It takes two to speak the truth — one to speak, and another to hear
— Henry David Thoreau

Description:

Since before the election in the spring of 2017 that included voting on Measure D, members of PVrrg realized that the City needed to investigate cost cutting and better efficiency in management in order to understand if a new parcel tax is necessary. We believed that a Citizens Finance Oversight/Advisory Committee was needed to help Council with Citywide financial management and potentially to draft a new parcel tax for the voters in order to meet current expenses.  We were confident that there are numerous competent resident professional financial experts who would be willing to volunteer to help solve the City’s financial problems.

At that time, PVrrg publically stated support for the establishment of such a committee and concern about Measure D without a rigorous financial review. For More information on the Measure D Parcel Tax, click here.

When Measure D did not pass, we began to actively advocate for the establishment of a Citizens Finance Advisory Committee and took up the task of researching how other cities utilized such a Committee to help manage their finances.  For more information on Financial Advisory Committees in other cities, click here

We are very pleased with the formation of PVE’s current Citizens Finance Advisory Committee and the selection of resident members with excellent financial experience and a strong commitment to invest significanttime and energy in trying to help out. We pledge our wholehearted support of the members of this Committee for their volunteer efforts on behalf of PVE. For more information on the FAC on the City website, click here.


Chronology of Events

8/8/2017 PVrrg sent its research and recommendation letter to the City -- click here

10/10/17 Larry Tramutola, political consultant hired by the City, recommended the City form a  “PVE Fiscal Oversight Advisory Committee”. To view the meeting, click here and got to Item 9.

1/10/18 City Voted to adopt Ordinance 17-727 establishing a Finance Advisory Committee. To view the meeting, click here and go to items 6 and 7.

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1/29/18 Finance Committee candidate interviews were held. There were 33 resident applicants with professional/financial experience who interviewed for the five Financial Advisory Committee member positions. 


Voting Record of Elected Officials:

On January 10, 2018, the five members of City Council; King, Vandever, Peterson, Kao, and Davidson voted unanimously for the establishment of the PVE Finance Advisory Committee.


PVE Finance Advisory Committee (FAC) Members

  • Amy Forte Chair) (Term ends 6/2020) –Senior manager in financial strategic planning at Toyota America
  • Mark Young - Co-chair (Term ends 6/2020) - Municipal finance consultant
  • David McGowan (Term ends 6/2020) - Forensic Accountant
  • Don Culler (Term ends 6/2019) –Engineer with financial management experiences
  • Ela Jhaveri (Term ends 6/2019) –Owner and CFO of diamond Business Company.
  • Victoria Lozzi (City Treasurer and non voting member) - Banker

To view each committee member's self introduction, go to  7:40 to 16:30 at this link.


Finance Advisory Committee Meetings: 

All FAC meetings are open to the public, and you can sign up for e-notifications of meetings on the City website here. Unfortunately, not all FAC meetings are recorded.  Therefore as a public service, PVrrg has summarized the content of each meeting below, and we make the information available for the convenience of members of our community who don’t have the time to attend or watch the video recordings of the meetings (when available) , but want to keep informed of the essential activities of the FAC.

Committee Meeting 1:         March 22, 2018

Agenda: 

  • City Attorney explains the Brown’s Act requirements
  • Member swearing-in
  • Discuss and define goals and objectives of the Committee based on ordinance 17-727
  • City Staff presentation – Operating budget & Capital Improvement projects, mid-year budget report, etc.
  • Formation of the Ad Hoc Committees

For video of the meeting, click here.

For minutes of the meeting, click here

PVrrg Summary of Essential Content:

There was general discussion of the Committee’s Goals and Objectives.  A sample of points made by individual members are paraphrased as follows:

Don Culler stated that the object of the Committee is to be the “window to the public”.

Amy Forte described the value of a “dashboard”to capture and communicate key metrics demonstrating the City’s financial picture.

Mark Young indicated that he favored looking for structural issues in order to ensure long-term budget sustainability.  He recommended frequent budget reviews and a two step process to 1) look at the status quo to determine if we are able to live within our means, and 2) if not, figure out options and engage in public debate.

David McGowan advocated that expenses not exceed what was budgeted for and Don added that revenue must match expense in the long term.

Ela Jhaveri called for clarity on pension and other benefits costs. 

The Committee determined that five Ad Hoc Committees should be established to address the key issues, with two members for each area as follows:

  1. Communication platforms and messaging to the public: Amy Forte and Don Culler
  2. Operating budget and expenses: Mark Young and David McGowan  
  3. Capital Improvements & Equipment: Don Culler and Ela Jhavari              
  4. Pension & Benefits: Ela Jhaveri and Victoria Lozzi
  5. Revenue Opportunities: Victoria Lozzi and Amy Forte

The committee members requested meeting at least monthly until they become familiar with the details of the City finance so that they can be in a position to give their recommendations. The City Manager stated that the Committee was only approved to meet four times a year.  The Committee members worked with the City Manager to choose the dates for the next few months in order to meet the timing for upcoming budget approval. The City Manager is to ask for Council approval of the meetings.

PVrrg Perspective: 

We are happy with and encouraged by the Committee members’competence, dedication, and determination to learn and to help with the City finance.  


Committee Meeting 2:          April 19, 2018

Agenda:

  • Staff presentation of Overview City Organization, Budget, Expenses and Projected long-Range Fiscal Challenges 
  • Discussion and Approval of Mission and Goals of Ad Hoc Committees 
  • Discussion About Unofficial Results of April 10, 2018 Special Election

For video of the meeting, click here.

For full minutes of the meeting, click here. Here are the highlights:

Operating Budget: The Ad Hoc Committee presented a recommendation for Committee to advise City Council to include a monthly cash-flow in the FY 2018- 2020 budget, and to request that staff provide a quarterly reconciliation of budgeted revenues and expenditures with an explanation of variances to the budget. It was the consensus of the Committee to schedule this recommendation for discussion and approval at the Committee meeting on May 17, 2018. The Ad Hoc Committee reported that its intent, using the FY 2018/19 budget as a base, is to complete a 5-year and 10-year detailed financial analysis and projection by the end of December 2018 for the purpose of educating the City Council and public and to insure the budget is structurally balanced. 

Pension and Benefits: The Ad Hoc Committee presented its mission as being to understand the City’s long-term and short-term pension obligation, and to develop possible courses of action for the long- and short-term. The Ad Hoc Committee reported that it will meet with staff and CalPERS for understanding of the pension and options, and may recommend consultant services similar reports reviewed from the Cities of Salinas and Pacific Grove. 

Capital Improvement, Maintenance and Equipment Replacement: The Ad Hoc Committee presented that its goal is to work with staff for recommendations on infrastructure status, current requirements and future plans; and resolve short- and long-term CIP financial requirements. The Ad Hoc Committee reported that it will first attempt to address the financial requirements by utilizing the expertise of professionals in the community who have existing knowledge of the City and as a cost-saving measure, and if this does not work, consultant services may be necessary. The Ad Hoc Committee identified the value of community engagement (community forum(s)) to identify capital improvement and maintenance needs. The Ad Hoc Committee identified its plan to complete its work for incorporation with the Operating Budget Ad Hoc Committee by the end of December 2018.

Communications and Messaging: The Ad Hoc Committee presented its goal as providing the public with a background orientation to understand the City’s financial records, sources of revenue, Fund Accounting, and liabilities; historical revenue and expense data; and current financial data inclusive of revenue to budget per Fund and expenses to budget per Fund. The Ad Hoc Committee presented a sample concept of a “dashboard”of the Committee’s charter noting how it is disseminated has not been determined; as such, the Ad Hoc Committee explained that its intent with the “dashboard”is to provide a window into the City’s finances and for serving as a forum for the public to ask questions and receive answers. It was noted that performance measures for including in communications would be created. 

FAC Charter.jpg

Revenue Opportunities: It was the consensus of the Committee that Chair Forte will join Treasurer Lozzi on this Ad Hoc Committee, and the Ad Hoc Committee should look at current revenue opportunities, and assets inclusive of preparing a statement that explains why the Palos Verdes Estates revenue situation is unique. The Ad Hoc Committee reported that its goal and focus would be presented at the next Committee meeting

PVrrg Summary of Essential Content:      

There was a long discussion between Tony and committee members on utilizing the expertise of professionals in the community by the Ad Hoc Committee members.  

Tony said that all engagements of the Ad Hoc Committee with the community are supposed to be done only during the Committee meetings in public not in private, claiming that it would prejudice the process.  He said that it is up to the Council to set the resources not the Committee.  He emphasized that the Committee is only in an advisory role.  However, at the end of the meeting, Councilman Davidson instructed the Committee members to enlist help from whatever source they may find useful including their own [spouses].

The FAC approved the recommendation of the Operating Budget Ad Hoc Committee to advise Council to include a monthly cash-flow in the budget and ask staff to keep records and perform quarterly reconciliation for the budgeted revenues and expenses as well as to explain whenever discrepancies occur.  The Committee decided to schedule discussion on this subject and subsequent approval at its next meeting on May 17, 2018.

PVrrg Perspective:    

We are happy with the seriousness and the no nonsense way that the Committee members are trying to understand the City budget so they can find ways to bring our City to financial health. We are very grateful to every member of the FAC for their commitment and dedication to their work on the Committee.

We don’t agree with the City Manager’s apparent non-cooperation at numerous times during the FAC meeting, especially when David McGowan asked for detailed information on City personnel.  Tony stated that it would be too much work, “the staffs are on treadmills”, and won’t have the time to do it until after the budget has been approved in June.  

We are aware of city personnel being involved in other time-consuming activities and tasks.  One example is the Citizens Academy, which uses a lot of staff’s time.  We can’t help but wonder about the City Manager’s priority.  While valuable, is the Citizen’s Academy more important than providing information to the FAC when the City is in dire need of financial advice?  

The members of FAC are experienced financial and management professionals.  It would be very costly for the City to hire 5 financial consultants of this caliber for their professional services.  Plus, when the City has hired consultants in the past, those consultants have required the support of City staff and have received such support.  

We believe the City Manager should demonstrate greater acceptance and willingness to provide necessary information and support to the work of the FAC.


Committee Meeting 3:          May 17, 2018 

 

Agenda:

  • Discussion and Approval of Revenue Ad Hoc Committee Mission and Goals 
  • Discussions and Approval of a Recommendation to the City Council to Include a Monthly Cash-Flow in the 2018-2020 Budget 
  • Discussion and Approval of a Recommendation to the City Council that a Quarterly Budget to Actual Revenue and Expenditure Reconciliation be Provided to the Finance Advisory Committee and City Council 

For video of the meeting, click here.

For full minutes of the meeting, click here. Here are the highlights:

Discussion and Approval of Revenue Ad Hoc Committee Mission and Goals 

The Ad Hoc Committee identified its purpose as exploring and identifying the ways to maximize   City revenue. The following was identified as areas the Ad Hoc Committee will address: 

  • Concessions
  • Investment Income
  • Property Tax
  • New funding sources (sales tax, grants, community sponsorship, exchange rates, and others not known at this time) 
  • The Ad Hoc Committee intends to benchmark Palos Verdes Estates revenue with other similar municipalities.
     

Discussions and Approval of a Recommendation to the City Council to Include a Monthly Cash-Flow in the 2018-2020 Budget

Action: Approve recommendation that the City Council include a monthly cash flow in the 2018-2020 budget. Motion: Committee Member McGowan. Second: Committee Member Jhaveri. (5-0) 
 

Discussion and Approvalof a Recommendation to the City Council that a Quarterly Budget to Actual Revenue and Expenditure Reconciliation be Provided to the Finance Advisory Committee and City Council

Action: Approve recommendation that the City Council direct staff to prepare a quarterly reconciliation of budgeted revenues and expenditures in comparison to actual revenues and expenditures, and provide and exception report of variances from the budget. Motion: Committee Member Jhaveri. Second: Committee Member Culler. (5-0)

PVrrg Summary of Essential Content:  

For the first time the FAC passed two recommendations for the City Council to improvetransparency and accountability:

  1. Establish Projected Monthly Cash Flow for the expected expenses.
  2. Staff to prepare monthly, quarterly, semiannually, and annual statements on the Projected Monthly Cash Flow for the City Council’s review to see if the actual expenses are in line with the projected cash flow.  If there are discrepancies, they should be explained and properly authorized  

PVrrg Perspective:

This committee is doing exactly what we had hoped.   We are very delighted to hear these first recommendations from the FAC to the City Council.  We hope the residents will watch the video and seefor themselves.  

What the CC will do with their recommendation is another story.  However, with the transparent way this Committee is operating and the financial shape the City is in, perhaps the Council will have little choice but listen to their advices.

We strongly urge the City Council to accept and direct the staff to adapt these two recommendations.


Committee Meeting 4:          June 14, 2018

 

Agenda:

  • Discussion of Joint Meeting of the City Council and Finance Advisory   Committee
  • Presentation of OpenGov
  • Ad Hoc Committee Reports

For video of the meeting, click here.

For full minutes of the meeting, click here. Here are the highlights:

The Committee discussed its overall work plan for the rest of 2018 to help the City not only balance the budget, but also to establish long term stability and setting up internal procedures for transparency, engagement, and communication.  This work plan is still in the working stage and is expected to be discussed at the City Council meeting on July 10.  See detail of the FAC work plan for 2018-19 here.

A representative from OpenGov presented their software accounting system for management of City finance, which costs $9,500 for 3 years. 1,800 cities as well as numerous government agencies and educational institutions are using it.  The members of the FAC were impressed with its effectiveness in accounting and financial management as well as its capability in support of transparency and accountability. They would like to see its installation expedited so as to make it available for use by July 1, if possible. David McGowan and Mark Young also recommended that the City hire temporary help familiar with OpenGov to do the necessary transitional work.  For more information on this system, click here.

Next FAC meeting will be on July 24.

PVrrg Perspective:   

We are enthusiastic about OpenGov and believe that the City would be wise to have it installed as soon as possible.  After hearing the presentation by their representative, and then visiting their website, we feel it would be a tremendous help to the management of our City’s finance.  The residents would also have the City financial information and data comparisons from year to year in numerous ways directly at their fingertips. The potential for transparency and accountability is already built in. 

Who wouldn’t want that?


Committee Meeting 5:          July 16, 2018

 

AGENDA:

For full agenda of the meeting, click here.

For video of the meeting, click here.

For the FAC Draft Workplan, click here.

Minutes are not yet available.

 

PVrrg Summary of Essential Content:      

The FAC Ad Hoc Committees presented some draft slides and discussed their reports to be presented to Council on Tuesday, 7/24 Joint meeting with City Council.  

Essentially each individual Ad Hoc Committee will do their work between July and September 31,2018, integrate all of the committees work together between October and December 2018, and make the FAC recommendations to Council by December 31.  


JOINT Meeting Special Workshop with City COuncil:

July 24, 2018

For full agenda of the meeting, click here.

No video of the meeting was recorded. Minutes are not yet available.

For the FAC Presentation made, including the final workplan, click here.


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