HomeMy WebLinkAboutJuly 24Meeting Minutes
Los Altos Hills Finance and Investment Committee
Monday, July 24, 2006
Town Hall
1. Roll call
Members present:, Jean Mordo, Karl Kneip, Jim Lai, Stan Mok
Members absent: Wilf Corrigan, Frank Lloyd, Lalla Stark, Doug Norby
In attendance: Carl Cahill, Cindy Higby, Sarah Ragsdale
Chairperson Mordo called the meeting to order at 6:05
2. Meeting minutes
The minutes of the July 10, 2006 were reviewed and approved
3. Nsesa of PFM Asset Management, LLC presented the Quarterly
Investment Review for Second Quarter 2006. Key changes from last
quarter were several extension trades to lengthen the average maturity of
the town’s portfolio to 1.39 years and the town’s increased yield on cost
went from 4.68% to 4.77%.
4. Discussion of post-employment health benefits: Currently the town has 3
options:
a. Continue with the status quo,
b. Switch to a cafeteria plan with the minimum (Currently $64.60)
allocated to post retirement health, and make up the lost benefit for
existing employees and retirees by a cash payment outside of
CalPERS.
c. Switch to the cafeteria plan as above, but make up the lost benefit
for ALL employees by increasing the pension contribution from the
current one to one of the richer options: 2.5%@55, 2.7%@55, or
3% @ 60. Current retirees would not receive the richer retirement
option. The Town would make up the lost benefit for current
retirees by a cash payment outside of PERS.
The advantage of option c is that we treat new employees the same way
as existing employee, while still providing a one time benefit that offsets
the loss of the retiree medical benefit. This is because the increase in
pension formula is retroactive for current employees to the start of their
employment with the Town. Depending on the formula chosen and the
seniority with the Town of each employee, the increased pension check
could more than offset the loss of retiree medical.
Note that retirees will still have access to the CalPERS medical plan,
except that in the future, they would have to pay for the cost in excess of
the minimum contribution paid by the Town. The advantage to them is that
if they do not need the coverage (e.g. coverage provided by a spouse),
they could keep the money.
An additional advantage for the Town is the greater predictability of the
cost. The higher pension cost is rolled into the monthly charge from
CalPERS. The funds are invested by CalPERS. There is no large liability
to accrue for if, for example, an employee vested into CalPERS retires
from the Town after a short tenure. We would still however have to accrue
for the actuarial value of the future minimum contributions, and, of course,
for the few employees already retired.
Doug Pryor of Bartel Associates, was asked to evaluate option 3. Carl and
Sarah will request a contribution analysis from CalPERS to determine our
costs for the different pension plans. Doug will calculate the costs to the
town different contribution levels, 2.0% at 55, 2.5% at 55, 2.7% at 55 and
3.0% at 60 to find the best alternative. The impact of the change on
employees should be evaluated depending on seniority with the Town.
In addition action items, Carl and Sarah will talk to the employment
attorney about making a change to town’s benefit package and invite him
to the September 11 meeting. Sarah will conduct a survey of benefits
packages from other comparable municipalities.
5. Presentations from the floor – Sarah distributed the June 30, 2006
Monthly Financial Report to all FIC members.
6. Adjournment – The meeting was adjourned at 7:35 p.m.