Loading...
HomeMy WebLinkAboutApproved Minutes - June 1, 2017Finance Committee Meeting Minutes June 1, 2017 Page 1 of 5 CITY OF NEWPORT BEACH FINANCE COMMITTEE JUNE 1, 2017 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 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), Committee Member Patti Gorczyca, Committee Member Joe Stapleton Council Member Will O’Neill, and Committee Member Larry Tucker ABSENT (EXCUSED): Committee Member William Collopy and Mayor Kevin Muldoon STAFF PRESENT: City Manager Dave Kiff, Deputy City Manager Rob Houston, Finance Director/Treasurer Dan Matusiewicz, Deputy Finance Director Steve Montano, Budget Manager Susan Giangrande, Administrative Assistant to the Human Resources Director Traci Mackinen, Budget Analyst Tam Ho, Budget Analyst Katherine Warnke-Carpenter, and Purchasing Agent Anthony Nguyen MEMBER OF THE PUBLIC: Jim Mosher III. PUBLIC COMMENTS Jim Mosher discussed the prior meeting and stated it was difficult for the public to follow without a paper copy of the budget. He discussed automobile sales tax and asked the revenue received by the City. He discussed the sales tax in the City of Westminster. Finance Director/Treasurer Matusiewicz stated the sales tax was retained where the transaction was negotiated and the City received the full 1 percent. IV. CONSENT CALENDAR A. MINUTES OF MAY 11, 2017 Recommended Action: Approve and file. MOTION Committee Member Gorczyca moved and Council Member O'Neill seconded a motion to approve the corrected minutes of May 11, 2017. The motion carried 4-1-2, Committee Member Stapleton abstaining and Mayor Muldoon and Committee Member Collopy absent. V. CURRENT BUSINESS A. REVIEW OF FISCAL YEAR 2017-2018 PROPOSED BUDGET Summary: The Committee shall continue its discussion of the Fiscal Year 2017-2018 budget and forward any recommendations to City Council. Recommended Action: Finance Committee Meeting Minutes June 1, 2017 Page 2 of 5 Review, comment on, and offer suggestions about City Manager proposed Fiscal Year 2017- 2018 Operating and Capital Budget. City Manager Kiff stated staff was completing the staff report and budget checklist for the June 13, 2017, Council meeting. In response to Committee Member Tucker, City Manager Kiff indicated the significance of changing the mooring contracts to part-time staff. Council Member O'Neill discussed the $9.1 million discretionary payment towards pensions. Finance Director/Treasurer Matusiewicz clarified that $8.9 million was discretionary, with $8.7 million coming from the General Fund. Council Member O'Neill stated that the Finance Committee needed to come up with its recommendation. He stated that he did not want the funds put into a 115 Trust. He suggested using a dollar cost average approach, rather than turning the entire amount over to CalPERS in one payment. City Manager Kiff asked for input on when to make the first dollar cost averaging payment. Chair Dixon asked if there was a deadline to make the payment. Finance Director/Treasurer Matusiewicz stated the required amount was due in July. Finance Director/Treasurer Matusiewicz recommended equal payments over 12 months. Committee Member Gorczyca expressed concern with the City’s reserves. She discussed reserves of surrounding cities and stated a 25 percent reserve might not be enough. She stated she could support moving forward with 12 month payments but she would like a more thorough review of reserves. Chair Dixon asked if the other cities included enterprise fund reserve accounts. Committee Member Gorczyca stated she obtained the information from calls to cities’ Finance staff and websites. She indicated that she did not focus on enterprise funds. City Manager Kiff stated that the City had other reserves that could be drawn from. Committee Member Tucker agreed that the reserves should be reviewed but it was difficult to compare to other cities. Finance Director/Treasurer Matusiewicz mentioned that South County cities tended to be more reliant on sales tax, whereas the City of Newport Beach was approaching $100 million in property tax which is far less volatile than sales tax. Chair Dixon stated a full discussion of reserves would occur in the fall. City Manager Kiff stated South County cities were holding cash based on the dowry received when incorporated. Committee Member Gorczyca stated that it was important to conduct a reserve analysis as soon as possible. She indicated that on a potential 115 Trust for pension the City’s reserves requirements would have bearing. City Manager Kiff recommended paying one-twelfth of the total discretionary payment on July 15. Committee Member Tucker stated that the Council could reverse the action at any time. Finance Committee Meeting Minutes June 1, 2017 Page 3 of 5 Committee Member Gorczyca discussed the Cal Pensions article. She expressed concern with CalPERS paying out more than incoming revenue. She suggested an investment advisor provide information to the City on CalPERS liquidity. In response to Chair Dixon, Finance Director/Treasurer Matusiewicz stated the City’s money was kept separate in CalPERS. Committee Member Tucker discussed the need to earn 7.5 percent in CalPERS and the difference in investing in a 115 Trust. Chair Dixon stated it was necessary to determine how and where to invest the City’s assets. Committee Member Stapleton questioned how the City could do better than CalPERS. Finance Director/Treasurer Matusiewicz stated the City would be less diversified and it was unlikely that it would invest in real estate and private equity on its own. City Manager Kiff discussed a recent presentation by PARS at which he asked if anyone invested in a 115 Trust to beat CalPERS and the response was no. Chair Dixon suggested outside independent expertise to provide information on CalPERS and 115 Trust. Committee Member Gorczyca suggested a reserve analysis be completed first. City Manager Kiff reviewed Committee Member Collopy’s comments on recommending the budget to the Council. City Manager Kiff explained the process for presenting the Committee’s recommendation to the Council. Committee Member Tucker stated that the Committee recommended that the Council approve the budget last year, and also do so this year as well. Jim Mosher added that he looked forward to seeing the Budget Checklist. He complimented staff on the glossary. He stated the public was not interested in the budget due to it being confusing. He indicated support for the Jack Wu approach to reviewing the budget. Deputy Finance Director Montano discussed the online availability of Socrata for public access to the budget. Chair Dixon stated there was a dramatic improvement on budget information and transparency over the past few years. MOTION Committee Member Tucker moved and Committee Member Stapleton seconded a motion to approve the budget as proposed with the qualification that the Finance Committee was not making a recommendation on the CIP budget. The motion carried 5-2, with Mayor Muldoon and Committee Member Collopy absent. MOTION Committee Member Tucker moved and Committee Member Gorczyca seconded a motion to recommend the Council proceed with staff’s recommendation on additional pension payments to PERS, paid monthly, beginning July 15, 2017. The motion carried 5-2, with Mayor Muldoon and Committee Member Collopy absent. Finance Committee Meeting Minutes June 1, 2017 Page 4 of 5 Jim Mosher stated that the Council did not expect the Committee to review the CIP, but could request its opinion. B. PENSION DISCUSSION Summary: Agenda item reserved for any discussion regarding the status of the City's pension liability and/or the proposed budgetary pension funding approach. Recommended Action: Review and comment. Finance Director/Treasurer Matusiewicz provided updates from CalPERS indicating the 2016 valuation resulted in a pension liability that was lower than was previously expected and year-to-date earnings had reached 10.8 percent. Committee Member Gorczyca stated that Kentucky reduced its discount rate to 5.25 percent. She asked if there was potential for further downward movement by CalPERS. Finance Director/Treasurer Matusiewicz stated it was difficult to say. City Manager Kiff stated most cities did not want to move that way because they could not afford it. Committee Member Tucker requested the valuation be presented to the Finance Committee each year. Finance Director/Treasurer Matusiewicz agreed and stated they were also available on the City’s and CalPERS website. Chair Dixon requested the Committee be provided with the monthly Treasurer’s Report. Finance Director/Treasurer Matusiewicz agreed and stated it was also available on the website on a monthly basis. Finance Director/Treasurer Matusiewicz stated Mr. Bartel was working on a stochastic forecast. In response to Chair Dixon, Finance Director/Treasurer Matusiewicz explained the amortization schedule and consolidation of bases. Committee Member Gorczyca asked when the projections would be available. Finance Director/Treasurer Matusiewicz stated Mr. Bartel anticipated them sometime next week. Jim Mosher stated he struggled to understand the financial terms utilized. He asked if the CalPERS valuation was included on the monthly reports. Finance Director/Treasurer Matusiewicz stated it was separate from the Treasurer’s Reports. He stated the actuarial valuation was updated annually and is available on the City website. In response to Chair Dixon, City Manager Kiff stated the primer would be updated. C. REVIEW OF FINANCE COMMITTEE WORK PLAN Summary: Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year. Recommended Action: Review and comment. Chair Dixon requested discussion on scoping for the reserve analysis. Committee Member Gorczyca requested discussion on the type of firm for the analysis. Committee Member Tucker mentioned that the Committee needed to complete its discussion of pension prior to the end of the calendar year.