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HomeMy WebLinkAbout10.10.2023 AMENDED Finance Committee Agenda PacketCity Council Finance Committee Agenda October 10, 2023 Page 1 of 3 SARATOGA CITY COUNCIL FINANCE COMMITTEE October 10, 2023 4:00 P.M. REGULAR MEETING AMENDED AGENDA • 10/10/2023 DRAFT BUDGET IN BRIEF POSTCARD ADDED Public Participation Information In accordance with Saratoga City Council’s Remote Public Participation Policy, members of the public may participate in this meeting in person at the location listed below or via remote attendance using the Zoom information below. In the event remote participation technology is unexpectedly unavailable, the meeting will proceed in person without remote participation. Members of the public can view and participate in the meeting by: 1. Attending the meeting in person in the Linda Callon Conference Room located at 13777 Fruitvale Avenue, Saratoga CA 95070; OR 2. Accessing the meeting through Zoom * Webinar URL: https://us02web.zoom.us/j/87124138638 * Webinar ID: 871 2413 8638 * Calling 1.669.900.6833 or 1.408.638.0968 Written Communication Comments can be submitted in writing at www.saratoga.ca.us/fc. Written communications will be provided to the members of the City Council and included in the Agenda Packet and/or in supplemental meeting materials. Public Comment Members of the public may comment on any item for up to three (3) minutes. The amount of time for public comment may be reduced by the Mayor. Meeting Recording Information In accordance with the Saratoga City Council’s Meeting Recording Policy, the City Council Finance Committee Meetings are recorded and made available following the meeting on the City website. City Council Finance Committee Agenda October 10, 2023 Page 2 of 3 CALL TO ORDER ROLL CALL Public Comment AGENDA ITEMS 1. Finance Committee Minutes Recommended Action: Review and approve the minutes for the September 12, 2023, Finance Committee Regular Meeting. Finance Committee Minutes 2. Pension Expenses and Reporting Recommended Action: Receive presentation from Foster and Foster on pension expenses, actuarial valuation, and GASBS 68 disclosure report as of June 30, 2023. Memo - Pension Expenses and Reporting Attachment A - Draft GASBS 68 Report 3. Budget in Brief Conceptual Review Recommended Action: Discuss the Budget in Brief Memo - Budget in Brief DRAFT - City of Saratoga Budget in Brief Postcard City Council Finance Committee Agenda October 10, 2023 Page 3 of 3 ADJOURNMENT CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT I, Gina Scott, Administrative Analyst for the City of Saratoga, declare that the foregoing agenda for the meeting of the City Council Finance Committee was posted and available for public review on October 6, 2023, at the City of Saratoga, 13777 Fruitvale Ave., Saratoga, CA 95070, and on the City’s website at www.saratoga.ca.us. Signed this 6th day of October at Saratoga, California. Gina Scott, Administrative Analyst In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to the Committee by City staff in connection with this agenda, copies of materials distributed to the Committee concurrently with the posting of the agenda, and materials distributed to the Committee by staff after the posting of the agenda are available on the City website at www.saratoga.ca.us and are available for review in the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, California. In compliance with the Americans with Disabilities Act and the Governor’s Executive Order, if you need assistance to participate in this meeting, please contact the City Clerk at bavrit@saratoga.ca.us or call 408.868.1216 as soon as possible before the meeting. The City will use its best efforts to provide reasonable accommodations to provide as much accessibility as possible while also maintaining public safety. [28 CFR 35.102-35.104 ADA title II] City Council Finance Committee Minutes – September 12, 2023 Page 1 MINUTES SARATOGA CITY COUNCIL FINANCE COMMITTEE MEETING SEPTEMBER 12, 2023 CALL TO ORDER The meeting was called to order at 4:00 p.m. ROLL CALL Present:Mayor Kookie Fitzsimmons, Council Member Page Also Present:James Lindsay, City Manager Dan Jacobson, Interim Administrative Services Director Ann Xu, Accountant II Gina Scott, Administrative Analyst REPORT ON POSTING OF THE AGENDA The Administrative Analyst reported the agenda for this meeting was properly posted on September 7, 2023. AGENDA ITEMS 1. Finance Committee Minutes Recommended Action: Approve the minutes for the June 13, 2023 Finance Committee Regular Meeting. PAGE/FITZSIMMONS MOVED TO APPROVE THE MINUTES FOR THE JUNE 13, 2023 FINANCE COMMITTEE REGULAR MEETING. MOTION PASSED BY VERBAL ROLL CALL. AYES: PAGE/FITZSIMMONS NOES: NONE. ABSTAIN: NONE. 2. CalTRUST Joint Powers Authority (JPA) Presentation Recommended Action: Receive presentation on alternative investment option and provide direction. Mayor Fitzsimmons invited public comment. No one requested to speak. 3 City Council Finance Committee Minutes – September 12, 2023 Page 2 Dan Jacobson, Interim Administrative Services Director, provided an overview of the Joint Powers Investment Pools and introduced Laura Labanieh and Charlie Praska from CalTRUST Joint Powers Authority to provide a presentation. The City Manager summarized the City’s Investment Policy criteria and asked the Committee to approve the recommendation to allow approved staff to invest up to 20% of the City’s funds with CalTRUST Joint Powers Authority Investment Company. After discussion with the Committee, the City Manager confirmed that if any funds are moved between LAIF and a JPA pool, staff will provide an investment report to the Committee with transactions and confirm that the investments will be made in compliance with the City of Saratoga Investment Policy. Investment information will also be shown monthly as part of the Treasurer’s Report. Councilmember Page also asked for a comparison between the LAIF rates and the JPA Investment Pool for each trade made. 3. City Fee Schedule Update Recommended Action: Recommend City Council approval of a resolution adopting fee increases effective January 1, 2024 and June 30, 2024 to incorporate negotiated salary and benefit cost increases. Dan Jacobson, Interim Administrative Services Director, provided an overview of the request to conduct one public hearing to approve two fee increases, the first effective January 1, 2024 and June 30, 2024, due to negotiated salary increases. If approved, a public hearing would take place in October. Mayor Fitzsimmons invited public comment. The following individual spoke: Eva Choi. PAGE/FITZSIMMONS MOVED TO APPROVE THE SINGLE PUBLIC HEARING NOTICE FOR TWO FEE INCREASES. MOTION PASSED BY VERBAL ROLL CALL. AYES: PAGE/FITZSIMMONS. NOES: NONE. ABSTAIN: NONE. 4. City Services Review Recommended Action: Receive presentation and provide feedback for City Council services delivery discussions in October. James Lindsay, City Manager, provided an overview of the exercise for discussing city services to help with the anticipated future structural deficit. Departments will be asked to justify the services they provide to the community. James clarified that it takes between 85% and 90% of the City’s budget just to exist as a City. There are functions that a City has to legally provide. Discretionary services will be reviewed as they relate to the City Council strategic goals and objectives. The 4 City Council Finance Committee Minutes – September 12, 2023 Page 3 meeting will be held on October 24th at 6:00 p.m. in the Grace Building at the Prospect Center. Zoom participation will not be an option at the meeting due to technical equipment limitations. Mayor Fitzsimmons invited public comment. The following individuals spoke: Bill Dalton, Darrell Miller NO ACTION NECESSARY. 5. Community Engagement with City Finances Recommended Action: Receive presentation and provide feedback on engagement approaches. James Lindsay, City Manager, provided information on the various forms of communication the City uses to provide transparency to the community on the City’s Finances and Council Policies. He confirmed that the budget in brief will be reviewed at the October 10 th Finance Committee meeting with the goal to have it mailed to every household by the end of October. Mayor Fitzsimmons invited public comment. The following individuals spoke: Darrell Miller,Bill Dalton A year-end fiscal year 2021-22 download of the City’s transaction reports will be sent to Darrell and Bill for them to review. A meeting will be set up with Bill, the Public Works Director, and the Environmental Programs Manager. 6. 2023 Storm Emergency Reimbursement Claims Recommended Action: Receive Update. Dan Jacobson, Interim Administrative Services Director, provided a status update on the FEMA reimbursement claim status relating to the January and March 2023 storms. He noted that the process is ongoing. Mayor Fitzsimmons invited public comment. There were no speakers. NO ACTION NECESSARY. 5 City Council Finance Committee Minutes – September 12, 2023 Page 4 ADJOURNMENT THE MEETING WAS ADJOURNED AT 5:30 PM. Minutes respectfully submitted: Gina Scott, Administrative Analyst City of Saratoga 6 DATE: October 10, 2023 TO: Finance Committee FROM: Dan Jacobson,Interim Administrative Services Director SUBJECT: Pension Expense, Liability and Disclosure Report (GASB Statement No. 68) Summary.This agenda item transmits the draft results of a valuation of the City's pension benefits (Attachment A) as required by Governmental Accounting Standards Board (GASB) Statement No. 68. The valuation reflects a net pension liability (NPL)of approximately $9.98 million for the fiscal year ended June 30, 2023, an increase of $9.25 million from prior year. The majority of the change in NPL is driven by investment returns from the California Public Employee Retirement System (CalPERS), which manages the pension plan for Saratoga, and by the impact of timing on reporting. Due to the differences between expected and actual returns, changes in NPL year- to-year are not atypical; however, the volatility in investment markets in recent years has amplified the magnitude of change. Background.Along with a number of other jurisdictions, Saratoga participates in a risk pool within CalPERS, which tracks the City’s contributions, gains, losses, and net position and reports the City’s proportionate share of the pool.Based on the timing of reporting and the work necessary to determine net position, a prior valuation and roll forward method was used to calculate an estimate of Saratoga’s NPL as of June 30, 2023. Table 1. Saratoga’s Pension Summary Fiscal Year End 6/30/2023 6/30/2022 Measurement Date 6/30/2022 6/30/2021 Proportion of net pension liability 0.08642%0.01345% Proportionate share of net pension liability $ 9,982,329 $ 727,447 Covered payroll1 $ 6,951,928 $ 6,568,081 Proportionate share of NPL as % of payroll 143.59%11.08% Plan’s fiduciary net position as a % of the plan’s total pension liability 76.68%88.29% 1 For the year ending on the measurement date. Staff Recommendation.Despite the relatively large increase in NPL between June 30, 2022, and June 30, 2023, some net pension liability (or asset) is a near mathematical certainty for pension plans due to the complexities involved. Saratoga has traditionally made contributions toward pension obligations which exceed the minimums set forth by CalPERS, an approach intended to reduce overall interest payments made by the City over time.Staff recommends maintaining this course at the current time. ATTACHMENTS Attachment A -Draft Report –June 30, 2022 GASBS 68 Accounting Information 7 CalPERS Miscellaneous Pension Plans June 30, 2023 Consolidated GASB 68 Reporting Information CalPERS Risk Pools Preliminary Results Mary Beth Redding Kateryna Pryor Foster & Foster, Inc. 411 Borel Avenue, Suite 620 San Mateo, CA 94402 kateryna.pryor@foster-foster.com August 22, 2023 © Copyright 2023 Topic Page Applicable Dates and Periods 1 Basis of Report 2 Net Pension Liability 3 Note Disclosures 5 Required Supplementary Information 13 Data as of 6/30/22 Measurement Date 17 Supporting Calculations 19 Journal Entries 33 Reconciliation of Deferred Outflows/(Inflows)37 Contents Attachment A 8 ■ Measurement date ■ Measurement period ■ Actuarial valuation date Fiscal Year June 30, 2023 Employer Applicable Dates and Periods June 30, 2022 July 1, 2021 to June 30, 2022 June 30, 2021 Page 1 August 22, 2023 City of Saratoga Basis of Report This report presents employer-specific amounts for reporting in accordance with Governmental Accounting Standards Board Statement No. 68 (GASB 68) for CalPERS public agency cost-sharing plans. Our calculations are based on information provided in actuarial valuation reports prepared by CalPERS and on the June 30, 2022 "Schedule of Employer Allocations for Components of Net Pension Liability and Schedule of Collective Pension Amounts" prepared by CalPERS and audited by BDO. We have followed the methodology described in that report and in other CalPERS publications including the GASB 68 Guide for Public Agency Cost-Sharing Multiple- Employer Defined Benefit Pension Plans. It was not part of the scope of this project, nor was information available, to review the census data, actuarial calculations or the actuarial assumptions used to prepare those reports. CalPERS reports used for our calculations are available at: https://www.calpers.ca.gov/page/employers/actuarial-services/gasb https://www.calpers.ca.gov/docs/forms-publications/acfr-2022.pdf Additional information to be presented in each agency’s Notes and RSI can be found on CalPERS website in the CalPERS Risk Pool reports as of the June 30, 2022 Measurement Date and CalPERS Annual Comprehensive Financial Report: https://www.calpers.ca.gov/docs/forms-publications/gasb-68-accounting-valuation-miscellaneous-risk- pool-2022.pdf https://www.calpers.ca.gov/docs/forms-publications/gasb-68-accounting-valuation-safety-risk-pool- 2022.pdf Page 2 August 22, 2023 City of Saratoga 9 ■ Fiscal Year End ■ Measurement Date ■ Total See page 20 for supporting detail. Proportionate Share of Net Pension Liability/(Asset) Fiscal Year Ending Net Pension Liability 6/30/2021 9,982,329$ 727,447$ 6/30/20226/30/2023 6/30/2022 Page 3 August 22, 2023 City of Saratoga ■ Fiscal Year End ■ Measurement Date See page 20 for supporting detail. Net Pension Liability Proportionate Share of Net Pension Liability/(Asset) 0.08642%0.01345%0.07297% ■ Percentage of Plan (PERF C) NPL Percentage Share of Plan Change: Increase/ (Decrease)6/30/2023 6/30/2022 6/30/2022 6/30/2021 Page 4 August 22, 2023 City of Saratoga 10 *This description is from the CalPERS report: https://www.calpers.ca.gov/docs/forms-publications/gasb-68-public-agency-schedules-2022.pdf https://www.calpers.ca.gov/page/forms-publications Note Disclosures Plan Description * The Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (the Plan or PERF C) is administered by the California Public Employees’ Retirement System (the System or CalPERS). The Plan consists of a miscellaneous risk pool and a safety risk pool, which are comprised of individual employer miscellaneous and safety rate plans, respectively. Individual employers may sponsor more than one miscellaneous and safety rate plan. Each individual employer rate plan generally has less than 100 active members. The Plan was established to provide retirement, death and disability benefits to public agency rate plans with generally less than 100 active members. The benefit provisions for PERF C members are established by statute. A full description regarding the number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information for the respective rate plan is listed in the respective rate plan’s June 30, 2021 Annual Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the funding valuation report. This report and CalPERS’ audited financial statements are publicly available reports that can be found on CalPERS’ website at Page 5 August 22, 2023 City of Saratoga ■ Discount Rate ■ Inflation ■ Salary increases ■ Mortality ■ Post-retirement benefit increase *These assumptions are from the CalPERS report: Note Disclosures https://www.calpers.ca.gov/docs/forms-publications/gasb-68-public-agency-schedules-2022.pdf Derived using CalPERS’ Membership Data for all Funds. The mortality table was developed based on CalPERS- specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website Net Pension Liability Assumptions * 2.30% Varies by Entry Age and Service 6.90% The collective total pension liability for the June 30, 2022 measurement period was determined by an actuarial valuation as of June 30, 2021, with update procedures used to roll forward the total pension liability to June 30, 2022. The collective total pension liability was based on the following assumptions: Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies Page 6 August 22, 2023 City of Saratoga 11 Asset Class Global equity - cap-weighted Global equity non-cap-weighted Private Equity Treasury Mortgage-backed Securities Investment Grade Corporates High Yield Emerging Market Debt Private Debt Real assets Leverage *This information is from the CalPERS report: 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2021-22 Asset Liability Management study. Note Disclosures Long-Term Expected Rate of Return * In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. The expected real rates of return by asset class are as follows: 0.50% 1.56% Assumed Asset Allocation Real Return Years 1 - 101,2 5.00%2.48% 5.00%3.57% 30.00%4.45% 5.00%2.27% 12.00% 13.00% 5.00% 5.00% 10.00% 3.84% 7.28% 0.27% https://www.calpers.ca.gov/docs/forms-publications/gasb-68-public-agency-schedules-2022.pdf 15.00%3.21% -5.00%-0.59% Page 7 August 22, 2023 City of Saratoga *This description is from the CalPERS report: https://www.calpers.ca.gov/docs/forms-publications/gasb-68-public-agency-schedules-2022.pdf Note Disclosures Discount Rate * The discount rate used to measure the total pension liability for PERF C was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Page 8 August 22, 2023 City of Saratoga 12 ■ Net Pension Liability See page 21 for supporting detail. Sensitivity of Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate Note Disclosures ■ Measurement Date ■ Fiscal Year End Discount Rate 5.90% (1% Decrease ) 6.90% (Current Rate) 7.90% (1% Increase ) 18,659,908$ 9,982,329$ 2,842,836$ 6/30/2022 6/30/2023 Page 9 August 22, 2023 City of Saratoga See page 31 for supporting detail. 5,380,749$ Pension Expense (Income) for Fiscal Year 2022/23 Note Disclosures ■ Total pension expense (income) for fiscal year Page 10 August 22, 2023 City of Saratoga 13 ■ Total * Supporting detail on page 23. ** Supporting detail on page 26. *** Supporting detail on page 29. ■ Net differences between projected and actual earnings on plan investments * Deferred Outflows/Inflows Balances at June 30, 2023 Note Disclosures 200,465$ (134,263) ■ Differences between the employer's contributions and the employer's proportionate share of contributions*** 1,022,898 - 1,828,498 - - (1,283,844) Deferred Outflows of Resources Deferred Inflows of Resources ■ Change in employer's proportion **2,724,234 - ■ Differences between expected and actual experience * ■ Changes of assumptions * ■ Pension contributions subsequent to measurement date 1,428,617 - 7,204,712 (1,418,107) Page 11 August 22, 2023 City of Saratoga ■ ="Fiscal Year Ending "&TEXT('ER Vars'!C8,"MMMM d")&":"Fiscal Year Ending June 30: Supporting detail on page 30. in Future Pension Expense 1,146,800$ Deferred Outflows/(Inflows) of Resources - ● Thereafter ● 2027 ● 2025 ● 2024 ● 2028 - Recognition of Deferred Outflows and Inflows of Resources Note Disclosures 1,304,443 1,118,371 ● 2026 788,374 Page 12 August 22, 2023 City of Saratoga 14 Fiscal Year End ■ ■ ■ $$ ■ ■ ■ * For the year ending on the measurement date. ** Supporting detail on page 17. of the Plan's (PERF C) Net Pension Liability Schedule of City's Proportionate Share Required Supplementary Information 6/30/22 6/30/21 6/30/23 6/30/22Measurement Date City's proportionate share of the net pension liability as a percentage of covered payroll Plan's fiduciary net position as a percentage of the plan's total pension liability ** 6,568,081 11.08% 88.29%76.68% 143.59% City's proportion of the net pension liability City's proportionate share of the net pension liability City's covered payroll * 0.08642%0.01345% 6,951,928 9,982,329 727,447 Page 13 August 22, 2023 City of Saratoga ■ ■ ■ ■ ■ * For the fiscal year ending on the date shown. Schedule of the City's Contributions Required Supplementary Information 6/30/23 6/30/22Contributions for the fiscal year ending: Actuarially determined contribution 1,428,617$ 1,335,987$ Contributions as a percentage of covered payroll City's covered payroll * Contributions in relation to the actuarially determined contribution Contribution deficiency (Excess) 19.85%25.27% 6,951,928 1,428,617 1,756,965 - (420,978) 7,196,642 Page 14 August 22, 2023 City of Saratoga 15 ■ Valuation Date ■ Actuarial cost method ■ Amortization method ■ Remaining Amortization Periods ■ Asset valuation method ■ Inflation ■ Salary increases ■ Discount Rate ** ■ Mortality * ** Entry age normal cost method Required Supplementary Information Actuarially Determined Contribution Assumptions * June 30, 2020 Please note, the discount rate used for Actuarially Determined Contributions is different from the one used for Total Pension Liability (page 6). Varies by date established and source. May be level dollar or level percent of pay and may include direct rate smoothing Differs by employer rate plan but not more than 28 years Market value of assets 2.50% Varies by category, entry age, and service 7.00% (net of investment and administrative expenses) Derived using CalPERS’ Membership Data for all Funds. The post-retirement mortality rates include 15 years of projected on-going mortality improvement using 90 percent of Scale MP 2016 published by the Society of Actuaries From the CalPERS reports (Appendix A): https://www.calpers.ca.gov/docs/forms-publications/actuarial-valuation-section2-miscellaneous-2020.pdf https://www.calpers.ca.gov/docs/forms-publications/actuarial-valuation-section2-safety-2020.pdf Page 15 August 22, 2023 City of Saratoga This page intentionally blank Required Supplementary Information Page 16 August 22, 2023 City of Saratoga 16 ■ Employer Allocation Basis* Total Pension Liability Fiduciary Net Postion ■ Data from Risk Pool Reports for Measurement Date June 30, 2022 Total Pension Liability (1)Fiduciary Net Postion Net Pension Liability Funded Percentage ■ Sensitivity (2)NPL @ 5.90% discount rate (1) + (2)TPL @ 5.90% discount rate (3)NPL @ 7.90% discount rate (1) + (3)TPL @ 7.90% discount rate ■ Collective Pension Expense 24,907,290,732 10,748,840,213 76.68% Data as of 6/30/22 Measurement Date 11,550,804,975 37,975,170,163 21,204,498,824 0.32005%N/A Miscellaneous Risk Pool Total $ 21,449,898,398 N/A Safety Risk Pool N/A 0.29677% 28,076,076,740$ N/A 2,273,494,154 6,871,577,916 49,525,975,138$ 31,953,339,037 3,702,791,908 16,770,671,339 4,679,227,059 N/A N/A 24,373,906,274 19,044,165,493 7,603,234,935 838,081,431 1,299,786,418 Page 17 August 22, 2023 City of Saratoga ■ Deferred Outflows (Inflows) Balances at June 30, 2022 Measurement Date (MD) MD 2020 2021 2022 2022 2019 2020 2021 2022 ■ Other Aggregate Employer Contributions Expected Average Remaining Service Lifetime (EARSL) Future Recognition of Deferred Amounts Measurement Date 2023 2024 2025 2026 *From the report: https://www.calpers.ca.gov/docs/forms-publications/gasb-68-public-agency-schedules-2022.pdf 77,677,694 N/A N/A N/A N/A Differences between expected and actual experience (62,935,700) (74,619,914)N/A Change in Assumptions 479,484,592 692,863,075 Differences between projected and actual earnings on plan investments Differences between projected and actual earnings on plan investments Differences between projected and actual earnings on plan investments Differences between projected and actual earnings on plan investments 120,199,247 (1,374,187,524) 312,537,227 174,169,461 473,170,861 247,407,447 661,935,967 524,237,813 N/A 356,682,534 605,236,738 Differences between expected and actual experience Differences between expected and actual experience N/A 16,290,350 79,135,584 205,254,063 N/A 14,147,130 16,708,988 N/A N/A N/A 3.7 N/A N/A N/A 869,907,904 1,414,671,412 2,096,951,246 145,106,702 (1,724,441,347) 2,647,743,862 N/A Page 18 August 22, 2023 City of Saratoga 17 ■ Misc Tier 1 - 472 ■ Misc Tier 2 - 23013 ■ Misc PEPRA - 26353 ■ Total 1,428,617 127,619 166,593 2022/23 Supporting Calculations Employer Contributions during Fiscal Year 2021/22 1,756,965 1,134,405$ n/a n/a n/a Page 19 August 22, 2023 City of Saratoga Fiscal Year Ending 6/30/2023 Measurement Date 6/30/2022 Fiduciary Net Position Net Pension Liability/(Asset) ■ City % * ■ Total Misc Risk Pool * ■ City's Proportionate Share ■ Total PERF-C NPL * ■ * Supporting detail on page 17. City's Proportionate Share of NPL N/A N/A N/A N/A 11,550,804,975 0.08642% Supporting Calculations $ 21,449,898,398 0.32005% $ 16,770,671,339 Total Pension Liability 0.29677% 63,656,863 N/A Proportionate Share of Net Pension Liability/(Asset) 53,674,534 $ 9,982,329 Page 20 August 22, 2023 City of Saratoga 18 Risk Pool Total Pension Liability * Employer's TPL Proportion Proportionate share of TPL Less: Proportionate share of FNP ** Net Pension Liability * Supporting detail on page 17. ** Supporting detail on page 20. ■ Miscellaneous ■ Fiscal Year End 24,373,906,274$ 21,449,898,398$ Supporting Calculations Sensitivity of Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate Discount Rate 5.90% (1% Decrease ) 6.90% (Current Rate) 7.90% (1% Increase ) ■ Measurement Date 6/30/2022 53,674,534 9,982,329 6/30/2023 19,044,165,493$ 0.29677%0.29677% 72,334,442$ 53,674,534 18,659,908 0.29677% 2,842,836 53,674,534 56,517,370$ 63,656,863$ Page 21 August 22, 2023 City of Saratoga Miscellaneous 4,679,227,059$ (2) City's Proportionate Share of Net Pension Liability **9,982,329 0.21333% * Supporting detail on page 17. ** Supporting detail on page 20. (1) Total Misc Risk Pool Net Pension Liability* (3) City's Deferred Outflows/Inflows of Resources Allocation Basis (2) ÷ (1) *** *** Deferred Outflows/Inflows of resources allocated based on the employer's share of the Miscellaneous Risk Pool net pension liability, per CalPERS' guidance in the 6/30/2022 Schedule of Employer Allocations for Components of Net Pension Liability and Schedule of Collective Pension Amounts. Supporting Calculations Allocation Factor for Deferred Inflows and Outflows Page 22 August 22, 2023 City of Saratoga 19 Measurement Date Misc Risk Pool* 16,290,350$ 77,677,694 (62,935,700) 2022 479,484,592 Net Difference between Projected and Actual Return on Investments 2019 to 2022 857,110,099 * Supporting detail on page 18.** Supporting detail on page 22, unrounded allocation factor is used. Differences between Actual and Expected Experience 2020 2021 165,712 Total Differences between Actual and Expected Experience 66,202 Supporting Calculations Employer Deferred Outflow Employer Deferred (Inflow) Employer Amount (0.21333%)**Item Total Risk Pool Deferred Outflows/(Inflows) 34,753$ 1,022,898 1,022,898 - 34,753$ (134,263) 165,712 200,465 - - 2022 (134,263) - (134,263) 1,828,498 1,828,498 - Changes of assumptions Page 23 August 22, 2023 City of Saratoga Unrecognized Changes in Assumptions Total ■ Miscellaneous Risk Pool Net deferral at 6/30/2021 MD 212,930,330$ -$ (1,657,554,246)$ Employer proportion at 6/30/2022 MD*0.21333%0.21333%0.21333% Employer amount using 6/30/2022 basis 454,250 - (3,536,108) (4,511,218) Employer balances at 6/30/2021 MD 81,575 - (635,023) (1,280,895) Difference (372,675) - 2,901,085 3,230,323 * Supporting details on pages 17 and 22, unrounded allocation factor is used. 18,065,791,524$ 0.32005% 57,819,566 57,922,541 102,975 Supporting Calculations Change in Proportion Calculation Fiduciary Net Position Total Pension Liability Unrecognized Net Difference Between Projected and Actual Earnings on Investments Unrecognized Differences between Expected and Actual Experience (58,649,988) 598,938 (19,964,594,105)$ 0.29677% (59,248,926) Page 24 August 22, 2023 City of Saratoga 20 Calculation at June 30, 2023 financial statement date 2019 Measurement Date 2020 Measurement Date 2021 Measurement Date 2022 Measurement Date Total Balance reported at June 30, 2022 $ (11,001)73,023$ 531,291$ 3,230,323$ * Remaining Amortization Years 0.8 years 1.8 years 2.7 years 3.7 years Current Year Amortization 11,001 (40,568) (196,775) (873,060) (1,099,402) Balance reported at June 30, 2023 - 32,455 334,516 2,357,263 2,724,234 * Balance at July 1, 2022, after 6/30/22 reporting date. Supporting Calculations Change in Proportion Page 25 August 22, 2023 City of Saratoga 2021/22 2022/23 2020/21 2021/22 728,066$ 3,230,323$ 3.7 years 3.7 years N/A N/A N/A N/A 196,775 N/A 196,775 873,060 196,775 873,060 137,741 873,060 - 611,143 728,066 3,230,323 FYE 6/30/2023 334,516 2,357,263 FYE 6/30/2023 - - 611,143 - - 32,455 ■ Deferred Outflows at ■ Deferred Inflows at - 2,724,234 - 2019/20 Recognition Schedule for Deferred Outflows/Inflows at June 30, 2023 Employer- Specific Deferral: Change in Proportions Initial Recognition Period Supporting Calculations Total2019/20 2020/21 ■ Measurement Period 2018/19 ■ Amount recognized in FY pension expense ■ Initial amount (52,254)$ ■ Initial recognition period 3.8 years 154,159$ 3.8 years ● 2019/20 (3rd prior year)(13,751) (13,751) ● 2020/21 (2nd prior year)(13,751) 26,817 N/A 40,568 40,568 ● 2021/22 (Prior year)(13,751) (52,254) 154,159 - ● 2025/26 - - - ● 2023/24 - 1,102,290 ● Total 4,060,294 32,455 ● 2024/25 1,010,801 223,592 ● 2022/23 (Current year)(11,001) 1,099,402 40,568 Page 26 August 22, 2023 City of Saratoga 21 Miscellaneous 869,907,904$ (2) Employer proportion (FNP %)**0.32005% 2,784,140 (4) Actual Contribution for Measurement Period 2021/2022 1,756,965 (5) Difference (4) - (3)(1,027,175) * Supporting detail on page 18. ** Supporting detail on page 17. (1) Aggregate Risk Pool employer contributions for MP 2021/22* (3) Proportionate share of aggregate Employer contribution (1) * (2) Difference in Actual Contribution and Proportionate Share of Contribution Calculation Supporting Calculations Page 27 August 22, 2023 City of Saratoga Calculation at June 30, 2023 financial statement date 2019 Measurement Date 2020 Measurement Date 2021 Measurement Date 2022 Measurement Date Total Balance reported at June 30, 2022 (264,298) (680,365) (368,312) (1,027,175) * Remaining Amortization Years 0.8 years 1.8 years 2.7 years 3.7 years Current Year Amortization 264,298 377,981 136,412 277,615 1,056,306 Balance reported at June 30, 2023 - (302,384) (231,900) (749,560) (1,283,844) * Balance at July 1, 2022, after 6/30/22 reporting date. Supporting Calculations Difference in Actual Contributions and Proportionate Share of Contributions Page 28 August 22, 2023 City of Saratoga 22 2021/22 2022/23 2020/21 2021/22 (504,724)$ (1,027,175)$ 3.7 years 3.7 years N/A N/A N/A N/A (136,412) N/A (136,412) (277,615) (136,412) (277,615) (95,488) (277,615) - (194,330) (504,724) (1,027,175) FYE 6/30/2023 - - FYE 6/30/2023 (231,900) (749,560) Recognition Schedule for Deferred Outflows/Inflows at June 30, 2023 Employer- Specific Deferral: Difference Between Actual & Proportionate Share of Employer Contributions Supporting Calculations Initial Recognition Period Total2019/20 2020/21 ■ Measurement Period 2018/19 2019/20 ■ Initial amount (1,255,414)$ (1,436,327)$ ● 2020/21 (2nd prior year)(330,372) (377,981) (708,353) ■ Initial recognition period 3.8 years 3.8 years ■ Amount recognized in FY pension expense ● 2019/20 (3rd prior year)(330,372) N/A (330,372) ● 2021/22 (Prior year)(330,372) (377,981) (844,765) ● 2022/23 (Current year)(264,298) (377,981) (1,056,306) ● 2023/24 - (302,384) (716,411) ● 2024/25 - - (373,103) ● 2025/26 - - (194,330) ● Total (1,255,414) (1,436,327) (4,223,640) ■ Deferred Outflows at - - - ■ Deferred Inflows at - (302,384) (1,283,844) Page 29 August 22, 2023 City of Saratoga Change in Proportion*** ■ 2023 ■ $ 1,102,290 1,146,800$ ■ 2024 ■ 1,010,801 1,304,443 ■ 2025 ■ 611,143 788,374 ■ 2026 ■ - 1,118,371 ■ 2027 ■ - - ■ Thereafter - - * See page 18.** See page 22, unrounded allocation factor is used.*** See page 26.**** See page 29. Difference Between Actual and Proportionate Share of Contributions **** (716,411)$ (373,103) (194,330) - - - Total Employer Specific Amounts Recognition of Deferrals in Future Pension Expense Risk Pool Amount* 524,237,813 666,745 371,561 1,118,371 - - Measurement Period Ending June 30: Fiscal Year Ending June 30: Miscellaneous Risk Pool Amount City's Proportionate Share Supporting Calculations 0.21333% 0.21333% 0.21333% 0.21333% ■ Thereafter - 0.21333% 0.21333% $ 356,682,534 312,537,227 760,921$ Applicable Percentage** 2024 2025 - 174,169,461 2026 2027 2028 Page 30 August 22, 2023 City of Saratoga 23 ■ Measurement date ■ Total pension liability ■ Fiduciary net position ■ Net pension liability/(asset) ■ Deferred inflows of resources ■ Deferred (outflows) of resources * ■ Contributions in the measurement period ■ Net balance sheet impact ■ Pension Expense (Income) * The deferral for contributions after the measurement date is excluded. 5,006,875$ (4,248,007) 6/30/2021 6/30/2022 6/30/2022 Fiscal year ending Change6/30/2023 9,254,882 1,756,965 727,447 1,958,999 (685,889) - 2,000,557 63,656,863$ 53,674,534 9,982,329 1,418,107 (5,776,095) 1,756,965 7,381,306 57,922,541 58,649,988$ 5,380,749 5,380,749 (540,892) (5,090,206) GASB 68 Balance Equation for Pension Expense Calculation Supporting Calculations Page 31 August 22, 2023 City of Saratoga This page intentionally blank Supporting Calculations Page 32 August 22, 2023 City of Saratoga 24 Following summarizes the beginning balances from the 2021 measurement date * Debit Credit 81,575$ -$ Changes of assumptions - - - (635,023) Change in employer's proportion 604,314 (11,001) - (1,312,975) 685,889 (1,958,999) 1,756,965 - Net Pension Liability - (727,447) Net Impact 243,592 - Check 2,686,446 (2,686,446) * Recorded at 6/30/22 fiscal year end. Differences between the employer's contributions and the employer's proportionate share of contributions Pension contributions subsequent to measurement date Journal Entries Differences between expected and actual experience Net differences between projected and actual earnings on plan investments Beginning Balances Total deferred outflow/inflow Page 33 August 22, 2023 City of Saratoga Debit Credit Net pension liability 1,756,965$ Deferred Outflow - FY 2022 contributions (1,756,965)$ Deferred Outflow - FY 2023 contributions 1,428,617 Pension Expense (1,428,617) Check 3,185,582 (3,185,582) Journal Entries Employer Contributions Following records the impact of employer contributions, assuming employer contributions were recorded as pension expense when paid. Page 34 August 22, 2023 City of Saratoga 25 Following records the impact of current year pension expense Debit Credit 5,090,206$ -$ 675,155 (134,263) 5,380,749 - Net pension liability - (11,011,847) Check 11,146,110 (11,146,110) See pages 38 and 37 ("Subtotal" row) for details. Journal Entries Deferred Outflows Pension Expense (Income) Summary Journal Entries - Pension Expense Deferred Inflows Page 35 August 22, 2023 City of Saratoga Debit Credit 200,465$ (134,263)$ Changes of assumptions 1,022,898 - 1,828,498 - Change in employer's proportion 2,724,234 - - (1,283,844) 5,776,095 (1,418,107) 1,428,617 - Net Pension Liability (NPL)- (9,982,329) Net Impact 4,195,724 - Check 11,400,436 (11,400,436) 5,380,749 - Journal Entries Ending Balances at June 30, 2023 Total pension expense (income) for FYE 2023 Differences between expected and actual experience Net differences between projected and actual earnings on plan investments Differences between the employer's contributions and the employer's proportionate share of contributions Pension contributions subsequent to measurement date Total deferred outflow/inflow Page 36 August 22, 2023 City of Saratoga 26 Journal Entry- Debit Journal Entry - (Credit) Ending Balance Debit 118,890$ -$ 200,465$ 1,022,898 - 1,022,898 1,828,498 - 1,828,498 2,119,920 - 2,724,234 - - - 5,090,206 - 5,776,095 1,428,617 (1,756,965) 1,428,617 6,518,823 (1,756,965) 7,204,712 Change in employer's proportion Differences between the employer's contributions and the employer's proportionate share of contributions Subtotal Total Deferred Outflows 81,575$ (Detail for page 35) Differences between actual and expected experience Differences between projected and actual earnings on plan investments - Change in assumptions - Contributions after the Measurement Date 1,756,965 Employer Specific 2,442,854 Note "Changes" for Risk Pool deferrals equals total change from prior year to current year. "Changes" for employer-specific deferrals includes recognition of previous deferral or establishment of new deferral. Reconciliation of Deferred Outflows Deferred Outflows Opening Balance Debit 604,314 - 685,889 Page 37 August 22, 2023 City of Saratoga Journal Entry- (Credit) Journal Entry - Debit Ending Balance (Credit) (134,263)$ -$ (134,263)$ - - - - 635,023 - - 11,001 - - 29,131 (1,283,844) (134,263) 675,155 (1,418,107) Change in employer's proportion Differences between the employer's contributions and the employer's proportionate share of contributions Total Deferred Inflows -$ Deferred Inflows Opening Balance (Credit) Employer Specific Reconciliation of Deferred Inflows Differences between actual and expected experience (Detail for page 35) Differences between projected and actual earnings on plan investments (635,023) Change in assumptions - (11,001) (1,958,999) (1,312,975) Note "Changes" for Risk Pool deferrals equals total change from prior year to current year. "Changes" for employer-specific deferrals includes recognition of previous deferral or establishment of new deferral. Page 38 August 22, 2023 City of Saratoga 27 ■ Measurement date ■ Total pension liability ■ Fiduciary net position ■ Net pension (liability)/asset ■ Deferred (inflows) of resources ■ Deferred outflows of resources ■ Net balance sheet impact Deferred Outflows includes contributions after the measurement date. 7,204,712 2,442,854 (243,592) (4,195,724) (727,447) (9,982,329) (1,958,999) (1,418,107) (58,649,988)$ (63,656,863)$ 57,922,541 53,674,534 Fiscal year ending 6/30/2022 6/30/2023 6/30/2021 6/30/2022 Reconciliation of Deferred Outflows/(Inflows) Summary of Balances Page 39 August 22, 2023 City of Saratoga This page intentionally blank Reconciliation of Deferred Outflows/(Inflows) Page 40 August 22, 2023 City of Saratoga 28 DATE: October 10, 2023 TO: Finance Committee FROM: Dan Jacobson,Interim Administrative Services Director SUBJECT: Fiscal Year 2023-24 Budget in Brief For the 2023-24 fiscal year, Saratoga is re-introducing the Budget in Brief to complement its other financial communication tools. Intended to reach a wide audience, the Budget in Brief follows the Government Finance Officers Association (GFOA)recommendation that governments strive for broader consumption and greater comprehension of the budget document. In order to achieve this, the Budget in Brief focuses on several operating budgetary highlights: An introduction and link to additional information Property tax distribution example Uses Infrastructure investment highlights The Budget in Brief draft document will be presented to the Committee at the meeting for feedback. The Budget in Brief is scheduled to be mailed directly to all City addresses and posted on the website by the end of October 2023. 29 Learn more at Saratoga.ca.us/2023Budget The City of Saratoga is an attractive, residential community with a small-town vibe in the midst of the world-famous Silicon Valley. It is the gateway to several distinctive destinations, including The Village downtown district, Hakone Gardens, and Montalvo Arts Center. Where Do My Property Taxes Go? $19,640 Education Example Property Taxes ($3.2M home value) Allocation from 1% base $32,050 $6,035 County, Special Districts, and Other $4,522 Fire Protection $1,852 City of Saratoga 61%19%14%6% 30 City of Saratoga /CityofSaratoga /cityofsaratogaca /CityofSaratoga /CityHallSaratoga To view this postcard in Chinese, visit www.saratoga.ca.us/translate本明信片中文版請查看 ： www.saratoga.ca.us/translate General Fund ExpendituresHow Each $ is Spent Major Capital /Infrastracture Projects 26.4% 26.2% 14.1% 11.1% 10.4% 8.6% 3.1% Public Safety Public Works General Administration Community Development Capital Programs Internal Serivces Community Services Most of what the General Fund transfers goes to streets and sidewalks. 80% 8% Streets & Sidewalks Parks & Trails 31