Staff Report
PREPARED BY: Steve Conway
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT MEETING DATE: 12/19/2017
ITEM NO: 14
DATE: DECEMBER 13, 2017
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: ADOPT A RESOLUTION FOR A $3,388,913 EXPENDITURE BUDGET
ADJUSTMENT FROM AVAILABLE CALPERS/OPEB FUND BALANCE TO
DEPOSIT TO THE IRS SECTION 115 PENSION TRUST
RECOMMENDATION:
Adopt a Resolution (Attachment 1) for a $3,388,913 expenditure budget adjustment from
available CalPERS/OPEB fund balance to deposit to the IRS Section 115 Pension Trust (115
Pension Trust).
BACKGROUND:
On December 4, 2017, the Council Finance Committee heard staff recommendation to refer to
the Town Council an expenditure budget adjustment in the amount of $3,388,913 for deposit
into the newly established 115 Pension Trust. This includes the previously allocated excess
pension reserves total of $1.5 million and the previously unallocated pension funds total of $1.8
million held in a reserve account.
In prior years, the Town Council appropriated funds in a deferred revenue deposit account to
be used as a funding source for future CalPERS required employer contributions. Due to robust
investment earnings during the "dot com" years preceding 2001, the Town's CalPERS pension
trust was determined by CalPERS to be "superfunded." As such, the Town was not required in
those years to make pension contributions to the CalPERS pension trust. The Town
conservatively elected to charge itself its required contributions and placed them into a General
Fund deposit account dedicated for future CalPERS employer pension costs. The total
remaining amount as of July 1, 2016 not used by the Town for employer contributions to
CalPERS was $1.8 million.
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SUBJECT: RECOMMEND AND ADOPT A RESOLUTION FOR A $3,388,913 EXPENDITURE
BUDGET ADJUSTMENT FROM AVAILABLE CALPERS/OPEB FUND BALANCE TO
DEPOSIT TO THE IRS SECTION 115 PENSION TRUST
DATE: DECEMBER 13, 2017
S:\COUNCIL REPORTS\2017\12-19-17\Pension Trust\Staff Report --115 PARS Budget Expenditure Final.docxLibrary Grant 12/14/2017 5:09 PM RB
BACKGROUND (Continued):
Upon review of its prior accounting for the amounts as deferred revenue, the Town reclassified
the $1.8 million deposit account as a prior period adjustment, increasing the General Fund
Reserve for CalPERS/OPEB and decreasing the same amount from the deferred revenue
CalPERS deposit liability account.
DISCUSSION:
Current accounting standards require that the transfer of monies from the committed reserve
into the 115 Pension Trust should be adopted through a formal governance process such as by
resolution. Staff recommends adopting a resolution allocating these funds to the 115 Pension
Trust for a total initial investment of $3.3 million.
FISCAL IMPACT:
None.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Draft Resolution