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2009-04-01 Finance Committee MinutesSPECIAL MEETING - FINANCE COMMITTEE CITY OF SAINT JOHN MINUTES WEDNESDAY, APRIL 1, 2009 - 5:30 p.m. Present: Deputy Mayor Chase, Chair Councillor Court Councillor Killen Councillor Mott Councillor Sullivan Terry Totten Andrew Beckett Stephanie Rackley -Roach Greg Yeomans Cathy Graham Hilary Nguyen Also present — Barbara Mahaffy, Recording Secretary Mr. Totten opened the meeting, saying he noticed that the Finance Committee had Ernst & Young in to talk about value for money audits. He wanted to make sure he is in sync with where the Finance Committee is on this issue. He had a report on this issue ready to take to Common Council but wanted to meet with the Finance Committee first as he is not sure who is taking the lead on this issue. Mr. Totten would also like to build benchmarks against which to measure ourselves. Deputy Mayor Chase gave some background on this issue, for Mr. Totten's benefit. The Committee wanted to get a sense of what value for money audits were and decided to invite Ernst & Young to a meeting to present on this topic. Mr. Totten asked what the Finance Committee thought of the Ernst & Young presentation on value for money audits. Councillor Killen said he thought the Committee had decided to give Ernst & Young a break and go with someone else for this audit. Mr. Totten noted that the Committee has to decide what they are trying to get out of this and suggested that they not limit themselves to one firm. He stated that they should be looking to others who are specialized in this area. Councillor Killen asked if we are getting the best value for our money from department to department and how do we know we are getting the best value for the money we are paying. There was some discussion around the difference between value for money and performance audits, with the definition of these two audits being different for everyone. Mr. Totten reiterated that a review of the City of Saint John's services by a third party is a good idea. It will help us determine if we are getting good value for our money. The issue for Mr. Totten was — has Common Council discussed or come to any kind of conclusion on this issue? For example, if we wanted to review the Fire Department, we should develop a set of questions which would form the basis of the review, with the last questions being "if you could do anything to reduce costs, what would you do? What are the risks involved ?" He felt it was important to have this kind of a discussion. He also noted that the Fire Department services need to be looked at in 2009. There needs to be Terms of Reference and a scope document developed, the Terms of Reference recognizing issues of value. We need to let Common Council know that to reduce costs, here is what you have to do and move forward from there. Mr. Totten suggested that, if not the Fire Department, then we should look at one of the areas within Municipal Operations. Mr. Totten asked what role the Finance Committee sees for itself in this process, which is the purpose of this discussion. Mr. Beckett spoke on operational value. He stressed that we must define what "value" is and we must have a common sense of purpose. Corporate Planning has developed a framework of accountability (a copy of which is attached to these minutes). We need to look at services rather than departments and move to service -based budgets. Service -based budgets would show the cost for service, the performance cost and the level set for that service as well as what we are going to get for that service. Mr. Totten interjected that all municipalities report things differently and we are using the best practices from across the country to build our framework. Councillor Killen commented that we need to develop measures of service and need to find somewhere else that has something similar. Mr. Beckett responded that a service - based budget will give us the ability to measure services that we cannot do now. It will set up standards and rigour for each service. We also need to have a third party looking at things to determine if we are performing according to the accountability framework. This third party review should be done on a cyclical basis. Councillor Killen asked if it was possible to have a third party within City Hall to conduct this review and was told that this was not a good idea by both Mr. Totten and Mr. Beckett. Deputy Mayor Chase asked if a third party review should be done before this new plan is implemented. Mr. Totten responded that we need to look for an operational specialist to review operational issues. Common Council should be asking staff to review their departments to feel out where costs can be reduced. Mr. Yeomans noted that there is a need to understand the service gap in service expectations. Reducing costs is done from a value for money audit. Mr. Totten asked how he will know that Common Council is satisfied that he has chosen the right path and how do we not stray from the accountability framework year after year. He noted that we need to focus on one area and move on to another area each year. Mr. Yeomans asked what do we want at the end of the day. We need to clearly define what the outcome is. Mr. Yeomans noted that the Finance Committee needs to decide what their role is in the value for money audit process through Common Council and decide who leads it and makes the contacts. The Finance Committee needs to recommend how we proceed. Mr. Totten stated that if the Finance Committee wants to do this then they need to say so. He went back to the importance of developing a set of questions which would form the basis of any review, with the last question (the most important one) being "if you could do anything to reduce costs, what would you do? What are the risks involved ?" Are the taxpayers getting good value for this service? The answers to these questions would form the basis for the Terms of Reference that we would put out for a call for experts in whatever area you are looking at. We must be very specific in what we ask for. The Finance Committee would then go back to Common Council with a short list for a decision. Mr. Totten would work with the departments to put a positive spin on this process. Deputy Mayor Chase inquired if once the Outside Workers' contract expires in December 2010, can we revisit the issue of 293. Mr. Totten responded that the issue of 293 will be a big topic in the next negotiations. Councillor Killen wants to hear Mr. Totten's report on value for money audits in open session. There will be a motion put before Common Council to provide the direction that Mr. Totten is seeking. Mr. Beckett noted that there is a huge discrepancy between the citizens' expectations and what they pay for. We need to draw the line somewhere and we need to have the accountability framework in place. We should start with Fire Department, which is well - managed, but expensive. Deputy Mayor Chase asked about the assessment caps the province is considering. Mr. Totten responded that the province is to establish a benchmark for each City and will force Common Council to have an open vote on tax assessments. Mr. Totten requested that the Finance Committee become more involved. This involvement will start in May or June when the preliminary outlook goes to Common Council and the Finance Committee. Staff will talk to the Finance Committee concerning their expectations and then in the summer, staff will be putting the service - based budget together. This will go back to the Finance Committee in October for discussion. Mr. Yeomans will put pressure on the City Solicitor to finalize the Terms of Reference for the Finance Committee. Deputy Mayor Chase expressed his concern that we are using the value for money audit to validate our current practices. Mr. Totten reiterated the need to ask these questions of a third party. The meeting adjourned at 6:40 p.m.