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HomeMy WebLinkAbout05/23/2022 Staff: Committee Members: Christian Clegg, City Manager Councilmember, Andrae Gonzales – Chair Mario Orosco, Budget Officer Councilmember, Kenneth Weir Councilmember, Eric Arias Regular Meeting of the Budget and Finance Committee of the City Council – City of Bakersfield Monday, May 23, 2022 12:00 p.m. City Hall North, First Floor, Conference Room A 1600 Truxtun Avenue, Bakersfield CA 93301 A G E N D A The meeting was called to order at 12:02 p.m. 1. ROLL CALL Committee members present: Councilmember Andrae Gonzales Councilmember Ken Weir Councilmember Eric Arias Staff present: Christian Clegg, City Manager Josh Rudnick, Deputy City Attorney Randy McKeegan, Finance Director Mario Orosco, Budget Officer Kevin Truelson, Assistant to the City Manager Brianna Carrier, Assistant to the City Manager Jena Covey, Risk Manager Gary Hallen, Assistant City Manager Anthony Valdez, Assistant to the City Manager Additional Attendees: Andrew Brown, Director, High Mark Capital Rosalva Flores, Brown Armstrong CPA Members of the Public /s/ Christian Clegg Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 2 2. PUBLIC STATEMENTS a. Agenda Item Public Statements – No public statements. Non-Agenda Item Public Statements – No public statements. 3. ADOPTION OF THE FEBRUARY 28, 2022, AGENDA SUMMARY REPORT The report was adopted as submitted. 4. NEW BUSINESS a. Discussion and Committee Recommendations regarding Pension Section 115 Trust Update – McKeegan Finance Director, Randy McKeegan, provided a general overview of the upcoming presentations on the unfunded liabilities of the City, connected to City pensions, new pension rate stabilization trust, and briefly touched on the retiree medical trust fund. Finance Director, Randy McKeegan introduced consultants from GovInvest and PARS who would provide presentations. Dan Matusiewicz with GovInvest, would cover CalPERS costs and provide background on the pension costing tool the City procured that allows more accurate and up-to-date calculations, which in part can allow better tracking of the funding plan of the new pension trust. Representatives from Public Agency Retirement Services (PARS) would cover City retiree medical trust and investment returns connected to the combined trust established. Finance Director, McKeegan would later wrap up the discussion on options that staff would like the committee to consider on strategies to fund the new trust with the anticipation of overall City reserve policy preparation that will be presented for approval next fiscal year. Dan Matusiewicz, GovInvest presented to the committee on pension funding. Committee Member, Ken Weir, asked why the information being provided was based on 2021. Finance Director, McKeegan was able to provide clarification. Mitch Barker, Executive Vice President, PARS, provided an overview of their role as the trust administrators for the section 115 pension. Mr. Barker explained the team effort between PARS, US Bank, and High Mark Capital Management. Andrew Brown, Director, High Mark Capital Management provided an overview of economic, and market forecast and performance. Committee member, Weir asked whether, at some point in time, the investment would be able to continuously pay for the insurance benefit and how long would that be? Finance Director McKeegan, referred to the actuary that projected funding through 2038 with a more recent actuary report to come. Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 3 Finance Director, McKeegan wrapped up the presentation requesting consideration of the proposed pension trust funding strategy to include: • Annual contribution based on savings from advanced unfunded accrued liability (UAL) payment • Fixed Percentage of surplus fund balance calculated at year-end • Annual contributions from $4 million (in FY 2021-22) to $10 million All with the understanding that proposed contributions would be dependent on the City’s needs for ongoing operations and related budgetary commitments. City Manager, Clegg provided the committee with further input on the proposed strategies for discussion and consideration. Committee members were all in favor of the first proposal of annual contribution based on savings from UAL payment as well as the second option of a fixed percentage or surplus fund balance calculated at year- end. Committee Member, Gonzales asked Finance Director, McKeegan, to provide his input on the third option. Mr. McKeegan noted that although the option was modeled it may not be as flexible as an adopted policy. Committee member, Gonzales requested that option three be evaluated a little more as a viable option. Committee member, Gonzales also suggested that the City provide messaging to the public to better explain unfunded liability. Committee Member, Weir made a motion to bring forward the first option of annual contribution based on savings from advanced UAL payment. The motion was unanimously approved. b. Discussion and Committee Recommendation regarding insurance Rates and Self-Insurance Fund – Covey/McKeegan Risk Manager, Jena Covey provided a brief overview of the self-insured fund and introduced Conor Boughey with Alliant Insurance Services who presented on Projection Insurance Costs and Market Conditions. Mr. Boughey provided the committee with an overview of liability & property market summaries and workers’ compensation, along with a summary of costs. Committee member, Weir made a motion to recommend insurance rates and forward them to City Council for approval. The motion was unanimously approved. Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 4 c. Discussion and Committee Recommendation regarding FY20-21 Annual Audit Reports – McKeegan Finance Director, McKeegan provided an overview of the FY20-21 Annual Audit Reports provided by auditors Brown Armstrong. Rosalva Flores with Brown Armstrong was introduced to assist with any committee member questions. Committee member, Weir made a motion to move FY20-21 Annual Audit Reports forward to City Council for approval. The motion was unanimously approved. d. Discussion and Committee Recommendations regarding PSVS Policy Ongoing Expenditures – Clegg City Manager, Clegg provided a brief overview of the PSVS Policy Ongoing Expenditures to ensure that we have one-time monies to complete large capital projects as well as have a reserve for flexibility for immediate and future needs. City Manager, Clegg requested a committee discussion on which expenditures to include in the ongoing expenditure policy. 5. COMMITTEE COMMENTS No committee comments 6. ADJOURNMENT Meeting adjourned at 2:09 p.m.