HomeMy WebLinkAboutMarch 5
Finance and Investment Committee Regular Meeting
Town of Los Altos Hills
Town Hall, Monday, March 5, 2018
The meeting was called to order at 4:00 pm by Chairman Sloss.
Members present: Allan Epstein, Kjell Karlsson, Betty Kayton, Susan Mason, Stan Mok, Chris
Nam, Bill Silver, Roddy Sloss and Chris Welborn
Members absent: None
Associate members: Jim Lai, present; Frank Lloyd, absent
Council present: John Radford, Mayor; Roger Spreen, Vice Mayor
Staff present: Pak Lin, Finance and Administrative Services Director; Karen Huang, Finance
Manager
Public and Guests present: Matt Goss, Customer Outreach and Support Manager, CalPERS CERBT;
and Andrew Brown, Highmark Capital, Director - Investment Executive
Approval of minutes:
February 5, 2018 meeting minutes were approved as presented by members who attended that meeting.
CERBT (OPEB) update and investment policy discussion – Matt Goss
Mr. Goss handed out and discussed a 14-page slide presentation and current client list. CERBT offers clients a
choice of three investment strategies that were described along with historical and expected future results. Mr.
Goss compared CERBT services to a similar PARS offering noting that CERBT expenses are significantly
lower due to economies of scale. In response to questions, he noted that annual withdrawals are allowed but
limited to the amount of OPEB Plan beneficiary payments for the prior year. Under usual foreseeable
circumstances, remaining balances when the Trust terminates if any are returned to the employer. The Town’s
current investment selection is Strategy 1. The Committee voted five to four in favor of keeping Strategy 1 over
Strategy 2. Members Karlsson, Mason, Nam and Silver voted for Strategy 2. Associate Member Lai favored
Strategy 1.
Highmark Capital Update and Investment Policy Discussion – Andrew Brown
Mr. Sloss asked Mr. Brown to focus his remarks on the Town’s proposed investment policy unless there were
significant new developments in the capital markets that might cause the FIC to wish to reconsider investment
decisions it made in its October and December 2017 meetings. Mr. Brown indicated he had not yet had an
opportunity to review the policy and would get back to the Committee as soon as he could.
Council activities of interest – John Radford
Mayor Radford described a recently completed Goal Setting meeting for identifying needs and requirements of
the Town in an effort to reach a Council consensus on the priorities of these matters. Ms. Lin supported the
presentation with a 15-year summary financial forecast.
Continued
March 5, 2018 FIC minutes, continued page 2.
Recent Finance Department Matters of Interest – Pak Lin
Ms. Lin announced that Karen Huang has accepted a position with Burlingame and will be resigning her
Finance Manager position with the Town on March 16, 2018. FIC members thanked Ms. Huang for her service
and wished her well. Ms. Huang will be working on arrangements for the upcoming Rate Study during her
remaining time with the Town. Ms. Lin would like to present a rate Study proposal to Town Council in its April
19, 2018 meeting. Ms. Lin would like to schedule the May 7, 2018 FIC meeting to discuss the staff proposed
fiscal 2019 Town Budget that will be reviewed with Council in a 4 pm Joint Meeting on May 30, 2018.
Regarding Workers Compensation Plan administrative changes, the Town is now part of a pool including former
pool participant’s and that will be administered by ABAG using Bickmore’s services.
Ms. Lin then presented the financial forecast mentioned in Mr. Radford’s report, above, and asked the
Committee with regard to the fiscal 2019 Town Budget to consider related assumptions particularly with respect
to employee retirement benefits. Prior to the meeting, Mr. Sloss circulated a memorandum he authored covering
the background and related issues. A discussion among the Committee followed regarding the appropriate
Unassigned Surplus reserve for the Town’s employee retirement programs. There was general agreement that
no further reserve was needed for the OPEB Plan as it is adequately funded as reported in January 2018 to the
Committee by Bickmore, the Plan’s actuary. With regard to Pension reserves, the Committee discussed Ms.
Lin’s proposal that a reserve accrete over time funded annually by a sum equal to 20% of the Town’s current
employee payroll costs, compared to an alternative proposal in Mr. Sloss’ memo calling a July 1, 2018 $3.2
million reserve representing all estimated past service pension costs that is based on estimates provided by the
Town’s actuaries assuming a reduction in the discount rate from the currently used 7.375% to 6%. All
Committee members favored setting up a $3.2 million reserve except Mr. Epstein who stated he believed the
reserve to be excessively conservative and that in combination with the numerous other reserves simultaneously
proposed by Ms. Lin combined to be unnecessarily constraining.
Review of future meeting calendar:
The Regular FIC meeting scheduled for April 2, 2018 is cancelled. The next FIC meeting will be a Regular
meeting on May 7, 2018 to: 1) Consider and review Town policy for a Section 115 Trust, and 2) Consider the
staff’s proposed fiscal 2019 Town Budget. Other topics for future meetings include: a recent Workers
Compensation 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 6:00 pm, there were no further matters to be discussed and the meeting adjourned.
Respectfully submitted by Roddy Sloss, Committee Secretary