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14. Consider adoption of a resolution accepting the Comprehensive Annual Financial Report (CAFR) and Other Related Audits for the Year Ending June 30, 2014 Finance Director Wagner presented the Comprehensive Annual Financial Report (CAFR) for the Fiscal Year ending June 30, 2014, which received what is known as a "modified" or "clean" opinion by independent accounting firm Vavrinek, Trine, Day & Co. This represents the 17th consecutive year that Pleasanton has met the highest standards in governmental accounting and financial reporting as established by the Government Finance Officer's Association. Ms. Wagner briefly reviewed several highlights of the financial statements. She stated that total assets exceeded liabilities by $863.9 million at the close of the fiscal year. Of this amount, $138.1 million is considered unrestricted net assets that may be used to meet the city's ongoing obligations to citizens and creditors without constraints. The city's current outstanding debt is $2.9 million, $2.1 million of which represents the remaining balance on the purchase of the Alameda Country Transportation Corridor. As previously reported, Governmental Accounting Standards Board (GASB) 68 takes effect June 30, 2015 and will require that unfunded pension and post retirement benefits be recorded as a pension liability rather than simply disclosed in the notes to the financial statements. In 2017, the same requirement will apply to unfunded retiree medical obligations. Applying these requirements in the present day, we would see that the city's unfunded pension obligation of $127.4 million reduced net unrestricted assets to $10.4 million. Based on information received from CaIPERS, the unfunded accrued actuarial liability as of June 30, 2013 is $167 million — 50% of the $58.7 million liability for LPFD, $72.5 million for miscellaneous employees, $25.5 million for police employees, and $40 million in retiree medical. Based on market value, assets represent approximately 2/3 of the total obligation, with the remaining 1/3 as an outstanding liability. Ms. Wagner very briefly reviewed funding ratios for the unfunded accrued actuarial liability by individual bargaining units. She noted that in 2006-2008 the ratio exceeded the industry standard of 80%. Due to the recession, market losses affecting assets and changes to the discount rate assumptions by CaIPERS, the funding level reduced considerably after that. This has, however, gradually improved since 2011. Ms. Wagner noted that in 2011 the Council adopted a fiscal policy to reduce the unfunded pension and retiree medical liability a minimum of 10% over the following 5 years. As a result of that policy the Council established a PERS Stabilization fund and over the last 4 years has deposited approximately $4 million in operating surpluses to the fund and made additional payments to CaIPERS. As labor agreements have expired over the past several years, the city has managed to negotiate 100% payment by the employee of the employee pension contribution rate, reduced retiree medical benefits and reduced retirement benefits for new hires. The Council also authorized a payoff of the police side fund loan to CaIPERS ($7.5 million, which resulted in approximately $3.5 million in interest savings and reduced the unfunded accrued actuarial liability. In sum, the city has reduced the liability a little over 9% since 2011. Ms. Wagner stated that staff met with the audit committee, comprised of Vice-Mayor Brown and Councilmember Olson, to review the CAFR and related audits on January 7, 2015. The committee recommended acceptance of the documents, which are available for public review at the Pleasanton Library and on the city's website, by the City Council. Vice-Mayor Brown noted that the CAFR and related audits also report out on transit services, specifically as it relates to Alameda County Transportation Commission Measure B funds, Measure F funds, and Housing Authority Funds. Councilmember Olson urged the public to review the letter co-authored by the City Manager and Director of Finance, dated December 19, 2014, for a very comprehensive review of the state of the city. City Council Minutes Page 9 of 12 January 20,2015