AUGUST 16, 2006 CITY OF RANCHO PALOS VERDES FINANCE ADVISORY COMMITTEE MINUTES AUGUST 16, 2006 CITY OF RANCHO PALOS VERDES FINANCE ADVISORY COMMITTEE MINUTES AUGUST 16, 2006 CITY OF RANCHO PALOS VERDES FINANCE ADVISORY COMMITTEE MINUTES

MINUTES

CITY OF RANCHO PALOS VERDES

FINANCE ADVISORY COMMITTEE

AUGUST 16, 2006

Chair Clark called the meeting to order at 7:07 PM at the City Hall Community Room, 30940 Hawthorne Boulevard, for the purpose of conducting business pursuant to the Agenda.

ROLL CALL

Roll call was answered as follows:

PRESENT: Clark, Grimme, James, McLeod, and Moon
ABSENT: Emenhiser, Nelson

Also present were Director of Finance and Information Technology McLean, Senior Administrative Analyst Gary Gyves and John Bartel from Bartel Associates, LLC.

APPROVAL OF AGENDA

Chair Clark requested a motion to approve the agenda. Member McLeod motioned for approval of the agenda and Member Grimme seconded. Hearing no objection, Chair Clark ordered approval of the agenda.

APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED AUGUST 16, 2006

Chair Clark postponed approval of the draft minutes from the June 28, 2006 FAC meeting due to a clerical error resulting in only one of four pages of the minutes being distributed in the agenda packet.

FAC ASSIGNMENT – PENSION AND POST RETIREMENT HEALTH CARE – PENSION OVERVIEW

Director McLean introduced John Bartel from Bartel Associates, LLC and let the FAC know that he is a pension consultant with expertise about California governmental pension plans. Director McLean informed the FAC that John Bartel was retained as the City’s consultant for the pension overview project assigned to the FAC by the City Council. Director McLean also informed the FAC that a different consultant will be retained to perform a survey designed to compare the City’s compensation package to compensation packages of similar cities.

John Bartel provided the FAC with a Power Point Presentation explaining the California Public Employees Retirement System (CalPERS) and the difference between a defined benefit and defined contribution retirement plan.

Analyst Gyves provided the FAC with a Power Point Presentation detailing the retirement and health benefits the City provides to its employees:

 The City contracts with CalPERS for retirement benefits. The retirement benefit is calculated based on the 2% @ 55 formula and on the employees highest year salary. The City pays the employees’ 7% contribution, which is typical for cities on the 2% @ 55 formula. The average total City contribution rate over the last twenty years (FY86-87-FY05-06) was 7% of payroll.

 The City pays the entire health care premium for the employee and half of the premium for the employee’s dependents. The City does not pay for retiree health benefits. However, retirees can purchase health care through the City’s provider at their own cost. Employees have the choice of the following three Blue Shield plans, which are listed along with the annual cost to the City for each type of plan:

Health Maintenance Organization (HMO) - $0 Deductible
 $3,694 – Employee only
 $5,542 – Employee + Spouse
 $6,650 – Employee + Family
Point of Service (POS) - $300 Deductible Per Enrollee ($0 deductible until 7-1-05)
 $4,848 – Employee only
 $7,270 – Employee + Spouse
 $8,726 – Employee + Family
Preferred Provider Organization (PPO) - $250 Deductible Per Enrollee ($0 deductible until 7-1-05)
 $6,952 – Employee only
 $10,335 – Employee + Spouse
 $12,513 – Employee + Family

 The City pays the entire dental care premium for the employee and half of the premium for the employee’s dependents. Employees have the choice of the following two Delta Dental plans, which are listed along with the annual cost to the City for each type of plan:

Delta Dental Health Maintenance Organization (DHMO)
 $188 – Employee only
 $249 – Employee + Spouse
 $323 – Employee + Family
Delta Dental Preferred Provider Option (PPO)
 $405 – Employee only
 $581 – Employee + Spouse
 $823 – Employee + Family

 The City pays the entire vision care premium for the employee and half of the premium for the employee’s dependents. Employees are provided eye care coverage through Vision Service Plan (VSP). The annual cost to the City for each type of plan is detailed below:

 $283 – Employee only
 $362 – Employee + Spouse
 $518 – Employee + Family

 Life, Accidental Death and Dismemberment (AD&D) and Disability Insurance are contracted through Standard Life Insurance Company. The benefit to the employee and total annual cost to the City are detailed below:

 LIFE INSURANCE
Employee Benefit – 2 Times Annual Salary (Maximum $200,000)

 AD&D
Employee Benefit – Up to 2 Times Annual Salary (Maximum $200,000) Depending on the Type of Disability

 LONG TERM DISABILITY
Employee Benefit – 67% of First $7,500 in Monthly Earnings up to a Maximum of $5,000

 Mental Health Insurance provides employees with professional counselors and services that can help resolve emotional health, family and work issues.

FAC ASSIGNMENT – ALTERNATIVE SOURCES OF REVENUE AND FUNDING

Director McLean informed the FAC that the City Council approved Staff’s recommendations detailed in the Alternative Sources of Revenue and Funding Staff Report that was presented to the City Council on August 15, 2006. Director McLean read the following approved recommendations from the Staff Report:

 Provide any additional direction to Staff and the Finance Advisory Committee regarding the City Council assigned task of studying alternative sources of revenue and funding, including the investigation of borrowing and debt financing.

 Task the Infrastructure Financing Team with analyzing the fiscal impact of the potential repeal of the Storm Drain User Fee to coincide with the FY07-08 User Fee Rate Review to be conducted by the Finance Advisory Committee prior to the Public Hearing that will be conducted before the City Council in June 2007.

Director McLean stated that the City Council provided Staff with suggestions related to studying alternative sources of revenue that will be considered.

Director McLean informed the FAC that on March 7, 2006, Staff, in conjunction with Chair Clark, took a Staff Report to the City Council detailing the proposed FAC projects for FY06-07. Director McLean informed the FAC that the annual review of the Five Year Financial Model and the annual review and recommendation regarding the User Fee Rate Review for the forthcoming year were two projects approved by the City Council at the March 7, 2006 meeting.

Director McLean reminded the FAC that two residents of the City have successfully qualified a ballot initiative for the November 2007 election to repeal the Storm Drain User Fee. Director McLean also stated that it makes sense to include the analysis of the fiscal impact of the potential repeal of the Storm Drain User Fee to coincide with the User Fee Rate Review.

Director McLean stated that during the Budget Policy Workshop on April 29, 2006, the City Council directed Staff and the FAC to study alternative sources of revenue and funding that may be available to the City to fund infrastructure improvements. Director McLean informed the FAC that if the City continued to subsidize storm drain projects and maintain the City’s streets in the current condition that the City’s reserves would slowly be depleted. Director McLean stated that the project will include identifying infrastructure needs, identifying potential revenue sources and any available financing options. Director McLean informed the FAC that the Staff Report will need to be presented to the City Council prior to the next budget cycle.

QUESTIONS REGARDING THE FAC ASSIGNMENT – ALTERNATIVE SOURCES OF REVENUE AND FUNDING

Chair Clark asked if Staff is planning to analyze using debt financing to hedge the significant increases in construction costs. Director McLean informed the FAC that Staff is planning on providing what-if scenarios that will detail debt-financing options.

DIRECTOR/MEMBER REPORTS

Member James informed the FAC the Public Use Master Plan (PUMP) Committee was formed to assist in deciding how the City’s open space will be used. Member James informed the FAC that the open space is made up of 20 parcels and the committee is discussing existing and future trails and the potential to link them all together. Member James stated the committee is also discussing opportunities on acquiring additional open space land. Member James also mentioned that part of a committee member’s responsibility is to go out in the public and receive feedback about the master plan.

PUBLIC COMMENTS

Don Reeves stated that the CalPERS discussion was interesting and complimented Director Mclean on his presentation of what’s happening with the Storm Drain User Fee.

ADJOURNMENT

Member James moved and Member Moon seconded a motion to adjourn the meeting at 9:41 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.

_____________________________
Chair, Financial Advisory Committee

ATTEST:

_____________________________
Gary Gyves, Recording Person