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Informal Meeting Minutes Monday, June 12, 2023 9:30 AM BOARD OF SUPERVISORS Maricopa County, Arizona (and the Boards of Directors of the Flood Control District, Library District, Stadium District, Improvement Districts and/or Board of Deposit) "The mission of Maricopa County is to provide regional leadership and fiscally responsible, necessary public services to its residents so they can enjoy living in healthy and safe communities” Board Members Clint Hickman, Chairman, District 4 Jack Sellers, Vice Chairman, District 1 Thomas Galvin, District 2 Bill Gates, District 3 Steve Gallardo, District 5 County Manager Jen Pokorski Clerk of the Board Juanita Garza Meeting Location Supervisors’ Conference Room 301 W Jefferson, 10th Floor Phoenix, AZ 85003 BOARD OF SUPERVISORS The Board of Supervisors of Maricopa County, Phoenix, Arizona, convened in an Informal Session at 9:30 AM on Monday, June 12, 2023, in the Supervisors’ Conference Room 301 W Jefferson, 10th Floor Phoenix, AZ 85003, with the following members present: Clint Hickman, Chairman, District 4; Jack Sellers, Vice Chairman, District 1; Thomas Galvin, Supervisor, District 2; Bill Gates, Supervisor, District 3; Steve Gallardo, Supervisor, District 5 (entered meeting late). Also present: Juanita Garza, Clerk; Jen Pokorski, County Manager; Karen Hartman-Tellez, Legal Counsel; Mia Vargas, Minutes Coordinator. PRESENTATION 1. PRESENTATION REGARDING THE MARICOPA COUNTY FY 2022 AUDIT Auditor General presentation of the audit results for fiscal year ended June 30, 2022. Lindsey Perry, Arizona Auditor General, Auditor General David Glennon, Arizona Auditor General, Financial Audit Manager Natasha Komo, Arizona Auditor General, Financial Audit Senior (C-18-23-124-X-00) Chairman Hickman opened the meeting and asked the Clerk to call the roll. Chairman Hickman noted the first item on the agenda was a presentation on the FY2022 Audit. Lindsey Perry, Auditor General, introduced David Glennon, Financial Audit Manager, and Natasha Komo, Financial Audit Senior. All three would be giving the presentation. Informal Meeting Minutes Monday, June 12, 2023 Page 2 of 11 Ms. Perry explained the purpose of the Fiscal Year 2022 Audit Results. She stated this presentation is in accordance with a 2021 state law, that directs the County Board to require the Arizona Auditor General (AAG) to present the audit results and any findings to the Board in a public meeting. The meeting needs to be held within 90 days of the audit’s completion. Ms. Perry said it is a great opportunity to answer any questions from the Board. Informal Meeting Minutes Monday, June 12, 2023 Page 3 of 11 Ms. Perry reviewed the three required annual reports listed on the slide above. She explained the purpose of each report and added that David Glennon would cover the highlights of each in further detail. The reports can be viewed by the public at the website, www.azauditor.gov. Ms. Perry noted, they reported for fiscal year 2022, an unmodified opinion. She stated the County’s statements are reliable. David Glennon, Financial Audit Manager, came forward to discuss the following slides below. Mr. Glennon presented key financial information for the County from the last five years. The slide seen above highlights Primary revenues over the last five fiscal years. He explained the increase on Shared State sales taxes, Federal and State grants and programs. Informal Meeting Minutes Monday, June 12, 2023 Page 4 of 11 In the slide above, Mr. Glennon explained the County’s four Primary expense sources. He also noted the increase and decrease of expenses in the past five years. The slide above highlights the five-year trend of the County’s revenues and expenses. Mr. Glennon explained the County’s net position for the last five fiscal years. He also noted, not all the net position balance was spendable at the end of fiscal year 2022. The $3.95 billion balance was invested in capital assets, and $701.2 million was restricted for highways, streets, debt Informal Meeting Minutes Monday, June 12, 2023 Page 5 of 11 services, and other purposes. He noted the remaining negative balance of $109.8 million was unrestricted due to the County’s pension liability. Mr. Glennon explained the Single Audit highlights-Federal expenditures for the last five years on the slide above. He noted the County reported grant expenditures under 15 federal agencies during fiscal year 2022. On the graph above are the five federal agencies with the most expenditures. He explained the increase of federal expenditures of $348 million between fiscal years 2019, and 2021 was because of new grant programs. ~ Supervisor Gallardo entered the meeting ~ Mr. Glennon explained the three financial statement findings and included a finding by other auditors who separately audit the Maricopa County Housing Authority. He stated, the Maricopa County Housing Authority is a legally separate entity pursuant to ARS 36 1404. It has its own Board of Commissioners who are responsible for monitoring and following up on the Housing Authority findings. Their finding was excluded from today’s presentation. Informal Meeting Minutes Monday, June 12, 2023 Page 6 of 11 Mr. Glennon explained the first finding, County’s process for managing and documenting its IT report on the slide above. He talked about the findings that the County has corrected from previous audits. He also talked about recommendations given to the County to comply by December 31, 2023. Mr. Glennon talked about the second finding from slide above. The County School Superintendent (CSS) Office paid with a purchasing card without complying with County policy Informal Meeting Minutes Monday, June 12, 2023 Page 7 of 11 and recommendations. He spoke about purchases made by the former Assistant County School Superintendent with purchasing card in the amount of $227,631 without independently reviewing or approving as required by County policy. The former Assistant County School Superintendent did not report other expenses totaling $32,280 on the required travel authorization expense form, and did not get advanced approval for purchased items in the total of $3,660. Finally, the former Assistant County School Superintendent, purchased two items totaling $606 which were not allowed by County policy. Mr. Glennon noted, the purchases made did not comply with County policies, and put County monies at risk of misuse and possible violation of the Arizona Constitution, which bans the gift of public monies. Mr. Glennon read the recommendations, as listed on the previous slide, for the County School Superintendent office, in order for the County to comply with policy and correct the deficiencies by June 30, 2023. Mr. Glennon reviewed the third financial statement from the slide above. He talked about identified inaccuracies that the County School Superintendent Office reported to Arizona Department of Education, stating it had separated program operations from its Accommodation Schools. This resulted in the County School Superintendent Office receiving higher funding. Mr. Glennon explained the recommendations listed on the slide above. He stated, the County reported it will correct its deficiencies by June 30, 2024. Natasha Komo, Financial Audit Senior, came forward to briefly talk about the three Federal Compliance Audit Findings included in the Single Audit Report. She noted the County partially corrected one prior year Federal compliance finding regarding the Teacher and School Leader Incentive Grants Program. The County is waiting on a management decision from the US Department of Education on how to resolve the finding and see if the County needs to repay the $1.7 million. In addition, the County corrected a federal compliance finding over the Injury Prevention and Control Research and State Community Based Programs related to Federal reporting. Informal Meeting Minutes Monday, June 12, 2023 Page 8 of 11 Ms. Komo reviewed the first Federal compliance finding on Emergency Solutions Grants Program and recommendations in the slide above. She stated, the County reported it corrected its deficiencies by April 1, 2023. In the slide above, Ms. Komo talked about the second Single Audit Report finding, Teacher and School Leader Incentive Grants. She said during the fiscal year, the office incurred additional program expenditures in which no reimbursement was requested. CSS wanted to first resolve Informal Meeting Minutes Monday, June 12, 2023 Page 9 of 11 the $1.3 million that was overdrawn as noted on the slide above. Ms. Komo reviewed the recommendations listed on the slide above. She stated the County reported in its corrective action plan that the overdraw was resolved. This item will be followed up on the fiscal year 2023 audit. Ms. Komo reviewed the third Single Audit Report finding, Emergency Rental Assistance Program on the slide above. She said management had reported six suspicious payments totaling $135,125 that were made to potentially fraudulent claimants in the fiscal year. After reviewing the six suspicious payments, it was determined that in each application, a landlord was listed that was not the recorded property owner of the residence. Ms. Komo also stated three of the six potentially improper payments totaling $74,926 were flagged by banks and were returned to the County. She reviewed the recommendations listed on the slide above. She stated the County reported it would fully correct its deficiencies by June 30, 2023. Ms. Komo stated federal regulations require the three federal grantors, the US Department of Housing and Urban Development, US Department of Education, and US Treasury to issue management decisions within six months of the audit reports being excepted by the governments clearing house. The audit reports were accepted on March 31, 2023, and expect management decisions to be issued by September 2023. Ms. Komo explained that each management decision would state whether the audit finding is sustained, reasons for the decisions, and the expected action to repay the disallowed cost, make other financial adjustments or take other actions. She also stated prior to making any management decision, the federal grantor may request additional information or documentation as a way of mitigating the disallowed cost. She said the County may need to provide documentation to support its claim that $935,925 has been resolved prior to the grants closeout. Informal Meeting Minutes Monday, June 12, 2023 Page 10 of 11 Ms. Komo noted, the Arizona Auditor General will follow up on these findings as part of the fiscal year 2023 audit. Additionally, the federal grantor may decide to review prior year information as part of audit responsibilities. Ms. Komo completed the presentation and asked the Board if there were any questions. Chairman Hickman thanked the auditors for their work and the presentation. He asked the Board if they had any questions. Supervisor Gates also thanked the auditors for their work and presentation. He asked the auditors how their interaction was with County staff during the audit. Mr. Glennon responded by saying it was a wonderful relationship with the County. He stated he works closely with the Budget Department and they are always responsive with the questions. Supervisor Gates appreciated Mr. Glennon’s response. Supervisor Gates also said that the Board takes the findings seriously and will work with the County Manager to address the issues moving forward. Chairman Hickman talked about the relationships that the Board has with the government and the statutory requirement in having this audit. He briefly commented on purchasing cards and the responsibility County staff have with taxpayer’s monies. Chairman Hickman asked Ms. Perry how does Maricopa County rank in comparison with the other counties in the state. Ms. Perry responded by saying the purchase cards are a high-risk area in audits for other counties too. She also noted finding six findings is expected from a large County. Ms. Perry talked about working with Cindy Goelz, Budget Director, to remediate prior findings from year to year. She noted the Board could see repeated findings in the fiscal year 2023 and 2024 audit reports. Ms. Perry talked about Maricopa County and other counties struggling with staffing issues related to COVID-19 monies and meeting requirements from the Federal Government. She appreciated the professional working relationship with Maricopa County Departments and enjoyed working with the Board, the County, and the County Internal Audit Department to give guidance. Informal Meeting Minutes Monday, June 12, 2023 Page 11 of 11 Chairman Hickman thanked the auditors for their presentations. He talked about working on the findings with County Departments. Chairman Hickman thanked Ms. Goelz, her staff and Lee Ann Bohn, Assistant County Manager for their work. He noted, having audits are good in tracking and monitoring how County money is spent. 2. EXECUTIVE SESSION Vote to convene in Executive Session to consider the items on the Executive Agenda dated Monday, June 12, 2023, for Board of Supervisors and relevant Special Districts pursuant to the statutory authority listed for each item. Motion to approve by Supervisor Jack Sellers, seconded by Supervisor Thomas Galvin Ayes: Clint Hickman, Jack Sellers, Thomas Galvin, Bill Gates, Steve Gallardo MEETING ADJOURNED There being no further business to come before the Board, the meeting was adjourned. ______________________________ Clint Hickman, Chairman of the Board ATTEST: ____________________________ Juanita Garza, Clerk of the Board