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Monett council okays financial services contract

Wednesday, November 25, 2009

Monett City Council members made a variety of financial decisions at their regular monthly meeting last Friday.

A one-year contract was approved with former finance director Dorothy Pendergrass. Now living in Florida, Pendergrass has continued preparing city financial statements for auditing purposes.

Accordng to City Administrator Dennis Pyle, Pendergrass has effectively helped reduce the city's cost for an annual audit. With the work done by Pendergrass, the next city audit will cost $19,950 compared to the next lowest bid of $23,000.

The city has been paying Pendergrass $18,000 a year. Pyle had been negotiating a reduction in Pendergrass's service and reported she had agreed to continue her work for another year at $12,000.

Pyle said that the arrangement with Pendergrass was reached to provide a smooth transition between having a finance director and a city administrator. At the present time Pyle said the city could continue without having a full-time finance director.

With the completion of the annual audit, Pyle reported sufficient funds were available to place $289,950 into a reserve fund for the Electric Department. Utilities Superintendent Pete Rauch said that prior to 2006 the city had zeroed out the electric fund to pay for other city operations. The arrangement to put a percentage into a reserve provided money to pay for infrastructure improvements.

"We thought we needed something for emergencies," said Mayor Jim Orr, pointing out there is a $5 million cap on the electric reserve fund.

The amount set aside was the maximum under the formula established by the city council when the reserve was created, Pyle said.

Council members also passed a resolution to establish a reserve account for its general fund. Previously the general fund reserve had simply carried over in the balance from year to year. Eight to 10 percent of balance each year will now be set aside for general obligations, such as dealing with economic downturns or emergencies such as ice storms.

"We hope to have some money so we won't have to have cutbacks in emergencies," Orr said.

Pyle expected the city would have a potential reserve of $200,000 by the end of the calendar year. In January he would begin transferring $50,000 a month into the new reserve fund. Under the plan, the city would place up to $586,000 in the fund, depending on cash flow.

In an attempt to firm up fuel expenses for the coming year, Pyle reported the city had asked six companies for bids on the cost of providing gasoline for city vehicles. Pyle asked bidders to be able to supply gas 24 hours a day and for a card control system enabling the city to track the amount of gas bought for each vehicle as well as who made the purchase.

Murphy's and H&W Oil responded with proposals. While H&W could not fully provide the accounting system, the local company offered a two-cent-per-gallon discount. Murphy's offered a one-cent discount and a card that could be used out-of-town though discounts would not be available outside the city.

City employees saw significant advantages to being able to buy gas at any time. Police Sergeant Dennis Camp said there have been times officers have had to go back to the police station during the night and switch squad cars for a lack of gas. Street Superintendent Russ Balmas said one of the snow plows goes through a tank of gas every two hours. Currently local gas stations close at 11 p.m.

Pyle said fuel purchases always offer a possibility of theft. A tracking system that includes odometer readings would reduce such problems. Department heads commented positively on the option, and Lisa Crawford, assistant city clerk, said such a system would save several hours of work a month breaking out fuel charges.

Orr scheduled a work session to review the fuel proposals.

Bills for the month were approved totaling $1,457,383.07. Major bills included $920,158 to Empire District Electric for wholesale electricity, including a fuel adjustment surcharge of $150,611.60, one of the lowest of the year.

Other major bills included $24,1,50 to Arkansas Electric for poles and transformers, $21,116 to Utility Service for inspection of the water tower by Lowe's, Allgeier Martin and Associates for engineering for the waste treatment plant, $17,963 to Prosource One for road salt, $17,600 to Reavis Water Well for well repairs and $16,941 to HD Utility for new utility meters that can be read by radio.



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