this
is oh yeah I'm I'm using my like one not
not you don't have
we I can
still sure we are we ready
recording all right I'm GNA call budget meeting for February 13 2025 to order
guess it's special meeting 2:30 uh roll call and council member LA
and I are both here uh that we don't have oh we do have some people online
we've got Eric CH you want to do this sure uh we have David Bullock and John
Waller
from okay and we have uh Ethan city manager
and James poke Works manager director what are you director director Finance
director manager final
officer I need name tags uh okay so we did that any public
comment it's get out there so no public comment uh so we'll go to approve the
minutes for the budget meeting from January 28
25 motion to approve minutes for the special budget meeting okay second all
those in favor
I okay we'll move on to the presentation of the audited comprehensive financial
report and measure K fund report for fiscal year of June 30th 2024 okay a
Brie presentation as I so uh David and John I'm sure we share their thoughts
of I'm sorry did I cut out or oh
okay screenshot
y okay
this morning this afternoon we're going to go over the the annual comprehensive
financial report the ACT we include the Met report it's Incorporated within the
general fund we'll see as we'll talk about for FAL year June 30
2024 and we also have the the management letter or uh comments from from the
Auditors to
at a very high level it's it's the ACT has broken up into five sections which
is is from the transmittal letter introduction to thep AUD report there is
a nice summary of what has happened over the course of last management discussion
and Analysis and then includes the basic Financial section which has the B basic
financial statements which includes the government wide as well as the F level
information as well as required of disclosure uh we also provide we
required to provide supplemental information as you saw most of that is
related to pension um it also has a budget actual fund information and then
last but not least I know that David will say this but the statistical
information is not audited but it is provided gives 10 years of history and
certain things when it comes to fun information or population uh lot of good
information in the in the statistical section but not it
again uh the partner and John's here from CS uh they provide an opinion of
the financial statements it's the highest level assurance that we are
presenting the finances fairly uh they have a we have a clean opinion which we
are that means we are I'll let David and John at the end talk about their opinion
and their management comments at the
end as I kind of mentioned earlier we look at the entity wide that basically
includes the city uh the governmental funds the Enterprise funds includes the
fund things like pension um incorporates that to the net position and the
statement of activities just taking a look at the
statement of net position which is Cal assets overall about 142 Million last
year about 144 million in the current year change is about an increase of
about $2 million in cash deferred outflow of resources what that really is
um is that are the future costs that we have to pay to covers basically at some
point it's based on their actual report it's
copulated total liabilities about 84 million to 8 almost the same 83.8
million in the current fiscal year the number that's always highlighted which
is the main increase is net pension liability went from about 52 million to
$5 55.6 million as I've kind of mentioned in previous
presentations that's really factored in by How cow Pur does so for example in
2023 uh their discount rate or their their
rate of return is 5.8% um if we were go back to 2022 it
was a negative 6% U and their target I know it's
different from an actual evaluation report to put in the financial
statements by 10% but their target 6.8 so every year they're trying to hit 6.8%
anytime they don't that means the liability grows in time uh they in exess
of that the liability decreases so for example if we were to put this schol
year 2022 into the slide you would see that net pension liability at about $29
million why in a year prior to that cers had an over 20% rate of return so that
just me the liability drastically decreased but again that's why we see
these large swings when it comes to uh the overall statement when especially
when it comes to Ping the city really doesn't have a lot of control on what
happen there long-term debt that really is the the bonds for private place bonds
for the library it's down we PID principle from 18 half to
16.4 um other liabilities it's really like house payable 13.6 11.8 and then
deferred inflow resources 5.1 to 2.9 2.9 what that really is is those are future
U interests that we will get from cpers again if we were to put the 2022
uh call me here you would see that number about 20 million that's what
do to the city so we've already in essence because of the C bad years we
burn that up already overall net
position [Music]
here 75.7 million um up to 79.5 million and we'll show why on the next slide
increase all right I'm just going to talk touch on I show expenses and
revenue so the statement effectivities basically income statement um expenses
went from 33.7 million to 40.8 million again what happened over a $7 million
increase and if you're looking at the the different functions General
government went from 5.3 to 10.9 that's a big increase Public Safety went from
11.2 to 15.8 million that's a large that's that's the reason for the
increases I'm just going to jump to the next slide just for a second just to to
show you why this is in your financial statements it's on page 22 in the
current Acer it's on page 23 the prior Acer so one the one of the things that
we need to do is make sure when we get to UI we have to show the the how do we
get track those expenses from the fund level to entity wide level in the last
year's financials because of those good years that or the Cali day we get to get
to account for that last year well that meant it was 2.3 million to the good
uh unfortunately now we're going into the bad years so we went from 2.3
positive to a negative 7.9 million expenditure swing of about $10 million
what that means is we need to now prate that expense to to the different uh to
the different functions and the different functions really is people
driven so the majority of the people are obviously in public safety which is the
place department and then General government which is pretty much everyone
else except for transportation which is some of um the Public Works people so
that's really why you're seeing that large increases because we need to we
need to prate that pension expense at at enwi
level taking a look at overall revenues uh program revenues about 10.9 down to
8.4 million um just in general what that is is is we were getting some large
revenue for 85 CL project some of the housing project over off
of obviously those projects are near complete so those T services aren't
coming in um any more since they done and we don't have for the most part C
Pleasant Hill is fully buil out so there's not a whole lot of new large uh
new development projects in Pleasant Hill property tax is up about half a
million from 9.4 to 9.9 million basically all it's all those
supplemental payments that we really don't know we're going to get until when
people sell their homes you might recall when you bought your home that there
might been a supplemental payment that you had to make well part of that comes
to the city of pleas Hill so when you get that's really the difference that
you're seeing here sales tax 11 million in the prior down to 10.6 million as I
kind of said and we actually had earli meeting this morning with our with our
sales tax Consultants we're just retail is just down I mean it doesn't help city
of BU Hill that we have some vacancies um in the downtown but just in general
Statewide as well as City buen Hill we're just seeing a decline in in retail
P that includes the county pool right right allocation how much was that down
is that down more than City or is that down about the same the
county it's a little interesting with County Pool in general the county it's
down because of the county overall what the county received can I um charges for
services again so it's it looks like 1.8 million revenue is less than from uh
2022 can you explain what the charges for services are again I may have missed
that so permitting licensing anytime we do um um a new development project all
that week when we fill that out for when building receive those revenues it's
that coming back so when you do do a remodel on your home certain building
permits but with permit fees when those large projects start coming down less
Char for so are you seeing that there's less projects that are happening is that
why from 2023 to 20248 it's the big project so like
development it's it's the I mean we're still seeing know doing home remodels
but we don't have a lot of uh we don't have a lot of new home development or
major apartment complex development that's really what that's really What's
happen measure k for the most part it's rounding it actually was down a little
bit from 5.5 to 5 like four6 billion um again we don't see as much of a
fluctuation when it comes to measure K as as we do with retail a lot of that
has to do with Auto Sales um so if you buy a car in in W Creek they might you
might notice that they say oh where do you actually live well you say you live
in Pleasant Hill um what happens normally is that 1%
sales tax will go to City of wall creek but they ask they ask you for your home
address because it's based on sidus address so if you live in Pleasant Hill
and there's an add-on sales tax well that add-on sales tax gets applied to
the purchase of your vehicle so we get that
whereas just normal sales tax obviously if you bought that car W Creek Nothing
comes to Pleasant Hill because you live to Pleasant Hill it's that add that
helps us as well as online sales that continues to to still relatively be
strong I a quick point I want I want to make sure we don't miss this um so while
we may have just going back to the charges and Services I I would hate for
the conclusion to be that we don't have anything going on in the city and
development is crashing it but that's not the case I would actually offer
account to say we just gen we just adopted in general plan last may we
changed some zoning designations we're in the process of upgrading our zoning
it may actually create more opportunities for other kinds of
projects certainly we are responsive to hcd we reone specific sites for larger
higher density projects that's not to say we don't we may not have any at
present but uh and the difference is as those projects W down as Eric explained
but that's not to say we don't have the possibility for other projects in future
just want to make sure that's you can't look at it as a
longterm Tri corre right correct that's that's the key it's just a year by
year and then the other piece I'll touch on this is again you'll see that
investment earnings went from about $800,000 last year to about $2 million
this year $1.2 million increase overall um part of that and we'll talk about a
little bit more on the general fund side um it's because of rising interest rates
is is the main reason it's also because as as David and John are aware you know
from the accounting perspective we have to mark Investments at a point in time
on June 30 and those have been um we had
some uh paper losses a couple years ago and and that's being offset as as
interest rates continue to rise again as long as we don't that basically means is
what we have to do for an accounting standpoint is we Mark Investments as of
June 30 as of that date if we had to sell everything today simplify it um and
then based on what that is you have to actually then book it whether it's a
gain or loss but I'm going to be honest reverse it the next day but we at least
have to reflect that at a point in time so again the overall the net
increase it was about 3.8 million so we went from 75.7 to$ 795
million that again general fund includes measur
pay again
they as well measure K was was passed as a general sales tax
we track measure Cas separately in separate funds from a a financial
statement I sorry from a general lger perspective but for financial statements
is considered a general sales tax so for financial statement presentation measure
K is comined with a general
fund just overall revenues of about $37 million expenditures of 31 million
transfers of net caners out of about 4.8 so general fund overall increased about
1.1 million from 18.2 to 19.3 million the main reason for transfers
out is for example since measure T is including in the general fund a little
over three million of those transfers are transfers to for projects for
streets and Roads or bik P for storage TR um the other over million dollars of
it is for it meetings so we have a um a police it fund and we also have a city
it fund so that's really what those transfers out are for
again some of this kind of mirrors with what you saw at the statement of
activities since most of for example property tax um from 8.7 to 9.1 million
really it's that supplemental sales tax that decrease from 10.9 down from 10.9
down to 10.6 uh I'll touch on Transit oy tax I
know I've said this in the past if few Tak now that's the one area that still
isn't quite to U isn't at a prco level uh
2019 this number was about 2.5 million and that was it with the opening of a
brand new hotel for only once say half a year the Hope was that this number will
be close to $3 million today then Co happened and we've been we've been about
2.2 for the last couple
years oh sorry and then I already talk about so the use of money in property
from about half million doll to 1.4 million as time to mention interest
rates started Rising which I kind about about half of that increases was due to
interest rates and the other half is what I talked about that market
adjustment that we have to make every year at June 30 was the other half a
million again that just means said oh our if we had to sell all of our assets
as of June 30 2024 was a half million better than it was a year
before now we take a look at General fin manes now you don't see the swings so
the statement of activities which you saw earlier you saw B General government
was at five the year before and $10 million it's because you have to count
for those pension when you look at it at a fund level you don't quite see the
swings that you saw at the stivity level overall 34 million that year last
year $31 million in the current year the main reason for the variance of that $3
million that Capital outlay that's the library so in 2023 we was still were
still heavy in construction in the library I mean it was close to being
done but there were still about $3 million of expense
we still have a little bit left to go as go the measure pay report but for the
most part people are join the library library um it's pretty much built out
still a few much l items but you can see what that did to expense from last year
to this year General government down about
$300,000 again that's really just due to a transition in staff so for example C
manager Ethan was the assistant city manager at one point uh we didn't have a
city manager a full-time City Manager for certain period of time as we're
going through that recruitment uh same thing for city court for six months we
had an acting or interim City Court until I own F that position uh so there
were several POS key vac uh open positions over over last year that have
been built and some of them haven't been back bu uh Public Safety again it's up
about $600,000 but we're look at the budget number I think was over 13
million we in the past historically somewhere between um some you know five
to 10 police officer vaces a year it just it just it just happens the goal
has always been to try to other than a couple of Frozen positions to fill all
those PD slots it's never easy to do I think we've only had maybe one year
since I Council that we've been fully staffed I actually spoke with I spoke
with the chief about this and he's wor for 25 years and he said he can remember
like one maybe two times for a limited portion was I just remember one year
where we were finally full that was a year we could finally do an
SRO was that year so it sounds like from about almost five to 10 vacancies but
that's also included in the budget though right you're assuming that all
those positions are filled or I am assuming they're all except for sorry
except for except for so that's accounted
for well it always it makes the budget look very conservative because it will
always be better than the budget right because the because those position
because those positions are assumed to be full not do we know what that number
is off the
top the difference in five police officers
what I mean you're basically talking fully loaded for a police officer 150
Grand a
piece 750,000 750 change
you know some of that will change again speak pension some of that will change
depending on if it's a brand new officer out of the academy because they are in
the pepper plan or if it's AAL so someone if we were able to get a police
officer from a different department that would change the all cost yeah and
generally budget do assume unless you as Council direct
staff otherwise just like we dis likee staff freeze position again and we ref
freeze it otherwise we do assume now I've
shared with the Council of the past and the LTA is in the old days servative
budgeting meant you assume um when you assume positions you assume TOP Step
fully loaded family plan and that was considered Serv buding we don't do that
anymore today we kind of find some mixture so I find some mixture in
between like okay maybe if we have three vac for police officers for example I
will assume one's going to be a family one will be plus one one will be single
um and I've never assumed TOP Step anymore I assume midep for example but
based on that information so there is technically kind of salary savings about
750,000 per year that we're looking at because those positions seem to be
historically BAC in at least 5 there can be yeah and the reason I say that is
just because HR is always looking and HR PD is always looking for good
officers for a while is pretty much
last several years it's been a lot harder
than and then the last slide I the last part of the slide is really the transer
out as I kind of mentioned earlier the bulk of the transfer out is really for
measure K to the gas tax fund for projects or to technology funds for
either for the city or VAR um again there is a a full note that actually
describes all not only is it presented it in the summer level um and the note
disclosure actually shows where all that money is
going and then just overall U the general fund about $24 million in total
assets uh deferred inflow and liabilities about
4.4 um and then it's about 19.3 total fund
balance restricted to about
do a
non caption and I do
the this way no okay
yeah so restricted and not the B of what restricted is is U the uh the section
150 so all of those funds are there is
basically we can only use that for a specific purpose for be pension expense
a sign of about 13.4 million a lot of that is is uh is related to measure k u
even though the council has discretion there's always been emphasis of what
measure pay has been used for and then the unassigned council could uh direct
staff to to do anything with those funds for government services about $4.2
million again we're going to talk about this a little bit more in the next it
assigned also includes our Reserve policy numers not just the measure K but
also also the 9 million 5 million for 14 Capital 4 million for Budget
stabilization plus the measure K that's assigned can I ask a question about the
uh transfers again so when we're going back to the transfers this on page 44 of
the agenda packet itself um there was total amount unspent as of June 30th
2024 it showed 5.3 million and then the current amount was 3.4 million was
transferred is that due to carry forward funds it's under note four page 14 oh
one so that's the measure K report so what we do on the measure K report
is we provide to you and the council as well as the measure committee is so we
there has always been an transfers to for measure k for projects for p p bike
stre of Roads P bike and S um which is that 3.4 million that
you're saying but we also report out there are previous years as as you're
saying we also done transfers in previous years as fall for those
projects so what we want to disclose to to you as bu committee members as to the
measure committee members 5.3 of those transfers has not been spent yet so that
you know that within for example in the gas tax fund um if you add up those
numbers that's sitting in the gas act right now that is for future streets and
Roads projects or biking pet projects um so that's that car board so we yes we
disclose thats year thank so I may be asking a lot the
questions because I'm looking at the annual report as city council but also
I'm diving in to all little details so please mindful that I might be asking a
lot of questions okay yeah and again I've been through it
again this is the presentation before you is more a summer level so if you
have more detailed questions feel free to ask because we don't part of this
presentation I don't get into all 20 I want to say 21 special Revenue funds and
seven coule project
funds and really uh this is the the last
slide yeah I noticed that so this is more of the high level overview the 164
pages that the public Y and then I do this every year I
got to I I got to thank Ross sta who's no longer here she's part of another
agency now um Billy who retired a few years ago but thanks thankfully she
comes back when I ask to help me out um Maria and Wendy and and really all City
staff to help with the together including Ethan and we're here
today uh I'm going to hand this off to John and David in one second
and then or you also ask question the one thing I keep forgetting I feels like
a lifetime ago but it really wasn't was we went through a system implementation
in 20 U for the last couple years but we turned it on in October of
2023 and the amount of work and time involved was extensive by all staff and
some of that to get it to help get it into the financials that you see today
it is took a lot of I just want to just again thank my team for doing that I
know that moo had some we had to work with moo this year with that conversion
as well to make the financials happen so I just want to thank them as well you're
more than welcome to ask questions I don't know if you want to hear the
Auditors before you yeah I do have a couple questions thank you again for all
the hard work that you put into putting together the report um again going back
to just the agenda packet itself on page 118 there's a ratio of outstanding debt
of 18.5 that's related to the Bank of Montreal for Library project and then I
saw a difference in page 145 which is 19.9 million um trying to understand I
guess the question is what is the 1.4 difference yeah so I wanted to clarify
that to make sure that that was what I was seeing as well because it wasn't
stated in um 145 and then what I found was really interesting was actually the
top 25 business sales tax producers 12 of them is actually in district
one um and another question that I had was so
that's about 50% almost 50% of the sales tax is coming from district one um and
Page
125 building permits so if we look at the building permit
from the last 10 fisal years we saw there was a jump into 2022 and
2023 right from 120 it was 123. 7 million and then we're going down in
2024 almost 55 million again is that attributed to the development of Le
component that you were talking about earlier 401 Taylor and5 Cleveland
Marland and then lastly I think we are going to talk about the pars Trust
and so about the unassigned funds and where we are with
that David I'm gonna stop sharing David and John it's your your
show okay great uh mayor Noak nice to see you again
mayor La welcome nice to meet you Council you gave me mayor I
appreciate that thank you I say mayor as well my apologies
UMC council member law nice to meet you um David bulock I'm the partner on the
engagement and John Waller is here joining me and more than happy to answer
any questions that you have on the audit uh thanks Eric for that presentation it
was a nice walk down memory lane um the audit and recalling all the activities I
would say that you know from the auditor's perspective it was a pretty
consistent year um for 24 not a lot of change other than the system
implementation was a big impact um but in terms of activities pretty pretty
routine in terms of uh you know not a lot of significant changes you know
going through the library project the bond issues associated with that it's
just been a lot of capital activity in the past few years and so this is kind
of seems like it's kind of normalizing back to a normal year um so we have
issued a couple of deliverables already we've issued the transport
Transportation development act that's your uh sidewalk and
pedestrian Pathways um that has a December 31 deadline so we had to issue
that back in December and then we've issued the State Controllers report or
help helped get that filed so those are two things that have been done today
we're focusing on the acur the financial statements and the measure K report and
what we have left is the single audit which is the federal grants and the Gan
limit and those will be issued next month
in terms of the actur um you know Eric walked through the numbers with you you
know our responsibilities really relate to uh expressing an opinion as to
whether or not those financial statements are fairly presented in
accordance with generally accepted accounting principles and gby is
responsible for setting those principles so we call that Gap and and gby
establishes that we did the audit or we conducted the audit in accordance with
our audit standards and there's really two sets of standards the aicpa's audit
standards and then the government auditing standards and the government
auditing standards really adds on an internal control focus and a compliance
Focus to our audit and so we're happy to report that we've issued unmodified
opinions on the financial statements for both the Citywide Acer and the measure K
uh we did not have any internal control deficiencies that we felt rise to the
level of a reportable matter so it's our responsibility ities to
communicate um control deficiencies that we believe are significant deficiencies
or material weaknesses and we didn't see anything to that nature um as it related
to the financial statements and then the same thing with compliance we did not
see any uh non-compliance that were required to report to you um the
financial statements this year um and this is probably the most quiet year
since uh covid began because gby put a a pause
on new implementations but there really wasn't anything that changed the
financial statements this year but you do looking down the road have some
significant gas bees to consider one will be for this fiscal year coming up
20 uh 2025 that's on compensated absences um and that could change the
way the city accounts for that liability um and then also the
reexamination of the reporting model produce some changes which you'll see in
how the budgetary comparison schedules are presented
you may see some other changes that impact your mdna and your proprietary
fund financial statements but those those changes will be down the road they
don't apply to this fiscal year um so this fiscal Year's report is very
consistent with how you've presented the financial information in past year so
not a lot of changes to to discuss um the uh so you know Eric went
through the uh the details of the financial
statements but we're more than happy to answer any questions you might have on
the audit
itself just glad to hear it was unmodified thank
you that go that goes to the good work of Eric
and his team yes I know that I appreciate that I I I should mention
that in addition to the financial statements uh we we issue a separate
report to your attention as the city council um it's it's labeled report to
those charged with governance and that's really uh the audit standards requiring
us to communicate the results of the audit to you and it's it's more um a
context it gives you a little more context of the audit it's just more
information um just to help you understand uh what transpired during the
audit and we communicate or we're required to communicate things that
might be negative things like uh we have if we had a
disagreement uh with management um if if there were some you
know material uh audit adjustments to the financial statements uh things of
that nature so I'm happy to report there there were no instances that came up
during the audit that were required to report to
you no
that and again I think our I brought up Tyler for a reason our
our future goal is to do this is to have this done soon yeah uh then the new
system Brew in some hurs and some wrinkles um especially when we we did a
basically a brand new general Leisure um that just took a little more time this
year again our most of my other agency have
worked for we were done at the latest whatever so this is unusual for me we're
trying to push that back to where it should be uh and now that we've gone
through this for the first time it should be easier the next time around
and hopefully that's our goal this year yeah
great anything else thank you both work and I guess that help with the
new Financial system oh yes well I got you both on the
screen by any chance David or John do you know if you're available on March
4th for measure T I know it's a little bit off topic but like measure T
committee meeting 5 5:30 and you have to respond on the on email me I just want
to make sure I don't want to forget to ask I don't see conflict
Eric thank you all right thank you very much have a
great day thank you U do you have any other questions
on oh I did I did have one question about
intergovernmental intergovermental Revenue what does that comprise
um sorry I know I'm going back to Pages because that's what I was looking at
with the agenda so um it's page 113 so what I saw was in FY 24 revenues was 1.2
million less than FY 23 and the main driver was due to intergovernmental
revenue and so I kind of wanted to understand what that category comis up
it it's really for example um watch Are You The Chair of
CCTA or chair MTC chair sorry I know you sit on CCT yeah
I so for example um CCTA sorry measure J is is a fund is a is a Hass sales tax
that we receive a sales tax for and that's one of the larger for projects
normally uh through CCT that we get and that's the bigger share of
intergovernmental Revenue some of that could also be the the AR funds depending
on what expenditures happened last year compared to this year some of the larger
projects I think happened um last year any but our book
lines would be consider intermental revenues as well okay it just it just
means that we have revenue from other agency other government agencies and so
that was reduced because measure J's amount is a percentage of the total
revenue but the revenue is driven by sales tax so the S to extend sales tax
dollar changes the percent account return Source CH kind of like our
measure K so there's measure is also well yeah measure J is meant to be a a
transportation um related measure that was done back in
20 I think it's because it's 234 and so um that is a half cent sales
tax goes primarily Transportation but there was a certain percentage I think
it's 18% that's returned to source so to the extent that Pleasant Hill generated
a certain amount that sales tax that went to CCTA 18% of that came back to us
and so that we usually goes to their own projects
Paving and then the other thing that so that was less this year though so I
meant that they didn't generate enough so or there there's other things like AR
funds well no no I'll do it this way the structure you
see at CCT CCTA today is it's the structure was and the reason I say that
is mainly because you have to um so the mayor's right there's 18% return
resource money there's also another 2% of return resource money that goes to
certain parts of the county there's also um eligible projects that you can that
each City can apply for funds for and the reason I bring that up is because we
as city of Pleasant Hill apply for funds I'm pretty sure with L not this the
current that you're looking at the year before or some of the three projects
that we would have got measure J funding for that need to apply towards for
example CCB CCB has 4.6 million so some of those funds we've already received
from cc to apply towards those projects which doesn't occur every
year lot of the CCB measure a lot of the other work that was done along contest
was also measure we've been very fortunate to probably received more than
our Fair sh grants don't say that out low yeah
are you trying to jinx me that's true but it's been the case for you know
entire time I've been on Council we've been very fortunate to be you know be
ready with projects so that when there's a call for projects we're ready to go
and result have been able to get it work you know good amount of
dollars I do have a few more questions that's okay yeah there was also an
increase in like 1.1 million in use of money in property interest that's okay
that's interest so that's where it's half of it because of interest
rates Rising the other half is that market adjustment we have to make on
every June 30 based on we still L Investments but what we
get and then um another question is that in expenses for Capital outlay it was
5.1 million less and so that kind of resulted in our 4.1 million of our
operating margin is that correct is that this the bulk of it the library libr
when you when you don't you don't have and that's again because of how it
was funded it was part of the in the general fund that's why you saw that a
large drop from last year to this
year all right I
think questions thank you great we need to approve this to go
to council a motion to approve the presentation of the oh not the
presentation I guess the audited the act act for and measure K fund report for
the fiscal year ended in June 30 20 I'll second you've made those changes
that I I'm gonna for those onto the a uh sorry yesterday was a holiday so I want
afford those changes to the Auditors I mentioned it to them prior to this
meeting I had a bunch of couple pieces that were uh inconsistent some numbers
there were it was principle wasn't that service and there was a couple other oh
like when I saw the library and I didn't see the no no it's in it's in the
wording oh it's in the wording sections that were um some wording pieces that
were off so um I can show you where they are but anyway I can show that to you
later but ER Eric got them all I went through them yesterday with him so um so
we'll yeah I'll forward that to the aors I gave my heads up yesterday that that
we have some edits yeah we com oh yeah did not just just no
comment
Y the only thing is you may not see those edit by the time it goes
tost okay by the time it gets published on the you see okay just as long as I'm
sure that they're going through that's okay okay so second that just that those
AMS favor that right motion passes we will
now go on to the fars section 115 trust
discussion sh
by gol yes only place you can get Yeah well yeah da City too close for
me dangerous dangerous I always get of July parade my contribution every
year okay that's part of our policy the Council budget comme adopt a couple
years ago was based on the annual audit we would come back and see if there's
any additional funds that we can put into the uh section 115 trust again the
section 115 trust can only be used uh in regards to pension related expenses it
allows it's a tool that allows the Investments to extend beyond what the
city can do normally so the the easiest example is R uh as a city we can only go
out five years on sure we can only invest out five years so for example
there we can't invest for example in the US Treasury a 10year note that's not
that's not allowable expens fory we can only go up five vehicles like the
section 115 trust allows you to go beyond the five
years and one of the things that well it really did come from the budget Comm one
of the things the budget committee really wanted um a couple years ago was
they wanted to make sure that there was specific language in there that would if
we did have a good year that we would that we would put um funds into the sect
115 trust so the minimum amount that we that would be recommended to be put in
was 10% or $50,000 of the unassigned fs of General FS again that's not including
measure K just the general fund
itself just to show you compare to the act the act for if you were to look at
the
Escape go if you were to look at the the app for um on page 22 you would see the
ending fund balance is about 19.4 million to break it into the components
it's about 15.7 in general fund only and about 3.7 million in metri
K based on that
activity just looking at the components for a minute and talk a little bit about
the 19.4 million 60,000 nonspendable what that is just um
um it's a loan to for planning for the general plan some
work that we need to do we sure there be enough money the general plan fund so
the general fund is long $60,000 there restricted as I kind of mentioned
earlier the bulk of that is almost all of that is really the U section 150
money that's already there assigned as we kind of talked about 9 million is the
city council policy and the other uh 4 million give or take is is really meure
take ons and then we're looking at the unassign component of 4.2 million which
is all General
month I go back to this slide see see okay just for example a year ago the
unassigned fund balance was about um went from 1 .4 million up to almost $3
million and increase of almost 1.6 million the required contribution based
on the city cons policy was we would put $157,000 into the section 115 trust
because the 10% was higher than
$50,000 with budget committee's recommendation and Council move forward
with budget commit recommendation based on the final numbers they they
contribute the $300,000 into the section 115 trust a year ago so
$143,000 in of what was the mimal requirement move fast forward a year to
this year again in November we meet with budget totee we give you some
preliminary information that's un audited based on what what happened a
year ago we did want to give the budg an option to because they they wanted to
already put some money ahead into 61 that trust so start earning interest so
we we did the same thing the prior year up at preliminary numbers rather than
waiting for the final to get additional interest earnings yep so again this year
uh again U we already put the city council with that project M
recommendation already put in $300,000 into the section with 15 trust again
it's a 172,000 more than see policy requir can you can the city council can
always put in more money that was they the policy itself was
design what what mayor Noak and and and mayor FL what mayor they wanted
to make sure that there there was no requirement to put money in now the
dollar level could obviously change but they wanted a floor um and so this so
the last couple years we have put in $300,000 a a year which is already more
than what the the floor
was so quick can I ask a question so did we look at this in the quarterly report
is that how you came up with this was a preliminary year end report so we
because remember this ended June 30th of last last year okay so we had
preliminary numbers in November as to and so when you saw the we saw what the
what the logical numbers we Eric wasn't that bad in accounting that we were
going to be off by a significant amount when it came to the audit yeah and so we
decided at that time we would prefer to get the 300,000 in and earning money
rather than waiting till the full audit came out so that was the decision that
the at the budget committee and then the council approved it so would we December
with that being said would we see preliminary numbers again in November
then um you want see year end preliminary numbers in November you're
going to see some preliminary numbers U either March or April for the where we
are where we're going okay um this for example the one the one thing U for for
like for example sales tax is an easy example yeah it's like we met today with
our our sales tax consultant um but sales tax is always about 3 to six
months Life Time so even though for it's always in their rears because for
example the the I'll just use October November December what the way that the
state works is they Advance you money during the course of that period of time
of what they think you're going to get but you don't actually get a true true
up for example we don't get a true true up until about late February early March
for the October to December time FR that's why there's always a lag actually
knowing what their numbers are going to be same thing for sales tax so even
though we're already at order of the way to the current thisal year Well we only
we're only getting the data the real data for the last quarter of the
previous fiscal year so the reason why I'm bringing that
up is because if we do get those numbers kind of preliminary we can possibly do
the same thing again where we would invest the what we already kind of have
in a sense of what we're going to end the year with but we'll probably take a
look at again in November when the next annual preliminary numbers come out okay
to see whether we want to do that then the question today is really do we want
to do anything more than the 300,000 we did in
December because we still have a you know we still have an unassigned fund
balance of four 4.2 million and 10% of that would be uh 4 24,000 yeah so so the
question is do we want it well it doesn't really matter what 10% is but do
we want to because the balance is 4.2 million do we want to take a little bit
more of that and put that in here and do you happen to have the slides on that on
that expected unfunded pension liabilities
where it peaks in 2032 no I don't that's today sorry do we
also have like a trend analysis of how much we are getting in the increase of a
tress like for the past five years for two years only had it for two
years oh for two okay so you wouldn't have go information we have it for than
two years yeah my head I want say about any but sorry just on the section
15 trust itself we do have uh we have pars come back every year so again
somewhere in the next couple months pars will come back and do an annual update
for this committee as well um as well as U Chandler who it handles our
investments for the city um outside the section 115 trust we have about $7
million of invested um in stocks and bonds um Chandler will
come back as well to update the investment policy as well as provide you
an update on how those invests are doing as
well that's help so one of the one of um the things that you and I discussed in
the past is do you prepay versus putting it in the trust and maybe you can go
through pluses and minuses of prepaying calers versus putting it in the 115
trusts that's an important piece I know CCTA we just
prepaid 2.5 million of there so that they're fully funded um and so maybe you
can walk through that for B's uh clarification so for example even for
city of Pleasant Hill or a lot of they went through the logic of do you fund do
you go ahead and just write H to cers um or do you set up a section 115 trust and
it really comes down to what the what city council felt comfortable with and
every entity is a little bit different for example when you write a check to K
pers for $100 um you you're taking all of their
assumptions as well which could be great because they're assuming 6.8% and
they're going to factor your $100 contribution as such that it's going to
earn 6.8% the good or the bad is now that
year that had 20% you're doing really great those years that it was negative 6
point uh over 6% or 5.8% where doesn't hit the 6.8 well that just created a
liability and again it's not neither good nor bad just matter your preference
so for example UC mentioned now they also pre funded
they also Lo a check I think a few years PRI of that to get them to 100% well
they went through the up and down cycle so now they're running another two2
million check to get back to to the 100 100% um so if you could guarantee me is
going to get 6.8 I would I would automatically tell you right today right
now right the check to cpers yeah yeah well I was looking at it for cers they
were attive I think 6.1% or something like that in previous years um but
historically I think their 30-year return or about almost 80 8% sorry not
80 for all you 8% um just a 30-year return but in looking at part it seems
more volatile to be in cers um versus being the pars trust which is consistent
with around what what's the percent so again there's so pars the other reason
is once you write the check to cers you have you don't have any control anymore
you you've written them the check they get to do what they want with that money
I mean the goal is obvious pay for retiring pensions but they control that
money once you write that the check what it's invested in how it's
invested and they do change their mind on what they're willing to invest in
when I listen them speak two years ago they were talk talking about getting
into Private Hedge Investments and I thought good God you're lowering the
discount rate to Tak in higher risk Investments yeah which is
counterintuitive to anybody and yet they're selling this is a way to get
higher returns but there's greater risk and greater risk of of you know losses
there too so you have to sort of factor in the volatility of cpers versus the
Vol volatility of what the the pars trust will invest in so you'll see the
pars trust sit around you know single digit returns but pretty consistent more
conservative right versus going from a 21% gain to a 60% loss a huge swing yeah
and depending on when you put the money in it could just you know vaporate sort
of and so that so those are sort of the thought process and our thought process
when we originally did this is sort of our our future Cowper's unfunded
liability peaks in what 2032 2032 and then starts heading down because of the
classic employees and so our thought was to put try to put away a little bit of
money all the time into this pars trust because you can use it for regular
pension payments and unfunded that we could use that money in those Peak years
2029 2030 203 30 through 32 to reduce that amount so it's not so much of a
strain on the city's budget and then be able to reduce it over time yeah CCTA
does it differently because CCTA they're if they're their bond Runs Out in 2034
they could disappear and so they don't want to have a big unfunded liability
they can't fund when they're when they tax half cent sales tax goes away so
they have a different mentality on on how why they prefunds why they prepay it
versus setting up this we have a we can have a much longer Outlook we can have
an Outlook of paying for this over 30 years while CCTA only has like six years
to go so there's there's also different perspectives on on why you want to yeah
do that type of thing so that was the idea behind why we set up the trust to
address
that the trust is importantance one it's one uh tool that we have but even now
even with 300 I'll say we about 1 point I'll say 7 million take
unfortunately or fortunately know that 1.7 million when we get out to 2032
that's only good for we would almost have to take all of that just to make up
for the increase for we out to those High years
yeah and that's the hard part is that dab of how do we even you saw me U I
know it was a very small PR um um and one of the supplemental supplemental
information of what you see is The Purge contributions now it's just not that fun
it's total Pur but it went from about 1.5 million U and I'm trying remember it
goes up to I'll say 7 million there there's a huge increase over 10e period
of for Pur cost um and and we're still trying to
pay for the or all the well the three of us sitting here classic employees we're
still trying to pay that off especially for some of those those down here sorry
now now I won't blame all foret that much
now what I always say what I always say is one of the
things that they did and in back in 2000 early 2000s was they increased pension
um benefits which wasn't necessarily the wrong idea Governor Davis was doing it
because he had to get a deal with CP officers which is Happ to get passed
down and and they were mostly overfunded at that point in time as well the
pensions were overfunded and so they felt that they could so when you're
talking about the a % so back then yes you could put money basically in the
savings account and easily get 6% without even
trying um the problem that they really created which they didn't p no one
really push back was they went retroactive they said hey not only we're
going to give you this better benefit we're going to give it to you like you
got from day one that you were hired that was really the problem with with
what what they it wasn't the fact that they gave necessarily a better benefit
was the fact that they just said hey we'll just go we're so overfunded we're
going to give it back to you we're going to pretend that you had it from one and
that was where they get the problem got really really bad especially as we went
through the Doom bubble and the Great Recession those are the issues that
we're we're still dealing with today and there was quite a bit of spiking going
on before Peppa too so there was a bunch of sort of abuses to the system people
spiking their salaries up so that their pensions were much higher and so Peppa
we actually have three levels we did one Classics up to 2 11 then we have 2011
till pea kicked in as a second tier and then the third tier is Peppa to now and
there's the unfunded liability associated with those two groups is oh
he's getting
hungry is most of the liability sitting with a
classic employees and just to give you an example so CCTA is World check for
about 2 and a half million write that similar check for city of
Pleasant Hill it would be about 50 million assing we had it yeah in the
general fund which we don't that that's what the that would be the equival the
check that CCTA just wrote yeah they only have 25 employees so that's little
different so that helps and no Public Safety and no Public Safety which
is so anyway anyway so that's a a lot more background in on the slides but it
was that's good to share
um this is just information because you've already um in the past we I me we
did a little bit more but you've already did that last November so this point I
will hand it back to you yeah well it's you know I mean we have the option of
doing a little bit more if we choose to um and and that's really up to us um or
we can hold off and make a bigger decision in November when this year is
done um depending on everybody's outlook on what the economy is and what's gonna
it we're we're almost halfway through or we're almost
three quarters of the way through our and we still are you know we're still
under staff so it's going to be our numbers we might be down on sales tax
but we will be ahead on expenses likely right I know you hate to say agree with
me on those things when I make those statements but it's true right yeah that
yes
I he doesn't want to commit anything's closer and closer yeah but
with with so with three qus of the Year almost done and still short on Staffing
not only at police but also here because you haven't stapped up not 100% no not
100% either and so we are uh we're going to be below on expenses on Staffing both
at PD and and here and then our revenues from last year
right is already 44 million right so that's only like 1.3 from L from 2023 so
I don't feel that we would our trajectory would go less than 44.5 and
looking at what our unassigned amount right now is well you could get impacted
on sales tax revenues especially if tariffs start going into place and
Things become more expensive and people are not purchasing things so there is is
a little bit of that but our expenses are still going to be lower because we
have vacancies we're already almost what half yeah three qu away so with 4.2
million this is why I always I'm hesitant to always say yes Eric hates to
to agree with these things well I will say that probably be less but just I
know you weren't pay p a number at the time um the previous Council has we do
have newus that have do have escalators in them for each of the each of the
fiscal years so I want to say TOA going to be less than last year because it's
not a flat line yeah we do have colus built into each of Theus for each of the
parking groups that we have in the city so is that is that the Assumption this
year three and a half three and a half and three and
half was approved I thought it was 3.25 3.25
and5 yes 3.25 3.25 and the third year so it's a little
bit more than the 3% that were originally factored into the long-term
financing plan but um all I'm saying is you might see expenses just like you
this year you might see expenses go up it might be less in budget is I'm saying
but I mean if we're just looking at the unassign amount right now which is the
4.2 million and in that policy or that component was the policy that was
designed right it says that well the 10% is the 10% difference in the year not in
the balance sheet number it's 10% on the
amount that changed during the year which was one point so so yes it's the
Delta the Delta only 1.27 that was the temp oh okay yeah it's not the that's
not the entire amount but if you know if you go year after year that unassigned
balance continues to accumulate and that's why the discussion always is if
that continues to grow should we put more into the P's Trust then they just
increase because you know we put 300,000 in and it grew again this year so now
we're sitting at 4.24 uh you know on on a signed uh with
300,000 going toward it and so you don't want it have it grow so much without
using it or something and and
just I mean I'm just thinking of May right now
this is point power point there might be former former for I just always say that
there might be other needs that we not think you have today and again and what
would what would some of those so if we if we had a sinkhole in the or something
something signif we also have reserves don't we and restricted not that we want
to tap into those but I'm seeing that if there's opportunity for us to put money
in cars right now to get some interest so that when we did have that rainy day
or warm off those are you can't so in a let's say we put more into the first
trust it can't be used for other things it can only be used for pension but it
could be used for just even our regular pension costs so you can put more in and
pull it out but to the extent let's say a big SLE that cost you 10 million you
can only sort of give yourself the you know say the 4 million that you uh have
for the pension you couldn't you couldn't take more out than that right
right so it's the question is and of the of the current Reserve policy with 5
million which is the working capital fluctuations of working capital during
the year so that we never have to borrow or do anything we always have enough
money sitting around to take care of our expenses because our income is
fluctuating and then the other four million is sort of for a downturn
economic downturn um we were very fortunate we never had
to touch that during the pandemic because sales tax dollars everybody kept
buying on Amazon sit we in good shape but U that's what that's for and so I
think there is a little bit more risk in the next couple years depending on all
these tariff issues and potential more inflation po potential uh sales tax
decreases sorry just a side note did I say this really we will have AG the plan
is is hopefully have HD at the next meeting to talk about sales tax they do
our sales tax forecast for us um so anyway that's that's
the you know that's or there could be other you know
other significant projects luckily you know we're in good shape on measure C on
the library our roads are in good shape thanks in so you know we're in pretty
good shape but you know like Mar almost had to file a bankruptcy because of the
sing remember that and you know that was
pretty bad and it took them two years to replace it because they didn't have the
money to do that so we don't want to get rid of all of that but I don't think
anybody wants to sit see us sit around with 4.2 million as well not using it
for something and so that's well so that's why that's the balancing well
when I was reading this my assumption is the unassigned amount of the 4.2 million
was at 10% % of that could be allocated to pars yeah it's it's not it's just the
10% was on the Delta that's what the policy was set for to make sure we did
something yeah um but we could certainly you know say okay we'll put another
100,000 in to bring it up to 400,000 you know we can certainly do that and take
it to council and see if they approve that um so that's that's a decision for
us and for Council to make up um what we want to do put that on a side want to
put more toward in to the to the pars trust or whether we want to leave it in
unassigned any what you think about for the future yeah I I would proceed with
moving into par another 100,000 yeah okay I'm fine with
that so um we will um I think it's it's good to be able to at least get some
interest on that and also it's not well there is cons yeah we do get interest on
this this money you know it's just it's a slightly higher interest part trust
than what we get with our own Investments so I don't want to say that
we're not getting interest on this money because we are it's just not as much as
we can get in the pars so just for information um the bulk of the city's
day-to-day operational money sits in U BL it's called local agency investment
which is the state pool basically it's the State savings account for all
municipalities um so a lot of our money sits there and
obviously the interest rat less than what you if you could invest it yourself
but it is a lot the more is bested somewhere else other than just in a
checking account okay so um I guess we make a
motion to put additional 100,000 in and put that forward to um city council yes
I okay so with that com see my public out there it's been there
all day yeah public um thank you for reminding me
um okay so could I make one comment you absolutely uh so there was um a question
asked about what was remaining at the library that needed to be completed and
so I know you know I've been I always get it wrong what do we call it I call
them the second chance signs but that's not what they're called the day two day
two was it's a whole um bunch of dat they call day two signs that are
happening at the library so it's I don't know why they're called day two I always
the day one is like the grand opening the big and then day two is like okay
now we're back fix all the stuff okay second day all the dust settles what we
doing and so there was a question asked we have one po that's still open at the
library to pay for any outstanding day2 items so I've been working with now now
engineer all I'm like what's your name again now they are making the day two
signs as we speak right now so we probably have about $30,000 left and the
Art Exhibit piece too is that included there all of that's included no art
though right like so there's there's also in on the wall in the NN portion of
the library will be an art display that we're going to get local artists I talk
I again back to me he because I need something to
do I said great I'm going to talk to you about this so um anyway we're going to
try to get local artists um to have their things on great in the Neil snook
and so that whole structure an has been working on to get that finished so that
along with these is that going to be rotating for local artists or is that
just gonna be kind of St okay there's a lot of people in the public that have
come forth and said they need space for art and so we're gonna have a little
committee because it's got to be you know there are a lot of young kids in
there too so we got to make sure it's appropriate art we have to warn
everybody that because there are a lot of young kids in this what could happen
to their art um Alan Vincent is a you know our former council member is a
wonderful photographer and so I sort of roped him in saying could you run this
thing run a little group with local artists to be a committee to review art
exhibits and takes charge of that because the library staff does not want
anything to do with that they don't want to do it so um that that's been our
thought process to do that but that installation piece is is part of this
yes whenever you hear Eric make a little jab at me that and still spending money
at the library there still an OP I I came into that project at the
very end so I was never actually sure what the day two artwork was going to be
cost to make and install and it's only been recently that we met with now yeah
it got lost in the confusion when on left and and and stepped into that role
so so we but I just paid the so Thomas Swan is the designer that did the signs
for day one he's we just sent him the first installment so he's moving forward
with production on the signs okay so I don't I don't imagine that we have more
than $30,000 every fees left and is are the friends going to handle additional
signs on the don't wall or is that going to be us you mean the donor wall in the
center of the lbr right when you walk I thought that was the friends okay those
are the friends I think it's it's like almost well it starts so the friends
well we can go to this later but um maybe not this is the meeting yeah the
next meeting oh yeah let's set the next meeting oh yes uh when when do you need
another meeting so it would be the week of March 24th
and the 24th is
24 no March
17 I know you have some other duties as FTC chair
yeah let me see I got Monday morning is good for me for the 24th let me just see
they sent me a bunch of dates today for MTC
that okay so the 26th uh is so I I'm all right that week
um can't do that Wednesday morning do Monday do Mondays
are Mondays my two Tuesdays are are like
impossible yeah we'll just have to so can we can we do first thing in the
morning yeah okay because we used to do 8:30 and Eric RS Donuts so s it to a FX
R for me so is it like having is it like
having a burrito yeah because dinner tonight will be late because at the
mayor's conference so I'm I'm holding myself off to the end of the meeting to
have one it's kind of carry me over till dinner at the time yeah okay so um 8:30
on the on the
24th of March thank
you oh just so I know ahead of time I'm just I have I might have
something I just want to know if the 27th is an
option hold up you mess me up
sorry I mean the hor forth might be fine I just I'm just I I might have something
that day that I still
5050 oh God MTC call me back about one Creek
issues okay U the the 27th yeah yeah that should be all right just the 26th
is bad for me that week JC's got me all day on that day can we do morning on
yeah and I might not have to sitting on or might have to sit on that
okay so we're locking in the 27th then will you have when just send out a
calendar and attend it for Thursday yeah is there a preference among the two
of you for I think Monday is Monday prer or
Thursday either way morning offer if you have a possibility rather just think
about it just lock let's just do the 27 since you
not
sure now can thank you okay