in over budget due primarily to insurance premium taxes, occupational taxes, and sponsorship revenues being more than budgeted.

Expenditures for all functional areas were less than budget as departments managed to generate savings of $1.68 million from the current or operating budget.

Budget Actual Variance

Revenue 17,433,143$       18,808,916$       1,375,773$         

Expenditures (18,620,650)        (16,944,630)        1,676,020           

Net Transfers (2,574,853)          (2,419,525)          155,328               

Net Change (3,762,360)          (555,239)              3,207,121           

Beginning Fund Balance 11,034,248          11,034,248          ‐                        

Ending Fund Balance 7,271,888$          10,479,009$       3,207,121$         

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Comments, Recommendations, and Other Issues

Segregation of Duties (Management Comment)

– During the course of our testwork, we noted a couple of areas in which the segregation of duties could be improved. Segregation of employee’s duties is a common practice in an effective internal control structure. The City has made improvements in this area with the implementation of the new accounting system, however there are still a couple of areas in the cash receipting area where segregation of duties could be improved.

• Individuals who collect receivables can post receipts to the sub-ledger.

• For property taxes, individuals who process bills are not independent of the assessment and collection functions. They also have the ability to record abetments/adjustments. As a mitigating controls entries are reviewed and approved by other staff.

– Without some segregation of duties within these functions, there is increased exposure that someone could intentionally or unintentionally misappropriate assets of the City.

Property Tax Allowance (Management Comment)

– During our testing of property taxes we noted the City has not recorded an allowance for uncollectable property taxes. Although the City’s annual collection rate is high (roughly 98%), there are delinquent taxes from tax years five years and older. We recommend the City review these delinquent taxes and establish and an allowance for uncollectable property taxes or consider writing off these old balances.

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Emerging Issues

New GASB Pronouncements- Implemented This Year

– GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, brings standards for recording the Total Pension Liability (similar to the requirements of GASB Statement 68) for plans not covered by that standard. This had no impact on the City.

– GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, enhances note disclosures and RSI for OPEB plan financial statements. This standard is similar to the requirements of Statement No. 67 related to pensions and impacts the financial statements of the plan itself.. This had no impact on the City.

– GASB Statement No. 77, Tax Abatement Disclosures, will require footnote disclosure related to any tax abatements entered into which would impact the City’s revenue, whether entered into by the City or another government but having an impact on the City. The City had no material abatements to disclose as of June 30, 2017.

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Emerging Issues

New GASB Pronouncements- Implemented This Year (continued)

– GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, amends GASB 68 to address practice issues which came up with the implementation of that new standard. It changes the accounting and disclosure requirements for government’s whose employees participate in a multi-employer cost sharing pension plan that is not a government plan and is used to provide pensions to both government and non-government employers. This had no impact on the City.

– GASB Statement No. 80, Blending Requirements for Certain Component Units, an amendment of GASB 14, amends the blending requirements to include a not-for-profit corporation in which the primary government is the sole corporate member. This had no impact on the City.

– GASB Statement No. 82, Pension Issues, an amendment of GASB 67, 68, and 73, amends the pension standards to address the presentation of payroll-related measures, the selection of actuarial assumptions, and the classification of payments made by employers to satisfy employee contribution requirements.

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Emerging Issues

New GASB Pronouncements for Future Years

– GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, requires governments providing defined benefit OPEB plans (post-retirement health-care benefits) to recognize the full amount of their long-term obligation for OPEB benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of OPEB benefits. This standard is similar to the requirements of Statement No. 68 related to pensions. Applicable for June 30, 2018.

– GASB Statement No. 81, Irrevocable Split-Interest Agreements, provides recognition and measurement guidance for situations in which a government is a beneficiary of split-interest agreement. A split-interest agreement is a type of giving agreement used by donors to provide resources to two or more beneficiaries, often through trusts. Applicable for June 30, 2018.

– GASB Statement No. 83, Certain Asset Retirement Obligations, this statement establishes the criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for ARO’s. Applicable for June 30, 2019.

– GASB Statement No. 84, Fiduciary Activities, This statement establishes criteria for identifying fiduciary activities with a focus on: 1) whether a government is controlling the assets of the fiduciary activity; and, 2) the beneficiaries with whom a fiduciary relationship exists. Applicable for June 30, 2020.

13

Emerging Issues

New GASB Pronouncements for Future Years (continued)

– GASB Statement No. 85, Omnibus 2017, addresses some practice issues that have been identified during the implementation and application of certain GASB standards. They impact items like accounting for goodwill and address issues related to OPEB plans and disclosure. Applicable for June 30, 2018.

– GASB Statement No. 86, Certain Debt Extinguishment Issues, which address the accounting for defeasances of debt using existing resources – bringing in to the standard what was largely being done in practice. Applicable for June 30, 2018.

– GASB Statement No. 87, Leases, will require all lease agreements to be recorded as a liability under full accrual accounting. Many of these leases were previously considered operating leases and payments were expensed as incurred with no liability accrued. Applicable for June 30, 2021.

14

Emerging Issues

Other Matters Currently Being Considered by GASB

– Re-examination of the Financial Reporting Model

– Capitalization interest costs

– Debt and Other Footnote Disclosures

– Revenue and Expense Recognition

– Social Impact Bond Accounting

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Free Quarterly Continuing Education for Governmental Clients

Since March of 2009:

– Mauldin & Jenkins provides free quarterly continuing education for all of our governmental clients. Topics are tailored to be of interest to governmental entities. In an effort to accommodate our entire governmental client base, we offer the sessions several times per quarter at a variety of client provided locations resulting in greater networking and knowledge sharing among our governmental clients. We normally see approximately 100 people per quarter. We appreciate the City’s participation in these

quarterly sessions.

– Examples of subjects addressed in the past few quarters include:Accounting for Debt IssuancesAmerican Recovery & Reinvestment Act (ARRA) UpdatesBest Budgeting Practices, Policies and ProcessesCAFR Preparation (two (2) day hands-on course)Capital Asset Accounting Processes and ControlsCollateralization of Deposits and InvestmentsEvaluating Financial and Non-Financial Health of a Govt.GASB No. 51, Intangible AssetsGASB No. 54, Governmental Fund BalanceGASB No. 60, Service Concession ArrangementsGASB No. 61, the Financial Reporting EntityGASB No.’s 63 & 65, Deferred Inflows and OutflowsGASB No.’s 67 & 68, Pension Stds. (several occasions)GASB No. 72, Fair Value Measurement and ApplicationGASB No.’s 74 & 75, OPEB Standards

GASB No. 77, Tax Abatement DisclosuresGASB Updates (ongoing and several sessions)Grant Accounting Processes and ControlsInternal Controls Over Accounts Payable, Payroll and Cash DisbursementsInternal Controls Over Receivables & the Revenue CycleIRS Issues, Primarily Payroll MattersLegal Considerations for Debt Issuances & Disclosures Policies and Procedures ManualsSegregation of DutiesSingle Audits for AuditeesSpecial Purpose Local Option Sales Tax (SPLOST) Accounting, Reporting & ComplianceUniform Grant Reporting Requirements and the New

Single Audit

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Questions & Comments