BOARD OF TRUSTEES, Committee in the Whole
Municipal Building: 874 Main Street, Antioch, Illinois

January 26, 2004  

CALL TO ORDER Mayor Maravelas called the regular meeting of the Board of Trustees to order at 7:30 p.m. in the Municipal Building: 874 Main Street, Antioch, IL.
ROLL CALL Roll call indicated the following Trustees were present: Pierce, Larson, Caulfield, Porch, Hanson and Turner. Also present were Mayor Maravelas, Attorney Long and Clerk Monroe.
MAYOR Mayor Maravelas introduced the meeting and asked Trustee Caulfield to proceed.
TRUSTEE CAULFIELD Trustee Caulfield stated this meeting was called to consider the retention of the firm, Goldberg, Mechales, Charneske &Schiffman, LTD. (GMCS), to guide the village and the village administrator in implementing the recommendations regarding policies and procedures for the Village of Antioch pertaining to finances.

In a previous meeting, a report was received from GMCS about the conditions they found when they inquired in the village, with the staff and the auditor. Their findings are in a 70-page report. The report is available at the library, as of last Friday.

The issue last meeting, which led to this committee meeting, was a recommendation by the firm to implement 42 points following their study. Some of the trustees were not comfortable with the recommendations and the retention of the firm. There was a vote taken to retain the firm and the motion failed. The meeting tonight is to address any questions the trustees have.

During the last meeting, the trustees requested that the proposals be narrowed down and the costs outlined. As well, there was question as to where the money would come from. Over the course of the evening, weíll be able to answer some of these questions.

There are two proposals sitting in front of the trustees, from GMCS. They represent the latest two proposals based on input from our last meeting. One plan is a scaled down, determined at one point as a ďband aidĒ approach, to handling some of the financial situations that need fixing and attention in the village. The other proposal is a full-blown proposal geared at getting the Village compliant with GASB34, to train and work with our staff and to help provide the internal controls, policies, procedures that are needed to get the finance situation in order. Trustee Caulfield asked Trustee Porch, since she had asked for the meeting, if she has any questions.

TRUSTEE PORCH Trustee Porch states that one of her concerns, is if there is a plan in place. She states the Board has been trying to get accurate information as to where the Village is with the projected budget for this year. As of this afternoon the Board did not have up to the minute information; this is due to the fact that the last financial report the Board got was for November. Trustee Porch asks Administrator Probst if he was able to put together data for the Board and if so, if he can tell the Board what he found. Administrator Probst explains that he went through the Villageís latest data today and tried to available money. Administrator Probst found that there is still $789,051 in the Capital Projects Fund #21, from last years $805,000 bond. The wording in that bond appears to allow the Village to use money for what the Village might want to do with this proposal. Particularly, to buy computer hardware and software recommended for the staff to upgrade the financial systems and for other improvements that the Village wanted to make. Administrator Probst also found money through some of the personnel changes that could save the Village between $43,000 and $58,000. This savings comes from the difference in salaries between the Treasures salary with the projected Finance Directors salary, the old Clerk verses new Clerk, the former Village Administrator with current Administrator unfilled Community Development Director. Additionally, he asked the staff to halt non-essential spending about six weeks ago; the staff was compliant. Finally from his best estimates, going through the numbers today and comparing the last few months and talking to department heads during the course of the day, he is fairly confident that there is around $207,000 that will be available in unrestricted operating budget accounts. That is not including that capitol account, mentioned before and this excludes all the restricted accounts. Some of the dollars are water and sewer, some of them are enterprise funds, and some of them are corporate admin funds, all usable for what the Village may want to do with the proposal. Also the water and sewer dollars may be used in this is application, because the billing is done in the same department. The total, the Village will have available is the amount in the Capitol Projects Fund and approximately $207,000 in addition to that. Again between $43,000 and $58,000 can be attributed to changes in personnel.
TRUSTEE PORCH Trustee Porch asked if she was correct to assume that if we should get an Economic Director that we would take some of that salary from TIF funds. Administrator Probst stated that part of that salary for that Community Development Director was from TIF Funds and would be absent.
TRUSTEE PORCH Trustee Porch states that part of the plan is knowing how the Village is going to fund a plan. She states that Administrator Probst come up with a plan to operate, as scheduled for the remainder of the fiscal year, without cutting any programs. Administrator Probst explains that is correct and that he asked the staff to hold off doing non-essential and waiting, till the next fiscal year started or when the finances were better.
TRUSTEE CAULFIELD Trustee Caulfield stated that in summary there are funds available, to be used for this proposal or something else. He asked Administrator Probst if it was difficult to come up with this information. Administrator Probst responded that there was considerable difficulty in obtaining the data. Due to problems with how the accounts are set up, irregularities with the accounts and having to take a best guess with historical data.
TRUSTEE PORCH Trustee Porch asked if the $207,000 included any revenue that we had not budgeted for. Administrator Probst responded that he only included budgeted dollars. He then explained that; as for additional funds, the village is a little behind budget for building permits. However, there are enough coming in and should be more after the weather changes, so the Village should be up in funds by the end of the fiscal year. Additionally, the Village Attorney, the Police Chief and the Administrator are working on an agreement for dispatch services that will bring in additional funds; as well as some other smaller initiatives to increase revenue. Trustee Porch asked if there has been an increase in revenue in the Building Department over what was projected. Administrator Probst responded that it was less than what the Building Director had planned to receive at this point, but there are so many buildings that donít have occupancy permits that he suspects that there will be a surge once the weather gets warmer. Trustee Porch asked if there was any other revenue received. Mayor Maravelas stated that there was revenue from Wal-Mart. Administrator Probst explained that the Wal-Mart revenue was not from taxes or permits. Mayor Maravelas informed the board that the Wal-Mart revenue was $147,000.
TRUSTEE CAULFIELD In response to questions of where the money would come from, Trustee Caulfield brought up past issues demonstrating how the Board made the public its priority. The first issue mentioned was related to an engineer that took another job. In the engineerís absence, an engineering firm was hired at an hourly rate until a new engineer was hired. Trustee Caulfield indicated he couldnít recall discussing, at the Board level, where the money would come from, the hourly rate and the number of proposals that should be studied to ensure that the Village got a fair deal. Instead the Board focused on making sure the work got done for the public.

The second issue pertained to the Sequoit Creek and the water treatment plant. Again, Trustee Caulfield stated he couldnít recall any Board discussion around the cost and whether or not the Board could afford to clean up the creek or afford to mitigate the problem. He remembered the Board doing what it took to get the problem taken care of for the Village.

The SMC study is another example where the Board paid for the study to do what was right for the public.

These examples show that the Board did what was right for the public and this is another opportunity to take care of the public business and to be open about it. That is why the report is very open, thatís why these proceedings are open. In some villages this would not be made public, the Board wants to be open and fix the issues that concern the taxpayerís dollars. Trustee Caulfield concluded that the Board has a right and responsibility to take care of this issue and that the Board has done the right thing with past issues.

TRUSTEE TURNER Trustee Turner stated that when she asked in the last meeting how this would be paid for, that she was not questioning if this should be done. She was questioning the difference in what was approved for the study and what is outstanding to GMCS. She states she believes upwards of $9,000 is still owed to GMCS. She states that with what they came up with, it seems to her that the Village Auditor should have given the Village this instruction through a management letter. Trustee Turner asks if the Village Auditor has provided a management letter in the past. Trustee Caulfield responded by saying that management letters, touching on some issues, have been provided in the past. These management letters had been reviewed by the previous Administrator and the Auditor. As a result of how that review was going, Trustee Caulfield approached the Board to do the study with GMCS. Trustee Turner states that she remembers Trustee Caulfield requesting $15,000 from the Board for the study. She also states that the Board had no problem providing the $15,000 for the study. However she does have a problem with giving the $15,000 and now owing another $9,000. She feels that the Village should be going out to bid. She has talked with other CPA firms and she feels that these costs are very high.
TRUSTEE PIERCE Trustee Pierce stated that he came here with the understanding that the proposals would be reviewed and come to a conclusion. He would like to review the proposals and come to an agreement that the Board can live with.
TRUSTEE HANSON In response to Trustee Turner, Trustee Hanson states he understands what the Board approved. He feels the bigger question is how did it get beyond that; who made the decision and was it a legitimate reason. He states maybe thatís more important to find out then why it went beyond $15,000. Trustee Hanson asks Attorney Long what is the line that an administrator, or whoever made the decision, can go beyond the approved amount if he feels it necessary. Attorney Long stated the only answer he knows is the one provided at the last Board meeting. Essentially, the scope of the proposal was made on a series of assumptions, some of which approved to be true, many of which did not. Which resulted in significantly more effort and time then originally thought. When hiring professionals on an hourly basis, itís not like a contract term with a fixed price. Itís time and material and unfortunately it took longer than anticipated and the bill came in higher. Why that wasnít related to the Board or who was responsible is beyond his knowledge. Trustee Hanson stated that over the years there have been many examples when one amount is approved and the final amount is more. He uses the Scout House as an example, $20,000 was approved and the final amount was more. This is why he feels that the policies and procedures letter that GMCS create is needed. He states the Board needs to get past the fact that it is costing more than originally stated and address the issues in the report.
TRUSTEE LARSON Trustee Larson states she would like to comment on the SMC report. Originally asked for $5000 for Manhart to study SMCís initial Sequoit Creek Water Shed plan and the bill came it at $4000. Then we asked for $10,000 for the third group and the bill came in at $6,900. The Chamber gave us $5,000 so our share was $1,900. She states that the Board is trying to be fiscally responsible. Had it come in higher, she states she is sure that Trustee Pierce would have brought it back to the Board, so the Board could all make a decision before going forward. Trustee Caulfield commented, stating that there is not a policy that requires the Board to approve engineering studies. There has not been precedence for bringing those types of professional fees to the Board. As well the Village gets bills from the Attorneys for various lawsuits or ordinances. Those bills are not brought to this Board either; they are part of the cost of running a village. He feels that this study falls into the same category.
TRUSTEE PIERCE Trustee Pierce states he would like to see a policy implemented where if the total amount is going to exceed what the Board approved, perhaps by more than 10%, that it is brought back to the Board. In an emergency, the Mayor would approve the extra amount.
TRUSTEE CAULFIELD Trustee Caulfield states the two proposals in front of the Board came from a request during the last board meeting. The reports break down into more detail the recommendations that the Board had in front of them during the last meeting. He states the Board can review each recommendation if they would like. The bottom line on these recommendations is that the firm and the Village responsibilities can be altered at any time, if the Village has someone qualified to perform those tasks. Itís up to the village and the village administrator, to see that these recommendations are implemented. The Village doesnít have to implement any of these recommendations; the Village could save a lot of money and not do any of this. Thatís one option. The Village could do none of it, all of it some of it. The some of it depends on how much this Village Staff and Village Administrator can handle. Trustee Caulfield states that the report speaks for itself and he doesnít want to go in and repeat what the report has in terms of the Villageís ability and checks and balances that are in place now. The report is saying that these things need to be done and for this hourly rate the Board cad expect that itís going to take about this much money to do these things. The Board can go through these one by one and take the ďband aidĒ proposal first. Trustee Caulfield asks if that is what the Board would like to do? Mayor Maravelas states he thinks the Board should have an opportunity to review the proposals.
ATTORNEY LONG Attorney Longs states that it seems that some of the problem that has a risen is because the size of the bill became known more or less as the same time as the report. He thinks that has bothered several of the Board Members. He states that the Board may want to implement interim status reports, maybe twice a month. This would allow the Board, at any board meeting, to say that too much is being spent. This may give the Board better financial control and avoid surprises. Trustee Caulfield adds that some of the surprise is due to the fact that the bills were in the Village and the Board didnít know. The bills were not brought to the Boards attention and both invoices were presented to the Board at the same time. Trustee Porch states that if maybe if they would have been aware of that they could have put a temporary halt on the work. Trustee Caulfield agrees. Trustee Larson states that it was difficult to get them to admit that their charges were not up to date with what was authorized at the last meeting. At the last Board meeting about $20,000 was authorized. At the end of the meeting Trustee Larson asked if there were any more bills outstanding. Joe, from GMCS, stated there were, he did not volunteer the amount outstanding. Trustee Larson is concerned that GMCS is not being forthright with the information, which is making it difficult for the Board to make a decision. Trustee Caulfield states that he believes that they are keeping the Administrator and the treasurer up to date with the bills they had, in a timely fashion, they just didnít get to the board.
MAYOR Mayor Maravelas asks if there are any more questions to the Board?
TRUSTEE PORCH Trustee Porch states she doesnít know what makes more sense to do tonight, to review this for next week or decide if the Board is going to hire a firm and not give a name to that firm. Trustee Caulfield states that the Finance Board has had several meetings, has made reports to this Board and recommends continuing with this firm. There was a Committee meeting suggested, for this meeting, to answer any questions that the Board had. The bottom line is that this is a Committee meeting, so a decision canít be made, itís an opportunity to ask questions and the real decision will be made at the next Village Board meeting. Trustee Larson stated that she has just seen the proposals, the two from this week and the one from last week and she would like to review them.
MAYOR Mayor Maravelas states he would like to address Trustee Turner and Trustee Pierceís question about the $9,000. Back in December this Board approved a bill for $12,000 for Rt. 173. The work was so bad, the repair had to be done again. There was no question from the Board about paying the bill. The Village has a report here that we need really badly and the Board canít make up its mind. Mayor Maravelas states he canít understand that. Trustee Caulfield states he would like to add to that; he is unclear as to why the Trustees are undecided on this. He feels itís very clear what the problems are, what is needed to remedy them. It is also very clear that there is not staff to take care of it and that this Village, on itís own, hasnít been able to do it right. He also states that his reasoning for requesting the study was correct and the study has provided credible information for the Board to make a decision on.
TRUSTEE LARSON Trustee Larson states that she feels that there are a lot of things in the study that can be done by the Administrator and the Department Heads. Once the Finance Director position is filled, the Finance Director can do a lot, so itís tailored for our Village.
TRUSTEE CAULFIELD Trustee Caulfield states that a lot of the job descriptions and work procedures/policies have been tailored around the people in the Village and it hasnít worked. The outside input is needed to be up front, to disclose what is going on and to keep the Village accountable. This Village is a lot better off then it was 2 Ĺ years ago. As we move forward, there is a plan to refine and update some of the Village policies, procedures and infrastructure. The village has updated the water/sewer bill; it had been 20 since it was last adjusted, and the permit and connection fees. There have been a lot of positive moves. Itís time that the Finance Department, the finance infrastructure, keeps pace. The Village doesnít have a system that allows the Finance Committee to keep track of payables, thatís why this Board was allowed to be kept in the dark. Trustee Caulfield stated that he hasnít heard a Trustee ask him what other bills arenít being seen. Trustee Larson stated that Trustee Caulfield is the Finance Director and the Board is assuming that he is bringing them to the Board. Trustee Caulfield states that the system does not allow him to know the information, so he canít bring it to the Board. If he canít implement a system with checks and balances the Board will continue to be in the dark, because he will be in the dark.
TRUSTEE TURNER Trustee Turner states she truly believe that the Village needs to implement these items, however we have a Village Administrator, we are going to hire someone to do the finances and we have an auditor. We have people to do these things. She states she doesnít see why the Village needs to hire someone to do these things. Trustee Caulfield responds with a comment he made when he originally requested the study; in the past we had a Village Administrator, a Village Auditor and a Treasurer. Trustee Turner states there is going to be a difference between the Treasurer and the person coming in to run finance. Trustee Caulfield states that there soon is to be no Treasurer. As well, the report shows that even with those folks in place and by our Administrators own statement last Board meeting; he needs the help to do this. He doesnít have the tools or resources at his disposal to make this happen. The Board is denying him those tools and resources if the Board doesnít move forward with this. The longer the Board takes to make this decision, the longer Administrator Probst goes with out the information he needs to do the work of the Village.
TRUSTEE PIERCE Trustee Pierce states that he came here tonight to come to a conclusion that would work for the Village and once again the Board is back where it was last week. He states he would like to come up with some sort of conclusion tonight. Heís looked through the ďband aidĒ proposal, he has no interest in looking at the upper level and there are a lot of things in here that can be done. There are 18 items that the Village could do right now. There are another 20 items that we can defer until we get a financial department head on board. Numbers 3, 6, and 8 could be dropped off this list and be done by a different source. Number 8 is to develop a disaster recovery program. There are companies out there that specialize in developing disaster recovery programs and could do a much better job than a CPA firm. He sates if he were to vote yes, he would like to see other changes. One of them being the 10% threshold he mentioned previously. He also states he was happy with a monthly status report and would be happy with a bi-weekly status report too. He feels a plan is need to deal with the other items that arenít being done. Once the Finance Director is hired, he should be given a month to come up with a plan as to whether he really needs and outside firm, do them himself or give them to the Village Administrator.
ADMINISTRATOR PROBST Administrator Probst states that he created some proposals for tonight to get the Village through the interim period. Trustee Porch asked Administrator Probst to give a synopsis of the proposals. Administrator Probst provided the following information:

ē The Finance Director position has been advertised on, the IGOFA website and in the NewSun.
ē Lori Davis and Lynn Holms both have some basic accounts payable background experience. I suggest training them with the current Treasurer. This should eliminate having to hire someone else.
ē The Finance Director will be able to do the Treasurers duties and continue to use current staff to help. I hope to hire a temporary Treasurer, which is fully qualified, until a Finance Director is on board. The temporary Treasurer could also be training the current staff and could start looking at addressing the issues in the current proposal, those the Village can do in house.
ē The temporary Treasurer could be from GMCS or from another firm and doesnít have to be full time.
ē We need new computer software and a financial system. The software would be between $15,000 and $30,000, initially closer to $15,000 for a new server based computer system. This would support a new financial system but GIS, calendaring and internal e-mail and other programs would cost $17,000. This would also allow us to link up with outlying departments. The funding could come from the $805,000 fund, since they will help with the Water/Sewer billing.
ē The assistance of a financial consultant could be decreased steadily as we can decrease that by having someone in a temporary position to start the training and start implementing some of the fixes. The financial consultant, if and when the Board decides to retain one, can be lessened. I would envision the Village steadily lessens the influence of that firm, when the Village gets a Finance Director on board and start doing more and more in house.

He states that the one thing that he is concerned about, above and beyond whatís mentioned above, is the GASB34 implementation. This is so specialized that it is unlikely that the Village can do this in house without the assistance of someone else. Mayor Maravelas asks how long the Village has to comply with GASB34. Administrator Probst responds that the reports have to comply by April 2005. Mayor Maravelas then states that in order to comply by March 2005, the implementation must start now. Administrator Probst states that is corrects. He continues by saying another item he didnít mention before is that if the Village gets an unqualified audit the Village can save probably a percent a percent and a half on bonds. The Village can use that bond for the Sewer rehab project and this last initiative could bring in another quarter of a million dollars a year. This is something for the Board to think about, if maybe some or all of them sound like options, we might be part way there.

TRUSTEE TURNER Trustee Turner asks how the audit is going. Mayor Maravelas responds that the audit is being done. There is something missing that canít be found. He states that he will let the Board know on Wednesday.
TRUSTEE PORCH Trustee Porch states that she doesnít understand why we are in this situation. We have an auditor, why canít the auditor find this. Mayor Maravelas states that the auditor is not a CPA. Trustee Porch responds that she understands that, but states shouldnít the auditor give a recommendation of the shortcomings that they have found in our system. Mayor Maravelas asks Trustee Caulfield to respond to Trustee Porch. Trustee Caulfield states that the auditor usually provides a management letter that describes anything in the Village that needs attention or anything that they want to point out about the audit. Attorney Long explains that with an audit, the auditor mostly looks at the structure, the internal integrity of the whole. The audit is not directed at the day-to-day, but to ensure the overall validity of the numbers. Trustee Porch asks if audits for municipal, business and banks are? Attorney Long responds that they are supposed to be the same. One of the issues today is that the auditors are supposed to be reviewing the books but on the other hand they are helping set up the books, which leads to the internal conflict. Essentially the auditor should, when he sees a problem, make recommendations but shouldnít be called to implement the actions. There is discussion between Trustee Porch and Trustee Pierce regarding the management letters. Attorney Long states that he has not seen the audits from last year or the year before and that he was giving a general overview of how audits work. Trustee Caulfield responds that Attorney Long may not have seen the management letters, because they were before he started supporting the Village. It is customary for the Village Attorney to provide an opinion on the management letter. This yearís audit is not final, but Attorney Long is trying to close the audit. Attorney Long agrees that he is trying to close the audit. Trustee Caulfield explains that one of the concerns with closing the audit is that an unqualified opinion is needed. During his last discussion with GMCS, they cannot provide an answer as to what it would take to get an unqualified opinion. The prior management letters address this asset issue that weíve said if we get this asset issue resolved and get an evaluation, which brings us in compliance with GASB34, will you give us an unqualified opinion. The answer from GMCS was no. Attorney Long explains that an unqualified audit means that when they find exceptions in the policies and procedures we use, then they would write a qualified opinion, that means the qualifications that based with these exceptions that itís okay. An unqualified audit would mean that everything that you are doing is great.
TRUSTEE TURNER Trustee Turner questions that the Village Auditor isnít a CPA. Mayor Maravelas explains that he isnít doing CPA work, he is a CPA, but he wasnít hired for that.
MAYOR Mayor Maravelas ask the Board if there are any other questions. Trustee Hanson asks what is being looked for, for the next Board meeting. He asks if Trustee Caulfield is going to work with the Administrator to get more details. Trustee Caulfield responds that he would like to request a Finance Committee meeting before the next Board meeting, to come up with a decision for the Board meeting. The Board members then discuss a possible date for the Finance Committee meeting.
TRUSTEE CAULFIELD Trustee Caulfield states that his recommendation is to continue with GMCS to implement the policies, procedures and internal controls. Trustee Larson asks if Trustee Caulfield recommends on of the proposals from GMCS over the others. Trustee Caulfield states that he is leaning towards the full-blown approach, because there is not much time before now and the start of the new fiscal year. The full-blown approach would provide us with an answer to our asset evaluation; it would prepare the current staff and the incoming Finance Director to work with the new computer system. A long with leaning towards the full-blown proposal, I would recommend acquiring the hardware and software necessary to implement this system. I would like everyone to have a chance to look through the proposals. Further discussion regarding when the Finance Committee meeting could be occurs. They agree to meet at 6:00 pm on Monday, February 2, 2004.

Mayor Maravelas motioned to adjourn the meeting, moved by Trustee Caulfield seconded by Trustee Hanson to adjourn the meeting at 8:40 pm. On roll call the vote was:

YES: 6: Pierce, Larson, Caulfield, Porch, Hanson, Turner.
NO: 0.

Respectfully submitted,


Amy S. Monroe,
Village Clerk
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