HomeMy WebLinkAbout2020-07-16 RMLD Audit Committee Minutesrq
Town of Reading
Meeting Minutes
Board - Committee - Commission - Council:
Audit Committee RMLD Board of Commissioners
Date: 7-16-2020 Time: 5:30 PM
Building: Location: Zoom
Address: Session: Open Session
Purpose: General Business Version: Final
Attendees: Members - Present:
TOWECLE
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REAClp'G, MA.
2121 JUN 20 PM 2:06
Philip B. Pacino, Commissioner, John Stempeck, Commissioner
Members - Not Present:
Others Present:
RMLD Staff: Coleen O'Brien, General Manager; Wendy Markiewicz, Director
of Business, Finance and Utility Technology; Tracy Schultz, Executive
Assistant
Melanson: Zackary Fentross, Andrew Gordon
Vivek Soni, Reading CAB Repesentative
Town of Reading: Mark Dockser, Audit Committee, Stephen Herrick, Audit
Committee, Carla Nazzaro, Audit Committee, Ed Ross, Finance Committee,
Shawn Brandt, School Committee
Minutes Respectfully submitted By: Philip B. Pacino
Topics of Discussion:
Due to the pandemic and the March 12, 2020 Governor's Executive Order Suspending
Certain Provisions of the Open Meeting taw, the meeting was held on zoom and all
participants attended remotely.
Call Meeting to Order
Mr. Pacino called the meeting to order.
Review Calendar Year 2019 Audit Findings with Melanson, Heath & Company, PC
and the Town of Reading's Audit Committee (Attachment)
Mr. Fentross Introduced himself and explained that the financial statements are not presented
on a comparative basis because the prior audit was for a six-month period. This was due to
RMLD moving from a fiscal year ending June 30 to a calendar year ending December 31.
Comparative financials will be presented starting with the December 31, 2020 audit.
Mr. Fentross stated that the RMLD had positive operating results for calendar year 2019, a
well -funded OPEB trust fund, and no management letter. RMLD received a clean opinion,
which is the best opinion that can be received from an independent audit and is the same
opinion that the has been received in prior years. Mr. Fentross presented the Statement of
Net Position. The capital assets net of accumulated depreciation has a balance of about
$79,084,000, which is approximately a $1.8 million increase from the previous year. The
increase is primarily due to improvements in infrastructure. The Department spent $6.5
million In total capital asset additions, but that was softened by $4.5 million In depreciation
expense, which results in the $1.9 million increase.
Major capital asset additions that took place in calendar year 2019 included $1.1 million for
new poles and fixtures, $2 million on overhead conductors, and $1.3 million on underground
conduit and devices.
Mr. Fentross then discussed non-current liabilities. The net pension liability has a balance of
about $14,610,000 and represents the Department's portion (28 percent) of the total
unfunded liability for the Reading Contributory Retirement System. The system as a total is
at 72 percent funded. The average In the Commonwealth Is 65 to 70 percent. This is a $3.8
million increase from the prior year, which is due to the retirement system's investments
coming in at $13.4 million less than what was anticipated. The net OPEB liability has a balance
of about $7,094,000, which is a decrease of about $280,000 compared to the prior year.
RMLD has set aside funds to fund about 36 percent of that liability. This is a strong position
for RMLD: most towns In the Commonwealth have only funded one to ten percent. Other light
departments in Massachusetts have funded between 20 to 40 percent of that liability. Mr.
Fentress reported on purchase power expenses, which has a balance of about $61,027,000.
This is a decrease of about $9 million from the prior year. Electric sales under operating
revenues has a balance of roughly $89,475,000. RMLD had savings on the cost of power that
it purchased and passed those savings on to the customers. Mr. Fentress noted that the
change in net position has a balance of approximately $4,319,000. This is essentially RMLD's
net income. RMLD had strong operating results.
Mr. Paclno asked for a change to the draft Financial Statements relative to Note 22, page 39,
to capture the gravity and unknown of the pandemic situation.
The Audit Committee requested Melanson to provide information on the following:
• How much debt would be a reasonable amount for an electric light department of
Reading's size.
• How much debt did each of the eight utilities have, how many have them, its use, and
amount of current debt?
• How many of RMLDs eight departments have no debt.
• What was the debt used for in each department?
• How often municipal light departments utilize debt?
Mr. Pacino made a motion seconded by Mr. Stempeck to approve that the Audit Report from
Melanson, Calendar Year ended December 31, 2019, as presented and as amended by the
Audit Committee, on the recommendation of the General Manager.
Motion carried unanimously by a roll call vote.
Motion to Adjourn
Mr. Pacino made a motion seconded by Stempeck.
Motion carried by a roll call vote 2:0:0.
As approved on June 15, 2023
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