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HomeMy WebLinkAboutMINUTES - 01242006 - C.13 C . 13 TO: BOARD OF SUPERVISORS Contra Irl _ FROM: Fire Chief Keith B. Richter Costa Contra Costa County Fire Protection District '3 County January 24, 2006 �a DATE: sr.c6`..... SUBJECT: Financial Actions Necessary to Recognize Recent Pension Obligation Bond (POB) Issuance Proceeds and Related Expenditures in Accounting Ledger SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE attached revenue and appropriation adjustments in the new "CCCFPD POB Debt Service Fund" (fund 202200; dept/org 7022). Pursuant to the recommendation of the County's external-auditor, Caporicci & Larsen, these adjustments are needed to reflect in the accounting ledger the proceeds and related expenditures of the District's July 2005 POB issuance. FINANCIAL IMPACT: These financial actions for current FY 2005-06 are essentially cost neutral. They result in adding the following revenue and an equal amount of expenditures to the District's budget: Revenue: Proceeds from Sale of POBs $129,900,000 Expenditures: Payment to CCCERA for URAL as of 12-31-04 $124,917,000 Payment to CCCERA for Paulson Obligation (Principal) 3,459,368 Payment to CCCERA for Paulson Obligation (Interest) 250,212 Cost of Issuance (COI) Payments 1,273,420 $129,900,000 BACKGROUND/REASONS FOR RECOMMENDATION:- With the approval of your Board, the District's issuance of Pension Obligation Bonds (POBs) was finalized on July 28, 2005. The POBs were issued to refinance the pension liabilities of the District in the following two (2) areas. First, as of December 31, 2004, the District's unfunded actuarial accrued liability (UAAL) with the Contra Costa County Employees' Retirement Association (CCCERA) was $124,917,000; this debt was being amortized over a 20-year period that began in 2003 at an interest rate of 7.9%. Second, the Paulson Settlement Obligation was being amortized over roughly the same time period at a rate of 8.0%; the remaining Paulson principal and interest due as of July 28, 2005 was approximately $3,709,580. CONTINUED ON ATTACHMENT: X YES SIGNATURE: i RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER 4 SIGNATURE(S): ACTION OF BOAV " APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT /' " �� ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED "�T� 52? Contact: Mike George 941-3311 JOHN SWEETEN,CLER FTHE BOARD OF cC,: C.C.C. Fire Protection District SUPERVISORS AND COUNTY ADMINISTRATOR County Administrator/Rich Seithel Auditor-Controller BY DEPUTY U:\SRMGRS\KR\BOARDORDERPensionObBondsFinActions601.doc , %�"— I' By issuing the POBs at the lower interest rate of 5.05%, the District will save $50,071,719 over the 18-year term of the bonds, or an average of $2,781,762 per year. Upon receipt of bond proceeds, payment was promptly made to CCCERA in the amount of $128,626,580 to extinguish both the District's UAAL and the amount of its remaining Paulson Obligation. Additionally, the District incurred Cost of Issuance (COI) expenditures payable to various entities including underwriter, bond insurer, bond counsel, disclosure counsel and County's financial advisor. Caporicci & Larsen, the County's external auditor responsible for auditing the County's FY 2004-05 Comprehensive Annual Financial Report (CAFR), has recommended that both the proceeds and expenditures related to the POB transaction be recognized in the District's accounting ledger. This recommendation is consistent with the "Blue Book" -- Governmental Accounting, Auditing and Financial Reporting (GAAFR) -- the authoritative accounting manual for state and local governments. Moreover, complete revenue and expenditure recognition of this POB transaction in the accounting ledger will ensure that this major, important financial event is correctly recorded and reported in the future CAFR for current FY 2005-06. U:\SRMGRS\KR\BOARDORDERPensionObBondsFinActions601.doc AUDITOR-CON CONTRA COSTA COUNTY FINAL APPROVAL NEEDED BY: APPROPRIATION ADJUSTMENT T/C 27 !� BOARD OF SUPERVISORS El COUNTY ADMINISTRATOR ACCOUNT CODING BUDGET UNIT: Contra. Costa County Fire Protection District ORGANIZATION EXPENDITURE - SUB-ACCOUNT EXPENDITURE ACCOUNT DESCRIPTION <DECREASE INCREASE 100 100 7022 1043 Ret Exp -. Pre 1997 Retirees 1 3,709,5cb0j00 7022 2310 Non-County Professional/Specialized Svcs 1 1,273,420.1 1 00 7022 3565 Contribution to Other Funds 1 124,917,000.100 7022 6301 Reserve for Contingencies 129,900,000 r 00 1 7022 6301 Appropriable New Revenue I 129,900,0O0J00 TOTALS 1991;9001 ;WOJ 00 259,800,000!.00 APPROVED r12T EXPLANATION OF REQUEST ,AUDITOR-CONTROLLER 00& Appropriate proceeds from District's POB issuance BY: Date ihj�k which was finalized 7-28-05. COUNTY` N §/T.,R A T By. Dote#& 80 D OF SUPERVISORS SUPENSURS 6101A,UILKEMA, YES: PIPHO,DESAULNIER,GLOVER NO. /407?C_ John Sweeten,Clerk of tr- '-,rd of Supervisors and County I........iistrator Chief of Admin Svcs 1-11-06 TITLE DATE SIGNATURE e 41d,AP d7 By: Doi ----------- APPROPRIATION A2D_0 ADJ. JOURNAL NO, (M129 Rev.2/86) SEE INSTRUCTIONS ON REVERSE SIDE CONTRA COSTA COUNTY ESTIMATED REVENUE ADJUSTMENT T/C 24 ACCOUNT CODING BUDGET UNIT: Contra Costa County Fire Protection District ORGANIZATION REVENUE ACCOUNT REVENUE DESCRIPTION INCREASE <DECREASE> 100 loo 7022 9901 Proceeds of Bond Sale 129,900,0001:00 I 1 I I I I � 1 I I I i I � I 1 I I I I I I I I I I I I I I I , TOTALS 129,900,000:00 �. APPROVED EXPLANATION OF REQUEST AUDITOR-CONTROLLER JRecognize proceeds from District's POB issuance By: ��� V Date ` �© which was finalized 7-28-05. COUNTY_ IIRZATO By: Date BOWr OF SUPERVISORS SUPERVISORS GIOIA,UILKEMA, YES: PIEPHO,DESAULHIER,GLOVER, NO. A/C»t'' Chief of ` . At Admin Svcs 1-11-06 John Sweeten,Clerk of the Board of SI GN ATUR E TITLE DATE Supervisors and County Administrator // n By: DoteV241W REVENUE ADJ. RAOO JOURNAL NO. (M 8134 Rev. 2/86)