Los Gatos City Council
May 17, 2022

TERI BLACK & COMPANY, LLC – EXECUTIVE RECRUITMENT SERVICES TOWN OF LOS GATOS - 2021 Page 4 of 6
iv. Consultant agrees to have and maintain, for the duration of the contract, professional liability insurance in amounts not less than $1,000,000 which is sufficient to insure Consultant for professional errors or omissions in the performance of the particular scope of work under this agreement.

General Liability:
i. The Town, its officers, officials, employees and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of Consultant, premises owned or used by the Consultant. This requirement does not apply to the professional liability insurance required for professional errors and omissions.
ii. The Consultant's insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Any insurance or self-insurances maintained by the Town, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it.
iii. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers.
iv. The Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability.

3.2 All Coverages. Each insurance policy required in this item shall be endorsed to state that coverage shall not be suspended, voided, cancelled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the Town. Current certification of such insurance shall be kept on file at all times during the term of this agreement with the Town Clerk.

3.3 Workers’ Compensation. In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required by California law and shall provide evidence of such policy to the Town before beginning services under this Agreement. Further, Consultant shall ensure that all subcontractors employed by Consultant provide the required Workers' Compensation insurance for their respective employees.

3.4 Indemnification. The Consultant shall save, keep, hold harmless and indemnify and defend the Town its officers, agent, employees and volunteers from all damages, liabilities, penalties, costs, or expenses in law or equity that may at any time arise or be set up 















TERI BLACK & COMPANY, LLC – EXECUTIVE RECRUITMENT SERVICES TOWN OF LOS GATOS - 2021 Page 5 of 6
because of damages to property or personal injury received by reason of, or in the course of performing work which may be occasioned by a willful or negligent act or omissions of the Consultant, or any of the Consultant's officers, employees, or agents or any subconsultant.

IV. GENERAL TERMS

4.1 Waiver. No failure on the part of either party to exercise any right or remedy hereunder shall operate as a waiver of any other right or remedy that party may have hereunder, nor does waiver of a breach or default under this Agreement constitute a continuing waiver of a subsequent breach of the same or any other provision of this Agreement.

4.2 Governing Law. This Agreement, regardless of where executed, shall be governed by and construed to the laws of the State of California. Venue for any action regarding this Agreement shall be in the Superior Court of the County of Santa Clara.

4.3 Termination of Agreement. The Town and the Consultant shall have the right to terminate this agreement with or without cause by giving not less than fifteen days (15) written notice of termination. In the event of termination, the Consultant shall deliver to the Town all plans, files, documents, reports, performed to date by the Consultant. In the event of such termination, Town shall pay Consultant an amount that bears the same ratio to the maximum contract price as the work delivered to the Town bears to completed services contemplated under this Agreement, unless such termination is made for cause, in which event, compensation, if any, shall be adjusted in light of the particular facts and circumstances involved in such termination.

4.4 Amendment. No modification, waiver, mutual termination, or amendment of this Agreement is effective unless made in writing and signed by the Town and the Consultant.

4.5 Disputes. In any dispute over any aspect of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, including costs of appeal.

4.6 Notices. Any notice required to be given shall be deemed to be duly and properly given if mailed postage prepaid, and addressed to:

Town of Los Gatos
Attn: Human Resources
110 E. Main Street
Los Gatos, CA 95030
Teri Black & Company, LLC
Attn: Tracey Carlson
25500 Hawthorne Blvd, Suite 1158
Torrance, CA 90505
or personally delivered to Consultant to such address or such other address as Consultant designates in writing to Town.
















TERI BLACK & COMPANY, LLC – EXECUTIVE RECRUITMENT SERVICES TOWN OF LOS GATOS - 2021 Page 6 of 6

4.7 Order of Precedence. In the event of any conflict, contradiction, or ambiguity between the terms and conditions of this Agreement in respect of the Products or Services and any attachments to this Agreement, then the terms and conditions of this Agreement shall prevail over attachments or other writings.

4.8 Entire Agreement. This Agreement, including all Exhibits, constitutes the complete and exclusive statement of the Agreement between the Town and Consultant. No terms, conditions, understandings or agreements purporting to modify or vary this Agreement, unless hereafter made in writing and signed by the party to be bound, shall be binding on either party.

IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement.

Town of Los Gatos by:

Laurel Prevetti, Town Manager
Recommended by:

Lisa Velasco, Human Resources Director
Consultant, by:

Teri Black, President
Teri Black & Company, LLC
Approved as to Form:

Robert Schultz, Town Attorney
Attest:

Shelley Neis, MMC, CPMC
Town Clerk

















 
 



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PREPARED BY: Salina Flores
Human Resources Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 05/17/2022
ITEM NO: 5
DATE: May 11, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Execute a First Amendment to a Special Services Agreement with Liebert Cassidy Whitmore to Extend the Term through June 30, 2024, to Perform Labor and Employment Relations Assistance in an Amount Not to Exceed $180,000
RECOMMENDATION:

Authorize the Town Manager to execute a First Amendment (Attachment 1) to a Special Services Agreement with Liebert Cassidy Whitmore to extend the term through June 30, 2024 to perform labor and employment relations assistance in an amount not to exceed $180,000.

BACKGROUND:

Liebert Cassidy Whitmore was selected as a sole source provider for labor and employment relations services as the result of a competitive interview process. Lisa Charbonneau, a Partner at Liebert Cassidy Whitmore and lead negotiator for the Town, provides valuable negotiation legal guidance and has established a good rapport with the Town’s bargaining units during current labor negotiations.

DISCUSSION:

The Town is currently in negotiations with its three bargaining units: the Town Employees’ Association (TEA), the American Federation of State, County and Municipal Employees (AFSCME), and the Police Officers’ Association (POA). It is critical to have continuity of labor representation during negotiations.

The original agreement with Liebert Cassidy Whitmore was for a two-year term from February 1, 2020 through February 1, 2022 (Attachment 3). A two-year extension of the term of the

PAGE 2 OF 2
SUBJECT: Authorize the Town Manager to Execute a First Amendment to a Special Services Agreement with Liebert Cassidy Whitmore, to Extend the Term To Perform Labor and Employment Relations Assistance in an Amount Not to Exceed $180,000
DATE: May 11, 2022
DISCUSSION (continued):

Liebert Cassidy Whitmore agreement is being requested from February 2, 2022, through June 30th, 2024, in an amount not to exceed $180,000.

CONCLUSION:

Liebert Cassidy Whitmore has been highly effective in assisting the Town with labor negotiations and employment relations support. The firm also has an abundance of legal resources to provide support during and after the negotiations process. Staff recommends that the Council authorize the Town Manager to execute a First Amendment (Attachment 1) to the agreement for Special Services with Liebert Cassidy Whitmore to continue providing labor negotiations and employment relations support.

FISCAL IMPACT:

The previous contract was for $165,000 and not all of the encumbered amount was used during the original two-year period. With this agenda item, there would be a total net increase of $15,000 which can be absorbed in the HR budget based on the adopted FY 2021/22 Budget and the anticipated resources needed for labor relations services. The total contract is not to exceed $180,000.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

Attachments:

1. First Amendment to the Agreement for Special Services with Liebert Cassidy Whitmore

2. Updated Rate Schedule

3. Original Agreement with Liebert Cassidy Whitmore

ATTACHMENT 1

FIRST AMENDMENT TO AGREEMENT FOR SPECIAL SERVICES
THIS FIRST AMENDMENT TO AGREEMENT is entered into this 17th day of May, 2022, by and between the Town of Los Gatos, State of California, herein called the “Town,” and Liebert Cassidy Whitmore, a Professional Corporation (“Attorney”), herein called the “Attorney.”

RECITALS
Town and Attorney entered into a Special Services Agreement from February 1, 2020, through February 1, 2022 (“Agreement”) (see Attachment 3).

AMENDMENT

1. The Town desires to extend the Agreement from February 2, 2022, through June 30, 2024.

2. Total compensation by the Town for the Attorney’s services shall increase by an additional $15,000, not to exceed $180,000.

3. Compensation is based on an updated rate schedule (see Attachment 2).

4. All other terms and conditions of the Agreement dated February 1, 2020, remain in full force and effect.

IN WITNESS WHEREOF, the Town and Consultant have executed the Second Amendment to Agreement as of the date indicated above.

Town of Los Gatos: Attorney:

By: ______________________________ By: ______________________________ Laurel Prevetti Liebert Cassidy Whitmore
Town Manager A Professional Corporation
Department Approval:
__________________________
Salina Flores
Human Resources Director
Approved as to Form:
_____________________________________
Robert Schultz
Town Attorney
Attest:
_____________________________________
Shelley Neis, MMC,CPMC
Town Clerk

LIEBERT CASSIDY WHITMORE

FEE SCHEDULE
Partners $415.00
Senior Counsel $345.00
Associates $230.00 - $325.00
Labor Relations/Human Resources Consultant $260.00
Paralegals $145.00
E-Discovery Specialists $145.00
Law Clerks $145.00 - $185.00
ATTACHMENT 2

. AGR ;;i.o. D.:t(o
IHH ____ _

AGREEMENT FOR SPECIAL SERVICES
This Agreement is entered into between the law firm of LIEBERT CASSIDY WHITMORE, A Professional Corporation ("Attorney"), and the TOWN OF LOS GATOS, A Municipal Corporation ("Town").

1. Conditions
This Agreement will not take effect, and Attorney will have no obligation to provide services, until Town returns a properly signed and executed copy of this Agreement.

2. Attorney's Services
Attorney agrees to provide Town with consulting, representational and legal services pertaining to employment relations matters, including representation in negotiations and in administrative and court proceedings, as requested by Town or otherwise required by law.

3. Fees, Costs, Expenses
Town agrees to pay Attorney the sums billed monthly for time spent by Attorney in providing the services, including reasonable travel time. i--ot-eJ.. Co �ptu'J S a'1 °-:-' -fe 1 ---tw. ou'(a.;1\0 r) Of-11,,¼S .�c.e..el'Y\v,-v "'�
. . ts V\OI The current range of hourly rates for Attorney time 1s from Two Hundred Ten to -t-o e�c.e.e& Three Hundred Eighty Dollars ($210.00 - $380.00). See Schedule I for a full Fee '$ lft,S7 ooo. u.r
Schedule. Attorney reviews its hourly rates on an annual basis and, if appropriate, adjusts them effective July l. Attorney will provide the Town with written notification of any adjustment in the range of rates. Attorney bills its time in minimum units of onetenth of an hour. 9120460.1 LC00l-009
ATTACHMENT 3

For Litigation Matters
See Schedule II attached for a description of Attorney's Litigation and EDiscovery Management.

Other Expenses
Town agrees to reimburse Attorney for necessary costs and expenses incurred by Attorney on behalf of Town. Attorney bills photocopying charges at Fifteen Cents ($0.15) per page. See Schedule I attached.

Payment by Town against monthly billings is due upon receipt of statements, and is considered delinquent if payment is not received within thirty (30) days of the date of the invoice.

4. Professional Liability Insurance
The California Business & Professions Code requires us to inform you whether we maintain errors and omissions insurance coverage applicable to the services to be rendered to you. We hereby confirm that the firm does maintain such insurance coverage.

5. Arbitration of Professional Liability or Other Claims Disputes. If a dispute between Town and Attorney arises over fees charged for services, the controversy will be submitted to binding arbitration in accordance with the rules of the California State Bar Fee Arbitration Program, set forth in California Business and Professions Code, sections 6200 through 6206. The arbitrator or arbitration panel shall have the authority to award to the prevailing party attorneys' fees, costs and interest incurred. Any arbitration award may be served by mail upon either side and personal service shall not be required.
9 I 20460. I LCOO I -009

If a dispute arises between Town and Attorney over any other aspect of the attorney-client relationship, including, without limitation, a claim for breach of professional duty, that dispute will also be resolved by arbitration. It is understood that any dispute as to any alleged breach of professional duty (that is, as to whether any legal services rendered under this agreement were allegedly unnecessary, unauthorized, omitted entirely, or were improperly, negligently or incompetently rendered) will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration
_
proceedings. Both parties to this agreement, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration. Each party is to bear its own attorney's fees and costs.

6. File Retention
After our services conclude, Attorney will, upon Town's request, deliver the file for the matter to Town, along with any funds or property of Town's in our possession. If Town requests the file for the matter, Attorney will retain a copy of the file at the Town's expense. If Town does not request the file for this matter, we will retain it for a period of seven (7) years after this matter is closed. If Town does not request delivery of the file for this matter before the end of the seven (7) year period, we will have no further obligation to retain the file and may, at our discretion, destroy it without further notice to Town. At any point during the seven (7) year period, Town may request delivery of the file.
9120460.1 LCO0l-009

7. 8.

Assignment
This Agreement is not assignable without the written consent of Town.

Independent Contractor
It is understood and agreed that Attorney, while engaged in performing the tenns of this Agreement, is an independent contractor and not an employee of Town.

9. Authority
The signators to this Agreement represent that they hold the positions set forth below their signatures, and that they are authorized to execute this Agreement on behalf of their respective parties and to bind their respective parties hereto. <J_ 0 '2,.�f> \} vfv-\

10. Term � 'o�""'--Y
4IDA€,""
This Agreement is effective February 1, 2020, ongoing and may be modified by mutual agreement of the parties. This agreement shall be terminable by either party upon thirty (30) days written notice.

LIEBERT CASSIDY WHITMORE,
A Professional Corporation
9120460.1 LC00l-009

TOWN OF LOS GATOS,
A Municipal Corporation
Name: Lour-el 3;--e ve+-h
Date: 0-. - d0 - ;;)_�o

SCHEDULE I - FEES & COSTS

1. Hourly Rates (As of Agreement Effective Date)
Partners
Senior Counsel
Associates
Labor Relations/HR Consultant
Paralegals
E- Discovery Specialists
Law Clerks

2. COSTS
I. Photocopies
9120460.1 LC00l-009
$380.00
$325.00
$210.00 - $305.00
$240.00
$135.00
$135.00
$135.00 - $175.00
$0.15 per copy

SCHEDULE II
LCW LITIGATION and E-DISCOVERY MANAGEMENT
LCW is committed to using state-of-the-art technology to efficiently manage and harness electronically-stored information ("ESI") in compliance with Federal and State law requirements. LCW partners with an outside managed services provider to provide Relativity, the industry leading e-discovery software, for this purpose. The cost for each matter will depend on the volume and format of the data. For non-complex data up to 50 gigabytes, LCW charges a monthly fee of $375 on all active litigation matters for data management, including data validation and security, ingestion, de-duplication, culling and streamlining, and creation of Relativity fields for expedited review. For data of 50 gigabytes and over and for complex data requiring specialized services (e.g., payroll data, spreadsheets with underlying formulas, video, advanced searches, etc.), additional charges are incurred and are passed through to the client. For such charges, we will provide an itemized bill from our managed services provider and obtain client approval prior to incurring the charges.

Litigation Case Staffing
LCW has organized its litigation practice to meet the challenges of today's complex litigation cases. We employ a dedicated Litigation Manager - a non-billing attorney litigator - whose responsibility is to monitor all litigation cases to ensure quality, efficiency, and adherence to client and firm litigation guidelines. Each litigation case is staffed with a Partner, an Associate ( or Associates, as required and as approved by the Client), a Paralegal and an E-Discovery Specialist. Our E-Discovery Specialists have extensive experience in the efficient management of electronic data through every stage of the e-discovery life cycle, and they strategize with attorneys and clients on effective ESI protocols. This makes the document review process more efficient and enables our attorneys to target the most relevant data to meet litigation objectives. Working with our e-discovery managed services provider, we are able to provide state-of-the-art data processing and hosting services at below-market rates.
6 9120460.1 LC00l-009

DATE:

TO:

FROM:

SUBJECT:

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
January 14, 2020
Mayor and Town Council
Laurel Prevetti, Town Manager
MEETING DATE: 01/21/2020
ITEM NO: 6
Authorize the Town Manager to Execute an Agreement with Liebert Cassidy Whitmore to Perform Labor and Employment Relations Assistance in an Amount Not to Exceed $165,000
RECOMMENDATION:

Authorize the Town Manager to execute an agreement with Liebert Cassidy Whitmore to perform labor and employment relations assistance in an amount not to exceed $165,000.

BACKGROUND:

Liebert Cassidy Whitmore was selected as a sole source provider for labor and employment relations services beginning in February 2018 and continuing for two years as the result of a competitive interview process. Donna Williamson, a Partner at Liebert Cassidy Whitmore and lead negotiator for the Town, provided valuable guidance and established a good repertoire with the Town's bargaining units during labor negotiations in 2018. Negotiations related to the narrow topic of salaries are scheduled to occur during the final year of the three bargaining unit agreements in 2020. All bargaining agreements will expire in 2021 and will reopen for the full scope of negotiations at that time.

The Town of Los Gatos also has an ongoing agreement with Liebert Cassidy Whitmore, a public sector employment law firm, to participate in a consortium that offers Human Resource professionals, management, and supervisory employment related training in areas such as: the hiring process, wage and hour issues, discipline and performance, legislative updates, the disability interactive process, and retirement. The consortium also offers free telephone legal consultation for less complicated employment relations inquiries.

PREPARED BY: Lisa Velasco
Human Resources Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 • (408) 354-6832 www.losgatosca.gov

PREPARED BY: Stephen Conway
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov

TOWN OF LOS GATOS

FINANCE COMMISSION REPORT
MEETING DATE:05/17/2022
ITEM NO: 6
DATE: May 11, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Third Quarter Investment Report (January through March 2022) for Fiscal Year 2021/22
RECOMMENDATION:

Receive the Third Quarter Investment Report (January through March 2022) for Fiscal Year (FY) 2021/22.

DISCUSSION:

The Finance Commission received this report on May 9, 2022.

As of March 31, 2022, the Town’s weighted portfolio yield was 1.16% which trended approximately 79 basis points above the Local Agency Investment Fund (LAIF) yield of 0.37%.

This favorable yield differential to LAIF was primarily due to the LAIF portfolio’s lower weighted average maturity (WAM) of 310 days versus the Town’s longer WAM of 470 days. The Town’s weighted average rate of return of 1.16% at the close of the third quarter in 2022 was 27 basis points lower when compared to the third quarter return of 1.43% in 2021.

In the third quarter of FY 2021/22, LAIF yields climbed from 23 basis points (0.23%) to 37 basis points (0.365%) through the end of March 2022. Staff in coordination with the Town’s investment advisor primarily replaced maturing investments in shorter to medium term maturities in the two- to three-year maturity range. These investments capture current yields that exceed the rates expected to be earned in the State Local Agency Investment Fund (LAIF) pool during that same time period. The State LAIF pool typically lags the market when current market yields are either increasing or decreasing.

PAGE 2 OF 2
SUBJECT: Receive the Third Quarter Investment Report (January through March 2022) for Fiscal Year 2021/22
DATE: May 11, 2022
DISCUSSION (continued):

Interest rates rose across the board during the quarter. The rise in short term rates was influenced by the Federal Reserve implementing its first Federal Funds rate hike since 2018.

The Feds quarterly “dot plot” continues to illustrate multiple rate hikes in the coming year.

The median projection rose to seven rate hikes this year, up from four in the December 2021 meeting. In addition, the Consumer Price Index (CPI) recorded another multi-decade high in line with expectations at 7.9% year on year.

CONCLUSION:

Staff recommends that the Town Council receive the Third Quarter Investment Report (January through March 2022) for Fiscal Year 2021/22.

Attachment:

1. Third Quarter Investment Report for FY 2021/22 (January through March 2022)

Town of Los Gatos
Summary Investment Information
March 31, 2022
Weighted Average YTM Portfolio Yield: 1.16% Weighted Average Maturity (days) 470 This Month Last Month One year ago
Portfolio Balance $71,616,902 $71,083,516 $63,051,470
Benchmarks/ References:

Town's Average Yield 1.16% 1.17% 1.43%
LAIF Yield for month 0.37% 0.28% 0.36%
3 mo. Treasury 0.51% 0.32% 0.02%
6 mo. Treasury 1.03% 0.66% 0.04%
2 yr. Treasury 2.34% 1.44% 0.16%
5 yr. Treasury (most recent) 2.46% 1.72% 0.94%
10 Yr. Treasury 2.34% 1.83% 1.74%
0 - 1 year
30%
1 - 2 years
30%
2 - 3 years
25%
3 - 5 years
15%
Portfolio Maturity Profile
Compliance: The Town's investments are in compliance with the Town's investment policy dated September 21, 2021 and also in compliance with the requirements of Section 53601 of the California State Code. Based on the information available, the Town has sufficient funds to meet the cash demands for the next six months.

ATTACHMENT 1

Town of Los Gatos
Portfolio Allocation & Treasurer's Fund Balances
March 31, 2022
Month YTD
Fund Balances - Beginning of Month/Period $71,083,516.26 $67,951,235.09 Receipts 4,246,952.04 53,115,796.21
Disbursements (3,713,566.56) (49,450,129.56)
Fund Balances - End of Month/Period $71,616,901.74 $71,616,901.74 Portfolio Allocation: % of Portfolio Max. % 0r $ Allowed Per State Law or Policy BNY MM $247,510.43 0.46% 20% of Town Portfolio
US Treasury Notes $10,046,915.87 18.82% No Max. on US Treasuries Government Agency Debenture Notes $22,858,340.87 42.81% No Max. on Non-Mortgage Backed Corporate Medium Term Bonds $13,340,489.68 24.99% 30% of Town Portfolio Local Agency Investment Fund $6,900,032.98 12.92% $75 M per State Law Subtotal - Investments 53,393,289.83 100.00%
Reconciled Demand Deposit Balances 18,223,611.91
Total Treasurer's Fund $71,616,901.74
BNY MM

0.46% US Treasury Notes

18.82%
Government Agency Debenture Notes

42.81%
Corporate Medium Term Bonds

25.0%
Local Agency Investment Fund

12.9%
Portfolio Investment Allocation
52000000
54000000
56000000
58000000
60000000
62000000
64000000
66000000
68000000
70000000
72000000
74000000
Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Treasurer's Fund Balances
page 2 Page 140
Town of Los Gatos
Non-Treasury Restricted Fund Balances
March 31, 2022
MAR 22 MAR 22 MAR 22
Beginning Deposits Interest/ Ending
Balance Realized Gain/Adj. Earnings Withdrawals Balance Non-Treasury Funds:
`
Cert. of Participation 2002 Series A Reserve Fund 686,324.26 $ 5.32 $ 686,329.58 Note 1 Cert. Of Participation 2010 Ser A Lease Pymt Fund 0.65 $ 0.65 Note 1 Cert. of Participation 2002 Lease Payment Fund 0.16 $ 0.16 Note 1 Cert. of Participation 2010 Series Reserve Fund 1,277,137.83 10.65 1,277,148.48 Note 2 Total Restricted Funds: $ 1,963,462.90 $ - $ 15.97 $ - $ 1,963,478.87 CEPPT IRS Section 115 Trust 0.00 0.00 0.00 0.00 0.00
Grand Total COP's and CEPPT Trust $ 1,963,462.90 $ - $ 15.97 $ - $ 1,963,478.87 These accounts are not part of the Treasurer's fund balances reported elsewhere in this report, as they are for separate and distinct entities.

Note 1: The three original funds for the Certificates of Participation 2002 Series A consist of construction funds which will be expended over the next few years, reserve funds which will guarantee the payment of lease payments, and a third fund for the disbursement of lease payments and initial delivery costs.

Note 2: The 2010 COP Funds are all for the Library construction, reserves to guarantee lease payments, and a lease payment fund for the life of the COP issue. The COI fund was closed in September 2010.

Note 3: The CEPPT Section IRS Section 115 Trust was established as an irrevocable trust dedicated to accumulate resources to fund the Town's unfunded liabilities related to pension and other p

Town of Los Gatos
Statement of Interest Earned
March 31, 2022
Interest by Month
July 2021 $57,076.80
August 2021 56,600.18
September 2021 54,523.00
October 2021 54,951.68
November 2021 51,445.84
December 2021 55,030.55
January 2022 51,909.39
February 2022 46,264.19
March 2022 50,912.58
April 20202
May 2022
June 2022
$478,714.21

Town of Los Gatos Investment Schedule March
2021
Maturity Yield to Interest Interest Interest Days
Deposit Par Original Market Purchased Date or Maturity Received Earned Earned to Institution CUSIP # Security Date Value Cost Value Interest Call Date or Call to Date Prior Yrs. Current FY Maturity Treasury 91282CAP6 US Treasury Note 6/30/2021 1,000,000.00 995,390.63 979,843.75 10/15/2023 0.33% $ 365.44 $ - $ 2,447.28 563 Toyota Motor Credit 89236THA6_1 Corporate Bond 04/12/21 500,000.00 510,580.00 498,257.41 8/25/2023 0.45% $ 5,868.75 $ 494.69 $ 1,715.77 512 Toyota Motor Credit 89236THA6 Corporate Bond 1/11/2022 1,100,000.00 1,107,315.00 1,594,423.71 8/25/2023 0.94% $ 1,815.00 $ - $ 2,236.30 512 US Treasury 91282CDD0 US Treasury Note 1/13/2022 1,100,000.00 1,090,675.78 1,081,265.63 843.23 10/31/2023 0.85% $ (843.23) $ - $ 1,964.66 579 US Treasury 91282CCN9 US Treasury Note 1/13/2022 1,200,000.00 1,188,375.00 1,180,265.63 7/31/2023 0.75% $ 73.37 $ - $ 1,903.54 487 FFCB 3133EKMX1 Gov. Agency Debenture 8/2/2019 1,000,000.00 1,014,400.00 1,096,166.30 2/23/2024 1.90% $ 62,625.83 $ 36,611.80 $ 14,371.97 694 FFCB 3133EMBE1 Gov. Agency Debenture 10/8/2020 1,600,000.00 1,598,000.00 1,563,154.94 3/28/2024 0.34% $ 7,053.34 $ 3,903.24 $ 4,035.81 728 FFCB 3133EMCQ3 Gov. Agency Debenture 10/16/2020 2,000,000.00 1,998,000.00 1,966,334.48 10/13/2024 0.31% $ 5,553.33 $ 4,295.55 $ 4,579.69 927 BankAmerica Corp 06051GHC6 Corporate Bond 10/9/2020 1,300,000.00 1,366,287.00 1,311,553.58 12/20/2023 0.66% $ 46,753.92 $ 13,250.31 $ 13,752.22 629 IBM 459200HG9 Corporate Bond 8/8/2019 1,000,000.00 995,010.00 1,003,587.34 8/1/2022 2.05% $ 46,510.42 $ 38,718.82 $ 15,330.86 123 IBM 459200JY8 Corporate Bond 3/25/2021 1,000,000.00 1,071,040.00 1,022,776.50 5/15/2024 0.71% $ 19,166.67 $ 1,964.86 $ 5,550.23 776 US Treasury 912828R28 US Treasury Note 7/2/2019 500,000.00 497,246.09 502,460.94 4/30/2023 1.77% $ 18,921.54 $ 17,663.79 $ 6,639.07 395 Freddie Mac 3137EAEN5 Gov. Agency Debenture 7/19/2019 2,000,000.00 2,072,358.00 2,038,331.88 6/19/2023 1.79% $ 132,916.67 $ 71,285.65 $ 27,432.96 445 FFCB 3133EKVF0 Gov. Agency Debenture 7/22/2019 1,000,000.00 999,630.00 1,010,005.98 1/17/2023 1.89% $ 46,614.58 $ 36,626.98 $ 14,154.86 292 Treasury 912828L57 US Treasury Note 7/22/2019 1,200,000.00 1,197,988.40 1,206,843.74 9/30/2022 2.09% $ 56,516.39 $ 42,014.96 $ 16,237.09 183 US Treasury 91282CDA6 Gov. Agency Debenture 1/31/2022 1,100,000.00 1,085,222.44 1,080,964.84 9/30/2023 1.07% $ 445.74 $ - $ 1,880.89 548 US Treasury 91282CAW1 Gov. Agency Debenture 7/15/2021 1,200,000.00 1,199,437.50 1,176,703.13 11/15/2023 0.27% $ 1,002.72 $ - $ 2,299.56 594 American Honda 02665WCZ2 Corporate Bond 11/27/2019 1,000,000.00 1,012,410.01 1,008,880.48 6/27/2024 2.12% $ 60,733.34 $ 33,895.56 $ 15,985.17 819 JP Morgan Chase 46625HJE1 Gov. Agency Debenture 2/11/2020 900,000.00 934,587.00 910,896.00 9/23/2022 1.74% $ 61,912.50 $ 22,179.72 $ 12,034.14 176 Honeywell Int'l. 438516BW5 Corporate Bond 11/20/2019 1,000,000.00 1,014,660.00 1,012,762.63 7/15/2024 1.64% $ 50,983.33 $ 31,978.44 $ 14,901.52 837 Caterpillar Financial Serv 14913Q2V0 Corporate Bond 2/23/2021 1,000,000.00 1,077,370.00 1,021,369.97 5/17/2024 0.44% $ 20,900.00 $ 1,582.27 $ 3,413.71 778 FNMA 3135G0V75 Gov. Agency Debenture 10/17/2019 1,100,000.00 1,105,833.30 1,103,488.08 7/2/2024 1.63% $ 42,831.25 $ 30,694.63 $ 13,521.43 824 US Bancorp 91159HHV5 Corporate Bond 12/24/2019 1,000,000.00 1,049,040.00 1,027,502.37 1/5/2024 2.12% $ 71,343.75 $ 32,781.93 $ 16,213.44 645 FHLB 3133834G3 Gov. Agency Debenture 3/11/2021 1,400,000.00 1,460,522.00 1,414,604.58 6/9/2023 0.19% $ 22,147.22 $ 854.65 $ 2,109.67 435 FFCB 3133EKQA7 Gov. Agency Debenture 10/21/2019 1,000,000.00 1,019,780.00 1,012,164.65 9/10/2024 1.66% $ 49,631.11 $ 28,373.17 $ 12,579.69 894 PNC Financial 69349LAM0 Corporate Bond 2/7/2022 1,000,000.00 1,034,736.67 1,023,920.81 1,266.67 6/25/2023 1.49% $ (1,266.67) $ - $ 1,822.63 451 FHLB 313379Q69 Gov. Agency Debenture 7/22/2019 1,000,000.00 1,006,960.00 1,004,595.59 6/10/2022 1.87% $ 50,645.83 $ 36,595.58 $ 14,142.72 71 FNMA 3135G0V59 Gov. Agency Debenture 11/27/2019 1,540,000.00 1,562,924.44 1,543,699.03 4/12/2022 1.61% $ 64,968.75 $ 39,792.92 $ 18,766.37 12 JP Morgan Chase 46625HJT8 Corporate Bond 9/23/2019 1,400,000.00 1,485,414.00 1,450,661.02 2/1/2024 2.39% $ 127,788.89 $ 61,355.87 $ 26,024.01 672 American Honda 02665WDH1 Corporate Bond 2/14/2020 600,000.00 603,756.00 602,848.69 5/10/2023 1.75% $ 22,295.00 $ 14,494.97 $ 7,911.60 405 Treasury 912828V23 US Treasury Note 11/29/2021 1,000,000.00 1,032,933.04 1,014,609.38 12/31/2023 0.66% $ 1,956.52 $ - $ 2,247.80 640 Treasury 91282CBE0_2 Gov. Agency Debenture 10/7/2021 1,000,000.00 994,768.98 975,429.69 1/15/2024 0.36% $ 339.67 $ - $ 1,702.24 655 FHLB 3130ALH98 Gov. Agency Debenture 2/26/2021 1,000,000.00 997,610.00 979,086.51 2/26/2024 0.33% $ 2,500.00 $ 1,119.96 $ 2,474.76 697 Treasury 912828M80 US Treasury Note 7/22/2019 1,000,000.00 1,006,175.23 1,007,812.50 11/30/2022 1.81% $ 47,158.47 $ 35,281.07 $ 13,634.71 244 Treasury 912828U57 US Treasury Note 7/31/2019 1,000,000.00 1,011,875.00 1,012,109.38 11/30/2023 1.84% $ 49,583.33 $ 35,502.32 $ 13,896.62 609 Treasury 912828X70 US Treasury Note 12/30/2019 1,000,000.00 1,010,589.29 1,010,195.31 4/30/2024 1.75% $ 40,703.30 $ 29,364.36 $ 14,682.18 761 Treasury 912828XT2 US Treasury Note 10/31/2019 1,000,000.00 1,015,667.41 1,010,351.56 5/31/2024 1.64% $ 41,639.34 $ 27,624.64 $ 12,449.26 792 American Honda 02665WCQ2 Corporate Bond 9/14/2021 950,000.00 1,012,871.00 977,180.37 10/10/2023 0.41% $ 2,487.15 $ - $ 2,214.95 558 FFCB 3133EJ3Q0 Gov. Agency Debenture 8/28/2019 1,500,000.00 1,587,503.75 1,539,235.82 12/21/2023 2.12% $ 99,786.46 $ 42,086.02 $ 17,160.07 630 Freddie Mac 3133EKKT2 Gov. Agency Debenture 6/24/2019 1,550,000.00 1,573,188.00 1,570,685.77 2/8/2023 1.82% $ 100,168.75 $ 57,521.06 $ 21,385.03 314 Treasury 91282CBE0 Gov. Agency Debenture 9/15/2021 650,000.00 647,615.46 634,029.30 1/15/2024 0.28% $ 269.37 $ - $ 989.88 655 Subtotal $ 45,390,000.00 $ 46,245,746.42 $ 46,181,059.27 $ 2,109.90 $ 1,482,867.14 $ 829,909.76 $ 398,796.36 BNY MM Money Market 247,510.43 247,510.43 0.00% 1
LAIF State Investment Pool 6,900,032.98 6,900,032.98 0.37% 16,541.07 1 $53,393,289.83 $53,328,602.68 $ 1,482,867.14 $ 829,909.76 $ 415,337.43 Matured Assets
US Treasury 912828Y20 Gov. Agency Debenture 1/31/2020 1,000,000.00 1,016,601.56 7/15/2021 1.47% $ 38,221.16 $ 20,977.00 $ 609.80 Wells Fargo 94988J6A0 Corporate Bond 6/24/2020 1,350,000.00 1,370,749.50 9/9/2021 0.80% $ 46,023.53 $ 10,139.92 $ 1,940.52 FNMA 3135G0Q89 Gov. Agency Debenture 2/10/2020 1,000,000.00 998,702.00 10/7/2021 1.38% $ 22,802.08 $ 20,147.24 $ 3,941.85 FHLB 3130AABG2 US Treasury Note 4/15/2019 1,000,000.00 988,250.00 11/29/2021 2.34% $ 49,166.67 $ 51,343.12 $ 9,670.58 Toyota Motor Credit 89236TDP7 Corporate Bond 05/20/19 1,100,000.00 1,102,596.00 1/11/2022 2.50% $ 75,551.67 $ 58,418.45 $ 14,755.96 Freddie Mac 3137EADB2 Gov. Agency Debenture 1/17/2020 2,100,000.00 2,132,039.70 1/13/2022 2.12% $ 99,195.84 $ 49,063.54 $ 18,236.83 American Express Credit Corp. 0258M0EG0 Corporate Bond 4/5/2021 1,000,000.00 1,020,330.00 1/31/2022 0.46% $ 24,600.00 $ 553.07 $ 1,382.68 PNC Financial 693476BN2 Corporate Bond 8/15/2019 1,000,000.00 1,029,280.00 2/6/2022 2.12% $ 84,608.33 $ 39,793.76 $ 12,838.57 Total Investments "Matured" $ 63,376.78
Total Interest FY 20_21 Matured and Current $ 478,714.21 Maturity Profile Amount
0-1 year $16,424,006.48
1-2 years $25,045,933.34
2-3 years $11,923,350.01
3-5 years $ -
$53,393,289.83
Amortized
Institution Cost
BNY Assets $46,245,746.42
BNY MM 247,510.43
LAIF 6,900,032.98
Totals: $53,393,289.83
Market to Cost Position Report

Town of Los Gatos
Summary Investment Information
February 28, 2022
Weighted Average YTM Portfolio Yield: 1.17% Weighted Average Maturity (days) 497 This Month Last Month One year ago
Portfolio Balance $71,083,516 $71,031,906 $62,768,611
Benchmarks/ References:

Town's Average Yield 1.17% 1.17% 1.53%
LAIF Yield for month 0.28% 0.23% 0.41%
3 mo. Treasury 0.32% 0.19% 0.04%
6 mo. Treasury 0.66% 0.47% 0.05%
2 yr. Treasury 1.44% 1.18% 0.13%
5 yr. Treasury (most recent) 1.72% 1.61% 0.73%
10 Yr. Treasury 1.83% 1.78% 1.41%
0 - 1 year
30%
1 - 2 years
30%
2 - 3 years
25%
3 - 5 years
15%
Portfolio Maturity Profile
Compliance: The Town's investments are in compliance with the Town's investment policy dated September 21, 2021 and also in compliance with the requirements of Section 53601 of the California State Code. Based on the information available, the Town has sufficient funds to meet the cash demands for the next six months.

Town of Los Gatos
Portfolio Allocation & Treasurer's Fund Balances
February 28, 2022
Month YTD
Fund Balances - Beginning of Month/Period $71,031,906.28 $67,951,235.09 Receipts 3,372,897.85 53,115,796.21
Disbursements (3,321,287.87) (49,450,129.56)
Fund Balances - End of Month/Period $71,083,516.26 $71,616,901.74 Portfolio Allocation: % of Portfolio Max. % 0r $ Allowed Per State Law or Policy BNY MM $247,510.43 0.46% 20% of Town Portfolio
US Treasury Notes $10,046,915.87 18.82% No Max. on US Treasuries Government Agency Debenture Notes $22,858,340.87 42.81% No Max. on Non-Mortgage Backed Corporate Medium Term Bonds $13,340,489.68 24.99% 30% of Town Portfolio Local Agency Investment Fund $6,900,032.98 12.92% $75 M per State Law Subtotal - Investments 53,393,289.83 100.00%
Reconciled Demand Deposit Balances 17,690,226.43
Total Treasurer's Fund $71,083,516.26
BNY MM

0.46% US Treasury Notes

18.82%
Government Agency Debenture Notes

42.81%
Corporate Medium Term Bonds

25.0%
Local Agency Investment Fund

12.9%
Portfolio Investment Allocation
54000000
56000000
58000000
60000000
62000000
64000000
66000000
68000000
70000000
72000000
Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Treasurer's Fund Balances
page 2 Page 145
Town of Los Gatos
Non-Treasury Restricted Fund Balances
February 28, 2022
FEB 22 FEB 22 FEB 22
Beginning Deposits Interest/ Ending
Balance Realized Gain/Adj. Earnings Withdrawals Balance Non-Treasury Funds:
`
Cert. of Participation 2002 Series A Reserve Fund 686,318.37 $ 5.89 $ 686,324.26 Note 1 Cert. Of Participation 2010 Ser A Lease Pymt Fund 152,362.76 0.39 152,362.50 $ 0.65 Note 1 Cert. of Participation 2002 Lease Payment Fund 131,462.50 0.16 131,462.50 $ 0.16 Note 1 Cert. of Participation 2010 Series Reserve Fund 1,277,126.98 10.85 1,277,137.83 Note 2 Total Restricted Funds: $ 2,247,270.61 $ - $ 17.29 $ 283,825.00 $ 1,963,462.90 CEPPT IRS Section 115 Trust 0.00 0.00 0.00 0.00 0.00
Grand Total COP's and CEPPT Trust $ 2,247,270.61 $ - $ 17.29 $ 283,825.00 $ 1,963,462.90 These accounts are not part of the Treasurer's fund balances reported elsewhere in this report, as they are for separate and distinct entities.

Note 1: The three original funds for the Certificates of Participation 2002 Series A consist of construction funds which will be expended over the next few years, reserve funds which will guarantee the payment of lease payments, and a third fund for the disbursement of lease payments and initial delivery costs.

Note 2: The 2010 COP Funds are all for the Library construction, reserves to guarantee lease payments, and a lease payment fund for the life of the COP issue. The COI fund was closed in September 2010.

Note 3: The CEPPT Section IRS Section 115 Trust was established as an irrevocable trust dedicated to accumulate resources to fund the Town's unfunded liabilities related to pension and other p

Town of Los Gatos
Statement of Interest Earned
February 28, 2022
Interest by Month
July 2021 $57,076.80
August 2021 56,600.18
September 2021 54,523.00
October 2021 54,951.68
November 2021 51,445.84
December 2021 55,030.55
January 2022 51,909.39
February 2022 46,264.19
March 2022
April 20202
May 2022
June 2022
$427,801.63

Town of Los Gatos Investment Schedule March
2021
Maturity Yield to Interest Interest Interest Days
Deposit Par Original Market Purchased Date or Maturity Received Earned Earned to Institution CUSIP # Security Date Value Cost Value Interest Call Date or Call to Date Prior Yrs. Current FY Maturity Treasury 91282CAP6 US Treasury Note 6/30/2021 1,000,000.00 995,390.63 979,843.75 10/15/2023 0.33% $ 365.44 $ - $ 2,170.40 594 Toyota Motor Credit 89236THA6_1 Corporate Bond 04/12/21 500,000.00 510,580.00 498,257.41 8/25/2023 0.45% $ 5,868.75 $ 494.69 $ 1,521.65 543 Toyota Motor Credit 89236THA6 Corporate Bond 1/11/2022 1,100,000.00 1,107,315.00 1,594,423.71 8/25/2023 0.94% $ 1,815.00 $ - $ 1,358.77 543 US Treasury 91282CDD0 US Treasury Note 1/13/2022 1,100,000.00 1,090,675.78 1,081,265.63 843.23 10/31/2023 0.85% $ (843.23) $ - $ 1,173.70 610 US Treasury 91282CCN9 US Treasury Note 1/13/2022 1,200,000.00 1,188,375.00 1,180,265.63 7/31/2023 0.75% $ 73.37 $ - $ 1,137.18 518 FFCB 3133EKMX1 Gov. Agency Debenture 8/2/2019 1,000,000.00 1,014,400.00 1,096,166.30 2/23/2024 1.90% $ 62,625.83 $ 36,611.80 $ 12,745.94 725 FFCB 3133EMBE1 Gov. Agency Debenture 10/8/2020 1,600,000.00 1,598,000.00 1,563,154.94 3/28/2024 0.34% $ 4,653.34 $ 3,903.24 $ 3,579.20 759 FFCB 3133EMCQ3 Gov. Agency Debenture 10/16/2020 2,000,000.00 1,998,000.00 1,966,334.48 10/13/2024 0.31% $ 5,553.33 $ 4,295.55 $ 4,061.55 958 BankAmerica Corp 06051GHC6 Corporate Bond 10/9/2020 1,300,000.00 1,366,287.00 1,311,553.58 12/20/2023 0.66% $ 46,753.92 $ 13,250.31 $ 12,196.31 660 IBM 459200HG9 Corporate Bond 8/8/2019 1,000,000.00 995,010.00 1,003,587.34 8/1/2022 2.05% $ 46,510.42 $ 38,718.82 $ 13,596.35 154 IBM 459200JY8 Corporate Bond 3/25/2021 1,000,000.00 1,071,040.00 1,022,776.50 5/15/2024 0.71% $ 19,166.67 $ 1,964.86 $ 4,922.28 807 US Treasury 912828R28 US Treasury Note 7/2/2019 500,000.00 497,246.09 502,460.94 4/30/2023 1.77% $ 18,921.54 $ 17,663.79 $ 5,887.93 426 Freddie Mac 3137EAEN5 Gov. Agency Debenture 7/19/2019 2,000,000.00 2,072,358.00 2,038,331.88 6/19/2023 1.79% $ 132,916.67 $ 71,285.65 $ 24,329.23 476 FFCB 3133EKVF0 Gov. Agency Debenture 7/22/2019 1,000,000.00 999,630.00 1,010,005.98 1/17/2023 1.89% $ 46,614.58 $ 36,626.98 $ 12,553.39 323 Treasury 912828L57 US Treasury Note 7/22/2019 1,200,000.00 1,197,988.40 1,206,843.74 9/30/2022 2.09% $ 46,016.39 $ 42,014.96 $ 14,400.05 214 US Treasury 91282CDA6 Gov. Agency Debenture 1/31/2022 1,100,000.00 1,085,222.44 1,080,964.84 929.26 9/30/2023 1.07% $ (929.26) $ - $ 892.63 579 US Treasury 91282CAW1 Gov. Agency Debenture 7/15/2021 1,200,000.00 1,199,437.50 1,176,703.13 11/15/2023 0.27% $ 1,002.72 $ - $ 2,024.32 625 American Honda 02665WCZ2 Corporate Bond 11/27/2019 1,000,000.00 1,012,410.01 1,008,880.48 6/27/2024 2.12% $ 60,733.34 $ 33,895.56 $ 14,176.63 850 JP Morgan Chase 46625HJE1 Gov. Agency Debenture 2/11/2020 900,000.00 934,587.00 910,896.00 9/23/2022 1.74% $ 47,287.50 $ 22,179.72 $ 10,672.62 207 Honeywell Int'l. 438516BW5 Corporate Bond 11/20/2019 1,000,000.00 1,014,660.00 1,012,762.63 7/15/2024 1.64% $ 50,983.33 $ 31,978.44 $ 13,215.58 868 Caterpillar Financial Serv 14913Q2V0 Corporate Bond 2/23/2021 1,000,000.00 1,077,370.00 1,021,369.97 5/17/2024 0.44% $ 20,900.00 $ 1,582.27 $ 3,027.48 809 FNMA 3135G0V75 Gov. Agency Debenture 10/17/2019 1,100,000.00 1,105,833.30 1,103,488.08 7/2/2024 1.63% $ 42,831.25 $ 30,694.63 $ 11,991.63 855 US Bancorp 91159HHV5 Corporate Bond 12/24/2019 1,000,000.00 1,049,040.00 1,027,502.37 1/5/2024 2.12% $ 71,343.75 $ 32,781.93 $ 14,379.08 676 FHLB 3133834G3 Gov. Agency Debenture 3/11/2021 1,400,000.00 1,460,522.00 1,414,604.58 6/9/2023 0.19% $ 22,147.22 $ 854.65 $ 1,870.99 466 FFCB 3133EKQA7 Gov. Agency Debenture 10/21/2019 1,000,000.00 1,019,780.00 1,012,164.65 9/10/2024 1.66% $ 39,231.11 $ 28,373.17 $ 11,156.44 925 PNC Financial 69349LAM0 Corporate Bond 2/7/2022 1,000,000.00 1,034,736.67 1,023,920.81 1,266.67 6/25/2023 1.49% $ (1,266.67) $ - $ 736.06 482 FHLB 313379Q69 Gov. Agency Debenture 7/22/2019 1,000,000.00 1,006,960.00 1,004,595.59 6/10/2022 1.87% $ 50,645.83 $ 36,595.58 $ 12,542.63 102 FNMA 3135G0V59 Gov. Agency Debenture 11/27/2019 1,540,000.00 1,562,924.44 1,543,699.03 4/12/2022 1.61% $ 64,968.75 $ 39,792.92 $ 16,643.17 43 JP Morgan Chase 46625HJT8 Corporate Bond 9/23/2019 1,400,000.00 1,485,414.00 1,450,661.02 2/1/2024 2.39% $ 127,788.89 $ 61,355.87 $ 23,079.68 703 American Honda 02665WDH1 Corporate Bond 2/14/2020 600,000.00 603,756.00 602,848.69 5/10/2023 1.75% $ 22,295.00 $ 14,494.97 $ 7,016.49 436 Treasury 912828V23 US Treasury Note 11/29/2021 1,000,000.00 1,032,933.04 1,014,609.38 12/31/2023 0.66% $ 1,956.52 $ - $ 1,676.64 671 Treasury 91282CBE0_2 Gov. Agency Debenture 10/7/2021 1,000,000.00 994,768.98 975,429.69 1/15/2024 0.36% $ 339.67 $ - $ 1,400.70 686 FHLB 3130ALH98 Gov. Agency Debenture 2/26/2021 1,000,000.00 997,610.00 979,086.51 2/26/2024 0.33% $ 2,500.00 $ 1,119.96 $ 2,194.77 728 Treasury 912828M80 US Treasury Note 7/22/2019 1,000,000.00 1,006,175.23 1,007,812.50 11/30/2022 1.81% $ 47,158.47 $ 35,281.07 $ 12,092.10 275 Treasury 912828U57 US Treasury Note 7/31/2019 1,000,000.00 1,011,875.00 1,012,109.38 11/30/2023 1.84% $ 49,583.33 $ 35,502.32 $ 12,324.38 640 Treasury 912828X70 US Treasury Note 12/30/2019 1,000,000.00 1,010,589.29 1,010,195.31 4/30/2024 1.75% $ 40,703.30 $ 29,364.36 $ 13,021.06 792 Treasury 912828XT2 US Treasury Note 10/31/2019 1,000,000.00 1,015,667.41 1,010,351.56 5/31/2024 1.64% $ 41,639.34 $ 27,624.64 $ 11,040.77 823 American Honda 02665WCQ2 Corporate Bond 9/14/2021 950,000.00 1,012,871.00 977,180.37 10/10/2023 0.41% $ 2,487.15 $ - $ 1,868.16 589 FFCB 3133EJ3Q0 Gov. Agency Debenture 8/28/2019 1,500,000.00 1,587,503.75 1,539,235.82 12/21/2023 2.12% $ 99,786.46 $ 42,086.02 $ 15,218.60 661 Freddie Mac 3133EKKT2 Gov. Agency Debenture 6/24/2019 1,550,000.00 1,573,188.00 1,570,685.77 2/8/2023 1.82% $ 100,168.75 $ 57,521.06 $ 18,965.56 345 Treasury 91282CBE0 Gov. Agency Debenture 9/15/2021 650,000.00 647,615.46 634,029.30 1/15/2024 0.28% $ 269.37 $ - $ 834.11 686 Subtotal $ 45,390,000.00 $ 46,245,746.42 $ 46,181,059.27 $ 3,039.16 $ 1,443,567.14 $ 829,909.76 $ 349,696.20 BNY MM Money Market 247,510.43 247,510.43 0.00% 1
LAIF State Investment Pool 6,900,032.98 6,900,032.98 0.28% 14,728.65 1 $ 53,393,289.83 $ 53,328,602.68 $ 1,443,567.14 $ 829,909.76 $ 364,424.85 Matured Assets
US Treasury 912828Y20 Gov. Agency Debenture 1/31/2020 1,000,000.00 1,016,601.56 7/15/2021 1.47% $ 38,221.16 $ 20,977.00 $ 609.80 Wells Fargo 94988J6A0 Corporate Bond 6/24/2020 1,350,000.00 1,370,749.50 9/9/2021 0.80% $ 32,468.18 $ 10,139.92 $ 1,940.52 FNMA 3135G0Q89 Gov. Agency Debenture 2/10/2020 1,000,000.00 998,702.00 10/7/2021 1.38% $ 22,802.08 $ 20,147.24 $ 3,941.85 FHLB 3130AABG2 US Treasury Note 4/15/2019 1,000,000.00 988,250.00 11/29/2021 2.34% $ 49,166.67 $ 51,343.12 $ 9,670.58 Toyota Motor Credit 89236TDP7 Corporate Bond 05/20/19 1,100,000.00 1,102,596.00 1/11/2022 2.50% $ 75,551.67 $ 58,418.45 $ 14,755.96 Freddie Mac 3137EADB2 Gov. Agency Debenture 1/17/2020 2,100,000.00 2,132,039.70 1/13/2022 2.12% $ 99,195.84 $ 49,063.54 $ 18,236.83 American Express Credit Corp. 0258M0EG0 Corporate Bond 4/5/2021 1,000,000.00 1,020,330.00 1/31/2022 0.46% $ 11,100.00 $ 553.07 $ 1,382.68 PNC Financial 693476BN2 Corporate Bond 8/15/2019 1,000,000.00 1,029,280.00 2/6/2022 2.12% $ 68,108.33 $ 39,793.76 $ 12,838.57 Total Investments "Matured" $ 63,376.78
Total Interest FY 20_21 Matured and Current $ 427,801.63 Maturity Profile Amount
0-1 year $16,424,006.48
1-2 years $23,033,923.34
2-3 years $13,935,360.01
3-5 years $ -
$53,393,289.83
Amortized
Institution Cost
BNY Assets $46,245,746.42
BNY MM 247,510.43
LAIF 6,900,032.98
Totals: $53,393,289.83
Market to Cost Position Report

Town of Los Gatos
Summary Investment Information
January 31, 2022
Weighted Average YTM Portfolio Yield: 1.17% Weighted Average Maturity (days) 511 This Month Last Month One year ago
Portfolio Balance $71,031,906 $60,407,357 $64,003,778
Benchmarks/ References:

Town's Average Yield 1.17% 1.20% 1.62%
LAIF Yield for month 0.23% 0.21% 0.46%
3 mo. Treasury 0.19% 0.06% 0.06%
6 mo. Treasury 0.47% 0.19% 0.07%
2 yr. Treasury 1.18% 0.74% 0.11%
5 yr. Treasury (most recent) 1.61% 1.27% 0.42%
10 Yr. Treasury 1.78% 1.51% 1.07%
0 - 1 year
30%
1 - 2 years
30%
2 - 3 years
25%
3 - 5 years
15%
Portfolio Maturity Profile
Compliance: The Town's investments are in compliance with the Town's investment policy dated September 21, 2021 and also in compliance with the requirements of Section 53601 of the California State Code. Based on the information available, the Town has sufficient funds to meet the cash demands for the next six months.

Town of Los Gatos
Portfolio Allocation & Treasurer's Fund Balances
January 31, 2022
Month YTD
Fund Balances - Beginning of Month/Period $60,407,356.54 $67,951,235.09 Receipts 13,835,794.34 45,495,946.32
Disbursements (3,211,244.60) (42,415,275.13)
Fund Balances - End of Month/Period $71,031,906.28 $71,031,906.28 Portfolio Allocation: % of Portfolio Max. % 0r $ Allowed Per State Law or Policy BNY MM $247,510.43 0.46% 20% of Town Portfolio
US Treasury Notes $10,046,915.87 18.82% No Max. on US Treasuries Government Agency Debenture Notes $22,858,340.87 42.82% No Max. on Non-Mortgage Backed Corporate Medium Term Bonds $13,335,033.01 24.98% 30% of Town Portfolio Local Agency Investment Fund $6,900,032.98 12.92% $75 M per State Law Subtotal - Investments 53,387,833.16 100.00%
Reconciled Demand Deposit Balances 17,644,073.12
Total Treasurer's Fund $71,031,906.28
BNY MM

0.46% US Treasury Notes

18.82%
Government Agency Debenture Notes

42.82%
Corporate Medium Term Bonds

25.0%
Local Agency Investment Fund

12.9%
Portfolio Investment Allocation
54000000
56000000
58000000
60000000
62000000
64000000
66000000
68000000
70000000
72000000
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Treasurer's Fund Balances
page 2 Page 150
Town of Los Gatos
Non-Treasury Restricted Fund Balances
January 31, 2022
JAN 22 JAN 22 JAN 22
Beginning Deposits Interest/ Ending
Balance Realized Gain/Adj. Earnings Withdrawals Balance Non-Treasury Funds:
`
Cert. of Participation 2002 Series A Reserve Fund 686,308.57 $ 9.80 $ 686,318.37 Note 1 Cert. Of Participation 2010 Ser A Lease Pymt Fund 21,141.66 131,220.84 0.26 $ 152,362.76 Note 1 Cert. of Participation 2002 Lease Payment Fund 22.41 131,440.09 $ 131,462.50 Note 1 Cert. of Participation 2010 Series Reserve Fund 1,277,116.13 10.85 1,277,126.98 Note 2 Total Restricted Funds: $ 1,984,588.77 $ 262,660.93 $ 20.91 $ - $ 2,247,270.61 CEPPT IRS Section 115 Trust 0.00 0.00 0.00 0.00 0.00
Grand Total COP's and CEPPT Trust $ 1,984,588.77 $ 262,660.93 $ 20.91 $ - $ 2,247,270.61 These accounts are not part of the Treasurer's fund balances reported elsewhere in this report, as they are for separate and distinct entities.

Note 1: The three original funds for the Certificates of Participation 2002 Series A consist of construction funds which will be expended over the next few years, reserve funds which will guarantee the payment of lease payments, and a third fund for the disbursement of lease payments and initial delivery costs.

Note 2: The 2010 COP Funds are all for the Library construction, reserves to guarantee lease payments, and a lease payment fund for the life of the COP issue. The COI fund was closed in September 2010.

Note 3: The CEPPT Section IRS Section 115 Trust was established as an irrevocable trust dedicated to accumulate resources to fund the Town's unfunded liabilities related to pension and other p

Town of Los Gatos
Statement of Interest Earned
January 31, 2022
Interest by Month
July 2021 $57,076.80
August 2021 56,600.18
September 2021 54,523.00
October 2021 54,951.68
November 2021 51,445.84
December 2021 55,030.55
January 2022 51,909.39
February 2022
March 2022
April 20202
May 2022
June 2022
$381,537.44

Town of Los Gatos Investment Schedule March
2021
Maturity Yield to Interest Interest Interest Days
Deposit Par Original Market Purchased Date or Maturity Received Earned Earned to Institution CUSIP # Security Date Value Cost Value Interest Call Date or Call to Date Prior Yrs. Current FY Maturity Treasury 91282CAP6 US Treasury Note 6/30/2021 1,000,000.00 995,390.63 990,117.19 10/15/2023 0.33% $ 365.44 $ - $ 1,920.31 622 Toyota Motor Credit 89236THA6_1 Corporate Bond 04/12/21 500,000.00 510,580.00 504,471.98 8/25/2023 0.45% $ 2,493.75 $ 494.69 $ 1,346.32 571 Toyota Motor Credit 89236THA6 Corporate Bond 1/11/2022 1,100,000.00 1,107,315.00 1,100,464.30 5,610.00 8/25/2023 0.94% $ (5,610.00) $ - $ 566.15 571 US Treasury 91282CDD0 US Treasury Note 1/13/2022 1,100,000.00 1,090,675.78 2,101,362.80 843.23 10/31/2023 0.85% $ (843.23) $ - $ 459.27 638 US Treasury 91282CCN9 US Treasury Note 1/13/2022 1,200,000.00 1,188,375.00 1,001,692.91 7/31/2023 0.75% $ 73.37 $ - $ 444.98 546 FFCB 3133EKMX1 Gov. Agency Debenture 8/2/2019 1,000,000.00 1,014,400.00 1,035,558.04 2/23/2024 1.90% $ 51,475.83 $ 36,611.80 $ 11,277.27 753 FFCB 3133EMBE1 Gov. Agency Debenture 10/8/2020 1,600,000.00 1,598,000.00 1,582,070.85 3/28/2024 0.34% $ 4,653.34 $ 3,903.24 $ 3,166.78 787 FFCB 3133EMCQ3 Gov. Agency Debenture 10/16/2020 2,000,000.00 1,998,000.00 1,985,575.98 10/13/2024 0.31% $ 5,553.33 $ 4,295.55 $ 3,593.55 986 BankAmerica Corp 06051GHC6 Corporate Bond 10/9/2020 1,300,000.00 1,366,287.00 1,326,948.74 12/20/2023 0.66% $ 46,753.92 $ 13,250.31 $ 10,790.97 688 IBM 459200HG9 Corporate Bond 8/8/2019 1,000,000.00 995,010.00 1,008,423.55 8/1/2022 2.05% $ 37,135.42 $ 38,718.82 $ 12,029.69 182 IBM 459200JY8 Corporate Bond 3/25/2021 1,000,000.00 1,071,040.00 1,044,797.43 5/15/2024 0.71% $ 19,166.67 $ 1,964.86 $ 4,355.10 835 US Treasury 912828R28 US Treasury Note 7/2/2019 500,000.00 497,246.09 507,226.56 4/30/2023 1.77% $ 18,921.54 $ 17,663.79 $ 5,209.49 454 Freddie Mac 3137EAEN5 Gov. Agency Debenture 7/19/2019 2,000,000.00 2,072,358.00 2,062,924.68 6/19/2023 1.79% $ 132,916.67 $ 71,285.65 $ 21,525.86 504 FFCB 3133EKVF0 Gov. Agency Debenture 7/22/2019 1,000,000.00 999,630.00 1,017,435.02 1/17/2023 1.89% $ 46,614.58 $ 36,626.98 $ 11,106.91 351 Treasury 912828L57 US Treasury Note 7/22/2019 1,200,000.00 1,197,988.40 1,212,796.87 9/30/2022 2.09% $ 46,016.39 $ 42,014.96 $ 12,740.78 242 US Treasury 91282CDA6 Gov. Agency Debenture 1/31/2022 1,100,000.00 1,085,222.44 0.00 929.26 9/30/2023 1.07% $ (929.26) $ - $ - 607 US Treasury 91282CAW1 Gov. Agency Debenture 7/15/2021 1,200,000.00 1,199,437.50 1,190,250.00 11/15/2023 0.27% $ 1,002.72 $ - $ 1,775.72 653 American Honda 02665WCZ2 Corporate Bond 11/27/2019 1,000,000.00 1,012,410.01 1,030,214.47 6/27/2024 2.12% $ 48,733.34 $ 33,895.56 $ 12,543.11 878 JP Morgan Chase 46625HJE1 Gov. Agency Debenture 2/11/2020 900,000.00 934,587.00 918,051.60 9/23/2022 1.74% $ 47,287.50 $ 22,179.72 $ 9,442.85 235 Honeywell Int'l. 438516BW5 Corporate Bond 11/20/2019 1,000,000.00 1,014,660.00 1,033,527.98 7/15/2024 1.64% $ 39,483.33 $ 31,978.44 $ 11,692.80 896 Caterpillar Financial Serv 14913Q2V0 Corporate Bond 2/23/2021 1,000,000.00 1,077,370.00 1,044,144.53 5/17/2024 0.44% $ 20,900.00 $ 1,582.27 $ 2,678.64 837 FNMA 3135G0V75 Gov. Agency Debenture 10/17/2019 1,100,000.00 1,105,833.30 1,124,320.26 7/2/2024 1.63% $ 42,831.25 $ 30,694.63 $ 10,609.88 883 US Bancorp 91159HHV5 Corporate Bond 12/24/2019 1,000,000.00 1,049,040.00 1,048,424.92 1/5/2024 2.12% $ 54,468.75 $ 32,781.93 $ 12,722.23 704 FHLB 3133834G3 Gov. Agency Debenture 3/11/2021 1,400,000.00 1,460,522.00 1,430,600.99 6/9/2023 0.19% $ 22,147.22 $ 854.65 $ 1,655.40 494 FFCB 3133EKQA7 Gov. Agency Debenture 10/21/2019 1,000,000.00 1,019,780.00 1,035,709.38 9/10/2024 1.66% $ 39,231.11 $ 28,373.17 $ 9,870.92 953 PNC Financial 693476BN2 Corporate Bond 8/15/2019 1,000,000.00 1,029,280.00 1,002,759.81 2/6/2022 2.12% $ 68,108.33 $ 39,793.76 $ 12,490.01 6 FHLB 313379Q69 Gov. Agency Debenture 7/22/2019 1,000,000.00 1,006,960.00 1,008,262.56 6/10/2022 1.87% $ 50,645.83 $ 36,595.58 $ 11,097.39 130 FNMA 3135G0V59 Gov. Agency Debenture 11/27/2019 1,540,000.00 1,562,924.44 1,548,996.57 4/12/2022 1.61% $ 64,968.75 $ 39,792.92 $ 14,725.44 71 JP Morgan Chase 46625HJT8 Corporate Bond 9/23/2019 1,400,000.00 1,485,414.00 1,482,316.18 2/1/2024 2.39% $ 100,663.89 $ 61,355.87 $ 20,420.30 731 American Honda 02665WDH1 Corporate Bond 2/14/2020 600,000.00 603,756.00 609,512.21 5/10/2023 1.75% $ 22,295.00 $ 14,494.97 $ 6,208.00 464 Treasury 912828V23 US Treasury Note 11/29/2021 1,000,000.00 1,032,933.04 1,030,117.19 12/31/2023 0.66% $ 1,956.52 $ - $ 1,160.75 699 Treasury 91282CBE0_2 Gov. Agency Debenture 10/7/2021 1,000,000.00 994,768.98 987,539.06 1/15/2024 0.36% $ 339.67 $ - $ 1,128.34 714 FHLB 3130ALH98 Gov. Agency Debenture 2/26/2021 1,000,000.00 997,610.00 991,706.43 2/26/2024 0.33% $ 1,250.00 $ 1,119.96 $ 1,941.87 756 Treasury 912828M80 US Treasury Note 7/22/2019 1,000,000.00 1,006,175.23 1,014,492.19 11/30/2022 1.81% $ 47,158.47 $ 35,281.07 $ 10,698.77 303 Treasury 912828U57 US Treasury Note 7/31/2019 1,000,000.00 1,011,875.00 1,026,953.12 11/30/2023 1.84% $ 49,583.33 $ 35,502.32 $ 10,904.28 668 Treasury 912828X70 US Treasury Note 12/30/2019 1,000,000.00 1,010,589.29 1,027,304.69 4/30/2024 1.75% $ 40,703.30 $ 29,364.36 $ 11,520.69 820 Treasury 912828XT2 US Treasury Note 10/31/2019 1,000,000.00 1,015,667.41 1,027,656.25 5/31/2024 1.64% $ 41,639.34 $ 27,624.64 $ 9,768.58 851 American Honda 02665WCQ2 Corporate Bond 9/14/2021 950,000.00 1,012,871.00 996,012.81 10/10/2023 0.41% $ 2,487.15 $ - $ 1,554.94 617 FFCB 3133EJ3Q0 Gov. Agency Debenture 8/28/2019 1,500,000.00 1,587,503.75 1,569,611.10 12/21/2023 2.12% $ 99,786.46 $ 42,086.02 $ 13,465.02 689 Freddie Mac 3133EKKT2 Gov. Agency Debenture 6/24/2019 1,550,000.00 1,573,188.00 1,584,563.17 2/8/2023 1.82% $ 82,731.25 $ 57,521.06 $ 16,780.23 373 Treasury 91282CBE0 Gov. Agency Debenture 9/15/2021 650,000.00 647,615.46 641,900.39 1/15/2024 0.28% $ 269.37 $ - $ 693.42 714 Subtotal $ 45,390,000.00 $ 46,240,289.75 $ 45,886,814.76 $ 7,382.49 $ 1,395,429.64 $ 869,703.51 $ 318,083.04 BNY MM Money Market 247,510.43 247,510.43 0.00% 1
LAIF State Investment Pool 6,900,032.98 6,900,032.98 0.23% 12,916.19 1 $53,387,833.16 $53,034,358.17 $ 1,395,429.64 $ 869,703.51 $ 330,999.23 Matured Assets
US Treasury 912828Y20 Gov. Agency Debenture 1/31/2020 1,000,000.00 1,016,601.56 7/15/2021 1.47% $ 38,221.16 $ 20,977.00 $ 609.80 Wells Fargo 94988J6A0 Corporate Bond 6/24/2020 1,350,000.00 1,370,749.50 9/9/2021 0.80% $ 32,468.18 $ 10,139.92 $ 1,940.52 FNMA 3135G0Q89 Gov. Agency Debenture 2/10/2020 1,000,000.00 998,702.00 10/7/2021 1.38% $ 22,802.08 $ 20,147.24 $ 3,941.85 FHLB 3130AABG2 US Treasury Note 4/15/2019 1,000,000.00 988,250.00 11/29/2021 2.34% $ 49,166.67 $ 51,343.12 $ 9,670.58 Toyota Motor Credit 89236TDP7 Corporate Bond 05/20/19 1,100,000.00 1,102,596.00 1/11/2022 2.50% $ 75,551.67 $ 58,418.45 $ 14,755.96 Freddie Mac 3137EADB2 Gov. Agency Debenture 1/17/2020 2,100,000.00 2,132,039.70 1/13/2022 2.12% $ 99,195.84 $ 49,063.54 $ 18,236.83 American Express Credit Corp. 0258M0EG0 Corporate Bond 4/5/2021 1,000,000.00 1,020,330.00 1/31/2022 0.46% $ 11,100.00 $ 553.07 $ 1,382.68 0 Total Investments "Matured" $ 50,538.21
Total Interest FY 20_21 Matured and Current $ 381,537.44 Maturity Profile Amount
0-1 year $15,880,098.48
1-2 years $22,086,960.67
2-3 years $15,420,774.01
3-5 years $ -
$53,387,833.16
Amortized
Institution Cost
BNY Assets $46,240,289.75
BNY MM 247,510.43
LAIF 6,900,032.98
Totals: $53,387,833.16
Market to Cost Position Report

Security Description Maturity Date Par/Shares Moody Rating S&P Rating Insight ESG Rating Environment Social Governance IBM CORP 1.875% 01AUG2022 8/1/2022 $ 1,000,000 A3 A- 3 1 3 4 JPMORGAN CHASE & CO 3.25% 23SEP2022 9/23/2022 $ 900,000 A2 A- 3 1 3 4 AMERICAN HONDA FINANCE 1.95% 10MAY2023 5/10/2023 $ 600,000 A3 A- 3 1 4 3 PNC BANK NA 3.8% 25JUL2023 (CALLABLE 25JUN23) 7/25/2023 $ 1,000,000 A2 A 2 2 3 2 TOYOTA MOTOR CREDIT CORP 1.35% 25AUG2023 8/25/2023 $ 1,600,000 A1 A+ 3 3 3 5 AMERICAN HONDA FINANCE 3.625% 10OCT2023 10/10/2023 $ 950,000 A3 A- 3 1 4 3 BANK OF AMERICA CORP 3.004% 20DEC2023 (CALLABLE 20DEC22) 12/20/2023 $ 1,300,000 A2 A- 3 1 4 4 JPMORGAN CHASE & CO 3.875% 01FEB2024 2/1/2024 $ 1,400,000 A2 A- 3 1 3 4 US BANCORP 3.375% 05FEB2024 (CALLABLE 05JAN24) 2/5/2024 $ 1,000,000 A2 A+ 4 2 5 4 IBM CORP 3.0% 15MAY2024 5/15/2024 $ 1,000,000 A3 A- 3 1 3 4 CATERPILLAR FIN SERVICES 2.85% 17MAY24 5/17/2024 $ 1,000,000 A2 A 3 3 3 4 AMERICAN HONDA FINANCE 2.4% 27JUN2024 6/27/2024 $ 1,000,000 A3 A- 3 1 4 3 HONEYWELL INTERNATIONAL 2.3% 15AUG2024 (CALLABLE 15JUL24) 8/15/2024 $ 1,000,000 A2 A 4 4 5 4 Total/Average $ 13,750,000 3.0 1.5 3.5 3.7
*ESG ratings are from 1 to 5, with 1 as the highest rating and 5 as the lowest. All ratings are weighted by industry rankings, based on the importance of the category within the individual industry.

Town of Los Gatos
Insight ESG Ratings as of March 31, 2022

PREPARED BY: Arn Andrews
Assistant Town Manager
Reviewed by: Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 05/17/2022
ITEM NO: 7
DATE: May 9, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Consider the Recommendations of the Finance Commission and Staff, and Provide Direction on the Town of Los Gatos Proposed Operating and Capital Budget for Fiscal Year (FY) 2022/23 and on the Proposed Capital Improvement Program for FY 2022/23 – FY 2026/27; Including but Not Limited to:
a. Provide direction to Balance the FY 2022/23 Proposed Budget; b. Provide Direction on the Proposed Operating Budget;
c. Provide Direction on the Proposed Capital Budget; and d. Consider the FY 2022/23 List of Potential Donations Consistent with the Town’s Donation Policy
RECOMMENDATION:

Staff recommends the Town Council consider the recommendations of the Finance Commission and staff, and provide direction on the Town of Los Gatos Proposed Operating and Capital Budgets for Fiscal Year 2022/23 and the Town of Los Gatos Proposed Capital Improvement Program for Fiscal Years 2022/23 - 2026/27, including but not limited to:
a. Provide direction balancing the FY 2022/23 Proposed Budget; b. Provide direction on the Proposed Operating Budget;
c. Provide direction on the Proposed Capital Budget; and d. Consider the FY 2022/23 List of Potential Donations consistent with the Town’s Donation Policy.

PAGE 2 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
BACKGROUND:

On April 18, 2022, the Town Manager’s Proposed FY 2022/23 Operating and Capital Budgets were posted on the Town’s website for the public’s review and comment (see Attachments 1 and 2). Per Measure A, the Finance Commission received the Proposed Budgets 21 business days before May 17, 2022, which is the first meeting at which the Proposed Budgets will be considered by the Town Council. The transmittal letter in the Proposed FY 2022/23 Operating Budget provides an executive summary of the budget, including the fiscal outlook, key budget assumptions, and other information.

The Proposed Operating and Capital Budget for FY 2022/23 (Attachment 1) is the Town Manager’s recommended comprehensive financial plan to provide services to the Town of Los Gatos and address the priorities set by the Town Council. The Proposed FY 2022/23 – 2026/27 Capital Improvement Program (Attachment 2) is a five-year capital improvement plan which identifies projects to construct and maintain the Town’s infrastructure. Please see the transmittal letters contained in each Budget document for a detailed overview and summary.

Both budget documents were prepared with contributions from all Town Departments. Of particular note, the Finance Department took the lead in developing revenue and expenditure forecasts, ensuring that the most current information was used in the preparation of the proposed budgets. In addition, the Department of Parks and Public Works identified high priority projects for inclusion in the Capital Budget based on its familiarity with the Town’s facilities, equipment, and infrastructure, and its work with various Town Commissions on these assets.

The FY 2022/23 Budget endeavored to maintain essential public services while controlling operational costs in light of the Five-Year Financial Forecast, which predicts operating shortfalls in subsequent fiscal years. The loss of previously projected future growth in revenues in conjunction with increasing expenses continues to illustrate persistent deficits in future years.

The deficits are on the order of approximately $2.0 to $3.0 million per year and can currently be resolved through a combination of expenditure controls, revenues reverting to pre-pandemic trends, and the use of one-time funds.

Even with areas of continued uncertainty, this Budget positions the organization well for continued excellence in service delivery to the community. However, in the event prepandemic revenue growth projections do not return and/or new revenue sources are not identified, the current projected deficits may need to be addressed through service delivery reductions or service outsourcing. If this occurs, the Council will need continued input from the community to identify acceptable organizational changes and service levels. The recently completed community survey provide useful insight into community prioritization of service delivery.

PAGE 3 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
BACKGROUND (continued):

In addition to the Town Manager’s Proposed Budget, the Town Council is being asked to consider the Finance Commission recommendations contained in Attachment 3. The Town Council is also being asked to consider corrections based on additional review and analysis since publication (Attachment 5). Any recommended changes and additional direction to the Proposed Operating and/or Capital Budgets provided by Council at the May 17, 2022 budget hearing will be incorporated into the implementing resolution to be presented for final Council approval on June 7, 2022. Finally, the Council is asked to review the annual list of donations (Attachment 8).

To help the Council work through all of this material, staff recommends that the Council discuss and make individual motions as appropriate on the items in the following order as presented in this staff report:
 Five-Year Forecast (motions are welcome to change any of the assumptions in the Forecast)
 Direction to Balance the Proposed FY 2022/23 Operating Budget  Finance Commission’s four recommendations
 Consideration of any funding requests (as of the date of this report, the Town has not received any)
 Any other direction on the Proposed FY 2022/23 Operating Budget  Any other direction on the Proposed FY 2022/23 – 2026/27 Capital Budget  Consideration the Proposed Donation List
DISCUSSION:

Overview of Proposed Operating Budget and Five-Year Forecast The FY 2022/23 General Fund Budget programs total revenues and reserve transfers of $50.4 million, and expenditures and allocations of $50.4 million. The Budget currently anticipates no significant new programming and does maintain existing service levels with modest staffing additions. Even with the budgetary challenges of the last several years associated with the COVID-19 pandemic, many of Council’s primary goals and priorities have been programmed in the FY 2022/23 Operating and Capital Budgets. Specifically, the Council would like continued progress on wildfire protection safety; emergency preparedness; semi-permanent parklets; diversity, equity, and inclusion; community policing; parking study implementation; and the General Plan and Housing Element updates.

The Five-Year Forecast takes a forward look at the Town's General Fund revenues and expenditures and is updated regularly. Its purpose is to identify financial trends, potential shortfalls, and other issues so the Town can proactively address them and budget accordingly.

It does so by projecting out into the future the fiscal results of continuing the Town's current

PAGE 4 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):
service levels and policies. This process helps to provide a snapshot of what the future may look like as a result of the decisions made to date. The economic ramifications of the pandemic have created lower revenue bases than in prior years which reverberate throughout the forecast period as future revenue growth is extrapolated from the lower initial base revenues.

Revenue forecasts for the current Budget (Attachment 4) have been developed in close consultation with the Santa Clara County Assessor, Town Sales Tax consultant MuniServices, and a review of national and regional hospitality research.

In addition to revenue growth projections, the Proposed Budget also forecasts anticipated increases in the Town’s pension obligation payments and salaries as well as other expenditures (Attachment 4). As a service delivery enterprise, the cost of salaries and benefits are a significant portion of the budget. The delivery of Town services is highly dependent on recruiting and retaining talent which comprises 66% of budgeted General Fund expenditures for FY 2022/23. Given the high dependence on labor for service delivery, the Town has helped manage salary escalation (and benefits) through the maintenance of lower staffing levels.

However, even with the Town reducing its full-time employees by 15.0% to 153 FTE employees since 2001, pension benefit costs per employee continue to escalate as evidenced by an average 11.9% increase per year versus a 3.3% average increase for regular salaries per year in the past seven years.

Balancing the Proposed FY 2022/23 Operating Budget
For FY 2022/23 the Proposed Operating Budget was balanced utilizing two primary budget balancing strategies. The first was direction to all Departments to develop a status quo budget.

To that end most Departments programmed existing resources by either maintaining current structures or realigning operations to remain effective while staying within prior year budgets.

In addition, Departments were provided guidance to enhance capacity where necessary through limit-dated, non-benefited personnel options and increases to temporary staffing when possible.

The second strategy is the use of $1.0 million of the Town’s $7.2 million allocation from the American Rescue Plan Act (ARPA) to replace lost revenue anticipated in FY 2022/23. This is consistent with prior Council direction for the use of ARPA in FY 2020/21 ($1.4 million) and FY 2021/22 ($1.9 million). It’s important to note, that as the economically sensitive revenues of sales tax and transient occupancy tax continue to revert toward pre-pandemic levels, no ARPA funding was ultimately expensed for revenue loss replacement in FY 2020/21. At this time, staff estimates that no ARPA funding will be needed at the close of FY 2021/22. The actual surplus/shortfall will be determined upon the final close and audit of the fiscal year.

PAGE 5 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):

Overview of Proposed Capital Budget
The FY 2022/23 – FY 2026/27 Capital Improvement Program (CIP) sets forth a five-year plan for proposed streets, parks, and public facility projects. The transmittal letter contained in the CIP provides a summary of the program including funding sources, recently completed projects, and the proposed projects for FY 2022/23. The proposed $32.5 million in the first year of the CIP is comprised of approximately $20.0 million in carryover funds from FY 2021/22 and approximately $12.5 million in new funding. The $12.5 million of new funding is comprised of $6.0 million in General Fund Appropriated Reserve (GFAR), $5.0 million in Grants and $1.5 million from other sources. Only the first year of the plan is formally adopted with funds appropriated by the Town Council as part of the budget process.

The first year of the five-year CIP (FY 2022/23) continues funding for the Town Council Strategic Priorities, including basic infrastructure needs. In January 2022, the Town Council established the 2022-24 Strategic Priorities. In terms of capital projects, the Town Council stated its priorities to begin phased implementation of the recommendations in the Comprehensive Parking Study, continue mobility improvements for all transportation modes, manage the vegetation on Town lands to protect against wildfire, and advance other needed improvements.

Street maintenance remains a high Council priority as the Town is making efforts to improve its Pavement Condition Index (PCI), a standard rating of street conditions. The Town utilizes funding from the Metropolitan Transportation Commission (MTC) to hire a consultant to conduct a regular assessment of pavement condition with a full assessment occurring every three years. The recent assessment concluded that after completion of FY 2021/22 street pavement projects, PCI is anticipated to jump to 75 or 76. The assessment indicated that the Town can maintain a PCI of 75 with an annual funding of $3.3M for the next five years.

While this is welcome news, the Town will need to identify dedicated ongoing sources of revenue for future deferred and routine capital maintenance.

Town staff go through a rigorous process to evaluate all previously funded projects and potential new projects when preparing the CIP. There are more needs than available funding, and staff recommends high priority projects that are consistent with the Strategic Priorities.

This year, due to limited available funds, the proposed CIP concentrates on funding key ongoing maintenance commitments (e.g., street paving), projects that have grant funding and a FY 2022/23 schedule obligation, and supplementing projects that are underway to ensure they are completed. These funding priorities leave funds for only one additional project. As a result, the CIP documents several unfunded projects within the respective programs. On April 27, 2022, the Planning Commission reviewed the proposed CIP, found it consistent with the General Plan, and recommended its adoption by the Town Council.

PAGE 6 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):

Finance Commission Recommendations
As previously mentioned, the newly constituted Finance Commission is tasked with a thorough review of the FY 2022/23 Proposed Operating and Capital Budgets. The Finance Commission recommended approval of the Proposed Budgets predicated on four recommended changes to the Proposed Budget (see Attachment 3).

The Commission’s deliberations coalesced around the following goals and observations:
 The Commission’s interest for continued enhancement of transparency in budget development, budget assumptions, and budget presentation.  The Proposed Budget continues to restrict capital expenditures relative to historic allocations.
 The Proposed Capital Improvement Program (CIP) continues to be challenged by a lack of dedicated funding.
 The higher percentage increases in the primary expenditures of Salary and Benefits relative to revenues is constraining other investments.  The Forecast projects deficits throughout the forecast period.  The Commission’s continued review of the Town’s Internal Service Funds.

The Finance Commission (FC) made two recommendations for additional funding allocations to the General Fund Appropriated Reserve (GFAR). The Council should consider the recommendations in relation to other budgetary priorities. For each FC recommendation, potential impacts are identified.

FC Recommendation: Recommend to Council the allocation of $3.77 million to the General Fund Appropriated Reserve (GFAR) for FY 2022/23 for capital budgeting purposes as determined by the Town Council’s priorities. (This amount is based on an historic average of

8.28% from 2005/06 through 2022/23 of operating revenues transferred to the Capital program.)
Potential Impacts: The recommendation would increase the FY 2022/23 operating deficit by approximately $700k. The Finance Commission did not make a recommendation as to how to close this new deficit. If the Council moves forward with this recommendation, the Town Council would need to identify modifications to the Operating Budget to maintain a balanced budget. For example, the Council may wish to allocate $700,000 from the unallocated American Rescue Plan Act (ARPA) monies.

FC Recommendation: Recommend to Council the allocation of approximately $3.7 million of unallocated ARPA funds to the General Fund Appropriated Reserve (GFAR) for FY 2022/23 for capital budgeting purposes as determined by the Town Council’s priorities.

PAGE 7 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):

Potential Impacts: ARPA funds would become unavailable for other uses.

If Council wishes to proceed with one or both of these recommendations, staff suggests that the Council consider potential modifications to the CIP and specific projects in August. At that time, staff will be prepared to identify priority improvements within existing staff limitations that constrain the Town’s ability to deliver a large Capital program.

The Finance Commission (FC) made one recommendation regarding the Town’s existing Internal Service Fund structure.

FC Recommendation: Recommend to Council the dissolution of the Workers Compensation and Self-Insurance Internal Service Funds starting in FY 2022/23 with remaining balances being transferred to the General Fund.

Potential Impacts:

Workers Compensation and Self-Insurance are considered “risk financing” due to their associated liabilities. The use of the Internal Service funds (ISFs) is one of the only two types of funds permitted by the Governmental Accounting Standards Board (GASB) to be used for the accounting for risk financing, the other being the General Fund. The pros and cons of closing the Workers Compensation and Self-Insurance Internal Service Funds are discussed below.

Pros of Closing Internal Service Funds and Merging into the General Fund  Because of the fees charged to the user Departments, there is an unavoidable doubling of costs in the budget which increases the total expenditures when looking at a financial summary of expenditures for all Town funds. This occurs because allocated costs for Workers Compensation is budgeted in the front-line program receiving workers compensation services such as public safety and the full cost of workers compensation is also budgeted in the home base Internal Service Fund where the costs are centralized leading to a “doubling up” of expenses. This “doubling up” leads to what some critics describe as an unnecessary artificial increase of revenue and expenditure budget totals.

Recognizing this anomaly, GASB requires that for the Annual Comprehensive Annual Financial Report, the “doubling up” of expenses is eliminated.  Frees up current ISF balances for any General Fund purpose desired by the Council.  Operating Departments often desire to be informed and educated to fully understand the rationale for the internal service costs being allocated to their Departments and absorbed in their budgets in the form of user charges. Staff time required for users of the service and administrators of the Internal Service funds to provide the required analysis for rate setting of user charges including the development of sustainable

PAGE 8 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):
ongoing user fee charges that can be absorbed in future operating budgets may be better allocated to other activities.
 Net position balances can be viewed by some as excessive if believed to be above the amounts necessary to achieve a balance of revenues and expenses over the long term.

Because of the unpredictability of claims, it is difficult to be definitive over the adequacy of net position at a given point in time
Cons of Closing Internal Service Funds and Merging into the General Fund  Loss of the ability to assess reasonable user charges to increase/decrease the net position of the fund to provide resources for unanticipated catastrophic losses, the estimation of future anticipated losses and known hazards, or amounts derived from actuarial studies.
 Less disruption to the adopted budget process. ISF balances allow for the smoothing of variability associated with these risk-financing expense categories.  Use of these funds allows for full accrual accounting and full cost of providing risk financing services as provided in the Internal Service Fund.  Long term Self-Insurance/General Liability and Workers Compensation claims liabilities not paid from “expendable and available resources” (short term) will not be reported on the General Fund balance sheet. Instead, they will be reported as a long-term liability in Government Wide Statement of Net Position.

If the Council wishes to eliminate these two ISFs, staff recommends that full implementation occur with the Council’s consideration of the Mid-Year Review of the FY 2022/23 Budget (February 2023). Staff needs time to close the ISFs, recalculate the user fees for each Department, distribute the funds to the General Fund, and ensure all accounts are properly managed. All of this work is not feasible prior to the July 1, 2022 start of the fiscal year.

The Finance Commission (FC) made one recommendation regarding projected deficits in the current Five-Year Forecast.

FC Recommendation: Recommend to Council that the Commission believes that a “Structural Financial Deficit” currently exists and for Council to acknowledge the Commission’s finding and direct the Commission to work with Town management to confirm the actual amount of the

PAGE 9 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
DISCUSSION (continued):
deficits that the Town is facing and come back to the Council with suggestions/ideas on how we can fix this “Structural Financial Deficit” and fund capital projects.

Potential Impacts: The recommendation has no direct impact on the Proposed Operating Budget for this fiscal year.

If the Council agrees with this recommendation, then staff would work with the Commission on refined projections of revenues and costs; identification of potential revenue enhancements and cost cutting strategies; and determination of other balancing mechanisms that would ultimately be forwarded to the Town Council for its consideration.

Consideration of Any Funding Requests
If there are individual requests for new spending, the Council should consider these requests in the context of the Proposed Operating Budget and identify the source(s) of funding for the(se) item(s). At the time of the preparation of this report, no requests have been submitted to the Town. On May 4, 2021, the Council approved “Principles for Considering Future Funding Requests” (Attachment 6), which the Council may find helpful.

Donation Opportunities - FY 2022/23 List of Town Needs
As part of the budget development process, the List of Town Needs is updated annually per Town Council Donation Policy (Attachment 7) to reflect goods, services, and other contributions that would help enhance Town services, programs, and events (Attachment 8).

CONCLUSION AND NEXT STEPS:

At its May 17, 2022 meeting, the Council will have an opportunity to listen to public testimony, ask questions, consider the Finance Commission’s recommendations, deliberate, and direct changes to the Proposed Operating and/or Capital Improvement Program Budgets. Any changes to the Proposed Operating and/or Capital Budgets directed by Council or identified by staff (see Attachment 5.) will be included for Council consideration in the resolution formally adopting the Budgets to be considered by Council on June 7.

During and after the Budget adoption, staff continues to monitor revenues and expenditures closely and will report to the Town Council actual revenues and expenditures later in the year as the data become available. Any modifications needed will be brought back to the Council as Budget Adjustments.

Public comment received after the Finance Commission meetings and before 11 a.m. on May 12, 2022 is contained in Attachment 9.

PAGE 10 OF 10
SUBJECT: FY 2022/23 Proposed Operating and Capital Budgets DATE: May 10, 2022
COORDINATION:

The preparation of the budget documents involved the participation of all Town Departments.

The Finance Commission deliberated and provided its recommendations to the Council as discussed in this report.

FISCAL IMPACT:

Under State law, the Town Council is required to enact a balanced budget. The Proposed Operating and Capital Budgets are balanced and as the Council directs changes, the outcome must be a balanced fiscal plan.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

Attachments Provided to the Council Prior to the Distribution of this Report:

1. FY 2022/23 Proposed Operating and Capital Budget
https://www.losgatosca.gov/DocumentCenter/View/30442/FY-2022-23-Proposed-Budget

2. FY 2022/23 – 2026/27 Proposed Capital Improvement Program Budget https://www.losgatosca.gov/DocumentCenter/View/30428/FY-2022-23-Capital-Budget Attachments Provided with this Report:

3. FY 2022/23 Finance Commission Operating and Capital Budget Recommendations

4. Revenue and Expense Forecast Assumptions

5. List of proposed changes related to corrections and adding clarifications

6. Council’s Principles for Considering Funding Requests (Approved May 4, 2021)

7. Town of Los Gatos Donation Policy

8. Town of Los Gatos Donation Opportunities: FY 2022/23

9. Public Comment Received Before 11 a.m. on May 12, 2022

ATTACHMENT 1
The FY 2022/23 Proposed Operating and Capital Budget can be found here:
https://www.losgatosca.gov/DocumentCenter/View/30442/FY-2022-23-Proposed-Budget

ATTACHMENT 2
The FY 2022/23 – 2026/27 Proposed Capital Improvement Program Budget can be found here:
https://www.losgatosca.gov/DocumentCenter/View/30428/FY-2022-23-Capital-Budget

PREPARED BY: Arn Andrews
Assistant Town Manager
Reviewed by: Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov
ATTACHMENT 3

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 05/17/2022
ITEM NO:

DATE: May 10, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager on behalf of the Finance Commission SUBJECT: Receive Fiscal Year (FY) 2022/23 Proposed Operating and Capital Budget Recommendations from the Town Finance Commission per Measure A RECOMMENDATION:

Receive Fiscal Year (FY) 2022/23 Proposed Operating and Capital Budget recommendations from the Town Finance Commission per Measure A.

BACKGROUND:

On April 18, 2022, the Town Manager’s Proposed FY 2022/23 Operating and Capital Budgets were posted on the Town’s website for the public’s review and comment. The Proposed Budgets were published 21 business days before May 17, 2022 (Council’s public hearing on the Budgets), in accordance with Measure A.

With the passage of Measure A, the Finance Commission has been tasked with several mandated duties as described in the provisions of the adopted Ordinance. Section 2.50.225. – Duties states that:
(a) The Finance Commission shall:
(2) Review the Town Manager's annual proposed budget prepared in accordance with section 2.30.295(6) of the Town Code. and provide written comments and recommendations to the Town Council.
(A) The Finance Commission's comments and recommendations shall include a recommendation about whether the Town Council should approve or disapprove the proposed budget. The Finance Commission may make a recommendation of

PAGE 2 OF 4
SUBJECT: Finance Commission FY 2022/23 Budget Recommendations DATE: May 10, 2022
approval of the budget conditional upon the Town Council's acceptance of one or more of the Finance Commission's recommendations.
(B) The Town Manager must provide a proposed budget to the Finance Commission at least twenty (20) business days before the first meeting at which the proposed budget is considered by the Town Council.

The Finance Commission established the following schedule to discuss and provide comments on the Proposed Budgets and Measure G allocation (meeting Agenda and Minutes link provided):
 April 25, 2022 – Special Finance Commission meeting
 May 2, 2022 – Special Finance Commission meeting
 May 9, 2022 – Regular Finance Commission meeting
https://losgatos-ca.municodemeetings.com/
In addition, the meeting schedule provided ample opportunities for the public to engage in the process either through written comment or verbal comment through Zoom.

The discussion section of this report details the deliberations of the Finance Commission and its recommendations to the Town Council.

DISCUSSION:

Finance Commission Current Budget Cycle Deliberations
Over the course of the Commission’s budget proceedings, the Commission received presentations on the Proposed Operating and Capital Budgets, evolution of forecasted budget deficits, allocated/unallocated American Rescue Plan Act (ARPA) funding, historic base salary, and benefit expenditures, historic Capital Improvement Program (CIP) expenditures, employee vacancies, and a summary of the Community Survey results. In addition, staff provided responses to Commission and public inquiries throughout the process.

The Commission’s deliberations coalesced around the following goals and observations:
 The Commission’s interest for continued enhancement of transparency in budget development, budget assumptions, and budget presentation.  The Proposed Budget continues to restrict capital expenditures relative to historic allocations.
 The Proposed Capital Improvement Program (CIP) continues to be challenged by a lack of dedicated funding.

PAGE 3 OF 4
SUBJECT: Finance Commission FY 2022/23 Budget Recommendations DATE: May 10, 2022
 The higher percentage increases in the primary expenditures of Salary and Benefits relative to revenues is constraining other investments.  The Forecast projects deficits throughout the forecast period.  The Commission’s continued review of the Town’s Internal Service Funds.

Based on the aforementioned areas of emphasis, the Commission ultimately made four recommendations to the Town Council. In addition, the Commission made a recommendation to approve both the Proposed Operating and Capital Budgets based on acceptance of the following four recommendations:

Capital Improvement Program Recommendations
As previously mentioned, Commissioners expressed that the Town needed to plan and budget proactively for its capital needs and find reliable funding source(s). The Commission agreed that the previous approach that created year-end surpluses was inadequate. As such, the Commission recommended that additional funding be programmed to ensure continued investment in critical Town infrastructure.

Motion by Commissioner Rick Tinsley to recommend to Council the allocation of $3.77 million to the General Fund Appropriated Reserve (GFAR) for FY 2022/23.

Seconded by Chair Ron Dickel.

Motion passed unanimously
Motion by Chair Ron Dickel to recommend to Council the allocation of approximately $3.7 million of unallocated ARPA funds to the GFAR for FY 2022/23. Seconded by Vice Chair Kyle Park.

Motion passed unanimously
Operating Budget Recommendations
As previously mentioned, Commissioners expressed interest in the Town’s current use of Internal Service Funds and concerns about projected deficits.

Motion by Chair Ron Dickel to recommend to Council the dissolution of the Workers Compensation and Self Insurance Internal Service Funds starting in FY 2022/23 with remaining balances being transferred to the General Fund. Seconded by Commissioner Loreen Huddleston.

Motion passed unanimously
Motion by Commissioner Kyle Park to inform Council the Commission believes that a “Structural Financial Deficit” currently exists and for Council to acknowledge the Commission’s finding and direct the Commission to work with Town management to

PAGE 4 OF 4
SUBJECT: Finance Commission FY 2022/23 Budget Recommendations DATE: May 10, 2022
confirm the actual amount of the deficits that the Town is facing and come back to the Council with suggestions/ideas on how we can fix this “Structural Financial Deficit” and fund capital projects. Seconded by Chair Ron Dickel.

Motion passed unanimously
CONCLUSION:

Per Measure A, this report provides written comments and recommendations to the Town Council regarding the Commission’s review of the Proposed FY 2022/23 Operating and Capital Budgets.

COORDINATION:

This staff report was coordinated with the Town Manager, Town Attorney, Director of Finance, and Finance Commission Chair.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

FORECAST ASSUMPTIONS

REVENUE BASELINE AND PROJECTION FACTORS
Type of
Revenue Base
Line Estimate
FY 2022/23
Budget
FY 2023/24
Forecast
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
Property
Tax/VLF
Backfill
SCC Assessor
Office January
2022 report.
3% 3% 3% 3% 3% 3%
North 40
Property
Sales
Starting in FY
2021/22
North 40 Sales 3% 3% 3% 3% 3%
ERAF
SCC Assessor
Office March
2022 report
SCCA
recommend
70% of FY
2021/22
anticipated
proceeds
$400K $400K $400K $400K $400K
Sales Tax
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
Sales Tax -
Measure G
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
MuniServices
3/16/2022
Most Likely
Estimates
Franchise Fee
Current
baseline set
by FY 2021/22
Year End
Estimates
Current
baseline set
by FY 2021/22
Year End
Estimates
3% 3% 3% 3% 3%
Transient
Occupancy
Tax
Current
baseline set
by FY 2021/22
Year End
Estimates
Current
baseline set
by FY 2021/22
Year End
Estimates
5% 5% 3% 3% 3%
ATTACHMENT 4

FORECAST ASSUMPTIONS

REVENUE BASELINE AND PROJECTION FACTORS
Type of Revenue
Base Line
Estimates
FY
2022/23
Budget
FY 2023/24
Forecast
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
Business License
Tax
Current baseline
set by FY
2021/22 Year End
Estimates
3% 3% 3% 0% 0% 0%
License &
Permits
Current baseline
set by FY
2021/22 Year End
Estimates
3% 3% 3% 3% 3% 3%
Town Services
Current baseline
set by FY
2021/22 Year End
Estimates
3% 3% 0% 3% 3% 3%
Fine &
Forfeitures
Current baseline
set by FY
2021/22 Year End
Estimates
3% Varies Varies Varies Varies Varies
Interest
Current baseline
set by FY
2021/22 Year End
Estimates
Varies
based on
portfolio
Varies based
on portfolio
Varies based
on portfolio
Varies based
on portfolio
Varies based
on portfolio
Varies based
on portfolio
Other Sources
Current baseline
set by FY
2021/22 Year End
Estimates
Varies Varies Varies Varies Varies Varies

FORECAST ASSUMPTIONS

EXPENDITURE BASELINE AND PROJECTION FACTORS
Beginning in FY 2020/21, the Town is budgeting salaries at the actual salary plus a one-step increase. 68% of the workforce is already at top step or one step below top step. In the Five-Year Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of April 1, 2022 and rate is increasing in the actual anniversary date.
*Salary increases are based on actual step increases and approved Memoranda of Understanding with the bargaining units.
**Benefit increase estimates are provided by CalPERS/Public Employees’ Medical and Hospital Care Act (PEMHCA).
***Based on historical trends.

The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Rates shown for FY 2022/23 are actual rates as prescribed by CalPERS. Forecasted rates for FY 2023/24 and subsequent years are based on the most recent CalPERS actuarial valuation reports and staff assumptions regarding staff’s current estimate of returns for FY 2021/22 which are presently expected to below the 6.8% discount rate.

Type of
Expenditure
FY 2022/23
Budget
FY 2023/24
Forecast
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
Salaries* 2% 2% 2% 2% 2% 2%
Benefit -
Medical** 7% 7% 7% 7% 7% 7%
Operating
Expenditures*** Varies 3% 3% 3% 3% 3%
Grants & Awards 0% 0% 0% 0% 0% 0%
Utilities*** Varies 3% 3% 3% 3% 3%
Internal Service
Charges***
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Debt Service Debt Service Schedules

FORECAST ASSUMPTIONS
Beginning in FY 2021/22, the estimates of employer contributions were credited with an anticipated reductions associated with the approximate $4.8 million additional discretionary payment (ADP) toward the 2016 unfunded amortization base paid off in October 2019 and the total of approximately $5.8 million in ADPs toward unfunded 2013 and 2015 amortization bases that were paid off in FY 2020/21.

Employer contribution rate projections also include small percentage increases reflecting the anticipation of CalPERS gradually lowering its discount rate over the Five-Year Forecast period in accordance with the CalPERS adopted risk mitigation strategy, and the lowering of the discount rate to the present rate of 6.8% as of 6/30/2022. Estimates were also informed by recent rate estimates developed by the Town’s actuary using the most recent actuarial valuation updated with current year projections of covered payrolls by plan type.

Type of
Expenditure
FY 2022/23
Budget
FY 2023/24
Forecast
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
Safety
POA

69.44% 72.01% 74.61% 75.68% 76.69% 76.66%
Safety
Management
POA

72.44% 75.01% 77.61% 78.68% 79.69% 79.66%
Safety

POA - PEPRA

14.62% 14.65% 13.78% 13.75% 13.76% 13.76%
Miscellaneous
TEA/Confidential/
Management

29.92% 30.04% 30.64% 28.45% 28.73% 28.42%
Miscellaneous
TEA/Confidential/
Management
PEPRA
Separate PEPRA
rate for
Miscellaneous has
not been
established yet by
CalPERS.

29.92% 30.04% 30.64% 28.45% 28.73% 28.42%
*Safety Classic Rate reflects 3% decrease in employer's contribution rate to reflect 3% contribution as negotiated with the Town's POA during the collective bargaining process effective FY 2019/20.

Updates to the Proposed FY 2022/23 Budget Documents
ATTACHMENT 5
Based on additional staff review, the following updates are recommended to include in the final FY 2022/23 Operating and Capital Budget documents:

Proposed Operating & Capital Summary Budget FY 2022/23
Page A – 5 – correct the Town’s reported total ARPA allocation value of $5.7 million to $7.2 million.

Page C - 40 - staff found that FY 2021/22 estimated salaries and benefits for the Street and Signals program 5401 were erroneously not included in the summary tables in the Proposed FY 2022/23 Operating Budget. While implementing the correction for this table, staff will take the opportunity to also update estimated salaries based on newly available information regarding employee final leave cash outs.

On June 7, 2022, staff will bring for Council consideration budget adjustments to the Adopted FY 2021/22 Operating Budget regarding other updated revenue and expenditure items. As is the Town’s practice, staff will update the FY 2021/22 year-end estimated numbers in the final published adopted FY 2022/23 Operating Budget, including these budget adjustments. The aforementioned corrections and the proposed adjustments to FY 2021/22 do not impact the proposed FY 2022/23 revenues and expenditures; however, estimated year-end fund balances will change based on the new estimates.

Town Council Principles for Considering Future Funding Requests Approved May 4, 2021
ATTACHMENT 6

1. Allocate funds in an equitable and objective manner to benefit all residents and all areas of Town;

2. Enthusiastically support events from all community partners in a flexible manner and avoid high traffic times, using available Town resources and/or ARPA funds, pending further guidance from staff;

3. Utilize the Community Grant process, including the equitable allocation, and consider the total budget for the Grants and moving the process timeline along as quickly as practical;

4. Include destination marketing and use it to improve the branding of Los Gatos with its historic heritage and iconic structures, and do so with a clear definition of the scope of work with assistance from staff;

5. Encourage opportunities and events to build synergy between the Town's office/tech companies and the local retail/restaurant business work force; and

6. Avoid any conflicts of interest in the public/private partnership with the Chamber of Commerce.

ATTACHMENT 8

TOWN OF LOS GATOS DONATION OPPORTUNITIES
FY 2022/23 LIST OF TOWN NEEDS
To ensure that all donations and contributions are sought and accepted in an ethical manner, the Council established a Donation and Solicitation Policy. A list of Town needs was developed to identify goods, services, and other contributions to enhance Town services, programs, and events. The recommended needs for FY 2022/23:

PUBLIC SAFETY
 Volunteer Program Materials and Equipment
 Specialized Public Safety Equipment and Supplies, including Support for Canine Program  Training Support for Public Safety Staff and Volunteers  Equipment, Supplies and Materials to support Police Operations  Community Outreach Program Supplies

LIBRARY SERVICES
 Children, Youth, and Adult Program Collections, Supplies and Services  Library Books, media items and other items for public circulation  Funding to Support Technological Enhancements, including Digital Services  Equipment and Services to Support Historical Preservation Efforts  Resource support for Collection Development and Reference, Local History, and Library Policy

SENIOR SERVICES
 Home emergency kits geared towards the needs of seniors  Senior Service Committee seeks targeted solicitations for community engagement per the Town Solicitation and Donation Policy.

COMMUNITY EVENTS
 Supplies, Materials, and Services for Special Community and Volunteer Events and Activities  Funding for the realization of Public Art projects or Donations of Public Art subject to Public Art Selection Policy

TOWN PARKS AND FACILITIES
 Beautification Materials and Services for Town Parks, Open Space, and Infrastructure; Land for Parks and Open Space
 Contributions that Support Recreation or Expansion of Athletic Fields  Contributions that support multi-modal transportation.

SUSTAINABILITY
 Contributions to Help Minimize Impacts on Local, Regional, and Global Ecosystems through Conservation, Reduced Pollution, Increased Efficiency, and Protection of Wildlife, Vegetation, and other Ecosystems.

TECHNOLOGY
 Equipment, Software and Services to Enhance Communication with the Public and Organizational Productivity

ATTACHMENT 9 Page 182
Town of Los Gatos Council
The Honorable Mayor Rennie, Vice Mayor Ristow, and Council Members Badame, Hudes, and Sayoc 110 E. Main St.

Los Gatos, CA 95030
May 11, 2022
Dear Mayor Rennie, Vice Mayor Ristow, and Council Members Badame, Hudes, and Sayoc, I am writing today to thank the Council for continuing rent forgiveness for NUMU in FY23.

Thank you for including another year of rent forgiveness for FY 2022/23 as shown in the In Kind Donations FY 2022 Summary in the Proposed Town FY 2022/23 Operating Budget: “....rent forgiveness is recommended for NUMU in FY 2022/23 with backfilling this revenue loss with the ARPA funds.” This is in line with the Council’s priority to use part of American Recovery Act (ARPA) funds to provide rent forgiveness to non-profit organizations.

The Town’s rent forgiveness has been a true lifeline for all of our efforts to support the Town’s Strategic Priorities, and is a testament for what we can achieve together. Please approve rent forgiveness in FY 2022/23 for 106 E. Main Street to support NUMU’s ongoing responsibility to maintain and steward the Town of Los Gatos’ history collection and provide arts, history, and cultural educational services to the Los Gatos community and support NUMU’s critical role in maintaining–and expanding–the Town’s cultural footprint.

NUMU’s relationship with the Town of Los Gatos is vital to us and our ongoing ability to serve our community. We look forward to further conversations about our partnership. Thank you from all of us for your continued support.

In partnership,
Ami Davis | Executive Director