AC 10.23.23Page 1
City of Cupertino
Audit Committee Regular Meeting
Minutes
October 23, 2023
CALL TO ORDER
At 4:00 p.m., Chair Chen called the regular meeting to order in the City of Cupertino Conference
Room A, 10300 Torre Avenue.
ROLL CALL
Committee Members Present: Chair Angela Chen, Vice Chair Sheila Mohan, Committee member
J.R. Fruen, Committee member Laura Hammer, Committee member Sophie Song
City Staff Present: Kristina Alfaro, Thomas Leung, Janet Liang, Matt Morley, Jonathan Orozco
Absent:
Guests: Carlos Oblites (Chandler), Colleen Rozillis (Moss Adams), Will Rogers (PARS), Ryan
Maxey (U.S. Bank), Rick Rosenthal (U.S. Bank)
ORDERS OF THE DAY
1. APPROVE MINUTES OF REGULAR MEETING ON JULY 24, 2023
Chair Chen motioned with an edit; Committee member Hammer seconded. No public comment.
The motion passes unanimously.
POSTPONEMENTS
ORAL COMMUNICATIONS
OLD BUSINESS
NEW BUSINESS
2. Receive OPEB & Pension Section 115 Trust Performance Report for the Quarter Ending
September 30, 2023
Rogers provided an overview of the report. Rosenthal provided an overview of the report.
Committee member Song asked what is the impact the war in Israel will have to our portfolio.
Rosenthal noted that at this point in time he cannot say but it does create some uncertainty. Vice
Chair Mohan asked if there are any plans to make an adjustment within the equity portfolio or to
increase the fixed assets portion of the portfolio. Rosenthal noted no because equity is more
favorable than the bonds.
No public comment.
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3. Receive the Treasurer's Investment Report for the Quarter Ending September 30, 2023
Leung provided an overview of the report. Oblites provided an overview of the report.
Committee member Fruen asked if he agrees with what USBank said that we are not headed
towards a recession. Oblites noted that if there is a recession that it would be headed towards a
minimal recession which would be barely felt.
No Public Comment.
Committee member Fruen motioned. Vice Chair Mohan seconded. The motion passes
unanimously.
4. Receive the Internal Audit and Fraud, Waste, and Abuse program update
Rozillis provided an overview of the report. No public comment.
5. Review the OPEB and Pension Trust Investment Policy
Orozco provided an overview of the report. Vice Chair Mohan asked if the difference between
the two numbers is due to strategy. Orozco noted that the vendors have their own actuaries but
every 2 years they will do a full analysis and in between they use a roll forward and assume the
same assumptions. Orozco added that this year they made changes to the assumptions that
people are living longer, retiring later, investments not doing as great and use that to plan the
City’s liability. Vice Chair Mohan asked what the difference is between this policy and last years.
Orozco noted that there was only an update to the asset amounts and Rosenthal’s contact
information.
No public comment.
Committee member Fruen motioned. Committee member Hammer seconded. The motion passes
unanimously.
6. Receive the Budget Format Review
Leung provided an update. Committee member Song asked where in the budget discloses the
revenue sharing sales tax agreements. Leung noted that the budget accounts for the net sales tax
revenue. Orozco noted that accounting wise and how it is reflected in the ledger it is net. Alfaro
noted that the City is required to do that because there is confidentiality related to sales tax and
if it is disclose the City would be in violation of confidentiality.
Chair Chen asked if the development revenue estimate includes sales, property and hotel tax.
Leung noted that it would depend on the type of development, if it was a hotel it would generate
transient occupancy tax.
Committee member Song asked if we can disclose how many revenue sharing agreements there
are. Alfaro noted that we have two and they have gone to City Council for approval with the
agreements being able to be found online.
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Vice Chair Mohan asked if the development revenue is an anticipated plan and why would the
budget not included it. Alfaro noted that it is risky. For example, we budgeted the revenue for
Prunridge being sold two years before we received it and had to come back to reallocate dollars
because we did not receive the revenue.
No public comment.
7. Receive the Annual Comprehensive Financial Report (ACFR) and AUP Update
Orozco provided an update. Vice Chair Mohan noted that the ACFR was late last year and asked
if we will face the same situation this year. Orozco noted that we will not be as delayed and noted
that it will go to Council in February.
No public comment.
8. Consider the Audit Committee 2024 Schedule and Work Plan
Orozco presented the committee's work plan. Chair Chen proposed to cancel January 22, 2024
meeting and create a special meeting on January 29.
STAFF AND COMMITTEE REPORTS
Chair Chen requested staff update the Audit Committee with City Council approved financial
changes that materially affect the City.
COMMITTEEMEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS
FUTURE AGENDA SETTING
ADJOURNMENT
The meeting adjourned at 5:49 p.m.
Recording Secretary:
Janet Liang, Management Analyst