Loading...
HomeMy WebLinkAbout2012-06-26 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING June 26, 2012 A meeting of the Finance-Accounting Committee was called to order by Director Kiley at 4:04 p.m. The meeting was held at the District's Administrative Office at 1717 E. Miraloma Ave, Placentia CA 92870. COMMITTEE STAFF Director Robert R. Kiley, Chair Ken Vecchiarelli, General Manager Director Phil Hawkins Stephen Parker, Finance Manager 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR Mr. Parker explained that while researching information relating to item 2.3, and subsequent to the agenda being posted, staff was made aware of an opportunity. The opportunity related to financial arrangements with CalPERS just as item 2.3 does, and by taking immediate action, the District could save money. As such, Mr. Parker requested to add an additional item — 2.4 Payoff of CalPERS Side Fund. Directors Kiley and Hawkins approved adding the item to the agenda. 2.1. Authorization to Invest with Bank of the West Mr. Parker discussed an opportunity the District was offered to invest in a money market account with Bank of the West. Mr. Parker explained that the guaranteed return of 35 basis points (0.35% yield) was similar to the current LAIF return of 0.36%, and this investment was collateralized 110% by US Government securities. Mr. Parker added that staff proposing to transfer $2 million from the District's LAIF investment to the money market account, but that the District's investment policy calls for Board approval for investments greater than $1 million in one institution. The Committee asked a few questions about the investment and supported staff's recommendation. 2.2. OPEB Liability Pay Down Mr. Parker presented an action item to the Committee to deposit the budgeted Annual Required Contribution plus $100,000 from the Employee Liability Reserve with the District's Other Post-Employment Benefits (OPEB) trust with CalPERS - the California Employees' Retirement Benefit Trust (CERBT). Mr. Parker explained that this was the third year that this action was recommended by staff, but this year staff would make the deposit at the beginning of the year, and draw down retiree costs at 1 the end of the fiscal year, which would allow the District to earn the CERBT's superior investment rate of return in the meantime. The Committee asked what the rate of return for FY 11/12 was, and Mr. Parker said that as the year had not ended, he was not aware. He indicated he was sure that it was higher than the District's current investment rate yield of 0.82%. The Committee asked that the current year's investment rate be added to the action item that will go to the Board, and supported staff recommendation. 2.3. Prepayment of PERS Employer Contribution Mr. Parker clarified that while obtaining additional information related to this action item, it was determined that pre-paying the PERS employer contribution for FY 12/13 would not result in a savings for the District, and as a result he requested that the action item be pulled. The Committee agreed. 2.4. Payoff of CalPERS Side Fund Mr. Parker explained that while discussing a potential prepayment of PERS employer contribution with the District's PERS actuary, the actuary informed Mr. Parker of a practice that many agencies were taking advantage of as a result of the current investment yields available. The PERS Side Fund is assessed an assumed 7.75% interest charge on the amount owed annually. Mr. Parker explained that the District owes $836,784 as of June 30, 2012 on the side fund, and that this liability is kept separate by PERS from the remainder of what is paid to PERS annually as a part of a pool. If the District were to use their operating reserves to pay down the side fund, the District would yield an effective 7.75% return on the reserves and the District's Employer Contribution Rate would drop from 11.668% to 10.238% for the upcoming fiscal year, and operating expenses would decrease by $80,000 or more every fiscal year for the next 14 years. The Committee asked questions about the impacts on the District's future reserve levels if this cash outlay were approved now. Mr. Vecchiarelli indicated that he was not concerned about future cash levels as a result of taking advantage of this opportunity now. Mr. Parker agreed, adding that Capital Improvement Projects can be adjusted to accommodate our current financial situation, which will be re-evaluated every year and with any significant events. The Committee supported staff recommendation. 2 3. DISCUSSION ITEMS 3.1. May 2012 Budget to Actual Results Mr. Parker presented the May Budget to Actual results. He pointed out that updated information from the 2010 census resulted in some changed figures in calculating the District's baseline and current gallons per capita per day calculation. Mr. Parker explained that MWDOC contracted with CSU Fullerton to estimate the population for the last decade, and that the reduction in population in the District's service area resulted in a higher consumption calculation that was provided to the Committee monthly. Mr. Parker went on to explain that other than the change in numbers of our 20 by 2020 goal, there were no major changes to the budget to actual results from the previous month. Director Kiley requested that as a future task Communications expense information broken out by line item or section be made available. The Committee commented on certain supplies and services expenses being well below budget, but did not have other questions for staff. 3.2. Investment Report for Period Ending May 31, 2012 Mr. Parker highlighted that a decrease in the CalTRUST medium term fund was the main driver for a decrease in total yield to 0.82%.Mr. Parker also explained that the Maintenance Reserve fund (established in the current year's Reserves Policy) was shown by itself for the first time. Previously it had been lumped into the Water Capital Fund. Mr. Parker also discussed changes in reserve balances. The Committee had no questions. 3.3. Status of Strategic Plan Initiatives Mr. Parker updated the Committee with changes in the status of Fiscal Responsibility strategic plan initiatives. The most significant changes related to the budget that was presented in draft version to the Board on the June 14 Board meeting and the public hearing for rate change and increase schedule for June 21, 2012. 3.4. Future Agenda Items and Staff Tasks The Committee asked that the current year's CERBT investment rate be included in the action item that will go to the Board on July 12. Director Kiley requested that as a future task Communications expense information broken out by line item or section be made available. 4. ADJOURNMENT 4.1. The Committee adjourned at 4:55 p.m. The next meeting of the Finance- Accounting Committee will be held July 23, 2012 at 4:00 p.m. 3