Desk Item
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: 4/17/2018
ITEM NO: 11
DESK ITEM
ITEM NO: 11
DATE: APRIL 17, 2018
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: INCREASE THE PAYMENTS TO THE IRS 115 PENSION TRUST TO LOWER
THE TOWN’S LONG-TERM UNFUNDED PENSION OBLIGATIONS AS
RECOMMENDED BY THE COUNCIL FINANCE COMMITTEE
REMARKS:
After the distribution of the staff report, staff received the following question from a
Councilmember. The staff response follows in italic font.
Attachment 4 reflects Public Comments received after the distribution of the staff report and
addendum from 11:00 a.m. on Monday, April 16, 2018 until 11:00 a.m. on Tuesday, April 17,
2018.
What is staff’s response to transferring Town cash to unfunded pay down?
The Public Comment suggestion is based on providing additional lump-sum payments directly to
CalPERS. The Finance Committee has consistently expressed a strong preference for placing any
excess funds into the PARS IRS 115 Pension trust versus large discretionary payments made
directly to CalPERS. There is currently approximately $4.3 million in additional lump-sum
payments available in the CalPERS/OPEB Reserve earmarked for distribution to PARS IRS 115
Trust. The Finance Committee has opted for a dollar cost averaging approach to the additional
payments into the PARS IRS 115 Trust and has directed staff to deposit approximately $300,000
per month until the monies are fully invested. These deposits are currently underway.
Additional Public Comment identifies one area of the Town’s credit rating report from Moody’s
as the basis for examining the Town’s cash balances. It is important to note that Moody’s and
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SUBJECT: INCREASE PAYMENTS TO THE IRS 115 PENSION TRUST TO LOWER THE
TOWN’S LONG-TERM UNFUNDED PENSION OBLIGATIONS AS RECOMMENDED
BY THE COUNCIL FINANCE COMMITTEE
DATE: APRIL 17, 2018
S:\COUNCIL REPORTS\2018\04-17-18\11 Town Pension Payments\11 Desk Item FINAL.docx 4/17/2018 1:09 PM
other credit rating agencies assign a rating based the aggregation of all the various metric s it
reviews. Based on the totality of Moody’s review, the Town has received the highest rating
available of Aaa.
The Town’s cash balances are primarily a byproduct of previous Town Council approved uses
such as capital projects, catastrophic reserves, budget stabilization reserves, etc. Per the
Government Accounting Standards Board Policy 54, the majority of the Town’s cash balances
are classified as Restricted, Committed, or Assigned. As of June 30, 2017, the Town had
approximately $31.1 million in restricted and committed fund balances of which Almond Grove
was $12.0 million, CalPERS/OPEB reserve $3.3 million, and the Catastrophic and Budget reserves
were $10.0 million. In addition as of June 30, 2017, the Town had approximately $21.9 million
in assigned fund balances which include $14.5 million for Capital Projects.
The Town Council has an opportunity to annually review its appropriations and Reserve Fund
Policies as part of the annual budget process. The Council is slated to deliberate these matters
at its May 15, 2018, Council meeting.
Attachments previously received with Staff Report and Addendum:
1. Finance Committee materials from the February 12, 2018 meeting, item 3.
2. Finance Committee materials from the April 9, 2018 meeting, item 3.
3. Public Comments received between 9:56 p.m., Thursday, April 12, 2018 and 11:00 a.m.,
Monday, April 16, 2018.
Attachment received with this Desk Item:
4. Public Comments received between 11:00 a.m., Monday, April 16, 2018 and 11:00 a.m.,
Tuesday, April 17, 2018.