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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
LÝ;·;· ,ä ä¦;
am;7 t©·Ez
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