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2 - Exterior Lighting Upgrades
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3 - Advanced Lighting Controls
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4 - HVAC Unit Replacements
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5 - Chilled Water System Upgrades
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6 - Hot Water System Upgrades
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7 - Building Management System Replacement
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8 - Secondary Transformer Replacements
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9 - Networkable Thermostats
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10 - Plug Load Controls
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11A - Solar Photovoltaic Arrays
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11B - Battery Energy Storage
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12 - Window Retrofits
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13 - Domestic Plumbing Retrofits
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14 - Irrigation System Upgrades
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Appendix D – HelioScope Models
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City Yard HelioScope Model
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 1/3 May 05, 2021
kWh
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0 10k
20k
30k
Shading: 0.7%
Reflection: 3.6%
Soiling: 5.2%
Irradiance: 0.4%
Temperature: 12.1%
Mismatch: 4.7%
Wiring: 0.4%
Inverters: 1.5%
AC System: 0.2%
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 2/3 May 05, 2021
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 3/3 May 05, 2021
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Fire Station 1, Police Station, Council Chambers
HelioScope Model
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Annual Production Report produced by Glen Padilla
kWh
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0 50k
100k
25k
75k
125k
Shading: 0.1%
Reflection: 3.4%
Soiling: 4.9%
Temperature: 4.8% Irradiance: 0.3%
Mismatch: 3.5%
Wiring: 0.2%
Clipping: 0.3%
Inverters: 1.8%
AC System: 0.6%
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Annual Production Report produced by Glen Padilla
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Annual Production Report produced by Glen Padilla
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Fire Station 4 HelioScope Model
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 1/3 June 04, 2021
kWh
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0 2.5k
5k
7.5k
10k
Shading: 0.4%
Reflection: 3.3%
Soiling: 4.9%
Irradiance: 0.4%
Temperature: 13.9%
Mismatch: 3.4%
Wiring: 0.4%
Clipping: 0.5%
Inverters: 3.5%
AC System: 0.1%
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 2/3 June 04, 2021
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Annual Production Report produced by Glen Padilla
© 2021 Folsom Labs 3/3 June 04, 2021
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City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Jan 25 2022
Department: Finance
Submitted by: Christopher Lopez, City Manager
Lorena Rocha, Finance Director;
☐ Receive and File ☐ Consent Calendar ☒ Business Item ☐ Public Hearing TITLE:
A Resolution of the City Council of the City of Hemet. California Amending the Fiscal Year 2021/2022 Budget, Approving Appropriations, and Amending the Budgeted Positions List RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Adopt a Resolution of the City Council of the City of Hemet, California, Amending the Fiscal Year 2021/2022 Budget, Approving Appropriations, and Amending the Budgeted Positions List BACKGROUND:
Each year, the City Council adopts an operating budget that commits resources for the fiscal year. In this year, the budget also provided the resources available to implement the City's Strategic Plan and provide services to the public. The budget is a document that is amended during the year for various reasons including allocating funds for unscheduled items, actions by third parties which impact the budget, or changes in the economy.
The current fiscal year began July 2021 with the FY2021/2022 budget adopted by Council on June 22, 2021. This document represented staff's best estimate of what each department needed to service the public and meet Strategic Plan goals.
ANALYSIS:
Economic Update
National
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In July 2021, the global economy was projected to grow 6% in 2021 and 4.9% in 2022. On a national level, the United States economy is expected to grow somewhere between 3.5% and 4% in 2022.
Although this is lower than 2021, experts believe the economy will slow, but remain strong. Despite the continuation of the Covid-19 pandemic and the rapid spread of the Omicron variant, holiday spending rose by 8.5% over last year.
Inflation, driven by continuing supply chain troubles and strong consumer demand is expected to fall to
2.6% by the end of 2022. Although this is an expected decrease when compared to 2021, prices continue to rise at their fastest pace in nearly 40 years. Consumers have experienced increases in everything from rent and used cars to groceries and non-essential items.
Mortgage rates have inched up in the last 3 weeks, the highest since March 2020. The move came as the 10-year US Treasury yield rose and financial markets made adjustments to combat inflation. As a result of this increase in mortgage rates, demand has decreased slightly. However, with less homes on the market for sale, the market remains competitive.
State
According to the UCLA Anderson Forecast, as the coronavirus continues to evolve and mutate, so does the pandemic’s impact on the California economy. The winter surge, which was not accounted for previously, is now anticipated to have a dampening effect on the state’s economy and recovery time.
The UCLA Anderson Forecast expects job growth to slow in sectors with high levels of personal contact and in tourism. But the continued effects of pullback from in-person activities will also lead to a slowerthan-expected decline in purchase of goods, meaning continuing high demand in the logistics industry.
California's unemployment rate is expected to average 5.6% in 2022 and 4.4% in 2023.
Inflation in the state is expected to remain high at a rate of 4.1% in 2022. Inflation will continue to reduce real personal income.
California home prices continue to climb, and a lack of affordability has become increasingly important in both the policy sphere and for forecasting the Golden State’s economic growth. Over the past two years, the state’s median home price as reported by the California Association of Realtors has increased 33.6% to a record high of $800,000. According to the S&P Case Shiller Home Price Index, prices on same-home sales in San Diego increased by 34.9%, in Los Angeles by 26.1%, and in San Francisco by 25.9% over the same period. Those prices will result in increased residential construction, with permits expected to reach 119,500 in 2021, and then increasing to 123,700 in 2022 and 139,700 in 2023.
Local
In Hemet, the local economy remains strong. Although the start of the pandemic brought many business closures, some temporary and others permanent, the community has continued to thrive with increased sales tax and a strong housing market.
In FY2020-21, Bradley Burns Sales Tax exceeded projections by over $4 million while the Measure U Transaction Tax exceeded projections by just under $4 million. In the current FY2021-22, sales tax
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and Measure U continue to be very strong with year-to-date numbers trending similar to last year's revenues. Early reports show strong revenues in vehicle sales, general consumer goods, and construction.
Community Development and Engineering are very busy with new developments coming in to the City and permits on new homes issued at record rates.
Unemployment rates continue to drop for the Riverside and San Bernardino region with the most recent report showing a 5.4% unemployment rate.
DISCUSSION:
FY2021-22 Year-To-Date Revenues and Expenditures
The General Fund (including Measure U) has collected 33% of revenues budgeted through the end of the second quarter. Measure U alone has collected 34% of revenues budgeted. This amount is typical as the majority of General Fund revenues collected through property taxes are received in the second half of the fiscal year and sales tax revenues are generally received two months in arrears.
General Fund revenues are projected to end higher due to the increase in Sales Tax and Measure U Transaction Tax Reports.
In Community Development, the increase in development and permits being issued supports the increase in revenue projections for the Planning, Building and Development Programs.
During the planning of the FY2021-22 Budget, Community Development increased their projections for the new year based on projected increases in development activity. However, the continued increase in housing development has outpaced even projected increase in revenues.
Business license renewal revenues remain strong with many businesses who had been closed due to the pandemic ready to do business in the City again. This mirrors the rebounding of the local economy which continues in a positive direction.
Library staff is busy processing Passports and have already exceeded their revenue projection fourfold.
General Fund expenditures are running under budget through the end of the second quarter at 43.4% mainly due to vacancies in budgeted positions.
In the Non-General Funds, revenues are also on track for this time of year. Gas Tax, Measure A, and Sewer and Water revenues are delayed by 1 to 2 months. Water and Sewer are billed in arrears.
Revenues from Lighting & Landscape Districts are mainly received after the December and April property tax payments are processed by the County of Riverside.
With several CIP projects planned, but not completed in the Streets/Gas Tax, Measure A, Water, Sewer, and Development Impact Funds, line items are below target on expenditures.
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Several projects started, but not yet completed are listed either under Purchase Order Carryovers or Continuing Appropriations. As with last fiscal year, Finance and the City Manager's office worked with departments to ensure only projects that were truly still active and expected to be completed within the current fiscal year were allowed on the carryover lists.
The 2nd Quarter Budget Update Reports are attached and will provide detail on each Fund's progress.
Mid-Year Review
Departments and divisions regularly review their Program budgets to ensure adequate funding exists in order to continue providing services to the Community, and will periodically make requests for adjustments. Annually, at mid-year, a thorough review is completed giving operations an opportunity to bring forward to Council items they deem critical to their operations but were unknown at the start of the budget cycle. These items assist departments as they work to meet their Strategic Plan goals.
Adjustments were necessary for both Revenues and Expenditures as a result of this review.
REVENUE ADJUSTMENTS
General Fund revenues are projected to end higher due to the increase in Sales Tax and Measure U Transaction Tax Reports.
In Community Development, the increase in development and permits being issued supports the increase in revenue projections for the Planning, Building and Development Programs.
During the planning of the FY2021-22 Budget, Community Development increased their projections for the new year based on projected increases in development activity. However, the continued increase in housing development has outpaced even projected increase in revenues.
Additionally, Mutual Aid Reimbursements will increase due to the higher than normal fire season and assistance provided by the Hemet Fire Department throughout the State to combat fires. Mutual Aid is fully reimbursed to the City so the City will see an increase in Revenues equal to the requested increase in expenditures due to these reimbursements.
Overall, there is a proposed increase in General Fund revenues of $3.3 million which includes an additional $1.2 million in Measure U revenues. As proposed, General Fund revenue increases will cover all requested additions to General Fund expenditures. Any revenues collected in excess of expenditures will be added to unreserved fund balance.
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EXPENDITURE ADJUSTMENTS
General Fund
On the expenditure side, departments such as Community Development and the Public Works Department have requested increases to their Professional Services contracts to support the ongoing increase in development. Plan Check services are reimbursable through User Fees meaning there is
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an equivalent increase in revenues to support these expenses which will not have a net impact to the budget.
As stated before, the Fire Department has been busy providing Mutual Aid to fires throughout the State of California and have already exceeded their annual expenditure budget for this line item. The budget request will right size the budget and an increase in revenues for the reimbursements from the State will offset these costs.
The list of General Fund requests includes 2 changes to the approved positions list:
• The City Treasurer has requested the addition of a part-time Management Analyst to assist with monitoring investments and researching government code. Staff is requesting direction on this specific item.
• The Police Department would like to convert one part time position for Property and Evidence Technician to a full time position to assist the Investigations Program. This request is being recommended for approval.
The remainder of changes include the following:
General Fund
• City Treasurer - Administration Program:
o It is proposed to add the position of one (1) part-time Management Analyst to assist monitoring investments, researching government code as it applies to the City and social media.
• Human Resources - Employee Services Program:
o It is proposed to add the position of one (1) temporary, part-time Office Specialist Confidential to assist in processing invoices, active and retiree reimbursements and other clerical duties.
• Police - Investigations Program:
o It is proposed to reclassify one (1) vacant part-time Property and Evidence Technician to one (1) full-time Property and Evidence Technician.
• Fire - Fire EMS Operations Program:
o It is proposed to increase mutual aid overtime budget to cover mutual aid due to a higher than normal fire season. A portion of these expenses have already occurred. Staff seeks to right size the Program's budget.
o It is proposed to convert one (1) Battalion Chief vehicle to provide separation of contaminated PPE from driver's compartment and add space for new technologies. o It is proposed to increase peak demand overtime to continue to provide Medic Squad services year round.
o It is proposed to replace one (1) Type-1 Fire Engine that is over 15 years old and has hundreds of thousands of hours of engine use and over 150,000 miles. Although it is not expected that the Engine would be delivered prior to year end, the long lead times for such equipment justify the request to come at mid-year and not wait an additional five months to begin the process.
o It is proposed to change all suppression personnel helmets (50) into NFPA compliant helmets.
o It is proposed to purchase three (3) sets of structural firefighting PPE. • Library - Administration Program:
o It is proposed to pay unfunded retirement liability for SBCERA from the City's portion of Inland Library System, a JPA that the City joined in 1977. This need arises from recent
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notification that the JPA was dissolved and all member agencies must pay off their share of the liability.
• Library - Support Services Program:
o It is proposed to add one (1) part-time Library Assistant to assist in coverage upon the Library opening full-time.
• Community Development - Building Program:
o It is proposed to increase the City's contract plan check services with CSG Consultants. o It is proposed to increase the City's contract plan check services with 4Leaf, Inc. Fi o It is proposed to increase the City's contract inspection services with 4Leaf, Inc. o It is proposed to increase the City's contract inspection services with HR Green. • Public Works - Parks Program:
o It is proposed to increase the water utility budget to meet the demand of water due to ongoing drought.
o It is proposed to increase contract services for over height tree trimming in which City trucks are unable to safely reach.
o It is proposed to increase contractor services for tree inventory. o It is proposed to install new satellite based irrigation controllers at Weston, Gibbell and Spencer Parks. Current systems require a person to drive to each park to adjust settings.
The satellite based controllers can be adjusted through a computer in the office. o It is proposed to replace one (1) riding mower that experienced catastrophic failure. This mower is no longer in service leaving only one riding mower to service all City Parks • It is proposed to replace one (1) riding mower that is reaching end of operational life and beginning to fail. This is the only riding mower currently in service. Should it fail, the City will have to make an emergency purchase if rental equipment is not a feasible option. • Public Works - Development Program:
o It is proposed to increase contract services for professional design.
Non-General Fund
On the non-General Fund side, staff is requesting to begin the process to replace several vehicles. In all cases described below, funding exists within the Equipment Replacement Fund. Due to long lead times for vehicle orders, departments are requesting to begin the process now rather than wait until the new year.
In the Lighting & Landscape Districts, staff is working on ways to reduce water consumption in parks mainly due to drought control measures and to limit the increased cost and consumption of water related to the drier than usual first few months of the fiscal year.
The Water Department has one requested change to the list of authorized positions. There is a need to replace one vacant Maintenance Worker 1 to a Water Distribution Operator 1 position. There is no cost involved with this change as both positions are in the same pay range. • Community Development - Building Program:
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o It is proposed to replace one (1) vehicle in the department's fleet to meet the increase of service requests. The vehicle is several years old and requires repair services often. Long lead times of 4-6 months on Ford Trucks. Ordering now would allow department to get truck into service at the start of the new fiscal year. • Community Development - Code Compliance Program:
o It is proposed to replace three (3) vehicles in the department's fleet due to high mileage and constant repairs. Long lead times of 4-6 months on Ford Trucks. Ordering now would allow department to get trucks into service at the start of the new fiscal year. • Public Works - Assessment Districts Program:
o It is proposed to increase contractor service for tree inventory as part of the Strategic Plan.
o It is proposed to replace one stolen utility tractor. The City received insurance reimbursement in late May 2021, but need an appropriation to move forward with replacement.
o It is proposed to increase the water utility budget in the Emerson District due to an unexpected break in the main line resulting in excessive water loss into the retention basin.
o It is proposed to increase professional services in the Rancho Diamonte district as a newly formed CFD. Funds for this formation were received through a Deposit. Need appropriation to pay invoices related to the formation. • Public Works - Storm Drain Program:
o It is proposed to install new satellite based irrigation controllers at Mary Henley Park.
Current systems require a person to drive to each park to adjust settings. The satellite based controllers can be adjusted through a computer in the office. • Public Works - Streets Program:
o It is proposed to replace one (1) pick-up truck that is over 20 years old, cannot pass smog and parts have become obsolete. Long lead times of 4-6 months on Ford Trucks.
Ordering now would allow department to get truck into service at the start of the new fiscal year.
• Public Works - Water Program:
o It is proposed to replace one (1) vacant full-time Maintenance Worker I position with one (1) full-time Water Distribution Operator I.
• Public Works - Fleet Maintenance Program:
o It is proposed to increase supply budget for fuel, oil, tires and parts due to International logistic issues, inflation and other external impacts. Necessary to continue to service City Vehicles
o It is proposed to replace one CNG tank on the 2007 Auto Car Dump truck which has reached the end of it's certified life expectancy. \
• Finance - Administration Program:
o It is proposed to increase contract services with Harris & Assoc. for AB1600 reporting. A Five-Year report was due this fiscal year and needs to be completed as soon as possible.
A comprehensive list of recommended adjustments to the City's budget is included below along with an explanation of each item. A table of all proposed adjustments is included in Attachment 2.
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Request for Council Action:
It is recommended that Council:
1. Provide direction on the City Treasurer's request for part time personnel.
2. It is recommended that the Council approve the following items:
• Add one (1) TPT Office Specialist Confidential to the Human Resources' Employee Services Program and increase budget in account 110-1801-???? by $25,000. • Reclassify one (1) PT Property & Evidence Technician to one (1) FT Property & Evidence Technician in the Police Department's Investigation Program. • Increase budget in account 110-3241-1325 by $700,000 for Fire Department's Fire EMS Operations Program of Mutual Aid overtime.
• Increase budget in account 115-3241-1340 by $285,000 for Fire Department's Fire EMS Operations Program of Peak Demand overtime.
• Increase budget in account 115-3241-5400 by $862,787 for one Fire Department's Fire EMS Operations Program of one (1) Type I Fire Engine and one (1) Battalion Chief vehicle conversion. • Increase budget in account 110-6100-2710 by $43,578 for Library's Administration Program payment for unfunded retirement liability for SBCERA.
• Add one (1) PT Library Assistant to the Library's Support Services Program. • Increase budget in account 120-3300-2610 by $172,000 for Community Development's Building Program contract services.
• Increase budget in account 110-4250-2110 by $80,000 for Public Work's Park Program water utility bills.
• Increase budget in account 110-4250-2400 by $11,600 for Public Work's Park Program contract services.
• Increase budget in account 110-4250-2450 by $35,000 for Public Work's Park Program new satellite based irrigation controllers.
• Increase budget in account 110-4250-5400 by $26,742 for Public Work's Park Program two (2) new riding mowers.
• Increase budget in account 120-4100-2710 by $250,000 for Public Work's Development Program professional design services.
• Increase budget in account 380-3300-5400 by $60,000 for one (1) Community Development's Building vehicle replacement.
• Increase budget in account 380-3350-5400 by $150,000 for three (3) Community Development's Code Compliance vehicle replacements.
• Increase budget in account 225-8250-2400 by $8,000 for Public Work's Assessment District Program contract services for tree inventory.
• Increase budget in account 228-8250-2400 by $8,000 for Public Work's Assessment District Program contract services for tree inventory.
• Increase budget in account 228-8265-5400 by $26,000 for Public Work's Assessment District Program one (1) utility tractor.
• Increase budget in account 228-8289-2100 by $10,000 for Public Work's Assessment District Program water utility bill.
• Increase budget in account 229-8314-2710 by $29,000 for Public Work's Assessment District Program CFD professional services.
• Increase budget in account 254-4650-2450 by $12,000 for Public Work's Storm Drain Program new satellite based irrigation controllers.
• Increase budget in account 380-4200-5400 by $36,000 for Public Work's Street Program one (1) vehicle replacement.
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• Change one (1) vacant Maintenance Worker I with one (1) Water Distribution Operation I in Public Work's Water Program.
• Increase budget in account 684-4550-2350 by $92,000 for Public Work's Fleet Maintenance Program fuel, oil, tires, parts and the replacement of one CNG tank on dump truck. • Increase budget in DIF Fund by $40,000 for Finance's Administration Program contract services of AB1600 reporting.
• Approve amended Revenue projections for Fiscal Year 2021/2022.
STRATEGIC PLAN INTEGRATION:
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
Objective 1: Operate in a financially sustainable manner.
Objective 2: Evaluate existing practices to ensure continuity with industry best practices.
Objective 3: Provide Council with policies that are consistent while lessening liabilities.
Objective 4: Increase employee retention by training and creating a positive workplace.
Objective 5: Streamline fire prevention coordination efforts.
FISCAL IMPACT:
If the Mid-Year Budget Amendment is approved as presented, the increase to General Fund expenditures will be $2,491,707, with $1,147,787 of this amount for Measure U. Non-general Fund expenditures will increase by $471,000 and General Fund revenues will increase by $3,314,000. The increase in General Fund revenues offsets requested General Fund expenditures. Any revenues collected in excess of expenditures will be added to the existing Unreserved Fund Balance.
ATTACHMENT(S):
Attachment 1: Resolution MidYear FY20212022
MidYear Requests FY2122
Q2 FY2022 Gen Fund
Q2 FY2022 Non Gen Fund Revenues
Q2 FY2022 Non Gen Fund Expenditures
Continuing Appropriations FYE063021
FY2021 PO Roll
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CITY OF HEMET
Hemet, California
RESOLUTION NO. 2022-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HEMET,
CALIFORNIA, AMENDING THE BUDGET AND APPROVING
APPROPRIATIONS FOR THE FISCAL YEAR COMMENCING JULY 1,
2021 AND ENDING JUNE 30, 2022
WHEREAS, on June 22, 2021, the Hemet City Council adopted the Fiscal Year 2021/2022 annual budget; and
WHEREAS, the City of Hemet conducts regular reviews of its budget as it is fiscally prudent to do so; and
WHEREAS, based upon the latest review the City desires to amend the budget as stated in Attachment A
NOW, THEREFORE, BE lT RESOLVED, by the City Council of the City of Hemet, California, the recommended adjustments to the budget as summarized in Exhibit A, attached hereto and incorporated herein by reference, and corresponding adjustments to the expenditure appropriations within the funds, are hereby approved.
PASSED, APPROVED AND ADOPTED this 25th day of January, 2022. ____________________________
Malcolm Lilienthal, Mayor
ATTEST:
_____________________________
John Maier, City Clerk
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State of California )
County of Riverside )
City of Hemet )
I, John Maier, City Clerk of the City of Hemet, do hereby certify that the foregoing resolution was adopted by the Hemet City Council on the 25th day of January, 2022, and was passed by the following vote:
AYES: Council Members:
NOES: Council Member:
ABSTAIN: Council Member:
ABSENT: Council Member:
_________________________________
John Maier, City Clerk
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EXHIBIT A
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Attachment A
Fiscal Year 2021-2022Mid-Year Budget RequestAll City
Department Item/Service Description Program Account Number Amount Justification Funding Source Finance Comments Human Resources TPT Office Specialist Confidential - .5 Employee Services 100-1801-1100 25,000$ Needed to process Retiree Medical Reimbursements, invoices,education reimbursements and other clerical duties. Also to answer phones and answer questions a the HR Counter. On going revenues No savings available Department Total: 25,000$ Police Part-time to Full-time Property & Evidence Position Investigations 110-3002-???? -$ Reclassify the current Part-time Prop. & Evid. Position to a Full-time Prop. & Evid. Position, which is currently vacant. This FT position is needed due to Quantity of evidence received and processes required under state laws/regulations. Salary Savings Requires Council action to change an authorized position from part time to full time. (On-going cost for this change is $57,000 annual) Department Total: -$ Fire Mutual Aid Overtime Fire/EMS Operations 110-3241-1325 700,000$ Additional overtime budget needed to cover mutual aid overtime due to higher than normal Fire season Ongoing revenues Revenues increased as well. State will reimburse City Fire Battalion Chief Vehicle Conversion Fire EMS Operations 115-3241-5400 7,000$ Provides separation of contaminated PPE from driver's compartment, and enhances command and control capability as well as the space for new technologies and necessary equipment that is safely secured away from the driver which increases visibility, reducing potential for accidents. (SP) Ongoing revenues New request, total cost is $15,000. $8k will come from Fire Prevention salary savings Fire Personnel Staffing Squad 1 (Peak Demand Overtime) Fire EMS Operations 115-3241-1340 285,000$ Provide overtime staffing for 2 personnel to staff the paramedic squad for the remainder of the fiscal year. (5 months @ $57k/month). The paramedic squad is a key component in maintaining the existing level of paramedic service to the City of Hemet Ongoing revenues No savings available to cover this added cost.
Fire 1- Type I Fire Engine Fire EMS Operations 115-3241-5400 829,218$ This engine is vital to replacing one of the engines that are over 15 years old and have hundreds of thousands of hours of engine use and over 150,000 miles saving fleet maintenance valuable hours spent on constant repair and reduces out of service time. Fire engines are the key delivery vehicle for our fire and EMS mission to the community. Measure U Fund Balance Long lead time. Need to get the process started.
Fire Fire Helmets (50) Fire EMS Operations 115-3241-5400 17,998$ Changing all suppression personnel into NFPA compliant helmets that provide appropriate protection from falling objects and heat from fire (SP) Ongoing revenues Critical need Fire Personal Protective Equipment (3 sets) Fire EMS Operations 115-3241-5400 8,571$ Structural Firefighting PPE for command staff that brings 100% uniformity to the department with regards to protective equipment (SP) - 3 sets reduced from 7 sets originally Ongoing revenues Critical need Department Total: 1,847,787$ Library
Unfunded retirement liability for SBCERA from City of Hemet portion of Inland Library System, a JPA that the City of Hemet joined in 1977, when the last Inland Library System employee left the organization in 2019. Administration 110-6100-2710 43,578$ Unfunded pension liability for Inland Library System, a JPIA, that The City of Hemet joined in 1977. Last employee of Inland Library System left the organization in 2019. This is a one time funding request. Ongoing revenues Necessary expense, no savings available to fund this Library 1 pt library Assistant Support Services 110-6103-1200 -$ Currently we have 2 ft Library Assistant II's, one of which has been on imtermittent FMLA for the last 18 months. This will be a game changer as once we reopen fully, this new staff member will be able to provide breaks and fill in for scheduled and unscheduled time off. Funding will be from savings of 2 months from vacant Library Associate II totaling $19,600, fully burdened. This position should cost $6,300 for the remainder of the year using a March 2022 start date. Salary Savings in 110-6102-1100 Requires Council action to add an authorized position (On going cost for this position is $6,300 per year) Department Total: 43,578$ Comm. Dev. Contract Plan Check Services-CSG Consultants Building 120-3300-2610 102,000$ Increased development has increased our use of the outside plan check consultant. Based on current fiscal year expeditures and the assumption the development will continue, this amount is being requested. Ongoing revenues Increase in revenues proposed to offset these costs Comm. Dev. Contract Plan Check Services-4Leaf, Inc. Building 120-3300-2610 6,000$ Increased development has increased our use of the outside plan check consultant. Based on current fiscal year expeditures and the assumption the development will continue, this amount is being requested. Ongoing revenues Increase in revenues proposed to offset these costs Comm. Dev. Contract Inspection Services-4Leaf, Inc. Building 120-3300-2610 14,000$ At the rate of development, the developers are asking for inspections at a rate that our current staffing levels cannot support. They have requested increased inspections thru September of 2022.
Ongoing revenues through Developer Deposits
Increase in revenues proposed to offset these costs (Original amount is $114,000 but using $100k in salary savings to offset cost) Comm. Dev. Contract Inspection Services-HR Green Building 120-3300-2610 50,000$ At the rate of development, the developers are asking for inspections at a rate that our current staffing levels cannot support. They have requested increased inspections thru September of 2022.
Ongoing revenues through Developer Deposits Increase in revenues proposed to offset these costs Department Total: 172,000$ Public Works Utilities - Water Parks 110-4250-2110 80,000$ Due to the ongoing drought, water demand in the parks has increased substantially. Third quarter water usage was signficantly higher than expected due to longer high heat days. Ongoing revenues No savings available to cover this added cost critical Public Works Contractor for overheight tree trimming Parks 110-4250-2400 3,600$ Current city tree trimming boom trucks are unable to safely trim trees over 50-foot in height. Request additional funds to retain contractor to trim overheight trees. Ongoing revenues No savings available. Line item critical to ongoing services Public Works Contractor for Tree Inventory Parks 110-4250-2400 8,000$ Total cost for inventory is $24,000, to be allocated equally to 110, 225 and 228. Under Strategic Plan - Organizational Effectiveness, "Create tree trimming program based on grid." It has been determined that the existing inventory may be inaccurate; therefore it is important to conduct a more detailed and accurate inventory update through Cartegraph. Ongoing revenues Needed in current year - part of Strategic Plan
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Attachment A
Department Item/Service Description Program Account Number Amount Justification Funding Source Finance Comments Public Works New satallite based irrigation controllers Parks 110-4250-2450 9,000$ WESTON PARK - Current irrigation controller at park is incapable of accomodating evapotransporation and rain information, as well as transmitting data to Cloud based information. Controller causes overwatering or excessive watering. By replacing with new satallite based controller, it will allow irrigation control to be handled from a centralized office. Ongoing revenues Needed in current year Public Works New satallite based irrigation controllers Parks 110-4250-2450 20,000$ GIBBELL PARK - Current irrigation controller at park is incapable of accomodating evapotransporation and rain information, as well as transmitting data to Cloud based information. Controller causes overwatering or excessive watering. By replacing with new satallite based controller, it will allow irrigation control to be handled from a centralized office. Ongoing revenues Needed in current year Public Works New satallite based irrigation controllers Parks 110-4250-2450 6,000$ SPENCER PARK - Current irrigation controller at park is incapable of accomodating evapotransporation and rain information, as well as transmitting data to Cloud based information. Controller causes overwatering or excessive watering. By replacing with new satallite based controller, it will allow irrigation control to be handled from a centralized office. Ongoing revenues Needed in current year Public Works New riding mower Parks 110-4250-5400 12,742$ During FY20-21, riding mower unit 8230 experience a catastrophic failure where the motor seized up. A quote for purchase was initiated in FY20-21; however, due to delays in manufacturing, the actual purchase will occur in this year. Ongoing revenues No savings available. Line item critical to ongoing services Public Works New riding mower Parks 110-4250-5400 14,000$ The second riding mower is reaching the end of its operating service life and is beginning to fail. Repairs parts are both expensive and difficult to come by. Unit 8229 may fail prior to next budget period, and would signficantly hamper the Parks Division's ability to mow. Ongoing revenues Needed in current year Public Works Professional Design Services Development 120-4100-2710 250,000$ Services provided to developers are paid through GF and reconciled/balanced with revenue received by work completed by the Division. Current Engineering budget allocation is($303,000) less than anticipated development costs, so this request is to balance the anticipated development costs with the anticipated revenue. This request, with the additonal $50,000 in "Inspections" brings the division's 21/22 allocation to $700,000, with anticipated revenue of $723,000. Ongoing revenues Increase in revenues proposed to offset these costs Department Total: 403,342$
GENERAL FUND TOTAL REQUESTS: 2,491,707$
Comm. Dev. Vehicle Replacement Building 380-3300-5400 60,000$ #3318 2006 Ford F150 Mileage 116,289 or #3317 2005 Ford F150 Mileage 110,247 We have experienced an increase in service requests on both vehicles. Keeping the vehicles running and on the road is a necessity for the Division. We would like to replace one vehicle based. It will be determined which one the mechanics feel has a shorter life, should the request be approved.
Equipment ReplacementAvailable for Dept: $43k
Due to lead times of 4-6 months for delivery, there is a need to get this process started ahead of the new fiscal year.
Comm. Dev. Code Enforcement Vehicles x 3 Code Compliance 380-3350-5400 150,000$ Replacement of trucks due to high mileage and constant repair. Replacing with electric – trucks.
Equipment ReplacementAvailable for Dept: $172k
Due to lead times of 4-6 months for delivery, there is a need to get this process started ahead of the new fiscal year.
Department Total: 210,000$ Public Works Contractor for Tree Inventory Assessment Dists. 225-8250-2400 8,000$ Total cost for inventory is $24,000, to be allocated equally to 110, 225 and 228. Under Strategic Plan - Organizational Effectiveness, "Create tree trimming program based on grid." It has been determined that the existing inventory may be inaccurate; therefore it is important to conduct a more detailed and accurate inventory update through Cartegraph. Fund balance Needed in current year - part of Strategic Plan Public Works Contractor for Tree Inventory Assessment Dists. 228-8250-2400 8,000$ Total cost for inventory is $24,000, to be allocated equally to 110, 225 and 228. Under Strategic Plan - Organizational Effectiveness, "Create tree trimming program based on grid." It has been determined that the existing inventory may be inaccurate; therefore it is important to conduct a more detailed and accurate inventory update through Cartegraph. Fund balance Needed in current year - part of Strategic Plan Public Works Replacement of stolen utility tractor. Assessment Dists. 228-8265-5400 26,000$ Small ride on tractor "Gator" was stolen in May of 2021 from the Heartland District. Insurance reimbursement for loss was received in the amount of $23,446 to replace unit. Insurance Reimbursement This was a PO entered at year end and cancelled because it was not completed Public Works Emerson District Water Bill Assessment Dists. 228-8289-2110 10,000$ Cover water usage for remaining year. Unexpected break in main line water service resulted in excessive loss of water into a retention basin. Fund balance Utilities - cost outside of staff control Public Works Rancho Diamonte - Professional Services Assessment Dists. 229-8314-2710 29,000$ To establish appropriations for a newly formed Community Facilities District Fund balance Deposit received for CFD formation. Need approval for expenditures to right size budget - No net cost to fund Public Works New satallite based irrigation controllers Storm Drain 254-4650-2450 12,000$ MARY HENLEY PARK - Current irrigation controller at park is incapable of accomodating evapotransporation and rain information, as well as transmitting data to Cloud based information. Controller causes overwatering or excessive watering. By replacing with new satallite based controller, it will allow irrigation control to be handled from a centralized office. Fund Balance Needed in current year, use of fund balance Public Works Replace Streets Supervisor Truck Streets 380-4200-5400 36,000$ Replacing Unit 4213, which is 2001 Chevy Silvarado with 107,772 miles and cannot pass smog certification . Unit is obsolete and parts are difficult to obtain. Replace with new F150 Ford Pick-up.
Equipment Replacement FundAvailable for Dept: $728k
Due to lead times of 4-6 months for delivery, there is a need to get this process started ahead of the new fiscal year.
Public Works
Change position from Mantenance Worker I to Water Distribution Operator I Water 571-9000-1100 -$ Replace a vacant Maintenance Worker I position with a Water Distribution Operator I position. The City currently has a eligibility list of Water Distribution Operators. This change will help the department by adding more qualified water distribution operators which can make the department be more efficient. No impact Council action needed to change approved positions, no cost involved Public Works Increases in Fuel, Oil, Tires and Parts Fleet Maintenance 684-4550-2350 70,000$ Due to international logistics issues, inflation and other external impacts, costs of fuel, oils and fluids, tires and parts are experiencing a 10% to 12% increase in costs. Fund Balance No savings available. Line item critical to ongoing services
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Attachment A
Department Item/Service Description Program Account Number Amount Justification Funding Source Finance Comments Public Works Replacement of CNG tank on 2007 dump truck Fleet Maintenance 684-4550-2350 22,000$ CNG tanks have a certified life expectancy. The CNG tank on unit number 4212, a 2007 Autocar Dump truck has reached the end of its certified life and needs to be replaced in order to allow the continued operation of the dump truck. Fund Balance No savings available. Line item critical to ongoing services Department Total: 221,000$ Finance Contract service with Harris & Assoc. for AB1600 Reports Administration DIFF Funds 40,000$ AB1600 reports have not been updated since FY2016 and this will bring the report current and maintained on an annual basis. DIF Fund Balances Needs to be started as soon as possible.
Department Total: 40,000$
NON-GENERAL FUND TOTAL REQUESTS: $ 471,000
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CITY OF HEMET
GENERAL FUND (INCLUDING MEASURE U)- REVENUE AND EXPENDITURE REPORTAS OF DECEMBER 31, 2021 Initial
Budget
Purchase Order
Carryovers
Continuing
Appropriations
Council Approved
Amendments
Adjusted
Budget
Year to Date
Actual
% of Budget
Rcvd / Used
% of Budget
Remaining
REVENUE SUMMARY
GENERAL ADMIN 962,600 - - - 962,600 559,602 58.13% 41.87% PROPERTY TAXES (includes VLF) 15,017,000 - - - 15,017,000 2,475,727 16.49% 83.51% SALES TAXES 14,000,000 - - - 14,000,000 4,824,420 34.46% 65.54% MEASURE U 12,000,000 - - - 12,000,000 4,052,701 33.77% 66.23% OTHER TAXES & FEES 6,621,889 - - - 6,621,889 2,987,015 45.11% 54.89%LICENSES & PERMITS 72,764 - - - 72,764 - 0.00% 100.00%FINES & FORFEITURES 135,100 - - - 135,100 39,319 0.00% 100.00% USE OF MONEY & PROPERTY 390,500 - - - 390,500 41,799 10.07% 89.93%INTERGOVERNMENTAL 340,000 - - - 340,000 162,296 12.29% 87.71% MUTUAL AID REIMBURSEMENTS 500,000 - - - 500,000 74,691 32.46% 67.54% CHARGES FOR SERVICES 448,700 - - - 448,700 170,085 37.91% 62.09%OTHER FINANCING SOURCES 2,338,100 - - - 2,338,100 894,684 38.27% 61.73%COMMUNITY DEVELOPMENT 2,290,746 - 510,317 - 2,801,063 2,284,386 81.55% 18.45% Total revenue before transfers 55,117,399 0 510,317 0 55,627,716 18,566,725 33.38% 66.62% TRANSFERS IN 144,000 - - - 144,000 95,315 66.19% 33.81% TOTAL RESOURCES 55,261,399 0 510,317 0 55,771,716 18,662,039.83 33.46% 66.54%
EXPENDITURE SUMMARY
Projected Year End
Expenditures
CITY COUNCIL 148,900 - - - 148,900 64,973 43.64% 56.36% 0.2% 129,946 PEG FEES PROJECTS - - 541,304 73,950 615,254 925 0.00% 100.00% 0.0% 1,851 CITY MANAGER 1,318,900 - - - 1,318,900 565,896 42.91% 57.09% 2.1% 1,131,792 CITY CLERK 571,000 - - - 571,000 205,579 36.00% 64.00% 0.8% 411,158 FINANCE 1,175,200 21,000 1,196,200 540,811 45.21% 54.79% 2.0% 1,081,621CITY TREASURER 89,300 - - - 89,300 12,504 14.00% 86.00% 0.0% 25,009 HUMAN RESOURCES 507,500 1,832 509,332 276,605 54.31% 45.69% 1.0% 553,210POLICE DEPARTMENT 30,318,261 493,604 804,455 - 31,616,320 13,431,093 42.48% 57.52% 50.7% 26,862,185FIRE DEPARTMENT 15,515,000 75,346 339,986 - 15,930,332 7,115,985 44.67% 55.33% 26.9% 14,231,970FIRE DEPARTMENT-MUTUAL AID 400,000 - - - 400,000 876,368 219.09% 3.3% 1,752,735 ANIMAL REGULATION 318,000 - - - 318,000 157,529 49.54% 0.6% 315,058LIBRARY 1,525,600 - - - 1,525,600 722,508 47.36% 52.64% 2.7% 1,445,015 PARKS 950,600 - - - 950,600 518,224 54.52% 2.0% 1,036,448 COMMUNITY DEVELOPMENT 3,688,912 251,297 259,648 - 4,199,857 1,566,500 37.30% 62.70% 5.9% 3,133,001 NON-DEPARTMENTAL 22,000 - - - 22,000 6,444 29.29% 70.71% 0.0% 12,888ENGINEERING 1,541,800 99,351 - - 1,641,151 419,253 25.55% 74.45% 1.6% 838,505 Total expenditures before transfers 58,090,973 942,430 1,945,392 73,950 61,052,745 26,481,196 43.37% 56.63% 52,962,393 TRANSFERS OUT 20,000 - - - 20,000 15,714 0.00% 100.00% 20000 TOTAL USES 58,110,973 942,430 1,945,392 73,950 61,072,745 26,496,911 43.39% 56.61% 52,982,393
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CITY OF HEMET
NON-GENERAL FUND - REVENUE AND EXPENDITURE REPORT
AS OF DECEMBER 31, 2021
Initial
Budget
Continuing
Appropriations
Council
Approved
Amendments
Adjusted
Estimate
Year to Date
Actual
% of Budget
Remaining
130 PUBLIC SAFETY TOWING 61,000 - - 61,000 34,000 44.26% 221 GAS TAX 3,616,300 - - 3,616,300 1,455,581 59.75%
222 MEASURE A 2,030,000 - - 2,030,000 604,259 70.23%
223 ARTICLE 3 / SB 821 - - - - - 0.00%
224 AQMD 110,000 - - 0 110,000 27,773 74.75%
231 ASSET FOREITURE 13,700 - - 13,700 12,580 0.00%
234 PUBLIC SAFETY CFD 815,000 - - 815,000 - 100.00%
241 GENERAL PLAN 91,200 - - 91,200 108,600 0.00%
254 STORM DRAIN/SEWER 3,759,700 - - 3,759,700 1,811,726 51.81% 270 AMERICAN RESCUE PLAN
788 HEARTLAND BOND 810,000 - - 810,000 10,742 98.67%
11,306,900 0 0 11,306,900 4,065,261 64.05%
315 PUBLIC MEETINGS FACILITIES 2,000 - - 2,000 - 0.00%
316 GENERAL FACILITIES 244,000 - - 244,000 282,290 0.00% 326 FLOOD CONTROL 231,400 - - 231,400 588,907 -154.50%
329 BRIDGES/STREETS 1,199,400 - - 1,199,400 1,924,876 0.00% 331 LAW ENFORCEMENT 142,400 - - 142,400 172,271 0.00%
332 FIRE FACILITIES 218,000 - - 218,000 204,521 6.18%
361 PARK DEVELOPMENT 458,900 - - 458,900 450,658 0.00%
362 VALLEY WIDE DVL 86,400 - - 86,400 92,870 0.00%
363 LIBRARY FACILITIES 237,000 - - 237,000 264,718 -11.70% 370 CAPITAL PROJECTS FUND - 10,565,781 - 10,565,781 - 0.00% 375 CITY EMERGENCY / DISASTER FUND - - - - - 100.00%
2,819,500 10,565,781 - 13,385,281 3,981,110 70.26%
571 WATER 12,962,200 - - 12,962,200 8,637,590 33.36%
12,962,200 - - 12,962,200 8,637,590 33.36%
225 L&LMD 1,731,227 - - 1,731,227 29,083 98.32%
227 LIGHTING DIST POST 218 383,979 - - 383,979 (2) 100.00% 228 LANDSCAPE DIST POST 218 1,944,398 - - 1,944,398 23,446 98.79% 229 PUBLIC WORKS CFD - - - - - 100.00%
4,059,604 - - 4,059,604 52,527 98.71%
380 EQUIPMENT REPLACEMENT 10,000 - - 10,000 205,597 -1955.97% 680 ADMINISTRATIVE SERVICES 1,637,200 - - 1,637,200 850,251 48.07% 681 WORKERS COMP 1,424,700 - - 1,424,700 792,600 44.37% 682 MEDICAL/DENTAL 305,000 - - 305,000 112,700 63.05%
683 LIABILITY FUND 1,779,800 - - 1,779,800 952,080 46.51% 684 VEHICLE MAINTENANCE 1,464,300 - - 1,464,300 729,906 50.15% 685 FACILITIES MAINTENANCE 1,663,200 - - 1,663,200 875,624 47.35% 686 PW ADMINISTRATION 0 - - - 0 100.00%
689 OPEB 4,867,000 - - 4,867,000 2,453,604 49.59%
690 UNEMPLOYMENT BENEFITS 25,000 - - 25,000 12,504 49.98% 691 CITY ATTORNEY ALLOCATION 1,625,000 - - 1,625,000 1,058,753 34.85% 692 EMERGENCY SERVICES 0 - - - 0 100.00%
14,801,200 - - 14,801,200 8,043,618 45.66%
232 PUBLIC SAFETY GRANTS - 220,950 - 220,950 70,068 68.29% 236 COPS /AB 3229 3,000 218,789 175,000 396,789 112,628 71.62% 237 LLEBG - - - - - 100.00%
240 CDBG 878,386 841,313 - 1,719,699 138,371 91.95%
242 HOME - Program Income 7,500 - - 7,500 - 100.00%
245 CALHOME 1,600 - - 1,600 - 0.00%
246 HOME 11,000 - - 11,000 - 0.00%
247 NSP GRANT - - - - - 0.00%
260 INDIAN GAMING GRANTS - - - - - 0.00%
901,486 1,281,051 175,000 2,357,537 321,068 86.38%
46,850,890 58,872,722 25,101,174
TOTAL GRANT FUNDS
TOTAL
TOTAL ENTERPRISE FUND
ASSESSMENT DISTRICT FUNDS:
TOTAL ASSESSMENT DISTRICT
INTERNAL SERVICE FUNDS:
TOTAL INTERNAL SERVICE
GRANT FUNDS
SPECIAL REVENUE FUNDS
TOTAL SPECIAL REVENUES
DEVELOPMENT IMPACT FEE FUNDS:
TOTAL IMPACT FEE FUNDS
ENTERPRISE FUND:
REVENUE SUMMARY
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CITY OF HEMET
NON-GENERAL FUND - REVENUE AND EXPENDITURE REPORT
AS OF DECEMBER 31, 2021
Initial
Budget
Purchase Order
Carryovers
Continuing
Appropriations
Council
Approved
Amendments
Adjusted
Budget
Year to Date
Actual
% of Budget
Remaining
Projected Year
End Expenditures
130 PUBLIC SAFETY TOWING 52,100 - - - 52,100 33,762 35.20% 45,000 221 GAS TAX 1,549,700 10,930 3,038,256 1,650,000 6,248,886 784,388 87.45% 1,675,000 222 MEASURE A - 44,819 9,709,110 3,200,000 12,953,929 164,438 98.73% 328,875 223 ARTICLE 3 / SB 821 - - - - - 100.00% -
224 AQMD 5,000 - - - 5,000 557,291 -11045.83% 78,092
231 ASSET FOREITURE - 8,569 - 8,569 7,530 12.13% 8,569
234 PUBLIC SAFETY CFD 626,000 - - - 626,000 309,349 50.58% 576,400 241 GENERAL PLAN - - - - - 3,696 100.00% 10,000
254 STORM DRAIN/SEWER 2,917,800 - 6,578,207 1,555,000 11,051,007 1,297,324 88.26% 2,276,487 270 AMERICAN RESCUE PLAN - - - 13,500
788 HEARTLAND BOND 753,900 - - - 753,900 605,850 19.64% 773,500 5,904,500 55,749 19,334,142 6,405,000 31,699,391 3,777,129 88.08% 5,771,923 315 PUBLIC MEETINGS FACILITIES - - - - - 0.00% -
316 GENERAL FACILITIES - 500,000 - 500,000 100.00% 31,100 326 FLOOD CONTROL - - 2,080,111 - 2,080,111 260 99.99% 10,000 329 BRIDGES/STREETS - 8,925 4,223,942 453,500 4,686,367 1,835 99.96% 50,000 331 LAW ENFORCEMENT - - - - - - 100.00% -
332 FIRE FACILITIES - - - - - - 100.00% -
361 PARK DEVELOPMENT - 12,000 195,772 - 207,772 133,713 35.64% 77,000 362 VALLEY WIDE DVL - - - - - 23,605 0.00% 47,210
363 LIBRARY FACILITIES 159,500 - - - 159,500 45,581 71.42% 125,800 370 CAPITAL PROJECTS FUND - 7,265,551 1,727,569 - 8,993,120 880,881 0.00% 2,000,000 375 CITY EMERGENCY / DISASTER FUND - - - - - - 0.00% 80,367 159,500 7,286,476 8,727,394 453,500 16,626,870 1,085,875 93.47% 2,421,477 571 WATER 11,199,099 104,848 15,621,484 2,650,000 29,575,431 4,373,229 85.21% 19,224,030 11,199,099 104,848 15,621,484 2,650,000 29,575,431 4,373,229 85.21% 19,224,030 225 L&LMD 1,690,500 - 17,095 18,000 1,725,595 730,274 57.68% 1,500,000 227 LIGHTING DIST POST 218 280,420 - - 280,420 104,934 62.58% 178,000 228 LANDSCAPE DIST POST 218 1,906,550 - 18,000 1,924,550 833,491 56.69% 1,600,000 229 PUBLIC WORKS CFD - - 20,388 100.00% 40,776
3,877,470 - 17,095 36,000 3,930,565 1,689,087 57.03% 3,318,776 380 EQUIPMENT REPLACEMENT - - - - - - 100.00% -
680 ADMINISTRATIVE SERVICES 1,666,000 - - - 1,666,000 634,609 61.91% 1,901,783 681 WORKERS COMP 1,584,700 - - - 1,584,700 1,037,662 34.52% 1,300,000 682 MEDICAL/DENTAL 305,000 - - - 305,000 127,562 58.18% 320,000 683 LIABILITY FUND 1,898,600 - - - 1,898,600 1,417,187 25.36% 3,384,305 684 VEHICLE MAINTENANCE 1,441,500 - - - 1,441,500 705,314 51.07% 1,350,000 685 FACILITIES MAINTENANCE 1,663,100 - 231,451 - 1,894,551 735,477 61.18% 14,500,000 686 PW ADMINISTRATION - - 142,485 - 142,485 - 100.00% - 689 OPEB 4,907,100 - - - 4,907,100 1,980,157 59.65% 4,627,000 690 UNEMPLOYMENT BENEFITS 25,000 - - - 25,000 6,625 73.50% 35,000 691 CITY ATTORNEY ALLOCATION 1,625,000 - - - 1,625,000 145,984 91.02% 850,200 692 EMERGENCY SERVICES - - - - - 100.00% 97,994
15,116,000 - 373,936 - 15,489,936 6,790,577 56.16% 28,366,282 232 PUBLIC SAFETY GRANTS - - 220,950 220,950 77,926 64.73% 250,000 236 COPS /AB 3229 - - 218,788 - 218,788 65,028 70.28% 150,000 237 LLEBG - - - - - 0.00% -
240 CDBG 881,758 - 1,535,826 - 2,417,584 570,165 76.42% 1,000,000 242 HOME - Program Income - - - - - 0.00% -
245 CALHOME - - - - - - 0.00% -
246 HOME - - - - - - 0.00% -
247 NSP GRANT - - - - - 180 0.00% 9,365
260 INDIAN GAMING GRANTS - - - 0.00% -
881,758 - 1,975,564 - 2,857,322 713,299 75.04% 1,409,365 37,138,327 100,179,515 18,429,195
EXPENDITURE SUMMARY
TOTAL GRANT FUNDS
TOTAL
TOTAL ENTERPRISE FUND
ASSESSMENT DISTRICT FUNDS:
TOTAL ASSESSMENT DISTRICT
INTERNAL SERVICE FUNDS:
TOTAL INTERNAL SERVICE
GRANT FUNDS
SPECIAL REVENUE FUNDS
TOTAL SPECIAL REVENUES
DEVELOPMENT IMPACT FEE FUNDS:
TOTAL IMPACT FEE FUNDS
ENTERPRISE FUND:
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
CAPITAL PROJECTS
Acct Number Project Amount Project Subtotal
221-5666-1100 CIP 5666 - Florida Ave EVP/Opticom Hardware 2,489.06$ 221-5666-1400 CIP 5666 - Florida Ave EVP/Opticom Hardware 441.03$ 221-5666-1405 CIP 5666 - Florida Ave EVP/Opticom Hardware 596.31$ 221-5666-2710 CIP 5666 - Florida Ave EVP/Opticom Hardware 560.30$ 4,086.70$ 221-5690-1100 CIP 5690 - ST19 Citywide Street Improvements 92,346.71$ 221-5690-2220 CIP 5690 - ST19 Citywide Street Improvements 1,000.00$ 221-5690-2710 CIP 5690 - ST19 Citywide Street Improvements 82,473.35$ 221-5690-2714 CIP 5690 - ST19 Citywide Street Improvements 500.00$ 221-5690-5500 CIP 5690 - ST19 Citywide Street Improvements 1,168,000.00$ 1,344,320.06$ 221-5704-5500 CIP 5704 - 1920 Pavement Rehabilitation 43,057.00$ 43,057.00$ 221-5712-1100 CIP 5712 - Latham St Improvements 79,977.00$ 221-5712-1400 CIP 5712 - Latham St Improvements 5,331.80$ 221-5712-1405 CIP 5712 - Latham St Improvements 21,327.20$ 221-5712-2710 CIP 5712 - Latham St Improvements 90,154.50$ 221-5712-5500 CIP 5712 - Latham St Improvements 951,364.00$ 1,148,154.50$ 221-5713-1100 CIP 5713 - 2021 SB1 Pavement Rehabilitation 34,773.00$ 221-5713-1400 CIP 5713 - 2021 SB1 Pavement Rehabilitation 2,318.20$ 221-5713-1405 CIP 5713 - 2021 SB1 Pavement Rehabilitation 9,272.80$ 221-5713-2710 CIP 5713 - 2021 SB1 Pavement Rehabilitation 38,637.50$ 221-5713-5500 CIP 5713 - 2021 SB1 Pavement Rehabilitation 413,636.00$ 498,637.50$ 222-5001-5500 CI Holding Acct 524,790.03$ 524,790.03$
222-5686-1100 1718 Pavement Rehab 91,589.19$
222-5686-2220 1718 Pavement Rehab 854.40$
222-5686-2710 1718 Pavement Rehab 61,721.50$
222-5686-2714 1718 Pavement Rehab 500.00$
222-5686-5500 1718 Pavement Rehab 1,964,745.09$ 2,119,410.18$ 222-5687-1100 Kirby St Improvements 70,191.94$
222-5687-2220 Kirby St Improvements 434.00$
222-5687-2710 Kirby St Improvements 40,866.38$
222-5687-2714 Kirby St Improvements 500.00$
222-5687-5500 Kirby St Improvements 144,168.11$ 256,160.43$ 222-5688-1100 1819 Slurry Seal 97,790.72$
222-5688-2220 1819 Slurry Seal 949.40$
222-5688-2710 1819 Slurry Seal 45,967.00$
222-5688-2714 1819 Slurry Seal 500.00$
222-5688-5500 1819 Slurry Seal 484,847.46$ 630,054.58$
222-5696-1100 Hemet Valley Bikeway 17,604.08$
222-5696-2220 Hemet Valley Bikeway 500.00$
222-5696-5500 Hemet Valley Bikeway 2,460,067.75$ 2,478,171.83$ 222-5703-1100 19/20 Accessible Sidewalk/Ramps 5,098.81$ 222-5703-2710 19/20 Accessible Sidewalk/Ramps 8,084.60$ 222-5703-5500 19/20 Accessible Sidewalk/Ramps 15.00$ 13,198.41$ 222-5704-1100 1920 Pavement Rehabilitation 60,199.32$
222-5704-1400 1920 Pavement Rehabilitation 9,331.69$
222-5704-1405 1920 Pavement Rehabilitation 51,925.51$
222-5704-2220 1920 Pavement Rehabilitation 1,500.00$
222-5704-2710 1920 Pavement Rehabilitation 106,586.04 $ I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 20 of 27
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
CAPITAL PROJECTS (cont.)
Acct Number Project Amount Project Subtotal
222-5704-2714 1920 Pavement Rehabilitation 1,000.00$
222-5704-5500 1920 Pavement Rehabilitation 1,454,989.40$ 1,685,531.96$ 222-5705-2710 1920 Slurry Seal 32,489.47$ 32,489.47$
222-5709-1100 2021 Citywide Pavement Rehabilitation 75,000.00$ 222-5709-1400 2021 Citywide Pavement Rehabilitation 5,000.00$ 222-5709-1405 2021 Citywide Pavement Rehabilitation 20,000.00$ 222-5709-2220 2021 Citywide Pavement Rehabilitation 500.00$ 222-5709-2465 2021 Citywide Pavement Rehabilitation 500.00$ 222-5709-2710 2021 Citywide Pavement Rehabilitation 208,117.50$ 222-5709-5500 2021 Citywide Pavement Rehabilitation 1,440,000.00$ 1,749,117.50$ 222-5710-1100 2021 Slurry Seal 19,654.98$
222-5710-1400 2021 Slurry Seal 3,978.76$
222-5710-1405 2021 Slurry Seal 15,858.28$
222-5710-2220 2021 Slurry Seal 500.00$
222-5710-2710 2021 Slurry Seal 20,987.50$
222-5710-5500 2021 Slurry Seal 59,744.05$ 120,723.57$
222-5711-2710 Pavement Management Program Update 99,462.00$ 99,462.00$ 254-5653-1100 Sewer Main Line Replacement 500.00$
254-5653-1400 Sewer Main Line Replacement 500.00$
254-5653-1405 Sewer Main Line Replacement 2,000.00$
254-5653-2220 Sewer Main Line Replacement 2,000.00$
254-5653-2710 Sewer Main Line Replacement 220,171.14$
254-5653-2714 Sewer Main Line Replacement 1,000.00$
254-5653-5500 Sewer Main Line Replacement 5,841,524.00$ 6,067,695.14$ 254-5663-2220 Sewer Man Hole Rehab 1,000.00$
254-5663-2710 Sewer Man Hole Rehab 16,000.00$
254-5663-2714 Sewer Man Hole Rehab 1,000.00$
254-5663-5500 Sewer Man Hole Rehab 142,000.00$ 160,000.00$ 254-5672-2710 ERP Planning System 250,000.00$ 250,000.00$ 326-4650-5400 Clarifier Units for Corp Yard 107,340.00$ 326-4650-5500 Storm Drain Maintenance 290,000.00$ 397,340.00$ 326-5590-1100 State St Storm Drain 199,427.76$
326-5590-1300 State St Storm Drain 15,500.00$
326-5590-1400 State St Storm Drain 6,135.75$
326-5590-1405 State St Storm Drain 38,724.06$
326-5590-2220 State St Storm Drain 500.00$
326-5590-2465 State St Storm Drain 200.00$
326-5590-2710 State St Storm Drain 58,548.44$
326-5590-2714 State St Storm Drain 700.00$
326-5590-5500 State St Storm Drain 1,253,920.18$ 1,573,656.19$ 326-5592-2710 Master Drainage Plan 109,115.06$ 109,115.06$ 329-4130-5400 Major Machinery & Equipment 176,000.00$ 176,000.00$ 329-5001-5505 Grants Reimbursable Const Exp Holding 495,728.71$ 495,728.71$ 329-5613-1100 Traffic Signal at Warren/Auto 105,203.10$ 329-5613-1400 Traffic Signal at Warren/Auto 5,325.83$
329-5613-1405 Traffic Signal at Warren/Auto 27,834.83 $ 329-5613-2710 Traffic Signal at Warren/Auto 43,609.72 $ I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 21 of 27
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
CAPITAL PROJECTS (cont.)
Acct Number Project Amount Project Subtotal
329-5613-2714 Traffic Signal at Warren/Auto 1,094.68$
329-5613-5500 Traffic Signal at Warren/Auto 443.45$ 183,511.61$ 329-5639-1100 Update DIF Analysis 18,000.00$
329-5639-1400 Update DIF Analysis 1,480.00$
329-5639-1405 Update DIF Analysis 5,220.00$
329-5639-2220 Update DIF Analysis 200.00$
329-5639-2710 Update DIF Analysis 275,000.00$
329-5639-2714 Update DIF Analysis 100.00$ 300,000.00$
329-5651-1100 HWY Safety Improvement 12,836.58$
329-5651-1400 HWY Safety Improvement 405.20$
329-5651-1405 HWY Safety Improvement 6,625.84$
329-5651-2710 HWY Safety Improvement 956,930.50$ 976,798.12$ 329-5668-1100 Interim Seattle Basin Improvements 17,000.00$ 329-5668-1400 Interim Seattle Basin Improvements 1,000.00$ 329-5668-1405 Interim Seattle Basin Improvements 7,000.00$ 329-5668-2710 Interim Seattle Basin Improvements 169,602.90$ 194,602.90$ 329-5670-2710 Chambers St Drainage 20,000.00$ 20,000.00$ 329-5706-1100 Esplanade Ave Improvements 56,702.07$
329-5706-1400 Esplanade Ave Improvements 3,780.14$
329-5706-1405 Esplanade Ave Improvements 15,120.55$
329-5706-2710 Esplanade Ave Improvements 377,301.00$
329-5706-5500 Esplanade Ave Improvements 1,424,397.24 $ 1,877,301.00$ 370-5697-1100 CIP 5697 McSweeny Phase 1 72,647.57$
370-5697-2710 CIP 5697 McSweeny Phase 1 46,747.73$
370-5697-5500 CIP 5697 McSweeny Phase 1 54,794.40$ 174,189.70$ 370-5698-1100 CIP 5698 McSweeny Phase 2 82,491.33$
370-5698-2710 CIP 5698 McSweeny Phase 2 52,726.23$
370-5698-5500 CIP 5698 McSweeny Phase 2 627,072.90$ 762,290.46$ 370-5699-1100 CIP 5699 McSweeny Phase 3 83,351.87$
370-5699-2710 CIP 5699 McSweeny Phase 3 52,227.54$
370-5699-5500 CIP 5699 McSweeny Phase 3 655,509.36$ 791,088.77$ 571-5598-2220 Echo Hills Phase III Santa Fe 1,000.00$
571-5598-2710 Echo Hills Phase III Santa Fe 372.50$
571-5598-2714 Echo Hills Phase III Santa Fe 500.00$
571-5598-5500 Echo Hills Phase III Santa Fe 93,500.00 $ 95,372.50$ 571-5627-2220 Water Quality Treatment 5,000.00$
571-5627-2465 Water Quality Treatment 20,000.00$
571-5627-2710 Water Quality Treatment 542,270.00$
571-5627-5500 Water Quality Treatment 1,103,300.00$ 1,670,570.00$ 571-5507-5500 State St Water Line Improvements 500,000.00$ 500,000.00$ 571-5655-5500 Echo Hills Tank Site and Water Line Improvements 3,500,000.00$ 3,500,000.00$ 571-5661-1100 Water Main Replacement - Park-Flda 5,000.00$ 571-5661-2465 Water Main Replacement - Park-Flda 500.00$ 571-5661-2710 Water Main Replacement - Park-Flda 135,527.50$ 571-5661-5500 Water Main Replacement - Park-Flda 1,967,390.00$ 2,108,417.50$ 571-5714-1100 Kirby and Arbor Water Main Replacement 11,250.00$ 571-5714-1400 Kirby and Arbor Water Main Replacement 750.00$ I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 22 of 27
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
CAPITAL PROJECTS (cont.)
Acct Number Project Amount Project Subtotal
571-5714-1405 Kirby and Arbor Water Main Replacement 3,000.00$ 571-5714-2220 Kirby and Arbor Water Main Replacement 500.00$ 571-5714-2465 Kirby and Arbor Water Main Replacement 3,000.00$ 571-5714-2710 Kirby and Arbor Water Main Replacement 23,521.50$ 571-5714-5500 Kirby and Arbor Water Main Replacement 303,000.00$ 345,021.50$ 571-5715-5500 Tank 2 Recoat 250,000.00$ 250,000.00$
571-5716-1100 Well 2A Rehab 3,750.00$
571-5716-1400 Well 2A Rehab 250.00$
571-5716-1405 Well 2A Rehab 1,000.00$
571-5716-2220 Well 2A Rehab 500.00$
571-5716-2710 Well 2A Rehab 15,023.00$
571-5716-5500 Well 2A Rehab 59,580.00$ 80,103.00$
571-5717-5500 Well 15 & 16 Treatment 5,000,000.00$ 5,000,000.00$ 571-5719-5500 Water Distribution System Analysis 155,000.00$ 155,000.00$ 685-5679-5300 Facilities - Fire Station Rehabilitation 57,222.23$ 57,222.23$ 686-5676-5300 PW Modular Replacement 75,000.00$ 75,000.00$ Total Capital Projects: 41,093,390.11$
GRANT PROJECTS - CDBG GRANTS
Acct Number Project Amount Project Subtotal
240-3450-2220 CV-COH Administration 659.05$
240-3450-2710 CV-COH Administration 3,000.00$ 3,659.05$ 240-3452-2400 CV-Salvation Army Housing Stability Prog 37,974.24$ 37,974.24$ 240-3453-2400 CV-My City Youth Food Program 32,800.22 $ 32,800.22$ 240-3455-2400 CV-Exceed Tech Devices 21,933.68$ 21,933.68$ 240-3456-2400 CV-Community Pantry Help Our People 7,368.20$ 7,368.20$ 240-3458-2400 CV3-Valley Restart Shelter 6,185.69$ 6,185.69$ 240-3459-2400 CV3-Hemet Cares Business Support 360,000.00$ 360,000.00$ 240-3460-1100 CV3-COH Administration 22,399.70$
240-3460-1400 CV3-COH Administration 1,753.83$
240-3460-1405 CV3-COH Administration 15,608.32$
240-3460-2200 CV3-COH Administration 146.40$ 39,908.25$ 240-3469-1100 Engineering - Sidewalk and ADA Ramps (CIP 5707) 22,611.00$ 240-3469-1400 Engineering - Sidewalk and ADA Ramps (CIP 5707) 1,507.40$ 240-3469-1405 Engineering - Sidewalk and ADA Ramps (CIP 5707) 6,029.60$ 240-3469-2710 Engineering - Sidewalk and ADA Ramps (CIP 5707) 33,164.00$ 240-3469-5500 Engineering - Sidewalk and ADA Ramps (CIP 5707) 268,172.00$ 331,484.00$ 240-3853-5500 CI Holding Acct 694,513.15$ 694,513.15$
Total Grant Projects - CDBG Projects: 1,535,826.48$
I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 23 of 27
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
GRANT PROJECTS - OTHER
Acct Number Project Amount Project Subtotal
110-3100-5410 PACT Host Agency Grant 105,035.12$ 105,035.12$ 120-1700-2710 Leap Grant 118,630.00$ 118,630.00$
120-1710-2710 SB2 - Planning Grant Program 132,297.50 $ 132,297.50$ 232-3112-2450 2020 Coronavirus Grant 26,354.22$
232-3112-5400 2020 Coronavirus Grant 3,141.54$ 29,495.76$ 232-3114-5400 2020 JAG Grant 871.00$ 871.00$
232-3115-2270 20/21 OTS Grant# PT21047 1,761.52$
232-3115-2710 20/21 OTS Grant# PT21047 36,900.00$ 38,661.52$ 232-3116-1300 20/21 OTS (STEP) Grant# PT21148 67,191.67$ 232-3116-2260 20/21 OTS (STEP) Grant# PT21148 4,990.00$ 232-3116-2270 20/21 OTS (STEP) Grant# PT21148 4,250.00$ 232-3116-2560 20/21 OTS (STEP) Grant# PT21148 4,000.00$ 80,431.67$ 232-3193-5400 BSCC Grant 4,489.60$ 4,489.60$
232-3266-5400 CHOG FY 2018 Equipment 67,000.00$ 67,000.00$ 236-3117-5400 19/20 STATE COPS GRANT ALLOCATION 101,241.60$ 101,241.60$ 236-3118-5400 20/21 STATE COPS SLESA 117,547.00$ 117,547.00$ Total All Other Grants: 795,700.77$
GENERAL PROJECTS
Acct Number Project Amount Project Subtotal
100-1150-2710 PEG Fees Project 25,232.92$
100-1150-5300 PEG Fees Project 514,876.74$ 540,109.66$
110-3100-5405 Gang Task Force Seed Money 1,194.09$ 1,194.09$ 110-3101-5400 Police Measure U - Radio System Replacement 555,678.31$ 110-3101-5400 Police Measure U - Enforcement Vehicles 143,741.42$ 699,419.73$ 110-3240-5400 Fire Measure U - Radio System Replacement 240,511.30$ 110-3240-5400 Fire Measure U - Apparatus Type 1 Engine Company 87,194.81$ 110-3240-5400 Fire Measure U - 911 Phone Hardware/Software 12,279.70$ 339,985.81$ 120-1700-2706 Downtown Specific Plan 8,720.00$ 8,720.00$ 225-8250-5400 Street Light Pole Replacements 17,094.82$ 17,094.82$ 241-1750-2710 General Plan Update 50,739.00$ 50,739.00$ 254-4650-5400 McCoy DIF Credit 100,511.59$ 100,511.59$
316-5001-2260 ERP System - IT 500,000.00$ 500,000.00$
361-7150-2710 Parks Master Plan ($150,000 xxx-5001-xxxx) 195,771.50$ 195,771.50$ 571-5001-2260 Enterprise Refresh - Water 300,000.00$ 300,000.00$ 571-9000-2410 GWMP Water Purchase CY18 1,556,999.71$ 1,556,999.71$ 571-9000-5400 Well Site Security Fencing (FS #2) 60,000.00$ 60,000.00$ 685-4560-5400 HVAC Replacements (14/15 & 15/16) - CIP 5558 231,450.78$ 231,450.78$ 686-4150-2801 CA Beverage Container 10,262.99$ 10,262.99$ Total General Projects: 4,612,259.68$
OTHER MISCELLANEOUS DEPARTMENTAL REQUESTS
Acct Number Project Amount Project Subtotal
231-3150-2560 Asset Seizure Training & Education 2,569.42$ 2,569.42$ 231-3151-2710 Narcotics/Crime Informants Award Fund - petty cash 6,000.00$ 6,000.00$ Total Other Miscellaneous Departmental Requests: 8,569.42$ Grand Total of all Continuing Appropriations: 48,045,746.46$ I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 24 of 27
15.G
Continuing Appropriations
For the Fiscal Year Ending June 30, 2021
Summary of Continuing Appropriations by Function
Capital Projects 41,093,390.11$
CDBG Grants 1,535,826.48$
Grant Projects 795,700.77$
General Projects 4,612,259.68$
Miscellaneous Projects 8,569.42$
Total Continuing Appropriations: 48,045,746.46$
CONTINUE GRANT REVENUES FOR THE YEAR ENDING JUNE 30, 2021 Account Description
120-0584 Community Development Grant Reimbursement 510,316.95$ 232-0582 Public Safety Grants 220,949.55$
236-0526 State COPS Funding 218,788.60$
240-0540 CDBG - Admin Projects 43,567.30$
240-0542 CDBG - Streets Projects 331,484.00$
240-0592 CDBG - HCD Grants 466,262.03$
370-0716 Capital Projects - Project Reimbursement 10,565,780.86$ TOTAL GRANT REVENUE: 12,357,149.29$
Approved, Lorena Rocha, Finance Director Date
Approved, Christopher Lopez, City Manager Date
I:\COMMON\FNCE\SPREADS\Audit21\Continuing Appropriations 2021\Continuing Appropriations Signature Page.xlsx All Dept FY2021 Signature Page 1/20/2022 Page 25 of 27
15.G
PO # PO Description PO Date Vendor # Vendor Name Ship-to Code
PO Type
Code
Close
Status
Total PO
Amount
Amount Owing
2021-000338 BUILDING DIVISION PLAN
REVIEW SERVICES
11/5/2020 96645 4LEAF INC Building
Dept
reg $80,000.00 $2,371.26
2021-000232 CIP 5697 MCSWEENY
FARMS PHASE I
8/11/2020 97106 A T P GENERAL
ENGINEERING
Engineering reg $1,617,958.50 $292,663.50
2020-000453 SB2 PLANNING GRANT
PROGRAM
7/1/2020 84512 ADVANCE PLANNING
LLC
Planning reg $81,650.00 $49,179.70
2021-000276 TRAFFIC IMPACT
ANALYSIS STUDY
SERVICES
9/9/2020 76829 ALBERT A WEBB
ASSOCIATES
Engineering reg $24,851.00 $21,480.25
2021-000144 CIP 5697, 5698, 5699
MCSWEENY ALLIANT
7/16/2020 94493 ALLIANT CONSULTING
INC
Engineering reg $48,370.00 $47,847.50
2021-000200 LABOR COMPLIANCE
OVERSIGHT FOR
MICROWAVE PROJECT
8/5/2020 94493 ALLIANT CONSULTING
INC
PD reg $12,721.00 $6,739.75
2021-000166 CIP 5705 19/20 SLURRY
SEAL
7/27/2020 96463 AMERICAN ASPHALT
SOUTH INC
Engineering reg $747,970.00 $12,511.40
2021-000419 PO FOR EMERGENCY
WATER REPAIRS ON
FLORIDA AVE
2/5/2021 97301 ATOM ENGINEERING
CONSTRUCTION
Water reg $139,486.83 $139,486.83
2021-000474 (5) FULLY-OUTFITTED 2021
BMW POLICE
MOTORCYCLES
3/30/2021 97332 BMW MOTORCYCLES
OF ESCONDIDO
PD reg $169,117.51 $169,117.51
2021-000308 INITIAL STUDY AND
MITIGATED NEGATIVE
DECLARATION FOR SB2
10/6/2020 82195 C A S C ENGINEERING
CONSULTING
Planning reg $19,649.00 $19,649.00
2021-000307 BUILDING DIVISION PLAN
REVIEW SERVICES
10/6/2020 91072 C S G CONSULTANTS
INC
Building
Dept
reg $100,000.00 $331.25
2020-000473 CIP 5703 ACCESSIBLE
SIDEWALK & ADA
7/1/2020 89603 C T & T CONCRETE
PAVING INC
Engineering reg $230,012.00 $3,372.00
2021-000277 CANON FINANCIAL
SERVICES, INC
9/9/2020 93130 CANON FINANCIAL
SERVICES INC
HR bla $3,225.36 $537.56
2021-000483 CANON LEASE
AGREEMENT HPD PACT
4/8/2021 93130 CANON FINANCIAL
SERVICES INC
Pact Bldg reg $990.50 $73.06
2021-000347 BLANKET PURCHASE
ORDER LEASE OF PD
RECORDS CANON COPIER
6565I II
11/18/2020 93130 CANON FINANCIAL
SERVICES INC
PD bla $2,754.00 $757.36
2021-000348 BLANKET PURCHASE
ORDER LEASE OF PD
TRAFFIC COPIER 6565I II
11/18/2020 93130 CANON FINANCIAL
SERVICES INC
PD bla $2,754.00 $757.36
2021-000349 BLANKET PURCHASE
ORDER LEASE
AGREEMENT OF PD
RECORDS FAX 1435IF
11/18/2020 93130 CANON FINANCIAL
SERVICES INC
PD bla $296.40 $81.52
2021-000243 MAINTENANCE
AGREEMENT
8/13/2020 74244 CANON SOLUTIONS
AMERICA INC
Building
Dept
reg $814.00 $256.65
2021-000484 CANON MAINTENANCE
AGREEMENT HPD PACT
4/8/2021 74244 CANON SOLUTIONS
AMERICA INC
Pact Bldg reg $413.47 $385.25
2021-000046 MAINTENANCE
AGREEMENT CANON
C5255 COPIER PD ADMIN
YEAR 5 0F 5
7/1/2020 74244 CANON SOLUTIONS
AMERICA INC
PD reg $1,918.44 $329.82
2021-000350 BLANKET PURCHASE
ORDER MAINTENANCE
AGREEMENT PD
RECORDS COPIER CANON
6565I II
11/18/2020 74244 CANON SOLUTIONS
AMERICA INC
PD bla $1,900.00 $1,450.33
2021-000351 BLANKET PURCHASE
ORDER MAINTENANCE
AGREEMENT PD TRAFFIC
CANON COPIER 6565I II
11/18/2020 74244 CANON SOLUTIONS
AMERICA INC
PD bla $1,600.00 $1,379.74
2021-000352 BLANKET PURCHASE
ORDER MAINTENANCE
AGREEMENT PD
RECORDS FAX 1435IF
11/18/2020 74244 CANON SOLUTIONS
AMERICA INC
PD bla $600.00 $473.62
2020-000151 INSTALL VESTA PRI
MODULE IN EXISTING
VESTA GATEWAY
7/1/2020 94471 CAROUSEL
INDUSTRIES OF
PD reg $6,835.19 $6,835.19
2021-000475 CONSULTING FOR USER
FEE STUDY
3/30/2021 97353 CLEARSOURCE
FINANCIAL
Finance reg $34,800.00 $21,000.00
2018-000542 RADIO READ WATER
METERS
7/1/2020 77258 CORE & MAIN LP $1,529,356.23 $14,466.59
2020-000079 CIP 5666 FLORIDA AVE
EVP/OPTICOM
7/1/2020 84721 D D L TRAFFIC INC Engineering reg $23,196.00 $8,296.40
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2020-000356 CIP 5613 TRAFFIC SIGNAL
@ WARREN & AUTO
7/1/2020 96818 ELECNOR BELCO
ELECTRIC INC
Engineering reg $298,356.55 $8,000.16
2021-000309 VEHICLE MILES TRAVELED
(VMT) FOR SB2 GRANT
10/6/2020 97165 FEHR & PEERS Planning reg $32,920.00 $16,369.25 2021-000225 15 BULLET PROOF VESTS 8/10/2020 70822 GALLS, LLC PD reg $11,461.82 $7,641.22 2021-000253 ENGINEERING SERVICES
FOR FISCAL YEAR 20/21
GENERAL FUND WORK
8/20/2020 96309 H R GREEN PACIFIC
INC
Engineering reg $175,000.00 $77,870.25
2021-000542 HOUSING ELEMENT
UPDATE
6/14/2021 97441 KIMLEY-HORN AND
ASSOCIATES INC
Planning reg $191,135.00 $172,872.50
2021-000173 CIP 5697, 5698, 5699 MC
SWEENY FARMS
7/27/2020 96675 KOA CORPORATION Engineering reg $156,370.00 $70,790.28 2021-000385 KOA - SECOND
AMENDMENT TO
AGREEMENT FOR
12/28/2020 96675 KOA CORPORATION Engineering reg $18,650.00 $6,495.00 2020-000268 KOFF & ASSOCIATESCOMPENSATION STUDY7/1/2020 96500 KOFF & ASSOCIATES INC
HR reg $35,028.00 $1,294.00
2021-000565 PR FOR CIP 5716 6/30/2021 96037 KYLE GROUNDWATER INC
Water reg $49,977.00 $49,977.00
2020-000319 CIP 5696 HEMET VALLEY
BIKEWAY
7/1/2020 79769 L S A ASSOCIATES,
INC
Engineering reg $44,151.00 $32,307.97
2021-000235 CIP 5698 MCSWEENY
FARMS PHASE II
8/11/2020 97105 LEONIDA BUILDERS
INC
Engineering reg $3,439,427.56 $3,349,427.56
2021-000236 CIP 5699 MCSWEENY
FARMS PHASE III STATE
8/11/2020 97105 LEONIDA BUILDERS
INC
Engineering reg $3,587,984.14 $3,498,327.45
2021-000313 OBJECTIVE DESIGN &
DEVELOPMENT
STANDARDS
10/6/2020 92431 M I G INC Planning reg $28,690.00 $5,246.70 2021-000477 (6) MOTOROLA MCC7500E
DISPATCH CONSOLES
3/30/2021 87139 MOTOROLA
SOLUTIONS INC
PD reg $819,379.00 $259,171.40
2021-000408 DESIGN PROFESSIONAL
SERVICES GIBBEL PARK
SKATE PLAZA
2/4/2021 97255 NEW LINE
SKATEPARKS FL INC
Parks reg $68,500.00 $12,000.00
2020-000462 CIP 5704 PHASE I
PAVEMENT REHAB
7/1/2020 97010 ONYX PAVING
COMPANY INC
Engineering reg $919,860.00 $2,633.37
2016-000595 ENGINEERING DESIGN
FOR NEW TRAFFIC SIGNAL
@ WARREN & AUTO BLVD
7/1/2020 94443 S T C TRAFFIC INC Engineering reg $27,414.17 $925.00 2020-000419 SOU TRAINING
AMMUNITION
7/1/2020 57297 SAN DIEGO POLICE
EQUIPMENT
PD reg $3,551.61 $1,765.12
2021-000260 TRAINING AMMUNITION
FOR HPD
8/20/2020 57297 SAN DIEGO POLICE
EQUIPMENT
PD reg $18,187.13 $5,960.96
2021-000517 (4) ARMOR EXPRESS
VORTEX LEVEL 3 VEST
5/10/2021 57297 SAN DIEGO POLICE
EQUIPMENT
PD reg $11,553.60 $11,553.60
2021-000518 PO FOR URBAN WATER
MANAGEMENT PLAN
5/10/2021 97379 STETSON ENGINEERS
INC
Water reg $29,000.00 $26,356.00
2021-000314 CIP 5708 ANNUAL ON-CALL
STRIPING
10/6/2020 97141 SUPERIOR PAVEMENT
MARKINGS INC
Engineering reg $50,000.00 $50,000.00
2021-000082 PUBLIC SAFETY
MICROWAVE RADIO
PURCHASE
7/8/2020 97076 TELECOM INC PD reg $542,923.73 $105,415.36 2020-000438 SCADA SERVER
PROGRAMMING
7/1/2020 95908 TESCO CONTROLS
INC
$58,420.00 $11,684.00
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City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Jan 25 2022
Department: Finance
Submitted by: Christopher Lopez, City Manager
Lorena Rocha, Finance Director;
☐ Receive and File ☐ Consent Calendar ☒ Business Item ☐ Public Hearing TITLE:
Discussion of Section 115 Trust
RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Discuss funding options to address the Other Post Employment Benefits (OPEB) and Public Employee Retirement System (PERS) Unfunded Liabilities and provide direction to staff.
BACKGROUND:
Municipal Governments such as the City of Hemet, provide services to their Citizens. With that, the City's single highest cost of its Operating Budget is the cost of personnel hired to provide these services.
Personnel costs include not only employee salaries, but also fringe benefits such as Workers Compensation Insurance, Medicare contributions, Retirement Plans, and Healthcare options to name a few. This is true for public and private entities.
The City of Hemet has two (2) pension accounts with the California Public Employees’ Retirement System (CalPERS): one (1) to fund public safety employees and one (1) for miscellaneous employees.
The accounts are funded by employer and employee contributions and by investment earnings on those contributions. These funds guarantee a pension payment to employees upon meeting PERS criteria and vesting. In order to reach necessary funding levels to pay employee pensions, CalPERS establishes a set of actuarial assumptions to achieve those levels.
In addition, until 1998, the City of Hemet offered employees Lifetime Medical Benefits when they retired from the City. The City currently has approximately 245 retirees receiving this benefit. As the cost of medical premiums continues to rise, the future liabilities of this plan grow. The most current Valuation Report completed with a Valuation date of 01/01/2021, reports the City's Unfunded Liability at approximately $50.9 million. This amount has increased by over $1 million since the last report completed 2 years prior.
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On November 10, 2020, Staff presented Council with options for funding the City's current Unfunded Liabilities related to PERS Retirement Funds and Other Post Employment Benefits (OPEB). At the meeting, Council and City Staff discussed the items below.
Summary of November 10, 2020 Discussion:
One of the most critical assumptions in attaining full funding goals in the CalPERS plans is the rate of return on investments in the trusts. CalPERS’ current annual rate of return (ROR) assumption is 7.00 percent. This is also referred to as the Discount Rate. Assuming this rate of return is attained, the funding of the pension obligations would be derived 66% from investment gains and 34% from contributions. If the 7.00% rate of return is not realized, contributions from employers and employees must increase in order to make up any investment shortfalls. Unfortunately, CalPERS has not consistently achieved this ROR. The outlook from the investment community and actuaries for a 7.00% annual rate of return is increasingly pessimistic. In fact, the rate of return for Fiscal Year 2019/2020 was 4.75%, significantly lower than projected.
The Annual Valuation Reports issued in July 2020 show the City’s current unfunded liability stands at $109,878,942. The Safety Plan’s share of this liability is $72,655,600 with a funding ratio of 62.5% while the miscellaneous plan has an unfunded liability of $37,223,342, and a funding ratio of 71.1%.
These amounts do not take into account any raises already approved for Public Safety or potential raises approved in the next five years. The City Council can absolutely expect PERS rates to increase on a go-forward basis.
Annual required PERS payments are projected to increase approximately 15% over the next 5 years.
Just in the next fiscal year, the City’s increase to its annual payment is expected to increase $388,000.
This does not include any other increases to salary and/or benefit levels. This number will increase each year with the increase in five years escalating to $1.4M. Collectively these increases will cost the City $2.3M over the next five years.
As a result of the increases to PERS cost, the City has been forced to reduce the number of employees, yet expectations remain the same. In order to minimize future reductions, and to better plan for the future, staff believes there are opportunities to prefund these PERS liabilities, or prepare for future increases so that the City does not reduce future programming.
The City can achieve this in multiple ways. Some of the discussed options included the following:
Pre-funding PERS:
Any additional payments sent to PERS above the annual required contribution would be subject to the same ROR obtained on normal annual payments. If PERS does not achieve their ROR, the City would essentially lose money and the unfunded liability would continue to grow.
Establishing a Section 115 Trust Fund:
Until recently, the City’s only option for reducing the unfunded actuarial accrued liability was to commit additional funds to CalPERS. Unfortunately, these funds would be subject to the same market volatility as the CalPERS investment policy, and the funds are not accessible to the City for other pension expenses. A few years, a private letter ruling was received from the IRS that establishes that under Section 115 of the Internal Revenue Code, public agencies or municipalities could create a separate trust to “pre-fund” its CalPERS unfunded liability. This would provide an alternative to sending the funds
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to CalPERS and would provide greater local control over the assets and investment portfolio management.
Some of the benefits of establishing a Trust fund are as follows:
• Act as a reserve fund to offset potential volatility in CalPERS annual contribution or rate requirements
• Allow more control and flexibility in investment allocations • Realize higher investment returns than by maintaining monies within the City’s portfolio that is restricted by State regulations to fixed income instruments • Diversifies investments in pension and retiree medical trusts • Act as a set-aside and available for use in reducing the City’s pension obligations • Solidifies the City’s triple A credit rating by demonstrating proactive action in meeting pension obligations
Issuing Pension Obligation Bonds:
Although Pension Obligation Bonds have been used by Agencies in the past, financial experts including the Government Finance Officers Association (GFOA) strongly discourage the use of this approach as it only delays and compounds the inevitable financial impacts. Bonds would pay off the unfunded liability at a specific point in time, but would not protect the City from additional unfunded liability building up if PERS continues to fall short on these ROR.
Work with employee bargaining units to increase employee pension contributions:
Although many local agencies and their employees have entered into agreements to share the cost of PERS, this requires discussions with bargaining groups through the meet and confer process.
During this discussion, Council directed staff to research establishing a Section 115 Trust Fund and bring it back for consideration. Council was very clear that investing in Retirement Bonds or increasing contributions to CalPERS were not desired options since CalPERS is very conservative in their investment strategy. Council also discussed whether it was beneficial to invest all unreserved fund balance into a Section 115 Trust as the City has other priorities within the city.
ANALYSIS:
In July 2021, CalPERS issued new Actuarial Reports for all Agencies including the City of Hemet.
Around this time, PERS also announced their rate of return for FY2020/2021 was 21.3%. Despite this increased Rate of Intern for the most recent fiscal year, the City's unfunded liability grew again. The City's Miscellaneous Plan has an Unfunded Liability of $38.7 million while the Safety Plan has an Unfunded Liability of $75.7 million. The combined Liability of these plans is over $114 million, an increase of nearly $5 million over last year. To be clear, this increase is over the life of the plan and not due within the next fiscal year. What will be due in the next fiscal year is an increase to the required contribution toward the Unfunded Liability. The City can expect to see a combined increase of $491,000 across both plans in FY22/23.
Historically, the annual payments for the Unfunded Liability portion of PERS costs has increased $3.2 million over the last 5 years.
EMPLOYER PAYMENT OF UNFUNDED LIABILITY
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Miscellaneous Plan Safety Plan Increase over Prior
Year
FY2017-2018 $ 2,162,763 $ 3,676,042 $ -
FY2018-2019 $ 2,770,349 $ 4,513,361 $ 1,444,905
FY2019-2020 $ 2,853,460 $ 4,739,815 $ 309,565
FY2020-2021 $ 2,903,086 $ 4,972,883 $ 282,694
FY2021-2022 $ 2,987,406 $ 5,536,588 $ 648,025
FY2022-2023 $ 3,096,427 $ 5,918,629 $ 491,062
TOTAL INCREASE: $ 3,176,251
In addition, normal cost or the Pay-As-You-go cost of PERS has increased another $1.1 million. In FY2017/2018, total PERS cost for the City was $8.1 million. The total PERS cost for FY2020/2021 was $12.4 million.
For Unfunded Liability, it is important to note the big increase from FY2017-18 to FY2018-19. This is mainly due to a change in amortization schedule from 30 years to 20 years, meaning, the City can expect to pay off the Unfunded Liability over a 20 year period. Additionally, PERS lowered its discount rate from 7.5% in FY2017-18 to 7.375% in FY2018-19.
Under the City's current policy, this increase in required contributions means the City would have to increase revenues or reduce expenditures by a comparable amount in order to afford this.
This is a perfect example of how a Section 115 Trust could help. When funded, the money in the trust can be used to help reduce volatility in payment amounts from one year to the next. This in turn would give the City the ability to continue to provide services to the community, provide job security to its employees, and increase retention. When employees are not concerned about how the City will balance its annual budget, they are more likely to stay with the City longer.
DISCUSSION:
There are many different approaches the City can take to fund a Section 115 Trust.
Some of the options include:
• Using seed money from Unreserved Fund Balances to start the Trust, then annual contributions based on Council approved criteria. It is important to keep in mind that all funds where employees are funded out of would contribute to the Trust as a direct proportion of total salary costs. The General Fund has an estimated $11 million in unreserved Fund Balance. A portion of this balance could be used as seed money to open the Trust. The City of Temecula has implemented such a policy and is attached for reference. • Contribute a percentage of a given year's realized year end surplus to address pension liability.
For example, if Council adopted a funding policy that allocated 50% of surplus revenues to be deposited in a trust the scenario would play out as follows: If revenues at year end are $500,000 above projections and department expenditures end the year with savings of an additional $500,000, the year-end surplus would be $1 million. Under a policy like this, $500,000 of this surplus would be transferred to the Trust and the remaining $500,000 would remain in the unreserved fund balance. The percentage would be decided by Council. • Earmark a portion of local sales tax to be set aside for unfunded pension liabilities • Use ongoing savings from prepaying CalPERS unfunded liability. The City already takes advantage of the discount realized by prepaying the annual unfunded liability required contribution. In this case, the savings would instead be used to fund the Trust.
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• Use one-time revenue source and lower the minimum General Fund Reserve level from 20% to an amount determined by Council. For example, if Council reduced the reserve requirement from 20% to 15% with an expenditure budget of $44 million, the new reserve policy would move approximately $2.2 million into unreserved funds that would then be used to fund the Trust. • Council can direct Staff to fund the Trust with a combination of the proposed methods above or other ways it sees fit.
The Policy for the City of Alameda is included for reference. Alameda's specific funding method is located on pages 3-4 of the policy.
The Policy for the City of Manhattan Beach is also included for reference with the funding method described on page 6.
Finally, the Policy for the City of Lemon Grove is included with reference to the funding method on page 6 of the pdf. Although Lemon Grove's funding method has much shorter term effects, it is one of the ways Cities are funding their Section 115 Trusts.
STRATEGIC PLAN INTEGRATION:
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
The proposed action aligns with Council adopted objectives: Operate in a financially sustainable manner; evaluate existing practices to ensure continuity with industry best practices; provide Council with policies that are consistent while lessening liabilities; increase employee retention by training and creating a positive workplace; streamline fire prevention coordination efforts.
It aligns with the specific action: Provide Council with a policy for dealing with OPEB/PERS costs.
FISCAL IMPACT:
There is no Fiscal Impact at this time. Should Council elect to fund the OPEB and PERS Liabilities through one of the options above, any related fiscal impact will be addressed in a future agenda item.
ALTERNATIVE(S):
The City Council may elect not to make any changes at this time.
ATTACHMENT(S):
Temecula Pension Rate Stabilization Policy
City of Alameda Sample Funding and Withdrawal policy
Pension Rate Stabilization Policy Sample
Manhattan Beach City - 170504 Adoption
Lemon Grove
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City of Alameda
Pension Rate Stabilization Program
(PRSP) and
Other Post-Employment Benefits
(OPEB)
Funding Policy
15.H
1 Purpose and Introduction
The purpose of this Pension Rate Stabilization Program (PRSP) and Other PostEmployment Benefits (OPEB) Funding Policy (“Policy”) is to establish a methodology and a process for funding current and future costs associated with the City’s contractual obligations to provide pension and retiree medical benefits as set forth in the City’s labor agreements.
Adoption and Implementation
The City Council is responsible for adopting the Pension Rate Stabilization Program (PRSP) and Other Post-Employment Benefits (OPEB) Funding Policy and for approving any significant revision. The City Manager, or his/her designee, is responsible for developing administrative procedures, as needed, to implement the Policy. In this role, the City Manager, or his/her designee, is authorized to make minor administrative changes in the Policy as long as they are intended to carry out the purpose of this Policy and will not have any significant policy impact. The City Council will review and approve this policy via resolution, as needed, to ensure it meets the current and future needs of the City.
Initial Set Up
The City shall establish an Internal Revenue Service Code Section 115 approved irrevocable trust to achieve a higher rate of return on investments than that earned on the pooled investment portfolio or LAIF. Once the City transfers funds into such a trust, they can only be utilized for payment of employee pension or OPEB costs. After the trust is set up with PARS, money currently invested in the OPEB Trust will be transferred over to the new combination Pension/OPEB Trust and shall be allocated entirely to the PRSP OPEB account.
The following outlines the governance and administration of the proposed Trust:
City Council has the authority to establish the Trust and define policies for the administration of the Trust funds.
City Manager and staff have overall responsibility for the Trust funds and will develop and manage procedures in accordance with the City Council’s adopted policies.
Trust Administrator, PARS, keeps plan documents current to ensure that they reflect the substantive plan and provides ongoing consulting, reporting and plan accounting records.
Trustee, currently US Bank, will be the plan’s trustee and custodian and will safeguard the assets in the Trust, hold the investment securities for safekeeping and make disbursements on request.
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2 Investment Manager, currently Highmark Capital Management, will recommend investment portfolio allocations based upon the Pension/OPEB Trust Funds’ adopted investment policies and manage those assets accordingly.
Trust Administrator
Public Agency Retirement Services (PARS) has established a multiemployer irrevocable trust in compliance with the requirements of Section 115 of the Internal Revenue Code.
While it is a multi-employer trust, each employer’s contributions benefit only its own employees. There is no sharing of either liability or investment earnings, and separate employer accounts are maintained. PARS serves as the administrator of the Trust.
Trustee
Any contributions made to the program are held and invested by a trustee. The trustee duties include:
1. Safeguarding assets for the benefit of retirees;
2. Providing oversight protection of the investments;
3. Custodian of the assets; and
4. Disbursing funds to pay for pension costs and/or retiree healthcare premiums.
Investment Manager
Investment Manager assists the City with selecting investment strategy depending on what rate of return the City expects to earn and level of risk tolerance the City is willing to take. Investment Manager provides annual review of the investment portfolio and asset allocation as well as takes on fiduciary responsibility for the City’s pension and OPEB assets management.
Asset Allocation Investment Strategy
PARS provides flexibility to the City in the selection of the investment strategy for its funds in the Trust, giving the City control on target yield and level of risk on its investments.
Within the Trust, the City has the option of pre-funding either or both of the Pension and OPEB accounts. In either case, the City has the ability to select one of five Investment Options that best suits its desired or expected return on its investments in the Trust. Each Investment Option allocates the assets in varying investment combinations of equity, fixed income, and cash. With each Investment Option, as the expected rate of return increases so does the assumed risk.
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3 The Asset Allocation Strategies and the corresponding Investment Options currently available are:
Equity Fixed Income Cash
Conservative 5% - 20% 60% - 95% 0% - 20%
Moderately Conservative 20% - 40% 50% - 80% 0% - 20%
Moderate 40% - 60% 40% - 60% 0% - 20%
Balanced 50% - 70% 30% - 50% 0% - 20%
Capital Appreciation 65% - 80% 10% - 30% 0% - 20%
The City Manager, or his/her designee, in coordination with the City Treasurer and Investment Manager will select the most appropriate investment option for each account (Pension and OPEB) in the Trust.
This Policy recognizes that there will be investment market place volatility and that actual economic and demographic experience will differ from assumed experience. Accordingly, this Policy is intended to provide flexibility to smooth such volatility and experience in a reasonable, systematic and financially sound manner.
Annual Contributions
In order to establish realistic and appropriate thresholds for annual contributions, the City adopts the following requirement for contributions to be shared among all City Funds proportionate with the number of employees allocated to these funds in any given year:
Minimum Maximum
Pension $250,000 Unlimited
OPEB $100,000 or as
required in the MOUs Unlimited
Note: FY 2015-16 OPEB Annual Required Contribution (ARC) was $10.987 million, as determined by the actuarial valuation report prepared in accordance with the Governmental Accounting Standards Board Statement No. 45. Per Bartel & Associates, if the City funds OPEB component of the Trust at the ARC level, the OPEB Trust would be fully funded by FY 2034-35.
Pension Plans 1079/1082 (closed pension plans) – starting FY 2016-17, the City shall transfer any unspent funds to the Pension component of the Trust. Each year thereafter, the City shall contribute at least as much as a year prior of the unspent funds plus any additional available funds. Available funds arise due to passing of participants in Plans.
Annual contributions from Successor Agency and Alameda Municipal Power shall be deposited to the OPEB Miscellaneous/Safety (Pre 1-1-2019) account of the Trust.
If financial conditions warrant, and until such time as the OPEB UAAL is fully amortized, it is the City’s policy to make an additional contribution to the OPEB account of the Trust to further pay down the UAAL. When there is General Fund Police or Fire Department projected budgetary operating savings, the City shall make an additional contribution into
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4 the OPEB Safety (Post 1-1-19) account of the Trust of no less than 10% of the projected budgetary operating savings.
Annual Withdrawals
In order to establish realistic and appropriate thresholds for annual withdrawals, the City adopts the following limitations on the withdrawals:
Minimum Maximum
Pension $0 10% or less of CalPERS
Annual Required Contribution
OPEB $0 Annual Required Contribution
(ARC)
Actuarial Terms Definition:
Normal Cost
The City incurs an annual pension and OPEB retirement obligation for current employees.
The ongoing cost for pension and OPEB earned by current employees during the current year is referred to as the “normal” cost.
Unfunded Actuarial Accrued Liability (UAAL)
The actuarial valuation calculates an unfunded actuarial accrued liability (UAAL) as of the valuation date. The UAAL represents the difference between assets available in the trust fund and the liability related to prior employment service for former and existing employees.
Annual Required Contributions (ARC)
The ARC to fund pension and OPEB, as determined by the actuarial valuation, reflect the normal cost plus amortization of the UAAL, until such time as the UAAL is fully amortized.
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Purpose
The purpose of this Pension Rate Stabilization Program (PRSP) and Other Post Employment Benefits (OPEB) Funding Policy (“Policy”) is to establish a methodology and a process for funding current and future costs associated with the City’s contractual obligations to provide pension and retiree medical benefits as set forth in the City’s labor agreements.
Adoption and Implementation
The City Council is responsible for adopting the Pension Rate Stabilization Program (PRSP) and Other Post-Employment Benefits (OPEB) Funding Policy and for approving any significant revision. The City Manager, or his/her designee, is responsible for developing administrative procedures, as needed, to implement the Policy. In this role, the City Manager, or his/her designee, is authorized to make minor administrative changes in the Policy as long as they are intended to carry out the purpose of this Policy and will not have any significant policy impact. The City Council will review and approve this policy via resolution, as needed, to ensure it meets the current and future needs of the City.
Initial Set Up
The City shall establish an Internal Revenue Service Code Section 115 approved irrevocable trust to achieve a higher rate of return on investments than that earned on the pooled investment portfolio or LAIF. Once the City transfers funds into such a trust, they can only be utilized for payment of employee pension or OPEB costs. After the trust is set up with (Trust Administrator), money currently invested in the OPEB Trust will be transferred over to the new combination Pension/OPEB Trust and shall be allocated entirely to the PRSP OPEB account.
The following outlines the governance and administration of the proposed Trust:
City Council has the authority to establish the Trust and define policies for the administration of the Trust funds.
City of Hemet
__________________PENSION/OPEB STABILIZATION POLICY
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City Manager and staff have overall responsibility for the Trust funds and will develop and manage procedures in accordance with the City Council’s adopted policies.
Trust Administrator keeps plan documents current to ensure that they reflect the substantive plan and provides ongoing consulting, reporting and plan accounting records.
Trustee will be the plan’s trustee and custodian and will safeguard the assets in the Trust, hold the investment securities for safekeeping and make disbursements on request.
Investment Manager will recommend investment portfolio allocations based upon the Pension/OPEB Trust Funds’ adopted investment policies and manage those assets accordingly.
Trust Administrator
Trust Administrator will establish an irrevocable trust in compliance with the requirements of Section 115 of the Internal Revenue Code.
Trustee
Any contributions made to the program are held and invested by a trustee. The trustee duties include:
1. Safeguarding assets for the benefit of retirees;
2. Providing oversight protection of the investments;
3. Custodian of the assets; and
4. Disbursing funds to pay for pension costs and/or retiree healthcare premiums.
Investment Manager
Investment Manager assists the City with selecting investment strategy depending on what rate of return the City expects to earn and level of risk tolerance the City is willing to take. Investment Manager provides annual review of the investment portfolio and asset allocation as well as takes on fiduciary responsibility for the City’s pension and OPEB assets management.
Asset Allocation Investment Strategy
The Trust Administrator provides flexibility to the City in the selection of the investment strategy for its funds in the Trust, giving the City control on target yield and level of risk on its investments. Within the Trust, the City has the option
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of pre-funding either or both of the Pension and OPEB accounts. In either case, the City has the ability to select one of five Investment Options that best suits its desired or expected return on its investments in the Trust. Each Investment Option allocates the assets in varying investment combinations of equity, fixed income, and cash. With each Investment Option, as the expected rate of return increases so does the assumed risk. The Asset Allocation Strategies and the corresponding Investment Options shall be determined by the designated Trust Administrator.
The City Manager, or his/her designee and the Investment Manager will select the most appropriate investment option for each account (Pension and OPEB) in the Trust.
This Policy recognizes that there will be investment market place volatility and that actual economic and demographic experience will differ from assumed experience. Accordingly, this Policy is intended to provide flexibility to smooth such volatility and experience in a reasonable, systematic and financially sound manner.
Annual Contributions
In order to establish realistic and appropriate thresholds for annual contributions, the City adopts the following requirement for contributions to be shared among all City Funds proportionate with the number of employees allocated to these funds in any given year:
To establish the Section 115 Trust for Pension Rate Stabilization, a one-time contribution of $XX million will be deposited as seed funding at the start of Fiscal Year 2022-2023.
Effective Fiscal Year 2023-2024 and every year thereafter until amended by Council;
1. All Funds shall contribute 50% of a given year’s surplus to fund the Pension Trust.
2. All Funds shall contribute an equivalent of 5% of annual pay-as-you-go cost of OPEB to the OPEB Trust.
3. If Fiscal conditions warrant, and until such time as the OPEB and Pension Unfunded Liabilities are fully amortized, it is the City’s policy to make an additional contribution to the Pension Trust to further pay down the liability. When there is General Fund Police and/or Fire Department projected budgetary operating savings, the City shall make an additional contribution into the Trust of no less than 10% of the projected savings
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from operating budgets.
Annual Withdrawals
In order to smooth volatility of Pension and OPEB contribution costs while maintaining realistic and appropriate balances in the Trusts, the City adopts the following limitations on withdrawals:
Minimum Maximum
Pension $0 10% or less of CalPERS Annual
Required Contribution
OPEB $0 10% or les of Annual Required
Contribution
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Agenda Date: 5/4/2017
TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
Henry Mitzner, Controller
Libby Bretthauer-Long, Financial Analyst
SUBJECT:
Presentation of Updated Pension Forecast; Options for Addressing Unfunded Pension Liabilities and Rising Pension Contributions; Establishment of a Pension Stabilization Trust Fund (Finance Director Moe).
RECEIVE REPORTS; ADOPT RESOLUTION
_________________________________________________________ RECOMMENDATION:
Staff recommends that the City Council receive reports on: a) updated pension forecasts from the independent actuary, and b) options available for addressing unfunded pension liabilities and rising contribution rates.
After receiving the reports, staff recommends that the City Council: a) adopt Resolution No. 17-0062 establishing a Pension Rate Stabilization Trust Fund Administered by Public Agency Retirement Services (PARS) ; b) Appoint the City Manager as the City’s Plan Administrator; c) Authorize the City Manager to negotiate and execute the final documents of the Trust; d) authorize the transfer of $500,000 in budgeted General Funds to the Pension Rate Stabilization Trust Fund, and e) assign responsibility and authority to the Finance Subcommittee to develop an investment policy and guidelines, and direct investments in the trust.
EXECUTIVE SUMMARY
Due to a number of factors, including changes in actuarial assumptions and inconsistent/substandard investment returns, the City is facing rapid growth in unfunded pension liabilities and required pension contributions. In an effort to proactively address these issues, the City Council requested information on options that may be available to go beyond the minimum funding requirements for pensions. Staff has identified such options that include: 1) establishing a Pension Rate Stabilization Trust, 2) accelerating amortization City of Manhattan Beach Page 1 Printed on 4/27/2017
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of existing unfunded liabilities, 3) paying down select liabilities, and 4) using a lower discount rate than currently utilized by CalPERS to set internal funding levels. Staff is recommending option #1, the trust fund, which may then be used in conjunction with the other three options if desired.
y
FISCAL IMPLICATIONS:
The City’s FY 2017-2018 total pension contributions are estimated to be $6.9 million, an increase of $674,000 over FY 2016-2017 budget. Those contributions include the Normal Cost (e.g., contributions for current service provided by current employees) as well as contributions for unfunded liabilities (past service for which full funding for retirement has not been achieved).
As of the last CalPERS valuation report (dated June 30, 2015) the City’s unfunded accrued pension liabilities totaled $55,158,732:
Police $26,056,225 47.2%
Non-Sworn $17,626,012 32.0%
Fire $11,476,495 20.8%
Given revised CalPERS assumptions for the expected rate of return adopted in December 2016 (which lower the rate from 7.5% to 7% over three years), coupled with lower than expected earnings by CalPERS, the City’s unfunded accrued liabilities are estimated to rise to $117 million by June 30, 2022. With this change, City contributions are also expected to rise to $12.0 million by FY 2021-2022, an increase over FY 17-18 contributions of $5.1 million.
These pension rates are built into the City’s updated Five Year Forecast presented with the FY 2017-2018 budget update.
The recommended initial funding for the Pension Rate Stabilization Fund is $500,000 from budgeted funds in FY 2016-2017.
BACKGROUND:
Over the past two years, staff has obtained the services of an independent actuary to assist in the analysis and forecasting of CalPERS pension data. This has proved beneficial during a time when CalPERS has changed actuarial assumptions, investments have performed inconsistently and alternative methods of funding pensions have been discussed.
At the May 4th Budget Study Session, John Bartel (Bartel Associates) will present an update to the City’s pension forecast. This update will incorporate the reduction in the discount rate approved by the CalPERS board in December 2016. That change will lower the discount rate from 7.5% to 7.0% over the course of three years. The rates associated with the change will affect the City beginning in FY 2018-2019, and are projected to add on average $1 million per year to City contributions over the next five years.
During FY 2016-2017 budget deliberations, the City Council directed that $500,000 be set aside in the budget for the creation of a Pension Rate Stabilization Fund (PRSF), the purpose for which is to assist in smoothing annual pension contributions so as to balance rising rates against other important needs and services. In September 2016, City Council, City of Manhattan Beach Page 2 Printed on 4/27/2017
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upon consideration of the actual implementation of the PRSF, requested staff explore an alternative to the PRSF of reducing the amortization period of the existing unfunded liabilities in order to pay-off liabilities sooner, thereby reducing cost. This report provides information on that alternative, as well as others for Council consideration.
DISCUSSION:
Pension Actuary Report
Attachment #2 to this staff report is an update on the City’s pension data prepared and provided by Bartel and Associates. This information will be the basis for discussion at the Budget Study Session. It includes data on the City’s three CalPERS pension plans for Police, Fire and non-sworn employees, including demographics, plan funding status, contribution rates and unfunded liabilities. It also includes options for addressing rising pension costs.
Addressing Unfunded Pension Liabilities and Rising Pension Contributions This report provides several options for addressing pension costs. As a basis for developing the following options, several objectives were identified:
1. Reduce unfunded pension liabilities
2. Maintain budget flexibility
3. Reduce the carrying costs of unfunded pension liabilities Each option listed below supports one or more of these criteria.
Option #1 - Pension Rate Stabilization Fund
Until recently, the only option available for the City to reduce unfunded pension liabilities was to submit additional discretionary payments to CalPERS above and beyond the required contributions (required contributions include funding for current employees as well as unfunded liabilities for past service). However, those funds, once on deposit, are subject to the same market volatility risk as the other funds invested with CalPERS. There is an alternative in the form of depositing funds into an irrevocable trust established specifically for pension rate stabilization purposes.
A Pension Rate Stabilization Fund (PRSF) has several benefits:
· The City maintains oversight of investment management and control over the risk tolerance level of the portfolio
· Assets can be accessed to offset unexpected rate increases thereby stabilizing on-going pension expenditures
· Assets held in the fund allow for greater investment flexibility and risk diversification compared to the City’s general investments
· Pending Governmental Accounting Standards Board (GASB) approval, funds deposited into the trust may address the City’s Net Pension Liability which is now reported on the City’s balance sheet in accordance with Government Accounting Standards Board (GASB) Statement No. 68
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· Depositing assets in a trust will be a positive development to Moody’s and Standard and Poor’s in the City maintaining Triple-A credit ratings from both of these entities It is important to note that any funds deposited in the trust fund may only be used for pension costs and cannot be recaptured for other uses. However, use of funds may reduce reliance on existing unrestricted funds freeing those moneys for other uses.
The concept of the account is that the City would deposit funds into the account and invest those moneys in instruments that have the potential to earn greater returns than can be achieved under the City’s existing investment policies and State law for general public funds. State law provides the framework for public funds investment in such trust funds. The principal and earnings may then be contributed to any one of the City’s three CalPERS plans (Police, Fire, Miscellaneous) at the City’s discretion. For example, the funds can be used as a buffer to reduce the impacts of large rate fluctuations in Employer rates from substandard investment returns.
While the PRSF has the potential to reduce net pension costs, actual earnings on those funds will most likely not approximate the carrying cost of the unfunded liabilities at CalPERS (unless riskier investments are selected in an attempt to achieve high returns).
The discount rate has the effect of being the interest rate charged by CalPERS on any unfunded liabilities. As a result, the City is, in essence, currently paying 7.5% interest on the unfunded liabilities (lowering to 7% over the next three years). For example, $55,158,732 in unfunded liabilities cost the City $4,136,905 annually in carrying costs with CalPERS.
Although risks exist with advanced funding with CalPERS, paying down liabilities more rapidly is the most cost effective way to reduce costs.
Objectives Met: 1, 2, 3
Option #2 - Accelerated Amortization
Another option is to reduce the existing amortization period for unfunded liabilities from the current 30-years to either 15-years or 20-years (see attachments #3, #4 and #5). Please note that these figures are based on the most recent valuation report dated June 30, 2015 and do not include the FY 2015-2016 investment results of 0.61% or the change in the discount rate from 7.5% to 7.0%, both of which will increase these estimates:
15-Year Amortization
Plan Savings 1st Year Payment Increase
Police $13.8 MM $1,054,900
Fire $6.1 MM $488,000
Miscellaneous $8.3 MM $658,930
Total $28.2 MM $2,201,830
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20-Year Amortization
Plan Savings 1st Year Payment Increase
Police $4.8 MM $605,200
Fire $2.1 MM $288,050
Miscellaneous $2.3 MM $359,590
Total $9.2 MM $1,252,840
It is important to note that once the City selects a reduced amortization period it cannot be revised. This inflexibility does not allow for payment adjustments in the event of financial or economic hardship. However, the savings are significant.
Objectives Met: 1, 3
Option #3 - Payoff of Selected Liabilities
This option allows the City to specifically select an unfunded liability and payoff that amount (see Attachments #6, #7, and #8). For example, utilizing the Fire Safety Plan (Attachment #8), if the City were to pay-off the “Share of Pre-2013 Pool UAL” of $4.8 million, the annual payment for that liability would be reduced by $360,907 in FY 17-18. On the other hand, it reduces budget flexibility by reducing available funds by $4.8 million that could be utilized elsewhere.
Objectives Met: 1, 3
Option #4 - Establish an Internal Discount Rate Upon Which to Base Contributions This option involves setting the City’s CalPERS contributions to a discount rate below what is used by CalPERS (currently 7.5% being adjusted to 7.0% over three years), with the effect being contributions in excess of the minimum required. This can be used in conjunction with Option #1 (Trust Fund) and/or with the other options listed. For example, if the City were to use a 6.5% discount rate, using FY 2022-2023 contribution rates as the basis (after the phase-in of the new 7% discount rate), additional contributions of $2.5 million per year would be necessary to fund at that level (this would equate to $15.7 million being allocated to pensions that year). Those funds could then be deposited in the trust fund and invested to achieve higher returns than achievable outside the trust. It also provides budget flexibility in that there is no legal obligation to set those funds aside (although once in a trust fund,limitations on use apply) which may then be reallocated in the event the funds are needed for other purposes.
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Objectives Met: 1, 2, 3
Based on the options listed above, staff recommends Option #1 - Establishment of a Pension Rate Stabilization Fund. This recommendation provides the following benefits:
1. The City maintains oversight of investment management and control over the risk tolerance level of the portfolio
2. Assets can be accessed to offset unexpected rate increases thereby stabilizing on-going pension expenditures
3. Assets held in the fund allow for greater investment flexibility and risk diversification compared to the City’s general investments
4. Pending Governmental Accounting Standards Board (GASB) approval, funds deposited into the trust may address the City’s Net Pension Liability which is now reported on the City’s balance sheet in accordance with Government Accounting Standards Board (GASB) Statement No. 68
5. Depositing assets in a trust will be a positive development to Moody’s and Standard and Poor’s in the City maintaining Triple-A credit ratings from both of these entities
6. Maintains budget flexibility and adapts to changes in the City’s economics from one year to the next
7. Can utilize the trust to accelerate payoff of selected liabilities (Option #2) by accumulating moneys and paying off those liabilities once sufficient funding has been achieved
Funding
The adopted FY 2016-2017 budget includes $500,000 in the General Fund to be deposited into the trust account once it is established. Aside from the $500,000 annual contribution now in place, additional future contributions will be directed by the City Council, and may include year-end surpluses and other one-time receipts. For FY 2017-2018, staff is recommending a $250,000 contribution to the trust.
Staff, in coordination with the Finance Subcommittee, will return to City Council in the future with a discussion on amending the City’s Financial Policies in order to include guidelines on funding this pension trust.
Public Agency Retirement Services (PARS)
Section 115 Irrevocable Trusts have been in existence for many years. In the past several years, they have they been adopted as a mechanism for pre-funding public agencies’ OPEB liabilities (which the City did in 2008 through a CalPERS sponsored plan). Most recently, they have become a popular tool for pre-funding pension liabilities as a method to address unfunded liabilities and large variances in annual pension contribution rates.
The number of administrators offering Pension Rate Stabilization Trusts is limited since this is a fairly new financial adaptation of Section 115 irrevocable trusts. Two main entities have entered the marketplace: Public Agency Retirement Services (PARS) and Public Financial Management (PFM).
While both are clearly capable and experienced in Section 115 trust administration, staff believes PARS is best suited to meet the City’s needs for the following reasons:
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· PARS is the leader in this marketplace having established 75 public agency PRSF trusts (up from 41 when Council discussed in September 2016), including 30 cities (up from 18)
· PARS has a track record of being a leading provider of public retirement services. For example, the City has received excellent service from PARS in providing part time employees with the legally required retirement plan (this is an acceptable and lower cost alternative to Social Security)
· PARS’s asset management costs are marginally lower than PFM’s (all-in costs for administration, management, trustee and advisory fees of .60% versus .715%) · The PARS program has been established as a multiple employer trust so that public agencies regardless of size can join the program to receive the necessary economies of scale to minimize administrative fees.
Portfolio Management
PARS has partnered with US Bank to serve as Trustee, and with its sub-advisor High Mark Capital Management to provide investment management services for the program.
Under the PARS Pension Rate Stabilization fund, the City maintains oversight of the investment manager and the portfolio’s risk level to mitigate undue risk. Several options exist for the portfolio management:
1. The City can utilize the Administrator’s (PARS) subadvisor, High Mark, to handle the investments on a preset basis. The City would select one of five preset options (Attachment #9) from active or passive (i.e., index funds) investments with High Mark determining the actual investments utilized. With this scenario, the City has the ability to influence the risk level and investment approach, but do not select specific investments (e.g., investing in a specific equity). For new plans that have not accumulated much by way of assets, this is generally the preferred route.
2. Once the asset levels are larger (e.g., over $ 5 million), it would be possible to work with High Mark on a more customized basis (for example, The City may guide High Mark to purchase individual bonds rather than bond mutual funds).
Also, once customized, the City can develop a strategy that is different than the 5 preset options which could include more alternative investments.
3. As a third approach, the City could hire a separate investment advisor. In this capacity, US Bank would serve as Directed Trustee and would be custodian of the assets. High Mark would not be involved at all. The City’s investment advisor would manage the investments based on City direction and would be separately compensated. The issue to note is that at small asset levels, investment advisors may not be that interested until assets reach a more sizable level. As a result, some PARS agencies are taking the approach of working with High Mark until assets reach a more significant level and then may decide at a later point in time whether or not to use a different manager.
Staff recommends that the City Council assign responsibility and authority to the Finance Subcommittee to develop an investment policy for the trust, and direct investment decisions City of Manhattan Beach Page 7 Printed on 4/27/2017
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for the fund (e.g., Conservative, Moderately Conservative, Moderate, etc.) or another alternative listed above as deemed appropriate by the Finance Subcommittee. This is similar to the role of the Finance Subcommittee with regard to the City’s other investments.
Further, staff will recommend to the Finance Subcommittee that initially the City utilize High Mark as the investment advisor utilizing one of the five preset options. However, advisory services for these investments may be changed at any time as deemed desirable.
Council Questions
When this item was previously discussed last summer, City Council had a number of questions regarding the pension fund program. Those questions, and associated answers, are provided below:
1. Describe the trust fund for retiree medical and how it works In 2008, the City established a Section 115 Trust Fund for the purpose of prefunding the City’s “Other Post Employment Benefits” (OPEB). The OPEB trust is administered by the CalPERS’ California Employers' Benefit Trust (CERBT). The funds are invested in one of three options available; the Finance Subcommittee selected the mid-level risk option (as opposed to the lowest risk or highest risk).
The City’s OPEB liabilities in this fund stem from two retiree medical benefit programs: a) a stipend of between $250 and $400 per month depending upon the labor group and certain minimum service years, which terminates when the retired employee reaches age 65 or Medicare eligible, and b) the CalPERS requirement that any agency participating in the Public Employee Medical and Hospital Care Act (PEMHCA) medical insurance program, as the City does, must provide employees and retirees with a certain minimum contribution.
Currently, that amount of $128 per month, subject to annual adjustment. Thirty-six percent ($2.1 million) of the City’s accrued liabilities relate to the City’s stipend while the CalPERS PEMHCA requirement accounts for 64% ($3.8 million).
The funds in the trust may only be used for OPEB related costs. Mechanically speaking, the City pays out the stipend to retirees monthly and seeks reimbursement from the trust at the end of the fiscal year. For FY 2015-2016, the OPEB reimbursement from the trust totaled $288,888.
The OPEB trust fund is currently funded over 160% of actuarially accrued liabilities. In dollars, assets total $9.5 million while accrued liabilities total $5.9 million, leaving $3.6 million in surplus assets. This cushion will allow the City to forego the normal scheduled contributions $285,793 for FY 2016-2017 and beyond.
2. Describe how investing in the Pension Stabilization Fund reduces the pension liability and controls long-term risk
The main purpose of the Pension Stabilization Fund is to provide a cushion and smoothing against rapidly rising pension contribution rates. By design, the City deposits funds into the trust, invests at returns greater than achievable for General investments the City makes City of Manhattan Beach Page 8 Printed on 4/27/2017
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under State law, and then uses the program funds to reduce outgoing cash flow for pension costs, allowing City funds to be used for other needs as appropriate or desirable. This reduces pension costs through the ability to achieve greater investment results compared to the standard investments the City makes.
The annual total pension payments to CalPERS include a component that is applied to unfunded liabilities. As a result, any trust funds we use to pay pension costs also help address unfunded liabilities. Further, if deemed financially prudent, trust funds may be used to accelerate pay down of unfunded liabilities with CalPERS. However, it is important to note that once additional unfunded liability payments are sent to CalPERS, they are comingled with standard Pension Fund investments, and thus are subject to the same risk as the entire CalPERS investment pool since the funds are no longer in the City’s control. This may result in gains or losses which mirror the risk the City is already exposed to through the pension plan.
Because the stabilization program funds are controlled by the City, long term risk may be improved compared to the CalPERS portfolio. This will be dependent upon the investment policies and risk profile the City selects. Investment choices will include lower risk Money Market and Conservative options to more aggressive Moderate and Capital Appreciation growth oriented portfolios, each with varying risk factors and corresponding expectations for rates of return.
3. What are the thoughts regarding guidelines and a distribution plan for the fund? Will there be benchmarks? What are we trying to accomplish for each department?
The recommendation is that the City Council assign responsibility to the Finance Subcommittee to develop policies on investment, sources and uses of funding. The policies may be reviewed and approved by the full City Council if so directed.
Other cities have varying funding policies. For example, Solana Beach contributes 50% of year-end surpluses to the pension stabilization fund. City of Sausalito contributes the difference between the required CalPERS contributions utilizing the current 7.5% discount rate, and a 2.8% discount rate. Finally, the City of Healdsburg set a maximum employer rate for the groups (Miscellaneous, Police, Fire) with the pension fund being utilized when employer contribution costs exceed stated levels.
Benchmarks may be established as a barometer of success. The options provided by High Mark (the initial recommended investment management advisory service) include benchmarks in their materials (Attachment #2), as do most advisory firms.
The goals for this fund are not set by department. Rather, the objective is to smooth impacts of rising pension contributions so as to not cause rapid negative impacts to other services.
This would be done on a citywide basis.
4. How are other jurisdictions using similar funds?
In addition to the smoothing described above, other public agencies are using the funds to primarily accomplish the following:
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· Help create new revenue sources from Trust Investment earnings to provide structural balance (i.e., helps revenue growth rate equal expenditure growth rate). (Town of Colma)
· Trust Assets act as a direct offset to Net Pension Liabilities under GASB 68 (City of Brea)
· Trust Assets act as a hedge against PERS investment risk (City of Upland)
5. How are other jurisdictions addressing the same problem? Do they have a similar fund? How has it worked for them?
Seventy-five public agencies in the state of California have established similar Section 115 trusts with PARS. These other public agencies include counties, school districts, a community college district and special districts in addition to the 30 cities that have already adopted the same trust program under consideration by the City. The same benefits and advantages of the trust are also present for these other jurisdictions.
The concept of this program is relatively new, having only been established for less than two years. These liabilities that are being addressed are long-term liabilities that will take many years to correct, so the ultimate success of the program will depend on a variety of factors including the ability to fund the trust, the overall investment returns of the City-controlled trust, and the actual plan experience of the underlying retirement system (i.e., CalPERS).
To provide an example of how other jurisdictions are investing plan assets, here is a breakdown of those 75 agencies that have already adopted the program:
Investment Strategy Type / % of Agencies in Strategy
Money Market (0% Equities) 2%
Conservative (15% Equities) 10%
Moderately Conservative (30% Equities) 34%
Moderate (50% Equities) 27%
Balanced (60% Equities) 17%
Capital Appreciation (75% Equities) 5%
Custom 5%
6. What is our current annual payment and what percentage will our contribution to the fund be of that number?
The City’s Fiscal Year 2016-2017 contribution is estimated to be $6.2 million. The City Council initially directed that $500,000 per year be deposited in the fund. That equates to 8% of FY 16-17 contributions. However, in an effort to balance the proposed FY 2017-2018 General Fund budget, staff is recommending reducing the on-going allocation to $250,000.
7. Are there additional policies needed for the City in association with this fund? What existing state laws are there and do we need to be augmenting them? Please see #3 above. Existing state laws do provide additional flexibility with respect to plan City of Manhattan Beach Page 10 Printed on 4/27/2017
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investments compared to the City’s current investment guidelines. The City (Finance Subcommittee) would work with the investment advisors to develop an Investment Guideline Document (IGD) with respect to assets held in the trust.
8. Timeline for developing those financial policies, if necessary.
If City Council accepts the staff recommendation to utilize the Finance Subcommittee to develop policies (including the Investment Guidelines Document), staff anticipates that policies would be prepared within 60-90 days.
9. Are there any reference guides from John Bartel on these issues? According to Mr. Bartel, there are no reference guides on this topic at this time. However, Bartel and Associates commonly recommend the establishment of a pension stabilization fund as a more meaningful actions a jurisdiction can take to smooth future rate increases.
10. Will this limit our risk more or less than PERS? Compare the two risks.
This will reduce our exposure to the risks associated with CalPERS’ aggressive style of investments, which are currently geared to attain 7.5% returns. CalPERS uses a diversified portfolio that has many different asset classes. For example, pension funds are invested in real estate, equities (stocks), bonds, and corporate debt. Investments in a City controlled trust can potentially be invested more conservatively than CalPERS, which can reduce the overall investment risk to the City. Please see Attachment #9 which includes investment options.
11. Compare and contrast this fund with what was done before Generally speaking, the City has made only the required contributions as calculated by CalPERS each year. With the exception of a one-time payment to CalPERS in the 1990s used to pay down unfunded liabilities, and the issuance of pension obligation bonds in 2008 to payoff liability side funds in the safety pools, no additional payments have been made.
However, please note that all regular, required payments to CalPERS include a component to pay down unfunded pension liabilities.
In FY 2003-2004, in the face of rising pension costs, the City established a Pension Stabilization reserve within the General Fund. This reserve was funded with one time moneys totaling $2,024,505 realized from a utility cost allocation study. Pension contribution increases totaling $2.2 million were expected in FY 2003-2004 and FY 2004-2005. The reserve was ultimately used in FY 2005-2006 ($680K), with the balance ($1.3 million) utilized in FY 2006-2007.
This new pension stabilization fund will act in much the same way the 2003-2004 reserve was intended, except that the City will have the ability to reduce pension costs through higher investment earnings potential than can currently be achieved with general City investments. Funds may be drawn to stabilize annual pension payments so that substantial City of Manhattan Beach Page 11 Printed on 4/27/2017
15.H
File Number: RES 17-0062
increases can be eased into operational expenditure budgets and reduce immediate impacts on service levels.
12. How does this limit our risk with the volatility of PERS? See #10 above.
13. Compare the annual payments and financial commitments of this fund vs.
CalPERS
There are no financial commitments or annual minimum payments required for the trust fund. It can be determined on an ad-hoc basis by the City Council, or through a policy approved by the City Council. Conversely, CalPERS requires certain minimum payments each year to fund the normal cost of pensions as well as unfunded liabilities. The Pension Stabilization program’s major requirement is that the funds may be used only for pension costs, and that reimbursements cannot exceed more than one year’s worth of actual pension costs, which currently exceed $6 million. For example, if the City did contribute $500,000 to the fund, the City would have immediate access to request a distribution of that original contribution since it is well below the City’s current annual pension costs.
14. How does it compare to the cushion that is already included by Finance in the annual budgets?
Aside from any budgeted General Fund surplus amount there is no budgeted cushion per se. Salaries and benefits are generally budgeted with a vacancy factor (4% in FY 2016-2017) in recognition of the fact that all positions are not filled 100% of the year. This factor applies to CalPERS contributions, which are budgeted at 96% of estimated cost.
Budget aside, the City typically generates year-end General Fund surpluses (e.g., revenues in excess of expenditures) which may be directed to the fund either through policies or on an ad-hoc basis by the City Council.
15. What other jurisdictions have similar pension liabilities? How are they addressing them? Which ones are using PARS?
Attachment #10 includes unfunded liabilities as a percentage of payroll for comparator agencies (these were provided by Bartel Associates last year). Attachment #11 lists PARS’ clients utilizing the Pension Stabilization Reserve Fund program. PARS has 30 cities and 45 public agencies in the state of California using the pension fund method. Other agencies may be addressing unfunded liabilities by issuing pension obligation bonds (interest arbitrage between CalPERS and borrowing rate), borrowing from other agency funds that may have sufficient working capital, reducing the amortization period with CalPERS (reduces interest expense but increases payment amounts), or using one-time money to reduce unfunded liabilities with CalPERS.
City of Manhattan Beach Page 12 Printed on 4/27/2017
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File Number: RES 17-0062
16. Can the funds be used for OPEB liabilities as well? No. While one trust fund may be established for both OPEB and pension stabilization purposes, funding must be used for the purpose intended at the time of deposit.
17. What will the process be for accessing the pension stabilization funds? A written request to the trust administrator will be submitted with direction on whether the requested funds are to be refunded to the City after incurring the expense, or paid directly to CalPERS to satisfy the required contribution or payment.
18. What impact on the existing funds and process will the new Pension Stabilization program fund have?
The pension stabilization funds will reduce reliance on on-going resources through increased earnings potential above that level achievable with the City’s general investments.
POLICY ALTERNATIVES:
ALTERNATIVE #1:
Establish a Pension Rate Stabilization Fund (Recommended) PROS:
· The City maintains oversight of investment management and control over the risk tolerance level of the portfolio
· Assets can be accessed to offset unexpected rate increases thereby stabilizing on-going pension expenditures
· Assets held in the fund allow for greater investment flexibility and risk diversification compared to the City’s general investments
· Pending Governmental Accounting Standards Board (GASB) approval, funds deposited into the trust may address the City’s Net Pension Liability which is now reported on the City’s balance sheet in accordance with Government Accounting Standards Board (GASB) Statement No. 68
· Depositing assets in a trust will be a positive development to Moody’s and Standard and Poor’s in the City maintaining Triple-A credit ratings from both of these entities · Maintains budget flexibility and adapts to changes in the City’s economics from one year to the next
· Can utilize the trust to accelerate payoff of selected liabilities (Option #2) by accumulating moneys and paying off those liabilities once sufficient funding has been achieved
CONS:
· Does not necessarily achieve the savings obtained through other options such as reducing amortization or paying off existing liabilities City of Manhattan Beach Page 13 Printed on 4/27/2017
15.H
File Number: RES 17-0062
ALTERNATIVE #2:
Accelerate amortization of existing unfunded liabilities PROS:
· Reduces interest cost of carrying unfunded liabilities at CalPERS CONS:
· Reduces budget flexibility by locking in higher required long term payments to CalPERS which could be in addition to higher payments resulting from poor investment performance
ALTERNATIVE #3:
Payoff selected unfunded liabilities
PROS:
· Reduces interest cost of carrying unfunded liabilities at CalPERS · Reduces on-going annual pension contributions
CONS:
· Reduces budget flexibility by reducing available cash ALTERNATIVE #4:
Establish an Internal Discount Rate Upon Which to Base Contributions PROS:
· Increases the amount of money allocated to pay down liabilities or reserve for further rate stabilization purposes
CONS:
· Reduces budget flexibility by allocating financial resources to pensions PUBLIC OUTREACH/INTEREST:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW
Not required.
LEGAL REVIEW
The City Attorney has reviewed this report and determined that no additional legal analysis is necessary.
City of Manhattan Beach Page 14 Printed on 4/27/2017
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LEMON GROVE CITY COUNCIL
AGENDA ITEM SUMMARY
Item No. .4
Mtg. Date September 4, 2018
Dept. Finance
Item Title: Pension Rate Stabilization Program Investment & Funding Policy Staff Contact: Molly Brennan, Finance Manager
Recommendation:
Adopt a resolution (Attachment C) adopting the City of Lemon Grove & Lemon Grove Sanitation District Pension Rate Stabilization Program Investment and Funding Policy.
Item Summary:
At the City Council meeting on July 17, 2018, a representative from the Public Agency Retirement Services (PARS) presented about the Pension Rate Stabilization Program’s ability utilize a 115 Trust to pre-fund the City’s unfunded actuarial liability (UAL) and generate additional interest earning. Council adopted a resolution authorizing the City’s participation in the program with PARS.
To open the new 115 Trust, the City is required to adopt a formal investment and funding policy to establish a methodology and process forfunding current and future costs associated withthe City’s contractual obligations to provide pension benefits.
Fiscal Impact:
None.
Environmental Review:
X Not subject to review I:INegative Declaration
E] Categorical Exemption, Section [:1 Mitigated Negative Declaration Public Information:
E None [:1 Newsletter article El Notice to property owners within 300 ft.
E] Notice published in local newspaper |:] Neighborhood meeting Attachments:
A. Staff Report
B. Pension Rate Stabilization Program
Investment & Funding Policy
C. Resolution
D. PARS Investment Portfolios
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Attachment A
LEMON GROVE CITY COUNCIL
STAFF REPORT
Item No. 4
Mtg. Date September 4, 2018
Item Title: Pension Rate Stabilization Program Investment & Funding Policy Staff Contact: MollyBrennan, Finance Manager
Background:
At the City Council meeting on July 17, 2018, a representative from the Public Agency Retirement Services (PARS) presented about the Pension Rate Stabilization Program’s ability utilize a 115 Trust to pre-fund the City’s unfunded actuarial liability (UAL) and generate additional interest earning. Council adopted a resolution authorizing the City’s participation in the program with PARS. Please refer to the staff report titled “Participation in the Pension Rate Stabilization Program to Prefund Pension Obligations” from the July 17, 2018 Council meeting for additional background on PARS and the 115 Trust.
To open the new 115 Trust, the City is required to adopt a formal investment and funding policy to establish a methodology and process for funding current and future costs associated with the City’s contractual obligations to provide pension benefits. The overall net pension liability of $6,672,556 as of June 30, 2017 is shared between the City of Lemon Grove ($5,060,051) and the Lemon Grove Sanitation District ($1,612,505), so the new policy willapply to both entities.
As directed by City Council, staff has prepared the necessary investment and funding policy to move forward in participating in the Pension Rate Stabilization Program. The recommended policy presented for Council adoption is Attachment B.
Discussion:
The goals of the Policy are:
0 Ensure sufficient liquidity to enable distributions when needed 0 Generate additional interest earnings while maintaining low risk portfolio o Stabilize annual contributions
o Designate funding sources for future pension obligations Based on the City’s current financial position and to leverage the benefits of the 115 Trust to the highest potential at this point in time, staff recommends considering both a short-term funding and associated investment strategy and a long-term funding and investment strategy.
Funding
To utilize the Trust's increased interest earning potential and given the City’s limited funding options, each year staff willtransfer the budgeted amount for retirement during the fiscal year to the Trust. This includes the estimated annual employer payroll percentage contribution and annual unfunded accrued liability obligations to Ca|PERS. Quarterly, the City willrequest reimbursement from the Trust for pension related expenses paid during the prior quarter.
Although the funding willbe a short-term contribution and withdrawal, moving the cash to the Trust will generate additional interest earnings versus keeping the cash in State’s Local Agency Investment Trust account.
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Attachment A
In addition, the following funding strategies will be considered bi-annually during the budget and mid-year budget process with the goal of using these funds to stabilize future increases in the City’s pension obligations.
1. A portion of year-end fund balance surplus
2. One-time revenues not committed to on-going operations PARS's Investment Portfolios
PARS’s PRSP has five investment portfolios: Capital Appreciation, Balanced, Moderate, Moderately Conservative, and Conservative. Each portfolio has different risk profiles with different amounts invested in equities and other instruments. The investment portfolios range from ‘‘CapitalAppreciation” with 72 percent of funds invested in equities to “Conservative” with 15 percent of funds invested in equities. It is important to note that as the amount of equities increases, risk and volatility increases. in contrast, as the amount of equities decreases, risk and volatility decreases.
Approximately 31 percent of public agencies participating in the PARS’s PRSP have selected the “Moderately Conservative” portfolio which is the second most conservative portfolio with 30 percent of funds invested in equities. Returns as of March 2018 in the “Moderately Conservative” portfolio were as follows:
o 1-Year Returns 5.73%
o 3-Year Returns 3.83%
o 5-Year Returns 4.47%
Through the deposit of funds into the PRSP, the City could expect to earn a rate of return greater than what would be attained through the City's investment with the State’s Local Agency Investment Fund. The higher return is made possible because the Section 115 Trust Program is not prohibited by the State law from making purchases of higher yield equities.
The table below compares investment returns from:
1. PARS/HighMark Capital Management,
2. Local Agency Investment Fund
PARS/HighMark Capital Management Returns as of 3/31/2018 1 Risk Tolerance % Equity 1-Year Returns 3-Year Returns 5-Year Returns j Portfolios ‘ l
, _-.. 7.,” . .. A_._,_-- _. , ,2 _. .. 2, __ _. _ . _ 1 Capital ‘ 65-85% 11.28% 7.18% 8.77% Appreciation
.,_ ___,_______, _ . . __ - _ .-,.__,___2]
fBalanced 50-70% 9.98% 6.11% 7.22% !
Moderate 40-60% , 8.34% 5.37% 6.28%
Moderately 20-40% 5.73%
‘ 3.83% 4.47%
I
l
: Conservative 1 |
_ - , , 1
. . _ _ .._ .. J
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Attachment A
Conservative ‘ 5-20% 3.69% 2.72% ‘ 3.71%
Local Agency Investment Fund (LAIF), State of California 2017 12016 i2015 ;
1-Year Earning Rates ending 0.754% 0.434% ,0.269%
December 315‘
Staff recommends the City selects two investment options. For the short-term trust contributions, the annual transfer based on the budged retirement spending for the coming year, staff proposes the City uses the Conservative asset allocation strategy. Since this funding will flow in and out of the Trust within twelve months, taking the lowest risk investment option will provide the most security that the funds will be available in the short-term.
For the longer-term contributions intended to stabilize the future impacts of increasing unfunded liability payments, staff proposes the City uses the Moderately Conservative asset allocation strategy. Based on the unfunded accrued liability amortization tables from Ca|PERS, the City's annual contribution will increase each year, peaking in 2031 at an estimated $862,242. Since the time-frame for when the cash willbe needed is 10 plus years out, the City can take a risker approach than with the short-term contributions.
There are few reasons why staff recommends the Moderately Conservative option rather than one of the more aggressive, historically higher interest rate generating options. First, the largest portion of other public agency participating in the program have selected the Moderately Conservative approach. Second, the US economy has done well over the last ten years but we are due for a dip during the next ten, the time period when our funds willbe invested. Third, due to the City’s financial position we cannot afford to take a big risk and lose, because we do not have additional funding to make up for a loss.
Fiscal Impact
For short-term contributions, our interest rate earnings are estimated to grow from .754% to
3.71%. The availability and timing of long-term contributions is unknown at this point in time, so the impact is undetermined.
Conclusion:
Staff recommends that the City Council adopts a resolution (Attachment C) approving the City of Lemon Grove & Lemon Grove Sanitation District Pension Rate Stabilization Program Investment and Funding Policy.
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Attachment B
CITYOF LEMONGROVE & LEMON
I GROVE SANITATIONDISTRICT
/‘
llii in
Pension Rate Stabilization Program
Investment & Funding Policy
PURPOSE
The purpose of this Pension Rate Stabilization Program Investment & Funding Policy (”Policy") is to establish a methodology and a process for funding current and future costs associated with the City and Sanitation District's contractual obligations to provide pension benefits.
ADOPTION& IMPLEMENTATION
The City Council is responsible for adopting the Policy and for approving any significant revisions. The City Manager, or his/herdesignee, is responsible for developing administrative procedures, as needed, to implement the Policy. The City Council will review and approve the Policy via resolution, as needed, to ensure it meets the current and future needs of the City.
GOALS
0 Ensure sufficient liquidity to enable distributions when needed 0 Generate additional interest earnings while maintaining low risk portfolio 0 Stabilize annual contributions
0 Designate funding sources for future pension obligations
INITIALSET-UP
The City shall establish an Internal Service Code Section 115 approved irrevocable trust. City Council has the authority to establish the trust and define policies for the administration of the Trust funds. City Manager and staff have overall responsibility for the Trust funds and will develop and manage procedures in accordance with the City Council's adopted policies.
Trust Administrator
Public Agency Retirement Services (PARS) has established a mu|ti—emp|oyer irrevocable trust in compliance with the requirements of Section 115 of the Internal Revenue Code. While, it is a multiemployer trust, each employer's contributions benefit only its own employees. There is no sharing of either liability or investment earnings and separate employer accounts are maintained. As Trust Administrator, PARS keeps plan documents current to ensure that they reflect the substantive plan and provides ongoing consulting, reporting, and plan accounting records.
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Attachment B
Trustee
Any contributions made to the program are held and invested by a trustee, currently US Bank. Trustee duties include:
1. Safeguarding assets for the benefit of the City/retirees
2. Providing oversight protection of the investments
3. Custodian of the assets
4. Disbursing funds to pay for pension costs
Investment Manager
The Investment Manager, currently Highmark Capital Management, will recommend investment portfolio allocations and manage those assets according to the adopted investment policy. They provide annual review for the City's pension asset management.
FUNDING
To utilize the Trust's increased interest earning potential and given the City's limited funding options, each year staff will transfer the budgeted amount for retirement during the fiscal yearto the Trust. Thisincludes the estimated annual employer payroll percentage contribution and annual unfunded accrued liability obligations to CalPERSfrom all City funds and the Sanitation District. Quarterly, the City will request reimbursement from the Trust for pension related expense paid during the prior quarter. Although the funding will be a short-term contribution and withdrawal, moving the cash to the Trust will generate additional interest earnings versus keeping the cash in State's LocalAgency Investment Trust account.
In addition, the following funding strategies will be considered bi-annually during the budget and midyear budget process with the goal of using these funds to stabilize future increases in the City's pension obligations.
3. A portion of year-end fund balance surplus
4. 0ne—time revenues not committed to on—goingoperations
INVESTMENTSTRATEGY
PARS provides flexibility to the City in the selection of the investment strategy for its funds in the Trust, giving the City control on target yield and level of risk for our investments. There are five investment options which allocate the assets in varying investment combinations of equity, fixed income, and cash.
With each investment option, as the expected rate of return increases, so does the assumed risk.
The asset allocation strategies and corresponding investment options currently available are:
Strategy Equity Fixed Income ICash
Conservative 5%-20% 60%—95% | 0%—20%
Moderately Conservative 20%-40% 50%—80% 0%—20%
Moderate 40%—60% 40%—60% 0%—20%
Balanced 50%-70% 30%-50% | 0%—20%
Capital Appreciation 65%—80% 10%-30% I0%—20%
The City and Sanitation District are selecting two investment options. For the short-term trust contributions, the annual transfer based on the budged retirement spending for the coming year, the City
15.H
Attachment B
&Sanitation District directs the Trustee and Investment Manager to use the Conservative asset allocation strategy.
For the longer-term contributions intended to stabilize the future impacts of increasing unfunded liability payments, the City & Sanitation District directs the Trustee and Investment Manager to use the Moderately Conservative asset allocation strategy.
WITHDRAWALS
The City Manager and City Treasurer are authorized to request distribution from the Trust for the following uses:
1. Direct transfer to Ca|PERS as employer contributions for payroll or unfunded accrued liability obligations
2. Direct transfers to any insurers, third party administrators, service providers or other entities providing services in connection with determining the City's pension obligation
3. To the City as reimbursement for the Employer's payment of the amounts described in 1 &2
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Attachment C
RESOLUTION NO. 2018 -
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LEMON GROVE, CALIFORNIA
APPROVING THE PENSION RATE STABILIZATION PROGRAM INVESTMENT & FUNDING POLICY
WHEREAS, the City of Lemon Grove authorized participation in the PARS Pension Rate Stabilization Program as of July 17, 2018 to help pre-fund the City’s rising pension costs and address pension liabilities; and
WHEREAS, a methodology and process for investment and funding of the program needs to be identified; and
WHEREAS, various funding methods may be used to supplement PARS’s Pension Rate Stabilization Program with the City; and
WHEREAS, each fiscal year the City Council willreview its funding method to determine if it is the most appropriate method based on the City's fiscal status; and WHEREAS, using best practices from other cities with similar programs and knowledge of the City’s current financial position, staff prepared a Pension Rate Stabilization Program Investment and Funding Policy.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lemon Grove, California hereby:
1. Approves the attached Pension Rate Stabilization Program Investment and Funding Policy
/////
/////
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15.H
Attachment D
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15.H
Attachment D
HIGHMARK‘*’
CAPTTAL MANAGEME
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15.H
HOLMNUS
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Attachment D
HIGHMARK C PITAL MANAGEMENT
750 C.2l|lfOfl1I:7: qtieet. Suite 1bO(} San Francisco CA 9A‘IO<: R00-:l82~¢1—/7:4 NWW iiigr'iiriail<capital C m
ABOUT THE ADVISER HigrIl\/lark" iHignMarl<I nae
'1 any ll]l:|y§-31$ lIl1C|lJUIl’IQ c-rears‘ >30! oraanizatloris Or'n‘J"Ul|OT1‘-1||lI(lTl5yl'llHl1‘ gs-riii-ni -=-x[ii-irieiii;i- vltli "nore than S13 5 UIHIOFI in a , 5 unde n ri gr.-men! H|unM4lk "(Is -I lorui |E,‘fl1IIJ|5l,|T,ll|F|I*:l,1 <ILl[IVOr1'.|" to money management and Cllfrf-?lly rnana<_1€-,<.asset<l0' 3 wine airay of clients
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown. CFA““
.‘)e—.nior '-roitlolio Manauer
lnvestrnent Experience since ‘SE44 HiunlvlarkTenure since 151517 Eiiiicatiriii MBA-HUlllvrel?lly ol (I(‘l|l"1t‘(|t i 4||l()lfIl7i E University of Southern faiiloriiia Salvatore "Toiy‘ Milazzo Ill CFA
Senior Dortfollo Manager
Investment F:(LItfll(‘,l1C€ ~;irii:i; .‘i)(I4 HigriMark tenure since 1014 Education 811 Coiaale U|'||VE‘tS|l‘/ J Keith Stribling. CFA" Senioi '_‘OlTlOIlOrV‘r.1|'|dU€T lnveslnient F-we-iieiiitr s‘irir‘.e- ‘$1-H.‘ HighMail< Tenure slrire 1995 Frliinntluri HA .')lr'l\()n LJll|‘IK:T.\l|\ ChfISlidll(-E TSUdd
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tI1LlL2rI||()ll HA Illlt-'Hl»1f|()I1‘dl -Ttii-~.rI‘4ri lJiiivr:isiI) Vikyn Anne Wiruniei. CFA
‘miiioi i»<)iIIoIin Nldlt?grl
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‘it-niov *-'Of‘[I0||O fvlanager
lni/estiiicnt E‘/:(J€l’|(:'llL2esinus 2. HItJhM‘zIfKtenure since _‘ 1" Eauc tion MBA Arizona '3ta1E-UnIverSl|y Eb University of \/Vasninqton Asset Allocation Committee Niimhci of r\/lt?llltffs ‘6 Average Vear< ot F-xperience Average Tenure -"1ears'_- I4
‘\
Manager Review Group Nuriitier of Menmcrs 6 Average Years 01 Exrieiieiice 19 Average Tenure Wearsi -14- Page 42 of 49
15.H
HIGHMARKII
CAPITAL MANAGEMENT
PARS DIVERSIFIED PORTFOLIOS
MODERATE
WHYTHEPARS DIVERSIFIED
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Attachment D
INVESTMENTOBJECTIVE =
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15.H
HOLWNGS
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Attachment D
HIG HMARK CAPITA MANAGEMENT
“.50 Caiifrirriia ,. reei
suite 1600 dan Francisco Lu 941
‘$00 —A7’,'.d
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ABOUT THE ADVISER Hiqnlvl. auita- R ager en’ Tl
'1:-airy 100 year’ ilriciudiriu urea
of V[1§llIklf|0flr1l I1|Ori~y iii'rii1r1<_Jeiiie~ni ..»rns-rieni;z- "HI"! more mar ‘$13 8 millionin aniler managenteni HiqrIM-nik n-as 4 long lerrI' 'Jl\I,|(II|I'\P¢(‘ -iLinro2-n;r- '0 ‘none-.y ri'ianagernenvanr1 Itiirrr-nny r
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ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew BruwI1.CFA
SHIN)‘ ;"JlIf()||O Mnnmiei
Investment Exoenen 6 Hiqnlvlark Tenure since ' Enurtanon MBA Uriiveermiy uf?nuinerri E University 0‘ ‘iouineui iaiilornia ‘ .v1l|1(Jll1IFI
Salvatore "Tory" Milaim Ill‘ CFA
Senior :‘.'Ji1fo|io l\/‘armor-I H1‘/tthllllelif E?<[It=l’|t:rlL2§' ‘il Hiqnlvlark Tenure sime SW4 Education BL Lloiaale Ul1|vefS||\, ."lJL|4
J. Keith Stribling. CFA"
'.5é.'I||O' :"J|If0||O |\/lanauw HI‘/t‘\[|'|1t:l1IE)(LIt1lll-‘l1I:e- xll ' Higr1M;.:rk T<"HLll'9~;iiu:<- ‘S Y F1lllf,‘r1f|Oli R11 Slvlsoii IJIII‘/UTSIIV
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Christiane Tsuda
.‘)r‘HI()¥ "()i[l()||<) rV‘rl[IrIlR‘V
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15.H
JHIGHTVI/\RK“"
CAPITAL MANAGEMENT
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ALANCEDPORTFOLIO“ 4
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Attachment D
HIGHMARK CAPITAL MANAGEMENT
"5 Caiifornia 3tri=-et
_,uII€- 760C
San FKBFICISCO
800-’ 2-A774
94104
/‘/WW iiiqiiriieirkcariital corn
ABOUT THE ADVISER HigriIV|art<" apital tvtariagenienl irii: iHign|\/iarki rias 'tt:af|“ ‘iU0 years iirictuctiriq preoe- sow orq nizaliorisi or instiluliolml rriorwy ivvalt?genient v':|Vpi=irt i-,- with more ma S13 8 Ctllltonin ass: a tinder n _gement t-|iqt1M»,:ik as 1 tong te.~iiTili itiiieil ‘r_1pht()41‘ to ‘noney mariag?ment and curreririy mariagr-<. assets to’ 3 wine array 0! clients
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA" Se-iiio’ wnitiolio 'V"a[1‘rI(Jt!t
tnvestrnent Experience since ‘994 HinnlvtarkTenure since ‘~J\J7 Fiitiimtinii t\/‘HA: University at Okltllerlt ii-illtornia BA‘.Univ:-.-rsity o‘Souttiern U ifornia Salvatore "Tory“ Milazzo Ill CFA
Senior 3om‘o|io Manager
|n\/r:sln1c':ntFi<ii::iieiii:e ~:ince= Jl'l('t4 Highlvt k Tenure SINCE‘ .‘(,lI4 Education BL‘ Colgate University J Keith Stribiing. CFA"' Senior Sontolio fvlaneiqur Ht‘/!.‘\ll11(‘IT[ E‘([\r!f|PHIIF- <iiu;e iflnf HignMark Tenure SINCE ' Sf E-ntticritlon HA l?tr-l\oii«lI1iv<~.iSIty Christiane Tsucla
.‘;(f[ll()' >"<)rtt0|i0 t\/t»1n‘4iié:i
Irivustrrierit Hrrit-erierice ince t$Jt,'ii HlqI’VN|dfk Tt-nurc sinct Z‘(I'|It Eijiirzntioii HA |ll|(‘.llldtI()lld|':|lll‘.[Ir1llUll|\/Hl?lfy ‘okyo Anne Wlrnmer, CFA
Hr-iiim »><iiti0liu'\/|:1nar1t-ei
tni/i-~,tnicnt Exticrienge <;ini;r ‘SH: Hiqnlt/tzirk ttatiuit ‘~iIl|I.t ‘(ti)’ Htiication BA University at - .:1|itornia "mnl‘n Haroara Randy Yurchaki CFA
‘uenior >’O?fO|lO Man ’ r
lni/=stn1z:iitExr.ii-;-iienc SINCE. Jltlif HignMartr it-.nure since ‘M1 Education H/18% -\(lZ0n8 State University BS University of \/V<’J‘:hlf1l]|O? Asset Allocation Committee Nlll'“UtfYO'r\/ICfI1lIt‘f‘x‘6 -‘Average vears at Pxrierienne 2' Average Tenure -Yearsi 14 Manager Review Group Nunmer of Members 6 Aveiagr Ycars of Hr-eerieiice 15 Average Tenure iYearsi ‘
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CAPITAL MANAGEMENT
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CAPITAL APPRECIATION
WHYTHEPARS DIVERSIFIED
CAPITALAPPRECIATIONPORTFOLIO?
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Attachment D
INVESTMENTOBJECTIVE
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PORTFOLIOFACTS
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15.H
HOLDINGS
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Hold/rigs Lire si/D/eci:0 change at the discieriuii oi‘ the iirv/esirrierii fiioilr?qel Attachment D
HIGHMARK CAPITAL MANAGEMENT
350 California .; re-et Suite 160C
San Francisco Lu .‘.4z11U¢1 F<00—~'iF’i?»47’14
JWWV nigiiinarkcaiziral corn
ABOUT THE ADVISER HignMark.“ ’apiiaI Nlariagernerii In-: iHignMarki has weariy 100 years iiriciuding pr 1.6550" organizations‘ 0? |l15I||u|I0nd| money rrianaur-rrieni exriurieii-tr min more than ‘S138 EIIIIIOFI in assets under managernent HIQHMHFKnas 4 |Ol'igft1f[IViJ|51:|[||lFI&:l1»30CI|’O‘aCl’1 Io ‘rioney management and ciirreniiy ma ges assels for a wiue array 0! -:iierii<.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA"' Sgruor -Zonioiio "\/landuer
Investment Experience sinc HiqnMari<Tenure since ‘EJ31- Eiiur.-arloii Vi/IRA Uni\/er<Ily of?niiliieiii Cdllloiiila BA University of Southern faiiforriia Salvatore "Tory" Milazzo Ill CFA
Senior iorifolio Manager
liiveslmenl Fxrierieiiix since .“l'lll4 Hignlvlark Tenure ‘SINCE’ ZOI4 Euu ‘anon BA Loiqale Ur1|VE‘TS|ly J Keith Siribling. CFA
Senior Donfollo i'\/ian-age:
iiivexinieni E'x[ie:rierii:£- \‘|HCt-' '98.‘ HignMark Tenure SIUCF i995 Fiiircailoii BA 5;|(!l‘1()f1UlIl\/gglslly Christiane Tsuda Senior >"0rIi0liu lvlrlflrllllff
Inve-,.trnenl biperience since ifl?i HiqnMari< Ieriure Slnl. 3(,IIi Eiliiizallon HA liilmviaimrmi '.IiIi>ii‘nii lJiiiver$:iiy '0ky0 Aime Wirnniev, CFA
Crrlllilt P<)r[f(1Ii()Maria<|:-i
|l1V(“;[ll]é‘nf hirierience Ini;c ‘SE7 Hiunii/IarkTenure ~;im. F0!)- f:iil|C?iI|()ll HA IJniver<iry O"..i||i0iI'1|?i ‘iariia iizirmra Randy Ymchakr CFA“ Senior Lortiolio rvianaqer
Irii/eslineniExperIem:c inc: HiuriM-aikTenure sinr. '_‘U1i Eoucaiiori MBA Arizona Fitziie-lJniversiiy BS Universiiy of \I\/ashinqion Asset Allocation Committee Nurntiei of Mcriiners Average Years oi E-xrierience '_‘i Average Tenure =Vearsi 14 Manager Review Group NumLierofMerntrcr:. 6 Average Years. of Exi-erieiice 19 Average Tenure -Years: " ‘ . i iiwealiiieiits eiiii?oyingliiglilviarh strateg ea are NOT insured hi, i re FOL‘ on in any atIierFedeiaI Gcnuiuiiie it Agency are HOT Sank u'<,-posiie: are NOT guararteed by ‘HE Bank or ziiyeaiii-. 1f?’iI!e i1iidMA‘." ‘ose vaiue iiicludi ig ncssénle loss of iiriricipal
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