CITY COUNCIL WORKSHOP AGENDA PACKET

CITY OF PLEASANTON, CALIFORNIA 11 | eidebailly.com ASSESSMENT OF RELATED FINANCIAL MANAGEMENT PRACTICES Although the scope of services primarily focused on assessing the City’s existing financial forecast, during the course of our assessment we identified related observations regarding financial management practices that merit mention. These observations are summarized in the table below. NO. OBSERVATION DISCUSSION 1 The level and type of information shared with the City Council and the community is very detailed, which can at times make it difficult to focus on key information. We observed that the staff reports and presentations provided to the City Council and community related to financial information often contain great detail in some areas and information without sufficient supporting detail in others. In our experience, effectively communicating complex financial information is one of the most difficult tasks for finance officers. To improve clarity, critical information should be distilled into key points and graphics, and more details supporting information should be provided in an appendix or upon request. Learning from the approach of peer jurisdictions and/or employing the assistance of GFOA or consultants to focus on this issue would be of great benefit to the City. 2 The City’s current Internal Service Fund Reserve Policies set reserves as a percentage of expenditures. The City’s reserve policies for internal service funds for facility and infrastructure replacement are currently set as a percentage of expenditures. It is a best practice to use a cash flow analysis of future expenditures, such as what will be included in the City’s infrastructure replacement plan, to identify the annual funding requirements and arrive at an annual contribution amount that will avoid a negative balance in each fund during the forecast period. The minimum reserve balance is then less important rather than that the analysis be undertaken to ensure that reserves are adequate in each year during the forecast period. This change will also facilitate illustrating why the full amount of funding included in these funds is necessary and not available for other purposes as the cash flow analysis will indicate that the funds are fully programmed in future years. 3 The City is not currently utilizing funds in its Section 115 Trust for UAL-related pension payments. The City is not currently utilizing funds in the Section 115 Trust to make payments toward its unfunded accrued liability (UAL). Based on the analysis undertaken by the City’s actuary and discussions with the City, we believe it is appropriate to begin drawing down on these funds on a limited basis during the forecast period as part of the baseline forecast rather than as a balancing measure. This is an appropriate use of the funds as the City’s pension plan matures and will serve to reduce the structural deficit while illustrating to the community that these funds are being utilized as intended. Page 20 of 33