HomeMy WebLinkAboutFebruary 2Finance and Investment Committee Meeting
Town of Los Altos Hills
Town Hall Council Meeting Room
Monday, February 2, 2009
Chair Roddy Sloss who prepared these minutes called the meeting to order at 5:00 p.m.
Members present Allan Epstein, Jim Lai, Frank Lloyd, Stan Mok, Jean Mordo, Doug Norby,
Roddy Sloss, Lalla Stark
Member absent: Wilf Corrigan
Staff present: Nick Pegueros, Finance Director; Cindy Higby, Accountant/Office Manager
Auditor: AJ Major, Partner, Vavrinek, Trine, Day & Co. LLP
Public present: None
Approval of minutes: The November 10, 2008 meeting minutes were approved as corrected.
Investment Policy: The Town Staff proposed two changes to Committee’s 11/10/08 proposed
Investment Policy changes. 1) Changes to the Town’s investment policy and practice (including
selection of a third party investment advisor) should be preapproved by Town Council and the
FIC should be informed of the proposed changes and invited to comment. The FIC proposal
anticipated the FIC commenting before Investment Policy changes are made. The Town staff
thought that might not be practical and the FIC agreed. And 2) Town staff proposed requiring
preapproval by Town staff of portfolio security sales initiated by an investment advisor that were
a) not made for cash flow purposes, and b) exceeded six such sales per calendar quarter. The
FIC did not concur with this proposal to limit security sales.
Report by Jean Mordo – recent city council activities of interest: 1) A water conservation
committee is being formed to address future water conservation measures that may be imposed
upon Town residents. 2) Regarding Westwind Barn, Friends of Westwind Barn are experiencing
difficulty raising matching construction funds. Councilman Breene Kerr proposed that a portion
of Westwind Barn construction work be accelerated and funded by the Town to take advantage
of lower costs presently available due to a slow down in construction. The Town Council agreed
to consider the proposal after receiving a long term revenue forecast prepared by Town staff that
has been reviewed by the FIC. Nick Pegueros plans to review this draft forecast with the FIC at
its March 2, 2009 meeting.
Report by Nick Pegueros – recent finance department matters: Town revenue receipts that
may be deferred due to the State of California’s current budget difficulties were discussed. The
FIC expressed a concern about VLF fees as they had been affected in similar circumstances in
the past. The FIC suggested that in the future VLF fees be separately reported in the CAFR
(page 31). The FIC also suggested for future financial reporting that actual property tax revenues
collected be broken down by type as part of the disclosure presently on page 89 of the CAFR.
Mr. Lloyd suggested that opportunities to early retire Town Hall related lease debt be reviewed
to take advantage of low interest rates.
A discussion was held of the West Loyal Sewer Assessment District Bond proposal and
alternative financing sources.
continued
FIC Minutes February 2, 2009 – page 2.
Current adverse investment results affecting CalPERS are not expected to be recorded in the
Town’s financial statements until 2012.
An internal control evaluation and study has been authorized to be performed by another
independent accounting firm who is expected to also make recommendations on changes to the
Town’s information systems. This work is expected to be completed in June 2009.
Mr. Mordo excused himself from the meeting.
Report from AJ Major on the audit of the Town’s June 30, 2008 financial statements
Mr. Major referred the Committee to new disclosures related to the Town’s pension plan and
OPEB liabilities in CAFR footnote 7 (page 57) and footnote 12 (page 61) noting estimates and
timing of reporting requirements for the related assets and liabilities. He referred the FIC to his
report dated 12/24/08 discussing significant audit findings and noted there were no
disagreements with management and no journal entries proposed.
Messrs. Epstein and Sloss posed questions related to the Sewer Fund operations and requested
detail information from Town management on favorable budget variances and reconciling
revenue detail to the general ledger accounts.
Review of Investments
Mr. Pegueros provided the FIC with 12/31/08 details of the Town’s investments. The FIC
reviewed the investments and noted that approximately $2 million is in the Town’s Bank of
America account. Less than one half of that amount is needed for foreseeable cash requirements.
Therefore the FIC suggested that Mr. Pegueros consult with PFM, the Town’s investment
advisor, and then diversify excess funds into other banks in FDIC insured accounts that generate
higher interest income.
Separately, regarding HSA accounts, Mr. Mok suggested that Town management meet with
insurance agencies specializing in employee benefits to review opportunities to lower the Town’s
medical benefit costs.
Presentations from the floor - none
Future Meeting Calendar: Next meeting is 5:00 pm March 2, 2009 at Town Hall.
Adjournment - The meeting adjourned at 7:15 p.m.