The City of North Battleford's finance director is leaving at the end of the week, but he's not going without some strong words of advice for council members.
At a special meeting called for Friday, Aug. 30 for council to receive the city's 2012 financial statement in time for it to meet a provincial deadline, Matthew Hartney, MBA, CMA, said there should be an onus on the city's finance director and management to do a better job.
The meeting was also attended by Barry Svenkeson and Beverley Allison from Holm Clements Kwong Svenkeson Raiche Chartered Accountants as external auditors.
"Without question I believe it is unacceptable to be where we're at right now," said Hartney, referring to the "11th hour" timing of the meeting. He said it was certainly a negative to be talking about 2012 financial statements at the end of August 2013.
"Your financial statements, in order for them to be relevant and meaningful to the public and our stakeholders, need to be out by May at the latest," said the finance director. "That would be my personal objective and would hope that at some point the province of Saskatchewan even changes their due date to reflect other provinces across Canada, which is usually June or July."
The financial statement needs to be done earlier in the year, he said, and much closer to year end. It may mean hiring part time help or changing priorities, said Hartney.
"That's a co-ordinated effort between your finance department and your external audit firm," he said. "Our audit firm had started this work back in December and for a variety of reasons, internal and external, we're still here now at the end of August."
Hartney, who filled the several-months-vacant position with the City in March of 2012 said, "I'm here to take some responsibility for that, but I also want everyone to know that is an objective to be changed. It has to be changed for our city."
The former senior auditor with NAV Canada, the country's civil air navigation services provider, said he thinks it's important to talk about how "we got here" and what council expects from its finance director and from management.
"Like many parts of your business, the City of North Battleford, the expectations, the job function, the job description [of the finance department] has been growing without actually updating and understanding what we need to accomplish this," said Hartney. "So you haven't increased our staffing complement at the City, but we certainly have additional roles and responsibilities."
In all its categories, whether it is corporate finance or any other part of the City's business, the entire city has been growing, he said.
The current structure of the finance department is in the tradition of the finance director's main function being the bookkeeper. But does council see it as greater than that, he asked.
"If you want other things to be accomplished, as well, you may want to think about how that structure, the organization and your corporate finance department operates."
Hartney was referring to several never-done-before initiatives of the finance department and management during the past year that have impacted the city's financial situation in a positive way.
"These are value for money items," he said.
Hartney said he intentionally pushed himself to expand the role of finance director, from focusing solely on the audited statements linking to the budget to initiatives that are cash benefits to the city.
For example, he said in negotiations between himself and the province, he was able to get a $27,000 refund on PST that SaskPower inappropriately charged the city. In the past, that wouldn't have been looked into.
"There is no reason for me to go back and look at those things, but we have done, to make sure we are getting the best bang for our buck for the residents of the city of North Battleford," said Hartney.
In another set of negotiations with the province over PST, he was able to reduce the total bill by $110,000.
They were also able to reduce the city's payment to the RCMP by $50,000. Hartney said the RCMP couldn't find a reference where another municipality had ever got such a refund. Past practice was when a bill like that came in, the City just paid it. But, he said, it shouldn't be paid if it isn't the right amount, and that needs to be investigated.
He also said thanks to the City Manager Jim Toye, through whose discussions with BMO, the city was also able to make a $23,000 improvement to its long-term debt picture.
Also, an extra allocation of $1.2 million for the CUPlex was due to a negotiation with the province to get them to a better understanding of the significant impact of the project, said Hartney.
His list also included savings of $80,000 and another possible $300,000 in by issuing RFPs (request for proposal) for auditing services and for natural gas supply.
"No right or wrong," he said, "but these types of functions weren't being done."
He said the City has seen some important overall value in its finance department, which has two other staff beside himself, using their expertise on some of these initiatives.
He told councillors, "The City has, as of today, three accountants on payroll, and you are paying less in salaries than you allocated in your 2010 budget, when you had one accountant."
Hartney said, given the fact that his end date was just one week away, he wanted council to hear about these things and to think about challenging their staff in the coming year, deciding on their main priorities and clearly setting those deadlines, objective and outlines for their finance department.
Despite his words of concern, Hartney also had a number of positives from the past year to point out. In terms of construction, he said, there were some "really amazing, amazing things for the City of North Battleford."
He also pointed to the highest ever annual revenue of just over $33 million, offset by operating expenses of $30 million. Both sides of the balance sheet are growing, he said, although he did say the expense side is outpacing the revenue side, and that council would have to take that into account in future decision-making.
The cash position of the City is very strong, he said, and, as of year-end, very reasonable in terms of the City's obligations.
The City has seen a $150 million increase in capital assets, Hartney also said.
"That's just phenomenal."
The increase is primarily due to the CUPlex, he said.
It's important for public to know they have new assets worth $56 million that really cost the City only $24 million in debt.
"That's a great equation," he said, describing the CUPlex as an excellent asset investment for the community.
He also referred to the City's use of reserves.
"The City and council has made intentional choices to use up some of your cash reserves for projects," he said. "That's excellent, that's fantastic. What that shows the community is that the City is not sitting idle with lots of cash, but have chosen to do things with it and make sure the community is growing and there's a return for the taxpayers."
However, he did say the policy on reserves on outdated. It hasn't been changed since 2006. Budget time would be a good time to enter into that conversation, he said.
He also pointed out the City has $1 million in accounts receivable for uncollected taxes.
"The finance department has taken action to try to address this," said Hartney, having sent out letters to 30 properties that account for almost $500,000 of the total owing, who "just refuse to pay taxes." Some date back to 2003, he said.
Hartney will be leaving North Battleford to accept a position in municipal government in Huntsville, Ont. His new role will be executive director of public infrastructure in that community, with broad managerial responsibilities for public works, parks and recreation and town-owned properties.
Gas Supplier Approved
At its special meeting Friday, in addition to receiving the 2012 financial statements, North Battleford City Council made a motion to enter into a one year contract with its current natural gas supplier, for savings worth $60,000 or more.
Presenting the recommendation to accept the bid by Connect Energy, Finance Director Matthew Hartney said the City has never had an RFP (request for proposal) for natural gas service before.
"My understanding previously this has been managed by the director of finance in his office," said Hartney, adding, "Like the external audit and like other service providers for your government, I continue to put forward and lead RFP initiatives, which is a more transparent process to buy services or goods for the City. "
The City has two bidders, Connect Energy and Twin Eagles. Over five years, Connect Energy would have been more expensive than Twin Eagles, however Hartley recommended a one-year contract due to a growing movement among Saskatchewan municipalities to move to RFPs for that kind of service.
He said Prince Albert and Humboldt have already asked North Battleford if they would like to join together on a much larger RFP, with a larger volume, which could result in an even lower rate. Other city governments may be interested as well, he said.
He suggested signing the one-year contract now, then working with those other governments over the next six to eight months, and perhaps signing a more long term agreement at a later date.
Gas prices are low right now and there might be some long-term benefits to be locked in, he said.
He also said they may get more bids, because most suppliers in Saskatchewan are not used to municipalities calling for RFPs.
"This is new in Saskatchewan," said Hartney.
Suppliers have said they usually just negotiate with an employee, like the director of finance, he said. There are two more suppliers who would like to take part in a bid next time, he added.
Of course, he said, SaskEnergy is still an option, but this will be the first time they have received rates lower than SaskEnergy's commodity rate.
Unfortunately, he said, the City has been paying three times that commodity rate to SaskEnergy because of the long-term contract the former director entered into.
"He hedged his bets, but lost over the long run," said Hartney.
