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Home My WebLink AboutFINANCE MINUTES 03-28-17 7.d . 1 CentraiContra costa Sa it as trict BOARD OF DIRECTO RS: REGULAR ME -o F THE PAU.If.CAUSEY CENTRALCONTRAPresident SANITARY DISTRICT JAMESA.1'VE.IE'I�L Y President Pro Tem FINANCE COMMITTEE MfC'HAEL R.1L1CGILL T4D J.PILECK'I DAVID R. WILLIA VIS MINUTES ,PHONE: (925)228-9500 FAX: (925)372-01 92 Tuesday, March 28, 2017 www.centralsan.org 1.00 p,rn. Executive Conference Doom 5019 Imhoff Place Martinez, California Committee: Chair Jim Ne edly Member Tad Pi eckii Invited guests: Andrew Brown, Director, HighMark Capital Management (left after Item 4.b.) Staff: Roger S. Bailey, General Manager Ann Sasaki, Deputy General Manager Phil Leiber, Director of Finance and Administration Stephanie Ding, Purchasing and Materials Manager Thea vassallo, Finance Manager Cindy Cranzella, Senior Administrative Technician 1. Call Meeting to order Chair-Nejedly called the meeting to order at 1.-00 p.m. 2. Public Comments None. 3. Old Business a. Review staff's responses to questions regarding expenditures at the February 2017 meeting: Finance Committee Minutes March 28, 2017 Page 2 .......... .......... ..... ...... ............... :.........:.........:......:... va, . n or r rV M, ................. .........:. :.... ............ Or #213192� $1%1344.00 Ilex Le Member 'ilecki.regc�ested additional 1/12/17 information on a refund of a permit fee. #213392 $955.60 ' Wonder ice Chiair Nejedly requested the cost 1125/17 Cream, Inca breakdown of the 70th Anniversary event. #213554 $150.00 e, n bola Clair I' e edly questioned if this was a 2/9/17Engineering month charge. b. Review staff's responses to questions regarding Procurement Card (P- Card) charges at the February 2017 meeting COMMITTEE ACTION: Reviewed staff's responses. 4. Andrew Brown of HighMark Capital Management to present on following issues regarding Governmental Accounting Standards Board (GASB) 45 Trust and OPEB Trust investments: a. More information on a wider range of fixed income options Mr. Brown re vie wed the presentation provided in the agenda materials. He explained that portfolio diversification and risk reduction are two reasons for exploring liquid alternative investments, which are securities traded as mutual funds or exchange-traded funds that irk vol ve strategies other than taking a long position in stocks or bonds. The presentation provided a potential addition to the Central San GASB 45 Frust of seven such liquid alternative mutual funds, which would be funded by reallocating 12% of the overall portfolio currently invested in fixed income instruments. lir. Brown reviewed the impact on portfolio returns over the past one- and three-year periods had these investments been in place, as well as the impact on measures of portfolio risk. It was noted that these investments have higher expense ratios, and the addition of them to the portfolio would increase the overall expense ratio by 10 oasis points. Member Pilecki inquired of Mr. Bailey and Mr. Leiber their views on the topic, and both agreed that no recommendation was being made at this time to add the liquid alternative investments to the portfolio, but additional exploration could be warranted. It was noted that changes to Board Policy No. BB 005—Statement of Investment Policy would be-needed should such investments be added, and that this would require Board approval. Member Pilecki expressed interest in receiving further information. u Finance Committee Minutes March 2$, 2017 Page 3 b. Alternative solutions regarding passive-versus-active investment options Mr. Brown explained that by switching certain current actively managed investments to similar passively managed'funds, central San could save a material portion of expenses. He recommended this as a possibility for US raid- and large-capitalization stocks as well as Real Estate Investment "rusts (REITs), but discouraged it for international and Us small- capitalization stock funds. The Committee Members and staff agreed that movements in this direction appeared advisable. Discussion was held on whether Board approval was required to implement any such changes. Mr. Brown indicated that he currently had the authority to make such changes. Mr. Bailey suggested bringing information on this topic, and the liquid alternative investments to the fall Board for heir information and potential feedback to.staff. chair lllejedly and Member Pilecki agreed. Accordingly, Mr. Brown agreed to present the information to the full Board at the April 0, 2017 meeting. COMMITTEE ACTION: Discussed, provided input to staff, and recommended that the information be presented to the full Board. 5. Expenditures a. Review Expenditures COMMITTEE ACTION: Reviewed and recommended Board approval. Requested additional information on the following: ... � ................. ...... ..:........ :...................... t :..-:.::.. at f :.......:..... .. % ... #l213636 $91,677.08 U S Bank chair Neiedly requested further 2/16117 (Procurement information on multiple charges Cards) described as `Parts to repair District vehicles" and noted several line items described as !`operational supplies.Yl 6. Review February 2017 Financial Statements and-investment Reports Ms. Vassallo stated that year-to-date operations and Maintenance (O&M) revenues are $340,000 under budget, mainly due to a shortfall in the first sewer service charge installment. O&M expenses are running a $3.9 million favorable variance due to labor, repairs, maintenance, and outside services. Sewer construction revenues are running a $2 million unfavorable variance due to the shortfall in the first sewer service charge installment sewer construction expenses, or capital spending, is $19.3 million, or 52.6% of budget. Member Pilecki voiced concern at having spent only 52.0% of the capitalsending budget Finance Committee ttee Minutes March 28, 2017 Page 4 within the first two-thirds of the year, especially with a rate hearings approaching. Mr. Bailey reassured him.that staff will look at year-end trends. Member Pilecki would like to have that information available at or before the rate hearing. Additionally, Member Pilecki requested that staff review the Recycled Dater charges and line item budgets to improve the accuracy of such budgets prospectively. COMMITTEE ACTION: Reviewed and recommended Beard approval. 7. Deceive follow-up information as to why higher fees are charged for the PTs (for temporary, part-time.employees) 1CMA Deferred Compensation Plan in comparison to other ICMA plans COMMITTEE ACTION: Received the information. 8. Review draft Position Paper request approval of a one-year extension of the existing contract for audit services with Maze & Associates Ms. vassallo explained that the requested extension is for one-year only. staff is currently starting the process of requesting proposals for subsequent years. Member Pilecki requested that this he noted in the position paper to the Board. COMMITTEE ACTION: Reviewed and recommended Board approval.. 9. Announcements a. Future scheduled meetings: Tuesday, April 25, 2017 at 1:00 p.m. Tuesday, May 23, 2017 at 1:00 p.m. Tuesday, June 20, 2017 at 1:00 p.m. 10. suggestions for future agenda items None. 11. Adjournment at 2:03 p.m.