HomeMy WebLinkAboutJanuary 10
Finance and Investment Committee Meeting
Town of Los Altos Hills
Town Hall Council Meeting Room
Monday, January 10, 2011
Chair Allan Epstein called the meeting to order at 5:00 p.m.
Members present: Allan Epstein, Jim Lai, Jean Mordo, Stan Mok, Bill Silver, Roddy Sloss
Members absent: Frank Lloyd, Lala Stark
Staff present: Nick Pegueros, Finance Director
Guest present: John Radford, member of Town Council
Public Present: None
Approval of minutes: The December 10, 2010 meeting minutes were approved as submitted.
Report by Jean Mordo on Recent Council Activities of Interest:
Gary Waldeck is leading a Council review of the proposed renewal of the quarry operating license.
Council will consider hiring an independent expert to review environmental issues and report to
Council.
The proposed Fremont bike lane is proceeding with construction planned for the year ending June 30,
2012. VTA will provide two thirds of the financing and the Town will provide the balance.
Work of the Ad Hoc Employee Benefits Committee on changing the pension benefit formula is
proceeding and Jean expects a no change recommendation for existing employees to be made due to
the resulting minor cost savings of changing from a 2%-55 plan to a 2%-60 plan. Additional
committee work is intended to look at further cost sharing with employees of pension and medical
expenses.
Report by Nick Pegueros on Recent Finance Department Activities:
Implementation of the Town’s new financial software provided by Tyler Technologies is proceeding.
Present plans are to complete the installation and testing in January and go live in February.
Formal recruitment of the Finance manager for the Town is scheduled for January 12 when five
candidates will be interviewed by a panel including employees of neighboring towns. Anna Erickson,
who is presently filling this role on a temporary basis, applied for the position, and is one of the five
candidates.
Review of 2009/10 Management’s Discussion and Analysis of the Town’s Audited Statement and
responses to FIC submitted questions.
Questions related to MD&A disclosures were reviewed. Responses to previously submitted questions
were reviewed. Allan Epstein met separately after the meeting with Nick Pegueros to review editorial
comments on the subject matter.
Continued
Minutes of January 10, 2011 Finance and Investment Committee meeting – page 2
Review of CalPERS Annual Valuation Report as June 30, 2009
Nick Pegueros presented and discussed a handout with information provided by CalPERS showing
historical and forecasted 1) pension rates expressed as a percentage of payroll, and 2) estimated
underfunded pension liability. The forecasted amounts are based on the Fund’s financial performance
through June 30, 2009.
Roddy Sloss stated from a review of the subject report that the data is so old that it cannot be relied upon
for current action without estimating subsequent market activity. LAH has gone from an overfunded
pension plan liability two years ago to an underfunded liability now. The equity market has substantially
recovered and is now comparable to the 6/30/08 level before the crash. Fixed income and real estate
market indexes are improved comparing June 2008 to December 2010. Therefore it seems reasonable to
assume pension costs will not escalate above present levels and could be expected to decline assuming
demographics and compensation remains steady.
Stan Mok pointed that even if markets have recovered there remains to be recovered the income that
would have been earned in the intervening years which could be as much as 15% of the portfolio.
Allan Epstein noted that there has been no official notice from CalPERS that the market recovery had
mitigated the need for future increases in pension costs and therefore it is prudent to wait before
concluding such increases would not be necessary. However, the steps the Town has recently taken to
increase its pension reserves should prove sufficient to mitigate a shortfall in the fund, should one occur.
Roddy Sloss noted that future accounting pronouncements presently under consideration could cause
faster recognition of unfunded losses, if any, resulting in higher pension costs.
(Post Script Note: a 12/28/10 CalPERS webinar not known to meeting participants at the meeting date
noted that Pension rates are expected to rise significantly despite a market recovery due to changes in
actuarial methods and assumptions.)
Proposed topics and dates for future FIC Meetings:
A meeting on February 7, 2011 at 5 pm was scheduled to discuss Town Investments and the funding for
the Town’s OPEB plan. A meeting on March 7, 2011 at 5 pm was planned to discuss issues related to
the Town’s sewer system.
Adjournment - The meeting adjourned at 6:10 p.m.
Respectfully submitted by Roddy Sloss – Committee Secretary