RPVCCA_CC_SR_2012_09_04_02_FAC_2012-13_Work_PlanCrTYOF
MEMORANDUM
Rt\NCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNC~
DENNIS McLEAN,DIRECTOR OF FINANCE &INFORMATION ~
TECHNOLOGY
SEPTEMBER 4,2012
FINANCE ADVISORY COMMITTEE 2012·13 WORK PLAN
CAROLYN LEHR,CITY MANAGER ®-
Staff Coordinator:Kathryn Downs,Deputy Director of Finance &Information
Technology U[)
RECOMMENDATION
Approve the proposed Finance Advisory Committee (FAC)2012-13 Work Plan (see
attached).
DISCUSSION
Each year,the City Council approves Work Plans for its appointed advisory boards.The
goal of the Work Plan is to define assignments and control City resources allocated to
support those assignments.
The FAC made modifications to its draft Work Plan and approved the final proposed
version at its meeting on August 22,2012.The proposed FAC Work Plan includes the
following assignments:
1.Receive a presentation of the City's Comprehensive Annual Financial Report
(CAFR)prepared annually,including the audit report;
2.Review and provide comments and recommendations regarding the Five-Year
Financial Model to the City Council;
3.Provide feedback and suggestions for a presentation and publication to be prepared
by Staff regarding various financial issues relevant to the City (e.g.Capital
Improvement Plan,Reserves,Budget,etc.)that could be delivered at local
community meetings;
4.Analyze various methods of generating revenues for the City,efficiency
improvements and expenditure reductions;
5.Receive the 2012 CalPERS Actuarial Valuation Report,update the Committee's
Memorandum to the City Council dated April 25,2012 and titled "Calculation of the
2-1
FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
September 4,2012
Page 2 of 2
City's Unfunded Pension Liability",and consider any other pension related issues
which City Council may direct;
6.Review and comment on either the draft or final 2012 Performance Audit Report;
7.If the City Council elects to direct the Committee to review a proposed Citywide
Sewer User Fee,review and provide comments and recommendations regarding
development and adoption of the proposed Fee;and
8.In addition to the above specific assignments,the FAC is prepared to meet on an
ad-hoc basis to review any additional projects assigned to it by the City Council
Support of these assignments will require an estimated 151 Staff hours (including 59 hours
for the optional Sewer User Fee review).Prior years'Work Plans have included 1 to 3
assignments in addition to the FAC's standing task of reviewing the Five-Year Financial
Model.T~is proposed Work Plan would add 4-5 assignments,resulting in an expanded
process and consumption of City resources.
Finance &Information Technology (FIT)Staff support both the Storm Drain Oversight
Committee and the Oversight Board for Redevelopment Dissolution.During the next 12
months,FIT Staff will also manage the Enterprise Resource Planning (ERP)system
procurement and implementation,procurement and assistance with implementation of
Recreation software,banking services Request for Proposal (RFP),independent auditor
RFP and the two-year budget process.Staff is supportive of the FAC's efforts and
appreciates the collective opinions,but requests that the City Council consider the
department workload before approving the proposed Work Plan.
During review of the draft Work Plan on August 22,2012,the FAC offered to prepare an
opinion statement about the City's fiscal health for use with the public outreach identified in
proposed task #3.Although the offer is well intended,Staff is concerned about public
misperception of an "opinion"when the FAC Members are not acting as licensed finance
and accounting professionals."Opinions"about the City's financial statements are
expressed by the City's independent auditors and should not be potentially confused with
any possible statements about the City's overall fiscal health made by others.Staff's
concerns were validated by discussions with colleagues at the Government Finance
Officers Association (GFOA)and the City's independent auditor from White Nelson Diehl
Evans LLP.Staff does not recommend that the FAC prepare an opinion statement about
the City's fiscal health.
FISCAL IMPACT
By approving the proposed FAC 2012-13 Work Plan,the City Council will be allocating
approximately 151 hours of Staff time,which will not be available for other assignments
and initiatives.
2-2
CfTYOF
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 1 of 11
MISSION STATEMENT
The Finance Advisory Committee provides citizen input to the City Council and
Staff regarding financial matters of the City of Rancho Palos Verdes.The
Committee shall review short and long-term financial information of the City and
other financial issues as assigned by the City Council.The Committee shall
provide advice regarding economic development matters such as methods to
improve the business climate and how to better work with local businesses and
shall recommend specific areas for review to the City Council.The Committee
will se'"'(e to advise the City Council regarding the City's financial condition.
SUMMARY OF SPECIFIC 2012-13 ASSIGNMENTS
1.Receive a presentation of the City's Comprehensive Annual Financial
Report (CAFR)prepared annually,including the audit report;
2.Review and provide comments and recommendations regarding the Five-
Year Financial Model to the City Council;
3.Provide feedback and suggestions for a presentation and publication to be
prepared by Staff regarding various financial issues relevant to the City
(e.g.Capital Improvement Plan,Reserves,Budget,etc.)that could be
delivered at local community meetings;
4.Analyze various methods of generating revenues for the City,efficiency
improvements and expenditure reductions;
5.Receive the 2012 CalPERS Actuarial Valuation Report,update the
Committee's Memorandum to the City Council dated April 25,2012 and
titled "Calculation of the City's Unfunded Pension Liability",and consider
any other pension related issues which City Council may direct;
6.Review and comment on either the draft or final 2012 Performance Audit
Report;
7.If the City Council elects to direct the Committee to review a proposed
Citywide Sewer User Fee,review and provide comments and
recommendations regarding development and adoption of the proposed
Fee;and
8.In addition to the above specific assignments,the FAC is prepared to
meet on an ad-hoc basis to review any additional projects assigned to it by
the City Council
2-3
OTT'a=~Rt\NcHo f1IlDS \JERDES
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 2 of 11
SUMMARY OF STAFF TIME
A summary of the total Staff time estimated for the assignments outlined in this
2012-13 work plan follows:
Assignment
Critique Community Presentation
Comment on Performance Audit
Analyze Revenue &Expenditures
Update Pension Memo
Receive CAFR Presentation
Review 2013 Five-Year Model
Subtotal Staff Time
Review Sewer User Fee
Total Staff Time
Staff Support
No.Meeting Date Hours
3 October 7
6 October 6
4 Nov/Dec/Jan 46
5 November 7
1 January 2
2 Apr/May 24
92
7 Unknown 59
151
2-4
CflY OF ~RANcHO fl\Los VERDES
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 3 of 11
SPECIFIC 2012-13 ASSIGNMENTS
1.RECEIVE A PRESENTATION OF THE CITY'S COMPREHENSIVE ANNUAL
FINANCIAL REPORT (CAFR)PREPARED ANNUALLY,INCLUDING THE
AUDIT REPORT
The Comprehensive Annual Financial Report (CAFR)is an annual report that
includes the City's audited financial statements,as well as other financial and
statistical information.Receipt of this presentation is an annually recurring item
intend~d to provide the Committee with relevant financial information.
Staff Responsibilities:
~Present an oral overview of the CAFR and accompanying staff report to
the Committee and answer Committee Member questions.
Timeline
Staff expects that this presentation will take place during a meeting with another
Work Plan assignment in January 2013.
Staff Time:
Committee Member Advance Q&A
Staff preparation for presentation
Total Staff Time Required
1 hour
1 hour
2 hours
2.REVIEW AND PROVIDE COMMENTS AND RECOMMENDATIONS
REGARDING THE FIVE-YEAR FINANCIAL MODEL TO THE CITY COUNCIL
The Five-Year Financial Model (the "Model")is a financial schedule which is
annually prepared by Staff,as required by City Council Policy No.18.The Model
includes the proposed budget for the coming fiscal year,as well as estimates of
revenues,expenditures,fund transfers and ending fund balance for all funds of
the City over a five-year time period.The Model is prepared as part of the
budget process for each fiscal year,and is a planning tool used to identify
structural problems in the budget and future fiscal challenges.
Committee Responsibilities:
~Review and comment on the draft 2013 Model prepared by Staff focusing
on noteworthy changes,trends,and key assumptions;and
~Provide recommendations to City Council.
2-5
CITY OF
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 4 of 11
Staff Responsibilities:
~Prepare the draft 2013 Model with accompanying staff reports explaining
key assumptions and noteworthy changes;
~Present an oral overview of the draft 2013 Model and accompanying staff
report to the Committee and answer Committee Member questions;and
~Forward the Committee's comments and recommendations to the City
Council for its consideration prior to adoption of the FY13-14 City bUdget.
Timeline
Staff expects that review of the draft 2013 Model will take place at two
Committee meetings during April and/or May 2013.
Staff Time:
Staff report preparation for the Committee
Agenda preparation with Chair &distribution
Committee Member Advance Q&A
Staff preparation for presentation
Meeting attendance for 1 staff person
Minute preparation
Total Staff Time Required
6 hours
2 hours
4 hours
4 hours
6 hours
2 hours
24 hours
Note:The Staff Time estimated herein is exclusive of the time to prepare the
Model and Staff Report for City Council...
3.PROVIDE FEEDBACK AND SUGGESTIONS FOR A PRESENTATION AND
PUBLICATION TO BE PREPARED BY STAFF REGARDING VARIOUS
FINANCIAL ISSUES RELEVANT TO THE CITY THAT COULD BE DELIVERED
AT LOCAL COMMUNITY MEETINGS
As part of its 2012-13 goals,the Finance and Information Technology
Department expects to make presentations at local community meetings
regarding the various financial issues relevant to the City (e.g.Capital
Improvement Plan,Reserves,Budget,etc.).This process will be improved by
the Committee's involvement.Committee Members would not be precluded from
attending these local community meetings and offering their individual opinions
and comments.
Committee Responsibilities:
~Comment and make suggestions for the presentation and draft
publication.
2-6
CITY OF
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 5 of 11
Staff Responsibilities:
~Deliver the draft presentation and publication,and answer Committee
Member questions;and
~Prepare the final presentation and pUblications incorporating Committee
suggestions as appropriate.
Timeline
Staff expects this assignment can be completed with one meeting during October
2012 ..
Staff Time:
Agenda preparation with Chair &distribution
Staff preparation for presentation
Meeting attendance for 1 staff person
Minute preparation
Total Staff Time Required
1 hour
2 hours
3 hours
1 hour
7 hours
4.ANALYZE VARIOUS METHODS OF GENERATING REVENUES FOR THE
CITY,EFFICIENCY IMPROVEMENTS AND EXPENDITURE REDUCTIONS
There are a limited number of revenue generation methods legally available to
California cities.After reviewing an overview of legally allowable methods and a
review of the City's existing revenue sources,the Committee may develop ideas
to secure a sufficient revenue stream for future City services and infrastructure
projects.In an effort to analyze the complete view of the City's financial activity,
the Committee would also consider efficiency improvements and the potential for
expenditure reductions that mayor may not be based upon reductions in service
levels.
Committee Responsibilities:
~Review legally allowable revenue sources for California cities;
~Review the City's existing revenue sources;
~Review the City's expenditures and service levels;and
~Develop recommendations to the City Council.
Staff Responsibilities:
~Provide authoritative evidence of legally allowable revenue sources for
California cities;
~Provide an overview of the City's existing revenue sources,expenditures
and service levels;
2-7
r.~
CITY OF.RANCHO PALOS VERDES
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 6 of 11
>-Forward the Committee's comments and recommendations to the City
Council for its consideration.
Timeline
46 hours
20 hours
3 hours
6 hours
9 hours
3 hours
5 hours
Staff expects this assignment can be completed during three meetings in
November 2012,December 2012,and January 2013.
Staff Time:
Staff r~port preparation for the Committee
Agenda preparation with Chair &distribution
Staff preparation for presentation
Meeting attendance for 1 staff person
Minute preparation
Prepare Report to City Council
Total Staff Time Required
5.RECEIVE THE 2012 CALPERS ACTUARIAL VALUATION REPORT,
UPDATE THE COMMITTEE'S MEMORANDUM TO THE CITY COUNCIL
DATED APRIL 25,2012,AND CONSIDER ANY OTHER PENSION RELATED
ISSUES WHICH THE CITY COUNCIL MAY DIRECT
On January 17,2012,the City Council made the following assignment to the
Committee:
"The Finance Advisory Committee (FAC)will study the alternatives that are
available for the City to accurately ascertain the CalPERS Unfunded Pension
Liability owed by the City of Rancho Palos Verdes,as other California General
Law cities have successfully done,and report its finding(s)to the City Council
within 90 days."
In March and April of 2012,the Committee performed its task and issued a
memorandum to the City Council dated April 25,2012 outlining the methodology
for calculating the City's unfunded pension liability and providing estimates
therein.
The Committee believes there is value to receiving the 2012 Actuarial Valuation
Report from CalPERS and determining whether the Committee's memorandum
to City Council should be updated.The Committee also offers to study any other
employee pension related issues that the City Council may direct.
2-8
CfTYOF
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 7 of 11
Committee Responsibilities:
~Review the 2012 CalPERS Actuarial Valuation Report;and
~Update the Committee memorandum to the City Council as appropriate.
Staff Responsibilities:
~Provide a presentation of the 2012 CalPERS Actuarial Valuation Report;
and
~Forward the Committee's updated memorandum to the City Council.
Timeline
Staff expects that this presentation will take place during a meeting with another
Work Plan assignment in November 2012.
Staff Time:
Staff report preparation for the Committee
Committee Member Advance O&A
Staff preparation for presentation
Prepare Report to City Council
Total Staff Time Required
2 hours
2 hours
1 hour
2 hours
7 hours
6.REVIEW AND COMMENT ON EITHER THE DRAFT OR FINAL 2012
PERFORMANCE AUDIT REPORT
On JUly 17,2012,the City Council approved a professional services agreement
with Matrix Consulting Group to conduct a Performance Audit of the City to
support the City Council Goal to improve organizational efficiency.The City
Council approved the scope of the engagement and is expecting the results to be
presented prior to the end of 2012.
The Committee believes the City Council would benefit from a Committee
perspective on the consultants report and recommendations.
Committee Responsibilities:
~Review the 2012 Performance Audit Report;and
~Offer comments and recommendations to the City Council.
Staff Responsibilities:
~Provide the 2012 Performance Audit Report to the Committee;and
~Forward the Committee's comments and recommendations to the City
Council.
2-9
CITY OF ~Rt-J'iCHO Fl\Los VERDES
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 8 of 11
Timeline
Staff expects that this presentation will take place during a meeting with another
Work Plan assignment in October 2012.
Staff Time:
Staff report preparation for the Committee
Committee Member Advance Q&A
Staff preparation for presentation
Prepare Report to City Council
Total Staff Time Required
2 hours
1 hour
1 hour
2 hours
6 hours
7.REVIEW AND PROVIDE COMMENTS AND RECOMMENDATIONS
REGARDING DEVELOPMENT AND ADOPTION OF A PROPOSED SEWER
USER FEE
In June 2009,Harris &Associates delivered a working draft of the City's Sanitary
Sewer Master Plan Update,which identified needed improvements to the
sanitary sewer system in the City.The sewer fees levied and collected by the
County Sanitation District only provide for maintenance and emergency repairs;
and are insufficient to clean and video existing sewer lines and pro-actively
replace sewer line segments as they reach end of life.It appears as though the
burden rests with the City to upgrade and refurbish the sewer system.The ad
valorem taxes available to the City are inadequate to fund replacement projects.
Accordingly,the purpose of the City-wide sewer fee under consideration is to
provide funds so the City can upgrade and refurbish the sewer system to keep
the City's sewer system operating properly.If the City Council elects to direct the
Committee to review a proposed Citywide Sewer User Fee,the Committee and
Staff will have the following responsibilities.
Committee Responsibilities:
)p>Review and comment on the proposed Sewer User Fee methodology.
Staff Responsibilities:
)p>Provide an overview of the consultant engineer's report outlining the
proposed Sewer User Fee methodology,as well as a summary of
information contained in the 2009 Sewer Master Plan Update;
)p>Present an oral overview of the proposed Sewer User Fee and
accompanying staff report to the Committee and answer Committee
Member questions;and
)p>Forward the Committee's comments and recommendations regarding the
proposed Sewer User Fee to the City Council for its consideration.
2-10
OTY OF ~HO FAlDs'vffiDEs
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 9 of 11
Timeline
The timing of a review of the proposed Sewer User Fee is yet to be determined;
but would likely require 2 meetings,which would include attendance of Public
Works Staff.
Staff Time:
Staff report preparation for the Committee
Agend~preparation with Chair &distribution
Committee Member Advance Q&A
Staff preparation for presentation
Meeting attendance for 2 staff persons
Minute preparation
Total Staff Time Required
35 hours
2 hours
4 hours
4 hours
12 hours
2 hours
59 hours
2-11
CITY OF
PROPOSED FINANCE ADVISORY COMMITTEE 2012·13 WORK PLAN
Page 10 of 11
COMMITTEE RESOURCES
Budget
Historically,the City's budget has included an allocation for hiring outside
consultants to assist in researching particular issues.Although this draft work
plan does not include assignments with an apparent need for consulting help,
additional assignments may come from the City Council in the future.Staff
believes the City's budget is adequate to meet the needs of the Committee.
ROLES
City Council
The five-member City Council is the legislative and policy body for the City,
charged with providing overall leadership by enacting laws and allocating City
resources for programs,services and activities.The City Council appoints
members to serve on this committee and assigns the committee special
assignments to research,discuss,and provide comments and recommendations
to the Council.
Finance Advisory Committee
Advisory committees are a structured way for individual citizens to share their
opinions and perspectives,and to formulate comments and recommendations in
a focused,small group structure.The primary purpose of advisory committees is
to provide judicious advice,from a citizen perspective,to the City Council.
Committee activities may include the study of critical issues,hearing public
testimony,and reviewing staff reports and recommendations -all of which is
intended so that the committee is prepared to discuss,formulate,and forward
well-developed,thoughtful comments and recommendations to the City Council
in a timely manner.All appointees to the Committee should act at the direction of
the whole or the majority of the City Council and not upon the request or direction
of an individual member of the Council.
The City Manager has assigned staff liaisons to each Committee to maintain
communication between the Committee, City Council and City Manager.Staff
works under the direction of the City Manager.Reports prepared by Staff are
generally for the ultimate review and action of the City Council subsequent to the
Committee's review and comment.Staff is responsible for the work product that
2-12
CITY a=~RA!'cHo I1ILos VERDES
PROPOSED FINANCE ADVISORY COMMITTEE 2012-13 WORK PLAN
Page 11 of 11
the Committee reviews and administration of the Committee's activities including,
but not limited to the following:
•Ensuring that meeting notifications and consistent record keeping occurs.
•Serving as a communication link between the Committee,City
administration,departments,and the City Council,as appropriate.
•Providing professional guidance,issue analysis and recommendations.
•Assisting the committee with report preparation,and correspondence in
keeping with the committee's Council-approved work plan.
•rylaking sure the intent of the advisory committee is not lost after the
Committee acts to make a comment or recommendation,and that it is
conveyed accurately to the City Council in a timely manner.
•Assisting the advisory committee in staying focused on the assignment
and agenda.
•Ensuring compliance of the Committee's actions with the Brown Act.
•Presenting advisory committee comments and recommendations to the
City Council,if requested to do so by either the committee or the City
Council.
•Maintaining a positive working relationship with the Chair and committee
members.
2-13