CCMIN 02162021 - Laserfiche WebLink

detailed the City's two Public Agency Retirement Services (PARS) accounts which combine for $40.3 million between long-term ($22.8 million) and short-term ($17.5 million) investments. She reported the Section 115 Pension Trust Funds returned 5.7% for PARS conservative/long-term, 10.1% for PARS capital growth/short-term, and 7.9% for CaIPERS, while the City's annual return is 2.0%. She noted the PARS Capital Growth Fund has a real value of $26.7 million (a $5.4 million growth) and the PARS Conservative Fund has a real value of$18.2 million (a $1.5 million growth). Director of Finance Olson stated the Other Postemployment Benefits (OPEB) liabilities have decreased by 26% to $14.8 million. She added the City will be able to stop paying into this Fund next year as retirement benefits migrate to the CaIPERS Fund. She reported the City is still awaiting some audited financial statements about the Livermore-Pleasanton Fire Department (LPFD). Director of Finance Olson reported the auditors had no concerns with either the City's internal controls or any aspect of the City's financial reporting. In response to Councilmember Arkin's inquiries, Director of Finance Olson confirmed the City's reserves are about 25% and advised it is the City's policy to have a minimum of 20%, a maximum of 30%, and a target of 25%, and clarified "other non-major Enterprise Funds" primarily includes the cemetery and paratransit. In response to Councilmember Arkin's inquiry, Director of Finance Olson clarified the City's previous approach was to pay down the retirement liabilities with CaIPERS. She advised CaIPERS was not getting the same investment returns as PARS so Council decided to switch approaches that provided more flexibility if needed urgently within the City. She added the City also reviewed and declined the option to issue Pension Obligation Bonds during the reassessment. City Manager Fialho explained the City Actuary assesses its pension performance annually. He advised the Actuary has been proven to be accurate over the years looking at long-term pension obligations. He noted the pre-pandemic assumption was the City could stay within its financial means while maintaining retirement services. He noted the biggest obligations come in years 11-20 of a 30-year window but noted at current rates the Section 115 Trust will have funds available to smooth out this impact. He added the City expects pension levels to stabilize in years 21-30 because the newer (lower) pension tiers will then be in effect. In response to Councilmember Arkin's inquiry, Director of Finance Olson clarified the City has always taken a "pay as you go" approach to OPEB liability. She added the City has also been putting money into an OPEB account with CaIPERS but will cease next year because enough will have been set aside there for future liabilities. In response to Councilmember Arkin's inquiry, Director of Finance Olson confirmed it is not unusual for the City to have no findings on an auditor's report. City Manager Fialho added there have been management findings a few times and operational recommendations in how to address weaknesses in accounting and cash control city-wide. He noted those have been implemented whenever they do come across. Director of Finance Olson advised it is the third consecutive year with no findings. City Manager Fialho commented it is a testament to how seriously Director of Finance Olson and her accounting team take the matter. In response to Councilmember Arkin's inquiries, Director of Finance Olson confirmed there is a Request for Proposal (RFP) every five years for auditors. She advised the RFP went out in January and the City is reviewing seven responders. She expects to bring a recommendation to Council in late March or early April and clarified that staff reviews the applicants. In response to Mayor Brown's inquiries, Director of Finance Olson confirmed the City did not start with a 50-50 split between PARS Capital Growth and PARS Conservative. She advised that last year, City Council Minutes Page 4 of 16 February 16, 2021