HomeMy WebLinkAboutApproved Minutes - February 15, 2018Finance Committee Meeting Minutes February 15, 2018
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CITY OF NEWPORT BEACH FINANCE COMMITTEE FEBRUARY 15, 2018 MEETING MINUTES I. CALL MEETING TO ORDER
The meeting was called to order at 3:01 p.m. in the Crystal Cove Conference Room, Bay 2D, 100 Civic Center Drive, Newport Beach, California 92660.
II. ROLL CALL
PRESENT: Council Member Diane Dixon (Chair), Mayor Pro Tem Will O'Neill,
Committee Member William Collopy, Committee Member Joe Stapleton, and Committee Member Larry Tucker
ABSENT: Council Member Kevin Muldoon (excused) and Committee Member Patti
Gorczyca (excused)
STAFF PRESENT: City Manager Dave Kiff, Assistant City Manager Carol Jacobs, Finance Director/Treasurer Dan Matusiewicz, Deputy Director, Finance Steve
Montano, Budget Manager Susan Giangrande, Accounting Manager Rukshana Virany, Police Chief Jon Lewis, Fire Chief Chip Duncan, Public
Works Finance Administrative Manager Jamie Copeland, Deputy Director of Police Support Services Jonathon Stafford, Police Department IT
Coordinator Tom Encheff, Fire Assistant Chief Jeff Boyles and Julie Lang.
MEMBER OF THE PUBLIC: Jim Mosher
III. PUBLIC COMMENTS
Chair Dixon opened public comments.
Jim Mosher commented that the “open budget” portal is more useful than he thought it would be.
He expressed concerns that the data is only updated periodically and would like a better sense of what is happening with the budget in “real time.” He suggested the timeliness of the data is a higher
priority than absolute accuracy of the data provided. He inquired regarding the “checkbook” portal and noted he was not able to find a reference to it in previous Finance Committee minutes.
Staff responded that there is a four-week refresh interval for the “Open Budget” module but they
are simply behind schedule on the next update. There are outstanding matters regarding the “Open Checkbook” module, which involve discussions with the City Attorney and Human Resources
regarding the public disclosure of sensitive information on confidential agreements and invoicing.
Chair Dixon closed public comments.
IV. CONSENT CALENDAR
A. MINUTES OF OCTOBER 12, 2017
Recommended Action: Approve and file.
MOTION: O’Neill moved, and Collopy seconded, to approve the minutes. The motion carried
(5 – 0, Muldoon and Gorczyca absent).
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B. MINUTES OF JANUARY 11, 2018 Recommended Action:
Approve and file. MOTION: Collopy moved, and O’Neill seconded, to approve the minutes, as amended. The motion carried (5 – 0, Muldoon and Gorczyca absent).
V. CURRENT BUSINESS A. CREATE A SUBCOMMITTEE TO REVIEW COUNCIL FINANCE POLICIES Summary: The Finance Committee will consider the creation of a Finance Subcommittee to review Council
Finance policies, discuss membership, scope of work and timeline. Recommended Action:
Discuss and recommend the formation of Finance Policy Subcommittee and related details.
A request was made by Mayor Pro Tem O’Neill to create a subcommittee to review the Council Finance Policies (“F” Policies). Several have already been reviewed or are under review, and this
new subcommittee would review approximately fifteen (15) of the remaining policies.
Discussion ensued regarding the purpose and scope of the subcommittee.
Chair Dixon inquired whether the subcommittee would consist of Mayor Pro Tem O’Neill and Committee Members Stapleton and Tucker.
Mayor Pro Tem O’Neill stated that he would like the subcommittee to review approximately four (4)
of the policies at a time and submit recommendations or suggestions to the Finance Committee for their review and consideration prior to forwarding final recommendations to the City Council.
Chair Dixon inquired as to the timeline for the subcommittee, the appropriate levels of review for
the Finance Committee, and which suggestions should be forwarded to the City Council for policy decisions.
Mayor Pro Tem O’Neill stated that ultimately the suggestions and recommendations on the “F”
policies would be forwarded to the City Council for their final approval. It was likely the review process would not be completed prior to the City Council budget review for the upcoming year. He
envisions the subcommittee’s work would commence immediately and be completed around September 1, 2018.
Chair Dixon opened public comments. Noting there were no members of the public who elected to
speak on this item, Chair Dixon closed public comments.
MOTION: O’Neill moved, and Stapleton seconded, to all form a subcommittee consisting of Mayor Pro Tem O’Neill and Committee Members Stapleton and Tucker to review the City Council Finance
policies and return with recommendations for the Finance Committee’s review in September 2018. The motion carried (5 – 0, Muldoon and Gorczyca absent).
B. RISK-BASED RESERVE SUBCOMMITTEE UPDATE
Summary: Discuss Finance Committee progress since the last meeting.
Recommended Action: Receive and file.
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Finance Director Matusiewicz stated the intent of this item was to give a status update on the
project. He mentioned Committee Members Collopy and Gorczyca participated in a conference call with staff and the consultant from GFOA to review the first drafts of study reports.
These reports primarily dealt with “extreme” events to get a sense of how to utilize the study
information. For example, in the earthquake example that was provided, the subcommittee members were presented with information that illustrated the level of reserves required to have
certain confidence levels the financial impacts of the extreme event could be met and addressed. The take-away from the meeting was there should be some level of reserves where
the City can affordably and efficiently address extreme events with cash reserves and then maintain insurance to address a certain range of financial impacts. At the upper limit, in the
event of extreme events, such as a 9.0 earthquake, it may be best to issue debt to cover costs.
Finance Director, Matusiewicz described various strategies that lead to an entity’s financial flexibility. A chart was displayed that showed the how cash reserves, insurance and debt are
interrelated and could be used to cover unexpected events. Using the illustration, as an example, Finance Director Matusiewicz described that it may be cost effective to use cash
reserves to get to the 75% confidence level that a loss could be covered but it would likely be more cost effective to achieve the remaining level of coverage with a combination of insurance
and potential debt issuance to achieve the desired level of confidence that sufficient funds would be available to pay for the event.
Committee Member Collopy described how these instruments could be used in conjunction
with cash reserves to address extreme events including an indemnity policy tied to the damages for a specific event, and a parametric policy, which would provide payout tied to a
certain threshold, such as a 9.0 earthquake. The consultant is spending a considerable amount of time on determining the types of losses that could be adequately covered with reserves.
Examples were given such as if a certain number of cars where not sold in a particular year, the parametric policy would provide cash upon reaching the threshold event. In summary, he
stated the purpose of this study was to provide staff with a tool that has higher fidelity whether the reserves are adequate to cover the amount of losses that could be expected given the
uncertainty of extreme events.
Committee Member Collopy commented staff is reviewing the consultant’s information and discussing the merits of a parametric and/or indemnity instruments, and whether the current
reserve amounts are adequate, inadequate, or too rich.
Discussion ensued regarding the recommendations that would be provided to the Finance Committee from staff and the consultant. Staff responded that a recommendation would be
made by staff to the Finance Committee, based upon the consultant’s study, regarding the various options available and the degree of confidence the City would be willing to accept, to
address risks and extreme events. There will be a “substance-based” analysis provided by the consultant.
Finance Director, Matusiewicz stated the staff report to the Finance Committee, as a result of
this study, would provide options to address risk and it would ultimately be the City Council’s decision to determine what level of coverage/risk the City would be willing to accept. He
mentioned various types of risks cities face including promises made to developers and pension obligations. He summarized that addressing risk typically involves an interrelationship
among cash reserves, debt and insurance.
Chair Dixon inquired as to the feasibility of “preapproval” of debt and whether that has been an approach taken by other municipalities.
KNN Municipal Advisor, Mark Young commented that the GFOA consultant is using a
“worksheet analysis” to identify risks and that process is commendable. He has used this
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approach for other municipalities and the resulting transparency into the process is worth the
time for the analysis. There are seven (7) worksheets in the analysis and one is related to liquidity, one factor used to assess an agency’s credit worthiness and ability to obtain and afford
additional financing quickly. He noted, in general, it is not common to have a particular debt facility “prenegotiated,” and it is best to evaluated on a case-by-case basis. He mentioned that
if an agency has very little debt on balance sheets and shows a surplus every year, a Line of Credit (LOC) would relatively easy to obtain. Most AAA credit-rated cities have very little
General Fund debt and are able to obtain LOC’s
Committee Member Tucker expressed skepticism that a LOC could be negotiated with terms that would bail the City out no matter what happened. A lender would not likely be willing to
accept such terms.
Committee Member Collopy expressed it was a novel idea and worth exploring but conceded that his perspective was from that of a borrower not a lender.
KNN Municipal Advisor provided an example from the City of Poway, which experience large
fires quite frequently. They have a history of major fires; however, they know they will likely need to significantly draw down their reserves quickly because reimbursement by FEMA would
take at least 18-24 months. Poway spent a significant amount of time determining how much cash reserves they should have on hand to deal with the liquidity issue even though they would
expect to be eventually reimbursed by FEMA.
Committee Member Tucker expressed skepticism of study and suggested it is possible the results of the study could simply affirm the City’s current reserve policies are adequate but
encouraged staff and Finance Committee “stay the course,” and monitor the study as it progresses.
Discussion ensued regarding whether the adequacy of cash liquidity to respond quickly to risk
events.
Chair Dixon inquired if there were any constraints on the City’s ability to issue debt in response to an extreme event would it alter City’s strategy. Staff noted there is an interrelationship
between cash reserves, access to debt and insurance. Constraints on debt may impact the level of required reserves and or insurance.
Chair Dixon opened public comments. Noting there were no members of the public who elected
to speak on this item, Chair Dixon closed public comments.
Staff noted that the consultant anticipated the final report to be issued in June; however, they have already been providing interim reports and anticipate an earlier final report by April or
May.
Finance Director Matusiewicz stated the Finance Committee will be given a report of the findings for their consideration. Ultimately, the Finance Committee’s recommendations would
be forwarded to the City Council for final review and consideration.
Committee Member Collopy suggested staff not report every component of the study as it comes in. He suggested the Subcommittee’s involvement should be a “top down” approach
versus “bottom up” and that staff only involve the Subcommittee after major sections have been completed. He reaffirmed that the overarching goal is to ensure the City is maintaining
reasonable reserves to mitigate risks.
There was no further discussion on this item.
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C. DEBT POLICY-REVIEW SUBCOMMITTEE UPDATE Summary:
Subcommittee will discuss revisions of Debt Policy and discuss next steps. Recommended Action:
Recommendation to the City Council to revise the Debt Policy as indicated.
Chair Dixon announced the Committee received a red-line version of the draft revised debt policy.
Mayor Pro Tem O’Neill acknowledged Mr. Young and Committee Member Tucker’s efforts to
improve the policy. He mentioned the Council policies, as established, do not bind the Council to particular courses of action, and the policy can be waived anytime with four (4) votes. He
noted the differences between Council policies and Charter provisions, which can only be changed by a vote of Newport Beach residents. He noted that in the “after-action” report issued
after the Civic Center COP debt was issued, there was mention of the City’s lack of a comprehensive debt policy. Subsequently, a debt policy was created. The changes to the debt
policy suggested as part of the staff report are substantive, rearrange the document for clarity and understanding but do not represent massive changes.
It was discussed that from one perspective, one of the goals of the debt policy is to maintain
good standing with credit rating agencies, which look at the City’s ability to use debt. Language was also included in the draft address new California laws. Failure to adopt these changes
might prevent some of the new assessment districts from moving forward.
Comments were made regarding including specific language, identified in Section F9 of the draft debt policy, which would ensure a City Council would have to affirmatively vote on a
authorizing bond resolution to utilize call options greater than 10 years or a “make whole” call provision if circumstances determine those call provisions would benefit the City. The staff
report would also have to affirmatively identify the type of call provisions being presented to the City Council.
Mayor Pro Tem O’Neill stated that, for the record, Committee Member Gorczyca expressed
objections regarding the utilization of any alternative debt instruments, as a “well-run” City should not include those in their debt policies and procedures. He noted she referenced the
County of Orange debt policy prohibits alternative debt instruments. The City of Mission Viejo also has a similar provision. He noted there was merit to this philosophy and noted that within
the draft policy in Section G. This would let staff and residents know the City does not anticipate utilizing these instruments. It is also important to the residents to keep the City’s AAA bond
rating and the debt policy should not create a circumstance which would not reflect positively on the City’s credit rating.
Chair Dixon affirmed removing the provisions would might compromise the City’s favorable
debt rating.
Mayor Pro Tem O’Neill stated the reference to the AAA bond rating was included inadvertently and the draft redline policy is not in its final format. It was noted that subsequent to the creation
of the debt policy, the credit rating agencies are currently including climate change and sea level rises as determinants of an agency’s credit rating. The final debt policy should include
wording which would set the City up to have its credit rating downgraded.
Mr. Young affirmed that he heard from credit rating agencies that policy decisions should be driven by their potential effects on the agency’s credit rating.
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Chair Dixon noted the Newport Beach residents are very proprietary about the City’s AAA bond rating. She inquired whether there were other options that could be considered to protect the
City’s credit worthiness.
Mr. Young stated the City’s AAA bond rating is an impressive economic development tool. It is not locked into policy, as down the road, there may be community needs that may be greater
than the value of the AAA rating.
Mr. Young stated that by not acknowledging there are other potential debt management tools available to the City there is a potential the policy would not be a strong instrument.
Committee Member Collopy inquired as to the triggers that would invite the City to consider
alternative debt tools.
Mayor Pro Tem O’Neill affirmed that all debt decision must come back to the City Council, including the utilization of alternative debt instruments. The use of alternative debt instruments
must also require the City to utilize an independent financial advisor. An independent financial advisor must also be utilized when the City utilizes other forms of debt.
Mr. Young stated all debt has to come back to the Council; alternative debt instrument must
include the use of an independent financial advisor, not just staff. The utilization debt must also include the use of an independent financial advisor.
Discussion ensued regarding the circumstances by which the City would have to utilize the
services of an independent financial advisor. It was clarified that only debt considered a security pursuant to SEC and MRSB regulations would require the use of an independent financial
advisor.
Discussion further ensued regarding the circumstances and procedures that may be followed if the City determines to affirmatively recommend provisions that are in conflict with proposed
debt policy section F9. This would make any deviation fully transparent to the public. It was noted that the decision regarding the Civic Center COP may not have changed, even if this
provision was in place, however, the entire process would have been more fully transparent to the public.
Chair Dixon inquired if the debt policy would have an impact on the City’s credit rating and
requested clarification of any Charter constraints.
Committee Member Tucker stated the debt policy should remain “apolitical,” The City Council makes policy decisions and they may consider the political ramifications of particular decisions.
However, it would not be appropriate for the Finance Committee to be making those considerations at this point.
Chair Dixon inquired as to the factors that could potentially impact the City’s credit rating.
Committee Member Tucker stated that the draft policy will now include edits and clarification
of terms that will provide deeper understanding of the City’s debt policy. He suggested further editing to provide further clarification, including consistency of defined terms.
Discussion ensued regarding the elements and clarifications that should be included in the draft
policy before it returns to the Finance Committee.
Finance Director Matusiewicz suggested an edit on the bottom of Page 7 of the draft policy, to include the word, “section.”
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Chair Dixon affirmed staff would provide “clean up” language in the proposed policy and it
would be forwarded to the City Council for their consideration with no further review by the Finance Committee.
Chair Dixon opened public comments.
Jim Mosher expressed concerns with “malleable” policies, which can be waived at the spur of
the moment. Certain Council policies adopted by resolution included clauses which state provisions cannot be waived by the City Council. Those circumstances should be affirmatively
noticed on the agenda when the City Council is planning to waive a provision. He concurred with Committee Member Collopy’s suggestions to formalize and provide uniformity of
definitions in the document. He noted he had “structural” concerns with the document, including on page 9, how the fixed rate debt would be structured. He noted it was stated previously a
preference to pay off debt very rapidly, including a strong preference and policy for “double” debt payment. It seems contradictory to state in the policy that we are not going to do that. He
also expressed confusion as to the provisions in Item F9 within the policy. He suggested consistency throughout the document.
Chair Dixon closed public comments.
Committee Member Tucker noted that several of the cleanup edits he had previously suggested
did not get into the latest draft of the Debt Policy. Since most of them were matters of form or word choices they should be looked at again by staff. He also noted that when a document is
reorganized with extensive edits, it is important to re-read the document to ensure the defining of terms is still in the right place, as well as paragraph references being correct. He also
suggested that the City Attorney’s Office proofread the entire document for clarity and consistency. It is important that the City’s well thought out Debt Policy not be diminished by
defined terms being out of place, bad paragraph references or not quite right word choices. MOTION: O’Neill moved, and Collopy seconded, to approve the revised debt management
policy, as amended and edited by the Committee Members and staff. The motion carried (5 – 0, Muldoon and Gorczyca absent).
D. REVIEW OF POLICE DEPARTMENT BUDGET TO ACTUAL RESULTS
Summary: In preparation of the 2018-2019 Budget, staff will review budget assumptions against actual
results for Fiscal Year 2016-2017 and pertinent updates concerning the Fiscal Year 2017-2018 to date.
Recommended Action: Receive and file.
Chief Jon Lewis and Deputy Director of Police Support Services Jonathan Stafford,
representing the Police Department made a staff report, which included display of a PowerPoint Presentation.
Chief Lewis stated he would provide an overview of the Police Department Fiscal Year 2017
budget, accountability measures, and management procedures for the funds that have been entrusted for the Department’s operations. Overall, the Department features a $57 million dollar
budget, of which 86% is spent on personnel costs. There are 146 sworn police officer positions, 77 civilian positions, various part-timers and volunteers who augment services. The materials
and operations portion of the budget is $8 million and there is a smaller portion, $3.2 million, dedicated to capital costs.
Chief Lewis spoke regarding recent budget savings reflected in the budget due to retirement
of long-tenured employees and the current number of vacancies being carried in the Department. Vacancies are due to retirements and attrition.
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Chair Dixon inquired if the Department is aggressively managing overtime costs.
Chief Lewis stated there is a correlation between minimum staffing levels and utilization of
overtime. The majority of overtime usage is to fill shortages in minimum staffing levels. He referred to the “table of organization” and the Department’s ability to over hire in the event of
an anticipated retirement. The Department does stay within its budgeted positions.
He further mentioned that overtime costs are often offset by salary savings, realized through the carrying of vacancies. Eighty-five percent (85%) of Department overtime costs are related
to minimum staffing requirements, primarily with field personnel. Back-of-house functions, such as support services, do not require minimum staffing levels. Chief Lewis provided examples
regarding overtime costs relative to whether it is a longer tenured versus shorter tenured employee providing coverage. He noted the Department utilizes an overtime spreadsheet
matrix and it has been an effective tool in managing overtime costs.
It was reported the Police Department receives grant funding for the provision of certain services, such as traffic safety. In that case, the funds are used to support services such as
DUI checkpoints. The federal grant is used to specifically fund overtime for traffic and safety enforcement; however, it cannot be used to support minimum staffing requirements. There are
also other programs, such as ABC establishment accountability efforts, which provide revenue offsets.
Deputy Director of Police Support Services Stafford provided detail on the Department’s
personnel budget and provided examples from the City’s new open budget portal, as well as other technology tools. He utilized the numbers from those instruments so that any member of
the public listening to the presentation could “match up” the numbers as well.
Finance Director Matusiewicz commented that last year there was a deviation between budget and actual. CalPERS used to collect the payment for Unfunded Accrued Liability (UAL). Staff
was able to get that changed starting in 2018.
Mayor Pro Tem O’Neill stated it is important for the Finance Committee to continue to take “deep dives” into Departmental budgets to ensure public transparency and understanding as
to why financial decisions are made. Factors, such as the UAL, which are set by outside agencies determine what the City can and cannot do in certain areas. He expressed ongoing
support for continued deep evaluation of the Department budgets so that the public can be provided deeper understanding of the structural factors that come into play.
Committee Member Collopy stated that the Finance Committee does not have control over final
budget decisions. Mayor Pro Tem O’Neill responded the Finance Committee provides transparency into the process and citing the example of the shift from the 30 year to the 20
year period that was recently establish due to diligent work by Department staff.
It was noted that the next State Controller’s Report would not require the City to provide information regarding the UAL.
Mayor Pro Tem O’Neill commented that the Finance Committee can make recommendations
regarding increasing or decreasing the number of personnel in every Department, although they do not have discretion over rates of pay or benefits.
Chief Lewis returned to the presentation and provided detail on the fleet replacement program.
The Department seeks to realize efficiencies and they manage outflows and purchases that are consistent with Council policies and purchasing guidelines. Each purchase is complete only
when all Departmental controls have been enacted, starting with the budget preparation each year. Every purchase has oversight at the line, division, and management level. He cited the
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credit card purchasing policy as an example and provided detail regarding the levels of
approval required. Deputy Director of Police Support Services Stafford provided detail on the Department’s fleet
maintenance program. The Department’s budget covers purchases, repairs and replacements. The Department has “black and white” vehicles as well as motorcycles, which need to be
“outfitted” with specific equipment including in-vehicle computers and mobile video. The after-market outfitting is not supported by the manufacturer and are handled separately from the
initial purchase. He noted the vehicles are received from the manufacturer ready to be outfitted; however, there is an additional 20% cost to equip the vehicles after purchase.
Deputy Director of Police Support Services Stafford commented on Council Policy F9, which
determines the time/mileage thresholds that have to be met prior to vehicle replacement. He noted the Department replaces the vehicles in worst condition first and they are very careful
about selecting new vehicles. He spoke regarding the recent renovation of the SWAT van and the Department decision to find a better option for the City’s Commend Post vehicle.
Chair Dixon mentioned the 2015 study of the City’s fleet and noted that without compromising
safety the City was able to save a significant amount of funds.
Chief Lewis affirmed the City’s fleet is in very good condition and overall officers take good care of Department assets. The vehicles are also the most visible representation to the
community of Department operations.
Chief Lewis shifted the presentation to the Department’s travel and training process, including the layers of approval and accountability for expenditures. There are City mandated
requirements for travel and training expenses and he described the management review required prior to approvals including review of the types of training, location, training providers,
and evaluations made by each employee’s supervisor prior to approval. Other options are considered for travel and training if there are more efficient and effective methods.
Committee Member Collopy inquired as to who enforces or “polices” the travel and training
process, to ensure there are no abuses.
Chief Lewis provided detail regarding the Department’s in-house travel specialist, the Staffing Division Secretary, who is well-versed in City policies and purchasing procedures. The
guidelines are applied rigidly and there are separate spreadsheets for internal control to project and forecast for training and travel costs.
Deputy Director of Police Support Services Stafford affirms there are even internal controls that
exist for the Chief’s purchases, travel, and training.
Committee Member Collopy inquired whether the Fire Department has a similar internal control system for travel and training.
Fire Chief Duncan noted the Department must also adhere to the City’s procedures related to
travel and training and that some Department training is articulated in Memorandums of Understanding. The Fire Department also provides in-house training at its training facility.
Chair Dixon inquired whether the Police Department is adequately funded and noted there has
been an increase in crime in certain parts of the community.
Chief Lewis commented the Department is lean, efficient, and utilizing resources effectively. Currently, they are not filling vacancies and are using overtime for certain core functions.
Department staff reviews the budget line-item by line-item and is usually finding budget savings over budget cycles. He mentioned that as the Department get closer to filling all vacant
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positions; they will continue to maintain vigilance over the budget, as funds will be less flexible
without the salary savings realized through the current vacancies. In response to an inquiry from the Committee, Chief Lewis acknowledged a significant portion
of his work time is spent monitoring the budget versus direct policing work; however, the processes are definitely interwoven. More of his time is spent with the administrative aspect of
Department operations rather than the actual business of police work.
Chair Dixon opened public comments. Noting there were no individuals who elected to speak on this item, Chair Dixon closed public comments.
There was no further action taken on this item.
E. YEAR-END CLOSING RESULTS Summary: Staff will present year-end closing results for Fiscal Year 2016-2017. Recommended Action: Receive and file.
Staff provided a brief report and made reference to a report that was distributed to the Finance
Committee. There was a $12.5 million dollar surplus, with $5 million from reserves and a significant amount from expenses.
Chair Dixon inquired whether Department savings are included in the surplus amount, to which
staff responded in the affirmative.
Chair Dixon opened public comments. Noting there were no individuals who elected to speak on this item, Chair Dixon closed public comments.
There was no further action taken on this item.
F. PENSION DISCUSSION Summary: Agenda item reserved for discussion regarding the status of the City’s pension liability, payment
strategies, CalPERS policy updates and/or advocacy efforts. Recommended Action:
Discussion if applicable.
Chair Dixon referred to a letter sent by Finance Director Matusiewicz related to CalPERS amortization rates.
Finance Director Matusiewicz stated the week prior to the Finance Committee meeting, the
League of California Cities lobbyist reported that the amortization policy may have already been “killed” by labor, as the perception would be it would pull money “off the table” for negotiations.
Finance Director Matusiewicz detailed the “mismatch” between the assumptions of the 20-year versus 30-year gains and losses. There is a significant amount of “credit” beyond 30 years that
is not being utilized by cities. This change in policy will eliminate almost all of the negative amortization build into the prior schedules and made a “level” dollar payment, rather than an
“inclining” payment that tracks with payroll. For almost 18 years, the City would be paying off the amount of underpaid principal.
Chair Dixon commented on the well-written structure of the letter and it was so well understood
that CalPERS voted to go to a 20-year amortization, even reading from Finance Director Matusiewicz’s letter in their meeting.
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Finance Director Matusiewicz stated the big savings would be realized by shortening the
amortization period. The liability is still increasing; however, this decision would mitigate some of the liability.
Chair Dixon commended City staff for their time and efforts to send Finance Director
Matusiewicz to Sacramento to give the employer’s side of the story.
Discussion ensued as to scheduling the next update on this matter. Staff will return when appropriate to update the Finance Committee on any other material updates.
Chair Dixon opened public comments. Noting there were no individuals who elected to speak
on this item, Chair Dixon closed public comments.
There was no further action taken on this item. G. REVIEW OF FINANCE COMMITTEE WORKPLAN Summary:
Staff will review with the Committee the agenda topics scheduled for the remainder of the fiscal year and highlight those work plan items carried forward from the prior fiscal year. The
Committee will also consider setting up a subcommittee to review finance related Council policies. Recommended Action: Receive and file.
This item was continued to a future meeting. VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE
PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM)
The meeting scheduled for June 21, 2018, was rescheduled to June 14, 2018.
Committee Member Tucker inquired if the Finance Committee could receive additional information
regarding the individual components of that make up the accrued liability of the net pension obligation.
VII. ADJOURNMENT
The Finance Committee adjourned at 5:12 p.m. to the next regular meeting of the Finance
Committee.
Filed with these minutes are copies of all materials distributed at the meeting.
The agenda for the Regular Meeting was posted on February 12, 2018, at 2:29 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic
Center Drive.
Attest:
___________________________________ _____________________
Diane Dixon, Chair Date Finance Committee