[0:56] Good morning, everyone, and welcome. The meeting is now called to order at 9 o'clock a.m., we will now have a moment of silent, silent reflection, or silent prayer.

[1:20] Thank you. Please join me in the pledge of allegiance.

[1:44] Welcome, everyone, for the record. This is the board meeting of March 29th, 2016. Will the clerk please call roll.

[1:54] Supervisor Viyapudua, Supervisor Miller, Supervisor Wynne, Supervisor Elliott,

[2:01] Chair Sabian.

[2:02] Present.

[2:03] Thank you.

[2:03] We will start the morning off with a proclamation and then a commendation.

[2:08] So we will begin with a proclamation declaring the month of April 2016 as sexual assault awareness

[2:16] month in San Joaquin County.

[2:18] So I accept that proclamation on behalf of the community.

[2:21] We have Kate Masek, Marketing and Development Director of the Women's Center Youth and Family Services.

[2:28] So as I'm approaching the bias, will the clerk please read the proclamation?

[2:35] Where a sexual assault is a violent crime with public health implications for

[2:40] every person in San Joaquin County, as a victim, a survivor, or as a family member,

[2:45] or significant other or neighbor, co-worker of a victim or survivor, and whereas no one person, organization, agency or community, can eliminate sexual assault on their own, we must work together to educate our entire population about what can be done to prevent sexual assault, what can be done to support victims or survivors and their significant others, and what can be done to increase support for agencies providing services to victims or survivors, and whereas agencies

[3:15] agencies such as a woman's center, youth, and family services have led the way in Sandwell King County in addressing sexual assault by providing 24-hour help line services and responding to emergency calls by offering support and comfort to those impacted by sexual assault during medical exams and criminal proceedings and empowering those impacted by sexual assault to charter their own course for healing and whereas ending sexual assault in Sandwell King County must include active public and private efforts including

[3:45] conversations about what sexual violence is, how to prevent it, how to help survivors

[3:50] connect with counseling and other support services, and how to work together as community

[3:55] to better address sexual violence.

[3:57] And whereas a woman's center, youth and family services request community support as it

[4:01] continues its effort for eliminating the sexual violence in Samo King County, to create a

[4:06] future where all women, men, and children can live free from violence and exploitation.

[4:12] Now, therefore, be it resolved that the San Joaquin County Board of Supervisors just hereby proclaim the month of April, 2016, as sexual assault awareness month in San Joaquin County passed an adoptive this 29th day of March, 2016.

[4:31] Thank you very much.

[4:32] I'd like to thank the supervisors for their support of our organization.

[4:36] Women's Center Youth and Family Services is 40 years old this year with the history of serving because of sexual assault domestic violence, human trafficking,

[4:44] and homeless and runaway youth.

[4:47] I do have some materials for the awareness month

[4:50] that I'll give to the clerk for the Board of Supervisors

[4:54] so you can have all of those, including the awareness pin.

[4:57] The awareness month color is teal, so I ask that you wear these,

[5:01] that you tell people why you're wearing these

[5:03] to help us raise awareness.

[5:05] I checked the statistics yesterday to give a comparison

[5:10] of what numbers of sexual assaults are actually reported

[5:14] to law enforcement in San Joaquin County compared to the numbers of people that we see.

[5:18] And on average, between 130 to 175 rapes are reported to law enforcement agencies in San Joaquin County each year.

[5:26] By comparison, we serve almost 1,300 individuals on our helpline every year.

[5:31] Last year, we had over 1,300 victims and there's significant others receiving crisis intervention services,

[5:37] is over 1,000 individuals, you have advocacy and accompaniment to court, and the list goes

[5:45] on in terms of our support groups, our help with accompanying individuals to Sam King

[5:50] General Hospital for rape exams to support them throughout their recovery process.

[5:55] We know that victims are not going to come forward if they don't believe that the community

[5:59] is going to support them, if they're not going to be believed, and we know the answer is

[6:04] to talk about it, to raise awareness, so let people know that we stand with survivors that we will not tolerate a culture that allows rape to happen.

[6:13] I greatly appreciate Chairman Zapy and sending out the memo to all of the county department heads about denim day, and we're really excited to be able to do this again this year.

[6:23] We had over 2,000 participants countywide last year in denim day, and including over 750 county employees, we hope that will continue to grow this year as well.

[6:33] It's a way to raise awareness.

[6:35] It's a way for us to raise funds to support our services for survivors.

[6:40] And Denim Day this year is April 27th.

[6:42] I also have materials for you for Denim Day, including a Denim Ribbon, and the Denim Day

[6:48] San Joaquin Sticker that I hope you'll wear on April 27th, and you'll let people know why

[6:53] you're wearing these items to support victims.

[6:56] And to change the harmful attitudes that still exist about sexual assault in our community

[7:01] across the country and across the world.

[7:04] The history of denim day goes back to a court case in Italy in the 1990s, where a young girl was raped by her driving instructor.

[7:13] The conviction was overturned by the Italian Supreme Court simply because the victim wore tight jeans when she was raped and the court concluded that as a result she must have helped remove them and thus gave consent.

[7:24] The next day women in the Italian Parliament came to work wearing jeans, email and mail legislators in California at the state level did the same and this became the spark to a worldwide outrage against these harmful myths and misperceptions that still persist about sexual assault.

[7:42] So by wearing jeans, by donating on denim day, the members of the community are saying that we won't tolerate this in our community, we won't stand for sexual assault, and we support and we believe the survivors.

[7:56] Thank you very much for your time today, and thank you for this recognition and this very important issue in our community.

[8:02] Thank you.

[8:02] Thank you so much, Ms. Masek, to you, your organization, and all the other organizations and individuals who work hard to help heal victims of sexual assaults and bring awareness to this very important issue.

[8:15] At this time, if there are any comments from the board,

[8:19] all right?

[8:21] Very well, thank you so much, we appreciate your hard work, thank you.

[8:30] We now have a recognition of the San Joaquin County Purchasing Department for receiving the 2015 National Achievement of Excellence in Port Curement Award.

[8:40] by the California Association of Public Procurement Officials.

[8:44] I'd like to ask Mr. John Drake, our Director of Purchasing and Support Services to come to the podium.

[8:49] We have both a Board Commendation and an Agency Award presentation.

[8:55] So I would first like to present your department with our Board Commendation.

[8:59] And then I will ask the President of the California Association of Public Procurement Officials to present the Agency Award.

[9:05] So, having said that, would Ms. Duzinski please read the commentation?

[9:11] Whereas to recognize a significant role that public procurement professionals have in assuring the efficient use of taxpayer dollars by the effective and ethical use of procurement practices, the National Procurement Institute established the achievement of Excellence in Procurement Award or AEP Award.

[9:29] And where is the AEP award recognizes organizational excellence in public or nonprofit procurement based on high scores achieved from standardized national criteria, including ethics, training, innovation, continuous improvement, contractual development, professional certifications,

[9:48] e-procurement, leadership in the industry, and many more.

[9:52] And whereas the counties procurement professionals are responsible for the purchasing of goods and services,

[9:59] contract execution, bids and requests for proposals, as well as developing procurement strategies to obtain the best product or service at the best price.

[10:08] And whereas the San Joaquin County Purchasing and Support Services Department was awarded the 2015 AEP award for

[10:15] where it's demonstrated excellence in public procurement practices.

[10:19] And whereas this AEP award is a great honor for San Joaquin County as it was one of only

[10:24] 50 counties in the United States and Canada that achieved this award.

[10:28] Now therefore be it resolved that the San Joaquin County Board of Supervisors does hereby

[10:32] commend San Joaquin County's purchasing and services department for being awarded the

[10:38] 2015 National Achievement of Excellence of Procurement Award and recognize the outstanding

[10:44] efforts of the department staff who work so conscientiously to fulfill the county's procurement needs.

[10:50] Past and adopted this 29th day of March 2016.

[11:01] Now I'd like to call up Mr. Craig Raider, president of the California Association of Public Procurement Officials, who will present the agency award.

[11:15] Good morning, Chair and members of the board.

[11:17] My name is Craig Raider on the president of the California Association of Public Procurement Officials, also known as Capo.

[11:22] So on behalf of Capo, I'd like to applaud Mr. John Drake, Mr. Johnny Terry and the entire procurement staff at San Joaquin County for the hard work and dedication that made possible to be a recipient of this internationally recognized award.

[11:35] This is the first award for San Joaquin County, and I'm sure it's the first of many to come.

[11:40] The procurement profession is rarely given much praise or recognition, yet performed by vital and much needed service to the organizations that we support.

[11:47] This is not such an easy task, considered all the federal, state, and local laws, regulation,

[11:52] statutes, and policies that impact how we procure the products and services in the public sector,

[11:57] which is why we have typically seen as a roadblock.

[12:01] So just look around you.

[12:02] Everything you see was purchased by somebody, whether it's this podium, the microphone, the computers,

[12:09] the flag, the monitors, everything was procured by a procurement professional.

[12:13] Your procurement staff works hard to ensure its customer's either products and services required,

[12:18] all while complying with lily mandated requirements.

[12:22] The receipt of the AAP recognition is the receipt of the AAP is recognition that they do it and they do it.

[12:29] I'm honored and privileged to know most of your staff for many years mainly through our involvement with CAFO.

[12:36] I met Mr. John Drake several years ago when we were both serving on the Board of Directors.

[12:40] I've known Johnny Terry for roughly 20 years when we were mainly co-workers at that county of Sacramento.

[12:45] John and his staff's involvement in CAFO, either supporting the local Delta chapter, volunteering for the annual conference, or as in Johnny's case, voluntary to chair CAFO Technology Committee for about several years, is a testament to their commitment to the procurement profession.

[13:00] and the county of San Joaquin and has played a big role

[13:03] in making the receipt of this award possible.

[13:06] The AEP award confirms the consummate professionalism

[13:09] of the procurement and support services staff.

[13:11] Their desire to provide the best level of service

[13:13] to their customers and to focus continue

[13:15] on improving processes and operations.

[13:18] I am proud to join you in celebrating success

[13:21] and applaud John and his entire staff.

[13:23] Congratulations on receiving this receiving award.

[13:46] Would you like to say a few words Mr. Dre?

[13:48] Thank

[13:53] you, Mr. Chairman.

[13:55] As Mr. Raider outlined, this AEP award is the industry standard in collecting and evaluating best practices in our field.

[14:05] For example, some of the criteria not previously mentioned are providing ongoing contract training, offering procurement cards for county employees, conducting a continuous and relentless review of transactions to ensure compliance and complete process transparency.

[14:22] We are elated that we are successful in achieving this honor.

[14:28] I'd like to thank the County Administrator and her office for their steadfast support.

[14:33] I'd like to publicly thank Mr. Rader for being here today and presenting us with this award.

[14:38] He and Sacramento County have been a strong supporter of ours for many years now.

[14:43] Thanks, Greg.

[14:44] I really want to recognize the purchasing and support services team.

[14:48] Sometimes our jobs do not make us very popular with our county departments.

[14:54] It's hard being the messenger, but that's okay.

[14:56] It is our role to ensure that all processes are present.

[15:00] Deliver exemplary levels of customer service and professionalism. We constantly walk the fine lines between county interests, governing codes and ordinances and the vendor community. In the end, our sole objective is to properly contract for goods and services that deliver the right quantity and quality at the right time for the right price. I also want to take this opportunity to recognize our county departments and their respective teams. We work with

[15:29] every single one of them and I'm happy to announce that we have developed an effective working

[15:36] partnership. Finally, I'd like to acknowledge Johnny Terry, purchasing step-of-your-director.

[15:42] He led our submission effort which is a large undertaking and we were successful.

[15:48] This is something we've been eyeing for seven years now and Mr. Terry led us in delivering this

[15:53] award for the county. So Mr. Chairman and members of the board, I am honored to accept this award

[15:59] on behalf of San Joaquin County, and the hard-working, purchasing and support services team.

[16:06] Thank you, Mr. Drake, to you and the rest of your departments.

[16:10] Are there any comments from the board?

[16:12] Just Mr. Reader, thank you for coming down, making this trip and to Mr. Drake, thank you for everything you've done, especially to your staff.

[16:22] This is a very prestigious award, and it just shows, you know, a hard and you and your staff have been working.

[16:31] Thank you so much.

[16:36] Thank you, Chair.

[16:39] Obviously, your job is very challenging and difficult, and I understand that sometimes the

[16:45] criticism that you and your staff receive

[16:48] that involvement would return it for a number of years and other agencies.

[16:53] I would just add one thing, which I think is most important.

[16:56] And last year, I was kind of spearheading a major project for the county, and I had some questions

[17:02] in regards to the process that you undertook in regards to a request for proposal.

[17:11] And I would say when I met with you, I was extremely impressed one because obviously

[17:15] you're not only, but you had a list of steps laid out that I could actually look at and

[17:21] to go through and keep and remind myself, et cetera,

[17:24] which was extraordinary because I just expected

[17:26] to have a short conversation.

[17:28] I think we spent more than an hour.

[17:30] The reason I bring that up is because I think

[17:32] that one of the things that your department

[17:35] and you as the director demonstrate

[17:38] is the caliber of our county and our departments

[17:41] and our leaders in regards to getting the job done

[17:44] for the residents.

[17:45] The second one is your personal engagement.

[17:49] Certainly with me, you know, trying to find out how the process works and taking the time because I know you're busy to explain it to me and show, you know, it's set by step, which I really appreciate it, which also was beneficial because I got a lot of calls in regards to the process, which I was able to sound halfway intelligent when I responded.

[18:06] So, I thank you for that, I thank your department for the great job they do, and again, well

[18:12] deserved, and I appreciate all the support that you give into the board, and certainly

[18:15] to the residents of Selma King County, thank you.

[18:18] Thank you.

[18:19] I would just also echo my colleagues, thank you for all your hard work.

[18:24] I think it's always difficult when you're the group that has to impose order, but I think

[18:32] your team does a great job in being consistent and being fair and it provides a lot of assurances

[18:40] for us when we interact with the public to be able, exactly as Supervisor Winds said,

[18:45] to be able to point to a process that is adhered to very consistently.

[18:52] It gives all of us and I think the public a great deal of comfort knowing that their tax

[18:57] dollars are being booked after and are really being spent in the most cost-effective way.

[19:05] So thank you.

[19:06] The last thing I would like to say is, would you like to have Mr. Terry and the rest of

[19:10] your team stand up so we can all acknowledge them?

[19:14] I would like to see them all.

[19:17] We'd like to take a picture with you if you don't want to.

[19:18] Yes, you bet.

[19:20] Thank you all.

[19:30] Well, thank you, Mr. Drake, and the entire purchasing department for your outstanding efforts

[19:34] Through out the years as evidenced by your receipt of this very prestigious award, it's certainly an honor to have an award like this being one of only 50 counties in the entire United States and Canada to receive such an award.

[19:50] So just high testament to the standards of excellence that you oversee throughout your department. Thank you very much for all your great work.

[19:58] Thank you all for your generous comments. Thank you.

[20:01] I'd now like to ask the members of the board to join me for a photo.

[20:08] Members of the department, please join us as well.

[21:19] In on in our agenda, we have the approval of the minutes.

[21:23] We have for the board's consideration the minutes of the regular meeting of March 15, 2016.

[21:31] Is there a motion in a second to approve those minutes?

[21:34] So move.

[21:35] Second.

[21:36] Moved and seconded.

[21:37] The providers please cast your vote.

[21:44] Motion carries five to zero.

[21:47] So much moving on to appointments to boards and commissions.

[21:51] We have no appointments for approval this state,

[21:54] so we will move on to public comments and the consent items.

[21:59] So now's the time for public comment on matters

[22:01] within the jurisdiction of the board of supervisors

[22:03] that are not listed on the agenda

[22:06] and any matters listed on the consent agenda.

[22:09] The request that she fill out a comment form,

[22:11] If you address the board, there is a time limit of three minutes for these comments.

[22:16] There is a device on the podium with a green yellow and red light.

[22:21] The yellow light will come on 30 seconds before the end of the three minutes

[22:24] with regard to public comment. The law strictly limits the ability of board members to discuss matters

[22:30] not on the agenda, so this is not an appropriate time to have a discussion

[22:34] with the board regarding your comments. We ask that you refrain from personal attacks during

[22:39] your comments and that you address all comments to the Board of Supervisors, not to the audience.

[22:45] Comments from the public may not reflect the viewpoint of the Board of Supervisors.

[22:53] I have a request from Mr. Kevin Schauver.

[22:57] I'd like to approach the podium.

[23:02] Good morning, Mr. Schauver.

[23:03] Good morning.

[23:05] My name is Kevin Schauver.

[23:07] I'm a lifelong resident of Stockton.

[23:09] I'm here today representing the Lincoln Highway.

[23:13] if you're not familiar what the Lincoln Highway is, it's America's oldest highway.

[23:18] It runs right through Stockton and Samokington.

[23:23] Over the last couple years ago, I started a project here in Stockton to have

[23:31] the signage installed along the route in Stockton.

[23:36] And there are 19 of these signs that go from the city limits

[23:39] It's on lower second eight mile down through South Stockton.

[23:45] They go right down Pacific Avenue, Maple Street, El Dorado and Center.

[23:52] I'm here today because I have something for board member Zapien.

[24:01] This should have gone to him when he was on the City Council.

[24:04] So some snags in getting this printed, some procrastination on my part, Mr.

[24:14] Zapion leaving the council to become a board member, I'm finally here to give it to

[24:24] him.

[24:24] I have a certificate of appreciation for you, Moses, and let's give it to you.

[24:37] I'm not only given this to Moses as the Lincoln Highways, with the Lincoln Highways appreciation but also with a personal thanks.

[24:56] Thank you.

[25:12] Thank you.

[25:14] Yes, Mr. President.

[25:15] Can you name those streets again?

[25:21] The Lincoln Highways in Stockton, the Lincoln Highway through Sam King County came down from Galt, the lower Sacramento road, Pacific Avenue, which back then was still called

[25:36] a couple block, a two-block section of Maple Street,

[25:42] Alderado from Maple to Weber, Weber from Alderado to Center,

[25:48] Center Street down to Turnpike Road and out Mantea Road

[25:52] on into the South County.

[25:55] It was later rerouted on what is now Highway 99 out of Lodi

[26:00] I do the area of the Wilson Way exit of 99 Newton Road,

[26:06] Cherokee Road, Waterloo Road, and Weber Avenue,

[26:12] and then the same route as the original route down

[26:16] through South Stockton.

[26:21] I'm not sure which board member is the representatives

[26:26] for Woodbridge and French Camp, but we'd like to get signs up in those towns also,

[26:36] and I'll contact whoever represents those areas in the near future.

[26:45] Very, my sister's in the back before you leave your number and

[26:53] So my district can see the

[26:55] riser wins.

[26:56] Okay.

[26:58] All right.

[26:59] Thank you.

[27:00] Thank you.

[27:01] Again, Mr.

[27:01] Shahbab Das.

[27:04] Our next request is from

[27:06] SOT

[27:06] Do you know Ken?

[27:07] Do

[27:30] you know Ken?

[27:31] Do

[27:35] you know Ken?

[27:37] I deteriorated in a few months.

[27:44] I lost vision.

[27:48] It's from Hedgehog, memory.

[27:53] Every body back, I cannot even walk.

[27:59] from outside their apartment outside. Why? They are playing a sand oak wind

[28:08] cow tea, so dull.

[28:15] Secondly, I cannot see clearly, but I could

[28:22] For

[28:25] charity, Mr. Girl's fashion body,

[28:36] however,

[28:42] Mr. Boss Elliot, so happy to see you there

[28:48] even you have it.

[28:51] So far, I love that like in me.

[28:56] Secondly,

[28:58] share the pain to be the happiest,

[29:07] try to be happy, and make me so happy.

[29:11] is your responsibility. You are not a care. The young you have a

[29:24] lot of capacity. Work with

[29:40] You

[29:43] have too many criminals immoral, like the demotions, the beating, I have been

[30:01] Lim, to come, of the family, airy, soft center, and, in the fake council, and council of center

[30:11] really, post the rescue mission, in charge of the homeless people,

[30:21] I suffer. Over 23, yes,

[30:29] because everybody knows I had been kidnapped in mental health,

[30:37] lock of prison. You know it. So now the conclusion is.

[30:44] Thank you, Ms. Nguyen. Fortunately, your time is up.

[30:48] Thank you,

[30:54] Ms. Nguyen.

[31:09] Thank you, Ms. Nguyen.

[31:10] Thank you,

[31:23] Ms. Nguyen.

[31:23] I'm going to have to ask you to make a seat. Thank you.

[31:29] Thank you. Ms. Shirley Maynard?

[31:47] I live at 35, 35, more to you. I've been here. That's right. I've been here several times before,

[31:57] and I'm asking for the same, I'm stating the same reason why I'm here, because I've

[32:03] I live in this house, and I've been to the county office on hate system, and I've been

[32:10] here 34 times, and the condition has not gotten any better.

[32:15] He said it was going to send someone, he said it was going to advertise, advertise, get a contractor

[32:22] to prepare my house.

[32:24] My house has been, you know, I live there, and I'm going to stay there, I've been there all my

[32:30] life. I moved, I lived, my mother purchased it. She and my father purchased that house in

[32:37] 50, 53 and we grew up in the house on Warfield. I'm in the district one, Cardinal's,

[32:46] Filipino. But anyway, I would like someone to come out and repair some of the things that

[32:53] It's really needed to frame my house up to code.

[32:58] I have asked different people to do my fence and my fences, and I don't have one to knock

[33:07] it down, and I need a fence.

[33:09] I need to, uh, foundation paired in the house, because the house is crooked, it's like this.

[33:18] And I would like someone to come out do something.

[33:21] I know somebody.

[33:22] you can't find a contractor and that's understandable but I need somebody to

[33:29] come out and just research a place so I can help in my classes. It's really

[33:39] before I get deteriorated and I need help out there and I know it's money in

[33:47] city, money in the county, and it's money that somebody can do something about, because

[33:54] I can't, I don't like living like that in that condition.

[33:58] It's in the community, and everybody knows that the community, everybody is supposed to

[34:05] afford it to the colds out there.

[34:08] So what I'm asking is, because the thesis I want out, I evaluate the place, follow me and

[34:14] I can't tell me that nobody ever came out, but I really need and that's what I need and I want to thank you.

[34:24] Thank you, Ms. Maynard.

[34:26] Those are all the requests for public comment that I have.

[34:29] Is there anyone else who would like to provide any public comment at this time?

[34:35] There being no further public comment, we'll move on to the consent agenda.

[34:40] Consent agenda consists of items number one through 33.

[34:43] are there any requests to pull any of those items for questions or comments?

[34:48] I'd like to pull item number 6 for comments.

[34:55] Pfizer-1?

[34:56] I don't know number 2.

[35:01] Any additional items?

[35:03] 6, 15, 33.

[35:14] Item number 6, supervisor Miller.

[35:16] Thank you.

[35:17] I just pulled this for a couple of comments and I'm so pleased to see this.

[35:23] This is such a good example of intergovernmental collaboration.

[35:28] We started out last year, City of Stockton approached us wondering if they had some one-time

[35:37] money, if they could get us to provide some additional spaces for summer job training

[35:44] for youth.

[35:46] Our staff worked really closely with them, and very quickly we were able to put this thing

[35:52] together. And now this year the city is doubling the amount of their commitment. So I want to thank

[35:59] our staff for continuing such strong collaboration with the city. I also want to really applaud the

[36:04] city of Stockton. This is, you know, given their very constrained fiscal situation with being

[36:13] a prime necessity for them is to adhere to their bankruptcy exit plan that they are

[36:21] committing some additional one-time dollar to the youth in our area, I think it's really commendable.

[36:30] And so I'd like to applaud them, also encourage them to continue this kind of collaboration with the county.

[36:36] It becomes very cost effective for the city.

[36:39] They can really, those dollars go.

[36:41] They don't have to invent a new program.

[36:43] They go right into summer job training for our young people.

[36:47] So, I just wanted to thank both our staff and also the city staff.

[36:51] This is a really great example.

[36:53] Thank you.

[36:54] Thank you so much, Supervisor Miller.

[36:55] Supervisor Villapurri, you had a comment on this?

[36:57] Yes, through the chair, thank you.

[36:59] I would also agree with Supervisor Miller.

[37:03] When I said, I said also, sit on the committee for the Parks and Rec.

[37:08] One of the committees that we all sit on.

[37:12] The meeting last night that we had, the question was that years back they used to have a

[37:17] Theater, art, drama, and they were trying to see if there's any way that they could add

[37:23] that to only that they had years ago.

[37:30] That's just a question.

[37:33] Thank you.

[37:35] Thank you, Supervisor Villapudra.

[37:37] Supervisor Wynn, item number two.

[37:41] Thank you, Mr. Chair.

[37:42] I just brief comment, I was speaking at a dinner last Thursday night and after I made my presentation there was a comment from the audience in regards to this item.

[37:53] And then from the rest of the proud that was there.

[37:59] And I guess what I'd just like to say is I appreciate my fellow board members certainly county council in regards to revisiting this issue because it has brought some clarity.

[38:09] to the agricultural and the county,

[38:12] agricultural, and the county in regards to these type of easements.

[38:15] So I think that's a plus anytime we can provide clarification

[38:20] to the public in regards to how they handle particular issues.

[38:23] And so that's just my comment.

[38:25] Thank you.

[38:26] Thank you, supervisor one.

[38:27] Supervisor Viaputo, item number 15 and 33.

[38:40] This is just a quick question.

[38:42] If you can just elaborate and explain to me what we're doing.

[38:46] and then the second one is I saw that the mobile crisis support team is going to

[38:53] expire. Are we going to also bring that back or is it as it's

[38:58] censored and buy for a grant?

[39:04] Jim Garrett, our new director of

[39:06] behavioral health.

[39:18] One second.

[39:21] There you go. Okay. There we go. As a result of the

[39:24] Affordable Care Act, we had an increase in the volume of medications we run

[39:27] through our pharmacy and with the increase price of those drugs to, we've seen a $973,000 increase in expenses.

[39:39] That's been offset by a $1.2 million revenue increase.

[39:44] Though the difference, I believe, is about $272,000 is being repurposed, and I've got that $127,000 being repurposed to support our new mobile

[39:56] crisis support teams, those in their design are funded, the staffing on those

[40:02] was funded for a period of two years, and through the application of those

[40:07] services we expect them to be appropriately continued funding, but this was an

[40:15] opportunity for us to continue to fund them at least through part of next year and the staffing and the things.

[40:21] and then I see there is no additional cost to the county.

[40:27] Correct.

[40:27] No additional cost to the county.

[40:28] Very good. Thank you very much.

[40:30] Thank you.

[40:38] Same thing, number 33.

[40:41] Just if you could just...

[40:44] Good morning.

[40:46] You can just elaborate what we're doing here.

[40:49] Yes.

[40:50] Surprise.

[40:50] I hope we do our Christmasology Director of Public Works.

[40:54] This is a good news coming in.

[40:56] as an, you know, appropriation increase, actually.

[41:00] So what we did was the Department of Public Works entered into an agreement with the city

[41:05] of Mantika to get their ways to a lowly transfer station.

[41:11] So we're getting about, you see, what the amount is.

[41:16] We're getting a revenue of approximately $1,000,000,000 and $22,000 from the city of Mantika for

[41:25] getting their ways to our transfer station. But we, the board also obligated the county to take

[41:33] that solid waste that we collect from the city of Manthiga that goes to the Low Lakes transfer

[41:38] station to the privately owned forward landfill. So we pay the forward landfill $138,000. So in effect,

[41:48] like, you know, we net approximately $300,000 in revenue to the county. So we take more

[41:54] from Antica than what we pay to forward to take it to that landfill.

[41:59] Since this agreement was done after the budget was approved,

[42:03] we need that when we did the media budget,

[42:07] we looked at these things.

[42:08] We need the appropriation authority to make this transfer to happen.

[42:13] We get that and it goes back to our general fund.

[42:16] I'm sorry.

[42:16] We get that and it goes back to our general fund.

[42:18] It goes back to the SWF basically,

[42:21] it's always enterprise fund.

[42:22] Very good. Good news. Thank you so much.

[42:26] Thank you.

[42:27] Thank you, Supervisor Veipudra. That concludes discussion on the consent items.

[42:32] Is there a motion in a second to approve the consent items numbers 1-33?

[42:38] Motion to approve consent.

[42:40] Second.

[42:41] Moved and seconded. Supervisors, please cast your vote.

[43:05] Motion carries 5-0.

[43:07] All right, moving on in our agenda, we come to our scheduled morning public hearing.

[43:17] This is the public hearing to adopt a resolution ordering the cancellation of certain authorized

[43:22] but unissued general obligation bonds of the Stockton Unified School District and the

[43:28] aggregate principal amount of $30 million.

[43:31] We are going to present to this item is Mr. Shabir Khan, the county treasurer and tax collector.

[43:36] Good morning,

[43:51] Mr. Chairman and board members.

[43:53] We have a, I have with me, Nicole Roberts of a Dale Scott in company, financial advisor

[44:02] for Stock and Unified School District, and Lisa Grant Dawson, CBO from Stock and Unified

[44:10] School District.

[44:11] Lisa will make a brief presentation.

[44:15] Nicole will, I'm sorry.

[44:17] So after that presentation, I recommend that you conduct a public hearing to adopt a resolution ordering the cancellation of version authorized but unissued general obligation bonds of the Stocking Unified School District in the aggregate principal amount of $30 million.

[44:54] My name is Nicole Roberts, I'm with Phil Stockton Company.

[44:58] We represent Stockton, if I-

[45:00] The school district does their financial advisor. Going to go through a brief presentation of the recent history of the school districts measure Q&A bonds.

[45:11] In 2008, the school district went to the voters for authorization for 464.25 million in authorization for the projects identified by the school district.

[45:29] The election passed.

[45:30] That's a little bit under 69% approval rating, which is a great support for the school district.

[45:37] The bonds authorized had a provision, the Proposition 39, where there is a soft tax rate

[45:43] cap of $60 per 100,000 per evaluation.

[45:48] The tax rate applies to the selection and any bonds series under the selection.

[45:53] The district followed its plan to issue bonds in 2008-1910, but a third of the way through

[46:02] the bond authorization program, bond issuance program, the recession hit, and the district

[46:09] was unable to continue with this program.

[46:13] On slide two, it goes the total percent change of the disfiguration of the properties in

[46:23] in the school district.

[46:25] During the election, seven election,

[46:27] we had planned for a rise in growth

[46:31] and the district did not expect,

[46:33] nor did we very steep decrease in assess valuations.

[46:39] Between 2010 and through 2013,

[46:42] the district saw 24% decrease in assess valuation.

[46:46] That, of course, with that decline

[46:48] the authorization for measure Q hit that $60 tax rate in the decision was unable to continue with the bond program as planned.

[47:02] The next slide, we developed an alternative for the district by going back to the voters and asking the voters to reauthorize a portion of the measure Q bonds.

[47:11] Then 2012 went back to the voters that better support than actually the

[47:16] Measure Q authorization at 74% approval and reauthorized $156 million which was

[47:26] about half of the uneasured portion of the Measure Q bonds. This gave the

[47:32] district a new $60 tax rate limit to proceed with their bond program that's

[47:38] plan. You can see the district issued that in 2014, $65 million. We completed a bond

[47:47] issuance this past winter for $30 million and the district plans to continue with this

[47:52] program issued the last tranche of these bonds that are around spring of 2017 or 2017.

[48:01] So the next step in issuing the authorization, the authorization of measure e-bonds kind of follows this path shown on the slide where the next step was to the district promised to voters that we would not go past the originally authorized

[48:23] a 464.5 million authorized from measure Q. So this kind of goes by step by step where

[48:31] first we authorized the measure Q bonds issued 152 million. There was that the recession and 312

[48:40] million became unavailable to us because of $60 tax rate. So we went back to the voters,

[48:49] is asked for a reauthorization of about a third of that original amount, 156 million,

[48:55] with the intent that with issuance of the measure e-bonds, we would decertify a like portion

[49:01] of the original measure, two bonds, zone in step three there.

[49:06] So this shows us upholding that promise to our voters that we would not go past the total

[49:15] 464.5 million total authorization.

[49:22] The last slide shows that same thing on tabular form, the measure Q bonds at the top showing

[49:30] the first series of bonds that the district has sold, 2008-2014, 2011, apologize.

[49:37] And the bonds that we've issued under measure E in 2014, the 65 million and the 30 million

[49:44] this past winter with the intent of the resolution we're asking for you to pass today.

[49:51] Add that line item for measure Q. You certifying or canceling the like amount of measure Q bonds

[50:00] that we issued in this past one of the 30 million like we did last in 2014 of the 65 million.

[50:09] That is the end of my presentation.

[50:11] I would answer any questions.

[50:14] Thank you so very much.

[50:15] Questions and comments from the board

[50:17] before I open up the public hearing?

[50:20] All right.

[50:23] I hear by declare this public hearing open.

[50:26] Is there anyone who would like to provide any comment?

[50:42] Maureen again, Ms. Nguyen?

[50:45] Elk Nguyen.

[50:47] I don't know anything about something you find.

[50:54] Done.

[50:58] However,

[51:00] I want to send an opinion

[51:03] by opinion, not when you fight.

[51:07] And others, group,

[51:12] home business,

[51:17] cry,

[51:20] all of that.

[51:22] US, Europe, the rest of the world.

[51:29] How dare, many women,

[51:33] in any group,

[51:38] they talk about more money

[51:42] for personal gain.

[51:48] The conclusion is, I know nothing about this bond,

[52:01] wrapping any kind of money from any group is

[52:10] so shameful.

[52:13] Keep looking at them.

[52:16] Not just adults and seniors, look at kids,

[52:21] one of the five in Hungary, in Missouri,

[52:29] so the conclusion is, I don't know anything about the

[52:33] bond authorization. Now it's time to cut Benning,

[52:43] especially an illustrator,

[52:50] law, and what do you call it?

[52:53] Attorney, up of any kind of the

[53:00] officer have to cut,

[53:10] that's what one has to say.

[53:14] Ms. Nguyen, is there any further public comment?

[53:20] There being no further public comment, I hereby declare this public hearing closed.

[53:25] Bring back the agenda item back to the board.

[53:28] There are no comments.

[53:29] I

[53:35] will, hereby, entertain a motion and a second.

[53:40] Move to approve, staff recommendation.

[53:42] All right, second.

[53:43] Moved and seconded.

[53:45] To provide just please cast your vote.

[53:53] Motion carries five to zero.

[53:56] That concludes the public hearing item.

[53:58] We're moving on to our items under discussion, general government.

[54:03] Our first item under that section is the acceptance of the Kyron report on funding alternatives.

[54:09] for the San Joaquin County Employees Retirement Association and approve an additional annual county contribution ranging from 0% to 5% a payroll for the next 10 years effective January 1st, 2017, December 31st, 2026, pay down the

[54:28] and funded retirement liability and an accelerated time frame.

[54:33] Here to present this item is Ms. Nino and her staff, Ms. Nino.

[54:39] Good morning, chairs, APN, and members of the board.

[54:42] We are here to present today options that are being considered in coming up with our ultimate recommendation in assisting and paying down the county's unfunded liability in a more timely fashion with the goal of a funded ratio of 80%.

[54:58] percent. Why is this important? For the county, the unfunded liability is for benefits already earned

[55:07] by both active and retiree employees. The two resources to fund an employer's unfunded liability

[55:16] is typically from investment earnings and that are generated from the retirement system,

[55:22] along with employer rates. I want to thank this board for being proactive in your

[55:28] consideration of today's recommendations.

[55:30] Chris Rose from my office, along with Kyron, are consultants that were hired out of the CAO's office, are here to present the options, along with today's recommendation.

[55:43] Good morning, Mr. Chairman, members of the board.

[55:46] In today's presentation, the county minister's office will provide the background on the county's unfunded retirement liability and compare Samuaking County with other 1937 Act plans.

[55:58] Cairon will then present its report titled, Funding Alternatives for the San

[56:03] Winking County Employees Retirement Association or S.J. Cera.

[56:08] Cairon's report will include how the system is funded, the status of our system, and

[56:12] several options the county can consider to improve our funded ratio.

[56:17] Once Cairon has completed its report, our office will make a recommendation for your

[56:22] board's consideration.

[56:23] The definition of funded ratio is the ratio of assets actually on hand to the asset goal

[56:31] set by the actuarial funding method, assuming that all actuarial assumptions are met.

[56:38] In nonactuarial terms, it is the ratio of the pension plan's assets compared to the total

[56:44] payments the plan is obligated to make.

[56:46] For example, if the plan stopped on January 1, 2015, the total payments of the plan is

[56:53] obligated to pay is $3.73 billion.

[56:57] The value of the plan's assets was $2.47 billion.

[57:01] The $2.47 billion in assets equates to 66% of the total liability the plan is obligated

[57:08] to pay, which equals a funded ratio of 66%.

[57:12] Prior to the 2008 stock market crash, the county's retirement system was 87% funded.

[57:19] From that point, the funded ratio decreased down to 63% through 2013.

[57:25] The funded ratio improved gradually over the last two years and is currently at 66%.

[57:33] There are 20, 1937 at county retirement systems in California.

[57:38] The average funded ratio for the plans is 81% with a high of 93% and a low of 59%.

[57:46] Down King County rakes 18th or 3rd lowest with a funded ratio of 66%.

[57:52] In dollar values, Down King County has the 7th highest unfunded liability at 1.3 billion,

[57:59] only bested by larger counties including LA, Orange, San Diego, Kern, San Bernardino, and Alameda Counties.

[58:06] It should be noted that 13 counties have outstanding pension obligation bonds and these amounts are not included in the unfunded liability for these county systems.

[58:19] There are eight different employer contribution rates depending on whether the employee is a general member or a safety member and when the employee entered into the retirement system.

[58:28] The composite rate is the average rate for the plan based on the total employer contribution divided by total salaries attributed to the pension costs.

[58:38] This table shows the adopted composite rates for calendar years 2007 through 2015.

[58:45] The annual county costs for retirement and the funded ratio of the retirement system.

[58:50] During the nine year period, county cost for retirement increased from $80.7 million to $155.5 million,

[58:59] while the funded ratio decreased from 87% to 66%.

[59:06] In recognition of the significant county obligation, your board established a reserve for the county's portion of unfunded liability to be funded with remaining fund balance after the annual budget is structurally balanced,

[59:20] and the board policy of an annual contribution to the

[59:23] contingency reserve has been met.

[59:26] Initially, the 2015-16 adopted budget included $2.5 million

[59:32] for the reserve in September 2015, and additional $1.6 million was

[59:36] set aside for a total reserve of $4.1 million.

[59:42] Additionally, during the 2015-16 first quarter report in

[59:46] November 2015, it was noted that the County Administration's

[59:50] office would evaluate various funding options to pay down the

[59:53] unfunded retirement liability in accelerated time frame.

[59:57] The consulting group Kyron was contracted.

[1:00:00] To identify options to address the unfunded actuary liability and improve funding ratio. Identify how the county's additional contributions to the retirement system can best benefit the county and identify how to maximize federal and state funding participation. At this time, I would like to introduce Robert McCrory and Ann Harper from Kyron to present their reports and analysis. After their presentation, our office will make a recommendation for your board's consideration.

[1:00:29] Good

[1:00:37] morning.

[1:00:37] It's a pleasure to be here.

[1:00:41] I'm Bob McCrory,

[1:00:43] an actuary with Kyron,

[1:00:45] and an actuary for 44 years now.

[1:00:48] With me as Anne Harper,

[1:00:50] he's been an actuary less long than that.

[1:00:54] But it's very experienced.

[1:00:56] We're going to go through our presentation,

[1:00:59] and I'd like to encourage you to,

[1:01:01] well, we take direction well.

[1:01:03] And so, if you have a question you want to ask, just ask it.

[1:01:08] If we're boring you to death, tell us so.

[1:01:10] If we're not hitting something that you want us to explain more fully,

[1:01:15] please ask us to expand on it.

[1:01:17] I've been doing this a long time, and has two teenage boys,

[1:01:21] so she's tough as nails.

[1:01:23] So, we'll be glad to change our presentation to suit you.

[1:01:32] I'm going to go over a few steps here.

[1:01:34] We're going to talk about why do we fund the retirement plan at all.

[1:01:39] Where are we in that funding, where are we going, and that's when Anne's going to pick

[1:01:43] it up, what can we do about it, and we'll close with some practical considerations.

[1:01:53] So we have a slide here with a lot of very small type on it, and I'll try to summarize

[1:01:59] it as best I can.

[1:02:02] One of the things that's unique about a pension plan is you are earning benefits while

[1:02:07] you're active that you will be paid when you're retired.

[1:02:12] So since benefits are paid after the termination of employment, there's a cost matching principle

[1:02:21] that accountants like to see, so that liabilities are paid for when they're incurred.

[1:02:27] So as members work and earn pension benefits that they'll be paid many years later, cost matching

[1:02:35] principle says set aside money, match those liabilities now for the benefits to be paid later.

[1:02:43] That's the accounting cost matching principle.

[1:02:47] It also ties into actuarial funding, which is based on the insurance industry, which says

[1:02:54] during a member's life, start collecting premiums, or the death insurance, so we have actuarial

[1:03:04] funding and the cost matching principle both having use set aside money during a

[1:03:08] member's active working lifetime for the benefits that you'll pay be paid.

[1:03:13] There's a third principle that applies to the government and it's called

[1:03:19] generational equity. The taxpayers should be paying now the expenses for the

[1:03:27] county employees that are providing them with services now. The idea is that

[1:03:33] your tax dollars now, pay not only for their current pay but also for the future retirement

[1:03:39] benefit.

[1:03:43] So for all of these reasons we fund.

[1:03:46] Now I want to take a step back here.

[1:03:49] This concept of generational equity comes up in sort of mysterious ways time to time.

[1:03:58] Generational equity says, as we said, current generation of taxpayers pays for the benefits

[1:04:04] that they're receiving from county employees

[1:04:07] and pays also for those employees, retirement labor.

[1:04:11] If you adhere very rigidly, generational equity,

[1:04:17] a every generation of taxpayers must pay exactly

[1:04:20] what they're getting back in county services

[1:04:22] and county costs.

[1:04:24] No variation, then it forces you

[1:04:28] to a very conservative investments

[1:04:31] where you're actually buying a laddered bonds

[1:04:34] the guarantee that there can't be any market.

[1:04:39] Now, if there's any magic,

[1:04:42] actual science at all is in pooling of risks,

[1:04:47] I mean, if you try to ensure your own home

[1:04:49] by setting aside enough money to replace it

[1:04:51] in the event of a fire,

[1:04:53] impossible for a person to average me.

[1:04:57] But, insurance company and pool those risks

[1:05:01] and offer you homeowners insurance

[1:05:03] in a very reasonable and practical way.

[1:05:08] Similarly, if we're willing to relax a little bit

[1:05:12] on the generational equity side by investing in risky assets,

[1:05:17] then that means that some generations of taxpayers

[1:05:20] are going to pay more, some generations of taxpayers.

[1:05:25] But overall, because of higher average earnings

[1:05:29] on the risky, everybody will pay a bit less.

[1:05:34] So, that's one of the things that's going on.

[1:05:37] Generational equity is a reason to fund, but it's not rigidly adhered to the name of

[1:05:43] holding down the overall average cost, including the risk, if you estimate risk, cross-generated.

[1:05:53] So, that's one reason, cost matching generational equity that we've, another reason, expense, which

[1:06:00] I've just alluded to, about half to two-thirds of the cost of retirement benefits are paid

[1:06:06] for by investment earnings.

[1:06:08] That's another important reason.

[1:06:12] You are legally required to fund retirement benefits in the employee retirement law and

[1:06:20] And the California Constitution actually requires that you hire an actuary to help you

[1:06:30] out in this endeavor.

[1:06:33] Oh, I guess I'm legally required evil.

[1:06:37] And then additionally benefit security.

[1:06:40] Now the key issue with benefit security and the retirement plan is that the financial

[1:06:46] The initial soundness of the retirement plan,

[1:06:48] the initial soundness of the county, are inextricably linked.

[1:06:54] If the county is sick and having revenue problems and expense problems,

[1:06:58] that manifests itself in difficulty funding the retirement benefits.

[1:07:02] Similarly, if the retirement benefit, having trouble,

[1:07:07] investments are so forth, that manifests itself in higher expensive.

[1:07:10] But you are like conjoined into it.

[1:07:18] Benefit security is somewhat provided, somewhat increased by the assets in the fund.

[1:07:23] Ultimately, benefit security most depends on the health of the plan.

[1:07:29] That's sort of a funding primer about what.

[1:07:34] If we look at where we are now and see that the funded ratio has been as

[1:07:40] pointed out declining over time, it's backed up in the last couple of years.

[1:07:48] Currently,

[1:07:51] the funded ratio is 66%, that's lower than we would like to see it.

[1:07:56] But one of the problems here is that the board has been moving all posts, and we have been

[1:08:03] complicit in that effort with them, specifically over the last two actual experience studies.

[1:08:12] is we have increased the lifespan that people are living on because people are living on.

[1:08:21] We have decreased the expected return that we anticipate receiving from plan investments.

[1:08:29] So in essence, we've been making the plan, increasing the flow of assets into the fund in

[1:08:38] In order to get more money into the fund, as we expect people to live longer and we don't

[1:08:44] expect the earn as much in investments, that lowers the investment or I mean, lowers

[1:08:50] the funded ratio.

[1:08:51] So we appear to be in versus shape, actually in a sense, we're in better shape for more

[1:08:58] conservatively funding the plan and we're not expecting as much from the end.

[1:09:07] So that's a large part.

[1:09:08] If, in fact, we were to do evaluation today, an actual report today, based on our assumptions

[1:09:16] back in 2009, or a lifespan, in return, our funder ratio would be about five percent.

[1:09:27] So, and we talked about, Chris presented the parasitic with you.

[1:09:32] So, Anna's going to take you through slides about where we're going in the Boston funder

[1:09:38] ratio.

[1:09:40] Good morning, so this slide gives you a look at where the plan is going and what the future

[1:09:47] looks like with a caveat that all actuarial assumptions are met just as we're into

[1:09:54] and that includes our investment return assumption.

[1:09:58] The top line is the projection of the funded ratio on a market value of asset basis and you

[1:10:06] that right now is at 66% and it slowly is increasing to 100% by 2035, the plan is expected to be fully funded.

[1:10:20] And the contribution rates are the bottom line with the dash line where the current county contribution rates are 41%

[1:10:28] and you're seeing a slight increase in that contribution rate.

[1:10:32] Since we have taken it upon ourselves to assume that that discount rate that the plan has

[1:10:38] is seven and a half percent, and the board has made some – there's some –

[1:10:48] There's feeling on the board.

[1:10:50] There's feeling on the board that they're going to continue to do that discount rate down

[1:10:54] to maybe seven percent.

[1:10:56] So we worked that assumption in actions so that you could see with those projections with them.

[1:11:03] So the contribution rate goes from 41 to about 47% and then it slowly declines over the period.

[1:11:09] Let me just make this clear. The board is taking no action in this regard. Currently the board is

[1:11:14] assuming that the investments will return 7.5%. But we expect that along with many other plans,

[1:11:22] they may wish to drop it more.

[1:11:24] So we've assumed a 10 basis point, 0.1% lease,

[1:11:30] in the next five years, 7%.

[1:11:32] That may not be realized in which case the cost above

[1:11:36] and the funder ratio might be more.

[1:11:40] The second thing is that this is of course something

[1:11:43] I refer to as the actuarial fantasy,

[1:11:46] as it assumes that all the contributions that they won't be.

[1:11:51] Where these are always wrong.

[1:11:53] We're really good at predicting things like mortality, turnover, retirement rates, those

[1:11:58] kinds of things.

[1:11:59] We are like everybody else really bad at marketing.

[1:12:03] So we use the 7.5, going down to 7% as sort of a planning figure, and then make adjustments

[1:12:09] when we go.

[1:12:11] Oh, that.

[1:12:18] In this picture depicts the scenario that Bob was talking about where there is a lot more

[1:12:24] variability in the markets.

[1:12:27] And since we know the actual assumptions,

[1:12:29] especially on the investment side, will not be bad.

[1:12:33] The graph shows the funded ratio

[1:12:37] and the variability in the funded ratio

[1:12:40] due to market fluctuations.

[1:12:42] Black line is that same line that I showed you

[1:12:45] in the previous slide for the funder ratio,

[1:12:49] starting at around 66%.

[1:12:51] And then as time goes on, we have run the statistical analysis where we run about 10,000 trials based on your asset allocation environment fund.

[1:13:08] Generates these different returns.

[1:13:11] So in the first couple years, you see some variability in the funded ratio, what the expectation is,

[1:13:17] that the band's widen as time goes out because you're seeing these under different,

[1:13:22] uh, 10,000 different files in different areas of what they're doing.

[1:13:27] Like, um, in 2017, for example, funded phrase show, there's a 90% probability

[1:13:36] that the funded ratio will be between 55 and 80, and that then as you can see as time goes on,

[1:13:44] and it's much harder to predict where that funded ratio

[1:13:48] where I actually land because the markets are at heart

[1:13:52] to predict.

[1:13:59] So this slide also shows that the baseline

[1:14:03] that I showed a couple of slides ago in the blue

[1:14:05] where we have the funded ratio and the contribution rate.

[1:14:08] The yellow lines represent what your funded ratio

[1:14:13] and contribution rates would look like

[1:14:14] Like if the fund only earned 5% over the next 10 years, now those 5% to show this projection

[1:14:23] and this is just a what if scenario, because the current economic outlook by many investment

[1:14:30] consultants is that plans of your of the San Joaquin, that type only earn between maybe 5

[1:14:40] I've maybe up to 7% in the next 10 years,

[1:14:43] given the market environment.

[1:14:45] So you can see what happens here.

[1:14:48] It just puts complete downward pressure

[1:14:50] on the funded ratio where it stays pretty flat

[1:14:52] for the next 10 years, while then solely over time

[1:14:56] the contribution increased to make up for

[1:15:00] Assets that are not coming into the plan, those investment returns. The more between 7 and 7 and a half percent versus the five that were actually being earned.

[1:15:14] There's just a comment about that. When you inquise investment consultants about their expectations for the future. One thing they'll point out is that the stock market is pretty fully valued as fairly high multiples of priced earnings. And they'll also point out that you're not getting anything in the money.

[1:15:33] I'll know this.

[1:15:36] So if traditional sources of current at least for the short-term future five, ten years

[1:15:45] kind of aren't there, that's why they're pretty.

[1:15:48] Something in the vicinity of 5% for a diversified.

[1:15:52] I wanted to show you that.

[1:15:54] That is kind of where the some investment consultants are.

[1:16:01] I mean, said that, I think the Wall Street Journal published a different organization.

[1:16:08] They published a bunch of rejections by investment consultants going forward and it changed

[1:16:14] all the way from 0% to 13% for the stock market, so you can see nobody now.

[1:16:23] But alternatively, we'll move a little more quickly through the rest of this.

[1:16:31] It's either an enormous super tanker there, it's just mind us the size of the problem and

[1:16:38] we'll talk about that in a second and then we'll look at several alternatives listed

[1:16:44] here, n% extra for 10 years, 5% extra for 10 years.

[1:16:56] There's a lot of money in the environment plan relative to payroll assets right now are

[1:17:03] over six times member payroll. As the plan becomes better funded the assets will

[1:17:10] over nine times payroll and that's the current member payroll and their assets

[1:17:16] there. So consequently you can see that if you were able to put in one year an

[1:17:22] additional one percent of payroll not in significant amount for you, the

[1:17:28] the funded ratio 0.11% on 9% will actually be some abilities to make a difference of 10% in the

[1:17:39] funded ratio would have to contribute an additional 7.5% of pay for it assuming that the fund

[1:17:47] then helps you out by returning 7% return.

[1:17:53] In other words, the entrepreneurial assumptions are

[1:17:56] So, it's a big pool of money, and you don't have a lot of leverage, but you have to, you

[1:18:03] know, not something that you've

[1:18:08] got to deal with much of a difference.

[1:18:12] So, recognizing the size of it, in fact, that any approach that's going to be successful

[1:18:17] is going to be somewhat gradualist, and is going to present several alternatives to it.

[1:18:24] So this first alternative is an extra 10% of payroll, a contribution of an extra 10% of

[1:18:31] payroll for 10 years.

[1:18:34] And again, the baseline is your blue lines, the yellow represents the funded ratio and

[1:18:40] the contribution rate assuming you're making an extra 10% of pay for 10 years.

[1:18:45] And at the bottom there, that's showing the actual numbers for the funded ratio and contribution

[1:18:50] right for this scenario for the yellow lines.

[1:18:54] So you can see in the short term, the funded ratio gradually is increasing and it takes

[1:18:59] time as Bob said for it to make a difference in your funded ratio but after 10 years that

[1:19:06] of at the 81 percent funded ratio in 2026 should be at 89 percent.

[1:19:16] So, that's a difference of about 8%.

[1:19:21] And you can see the contribution rate, though, jumps up to about 53%, instead of 43%,

[1:19:28] and then stays about that level, and the client's a little bit over time.

[1:19:32] And the good news once after that 10 years, though, is that the contribution rate does fall

[1:19:37] below the baseline, because you're putting more contributions in up front, so you're paying

[1:19:41] more now and then less later.

[1:19:47] This is a similar scenario.

[1:19:49] It's an additional contributions of 5% of payroll.

[1:19:52] And the effect is virtually about half of the impact that you get at 10%.

[1:19:57] So the funded ratio in 2026 now is at 85% with a 4% difference.

[1:20:04] And the contribution goes up half as much.

[1:20:07] This

[1:20:13] graph is showing if you were to put an extra $125 million payment in now, or 2016.

[1:20:22] And you can see there's a spike in the contribution right that yellow dash line goes up to 73%.

[1:20:28] And then the funded ratio, though, you get an immediate 3% boost in the funded ratio the year after that contribution is made.

[1:20:37] However, any gains in the fund ad ratio that you have are less than as time goes on because then the contribution adjust itself as well because of more money coming into the fund than the fund anticipates that there's more assets so the contribution gets adjusted.

[1:20:53] So this is really just almost like a one time boost and that you're going to continue to make higher payments with that fund ad ratio.

[1:20:59] So keep it going up.

[1:21:05] This scenario is a rather ambitious scenario to try to fund the plan to 100% in 10 years.

[1:21:13] So you can see in 2026 that yellow straight line goes all the way up to 100%, but the

[1:21:21] contributions required for that over the 10-year period is 63% of payroll for 10 years.

[1:21:27] So that's rather ambitious, but we thought you might be interested in looking at something

[1:21:32] like that, just to see where benchmarks are.

[1:21:40] And this graph is showing, assuming that the plan earned that 5% that we wrote in one

[1:21:47] of the slides before, if that assets are 5% for 10 years, if you wanted to maintain your

[1:21:53] funded ratio over those 10 years and you funded upfront for that, it's very similar to the

[1:21:58] the funding at 100% where your contributions go up to about 60% over the course of 10

[1:22:05] years.

[1:22:06] And you can see the blue and the yellow lines are almost on top of each other so that

[1:22:11] you're maintaining your funded ratio.

[1:22:14] Under this scenario, if the plan did earn the assumed rate of return, you would see that

[1:22:19] your funded ratio would go up to about 100% in 10 years.

[1:22:25] And

[1:22:28] this just is a summary of all the different scenarios that we put together for you.

[1:22:34] The top line or the top graph is the funded ratio projections, the bottom again, the employer

[1:22:38] contributions.

[1:22:41] And the red line, if you can see it, that's the 10% additional contributions.

[1:22:48] And again, if you want to look at 5%, it would be about half that.

[1:22:52] And you can see that the scenario that gives you the most boost in your funded ratio is

[1:22:59] that targeting 100% in 10 years, which again is very ambitious.

[1:23:04] I think from looking at these graphs, the bottom graph, you can see that all of the scenarios,

[1:23:11] the contribution rates are higher than that baseline that we showed, the baseline is the blue.

[1:23:17] They're all higher in the beginning and they drop off after the 10-year period.

[1:23:21] And so it's just the same thing, is if you pay more now, you're going to pay less later so it's either paying now or paying later.

[1:23:35] Just close with some practical considerations.

[1:23:38] One of the things we've noticed is that it's a lot of assets out there, a lot of liabilities.

[1:23:45] It takes a concentrated effort over a period of time to move it.

[1:23:49] There's limits to what what you can do, but right now six times payroll is out there

[1:23:54] in assets.

[1:23:55] It's going to increase over nine.

[1:23:58] We'll need cooperation from SJ Sarah in order to make this work, specifically for additional

[1:24:07] contribution.

[1:24:08] We'll need to be separately accounted for so that other participating employers don't have

[1:24:12] their rates reduced because of your increase in contributions.

[1:24:18] Plan actually will have to make some additional calculations in order to have a special

[1:24:22] rate for you.

[1:24:25] These are not major, neither of these as a major issue, it would be a problem in the aim

[1:24:30] of getting additional funds in.

[1:24:32] I would expect that the retirement board be very favorably disposed to work with you.

[1:24:38] Revisions in the S.J. Sarah funding policy itself will not be required, because they're sort

[1:24:43] of looking at what applies to all participating employers and these contributions that you

[1:24:49] would make would be in addition to your act where you required contribution and would

[1:24:54] be modifiable part of your budgeting process.

[1:25:02] And then one of the things you want to look at carefully is to make sure that all of your

[1:25:05] state and federal contracts would allow full reimbursement, including your additional

[1:25:11] contribute. I understand you have a verbal assurance that's probably correct anyway. However,

[1:25:20] with that, that concludes our portion presentation. Thank you.

[1:25:29] Thank you so very much for that

[1:25:30] informative presentation. Questions and comments from the board? Chair Sapien, we have just kind of some

[1:25:37] conclusions. Yeah, we do that and thank you. Appreciate it.

[1:26:03] All right, we've got to get back to our

[1:26:04] slide.

[1:26:16] Acknowledging that paying down this 1.3 billion liability in its entirety is not feasible.

[1:26:22] The goal of accelerating the paydown is to put the county in a 75-80% funded ratio range,

[1:26:29] which would be about average for the 1937 Act plans.

[1:26:33] In recognition of one of the board's top strategic priority of maintaining a structurally balanced

[1:26:38] budget, it is the county administration's recommendation that your board adopt a modified

[1:26:42] version of option 3 outlined in your staff report by contributing an additional

[1:26:47] county contribution ranging from 0 to 5% of payroll for the next 10 years. The

[1:26:53] additional contribution rate would be evaluated and determined during the

[1:26:57] development of the annual budget.

[1:27:01] This table shows the change in funded ratio if

[1:27:04] the county was able to contribute 5% each of the 10 years. The additional

[1:27:08] Annual contributions of 207.6 million over 10 years improves the funded ratio from a projected

[1:27:15] 77% to 80% if all the actuarial assumptions of the plan are met.

[1:27:22] While this does not seem significant, it does put Samuaking County's funded ratio near

[1:27:26] the average of the 1937 act plans.

[1:27:30] At the 5% contribution level, the annual additional cost will be 20.8 million with a net county

[1:27:36] cost of $7.8 million. For 2016-17, it is anticipated that the additional

[1:27:43] contributions would begin January 2017 in conjunction with the 2017 calendarate set

[1:27:49] by the SJ Sarah Board.

[1:27:54] Estated in the 2015-16 Midyear Report, the June 30, 2016 year-end

[1:28:00] General Fund Balance is estimated at 16.4 million.

[1:28:05] After the 2016-17 budget is structurally balanced and the contingency reserve level

[1:28:10] has been met, a portion of the remaining year-in projected savings will be set aside for

[1:28:15] the unfunded retirement liability reserve.

[1:28:18] In the year 2016-17, appropriations from the General Fund would be increased to fund the net

[1:28:25] county cost portion of the additional contributions to the remaining six months of the fiscal

[1:28:29] year. Any necessary adjustments to non-general fund

[1:28:33] departments would also be brought to your board at this time.

[1:28:37] Once a method of accelerated paydown is approved by your board, the county minister's office

[1:28:42] will work with the SJ Sarah Board to establish an agreement with the county and the necessary

[1:28:47] processes to keep separate accounting for the additional county contributions to ensure

[1:28:53] these funds are credited only to San Joaquin County. Our office and the auditor controller

[1:28:58] had discussions with the State Controller's Office requesting affirmation that the recommended method of accelerated paydown would be acceptable for state and federal participation.

[1:29:09] The State Controller's Office indicated that it would be acceptable.

[1:29:13] Once your board approves a method to pay down the unfunded retirement liability, the county would seek written affirmation from the State Controller's Office.

[1:29:21] At this time, it is recommended that your board accept the Kyron Report on funding alternatives

[1:29:28] for the San Joaquin County Employees Retirement Association and approve an annual policy to include

[1:29:34] as part of the final budget hearing an additional annual county contribution ranging from 0 to 5%

[1:29:39] a payroll for the next 10 years effective January 1, 2017 through December 31, 2026 to pay down

[1:29:48] the unfended retirement liability in accelerated time frame.

[1:29:52] This concludes the presentation.

[1:29:54] County Administrator Monica Nino and I are available for questions.

[1:29:59] Thank you again.

[1:30:00] And Ms. Nino, and to your staff, and the Kyrah. Questions and comments from the board?

[1:30:08] First request is from supervisor Wynn. Thank you, Chair.

[1:30:16] Obviously, and the calculations as far as our contributions. It's the investment. Return on investments. It's contributions for the employer and contributions for the employees. So those are the three driving forces that would obviously

[1:30:33] the rate, whatever, and final liability we have in the future.

[1:30:37] So, and you talked about, you know, obviously, with the county

[1:30:42] administration, certainly with the bargaining units, we can work on the fine eight numbers, as far as the not contributed.

[1:30:49] If I understand you correctly, as far as the investment side, which obviously would contribute to the goal of the increasing

[1:30:59] in infant liability at least in the percentage.

[1:31:02] That's kind of unpredictable.

[1:31:04] Is that what I'm hearing you say

[1:31:05] from all the experts who predict the future

[1:31:09] of investment returns over the next 10 years?

[1:31:12] Yes, I mean, there are two big sources

[1:31:18] of uncertainty with regard to the natural health of Earth.

[1:31:24] We're really good, as I said,

[1:31:25] that is figuring out when people have been in their rates

[1:31:30] of debt and ability in all the rest of it.

[1:31:34] Outside of California, it dates

[1:31:36] with where we governance structures,

[1:31:40] where pension contributions are sort of a balancing

[1:31:44] item in them.

[1:31:46] You've had situations like in Illinois, Michigan,

[1:31:50] in Jersey, just not contributed to the fall actuarial costs of the plan.

[1:31:57] That's why they're in some way.

[1:31:59] The second, so that's one big uncertainty there,

[1:32:02] California, where we draw a governance structure,

[1:32:05] as at the retirement board, basically write a bill

[1:32:10] on string employers' thing.

[1:32:14] The second, as you point out, investment returns.

[1:32:18] The only way to secure predictable investment returns to invest in assets that basically don't return anything.

[1:32:30] And that's usually expensive process, so we have to live with the uncertainty and nobody seems to know.

[1:32:39] Well, I see from other pensions funds that they overestimate the return on their investments.

[1:32:45] And thereby, reduce the contribution rates, and therefore they get upside down,

[1:32:50] because there's not enough revenue coming either from the investment or from the

[1:32:54] contribution from the employer or the employee.

[1:32:57] That's why, you know, recently we've had tremendous increases in contributions

[1:33:01] and some pension funds throughout the state.

[1:33:05] The other question regards to the ten years, the 5% over ten years.

[1:33:09] Now, you know, I have the expertise you all have, but it would seem to me that if

[1:33:14] We talked about 5% because the amount of money contributed over those 10 years is always the same.

[1:33:20] It would seem to me that as county budgets and hopefully we continue increase and

[1:33:27] sourds increase by virtue of negotiation, et cetera, that that 5% that you're talking about

[1:33:33] each year would increase incrementally over those 10 years as opposed to a static amount of the $20 million.

[1:33:40] So, I guess my question is, wouldn't that be a more accurate representation of that

[1:33:47] ten-year projection by increasing incrementally?

[1:33:50] And I understand we don't know what the ten-years hold as far as it.

[1:33:53] But it would seem to me that, actually, in the end, there would be an increase in the

[1:33:58] contributions annually, which ultimately would affect end results in regards to the

[1:34:03] percentage.

[1:34:04] I mean, I know you can't predict the future, but I guess I'm saying it probably better

[1:34:09] You're correct, Supervisor. There is that. But what we were doing was our status

[1:34:14] quote, the assumptions were essentially assumed the same for that projection. But yes,

[1:34:18] you are correct, because it's a percentage of payroll.

[1:34:20] Right. Thank you.

[1:34:22] Thank you, Supervisor Winn. Supervisor Miller?

[1:34:25] Thank you. I want to make sure I understand on the option it calls for $125 million,

[1:34:31] one-time contribution. Are we talking about pension obligation bond?

[1:34:36] You are correct, because we do not have that kind of cash available in the general fund to contribute towards the return.

[1:34:42] That's what I assumed.

[1:34:44] And then I just want to make sure everybody understands, because I've got,

[1:34:48] I have received questions in terms of, welcome, there's only 20 other counties on this list.

[1:34:54] Can you just very briefly give a little overview of what in 1937 Act counting me

[1:35:01] and why we're not comparing ourselves to every county.

[1:35:09] Historically, the 1937 Act asked a single pension plan,

[1:35:15] a single set of a pension plan design for 20 counties

[1:35:23] that were included.

[1:35:26] And that's the Sackers members and 20 of them.

[1:35:30] Packers is a state association of county retirement systems, and it includes, you know,

[1:35:37] the ones that are on that list.

[1:35:38] So they are all similar in the sense that there are counties, they include both general

[1:35:43] and safety members, they have comparable administrative structures, comparable and not identical

[1:35:51] benefit structures and similar, similar, almost identical governance.

[1:36:00] It excludes a number of other counties that are, for example, within CalPERS, or that

[1:36:07] are completely separate, like the County of San Francisco, or Al-Iars, or it's.

[1:36:17] So it's a good, it's as comparable a group of counties as you find.

[1:36:24] Great, thanks.

[1:36:25] I just wanted to make sure that everybody else up here understood that.

[1:36:29] And then the last thing is I understand that our goal is to get to essentially 80% in 10 years

[1:36:38] and that the projections are based on if we allocate an additional 5%

[1:36:46] every year. So if we don't do that, we will not hit the 80% funded level, correct?

[1:36:58] Okay. Correct.

[1:36:59] So what that means is, as we go forward with labor negotiations, we

[1:37:05] to keep this in mind in terms of what it does to our bottom line so that we can

[1:37:11] make sure we have that additional 5% cheer to pay this down, is that correct?

[1:37:18] That is correct.

[1:37:19] Okay.

[1:37:20] Thank you.

[1:37:21] And that's why we put a range in their supervisor because what we're going to do is

[1:37:26] we'll address this as part of our annual budget process.

[1:37:29] And I would hope that investments that we're able to achieve closer to our assumed

[1:37:36] to return because then hopefully there's a balancing that takes place.

[1:37:41] As Bob said and as I said, there's two primary factors of funding resources here, the employer

[1:37:47] and investment earnings. And so I would hope when we're doing that annual evaluation that there's

[1:37:53] some balancing going on because I don't believe and I will tell you from what I know now even in a

[1:37:58] current budget, I don't know if we could currently fund our 5% for next calendar year, but that's

[1:38:06] our goal. And we have some other factors of board policy, which is excellent fiscal

[1:38:12] policy, that the board has adopted that I need to meet those benchmarks first. And that's

[1:38:17] what's so helpful with having a range.

[1:38:21] Thank you, supervisor Miller. Is Charlie up?

[1:38:29] Thank you, Mr. Chairman. Okay. Staying on this range of percentages here, just a bit more.

[1:38:38] Do I understand you to say then that the analysis that would be done as part of the preparation

[1:38:43] of the budget each year would look at also the rate return on market investments, and

[1:38:50] if the investments were doing better than we had expected, then the percentage that we

[1:38:56] would contribute would go lower, that part of.

[1:39:00] So, supervisor Elliott, what I said was, and hopefully I can clarify it better, the range is primarily about affordability, because I need to be able to provide this board with a structurally balanced budget, and I know this board blocks me to continuously meet the appropriation contingency, and thirdly is this range of retirement contribution.

[1:39:23] I would hope, though, if I'm unable to achieve the 5% because I'm not just looking at the general

[1:39:30] fund affordability, I'm also looking at what our state and federal programs and our

[1:39:36] enterprise funds can afford.

[1:39:38] So for me to bring a percentage up to that 5%, I want to know that organizationally we can

[1:39:44] afford it.

[1:39:45] And so in the event I can't meet that 5%, I would also reach out to San Joaquin Sarah to say,

[1:39:52] Okay, where are we in regards to if we don't meet the 5%, I have no idea at the timing

[1:39:58] of when we do our budget, if we know the status of our investment earnings, I know we

[1:40:03] at least have some insight, but I would hope I could tell you also, well, we may not

[1:40:09] achieve in year 2020 our 75% funded ratio, but we might be able to achieve 74% because between

[1:40:20] the combination of our additional contribution and what we're projecting on investment earnings,

[1:40:25] we might still be able to achieve that once the books are closed for San Joaquin Sarah.

[1:40:29] So what I'm saying is I would hope that I could also give you some insight of us not meeting

[1:40:37] our 5 percent, but possibly investments are at least meeting it some way in some fashion,

[1:40:42] or what percentage it's helping us in that regard.

[1:40:47] Okay. So is it correct to say, then, that the goal of this recommendation is to increase

[1:40:54] the contributions by 5 percent, no matter how well the investments are doing?

[1:41:00] Correct.

[1:41:02] That's, and the goal is the operative word because I need to make sure I present a structurally

[1:41:09] balanced budget.

[1:41:10] Right.

[1:41:10] And then the only reason we would not contribute an additional 5 percent would be if we just

[1:41:14] couldn't afford it based on that.

[1:41:15] You are correct.

[1:41:17] Okay. Now, can you elaborate just a little bit more on the timeline of how this all works?

[1:41:26] Basically, what I want to clarify is the relationship of this proposal today to the board action that we passed last year, I believe,

[1:41:36] where we created a separate fund to help counteract the unfunded liability.

[1:41:43] So, are we still doing that, or is this program replacing that reduction?

[1:41:51] So, that goes very much in hand with Supervisor Miller brought up also.

[1:41:56] So, the key would be, is our retirement rates go into place in January of every calendar year.

[1:42:02] So, for the 16-17 fiscal year, our new rates and hopefully a percentage of,

[1:42:07] hopefully 5% would go in place to solve this unfunded liability issue.

[1:42:12] What we would do as part of mid-year, as Chris mentioned, we would come up and say,

[1:42:17] okay, how much is that going to cost the general fund?

[1:42:20] We would dip into that general fund reserve, or if we had capacity within our existing

[1:42:26] budget in order to fund that six months of that unfended liability percentage.

[1:42:32] Our state and federal operated programs, we would also need to meet with them because every

[1:42:38] major are various departments do their urine projections. So we would also look at their

[1:42:43] budgets and what the status was in that regard. So we would essentially take that money

[1:42:48] to offset general fund departments only because all of that money in that reserve was to essentially

[1:42:55] start building a fund in the general fund so that we could offset whether it's increased

[1:43:01] costs in the CAO's office or say increased costs in planning. We would increase that spending

[1:43:07] authority, and we would pull that money from the reserve and put it as part of our operating

[1:43:12] budget in order to offset that additional expense. But take, for instance, my budget. If I

[1:43:18] have savings in my budget, I would not expect this board to co-in and adjust my budget, because

[1:43:23] I would use whatever budget capacity I have for my fiscal year end as of the end of June to

[1:43:30] absorb that increased unfended liability percentage. We would only pull money from that reserve

[1:43:37] for General Fund Departments that we believe could not afford the increased cost

[1:43:42] related to the unfunded liability.

[1:43:45] What reserve are you to?

[1:43:47] The unfunded liability reserve.

[1:43:49] The one that you started setting up last year that we roughly have about 4.1 million.

[1:43:55] 4.1 million.

[1:43:57] Okay, so my original question was, are we going to continue to contribute money to that

[1:44:03] that separate reserve in addition to this 5% increase in contribution to the unfunded liability.

[1:44:11] Correct.

[1:44:13] Okay, so the sequence would be we create a structure, a structurally balanced budget.

[1:44:19] Then anybody that's left over, we meet our obligations to try to build up the contingency fund.

[1:44:27] Then what comes next?

[1:44:28] Then we evaluate whether or not we can meet the 5 percent increase.

[1:44:34] Okay, and then we see if we have, after we've done that, if we have any money left over,

[1:44:38] then we put some additionally into this reserve fund to try to meet, to further meet

[1:44:44] any unfunded liabilities in the pension plan.

[1:44:46] You are a direct supervisor.

[1:44:48] Okay.

[1:44:49] All right.

[1:44:51] Different topic here.

[1:44:56] Now, part of the staff report then, right toward the end of the presentation, we were talking

[1:45:00] We're talking about whether state and federal participation, or whether our plan would be acceptable for state and federal participation. Could you explain that just a little bit more state and federal participation regarding what? Federal and state participation is basically when you have a state or federal grant program. And in the grant program, it allows for the county to be reimbursed for salaries benefit.

[1:45:29] that's part of the benefits are retirement.

[1:45:32] So right now it is acceptable, that's an acceptable cost.

[1:45:36] So what we want is written affirmation

[1:45:38] that if we increase our rate for retirement,

[1:45:43] to basically catch up on our infended liability

[1:45:46] if that's acceptable for reimbursement.

[1:45:49] So state and federal programs would also provide

[1:45:51] part of this 5%.

[1:45:53] Correct.

[1:45:55] Thank you.

[1:45:57] Thank you, Vice Chair Elliott.

[1:45:58] It's a few comments and observations.

[1:46:02] I think it's important from the outset to note how very consistent this proposed action is with the board's strategic priorities.

[1:46:09] Back to the first strategic priority of the board that was adopted was to ensure fiscal responsibility.

[1:46:15] And within that was a subset goal of responsibly addressing the county's pension obligations.

[1:46:21] So when we talk about goals, certainly the goal to achieve an 80% funded ratio is

[1:46:30] a ultimate goal within the policy, but also within the context of our board's strategic

[1:46:34] priorities.

[1:46:35] I think it's also important to note that having reviewed the various options available,

[1:46:41] I certainly concur with staff's recommended option, and I believe it provides the type of

[1:46:50] flexibility, the pay-as-you-go method, which

[1:46:57] makes into consideration the volatility and the predictability

[1:46:59] of the markets.

[1:47:02] And I think it makes a meaningful progress

[1:47:04] towards median counties goal of having an 80% funded pension

[1:47:10] fund in 10 years, and also within the context

[1:47:14] of the board's strategic priorities.

[1:47:17] So, are there any additional comments from the board?

[1:47:21] There are no additional comments.

[1:47:23] Are there any comments from the public?

[1:47:25] Thank you.

[1:47:26] Mr. Nguyen.

[1:47:29] In my 30 years, almost I

[1:47:39] was hit and locked up and daughter.

[1:47:45] Almost 30 years.

[1:47:47] So, in the past so many years,

[1:47:57] there's a lot of criminal

[1:48:03] get-should-to-beget-retirement

[1:48:08] women, very? No, I should not. Therefore, women and vice-demon looking to those pre-minor

[1:48:26] population that should be thrown into garbage. Instead of getting young one and

[1:48:40] kick, then force them to fight, that's it, to do criminal, for many of them, oh, too

[1:48:52] many, in segment of the human system, so I might have a list of those criminal that

[1:49:07] should not let me read time and

[1:49:10] verify so that the young one and

[1:49:14] the new one, not have to pay for those

[1:49:21] big enough. Many. I'm going to take

[1:49:26] a list.

[1:49:29] Too many. Thank you, miss

[1:49:30] Noisy. Is there any further public

[1:49:33] comments? Now for the public

[1:49:37] comments, I'll bring the item back

[1:49:38] back to the board, Mr. Elliott.

[1:49:43] Thank you, Mr. Chairman.

[1:49:45] The light of the report that we received here, I think that the staff proposal is just

[1:49:50] a common-sense approach here to try to reduce our unfunded liability, bring our percentages

[1:49:59] up into an acceptable range here, so I would move that we accept the Kyron report and we

[1:50:04] approve the staff recommendation.

[1:50:08] I would second that.

[1:50:09] All right.

[1:50:09] Moved and seconded.

[1:50:11] Supervisors, please cast a vote.

[1:50:19] Motion carries 5-0.

[1:50:21] Okay.

[1:50:21] Thank you.

[1:50:22] Thank you very much.

[1:50:23] Thank you so much, Ms. Nino, and the Kyron Group and the rest of your staff.

[1:50:29] Moving on to our second item in our discussion section, where to consider approving the accounting

[1:50:37] making changes to make the necessary budget adjustments in the airport enterprise fund and general fund beginning in fiscal year 2016 through 2017 to comply with Federal Aviation Administration grant assurances.

[1:50:54] The item will be presented by Ms. Nino and her staff.

[1:50:59] Good morning again, Chair, Ms. APN and board members.

[1:51:03] Thank you again.

[1:51:05] Today's presentation is to explain the recommended accounting changes for the Airport Enterprise Fund for fiscal year 2016-2017 to comply with the Federal Aviation Administration grant assurances.

[1:51:19] The new lease payments, as you'll hear about as part of Mr. Lozier, Ms. Lee's presentation this morning, along with the General Fund contribution, total the same amount.

[1:51:32] And you'll see that on the very last page of the board later.

[1:51:35] I am not asking for the general fund contribution in total between our lease payments in the cash contribution to change from what the airport enterprise fund is currently receiving in the current year for 15-16.

[1:51:50] We are not asking for board action on the six-year lookback of the general fund contribution versus what the county would have paid

[1:52:00] In the new lease payments that we're asking authority for today, we're not asking for

[1:52:05] board action to the airport, which essentially resulted in that six-year lookback, roughly $1.8

[1:52:12] million in an additional general fund contribution. I'm not asking this board to act on that.

[1:52:18] I am also not asking this board to record a liability for that $1.8 million.

[1:52:23] It is important the board be aware that when staff has all the information on parcel B5, which is roughly 31.3 acres of airport land that currently the county along with our partner Catalyst is considering as including as part of our

[1:52:42] our Air Part 599 project.

[1:52:44] When that recommendation, when that comes back, that's when I will make a recommendation

[1:52:50] and give the Board some options on how to address the additional $1.8 million.

[1:52:56] It was extremely important to staff to keep this policy decision with the Board of Supervisors.

[1:53:03] The ultimate decision will only remain with the Board of Supervisors if the county's

[1:53:09] cash contribution, remains as such, if it remains, and from the general fund, that will

[1:53:16] keep that decision here.

[1:53:18] Today's recommendation will also provide consistent fiscal policy on how to treat our airport

[1:53:25] enterprise fund consistent with past practices on how we've treated our hospital enterprise

[1:53:31] fund, why there's likeness in this regard.

[1:53:34] As you heard in my midyear report, we previously have given the hospital fund not only our maintenance

[1:53:40] of effort, and we currently do not have a maintenance of effort with the airport.

[1:53:44] We're talking to enterprise funds, but different requirements when it comes to state and federal

[1:53:50] programs, a maintenance of effort is required to pull down state and federal funds for our hospital.

[1:53:56] The hospital, the airport, has been primarily a general fund contribution because of this

[1:54:03] This boards priority of economic development and to see the airport thrive.

[1:54:08] The rest of the report will be presented by Mark Lozier, a staff from the CAO's office, along with Rosalie.

[1:54:18] Good morning, chairs, APN board members, CEO Nino and county council.

[1:54:23] Mark Lozier, senior deputy county administrator.

[1:54:26] Before you today is an item to approve accounting changes in the airport enterprise fund and

[1:54:31] General Fund beginning in fiscal year 2016, 2017.

[1:54:36] Just by way of background, a little bit of history, the Stockton Metropolitan Airport

[1:54:41] has been a county-owned asset since the county accepted sole ownership of the airport

[1:54:46] on July 1, 1956 from the city of Stockton.

[1:54:50] The Stockton Metropolitan Airport operates as an enterprise fund whose revenues are primarily

[1:54:55] from landing fees, rental fees, concessionary fees generated from airport-owned facilities and

[1:55:02] capital grants from the Federal Aviation Administration. In addition, it currently receives general

[1:55:08] fund contributions, including general fund unsecured property taxes and non- airport farm leases.

[1:55:17] The following table is a summary of the net general fund contribution for the current fiscal year

[1:55:22] 2015-2016. The 2015-16 adopted budget for the airport enterprise fund, approximately

[1:55:30] 4.7 million, with a general fund contribution totaling 1.4 million. Also included in the

[1:55:38] general fund contribution is an annual payment of $132,000, 115 associated with the lawsuit

[1:55:44] settlement related to the development of the current airport 599 project which has been

[1:55:51] the past through cost in the airport's budget.

[1:55:54] This final annual settlement payment will occur in 2029.

[1:56:03] In December 2015, the county administrator,

[1:56:08] the airport director, the FAA regional director,

[1:56:11] and staff meant to discuss the potential development

[1:56:13] of a portion of the parcel on airport land

[1:56:17] as part of the airport 599 master development project.

[1:56:21] At that meeting, the FAA advised

[1:56:23] the county to conduct a six-year look-back of property lease revenues generated on county

[1:56:29] airport own land to be reflected in the airport enterprise fund budget to ensure compliance

[1:56:35] with FAA grant assurances. It's important to note that this look-back does not include all of the

[1:56:41] leases on county owned airport land as there are additional leases which the airport director will

[1:56:47] renegotiate as they come up for renewal. Since that time the county administrator staff completed

[1:56:53] the six-year look-back and recommends that the board consider the following accounting changes going

[1:56:59] forward. The recommended changes will create a greater level of transparency while also achieving

[1:57:05] compliance with FAA grant assurances ensuring that the airport can continue to receive annual

[1:57:11] federal funding to help support operations of the airport.

[1:57:28] So beginning in fiscal year 2016,

[1:57:31] 2017 staff is recommending to add the following lease revenues, totaling $636,171 from the General

[1:57:40] Fund to the Airport Enterprise Fund.

[1:57:43] There are three leases, the Arnez lease, the Ag Center lease, the Farm Ag credit lease.

[1:57:48] Each of these leases are based on airport property rental rates approved by the board on June

[1:57:53] June 27, 2013, and those rates are based on undeveloped land.

[1:58:00] With the exception of the Farm Ag Credit Lease Payment, these transactions had not previously

[1:58:06] been included in the county budget.

[1:58:08] Based on the current agreement, the Farm Ag Credit Annual Lease Payment totals $22,436 and

[1:58:14] is currently credit to the Facilities Management Budget in the General Fund.

[1:58:18] Consistent with the FAA's request to record leases on county-owned airport land, the recommended

[1:58:25] changes achieve FAA grant assurances.

[1:58:29] The following slide shows each lease in relationship to the overall county airport parcel.

[1:58:38] The Arnez lease was part of, which is right here, the 25-acre, the Arnez lease was part of

[1:58:42] the settlement associate with airport 599, which gave Arnez development rights for 49 years for the 25 acres.

[1:58:51] The least Arnez will expire in 2053 with an option to extend one additional term of 10 years.

[1:58:58] In addition to the county constructed, in addition, the county constructed the ag center on 10.65 acres.

[1:59:06] As was the farm ag credit facility on 1.23 acres.

[1:59:11] The farm ag credit lease is for the term of 60 years and at the end of the lease the county

[1:59:17] will receive lease payments in excess of 1.9 million because the airport cannot develop

[1:59:23] any of these parcels.

[1:59:25] Staff is recommending to add the lease revenues totaling 636-171 to the airport enterprise

[1:59:32] fund beginning in fiscal year 2016-2017 and if you'll note there are two under undeveloped

[1:59:41] portions, which I'll discuss later in the presentation here.

[1:59:48] So there are five recommended accounting changes beginning in fiscal year 2016-2017 that

[1:59:53] staffs recommending.

[1:59:54] First, is to reallocate the General Fund unsecured property taxes, currently budgeted

[2:00:00] At 470,400, within the boundary of the airport, back to the general fund. Two, to assign non- airport

[2:00:08] farm lease revenues totaling $63,000 from the airport enterprise fund to the facilities

[2:00:14] management budget in the general fund. Three, to allocate the annual payment of $132,015,

[2:00:23] associated with the lawsuit settlement from the airport enterprise fund to the facilities

[2:00:29] Management Fund, which resides in the General Fund, or to add the airport leases

[2:00:35] totaling 636-171 to the airport enterprise fund budget. Then finally five to

[2:00:42] adjust the General Fund net county cost from 874-712-639-826. These

[2:00:50] recommended accounting changes reflect different sources of General Fund

[2:00:55] funding, and we'll ensure the airport enterprise fund will receive an equal amount of funding

[2:01:01] next fiscal year as was received in fiscal year 2015-2016.

[2:01:14] The first right here before you, this demonstrates it over the past six years from 2010-2011-2015-2016.

[2:01:23] The county's general fund, contribution to the airport enterprise fund, total $5.7 million.

[2:01:29] Based on the recommended accounting changes and the value of the corresponding 6-year period the general fund lease payment revenues to the airport enterprise fund would have been totaled 3.8 million.

[2:01:45] The general fund contribution to the airport enterprise fund is 1.9 million in excess of the lease payment value for the same 6-year look back period.

[2:01:55] The

[2:01:58] county administrator is currently negotiating with Catalyst on a revised master development agreement,

[2:02:04] which includes an option to develop parcel B5, which is approximately 31.3 acres on county owned airport land as part of the air park 599 master development project.

[2:02:16] If a determination is made for the county to purchase parcel B5, the county administrator will present the boards,

[2:02:23] or the Board's consideration to proceed with the master development agreement and propose that the excess general fund contribution be considered toward the purchase of Harsal B-5.

[2:02:38] It should be noted on the slide here that the construction of the Ag Center and the Farm Ag Credit facility on the county-owned airport land included the full development and build out of site utilities.

[2:02:50] The site improvements, totaling 2.6 million, were fully funded by the county's general fund.

[2:02:58] When the airport leases the two remaining parcels, which are approximately 9 acres,

[2:03:03] it will realize the value of those site improvements.

[2:03:10] At its February 23rd, 2014 meeting, the airport advisory committee voted to reject the CEO's recommendation

[2:03:17] to reallocate the General Fund unsecured property taxes.

[2:03:22] Subsequently, the Chair of the Airport Advisory Committee sent a letter to the Board,

[2:03:27] outlining its objection to reallocate the General Fund property taxes back to the General Fund,

[2:03:33] the letter in a presentation that the Airport Director presented to the Airport Advisory Committee are included in your Board's packet.

[2:03:44] Unsecured property taxes are part of the county's general fund discretionary revenues and staff recommends that they not be designated to the airport enterprise fund.

[2:03:55] County Council has opined that the county's plan to use the tax revenue generated from personal property located at the airport is not prohibited by the FAA grant assurances, nor is it prohibited by federal law.

[2:04:08] Personal property taxes generated from the airport located at the Stockton metropolitan airport will not be considered a diversion of revenues and violation of the FAA's grant assurances.

[2:04:24] So at this time, staff recommends the board approve the accounting changes to make the necessary budget adjustments in the airport enterprise fund.

[2:04:33] and the general fund beginning in a fiscal year 2016-2017 to comply with federal aviation administration grant assurances.

[2:04:43] The recommended accounting changes will allow the airport to continue to be eligible for federal grant funding

[2:04:50] and continue towards self-sufficiency as an enterprise fund.

[2:04:56] And with that staff is available to answer any questions.

[2:05:01] Thank you.

[2:05:01] Mr. Lozier, Ms. Nino, questions and comments from the board?

[2:05:14] Iceland.

[2:05:16] That's right.

[2:05:17] Go ahead to provide them.

[2:05:18] Thank you.

[2:05:18] Through the chair.

[2:05:22] So we're not proposing to settle up anything on this shortfall, the 1.8 million, until after

[2:05:33] we know what's going to happen with parcel B5.

[2:05:36] You are correct, Supervisor Miller.

[2:05:37] And at that time, when a proposal comes back to us, the discretion lies with the board.

[2:05:43] You are correct, as long as the property tax that you adopt staff recommendation for 16, 17,

[2:05:52] and do it as a general fund contribution. Okay. So at that time then, we have the discretion on either

[2:06:02] are essentially truing up and taking that $1.8 million or not.

[2:06:12] You're correct.

[2:06:14] Okay.

[2:06:15] And there's not going to be any immediate shortfall in the airport's budget.

[2:06:22] You're accurate.

[2:06:24] Okay.

[2:06:24] And so if I understand correctly, the letter we received from the Airport Advisory Committee,

[2:06:36] there were pleased to see that the lease payments would be going to them, but they also wanted

[2:06:44] the unsecured property taxes to continue, which am I correct? That would essentially

[2:06:51] really result in an additional contribution of $636,000 to the airport fund.

[2:06:59] If that happened, if we did not transfer property tax, but we did transfer the lease revenue,

[2:07:06] you are correct.

[2:07:08] Okay.

[2:07:09] All right.

[2:07:10] Those are my questions.

[2:07:11] Thank you.

[2:07:12] Do you supervise your Miller?

[2:07:13] Fistarily?

[2:07:20] Thank you, Mr. Chairman.

[2:07:21] One thing on this lawsuit payment of $132,015, I think it's pretty clear in the last chart

[2:07:33] that we showed there that it will no longer be figured in any way against the airport

[2:07:40] enterprise fund.

[2:07:41] I think that was the intent.

[2:07:43] There's another chart here that shows accounting changes, that shows a plus that says lawsuit

[2:07:50] payment to the general fund. Are we still saying that that that payment is going

[2:07:56] down separately from the airport enterprise fund? Is that the intent of those?

[2:08:02] You are correct, Supervisor Lynn. Okay. I'm glad to see that our intent is to keep

[2:08:10] the the level of support to the airport at about the same level.

[2:08:19] But to me it seems

[2:08:20] a little bit counterintuitive here to say that it increases transparency if we take the

[2:08:29] unsecured property taxes that are now going to the airport enterprise fund and we put those back

[2:08:35] in the general fund and then we contribute an amount equal to that or including that as a general

[2:08:44] fund contribution to the airport it seems that if we really want the airport to be an enterprise

[2:08:50] then the clearest most transparent way to do that would be just to leave the revenues that are associated with the airport in the enterprise which would mean those unsecured property taxes would just continue as part of the airport enterprise fund.

[2:09:09] And then we could just reduce the amount of general fund contribution that would be needed to make up that difference.

[2:09:17] So, for example, in the table that we're showing in the staff report on the last page, which

[2:09:25] shows, or 2016, 2017, a proposed general fund contribution of $639,000,000 in $26,000.

[2:09:33] If we just continue the practice of keeping the unsecured property taxes as part of the airport

[2:09:42] enterprise fund, move that over into that column, then we could reduce the general fund contribution

[2:09:49] that's showing there by the amount of the insecure property taxes so that the general fund contribution

[2:09:55] then would show as a total of 169,000 or 26. The net result would still be the 1.2 million

[2:10:04] in terms of funding revenue going to the airport enterprise fund, but it just seems to me that would be a more transparent way of showing whether the airport is actually self-sufficient or not.

[2:10:20] Because the reason those unsegured property taxes are able to be collected is because the airport is there, and there are tenants and users of the airport facility who have equipment there, and therefore they pay those taxes.

[2:10:33] But why not just roll that into the enterprise fund, it just seems that would really give

[2:10:39] a clearer picture of whether the airport is supporting itself or not.

[2:10:44] So supervisor Elliott and Rosa might even want to chime in here with prior to the airport

[2:10:51] receiving that revenue, it was in general purpose revenue as property taxes.

[2:10:56] Traditionally, in counties, property taxes you always want to remain the integrity of your

[2:11:02] your base property tax revenue as general-purpose revenue, because as you know, as a board

[2:11:07] member and our entire board knows, that's primarily the dollars that this board has

[2:11:12] discretion over when it comes to meeting those general fund obligations, whether

[2:11:17] it's law enforcement, whether it's DA, you know, whether it's other governmental-related

[2:11:23] services.

[2:11:24] So, losing the integrity of your entire general-purpose property tax pool is what is a

[2:11:32] essentially occurred since 2003, and so that's why the transparency argument, that's why we're using the transparency piece of it because what it does prior to 2003, it was a general fund general purpose revenue.

[2:11:47] 2003, my understanding as a result of the airport coming onto a financial crisis, that money got diverted from the general fund to the enterprise fund.

[2:11:58] Typically, when a general fund contributes to an enterprise fund, you don't divert the revenue.

[2:12:05] You typically would do an operating transfer in if you're truly doing some accounting practices.

[2:12:11] Because what it does is keeps the integrity of the general fund contribution to a non-general

[2:12:17] fund operation.

[2:12:19] And so the reason why that is so important, say, for instance, typically our federal and state

[2:12:25] programs require a match. They typically want it to come from the general fund. I know there's a

[2:12:31] little bit of different FAA requirements when it comes to discretionary grants that our airport

[2:12:39] manager is able to apply for. And that match comes from that budget, that match. But if the feds ever

[2:12:47] asked for a general fund contribution, not only would we be giving them already the airport tax if we

[2:12:53] We chose to give that revenue directly, but we would have to increase our cash match as a result to making that transaction.

[2:13:01] But I also want to share with you from a bigger picture perspective that comparison between the hospital, I have two short points.

[2:13:10] The comparison between the hospital and the airport.

[2:13:13] When we, as part of the 1617 budget, you heard as part of the mid-year, I am doing away.

[2:13:19] I am going to be recommending to this board to no longer give the hospital enterprise fund a general fund contribution.

[2:13:27] But I am required in order to pull down state and federal funds because medical, whatever additional programs they require a county match.

[2:13:36] That does not mean in the future that the enterprise for the airport may eventually require that also.

[2:13:43] So, 16-17 since the hospital is doing well financially, I am pulling back 100 percent of that $3 million in that general fund cash contribution.

[2:13:54] We have consistently in this organization shown it very appropriately that it was a cash contribution to the enterprise fund for the hospital.

[2:14:03] When the enterprise fund for the hospital was not doing well, we took money out of general fund reserves and gave it to the hospital.

[2:14:10] We have yet to ask that hospital to give it back, and I am not recommending that.

[2:14:15] It's the same thing I'm not recommending on the 1.8, 1.9 million in the 6-year lookback.

[2:14:23] If this Board considers today to give the unsuffered property tax to the airport,

[2:14:31] we give up that 6-year lookback of that $2.6 million.

[2:14:36] and dollars. Why would we want that policy decision to be pulled out of the board's hands?

[2:14:43] Because that would no longer be included as part of the six-year look back.

[2:14:48] And that source-to-revenue originated out of the county's general fund.

[2:14:53] It did not originate from distribution purposes out of the enterprise fund.

[2:14:59] I.N.

[2:15:00] You understand your logic relative to where it's generated, but typically property taxes in county

[2:15:06] government remain in the general fund. And when the, when the board makes a fiscal policy

[2:15:12] decision to make a contribution to a fund outside of the general fund, it is done through

[2:15:19] net county costs. It's done through a cash transfer, not a diversion of revenue.

[2:15:25] That's where the transparency comes into play.

[2:15:27] Okay.

[2:15:28] Okay.

[2:15:29] So are you saying that for all of our enterprise funds, none of them have unsecured taxes

[2:15:38] allocated to them directly as a form of revenue to help them balance their budgets?

[2:15:45] You know what?

[2:15:46] I look at Rosa.

[2:15:47] I'm almost sure that they aren't.

[2:15:49] We have our landfill, which is 100% self-supporting, and we have our hospital.

[2:15:54] Those are the two I'm most familiar with, but Rosa could you respond?

[2:15:58] Good morning.

[2:15:59] That's correct.

[2:16:00] And I want to add that only one department besides the airport receiving an allocation

[2:16:06] of general fund property tax.

[2:16:08] That's the shift voting safety.

[2:16:11] However, that's a required match from the state.

[2:16:15] That actually require the county in order to draw down the state grant for voting safety.

[2:16:19] The county actually had to allocate unsecured property taxes raised on boats to that program.

[2:16:27] No out of county departments receive direct allocation of general fund property tax revenues.

[2:16:34] Supervisor Elliott, the way this board is able to contribute to non-general fund departments

[2:16:39] is through our county's net county cost process.

[2:16:43] When you see when we introduce the budget and we talk about general purpose revenue, that's

[2:16:48] essentially the pot of money that this board approves or disapproves on how those dollars

[2:16:54] are used in non-general fund departments. And a good example with that, we always pointed

[2:16:59] out when we were recommending that $3 million for the hospital, and it was much greater

[2:17:04] a years back, that that was clearly a general fund contribution, and it was not a permanent

[2:17:10] solution. Because an enterprise fund is in its effort to become self-sustaining, it's

[2:17:16] primarily through user fees and those in leases, those kinds of charges.

[2:17:23] So for the hospital, next year, for this next budget you're going to recommend that we

[2:17:30] don't provide any general funds to the hospital, any general fund support.

[2:17:35] The $3 million cash contribution, we always had two pieces.

[2:17:39] We have a maintenance of effort, which is required.

[2:17:43] That's required for their state and federal programs.

[2:17:46] We could not pull down certain state and federal programs for the hospital's benefit for

[2:17:52] services we deliver without 2.1 million.

[2:17:55] And we have had that maintenance of effort for multiple years.

[2:17:59] It's a little bit similar when we talk about maintenance of effort of the maintenance of

[2:18:03] effort the general fund contributes to the courts across the street.

[2:18:08] Those are required.

[2:18:09] Those are typically agreements we have with the state or federal agencies.

[2:18:15] But there was always an additional $3 million plus that we were giving to the hospital above that.

[2:18:21] These last few years, we've asked the hospital administrator to dedicate it towards capital.

[2:18:28] And that's primarily what they've used that money for.

[2:18:30] But in this current year, since our hospital is getting back on its feet and has a level of fiscal stability,

[2:18:37] We are pulling that $3 million, but we cannot pull that $2.1 million because of the MOE requirement.

[2:18:44] We do not want to jeopardize the other hundreds of thousands of dollars that that hospital receives as a result of it.

[2:18:52] Okay, so continuing with the hospital, just so I can understand the comparison a little better.

[2:18:58] So the 2.1 maintenance of effort, that is something that the county is required to pay just as part of the county's

[2:19:07] effort to continue to support the hospital, is that so?

[2:19:09] That's not my understanding.

[2:19:11] Go ahead, Rosa.

[2:19:13] I would call it, the county need to put in $2.1 million

[2:19:17] to the hospital enterprise so that we can actually draw down

[2:19:20] roughly over $20 million of federal and state dollars.

[2:19:24] So you have to put in at least $2.1 million

[2:19:27] and so that you'll be eligible to get federal and state money.

[2:19:31] So they often hear the term minimum match requirements.

[2:19:40] It's not just a 10%, it's typically a fixed dollar amount and it typically stays the

[2:19:46] same and it remains static from year after year.

[2:19:49] Okay, so it has nothing to do with the needs of the hospital just a contractual requirement

[2:19:54] that we pay that amount.

[2:19:56] Correct.

[2:19:57] Okay.

[2:19:57] Okay. And then the other three million, that is, I guess discretionary.

[2:20:03] You are correct.

[2:20:06] Is that include unsecured property taxes?

[2:20:09] When it does is it gets funded as a result.

[2:20:12] The bulk of our revenue in general-purpose revenue is unsecured property taxes.

[2:20:17] So part of our total pool, we have unsecured property taxes, sales tax.

[2:20:23] I don't think we have any more vehicle license fees.

[2:20:26] Do we, any more, Rosa, interest, all of those various pools?

[2:20:31] So there would be, but it does not get diverted over there.

[2:20:35] It comes in through a cash transfer.

[2:20:38] That's the big difference.

[2:20:39] That's where the consistency with the airport comes into play.

[2:20:47] If we were doing something along those lines in terms of allocating unsecured

[2:20:55] property taxes that are brought in due to the hospital's operations, if we're allocating

[2:21:02] those unsecured property taxes to the hospital, would that negate the requirement to pay

[2:21:08] that $3 million that we've been paying?

[2:21:16] Our plan for 1617 is that we no longer provide that additional $3 million to Samuikin General

[2:21:23] a hospital and if we were to allocate and secure property taxes generated by the hospital

[2:21:31] campus as county contribution that would not count toward the $2.1 million required

[2:21:38] match.

[2:21:40] Okay, so the hospital is doing well enough that they don't need that and secure property

[2:21:44] tax to be able to balance their budget next year.

[2:21:49] Is that what I'm hearing?

[2:21:50] You're correct.

[2:21:52] Right.

[2:21:52] Okay. Okay. So part of the argument then is that we want to reallocate unsecured property taxes into the general fund just to be consistent.

[2:22:07] Okay.

[2:22:07] And it provides truly what the county is contributing to the airport through the cash contribution.

[2:22:15] That's where the transparency comes into play.

[2:22:19] because if ever they asked for a general fund contribution and it was say a 10 or 20% match,

[2:22:27] we could meet potentially that requirement.

[2:22:32] But the key is to provide some consistency

[2:22:35] on how our enterprise funds operate within our bigger organization.

[2:22:41] Now are you saying that if we were to allocate unsecured property taxes to the airport

[2:22:48] that we could not account for that in a way that would make it obvious that that's where those contributions came from.

[2:22:58] And that they would not count as any kind of a matching fund for grant purposes.

[2:23:05] Oh, I think that Airport could probably use it as a matching fund, but it would no longer filter through the General Fund.

[2:23:11] When you take general-purpose revenue out of the general fund, the key is understanding

[2:23:17] the difference between a general fund and an enterprise fund.

[2:23:21] Completely two different animals when it comes to governmental accounting.

[2:23:25] That's why it's so important to keep the integrity of general-purpose revenue where all the taxes,

[2:23:31] whether it's sales tax, whether it's property tax, but no supervisor, the airport could use the

[2:23:37] the unsecured property taxes as match, but it comes in as enterprise revenue.

[2:23:43] It does not come in as general fund revenue.

[2:23:47] That's what I'm trying to make sure that this Board understands.

[2:23:50] There's a clear distinction when you have revenue coming from the general fund to the enterprise fund.

[2:23:55] It looks very differently in regards to state and federal funding.

[2:24:01] Okay. I also got lost a bit in your explanation of the look back on the 2.5 million,

[2:24:09] that if we allocated the unscored property taxes to the airport enterprise fund,

[2:24:14] we would lose this 2.5 million. How would we lose that?

[2:24:21] Because what it does is it would it went directly to the airport.

[2:24:25] So even though it originated as general fund revenue, and it was always part of the general fund contribution,

[2:24:34] if you're now, if this board considers making a policy decision to completely on a permanent basis,

[2:24:41] divert that property tax revenue, we could not include that as part of our six-year look back.

[2:24:51] It lost me there. I mean, if you know what happened, how could we not account for it?

[2:24:55] because it was going directly to the enterprise fund.

[2:24:58] And Rosa has the history of why we even did it

[2:25:02] because it originated in the general fund.

[2:25:05] Again, if the board met the policy decision to say

[2:25:08] that we're going to permanently allocate the portion

[2:25:11] of the general fund property tax to the airport enterprise,

[2:25:15] then follow that logic.

[2:25:17] When you do the six-year lookback,

[2:25:19] you would exclude it out from the reconciliation.

[2:25:23] So, therefore, you lose the ability, your flexibility, on that $2.6 million, you already provided

[2:25:30] to the airport from the General Fund.

[2:25:38] Okay.

[2:25:42] Perhaps this will all become clearer later, but in your right, Mr. Chairman, I would also

[2:25:48] like to ask, you know, we've got a unanimous opposition to this plan from the Airport Advisory

[2:25:55] commission and I'd like to just hear from one of their representatives or from the

[2:26:01] airport director as to just in light of this discussion that's taken place this morning.

[2:26:08] Are there any changes in their positions or?

[2:26:12] Yes, however, I will have to defer your request for the time being because there are still

[2:26:17] requests from board members to ask questions.

[2:26:20] So for the time being, let's finish up board questions and comments.

[2:26:25] Do you have any further comments on Vice-Chair Lea?

[2:26:28] No.

[2:26:29] Okay.

[2:26:30] Moving on to Supervisor Viyapugla.

[2:26:32] Thank you.

[2:26:32] Through the chair.

[2:26:33] So Monica, as we compare the hospital and the airport, talked about, we were trying to make

[2:26:44] sure that the hospital is stable enough, so then we will look at the airport and this

[2:26:54] is a question to both you.

[2:26:58] And after reading this letter from the FAA,

[2:27:05] are we jeopardizing anything,

[2:27:12] I still don't

[2:27:13] see that the airport, even though we've invested, and we continue to strive to make that,

[2:27:21] you know, a jewel of a county, are we stable?

[2:27:27] And changing this funds over back to the county, jeopardize our relationships with the FAA.

[2:27:39] And I was just looking at the, you know, I read the letter and it just seems clear that,

[2:27:46] you know, making these changes would probably hurt that relationship for me.

[2:27:53] I know we worked so hard to build on that.

[2:27:57] And I think at the end of the day, this board still will make and control any type of funding

[2:28:06] that the report has?

[2:28:10] Well, Supervisor Philip Houdra, I think the board has less policy authority when we give the

[2:28:21] unsecured property taxes to the airport, especially in the six-year lookback.

[2:28:25] I think that's the important piece of this discussion today.

[2:28:29] I don't believe this jeopardizes the FAA funding, I really don't.

[2:28:33] I received a call last week in advance because Mr. Lohman did let me know that our airport

[2:28:39] director had forwarded him today's board letter prior to board action.

[2:28:44] So he gave me a call that he was going to respond.

[2:28:47] He knew the FAA, he was well aware of what the six-year look-by looked like because I had

[2:28:54] given him a preview of that when we met in December and he knew when they asked me, this was

[2:29:01] was very much directed from the FAA about getting our county airport land related leases in the appropriate

[2:29:10] accounting. So he knew I was going to go forward with it because he knows we're currently looking at B5 as part of

[2:29:17] airport. And what was extremely important to me is that he knew what beyond just our general fund cash

[2:29:24] contribution the airport was receiving, but to answer your question in regard to jeopardizing

[2:29:30] our relationship with FAA, they mentioned then that they were going to come out and

[2:29:34] audit our airport at that time.

[2:29:38] What appeared yesterday, their letter in that regard, I have no problem sharing with

[2:29:44] them our six-year look back, and I believe it is sound.

[2:29:49] That's why also he was well aware, I got a legal opinion from our county council that it

[2:29:54] was not considered a diversion of airport revenue, he acknowledged that on the phone on Friday.

[2:30:00] So, I do not believe of anything. I would say on Airport 599, we have worked better with FAA than what I've heard previously, and Rosa couldn't respond to that, also with historic, because we've been able to move the needle sooner, quicker as a result of Mr. Lomans' interaction with the CAO's office. But it has not helped when our airport is in the behind the scenes.

[2:30:30] essentially giving a little different direction relative to B5 because I've

[2:30:35] got to share this board. B5 right now as a result of the various hoops we're

[2:30:41] having to go through as a result of the kind of the twist and turns and

[2:30:45] dealing with the airport on B5. FAA already knows B5 might not in the end even

[2:30:52] being included as part of the project.

[2:30:54] But

[2:30:57] it just seems that, I mean, we've been driving our feet on B5 for years.

[2:31:02] Oh, I agree with you, Supervisor.

[2:31:05] And it just seems that, you know, I look back, I've been here for seven years, and I've

[2:31:09] seen airport directors come and go, this is the first time we have an airport director

[2:31:14] who comes from an economic background that has moved, you know, this airport to make it

[2:31:25] and we're still, I feel, unstable, unstable, but we need to make this stable.

[2:31:31] And I just think that if we're taking away where maybe the FAs are going to look at our

[2:31:40] books and say, hey, you know, are these stable or not?

[2:31:44] I mean, I just don't want to mess up anything that's been worked so hard with the aviation

[2:31:52] board that's worked.

[2:31:52] I mean, it's so much work into this, I mean, it just seems like we're moving in the right direction.

[2:31:59] And I just don't want to jeopardize that at all.

[2:32:03] In today's recommendation does not jeopardize that because as I think one of the other supervisors,

[2:32:07] I think supervisor Miller stated, the very last page, this is a revenue neutral impact to the airport.

[2:32:15] They're currently receiving $1.2 million, we are recommending $1.2 million for $16.17.

[2:32:23] And also the airport did not appear in front of this board as a result of overexpending their

[2:32:28] budget after mid-year as they appeared last year.

[2:32:31] So they're clearly doing better financially.

[2:32:34] I'm not saying that they're truly and operating as an enterprise fund because the county's still

[2:32:39] giving them a general fund contribution.

[2:32:42] They're not right now in the classification of where the hospital is.

[2:32:45] But what I'm recommending to this board is before making a decision today, think about what happens as a result of the six-year lookback if those property taxes are given to the airport.

[2:33:01] Thank you.

[2:33:01] Thank you, Supervisor Riapudo, Supervisor Miller, then Supervisor Wen, and then we will finish up with Vice-Serialiates, and then we'll go to public comment.

[2:33:10] So my question goes to the six-year lookback, and I want to make sure that I understand the ramifications of what we're looking at today.

[2:33:16] The way I understand it is, we're being required by the FAA to do a six-year look back and

[2:33:22] true up the leases. Correct. But that means $3.8 million to the airport enterprise fund.

[2:33:33] What we're saying is we want to offset that amount by the unsecured property tax, which has been

[2:33:41] going to the airport enterprise fund, but has not been required to be diverted to go there.

[2:33:47] Clear saying, we voluntarily done that, but it counts as a general fund contribution, correct?

[2:33:55] So my question is, if we today make the decision we want to continue diverting the unsecured property tax to the airport,

[2:34:06] It doesn't just impact next year's contribution, correct?

[2:34:11] We will still owe $3.8 million to the airport enterprise fund, and we will have to come

[2:34:17] up with a way to fund that.

[2:34:20] You are correct.

[2:34:21] And that's where Mr. Lohman in the letter yesterday said once Ford takes action and also once we resolve

[2:34:28] B5, whether it's in the project or out of the project, they will look at how we've come

[2:34:33] up with our general fund contributions, and I feel very confident in what we've come up with.

[2:34:38] And we will, they will also look at the receipts, the lease agreements, this 3.8 to make sure

[2:34:46] that County has calculated that correctly.

[2:34:49] So they'll look at both sides of the equation.

[2:34:51] So I just want to make sure, if we opted today to continue and making it permanent to direct the

[2:34:58] unsecured property tax, we're basically giving up any credit for that $2.6 million that's already gone and we will

[2:35:09] having already directed it to the airport. We will now owe it again to the tune of $3.8 million to the airport enterprise fund.

[2:35:18] What we would owe would essentially the way you would come up with the calculation, it would be the $5.6 million

[2:35:23] that currently shows up in the general fund, you would subtract that number from the 2.6 and it turns the county into owing the airport.

[2:35:34] So not only would the county have to pay back that money, but if B5 showed up as part of airport, the county would also have to pay for that.

[2:35:44] Got it.

[2:35:45] Okay, thank you.

[2:35:49] Thank you, Mr. Chair.

[2:35:52] Actually, I was going to wait to make comments until after we heard from some of the members

[2:35:55] of the airport advisory group that I'll just make a few comments and then wait to see what

[2:36:00] they have to say.

[2:36:05] A couple of areas that concern me that have been mentioned, this reconciling process obviously

[2:36:13] as was just stated, if we agree that the unsecured property tax idled to the enterprise fund,

[2:36:25] that does not give us the credit of the 2.6 million already given premium.

[2:36:32] The other part of it is that, you know, I had two meetings yesterday involving groups,

[2:36:40] So I'm sure my fellow supervisors have had similar meetings over the last few weeks.

[2:36:47] And focus those discussions was money, revenue for their particular agendas, which is

[2:36:54] fine.

[2:36:56] One of the things that always concerned me in regards to this board and going through

[2:37:02] the budget hearings last year, and for those who were here obviously, it was very challenging

[2:37:07] based upon the number of requests as opposed to the money's available.

[2:37:14] And so I'm always concerned with the prothra of agencies that need to do their job serving

[2:37:25] our residents.

[2:37:26] I'm always a little bit protective of this board's ability to use whatever funds we receive.

[2:37:32] certainly general fund revenues, as they do go to a major portion of our law enforcement and so I virtue of that, I'm a little reluctant to release any amount of what I consider general revenue funds to albeit for good purposes, but to another organization that that

[2:38:01] It may not appreciate that benefit of having those funds under their control.

[2:38:08] So, more importantly, I guess what I'm concerned about with this forward's decision is that

[2:38:14] and I've had conversations with Monica and I've had conversations with Airport Director

[2:38:20] and I've, in my conversations, have stated that I don't want to jeopardize as supervisor

[2:38:28] Federal Food Service on the Report Advisory Commission with me,

[2:38:32] jeopardized the good work that's already transpired.

[2:38:34] We are essentially making tremendous headway

[2:38:38] in regards to the future of the airport

[2:38:40] and certainly the county.

[2:38:42] It's interesting because in that same presentation or speech

[2:38:46] I gave last week, I did talk about the airport

[2:38:49] and there was a lot of positive comments

[2:38:53] about what we're doing and what the future holds for the airport

[2:38:56] and certainly for residents.

[2:38:58] So I'm a little bit concerned about losing or I should say,

[2:39:05] but it's turning over control of, for example,

[2:39:09] over the past six years, 2.6 million.

[2:39:12] And of course, the future that we'll continue.

[2:39:16] I would like to see this board and future boards

[2:39:20] because I'm always protective of future councils

[2:39:23] and their discretion to make decisions as to what comes before them.

[2:39:29] When I was on the council, I was always opposed to anything that was saddled.

[2:39:35] Future councils were the mandate that they had to do certain things because the times

[2:39:39] change, the finances change, et cetera.

[2:39:41] I have the same view on this board.

[2:39:43] I'm reluctant to make any policy decisions or changes that would hamper future board supervisors

[2:39:50] to make discretionary decisions based upon what the financial environment holds for them in those particular challenges.

[2:40:00] So I'm a little bit reluctant and I'm certainly hoping to hear from those who have different, maybe different perspective on what we can do to maintain the upward climb and the increased activity of the airport.

[2:40:18] And I think Supervisor LePoodle and I have talked about, you know, certainly the great things that have happened and what will happen.

[2:40:26] And Mr. Maverick-Genesis is a fantastic job. I think everybody agrees to that because I've talked individuals who were more knowledgeable in what's happened in the past and there's been tremendous changes in improvements that have taken place over the past few years.

[2:40:45] So I do not want to see that direction change, I want to see it to get to you.

[2:40:51] This is a very small, although it's important, I know to the participants, but it's a challenge

[2:41:00] for me from the standpoint of wanting to see the airport and the advisory board certainly

[2:41:05] get what they believe is necessary to continue their climb and improving the airport and its

[2:41:11] service to our community.

[2:41:13] At the same time, I don't want to necessarily release any kind of discretion that sport has for future.

[2:41:20] As I just say, and I know you all know this, but this year is going to be even more challenging last year as far as budgeting limited amount of resources we have available.

[2:41:32] Though I'm a little bit protective of that, but having said that, I essentially would like to air from the members of board and the director and see what their comments are before.

[2:41:43] or obviously we may.

[2:41:45] Thank you, supervisor, when?

[2:41:47] Vice Chair Elliott?

[2:41:49] Yes, one last question on the FAA position

[2:41:53] on the unsecured property taxes and the six-year look back.

[2:41:57] In reading that letter, I didn't see anywhere in there

[2:42:00] where it said that the FAA, if we were to continue

[2:42:05] to allocate the unsecured property taxes

[2:42:07] to the airport enterprise fund.

[2:42:09] I didn't see anywhere where they said that if we did that,

[2:42:13] then we could not take credit for having made those contributions over the past six years.

[2:42:19] Did the FAA representative say that?

[2:42:24] They didn't. They didn't say that. But what it does is it puts fiscal policy in place and we're going forward.

[2:42:34] It's going to be a hard argument to make that because what we're going to do is we're going to continue what our past practice has been.

[2:42:43] And it's essentially been a diversion of property tax that's out of general purpose revenues

[2:42:48] to the enterprise fund, but you are correct, Supervisor Elliott, it's not in that letter.

[2:42:53] Right, and if we did continue to divert those from the general purpose funds, then logic

[2:42:59] would say that they are still general purpose funds that we have just decided to allocate

[2:43:04] to the airport, so there shouldn't be any – there shouldn't be any problem with looking

[2:43:10] back and saying yes, that was in fact a contribution from the general fund.

[2:43:17] You're getting, and I'm going to have Rosa speak, also, you're getting my 29 years of

[2:43:22] experience, typically if your past practice and then your board takes action to continue

[2:43:27] that past practice, typically outside agencies look that, and especially if the revenue did

[2:43:33] not filter through the general fund, it's considered revenue and the enterprise fund.

[2:43:38] So, I think that's a real hard argument to make.

[2:43:42] I can go ahead, yes.

[2:43:48] If the board were to make a decision to continue to divert property tax to the enterprise fund,

[2:43:54] essentially, when you talk to the FAA, you need to negotiate when you look at those six-year look back,

[2:44:01] rather than in a position to say that that's the general fund dollars,

[2:44:04] and we are using it to reconcile the, on the least payments, is a very different discussion

[2:44:12] depending on what the board's policy is going to be.

[2:44:16] All right, okay, thank you, we'll leave it there.

[2:44:18] Thank you, Vice Chair.

[2:44:20] Now's the time for public comment, I have a request to speak from Mr. Bill Treza.

[2:44:38] Appreciate your patience, Mr. Treza.

[2:44:42] Good

[2:44:46] morning, ladies and gentlemen, thank you.

[2:44:50] Monica, we disagree, but we'll always be professional friends.

[2:44:55] I just want you to know that.

[2:44:57] I've been on the airport commission since 10.

[2:45:00] It was one of the first members on the current chair, and so I've volunteered, I've been elected to speak on behalf of the board. You heard a lot of information. This has been a very rewarding trip. A lot of frustration in the beginning because we were charged with, let's make this thing a business enterprise, a positive, not a cash drain on the county, no sufficiency. And as you all know, since Harry and

[2:45:29] We want to have been here, things have flipped, they know FAA, they know aviation, they know

[2:45:36] our airport, and they know how to work the markets.

[2:45:38] So we're very pleased with where we're going, where we've been, the port we got from

[2:45:42] COG on helping us get ready for the future.

[2:45:49] Transparency and clarity have not always been something we've benefited from.

[2:45:53] We can never understand where our money came from how we spent the parts but not the whole picture and finally

[2:46:01] I think we're getting close.

[2:46:04] I don't see

[2:46:08] Settling on the

[2:46:10] FAA

[2:46:13] Least revenue if if we did if we did had that money

[2:46:17] We wouldn't have needed as much subsidy. I'd like to think that the general subsidy funds

[2:46:24] we can almost wash that. We can walk away from this thing saying that there's not a lot of debt owed to somebody and we can convince FAA that there can be a payment plan either way to settle that.

[2:46:39] I don't see the back side of this transaction as a risk. I see going forward as they see.

[2:46:47] We would definitely like to benefit from the revenue that comes off airport property,

[2:46:53] airport to fine property, rents, leases, etc.

[2:46:58] And I have to disagree with Monica, that $400,000 a year means a lot more to us.

[2:47:04] Simply because in our general aviation and public side of the airport,

[2:47:09] we have horrible maintenance issues.

[2:47:12] and blame the airport for all these years for never dealing with it.

[2:47:18] Prior administrations, the airports never been a big revenue maker,

[2:47:22] so it never worried about deferred maintenance.

[2:47:24] That fund could be very valuable for two reasons.

[2:47:28] Number one, once we get where our revenues exceed our operating expenses,

[2:47:34] we can start using that fund for deferred maintenance.

[2:47:38] The other is incentive.

[2:47:39] I've got him running out of time already.

[2:47:42] Instead of, I'll allow you additional time

[2:47:44] just because it's complex.

[2:47:47] Incentives, we have the ability to go out

[2:47:50] and rent more of that property or to convince

[2:47:54] our subtenance to maybe invest more and generate

[2:47:58] more property tax revenue.

[2:48:01] And I know this is a diversion from policy,

[2:48:04] but that 400,000, not a big number

[2:48:07] When you look at the property taxes collected in this county, I know you don't like exceptions.

[2:48:13] We're asking you to move your cheese, but we are and the reasons are we need the money number one.

[2:48:21] Number two, if there's an economic fallback and say sales taxes go away and things like that,

[2:48:27] then maybe the general fund can't give us what we need. It's going to be a regular

[2:48:32] whereas with property tax, even with property valuations, it's never that dramatic fall and revenues, and that's important to us.

[2:48:42] And thirdly, that incentive that we can go out and know that if we can do more business, we can help make our tenants live in a much stronger, safer environment, fire protection roads, et cetera, et cetera, et cetera.

[2:48:57] So it seems like the property tax is the big issue and that's where we stand and that's my opinion there may be more information I could filter on to that but that's the way we see it and greatly appreciate your spending this much time on our little airport, which we're all very proud of.

[2:49:18] Thank you, if you have any questions, I'd be glad to answer them.

[2:49:22] Thank you, Mr. Treason, questions from the Board.

[2:49:28] Thank you so much, Mr. Treason.

[2:49:29] Thank you.

[2:49:30] I appreciate your hard work and diligence on the Advisory Committee.

[2:49:34] Is there anybody else who would like to provide comment at this time from Avergenies?

[2:49:53] Well, thank you for the opportunity.

[2:49:57] Basically, overall, I think, the one issue that separates us is this unsecured property

[2:50:04] tax.

[2:50:05] It's an important source for us because it is essentially something we can count on.

[2:50:11] I can leverage and do a lot more with.

[2:50:14] If we turn it around the other way where we get a backhand subsidy, it's never a sure

[2:50:19] of thing.

[2:50:19] But it depends on what's left over.

[2:50:22] In terms of payback, you're requiring with this action that we pay back things.

[2:50:31] For what I heard, for the hospital, you're not going to require them to pay back.

[2:50:36] I don't know what the difference is there.

[2:50:40] The letter from FAA that came in my mind indicates a very strong reference from FAA.

[2:50:47] Even though there's no prohibition for reallocation of the unsecured taxes, they strongly suggest

[2:50:55] that the taxes continue to be used for the maintenance and operation of the airport as they

[2:51:00] have been in the past.

[2:51:03] So this is and this is consistent with the grant

[2:51:07] insurance is also so they feel strongly about it too. I think it will enhance

[2:51:13] our relationship with FAA and I strongly urge you to consider and I appreciate

[2:51:19] all the effort the administration has made to write the ship but when I look at

[2:51:24] what's left with having to pay back $1.8 million plus all the other negatives, we're

[2:51:33] worse off financially now under this plan than we were before and without the guaranteed

[2:51:39] subsidy.

[2:51:40] So, I would ask you to consider leaving the unsecured property taxes with the airport.

[2:51:46] Thank you.

[2:51:49] Mr. Merver, Jeannies, would you hold on one moment?

[2:51:52] I believe there are questions.

[2:51:59] That's one point eight million payback. I'm not quite sure because I haven't had any conversations

[2:52:04] that require the airport to pay back that money. I'm sorry. You've talked about a one point eight

[2:52:11] million dollar payback. Right. To the county. It's your fund. I haven't had any conversation with anybody

[2:52:18] that's talking about having the airport payback one point eight million dollars. That's the negative

[2:52:24] to this left over at the end of the day from the past and secured property passes.

[2:52:31] I understand.

[2:52:32] I have to be handled some way.

[2:52:34] I may be handled with a property sale later.

[2:52:38] It may not.

[2:52:39] But how is it going to be handled?

[2:52:42] Well.

[2:52:42] Is the board willing to waive that?

[2:52:45] That would be fine.

[2:52:47] But if not, it's a liability.

[2:52:49] One fashion or another, it's something that we have to carry.

[2:52:53] Well, I think you're right in regards to, you know, this board has to make a decision but I don't think anybody, I haven't talked to many of the board members about this but I don't think anybody's including myself has made a statement that we expect the airport to pay back $1.8 million.

[2:53:08] And I guess my further point is until we make this decision on regards this particular position as to the funding and whether it goes enterprise fund or general fund,

[2:53:20] And I don't think we can have that discussion until after that's the decision that made.

[2:53:25] And I know there's been talk in regards to B5, you know, those types of discussions have

[2:53:29] taken place.

[2:53:30] But I, this might experience obviously limited, but various departments I dealt with, I know

[2:53:41] that the, whether it be that the board itself or the CEO have been very open to, to talking

[2:53:48] about these issues to ensure that whatever department we're dealing with remains whole and maintains

[2:53:53] their mission and all that has all the resource they need to complete that I don't think anybody

[2:54:00] is talking about payback at this point in time and I may be wrong maybe somewhere down the road but

[2:54:05] I certainly don't have any inclination to require their report to pay any money back that they've

[2:54:12] already received. And the other question in regards to the maintenance issue and I get it

[2:54:18] I see the property, you know, I go out there and I've a 10-year meetings and I've heard

[2:54:23] your presentation, and I think you do an excellent job.

[2:54:26] I think the board does an excellent job, ain't Bill and Bill, and the rest of the board

[2:54:30] are passionate about the airport.

[2:54:33] Most have been there since the beginning, I believe, since the advisory board started.

[2:54:37] So they obviously have a good view of what's been happening in some cases, not happening

[2:54:43] over the years.

[2:54:45] And I think we're making tremendous strides.

[2:54:46] I think they're making tremendous strides, but I guess for my vantage point and maybe I'm a little more simplistic, but a dollar is a dollar.

[2:54:57] That the dollar comes from obscure property tax or the dollar comes from the general fund or the dollar comes from the federal government or wherever.

[2:55:06] I would certainly think that the money as you received based on you and what Ron do on a daily basis would be your decision to make.

[2:55:14] I think I certainly have never offered any direction to either your board or to you in regards to what you do, and I think that's been pretty apparent, especially with the job you're doing.

[2:55:27] I don't think anybody is. We've had discussions about COG. I pushed that and my fellow members of the board pushed that loan, and you know how that started and opposition that we received from the county.

[2:55:42] So I don't think you can say that this Board of Supervisors,

[2:55:46] certainly members of COG and the others have done anything

[2:55:49] but try to do everything possible to make your operation

[2:55:53] more successful.

[2:55:54] And I thank you and Ron and the Board are an integral part of that.

[2:55:57] So I think we're on the same team.

[2:56:00] I think we're trying to copy the same goal.

[2:56:02] It's just a matter of semantics, it's a matter of policy

[2:56:07] that ultimately this Board will have to decide.

[2:56:12] But I appreciate what you're doing. I appreciate your working hard on this.

[2:56:18] Thank you. I appreciate that. The little confused about the 1.8 million if you're saying we don't have to pay it back.

[2:56:25] That makes a big difference. I'm not saying that. I can't say that. I'm only one board member.

[2:56:30] What I'm saying is that I have not had any conversations after this point.

[2:56:35] of anybody saying that the airport has to pay back the $1.8 million.

[2:56:41] And having said, I can't say that won't happen, I can't predict the future, but I'm certainly not implying to make that requirement.

[2:56:49] So that would have made my part.

[2:56:52] Could Supervisor Winn vice-Charlie?

[2:56:55] Thank you, Mr. Chairman.

[2:56:58] Just on that topic of $1.8 million, my understanding of what this staff report says is that the

[2:57:06] only way that is being factored into any calculations on how it would be accounted for is if we

[2:57:16] were to purchase that parcel known as B5, then the county would want to consider that $1.8 million

[2:57:24] that had already been contributed through past general fund contributions as part of the purchase price.

[2:57:30] But otherwise, the way I read this effort, that's the only calculation that's being considered.

[2:57:37] We're not considering any payback, is that correct?

[2:57:42] Correct. That's why we put the word consider because we don't have all the facts on B5 yet.

[2:57:48] Right.

[2:57:49] We are not asking for board decision on the 1.8.

[2:57:53] or are we asking the board, or am I asking the board,

[2:57:58] or recommending a liability to go on the airport's books for the 1.8?

[2:58:03] Okay, thank you. And then Mr. Maverick-Gennis, I've heard the argument,

[2:58:08] and I think I read it in one of those communications that we received as well,

[2:58:13] that under this reallocation proposal here,

[2:58:17] the airport would be losing $2 for every dollar it receives from the new lease revenue.

[2:58:22] So how would that work?

[2:58:24] That analysis was done on the basis of receiving 636,000 in lease revenues, but we're giving

[2:58:33] up 1.2 million between the 870,000 and the 470,000.

[2:58:41] And as in my mind, the other back end contribution was not a guarantee likely property fax is.

[2:58:51] not a sure thing. It may change from year to year based on the portions of the county.

[2:58:57] So as far as sure things, that's the way I looked at it.

[2:59:01] Okay, well, of course the unscored property taxes are likely to change from year to year as well, either going up or down or.

[2:59:08] Right, go up, if we do improvements, if we fix the area up, it will go up.

[2:59:13] Right, okay, thank you.

[2:59:17] Thank you, Vice-Tralia, Supervisor Miller.

[2:59:18] Thank you. Mr. Maverick, if I look at this little chart that basically says, in the 2015-16

[2:59:28] budget, total the airport received a net of $1.00, almost $3 million. And that what is being

[2:59:35] proposed is that in the 2016-17 budget, the airport will also receive the exact same amount just

[2:59:42] under $1.3 million, but what I understand you to say is, you'd prefer that that formula come in

[2:59:51] the form of unsecured property taxes at $470,000 to move into that column. Doesn't it stand to

[2:59:58] The reason that then the...

[3:00:00] Proposed general fund net county contribution would go down in a corresponding amount so that it's still ended up with $1.3 million?

[3:00:10] Yes, but this would be a, it's a more secure funding source, and that's why I prefer it. It's something that I can count on. In use, we can leverage I think much better. No, it's there. Okay. I understand what you're saying. Thank you.

[3:00:28] Thank you so much, Mr. Maverick, just a

[3:00:38] couple of comments and observations.

[3:00:43] I think it's important to put this in the context of the government accounting principle.

[3:00:50] I think that's helpful to understand what exactly we're trying to accomplish here specifically.

[3:00:56] I understand that there are a variety of subjects that we can delve into relating to how we

[3:01:03] might be able to better enhance the self-sufficiency

[3:01:07] of the airport.

[3:01:09] But I think that discussion is a much larger one

[3:01:12] that will require additional information

[3:01:15] that we don't have on hand, particularly important

[3:01:19] to note that the scope of what we're trying

[3:01:20] to accomplish here is FAA grant assurance component.

[3:01:25] And from that respect, having reviewed all the information

[3:01:29] that has been provided to me by both staff

[3:01:33] enough, and certainly the dedicated members of the advisory committee, and of the opinion

[3:01:38] that that recommendation is consistent with the AA grant assurance principle.

[3:01:44] In terms of the $1.8 million what we are terming as liability, at the moment I concur with the

[3:01:55] consensus of the board that we are not providing with direction at the moment, how to treat

[3:02:00] that whether in fact we are treating it as a liability or something else.

[3:02:04] So I think that should press and concerns that there may be by members of the advisory

[3:02:11] committee, whether or not we are acquiring and payback or structuring that as some type

[3:02:17] of your debt on the airport, because that is not the case with me, at least the consensus

[3:02:24] that I'm hearing from the board moment.

[3:02:29] So, I've been said that if there are any additional comments from the board, I would entertain

[3:02:34] in motion, and there is an additional comment, so I will refer to supervisor one.

[3:02:43] Thank you, Mr. Chair.

[3:02:45] From, I understand we're, we're, uh, airport director and, and their board are coming from,

[3:02:51] I get it.

[3:02:52] And Mr. Rivera-Jones mentioned a couple of times the leveraging of a certain amount that can be guaranteed.

[3:03:01] Also, the advantage of having property tax to indicate, although I put it otherwise, it normally goes up,

[3:03:10] which means you have a greater amount to work with for future projects, maintenance, so such a things.

[3:03:16] So, I understand the advantage of having control over the unscruperable tax.

[3:03:22] So, I guess from my vantage point, I appreciate certainly the hard work and the dedication and the vision

[3:03:31] that the airport staff, Ron, and Bri have, but also the advisory board.

[3:03:39] I can't predict the future, and as I said earlier, I would never settle a future board

[3:03:45] requirements or mandates that they couldn't follow or have to make sacrifices in other areas that may have a higher priority.

[3:03:52] But I would offer this because whether the unsecured property tax and under the control of the airport and the enterprise fund,

[3:04:05] and then the on top of that subsidy that the general fund provides, which is totally discretionary in regards to any future

[3:04:16] economic changes. I can only offer this, because I've been somewhat closer than others on

[3:04:26] the board because of the Reserville Food and myself being part of the advisory committee.

[3:04:31] Also our challenge with COG and the success that Harry was instrumental in achieving, I can

[3:04:42] committed as a board member, I have talked to any number of residents and constituents

[3:04:49] who are excited about, you know, what's happening in the airport and what the future holds

[3:04:54] in regards to a hub, regards to international travel, and I can't, I couldn't in good

[3:05:00] conscience do anything but continue to support, and if possible, even increase support through

[3:05:06] the airport in its future because I think we're on the right track and I think we're close

[3:05:11] to success, some of the major goals that have been promised.

[3:05:16] So I get it, but again, I have to be very cautious in regards to the control of general

[3:05:25] fund revenues for this board, probably maybe even this in June and certainly for the future.

[3:05:33] And I don't think, the honest with the, I don't envision this year next year maybe in the future

[3:05:40] that I can see, any decrease in the money is available as Supervisor Miller indicated it's

[3:05:48] the same amount from year to year, and I can't see any reason that can't continue with

[3:05:52] this board support, and certainly the support of the advisory board.

[3:05:57] So dollars are dollars, and I guess I'm sure Mr. Mavagenis would need is go out and talk

[3:06:06] to entities, whether it be airlines or other business operators, I have X number of dollars

[3:06:17] that I'm guaranteed. Therefore, we will continue to maintain our facility and improve it

[3:06:22] and all those other things. I get it, but I still think that dollar amount, and I don't

[3:06:32] I want to say guarantee that certainly it adhered to as much as possible for the future.

[3:06:36] To not inhibit his programs, his recruiting of businesses and airlines and those types of things.

[3:06:43] And I would only say from this board that I think we have given him total support in the past.

[3:06:48] And I think he can use that support in his discussions with anybody.

[3:06:53] But the committee, the mayor's office, et cetera, are committed to make this airport.

[3:06:58] The best it can be, and I think by virtue of that.

[3:07:00] But you can take that to the bank, at least my vantage point.

[3:07:05] Again, I'm not inclined to go any other direction other than the recommendations from this.

[3:07:12] So.

[3:07:14] Thank you, supervisor.

[3:07:15] One, and just to briefly illustrate your point of support, I think it's good to note the

[3:07:21] amount of general fund contribution over the past several years.

[3:07:25] and how we have consistently provided support every year in an amount that exceeds various

[3:07:35] amounts, but nevertheless, I think that certainly demonstrates the commitment of the

[3:07:40] sport to the airport and is predictive of a trend in being on to Supervisor Miller.

[3:07:49] Thank you.

[3:07:49] So I agree with our director that he's concerned with the stability of the airport enterprise

[3:08:00] fund.

[3:08:01] And I understand that very much.

[3:08:05] And he and his advisory commission, that's what they're charged with doing, is focusing

[3:08:11] on the airport operations and the stability of that enterprise fund.

[3:08:16] But this board, we are charged with the stability of the entire county

[3:08:22] organization. And so, for me,

[3:08:27] what this is more about, it's two things. The first one

[3:08:30] is that the discretion and the decision making process remains with the board

[3:08:36] because we have access to information on the entire county organization. And it's

[3:08:44] always important for us to make our decisions based on that perspective, but the second thing

[3:08:49] is this is based on public accounting principles. And I will just say, having come through a pretty

[3:09:00] brutal tutorial on public financing and accounting, it is a very, very specialized unique field and a

[3:09:12] different kind of accounting and between just just two of the members making this recommendation here we're looking at over 60 years of specialized experience in public accounting and so I have a lot of faith in that experience and I have learned the hard way that

[3:09:35] when you don't pay attention to those, that kind of experience and those sort of recommendations

[3:09:42] can be very problematic and there can be a lot of unforeseen and unintended consequences

[3:09:50] from decisions that are made.

[3:09:52] So, from my standpoint, I think all of us have said many occasions in public

[3:10:00] how strong our support is for the airport, and for seeing it become self-sufficient, and really, it just has so much potential for our county, and yes, supervisor win commented on the advocacy that some of us provided through COG to make sure that our airport director has financial wherewithal to move into the future and make some decisions.

[3:10:27] So, I also agree, I do not see any reason why that support would waver in the future and why the funding would be jeopardized.

[3:10:37] So, I'm inclined to support this recommendation as well.

[3:10:41] Thank you.

[3:10:42] Supervisor Miller, Vice Chair Alia.

[3:10:45] Thank you, Mr. Chairman.

[3:10:47] I'd also just like to thank the Airport Director and the Airport Advisory Commission for their diligence here in trying to

[3:10:57] to make sure that the airport enterprise fund

[3:11:00] does become self-sufficient.

[3:11:01] I think we've made great strides in that regard.

[3:11:05] I can clearly see the argument for maintaining

[3:11:09] the unsecured property taxes

[3:11:11] as part of the revenues for the airport enterprise fund.

[3:11:17] However, I am also swayed here by the arguments

[3:11:22] of consistency and creating all of our enterprise funds

[3:11:26] the same way and making our accounting practices be uniform in the way that we handle our budget

[3:11:35] negotiations and our budget deliberations.

[3:11:38] So based on that, while I can certainly see the logic and the benefits of keeping those

[3:11:45] unsecured property taxes permanently allocated to the airport, I am going to support this recommendation

[3:11:54] today.

[3:11:55] However, I would recommend that we also conduct further discussions with the FAA, and I'm

[3:12:02] sure that will happen as a result of this audit, but we should also just make that point

[3:12:10] to the FAA that we are not attempting to create any obstacle, and make it very difficult

[3:12:16] for the airport enterprise fund to balance its budget or to be self-sufficient.

[3:12:21] That is, in fact, the goal, but we're doing this particular exercise here in terms of maintaining consistent accounting practices.

[3:12:30] And I think that's more important in terms of our fiscal responsibility.

[3:12:35] So that being said, keep up the good work in terms of the management of the airport and the airport enterprise fund.

[3:12:42] However, I will support this recommendation today.

[3:12:47] Vice Chair Elliott, any further comments from the board?

[3:12:52] Very well.

[3:12:52] I will entertain a motion and a second to approve

[3:12:56] staff's recommendation, the item, the move.

[3:13:00] Second.

[3:13:01] Moved and seconded.

[3:13:02] Supervisors, please cast your vote.

[3:13:11] The motion carries, four to one.

[3:13:16] Thank you all.

[3:13:17] Again, so very much for the hard work and diligence that you guys put into

[3:13:20] to advising us and providing us with service to the airport in our community.

[3:13:26] Chair Zapien, this is the last board presentation that Miss Lee will be conducting in her career of over 37 years with San Joaquin County.

[3:13:39] She would not have allowed me to do this if I would have told her I was going to do it.

[3:13:43] But as Supervisor Miller mentioned, we're talking in her career alone, 37 years.

[3:13:53] Here was San Joaquin County.

[3:13:55] It has been very fiscal related.

[3:13:58] She has come up from working in the Public Works Department to be in the Assistant CAO here

[3:14:06] in San Joaquin County.

[3:14:07] She has provided this organization such a level of sound fiscal policy that passports

[3:14:15] along with this board have been able to consider solid staff work and just a level of integrity

[3:14:23] and competence that is just incredible.

[3:14:27] And I just want to personally thank her because in almost my three years here she has made

[3:14:32] my life so easy.

[3:14:34] I love what I do, but as you guys can all see, we have to make sure we have roughly a

[3:14:41] department of 10 people that we manage along with all of our department heads and their

[3:14:47] finance staff, and Rosa has been instrumental to the end degree in leading that effort.

[3:14:54] So I want to acknowledge her and thank her because this organization has benefited greatly

[3:14:59] from her.

[3:15:00] Thanks for your expertise.

[3:15:16] Thank you, Chair. Very briefly. It's been a wonderful, wonderful experience and journey with San Joaquin County. It truly, truly is the employer of choice and opportunities. You know, Ann, thank you. Thank you, Miss Lee. Any additional comments from the board?

[3:15:40] Moving on in our agenda. Our next item is communications. Is there a motion to receive and refer all board communications?

[3:15:48] the state has outlined on the communications distribution listing.

[3:15:51] No moved.

[3:15:52] Moved and seconded.

[3:15:54] Supervisors, please cast your vote.

[3:16:01] Motion carries five to zero.

[3:16:03] Moving on to supervisor comments and committee reports.

[3:16:07] Any requests?

[3:16:08] Supervisor Miller?

[3:16:09] I have just a real quick one.

[3:16:11] I just want to say it's a pleasure to see our new logo popping up.

[3:16:15] Our Samuakine County greatness grows here.

[3:16:18] It's starting to appear on a lot of the presentations and I think it's great to see.

[3:16:24] So nice.

[3:16:26] Thank you.

[3:16:30] Thank you.

[3:16:30] Supervisor Miller?

[3:16:31] Supervisor Wynn.

[3:16:33] We're a quick, I have a couple of meetings in the last two weeks in regards to homelessness.

[3:16:39] It is a problem that will not go away.

[3:16:43] I was at low IPD for a group meeting in regards to a suite that they were going to make the following two days later.

[3:16:50] Also, I had an opportunity with Chief Jones, Stockton PD, and some of the things they're doing.

[3:16:58] And I know, surprise Miller is working with the homeless task force.

[3:17:03] I think there's opportunities, based on what I've seen.

[3:17:06] I am really impressed by the efforts made by just any number of organizations, including police departments,

[3:17:13] the Sheriff's Department, the railroad business owners, homeowners, and

[3:17:18] And it goes on and on, and hopefully we can kind of not just maintain it, but we can kind of make some progress.

[3:17:26] And I know there's been a lot of innovative ideas and I hope that maybe Supervisor Miller and I can get together, and she can share some of the things going on, and I can share some of the conversations I had.

[3:17:39] And where the rest of the year work on, I know we'll never eliminate it, but at least dramatically reduce it in our county.

[3:17:48] Thank you, supervisor Wynne.

[3:17:51] There being no further board comments, we'll turn it over to county council to announce

[3:17:57] our closed session.

[3:17:59] Two items on for a closed session.

[3:18:01] We have a conference with legal council, anticipated litigation, and we also have a public employment

[3:18:10] item also, public defender.

[3:18:13] Thank you so much, Mr. Flores.

[3:18:14] The board will stand in recess.

[3:18:16] Thank you also very much.

[3:18:17] All

[3:18:42] right. Ready?

[3:18:47] We're back on the record for the meeting of March 29,

[3:18:54] 2016.

[3:18:56] All right. We reconvene the closed session at 130. There were interviews of the applicants for the public defenders office.

[3:19:05] The Board of Supervisors has authorized the CAO's office to begin negotiations with one of the applicants.

[3:19:14] We are here by adjourned to Tuesday, April 12th, 2016 at 9 a.m.

[3:19:19] Thank you so much.

[3:19:20] Thank you.

[3:19:21] Thanks.

[3:19:22] Thanks very much.

Board of Supervisors Regular Meeting

Agenda

Transcript