AC 4.22.24Page 1
City of Cupertino
Audit Committee Regular Meeting
Minutes
April 22, 2024
CALL TO ORDER
At 4:00 p.m., Chair Schmidt called the regular meeting to order in the City of Cupertino
Conference Room A, 10300 Torre Avenue.
ROLL CALL
Committee Members Present: Chair Eno Schmidt, Mayor Sheila Mohan, Committee member
Hanyan Wu, Councilmember Hung Wei
City Staff Present: Kristina Alfaro, Thomas Leung, Janet Liang, Matt Morley, Jonathan Orozco
Absent: Committee member Angela Chen
Guests: Carlos Oblites (Chandler), Haile Garcia (Moss Adams), Ryan Maxey (U.S. Bank), Jennifer
Meza (PARS), Will Rogers (PARS), Dennis Mullins (PFM Asset Management), Rick Rosenthal
(PFM Asset Management)
ORDERS OF THE DAY
1. APPROVE MINUTES OF SPECIAL MEETING ON MARCH 21, 2024
Mayor Mohan motioned; Committee member Wei seconded. No public comment. The motion
passes unanimously.
Chair Schmidt motioned an amendment to edit future minutes so that the Audit Committee
members that are on the City Council should be addressed as Council member in the minutes
instead of Committee member. The motion passes as amended unanimously.
POSTPONEMENTS
ORAL COMMUNICATIONS
Rhoda Fry provided comments. Brooke Ezzat provided comments.
OLD BUSINESS
NEW BUSINESS
2. Receive the Internal Audit and Fraud, Waste, and Abuse programs update
Garcia provided an update. Chair Schmidt asked if committee members were interested in seeing
the Fraud, Waste and Abuse reports, would it be available to view. Garcia noted that the reports
are confidential and is a requirement of State law and City policy.
No public comment.
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Mayor Mohan motioned to receive the report, Committee member Wu seconded. The motion
passes unanimously.
3. Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending
December 31, 2023 and March 31, 2024
Meza provided an overview of the report. Rosenthal provided an overview of the report. Chair
Schmidt asked what the process is for eliminating certain stocks and if they are in communication
with city staff. Rosenthal noted that they do not communicate trades directly with the City, it is
included in the statements and the report shows the top 5 and bottom 5 contributors. Chair
Schmidt asked if they are worried about regional banking failures. Rosenthal noted that they have
not seen much of it in the last year. Commmittee member Wu asked if they have any
recommendations on the market trend. Rosenthal noted that they do not as they did a through
review not too long ago.
No Public Comment.
Councilmember Wei motioned to receive the report, Committee member Wu seconded. The
motion passes unanimously.
4. Receive the Treasurer's Investment Report for the Quarter Ending December 31, 2023 and
March 31, 2024
Orozco provided an overview. Oblites provided an overview. Chair Schmidt asked if we should
expect the portfolio to vary from the index in the future because of the duration. Oblites noted
yes, particularly on the front end because of the benchmark. Chair Schmidt asked if this leads
into the cash management issue for the City. Oblites noted yes and that there is a liquidity
component at the bank and at the State Pool - LAIF to cover expenditures, payroll runs and AP
runs.
Committee member Wu asked about the $45 million LAIF transfer. Orozco noted that the City
transferred funds out and withholding the funds until then was driven by the unknown of the
CDTFA audit and a few other outstanding liabilities.
Mayor Mohan asked if it is common to move funds to LAIF. Orozco noted that the City
historically has maintained approximately $20 million but with clarity in the CDTFA audit and
repayment portion of it, funds were moved. Alfaro noted that staff looks at it on a regular basis
and make a decision on what we know at a given point in time. Mayor Mohan asked one of our
priorities is liquidity, how does LAIF play into it. Orozco noted that it is relatively liquid and that
it is around 4% return.
Committee member Wu asked what is the composition of the LAIF fund. Orozco noted that LAIF
is administered by the State of California and they set the restrictions and baseline. Oblites noted
that LAIF invests in money market securities and longer treasuries.
Rhoda Fry provided public comment.
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Councilmember Wei motioned to receive the report, Committee member Wu seconded. The
motion passes unanimously.
5. Annual Review of the City’s Investment Policy
Orozco provided an overview. Chair Schmidt asked about the initial allocation of $56.5 million
that was set aside for disputed sales tax revenue, how does it get into the investment policy.
Orozoco noted that the funds are set aside in the City’s accounting software and is unaffected or
may be affected by the investment policy as the City wants to shorten the maturity date.
Rhoda Fry provided public comment.
Mayor Mohan motioned to accept the report and forward to the City Council for approval,
Committee member Wu seconded. The motion passes unanimously.
6. Update on FY 2022-23 ACFR and Supplemental Reports
Orozco provided an overview.
Rhoda Fry provided public comment.
7. Receive the proposed Audit Committee 2024 Schedule and Workplan
Orozco provided an overview.
Govind Tatachari and Rhoda Fry provided public comment.
STAFF AND COMMITTEE REPORTS
COMMITTEEMEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS
FUTURE AGENDA SETTING
ADJOURNMENT
The meeting adjourned at 5:56 p.m.
Recording Secretary:
Janet Liang, Management Analyst