Federal Mineral Lease Special Service District
Meeting November 2, 2023 at 1:00 pm 
160 N Main Room 101, Manti, Utah 84642

Meeting called to order by Chair Troy Shelley at 1:02 pm

MEMBERS IN ATTENDANCE:  Chair Troy Shelley, Commissioner Reed Hatch, James Ericksen, Stacy Lyon, Brian Nielson, and Lisa Roberts 

ADDING A NEW MEMBER/ALTERNATE:

Commissioner Reed Hatch advised that Brian Nielson does need to be sworn in as a board member of SSD 3 by Linda Christiansen, Sanpete County Clerk. Chair Troy Shelley advised that we return to this later in the meeting. 

PURCHASE OF A NEW COMPUTER:

Commissioner Reed Hatch stated he doesn’t believe that SSD 3 needs to purchase a new computer and that one will be donated to SSD 3. Chair Troy Shelley advised that we believe a computer will be donated and if that is not the case, we will address it at the next meeting.

ELECT A VICE CHAIR:

Chair Troy Shelley advised that we need to vote on a vice chair, but he proposed we move this to the end of the agenda unless there is an objection. There were no objections.

REVIEW THE RESOLUTION APPROVED BY THE COUNTY COMMISSION:

Chair Troy Shelley advised he was going to review the resolution from Kevin Daniels but we need to wait until after it is approved by the County Commission. Commissioner Reed Hatch advised he was hoping that one of the other commissioners would say okay and then they could ratify it next Tuesday, but he hasn’t heard back from the other commissioners. He will have them put it on the agenda so they can either do it as a ratification or just address it then. Chair Troy Shelley requested Commissioner Reed Hatch advise everyone what that resolution would entail and how it applies to the SSD. Commissioner Reed Hatch advised there was some confusion on the February of 09 and May of 09. May of 09 took the paragraph out on the ability to tax, addressed the board members, the ability to pay them up to $5,000, per diem, etc. It’s taking out the paragraphs that May had superseded February.  Kevin was working on February like it was the gospel and didn’t know about May. So, it’s taking the stuff out that he had already put together that he submitted to us in May and changing the paragraphs. You can find that in there as far as doesn’t have the right to tax, which he has taken out and addressing the board members who can be paid up to $5,000. There is per diem. It basically says that anything that needs to be paid needs to be approved by the board.

REVIEW THE AUP/INCORPORATE LANGUAGE TO CORRECT ISSUES:

Chair Troy Shelley requested to move into answering the AUP questions. He advised the auditor, which is Smuin something out of Price, came up with about 23 action items and some of them can have the same answers. It’s like policy and procedure type of things. Commissioner Reed Hatch advised the state turned the audit over to a group out of Price. Discussion ensued about the absence of policies and procedures with associated controls. Commissioner Reed Hatch advised that we need to have a billing type document. It needs to be quite expansive and really define what we are paying for.  

Chair Troy Shelley inquired if we should have a policies and procedures manual or if that is something that goes into the operating agreement under policies and procedures.  Brian Nielson advised there are a number of ways this can be done. We can do an MOU and if the number of policies and procedures we needed to operate effectively and function appropriately was short enough to incorporate into that, then that would be appropriate. If we needed a little bit more of a manual with a list of policies and procedures, we could separate those out to make them clean and the MOU with the county would be very concise. Example: This is what we agree to do for the county as the SSD created under the resolution adopted by the commission. There are some benefits and drawbacks. If you put it in the MOU, it’s pretty static until you change that document. If you separate them, you can make changes to the policies and procedures as a board very easily. On an MOU, if we are in an agreement with the county, that is adopted by both our board and the county commission. So that would be more difficult to change, where a policy and procedure manual owned by this group could be adapted more easily because it is owned by this group.  

Stacy Lyon advised there is a requirement that they have to do called a fraud risk assessment. It talks about different policies and procedures they are required to have.  The state auditor’s office has policies and procedures that we can edit to fit us that they already have typed up. They are ethical behavior policy, conflict of interest policy, credit card policy which we don’t have a credit card but we still have the policy so we can get the points for it, fraud reporting, cash receipting, and a purchasing policy. She already has them written and typed up for the SSD 3 but, she hasn’t had the opportunity to get them presented and approved. Chair Troy Shelley requested that those be sent out to everyone and feels we should reference in our agreement that there is a policies and procedures manual.  

Commissioner Reed Hatch advised anything that is to be paid must be itemized with better explanations. They need to be clear to a third party who doesn’t know the story.  Stacy Lyon advised that she talked to someone who is doing their audit and they suggested invoicing the district for wages quarterly if not monthly to create a clearer picture and put a ledger behind it. Chair Troy Shelley inquired how the money is distributed. Stacy Lyon advised that SSD 1 money is distributed by her. 

Troy Shelley advised that right now the Federal Mineral Lease Special Service District is an entity of its own and this board controls what happens to all of the money. The County Commission doesn't determine what happens to this money, however the County Commission can adjust the resolution to say we are going to limit it to this, and then our board is subject to what the County Commission does. The County Commission can also come in and say we want the State of Utah to fund the SSD 1 __ percentage of this money, and we also want __ percentage of Federal Lease money to go to a jail so we are going to create a fund. He is not sure if it has to be a Special Service District but there is an entity. Then the County Commissioners can say we want to take a certain percentage like 30% or 60 % of this money and say where that money goes. The County Commissioners can dictate where that money is split, but if they don’t allocate that money then it falls to the Federal Mineral Lease Special Service District board, and this board dictates how that money is spent based on the parameters of the resolution. 

Stacy Lyon suggested the commissioners address this based on a lease so the Skyline Mine is SSD 3 and the rest goes to SSD 1. Commissioner Reed Hatch advised he was hoping that the state at the state level would send Skyline Mine to SSD 3 only and then we would only have to deal with Skyline Mine and the rest could go to SSD 1.  Then you can work within the SSD 3 how that money is allocated. Chair Troy Shelley believes it could be possible. He believes he saw something about this when Spencer Cox was a commissioner, and he signed an affidavit that there was only one account that all Federal Lease money goes into. If that is the case, the County Commissioners can say to the state we want all of this money from Wolverine to go here. He advised that is his understanding.  Stacy Lyon requested clarification on the SSD 1 monies.  She advised SSD 1 doesn't receive any of the reports because the state only sends those lease reports to one person and currently it is her. She is wondering how she would create an invoice. Further discussion ensued about invoicing. Chair Troy Shelley advised that his understanding is that the state puts all the money into the account, then they immediately pull some of it back out and put it into another account. Stacy Lyon advised that Carbon County doesn't touch our account. They do it on the state side. She advised that once a month when she gets the mineral lease reports the state pulls it. Linda Ballard with Carbon County SSD receives a report.  Linda Ballard and Stacy both do a calculation then Linda Ballard sends Stacy her report.  If their numbers match then they tell the State this is what the distribution is and the State does that on their side.  Carbon County is not frozen and they are still getting their money on the distribution side.  It used to come to our account and we had to transfer it back out. Chair Troy Shelley inquired if Stacy Lyon saw that Carbon County's calculations were wrong. He said they are calculating 40% of what the state keeps not 40% of what gets distributed out.  Stacy Lyon advised when she gets the mineral lease report that they take the total mineral lease from Skyline Mine and multiply it by an average of 36.3 % or 36.6%.  She advised that we can only ever receive 40% of the lease.  

Commissioner Reed Hatch requested a pause in this discussion to have Linda Christiansen swear in Brian Nielson as a board member of SSD 3. 

Linda Christiansen, Sanpete County Clerk, performed the official swearing in of Brian Nielson as an SSD 3 board member.

Stacy Lyon advised that her deposits don’t align with how Chair Troy Shelley believes the percentages work. Stacy Lyon goes over one of the reports that she receives and a bank statement. Further discussion ensues between them on this matter. Chair Troy Shelley questions why the state is keeping as much as they are, and he believes we should research about that 40% and why the state keeps as much as they do.

#1 Absence of policies and procedures with associated controls.

SSD Action: All invoices should have itemization. Should include total and current balances minus current expenses.

#2 Improper allocation and documentation of Federal Mineral Lease Money.

SSD Action: Working to allocate on a state level. Until then, all invoices should have itemization. Should include total and current balances minus current expenses.

#3 Lack of itemized invoicing and standardized process for payment to vendors and entities.

SSD Answer: Provide invoices for all money moved. All invoices should have itemization. Should include total and current balances minus current expenses. All invoices will be detailed as to the allocation of each dollar. The invoice shall show any balance remaining should there be a balance remaining after the invoice is paid. The Treasurer shall prepare a check to match the invoice and the check shall be signed by authorized signers of the governing board once expenditures are approved by the board.

Commissioner Reed Hatch advised the auditors said that the person writing the checks should not be the one signing the checks. Brian Nielson advised we should be using standard accounting practices, and no one person should have the sole ability to both receive the funds and dispense the funds. Stacy Lyon feels that the chair or someone assigned on the board should review the bank statements to see the canceled checks that are going through the bank account. Brian Nielson advised we can establish a clerk and treasurer so one would create, and one would verify. Commissioner Reed Hatch advised in the audit, they keep calling it a secretary, but the SSD 3 has a clerk not a secretary. He advised if we got the clerk and treasurer on the account, then they could sign the checks once they were approved by the board. Brian Nielson advised doing that would comply with GAAP.

#5 County Overreach and Violation of Auditor Alert 2016-4.

SSD Action: The board will adhere to the resolution of Sanpete County and act autonomous of the County Commissioners.  

#6 Non-Compliance with Agreed Upon Procedure #1.  Non-compliance with Utah State Auditors Large financial survey Submission and GAAP in Financial Reporting.

SSD Action: Invoices and payments will be made according to standard accounting practices.

#7 Non-compliance with Agreed Upon Procedure, Procedure #2-4. Inability to complete procedures number 2 through 4 due to lack of compliance with Utah State Auditors Procedure for Large Financial Survey Submission.

SSD Action: SSD 3 will comply with this based on the Policy and Procedures manual provided to entities by the State of Utah.

Chair Troy Shelley wanted to clarify that there is both a Federal Mineral Lease Special Service District and SSD 3. He proposed to drop SSD 3 and for us to now go by Federal Mineral Lease Special Service District, because that is how the state identifies us. Brian Nielson advised that #4 in revised resolution lists us as Federal Mineral Lease Special Service District. Chair Troy Shelley will contact the state and have them move any minutes from SSD 3 over to Federal Mineral Lease Special Service District then delete SSD 3. 

#8 Non-compliance with Agreed Upon Procedure, Procedure #5.  Non-compliance with Utah State Auditors Reporting Requirement and Procedures.

SSD Answer: The board will ensure that the reporting requirements are completed by November 10, 2023.

#9 Non-compliance with Agreed Upon Procedure, Procedure #6. GAAP and Inadequate Financial Reporting Procedures.

SSD Action: The board has adopted a procedure to ensure compliance.

Stacy Lyon advised the state auditor’s office recommended putting everything on a shared drive that the board has access to. She will always give a paper copy to the clerk to keep with the minutes. The shared drive for board members will be view only access and should not be shared with the public. The public would need to file a GRAMA records request to obtain any of this information.

#10 Non-compliance with Agreed Upon Procedure, Procedure #7b. Review of Disbursements.

SSD Action: The policy and procedures adopted by the board will ensure compliance with this recommendation. 

#11 Non-compliance with Agreed Upon Procedure, Procedure #7c. Absence of Disbursement Authorization Policies.

SSD Action: The board will follow the policies and procedures provided by the State of Utah and will edit as needed to fit the specific needs of the SSD.

#12 Non-compliance with Agreed Upon Procedure, Procedure #7d. Lack of adopted purchasing policy.

SSD Action: The policy and procedures adopted by the board will ensure compliance with this recommendation.

#13 Non-compliance with Agreed Upon Procedure, Procedure #7e. Non-compliance with GAAP and State Policies.

SSD Action: The board will follow the policies and procedures provided by the State of Utah and will edit as needed to fit the specific needs of the SSD.

#14 Non-compliance with Agreed Upon Procedure, Procedure #10. Absence of Monthly Financials and Bank Reconciliation.

SSD Action: The board will adopt the accounting practices and ensure compliance.

#15 Non-compliance with Agreed Upon Procedure, Procedure #11. Lack of Segregation of Duties and Limited Board Member Access to Documentation.

SSD Action: The board has adopted policy and procedures to ensure compliance.  We will comply with the “Little Manual for Special Service Districts.”

#16 Non-compliance with Agreed Upon Procedure, Procedure #13a. Absence of Meeting Notices and Agendas on the Utah Public Notice Website.

SSD Action: The board will ensure all notices and minutes are posted on the Federal Mineral Special Service District tab on the State Public Notice Website.

#17 Non-compliance with Agreed Upon Procedure, Procedure #13 b-e.  Non-compliance with Utah Open and Public Meetings Act Procedures by Special Service District. 

SSD Action: The board will ensure all notices and minutes are posted on the Federal Mineral Lease Special Service District tab on the State Public Notice Website. The board will comply with OPMA.

#18 Non-compliance with Agreed Upon Procedure, Procedure #14. Absence of Prepared Budget for 2019.

SSD Action: The board will ensure that a budget will be prepared and posted prior to the budget hearing. 

#19 Non-compliance with Agreed Upon Procedure, Procedure #15. Absence of Required 7-day notice for Budget Adoption Hearing. 

SSD Action: All notices will be posted according to State Statute.

#20 Non-compliance with Agreed Upon Procedure, Procedure #16. Absence of Budget and Expenditure Control. 

SSD Action: The board will review all expenditures and authorized procedure for payments.

#21 Non-compliance with Agreed Upon Procedure, Procedure #18. Impact of Absence of an Adopted Budget on a Special and Local Service District’s Unrestricted General Fund Balance.

SSD Action: This will be addressed during the annual budget hearings.

#22 Non-compliance with Agreed Upon Procedure, Procedure #19. The consequences of Incomplete Training and Absence of a Designated Records Officer in a District. 

SSD Action: The clerk or designee will keep track of all training certificates.

#23 Non-compliance with Agreed Upon Procedure, Procedure #20. The implication of Absence of Approved Policies and Uniform Fee Structure for GRAMA requests in the district.

SSD Action: The board will establish a policy and procedure for GRAMA requests.

#24 Non-compliance with Agreed Upon Procedure, Procedure #21. The Risk of Absence of a Treasurer’s Bond or Indemnity Pool Insurance in an Entity.

SSD Action: The board will comply with both a Treasurer’s Bond and General Liability or Indemnity policy.

Chair Troy Shelley requested to entertain a motion to accept our AUP responses.  Commissioner Reed Hatch made a motion to accept AUP responses. Brian Nielson seconded the motion. All were in favor. None were opposed. Motion passed.   

Chair Troy Shelley will email audit answers to the board today and will wait until Friday for a response from board members. If there are no changes, he will email it to the auditor tomorrow.

RE-ADDRESS VOTE ON VICE CHAIR

Chair Troy Shelley asked for nominations for vice chair. Commissioner Reed Hatch nominated Brian Nielson for vice chair. James Ericksen seconded the motion. None were opposed. Brian Nielson elected as Vice Chair.

Chair Troy Shelley will get a draft of policies/procedures and get together with Brian Nielson to go over them before the next meeting. 

AGENDA ITEMS FOR NEXT MEETING

Hire a clerk and discuss pay. Approve minutes for previous meeting.  

Commissioner Reed Hatch made a motion to adjourn the meeting. Brian Nielson seconded the motion.  

Meeting adjourned 3:36 pm