HomeMy WebLinkAboutSeptember 21Finance and Investment Committee Meeting
Town of Los Altos Hills
Town Hall Council Meeting Room
Monday, September 21, 2009
Chair Roddy Sloss who prepared these minutes called the meeting to order at 5:05 p.m.
Members present: Allan Epstein, Jim Lai, Frank Lloyd, Stan Mok, Roddy Sloss, Lalla Stark
Member absent: Jean Mordo
Staff present: Nick Pegueros, Finance Director
Guest: Doug Pryor, Actuary, Bartel & Associates
Public present: None
Approval of minutes: The August 3, 2009 meeting minutes were approved as submitted.
Presentation on prepayment of unfunded past service retirement costs by Doug Pryor:
As background, in fiscal 2004, the Town joined the CalPers small employer retirement plan pool.
At that time, past service cost was determined to be approximately $900,000. The Town agreed to
contribute those past service costs into the pool over 15 years including 7.75% interest (actuarial
assumption for plan performance) in annual installments growing from approximately $50,000 to
$100,000. This obligation is unaffected by actual pool performance, early retirement of employees,
or other unanticipated changes in compensation of the related employees. Given the comparatively
modest performance of the Town’s investments, town staff asked the FIC to review the question of
whether or not the Town should prepay this obligation and there-by save the 7.75% future annual
interest charge. The precise prepayment amount depends on payment timing and has not been yet
been calculated, but it is approximately $600,000.
Doug Pryor made a 16 slide presentation to the Committee and took concurrent questions. This
discussion also addressed current and future pension costs including possible outcomes if the
CalPers investment performance does not recover to historical standards, or if other members of the
Town’s retirement plan pool default and can not fulfill their obligations. The Committee inquired
into the Town’s alternatives should it wish to protect itself against these risks by withdrawing from
CalPers.
The conclusion of this discussion was that the Committee wishes to consider responses to the
following questions in a future meeting and requests Town staff to receive this information:
1. Present a list of other governmental entities in the Town’s CalPers retirement pool;
2. Can the Town withdraw from CalPers and if yes, what are the requirements?
3. If other members of the Town’s CalPers retirement pool default, do the non-defaulting
members assume their obligations, or are retirees of the defaulting member at risk, or is
there another outcome?
4. What is the Town’s cash balance and what are the existing restrictions on those funds?
Continued
Finance and Investment Committee Meeting Minutes, Monday, September 21, 2009
5. The Committee requests that the Town receive a letter from CalPers stating: 1) the
existing obligation for unpaid past service costs, 2) a schedule of the remaining
payments; 3) amount required currently and each year in the future to retire this
obligation through prepayment; and 4) other opportunities, if any, to mitigate this
obligation (i.e. withdrawing from CalPers.)
Comments by Nick Pegueros on recent Finance Department activities
Property tax revenue of at least $265,000 will be loaned to California by the Town and legislation
has been proposed but not enacted enabling the Town to either earn interest on these funds or
borrow them back interest free. The related proposed rates are not yet known. The Town is
reference checking Tyler Technologies to become the provider of new financial software and is not
yet ready to return to the Committee with a proposal to act.
Quarterly review of Town’s investments:
Nick Pegueros provided a multi page handout related to the Town’s investments. The Town’s
investments were briefly reviewed and the Committee encouraged Town staff to setup and utilize
the Comerica facility (see July 6, 2009 Committee meeting).
Presentations from the floor - none
Review of FIC future meeting calendar.
The next FIC meeting is scheduled for October 19, 2009 at 5 pm. The primary subject is expected
to be a review of draft, unaudited Town 6/30/09 annual financial statements. The October 5, 2009
regular meeting is canceled.
Jean Mordo was absent and there was no report on recent Town Council activities.
Adjournment - The meeting adjourned at 6:40 p.m.
Attachment: Doug Pryor slides