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11-13-12 Searchable packet Table of Contents Agenda2 Amendment to Contract with the California Public Employees' Retirement System for a second tier, 2% at 60 retirement plan Staff Report5 Draft Resolution7 Treasurer's Investment and Budget Report for Quarter Ending September 2012 Staff Report8 A - Investment Portfolio10 B - Investments by Type, Rate of Return, and Compliance Charts11 C - Retiree Health Trust Report13 D - General Fund Budget Report15 E - Expenditure and Revenue Charts16 1 AGENDA CUPERTINOCITYCOUNCIL~SPECIALMEETING SUCCESSORTOTHEREDEVELOPMENTAGENCY~REGULARMEETING 10350TorreAvenue,CommunityHallCouncilChamber Tuesday,November13,2012 6:00PM CITYCOUNCILMEETING PLEDGEOFALLEGIANCE ROLLCALL CEREMONIALMATTERSANDPRESENTATIONS POSTPONEMENTS ORALCOMMUNICATIONS Thisportionofthemeetingisreservedforpersonswishingtoaddressthecouncilon anymatternotontheagenda.Speakersarelimitedtothree(3)minutes.Inmostcases, Statelawwillprohibitthecouncilfrommakinganydecisionswithrespecttoamatter notlistedontheagenda. CONSENTCALENDAR Unlessthereareseparatediscussionsand/oractionsrequestedbycouncil,staffora memberofthepublic,itisrequestedthatitemsundertheConsentCalendarbeactedon simultaneously. 2 Tuesday,November13,2012CupertinoCityCouncil SuccessortotheRedevelopmentAgency 1.Subject:AmendmenttoContractwiththeCaliforniaPublicEmployeesRetirement Systemforasecondtier,2%at60retirementplan :AdoptResolutionNo.12131intentiontoapprove RecommendedAction amendmenttoContract StaffReport DraftResolution Page:5 2.Subject:TreasurersInvestmentandBudgetReportforQuarterEndingSeptember 2012 RecommendedAction:Acceptthereport StaffReport AInvestmentPortfolio BInvestmentsbyType,RateofReturn,andComplianceCharts CRetireeHealthTrustReport DGeneralFundBudgetReport EExpenditureandRevenueCharts Page:8 SECONDREADINGOFORDINANCES PUBLICHEARINGS ORDINANCESANDACTIONITEMS REPORTSBYCOUNCILANDSTAFF ADJOURNMENT 3 Tuesday,November13,2012CupertinoCityCouncil SuccessortotheRedevelopmentAgency SUCCESSORTOTHEREDEVELOPMENTAGENCYMEETING Canceledforlackofbusiness. The City of Cupertino has adopted the provisions of Code of Civil Procedure §1094.6; litigation challenging a final decision of the City Council/Redevelopment Agency must be brought within 90 days after a decision is announced unless a shorter time is required by State or Federal law. Any interested person, including the applicant, prior to seeking judicial review of the city council’s decision with respect to quasi-judicial actions, must first file a petition for reconsideration with the city clerk within ten days after the council’s decision. Any petition so filed must comply with municipal ordinance code §2.08.096. In compliance with the Americans with Disabilities Act (ADA), the City of Cupertino will make reasonable efforts to accommodate persons with qualified disabilities.If you require special assistance, please contact the city clerk’s office at 408-777-3223 at least 48 hours in advance of the meeting. Any writings or documents provided to a majority of the Cupertino City Council after publication of the packet will be made available for public inspection in the City Clerk’s Office located at City Hall, 10300 Torre Avenue, during normal business hours and in Council packet archives linked from the agenda/minutes page on the Cupertino web site. 4 ADMINISTRATIVE SERVICES DEPARTMENT CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3227 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: November 13, 2012 Subject Amendment to Contract with the California Public Employees’ Retirement System (CalPERS) for the creation of a second tier, 2% at 60 retirement plan. Recommended Action Adopt Resolution of Intention to Approve an Amendment to Contract between the Board of Administration, CalPERS and the City. Description This past year, the City negotiated a two-tier retirement plan with its employee groups. The new plan, effective for employees hired, from another CalPERS agency, on or after December 31, 2012, will provide for a 2% at 60, three year average, retirement package with CalPERS versus our current plan of 2.7% at 55, highest single year. Discussion This benefit change is due to the growing concern that current retirement plans are not sustainable and that governments will need to modify their existing plans in regards to benefit payout and retirement age. In addition, the Santa Clara County Grand Jury has strongly recommended that all cities adopt a two tier retirement plan to reduce current and future costs. Assembly Bill 340, adopted this fall, limits new members to CalPERS, as of January 1, 2013, to a retirement package that provides for a 2% at 62, three year average. However, the City has negotiated a 2% at 60, three year average retirement benefit which would apply to any new Cupertino employee who had previously served with a CalPERS participating agency within the previous six month period. This intermediate tier will help the City remain competitive in recruiting future employment applicants who have experience with other public agencies who are also CalPERS members, but closes the current 2.7% at 55 retirement benefit for all new employees going forward as of January 1, 2013. The formal CalPERS documents needed for this resolution have not, as yet, been received by the City although we expect delivery by th November 8. Once received, the additional documents will be forwarded to you as part of this agenda packet. 5 The Council will be required to adopt an Urgency Ordinance 20 days after adoption of this Resolution of Intention, or December 4, 2012. The ordinance will set forth the effective date of December 31, 2012 which conforms with CalPERS guidelines. Fiscal Impact Long term savings for transitioning to a multi-tier retirement system are estimated at approximately $35,000 in FY 2016/17 and increases to roughly $325,000 per year in FY 2025/26. ________________________________ Prepared by: Carol A. Atwood, Director of Administrative Services Approved for Submission by: David Brandt, City Manager Attachments: Staff Report A-Draft Resolution 6 RESOLUTION NO. 12- A RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY OF CUPERTINO WHEREAS, the Public Employees’ Retirement Law permits the participation of public agencies and their employees in the Public Employees’ Retirement System by the execution of a contract, and sets forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law; and WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the governing body of the public agency of a resolution giving notice of its intention to approve an amendment to said contract, which resolution shall contain a summary of the change proposed in said contract; and WHEREAS, the City of Cupertino has met with its employee groups, bargained for and approved a new second tier retirement system with a 2% at 60 formula, three year average, for all Miscellaneous Plan employees starting employment after December 30, 2012, to provide a sustainable pension benefit; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Cupertino hereby gives notice of intention to approve an amendment to the contract between the City of Cupertino and the Board of Administration of the Public Employees’ Retirement System, a copy of said amendment being attached hereto, as an “Exhibit” and by this reference made a part hereof. PASSED AND ADOPTED at a special meeting of the City Council of the City of th Cupertino this 13 day of November 2012, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: Grace Schmidt, City Clerk Mark Santoro, Mayor, City of Cupertino 7 ADMINISTRATIVE SERVICES DEPARTMENT CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3220 www.cupertino.org CITYCOUNCILSTAFFREPORT Meeting:November13,2012 Subject 3¸«§¹»¸«¸¹InvestmentandBudgetReportforQuarterEndingSeptember2012 RecommendedAction Acceptthereport DiscussionandFiscalImpact (´¼«¹º³«´º¹ Themarketandbookvalueofthe"¯º¿¹portfoliobothtotaled$57.2millionat September30,2012.The¶µ¸º¬µ²¯µ¹Septemberyieldof0.23%wasdownfromtheJune 2012yieldof0.26%anddownfromtheyearagorateof0.28%duetothe¶µ¸º¬µ²¯µ¹safe mixofinvestmentsandincreasedliquidity.TheLAIFbenchmarkwasat0.35%for September,downfrom0.36%inJuneand0.38%ayearago,duetolowermarket interestrates. Theportfoliototalwasrelativelyunchangedfromlastquarter.Sixmillionofmaturing Treasuriesduringthequarterwasmovedtothemoneymarketfundtobuildup liquidityforthis¿«§¸¹retireehealthtrustcontributions. Theretireehealthtrustmarketvalueincreasedto$11.3millionatSeptember30,2012, up$0.5millionfromlastquarterandup$2.5millionfromayearago,resultingfrom $900,000incontributionsand$1.6millionininvestmentgains.Thestock,bond,and cashportfolioreturned18.1%inthepastyearand7.7%sinceinceptionovertwoyears ago. InvestmentsaretieredtoprovidesufficientcashflowstopayCityobligationsoverthe nextsixmonths.TheyareincompliancewithCityinvestmentpolicyandStatelaw exceptthattheallocationtothemoneymarketfundwas1%overthe20%limitat September30,2012,aconditionthatwascorrectedinOctober.Marketvalueson 8 individualsecuritiesintheinvestmentportfolioareprovidedbyWellsFargoBank InstitutionalTrustServicesusingvaluationsfromInteractiveDataPricingand ReferenceData,Inc. &«´«¸§²%»´ª!»ª­«º1«¶µ¸º RevenuesforthequarterendinginSeptember2012areup14%fromayearagobut underbudgetprojections.Transientoccupancytaxesandchargesforservicesare exceedingexpectationswhilesalestaxesandpermitsarecominginbelowprojections. Mostofthebudgetedsalestaxandpermitrevenuesfromlargedevelopmentprojects areexpectedtocomeinlaterthisfiscalyear.Expendituresforthesamequarterare down4%fromlastyear,andontrackwiththebudget. TheAuditCommitteeacceptedthereportonNovember8,2012. _____________________________________ Preparedby:DavidWoo,DeputyTreasurer Reviewedby:CarolAtwood,CityTreasurer ApprovedforSubmissionby:DavidBrandt,CityManager Attachments:AInvestmentPortfolio BInvestmentsbyType,RateofReturn,andComplianceCharts CRetireeHealthTrustReport DGeneralFundBudgetReport EExpenditureandRevenueCharts 9 City of Cupertino Investment Portfolio September 30, 2012 ACTIVITY DATE COUPONYIELDADJUSTEDMATURITYMARKETUNREALIZED PURCHASEMATURITYDESCRIPTIONRATE To Maturity COSTVALUEVALUEPROFIT/LOSS SECURITIES MATURED 05/11/1106/30/12US Treasury Note 0.63%0.22%1,000,0001,000,0001,000,0000 05/25/1107/31/12US Treasury Note 0.63%0.23%1,000,0001,000,0001,000,0000 06/15/1107/31/12US Treasury Note 0.63%0.24%1,000,0001,000,0001,000,0000 06/03/1108/31/12US Treasury Note 0.38%0.24%1,000,0001,000,0001,000,0000 06/15/1108/31/12US Treasury Note 0.38%0.25%2,000,0002,000,0002,000,0000 CITY PORTFOLIO CASH 09/30/12Wells Fargo - Workers Comp Checking12,85612,85612,8560 09/30/12Wells Fargo - Regular Checking0000 09/30/12Wells Fargo - Repurchase Agreements0.02%0.02%2,625,7282,625,7282,625,7280 2,638,5842,638,5842,638,5840 LAIF 09/30/12LAIF - State Pool0.35%0.35%599,184599,184599,1840 MONEY MARKET FUNDS 09/30/12Wells Fargo 100% Treasury0.00%0.00%11,937,05311,937,05311,937,0530 11,937,05311,937,05311,937,0530 US TREASURY SECURITIES 03/28/1109/30/12US Treasury Note 0.38%0.52%1,000,0001,000,0001,000,0000 06/15/1109/30/12US Treasury Note 0.38%0.26%1,000,0001,000,0001,000,0000 06/03/1110/15/12US Treasury Note 1.38%0.27%1,000,4521,000,0001,000,47018 06/27/1110/31/12US Treasury Note 0.38%0.21%2,000,2712,000,0002,000,380109 05/19/1111/30/12US Treasury Note 0.50%0.36%1,000,2291,000,0001,000,516287 06/27/1111/30/12US Treasury Note 0.50%0.23%1,000,4561,000,0001,000,744287 03/28/1112/31/12US Treasury Note 0.63%0.64%999,9551,000,0001,001,1701,215 03/28/1103/15/13US Treasury Note 1.38%0.72%1,002,9621,000,0001,005,5502,588 08/25/1103/31/13US Treasury Note 0.75%0.19%3,008,4003,000,0003,008,910510 05/06/1104/30/13US Treasury Note 0.63%0.57%1,000,3201,000,0001,002,6902,370 05/19/1106/15/13US Treasury Note 1.13%0.58%1,003,8291,000,0001,006,6402,811 09/26/1107/31/13US Treasury Note 0.38%0.20%2,002,9602,000,0002,003,280320 11/17/1108/31/13US Treasury Note 0.13%0.22%1,998,1962,000,0001,999,060864 03/28/1109/15/13US Treasury Note 0.75%0.96%998,0601,000,0001,005,3507,290 12/07/1110/31/13US Treasury Note 0.25%0.23%3,000,5353,000,0003,001,6501,115 01/24/1211/30/13US Treasury Note 0.25%0.22%3,001,1823,000,0003,001,530348 02/14/1212/31/13US Treasury Note 0.13%0.26%2,995,0043,000,0002,996,8201,816 02/14/1201/31/14US Treasury Note 0.25%0.26%2,999,6813,000,0003,001,4101,729 02/29/1202/28/14US Treasury Note 0.25%0.27%3,999,1164,000,0004,001,8802,764 05/14/1203/31/14US Treasury Note 0.25%0.25%2,999,9073,000,0003,000,9301,023 05/14/1204/30/14US Treasury Note 0.25%0.25%2,999,8113,000,0003,000,810999 06/25/1205/31/14US Treasury Note 0.25%0.30%999,1911,000,0001,000,3101,119 42,010,51842,000,00042,040,10029,582 Total Managed Portfolio57,185,33957,174,82157,214,92129,582 Average Yield0.23% Average Length to Maturity (in years) 0.69 TRUST PORTFOLIO MONEY MARKET FUNDSKester Trust 09/30/12Wells Institutional Money Mkt Acct0.07%0.07%48,49548,49548,4950 BOND RESERVE PORTFOLIO Bond Delivery Cost Acct Goldman Sachs Financial Sq Money Mkt0.15%0.15%34,07034,07034,070 Bond Reserve Acct Goldman Sachs Financial Sq Money Mkt0.15%0.15%1,587,5721,587,5721,587,5720 Total Bond Reserve Portfolio1,621,6421,621,6421,621,6420 10 L“Ý;­·’;“·­ ,ä ä¦; a“m;7 tš©·EšŒzš LAIF Cash 1% 5% Money Market 21% US Treasuries 73% Rate of Return Comparison 0.60% 0.50% 0.40% 0.30% 0.20% LAIF 0.10% Cupertino 0.00% 11 COMPLIANCE WITH INVESTMENT POLICY City of Cupertino September 30, 2012 CategoryStandardComment Treasury IssuesNo limitComplies US Agencies No limitComplies Medium Term Corporate Bonds30% with A ratingComplies LAIF$50 millionComplies Money Market Funds20%At 21% Maximum MaturitiesUp to 5 yearsComplies Per Issuer Max10% (except for Treasuries and US Agencies)Complies Bankers Acceptances 180 days & 40%Complies Commercial Paper270 days & 25%Complies Negotiable Certificates of Deposit30%Complies Repurchase Agreements365 daysComplies Reverse Repurchase agreementsProhibitedComplies 12 General Fund Revenues Projected vs. Actual 11,000 10,000 9,000 8,000 Projected, per current budget Actual 7,000 6,000 5,000 4,000 9/12 Quarter Ending General Fund Expenditures Projected vs. Actual 9,500 9,000 Projected, per current budget 8,500 Actual 8,000 7,500 9/12 Quarter Ending 16 Sales Tax Projected vs. Actual $6,000 $4,000 Projected, per current budget $2,000 Actual $0 9/12 Quarter Ending 17 Transient Occupancy Tax Projected vs. Actual 700 600 500 400 Projected, per current budget 300 Actual 200 100 0 9/12 Quarter Ending Licenses & Permits Projected vs. Actual 1,750 1,500 1,250 1,000 Projected, per current budget 750 Actual 500 250 0 9/12 Quarter Ending 18 Charges for Services Projected vs. Actual 1,600 1,400 1,200 1,000 Projected, per current budget 800 Actual 600 400 200 0 9/12 Quarter Ending Use of Money & Property Projected vs. Actual 200 180 160 140 Projected, per current budget 120 100 Actual 80 60 40 20 0 9/12 Quarter Ending 19