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Desk ItemTOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 02/21/2017 ITEM NO: 10 DESK ITEM DATE: FEBRUARY 21, 2017 TO: MAYOR AND TOWN COUNCIL FROM: LAUREL PREVETTI, TOWN MANAGER SUBJECT: OPTIONS TO INCREASE PUBLIC PARTICIPATION ON THE COUNCIL FINANCE COMMITTEE REMARKS: Attachment 1 contains public comment received before February 21, 2017. Attachment (received with Desk Item): 1. Public comment received before 11:00 a. m. February 21, 2017. PREPARED BY: KAY WINER Interim Assistant Town Manager Reviewed by: Town Manager, Town Attorney, and Finance Director Subject: FW: Council Meeting 2-21-17 On Feb 19, 2017, at 8:09 PM, Jak VanNada < r;n;,rdn;<-)gra !_c:nm> wrote: I am sorry to say that I won't be at the Tuesday meeting due to travels scheduled for this week. I would like to say that we appreciate all that you've done by listening to us the past 5 months and allowing us to express our views and findings. It was more than fair of you to allow us to bounce ideas off you as we worked our way forward searching for a better way to do things financially. One suggestion I have would be to encourage you to stiffen the requirements for those applying to the committee. In the staff report, as I read it, people that don't have the shear depth of knowledge to understand complicated financials could be considered as viable candidates. I think they will have a very difficult learning curve, and they may lose their desire while trying to figure things out. The learning curve of a non -financial laymen will take time that the town does not have. This is a very complicated position that requires experience in the financial field. We suggested corporate level experience; eg, a Director of Finance; a CFO in a public corporation; a CPA who has had corporate clients, etc., etc. After 5 months of being spoon fed by our two public company CFO's, both of whom were more than patient with me, I can assure you that the challenge of paying off the UAL intelligently, financing our streets and making strategic decisions in the future should not be left to the laymen. An example I used for two of the councilmen was that if they had a murder case, they aren't going to ask the smartest, nicest law clerk in the office to handle the case. They will want the best trained; most articulate and strategic thinker that they have available. These citizens have to have a strong financial aptitude with at least 5 years of experience working with financial numbers to cut into the time a learning curve can take. Secondly, I think it is time to have the Finance Committee thoroughly review the work of the auditor. Too many mistakes were found in the very short time we were looking at the towns finances that I think the auditor should have found. But in any case, this is a function the new Finance Committee should undertake and at the very least, make sure that they bid out the work since the contract will end soon. Jak VanNada Los Gatos Community Alliance i ATTACHMENT 1 February 21, 2017 Town of Los Gatos Madam Mayor and Council Members, I would like to endorse a unique community resource targeted to help the Town Council, the Finance Committee and Town Staff to broadly, yet efficiently, work thru to good solutions for the near and long term financial challenges facing Los Gatos. That resource is to have 3 very well qualified Townsfolk to be appointed as additional members of the Finance Committee. Their charter, as non -voting members, is to help prepare financial analyses for major proposals being considered by the TC so that the Council can better evaluate the financial consequence of options under review. The methods they can use: • To conduct independent research, do analysis, to provide modeling of financial scenarios, and to develop revenue and expenditure proposals for long term financial viability. • To solicit additional community input specific to issues also important to Townsfolk and the community at large • The citizen appointees could also take on assignments directly from the Council members and Staff for research, further analysis etc.. • The format for the Finance Committee Meetings would be as a public forum to allow additional citizen input from the broader community, thus removing the perception of prejudiced / political influence to some issues • Their three-year appointments, with a minimum of quarterly meetings, would ensure continuity and on -going reviews with updates for strategic proposals, not just semi-annual reviews as at present. Absent these three citizens formally appointed as additions to the Finance Committee, there is more likelihood of the broader community's concern for unqualified/random proposals, or a focus on only a single issue at the expense of other needs. Further, without formal appointment to the Committee, there is a higher likelihood of a lack of commitment from the well qualified community members all of us would want to participate in the process. Only by appointment would senior, financially educated and experienced Townsfolk be interested to make this significant time commitment for Los Gatos. We have already seen how some citizen input these last several months on the Town's financial issues has led to some new accounting discoveries and help Staff identify misclassified funds, etc., as they incorporate the new Government Financial Standards. Please move quickly to appoint three well -qualified Townsfolk to the Finance Committee, even if on a one year trial assignment, so they are in place by April 1st to help you work on the upcoming new budget. Longer term appointments could follow this trial once they demonstrate the value of this reformatted Finance Committee Thank you Lee Fagot 845 Lilac Way Los Gatos, CA 95032 408 828 7080 cell DATE: FEB 21, 2017 TO: MAYOR AND TOWN COUNCIL FROM: PETER L HERTAN, RESIDENT (152 TERESITA WAY, LOS GATOS 95032) SUBJECT: FEB 21, 2017 Town Council Agenda, ITEM 10: OPTIONS TO INCREASE PUBLIC PARTICIPATION ON THE COUNCIL FINANCE COMMITTEE "OUR ICEBERG IS MELTING" RECOMMENDATION: The town council should approve a resolution today, to expand the membership of the FINANCE COMMITTEE as defined in Council Agenda Item 10, Option 2, with the following changes to the list of specifics on pp 3 & 4 of the ITEM NO: 10 MEMO dated Feb 13, 2017 from Laurel Prevetti, to the Mayor and Town Council The expanded membership should become effective April 1, 2017 (as opposed to January 1, 2018) The number of resident members should be 3 Resident membership vacancies may be filled as MID-TERM APPOINTMENTS (as defined by town Commission Appointment Policy for PLANNING COMMISSION mid-term vacancies) Resident members should be non -voting BACKGROUND: Los Gatos has a large, growing, urgent financial challenge which could be characterized by the allegorical phrase "Our Iceberg is Melting" (from the management book of that title by John Kotter). Of the 8-step process for accomplishing change, we are beyond Step 1- dealing with it: we have recognized the problem and its urgency. We are beyond Step 2 - a core group of residents pulled together a team to recommend a course of action. We are in Step 3 - Deciding what to do. I recommend that deciding what to do about our town's financial challenge should be led by the Finance Committee, expanded to include 3 residents with talents that complement those of the two Council members and the town staff. As with any challenge, there are many possible ways of dealing with it. Though there are good Pro and Con arguments for each proposal, my recommendation is for the town council to approve the expansion of the Finance Committee and follow the process for Mid -Term appointments. The negative consequences of delaying expansion of the Finance Committee until January 2018 far outweigh any negative consequences of expanding the application of Mid -Term Appointments currently defined only for the Planning Commission. It is clear that the Planning Commission is so critical to the town's operation, that vacancies must be filled expeditiously. The same is clearly true for an expanded Finance Committee. The biggest financial challenge the town faces is the unexpected growth of its employee retirement benefit costs. Without a new approach, the annual cost to the town will soon absorb its entire annual revenue.