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HomeMy WebLinkAboutJanuary 8Finance and Investment Committee Special Meeting Town of Los Altos Hills Town Hall, Monday, January 8, 2018 The meeting was called to order at 4:00 pm by Chairman Sloss. Members present: Allan Epstein, Susan Mason, Stan Mok, Bill Silver, Roddy Sloss and Chris Welborn Members absent:Betty Kayton, Kjell Karlsson and Chris Nam Associate members:Jim Lai, present; Frank Lloyd, present Council:John Radford, Mayor; Roger Spreen, Vice Mayor Staff present:Pak Lin, Finance and Administrative Services Director; Karen Huang, Finance Manager, Public present: none Guests present:Catherine MacLeod, Director - Health and Benefit Actuarial Services, Bickmore Approval of minutes: December 4, 2017 meeting minutes were approved as amended by members who attended that meeting. June 30, 2017 Draft Actuarial report of Retiree Benefit Valuation for Funding Purposes (aka “OPEB” Trust) – Catherine MacLeod Members received a draft subject Report and questions posed with Bickmore responses for review prior to the meeting. Ms. MacLeod distributed seven PowerPoint slides to members at the meeting and discussed points noted on the slides. At Ms. Lin’s request, the Committee unanimously indicated their acceptance of the draft report. The Town’s unfunded past service cost balance declined significantly since the prior report issued two years ago primarily because of strong stock market performance; the separation of one employee eligible for full retiree medical coverage; and the continued contribution of Actuarial Determined Contribution and direct retiree medical payment to eligible retirees. This in turn caused the Committee to consider changes to past practice for the Town’s funding strategy. Alternatives were discussed and then the Committee and others attending the meeting unanimously (attending Council members and Ms. MacLeod abstained) favored a strategy suggested by Ms. MacLeod calling for the continuation of annual retiree medical reimbursements but the suspension of additional contributions to the Town’s OPEB Trust (California Employer’s Retiree Benefit Trust). This represents an estimated $140,000 reduction in this annual cash outflow. The fund’s invested balance is managed by CalPERS in a California Employer’s Retiree Benefit Trust (“CERBT”). The Committee has previously received presentations from PARS who also provides these services. A comparison of the two firms considering fees, strategies, and results were reviewed. The Committee and other attendees (except Ms. MacCleod and Mr. Radford both of whom had left the meeting and Mr. Spreen who abstained) unanimously favored remaining with CalPERS and to reconsider the matter after the Town had more experience with PARS who will be managing a portion of the Town’s funds related to its’ Pension Plan in a Section 115 Trust. Continued.- January 8, 2018 FIC minutes, continued page 2. Discussion of Proposed Policy for Pension Funds managed by PARS for a Section 115 Pension Plan Trust - R Sloss Mr. Sloss presented a draft policy to attendees before the meeting that used the Town’s existing Investment Policy for PFM managed investments as a baseline with not applicable sections deleted and new sections conforming to changes required by the PARS agreement added. The draft highlighted these changes. After discussion, the Committee requested that the draft add and /or clarify the following points: 1) Only the Town Council is authorized to select and/or change investment managers (as opposed to PARS who serves as an administrative manager who engages investment managers); 2) The Town Manager is authorized to execute changes authorized by Town Council, 3) The PARS standard Investment Strategies available to the Town be explicitly listed in the Policy and 4) requiring a plan performance review at least every two years and an investment performance review at least four times a year. Mr. Sloss will make the requested changes and submit the revised draft to Staff for review and presentation to Council for approval. Report on Finance Department activities of interest – Pak Lin Ms. Lin stated that the final CAFR had issued and hardcopy is available at the meeting. The finance staff will be working on the fiscal June 30, 2018 mid-year budget update and will be ready to present a draft to the Committee at its February 5, 2018 meeting. Report on Council activities of interest – Roger Spreen Mayor Radford had left the meeting and Council Member Spreen stated he had nothing to report. Review of future meeting calendar: The next FIC meeting will be a Regular meeting on February 5, 2018 to receive and review the staff’s draft mid- year budget update. Other topics for future meetings include: Workers Comp. provider change; Review of long term capital plans and related policies; Financial policy and procedures review; Status of Planning and Building software (Filemaker replacement); Cost Recovery/Cost Allocation Study; LAH Sewer rate study and updates to related published schedules and literature; review of FIC Monthly Project Summary Report and review of Quarterly Finance Department report on financial controls. Presentations from the floor: None. Adjournment: At approximately 5:50 pm there were no further matters to be discussed and the meeting adjourned. Respectfully submitted by Roddy Sloss, Committee Secretary attachment