Southern Marin Fire Protection District 308 Reed Boulevard Mill Valley, California 94941

Phone: 415 388-8182

Fax: 415 388-8181

Southern Marin Fire Protection District - Board of Directors Meeting

AGENDA Wednesday, July 26, 2017 7:00 pm 308 Reed Boulevard, Mill Valley Phone: (415) 388-8182 Fax: (415) 388-8181 Any person with a disability covered under the Americans with Disabilities Act (ADA) may receive a copy of the agenda and a copy of all the documents constituting the agenda packet prepared by the local agency or other interested person for the meeting of 07/26/2017 upon request in an appropriate alternative format. Requests for mailed copies of agendas or agenda packets are valid for the calendar year in which requests are made and must be renewed annually after January 1. Any person with a disability covered under the ADA may also request a disability-related modification or accommodation, including auxiliary aids or services in order to participate in a public meeting. Please contact Susan Kim, at (415) 388-8182 at least 5 working days prior to the meeting and provide information on the assistance required.

Call to Order:

Pledge of Allegiance: Open Time for Public Expression: (limited to 3 minutes per person). The Board welcomes public comments on all agenda items. Agenda Adjustments: Approval of Minutes: June 28, 2017 – Regular Board Meeting

Pages 1-6

A. Correspondence 1. Thank you letter dated 3/20/17 from Board President Cathryn Hilliard for incident response

Page 7

2.

Commendation letter to BC Matt Barnes from MC Fire Chief Weber for outstanding work on Regional Fire Academy

(Action)

Page 8

3.

Thank you letter to Captain Doug Paterson & FF Adam Vollmer from MV Fire Chief Tom Welch for assistance at Mill Valley Evacuation Drill

Page 9

4.

Shout-Out Newsletter

Page 10

5.

Ark Newspaper article Firefighter contain 3-acre blaze in Tiburon Open Space, dated 7/12/17

Page 11

6.

Thank you letter from Michael Powanda to Captain Cary Gloeckner, ENG/PM Larry Yoell, FF/PM Robert Grady and ENG/PM Kenny O’Reilly for incident response.

Page 12

7.

Letter of concern to Sausalito City Manager Adam Politzer from Board President Cathryn Hilliard regarding a fire and life safety issue on Caledonia Street in Sausalito

Page 13

B. Staff Reports 1.

Fire Chief Report: Fire Chief Chris Tubbs

Pages 14-19

2.

Operations & Training: Battalion Chief Matt Barnes

Pages 20-22

3.

Prevention: Deputy Fire Marshal Fred Hilliard

4.

Finance: Finance Manager Alyssa Schiffmann

5.

- Finance Report: July 2017

Page 23

- Balance Sheet: Dated 7/19/2017

Page 24

- Budget Report FY 2017/2018: Dated 7/19/2017

Pages 25-29

- Budget Report FY 2016/2017: Dated 7/19/2017

Pages 30-34

- SMFD Disbursements/Warrants: Dated 7/3/17 & 7/17/17

Pages 35-37

- Bank of America Statement: Dated May 14, 2017 to June 13, 2017

Pages 38-41

Association Report: Association President Jason Golden

Page 42

AGENDA – Board of Directors Meeting – July 26, 2017

1|P a g e

C. Committee Reports: 1.

Southern Marin Emergency Medical Paramedic System (SMEMPS)

(Discussion/Action)

2.

Shared Services Committee

(Discussion/Action)

3.

Finance Committee

(Discussion/Action)

4.

Personnel Committee

(Discussion/Action)

5.

Communications Committee

(Discussion/Action)

6.

Building Committee

(Discussion/Action)

7.

MERA Committee

(Discussion/Action)

D. New Business: 1. Other Post-Employment Benefits (OPEB) Funding Policy pages 43-47 (Discussion/Action) Board approval is requested for District OPEB Funding policy which details how OPEB is funded & guidance for budget decisions. 2.

Pension Trust with Public Agency Retirement Services (PARS) pages 48-49 (Discussion/Action) Board approval is requested to open a trust account with PARS for the purpose of pre-funding the District pension obligations and/or OPEB obligations in a single trust.

3.

Resolution 2017/2018-1 Establishing a PARS Trust SMFD Pension-OPEB Obligations pages 50-51 (Discussion/Action) Board approval is requested for Resolution 2017/2018-1 to officially establish a PARS Trust for the purpose of pre-funding both pension obligations and/or OPEB obligations in a single trust

4.

Resolution 2017/2018-2 TAX RATE per Ordinance for Fiscal Year 2017/2018 page 52 (Discussion/Action) Board approval is requested to approve Resolution 2017/2018-2 TAX RATE per Ordinance for Fiscal Year 2017/2018

5.

Grand Jury Response: Marin’s Retirement Health Care Benefits, The Money Still Isn’t There pages 53-54 (Discussion/Action) Board approval requested for the proposed response to the Grand Jury Report, Marin’s Retirement stapled packet Health Care Benefits, The Money Still Isn’t There and direct the Fire Chief to submit the District response to the Grand Jury.

6.

Grand Jury Response: The Budget Squeeze, How Will Marin Fund Its Public Employee Pensions? Approval is requested for the proposed response to the Grand Jury Report, The Budget Squeeze and direct the Fire Chief to submit the District’s response to the Grand Jury.

7.

Grand Jury Response: The Big Picture Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits, Report Date: June 8, 2017

8.

Pages 55-56

(Discussion/Action)

stapled packet

pages 57-68

(Discussion)

Shared Services Presentation – ENG/PM Jason Golden

pages 69-76

(Discussion)

9.

Staff Report by Chief Tubbs – Shared Services Update & Next Steps

pages 77-90

(Discussion/Action)

10.

Deployment Measure Performance Policy pages 91-94 (Discussion/Action) Board approval requested for Performance Measures Policy and direct Fire Chief to report on the adopted policy performance. Closed Session: (1 item) 1.) Conference with Labor Negotiator pursuant to Government Code Section 54957.6 Agency negotiator: SMFD Personnel Committee Employee Organization: Southern Marin Chief Officers Association, IAFF Local 1775 Open Session: Report on any action taken in closed session

E. Personnel 1. Step increase for Liza Andre from Project Manager, Step 3 to Project Manager, Step 4 at a salary of $7,667 per month effective 7/1/2017. 2. Step increase for Alyssa Schiffmann from Finance Manager, Step 2 to Finance Manager, Step 3 at a salary of $8,820 per month effective 8/31/2017. F. Poll the Board Next Regular Meeting: 08/23/2017 At the discretion of the Board, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board.

AGENDA – Board of Directors Meeting – June 28, 2017

2|P a g e

APPROVED July 26, 2017

Approved Minutes

BOD Meeting

BOARD OF DIRECTORS REGULAR MEETING Wednesday, June 28, 2017 7:00 p.m. Headquarters Fire Station #9 – 308 Reed Boulevard, Mill Valley Phone: (415) 388-8182 Fax: (415) 388-8181 Call to Order: 7:00 p.m. Pledge of Allegiance Open Time for Public Expression: None Present: Directors Chun, Fleming, Hilliard, Perazzo, St. John, Waldeck & Willis Absent: None Also in Attendance: Mill Valley Fire Chief Welch, Battalion Chief M. Barnes, Deputy Fire Marshal Hilliard, Association President Golden, Finance Manager Schiffmann, Administrative Services Manager Kim and Courtney Ramos, Matrix Agenda Adjustments: None Approval of Minutes: May 24, 2017 Prior to the Board meeting, Battalion Chief M. Barnes provided some corrections to the Minutes of May 24, 2017. ASM Kim corrected the May 24th Minutes and presented updated copies of the Minutes of May 24, 2017, to the Board. The Board had three additional typographical corrections to the Minutes of May 24, 2017. A motion was made to approve the minutes of May 24, 2017, as corrected. M/S: Willis/St. John; all ayes A. Correspondence 1.

Thank you card from Marin County Sheriff’s Dispatch Page 5

2.

Marin IJ article, dated June 15, 2017, Marin City Condo Unit Damaged Page 6

3.

Letter from CPC for FF Adam Vollmer Fire Officer designation Page 7

4.

Thank you card from Kary Witt, Golden Gate Bridge District Page 8

5.

Shout Out for medical incidents Pages 9-10

6.

Lifeline EMS Recognition to SMEMPS Page 11

7.

Marin IJ newspaper article date 5/25/17 Helping Burn Victims Firefighter Fundraiser Page 12

8.

Marin IJ newspaper article dated 6/8/17 Main Larkspur, Corte Madera Working on Fire Merger Pages 13-14

9.

Noteworthy Sausalito Event – Commendation to FF Joe Frazier and SMFD

ASM Kim presented one additional correspondence to the Board. Battalion Chief Matt Barnes received a letter of commendation for his efforts and hard work on the Marin County Regional Fire Academy from Marin County Fire Chief Webber. Director Chun thanked BC Barnes for his good work. He also acknowledged that the Academy is a lot of work and Matt does a great job. B. Staff Reports: 1.

Fire Chief Report: Fire Chief Chris Tubbs Chief Tubbs was unable to attend the Board meeting and Mill Valley Fire Chief Tom Welch was in attendance on Chief Tubbs behalf.

Chief Welch noted three significant items that were in Chief Tubbs report.  Service Awards & District Dinner  Shared Services work  Grants The Board asked about the Project Update report. ASM Kim explained there is a notation at the bottom of the Project report stating that Chief Tubbs & Project Manager Andre are developing a different project report. The current report is problematic. The Board noted the Admin Report submitted by ASM Kim, stating that after staff goes to events and trainings, it’s great to hear what was learned. ASM provided some additional details about the Behavioral Health training and will forward the notes from the training to Association President Golden. 2.

Operations & Training: Battalion Chief Matt Barnes Chief Barnes was in attendance at the meeting and also provided a detailed Operations & Training report in the Board Meeting Packet for June 2017.

3.

Logistics: Battalion Chief Kai Pasquale Chief Pasquale was not in attendance at the meeting and he provided a detailed Logistics & Administration report in the Board Meeting Packet for June 2017. In addition to the written report, Chief Pasquale asked Chief Welch to add the following:     

TCSD will begin charging SMFD for sewer & trash services. For decades, TCSD did not charge the District. Apparatus – There were some issues with Alameda County and some maintenance and services needed to be done at Diego’s Truck Repair. R9 specs are completed and now, the Spec Committee is looking at the Ladder truck. The committee is reviewing the 107 foot ladder truck The new Prevention vehicles are in service BAT 1 is being outfitted with gear now

Director Perazzo reported that the Ford Police Interceptors Explorers have some issues with the exhaust. If the vehicle sits, idling, the fumes enter the cab. Staff notify Chief Pasquale of the potential issue. 4.

Prevention: Deputy Fire Marshal Fred Hilliard 

333 Caledonia, Sausalito Met with the property/business owner and City of Sausalito to discuss events and compliance for 333 Caledonia. The business at the property is an art gallery and they sponsor events at the gallery. During the meeting, the three parties developed a compliance plan to get the building up to compliance. There are several issues that need to be addressed.

Director Willis lives in Sausalito and stated he is uncomfortable with compliance agreement. He went on to say this is a residential neighborhood and the gallery/property owner has been out of compliance for several years. He continued, the gallery/property owner has relationship with City Council members and the approval for these event seems like a backdoor deal. The City approved 17 events for the art gallery but the Sausalito Woman’s Club is only allowed 1 event of month or 12 per year. The time frame for compliance is too long. There is a long list of issues and the gallery/property owner hasn’t made a big effort to resolve the compliance issues. Fire Marshal Hilliard thanked Director Willis for his comments and then stated, there are many aspects of the permit that the Fire District has no control over. The City of Sausalito determines number of events. The gallery/property is zoned A-1, dual use, up to 49 people. If the gallery events are approved, a special event -2-

permit is required for each event and the District is also requiring that a fire watch be present at every event. A fire watch is a private security company that is hired to monitor exits and fire dangers at the event. If property owner does not bring property up to compliance or if he violates the compliance contract, his property will change back to M-occupancy zoning and will no longer be zoned A-1, dual use. Director Chun stated that although this is an enforcement issue, it is an educational opportunity too. The zoning and event approval is the City’s decision and the District needs to work with the City. Fire Marshal Hilliard said that SMFD originally required that compliance issues be resolved before any events are scheduled but the City asked SMFD to modify requirements and allow the compliance issues to be completed within a timeframe. Events are allowed while the compliance issues are being resolved. The City asked SMFD to help create a plan that does not put the gallery owner out of business. The Fire District will be notified of events prior to the event and SMFD will inspect property and determine the occupancy for event. No attendees will be allowed in any areas within the building that do not have proper exits or are a potential fire hazard. Chief Welch said that fire mitigation is only thing SMFD can do in a situation like this. Make sure staff knows the building and be familiar with the preplans. This will reduce any liability to District. 

Weed Abatement Program The program began June 1st and all crews have been inspecting their assigned areas. Feedback from residents have been positive. They are not angry. They are glad the Fire District is assessing their property for hazards. They want to help.

Director Fleming asked if this is a topic for Communication Committee. How do resident know what the requirements are and approximately how many people receive notices. Fire Marshal Hilliard said In Tam Valley, there are quite a few properties that will receive a notice. Many will also In Sausalito too but not many in Zone 9. Residents are not being cited or fined. They are receiving a notice of unsafe fire hazard to houses that are well overgrown, have ladder fuels like broom, if their roof or gutter are filled with leaves or pine needles or if their address in not clearly marked. This is not punitive. It’s a way for Fire to engage with the community about fire hazards. Director Perazzo said that the Sausalito Disaster Committee is working on a project that will be published in the Currents about how fire spreads. The examine a Marin City Fire which began short grass but moved along using fuels until it eventually worked its way to an interior room and set a couch on fire. Maybe the Communication Committee can do something similar. SMFD is assisting with vegetation management by mailing a postcard to residents addressing vegetation hazard, Defensible Space handouts info for citizens and residents can purchase a blue reflective address signs at STA 4. There is a Firewise Class in MV on June 8th. Parking is also an issue. Sausalito is getting quite a few requests for parking permits for 2nd occupancy units. There is a need for designated parking on certain streets to allow fire trucks to get through. 5.

Finance: Finance Manager Alyssa Schiffmann Finance Report - June 2017  As of June 22, 2017, the FY 2016/2017 budget is at 91% of 96% of the total budget 

ERAF revenues came in $178,000 higher than budgeted. All agencies received a refund from ERAF for $138,000



To-date, out of county overtime consists of 7,237 hours or approximately $386K total in costs out of the 21,764 total overtime hours  As of April 30, 2017, the SMFD OPEB Trust balance is $2,491,582, reflecting an increase of $25,189 in April 2017. Additional contributions were made to the OPEB Trust after April 2017 totaling $375,000 that are not reflected in the current balance. -3-



A final report for 2016/17 will be presented to the Board in September 2017  The CERT Program used all of their 2016/2017 funding totally $22,500. CERT is expected to receive $30,000 from the County of Marin in July for FY 2017/18  To-date, the District has spent $56,413 on legal fees to respond to the numerous Grand Jury reports. In the last month, the District received two additional Grand Jury reports and staff has already begun working on the reply. The new Grand Jury reports will be presented to the Board at the June 28, 2017, Board pf Directors meeting. 6.

Association Report: Association President Jason Golden Upcoming Events  The next Jazz by the Bay is July 28th  The June 2nd Jazz by the Bay sold out. Thanks to Director Perazzo and FM Schiffmann who helped out at the event  The last Creekside Friday, the Association sold 400 oysters and the next Creekside Friday is in August RSA 

Stalled a bit but got together with ICMA and are back on track



Chief Tubbs will have more to say about this

Shared Services I’ve been working on a presentation for Board and Mill Valley City Council about the benefits of shared services and hopefully, it will be presented in July. Behavioral Health  Several staff attended the Workout Peer Counseling training. It was a good training except seemed to be geared toward more classes 

Health wellness added to Intranet so staff can find resources like EAP and other services. Will build it up with new info

Fireflex Yoga  A shift - done with first phase 

B shift - beginning first phase



C shift - done with first phase



Staff seems to like the yoga component. We’ve been trying it for free for the past 6 months and intend to sign up for a 12-month subscription

Retreat Peer trainer I will be attending the Westcoast Retreat in Maryland from July 9 – 12. The program cost $30,000. We are hoping to develop a plan to pay for the retreat if a staff member needs the service. We don't anticipate many requests but it would be best to be ready with funding if the need arises. The Association could create a special fund and accept donations. Director Perazzo stated that he now serves on the FASIS Board and attended his first FASIS Board Meeting. Behavioral health was on the agenda and the FASIS folks are pretty impressed with SMFD and the work being done in Behavioral health. FASIS realizes that what they offer is not adequate and they want to do a better job at getting qualified clinicians. They are figuring out what FASIS can do better to support behavioral health. C. Committee Report 1. SMEMPS – The Committee did not meet. 2.

Shared Services Committee – The Committee did not meet. -4-

C. Committee Report (continued) 3.

Finance Committee – Director Perazzo reported the following: There were 2 Finance Committee meetings in June, June 14th & June 21st  June 14, 2017 - The committee discussed the LTC and EAP benefit change. EAP: The current EAP benefit costs $1.14 monthly for 5 visits and the Committee recommended to opt for 8 EAP visits at a cost of for $8.17 per month. EAP is not a stand-alone benefit. It is a benefit added with life insurance. LTC: California Association of Professional Firefighters (CAPF) provides the Long Term Care (LTC) benefit and in 2006, CAPF notified the District of three 18% increase to the LTC benefit. At the time, there were questions about CAPF finances and sustainability and the District decided not to pay increases until LTC could prove itself financially stable. In 2016, CAPF reported that the latest actuary rated the benefit as sustainable. The District is in arrears due to the three 18% increases in the amount of $74,048 and the new composite rate for LTC is $72.15. The Finance Committee recommends approving both benefit changes. 

June 21, 2017, the committee discussed the Preliminary Budget and Draft Revenue Study The Finance Committee recommends approving the FY 2017/2018 Preliminary Budget



Draft Revenue Study: The Finance Committee was given the first draft of the Revenue Study. The report indicated that in approximately three years the District revenue and expenses will meet. SMFD has a little time to figure out how to increase revenue.

4.

Personnel Committee – Director St. John reported the following: The Personnel Committee met with the Battalion Chiefs on June 15th and the Board will discuss the BC MOU in more detail in Closed Session.

5.

Communication Committee – The committee did not meet but Director Fleming reported the following:  The committee finished the social media postcard and it will be mailed to all in the District soon\  Director Waldeck provided new text for the Emergency Preparedness section on the District website, SMFD.org. The preparedness section is now in line with the social media postcard. The postcard couldn’t be mailed until the website was correctly populated,  After the postcard is mailed, the committee will monitor the increase in traffic on social media  With a possible property tax increase coming up, the SMFD social media will be a good tool to promote the need  The committee will continue working on best practices for communications with the community

6.

Building Committee – The committee did not meet.

7.

MERA – Director Willis did not attend the MERA meeting but stated everything is moving forward and the project is on time and on budget.

D. New Business 1. Preliminary Budget FY 2017/2018 - Approval requested for the Preliminary Budget for Fiscal Year 2017/2018 A motion was made to approve the Preliminary Budget FY 2017/2018. M/S: St. John/Fleming; all ayes E. Old Business 1. Ordinance 2016/2017-23: An ordinance of the Board of Directors of the Southern Marin Fire Protection District Establishing a Fee Schedule for Fire Prevention Services – Second Reading Open Public Hearing regarding Ordinance No. 2016/2017-23 adopting the District Prevention Fee Schedule  The new prevention fees aim for an 81% cost recovery which is higher than the National average but will recover costs not only for prevention tasks (plan checks inspections) but for all prevention services. 

20-40% includes just prevention tasks, no other tasks. This is a National average. -5-



There is no charge many other prevention services like vegetation management, weed abatement, hazard assessments, safety training, etc. and there is no cost recovery for these prevention activities.



Regionally, prevention fees on average are higher than the National average



It is a good idea to develop a Policy goal for prevention income



Suggest that SMFD develop a clear message about fees



It is the responsibility of the District to review the prevention fees. It's is not appropriate to raise fees just to produce income and it is also not appropriate to undercharge for services. Tax payers should not subsidize prevention services. A motion was made to approve Ordinance 2016/2017-23: Establishing a Fee Schedule for Fire Prevention Services as presented. M/S: Perazzo/Willis; all ayes 2. Board Committee Meeting - ASM Kim provided a new calendar for Board Committee meetings Closed Session: (1 item) Out of Session at 8:45 pm. 1.) Conference with Labor Negotiator pursuant to Government Code Section 54957.6 Agency negotiator: SMFD Personnel Committee Employee Organization: Southern Marin Chief Officers Association, IAFF Local 1775 Open Session: Back in Session at 9:34 pm Instructions were was given to the Personnel Committee. E. Poll the Board Director Chun: Thank you to staff for hard work. Thanks to Chief Welch for joining us. Director St. John: Congratulations to the Ford family. Thanks to Tom for joining us. I’d like to recognize the association attendance at the Board meeting. We welcome your voice. It cost the District over $60,000 to respond to the Grand Jury reports. Grand Jury work is needed but it is costly to respond. Director Willis: Thanks to Fred for the work you’re doing at 333 Caledonia Street. I’m confident he'll stay on top of the issue. Thank you to Alyssa for your work on the budget. Thanks for the annual dinner event. It was a special meeting for me because I worked with Jeff, Mike and Cary and it was a pleasure to work with them. As the Sausalito Fire Chief, the first three firefighters I hired were Matt Bouchard, Tony Vitalie and Doug Paterson. I didn’t realize that at the annual dinner that it had been 25 years! It makes me feel very old but I was also very honored to be there to see them get their service time honors. The event was lots of fun and the food was very good. Director Waldeck: I enjoy the process of being on the Board. I am honored to be among fellow board members. Excellent work with the budget and thanks to Susan for your work on the website and with the Communication Committee. I appreciate being part of the process and am still learning but I’m getting there. It’s a privilege to work with you all. Director Fleming: I second the appreciation from all of the Board members. There is a lot of care and thought that goes into these meetings and it shows. Director Perazzo: I echo everyone. Thanks to Jason for your work on behavioral health. Thanks to staff for getting us ready for the meeting. The District Dinner was great thanks to Susan. Thank you to Chief Welch for attending tonight. Director Hilliard: I am grateful for all of the Board members. Everyone is fabulous and you come from all areas. The discussions are very thorough. Thanks Chief Welch for attending. It was an honor to be presenting the services awards at the District Dinner. They deserve so much recognition. Thank you for the flowers. I was so surprised and the flowers were incredible. Adjourned: 9:45 pm -6-

Cathryn A. Hilliard 547 Browning Street Mill Valley,CA 94941 [email protected] 415-381-6524 March 20,2015

Chris Tubbs,Chief Southern Marin Fire Protection District 308 Reed Boulevard Mill Valley,CA 94941 RE: Thank you so much! Dear Chief Tubbs, On Monday, February 22,2015,I called 911 for help with my mother Eva Sampson who had a serious cough and who could hardly catch her breath. She had just celebrated her 98th birthday just 10 days before and was afraid to call for help for fear that if she would go to the hospital, things would get worse. I propped her up with pillows in back and on her side. She was trying to sit up in her bed to stop the coughing and none of her medications seemed to help. Finally,at 7:30 a.m. I called. Before I could hang up the phone,your magnificent team from Station 4 was at my door. The first one in was Yvette Blount followed by Ben Pope and then Captain Gloeckner,Cordi Sullivan, Dean Raffaini,and Peter Gundolff. Yvette talked to Eva and,even though she was still coughing,she was so relieved. I could see it in her face immediately. Every one of the team participated and took her in a chair to the ambulance. Thanks to their quick action,my mother avoided pneumonia,according to the attending physician at Marin General Hospital. Eva has since recovered although she's a little weak. She told me that Yvette even stayed with her at the hospital and that the rest of the handsome gentlemen also knew exactly what to do for her even though she couldn't make herself understood. My mother and I both want to thank the team from Station 4 for their excellent skills,service and compassion. Please thank each one and tell them that Eva and I will never forget their wonderful help and concern. As a Board member and a constituent,I'm so proud of these talented rescuers. With sincere gratitude, Eva Sampson and Cathryn Hilliard

-7-

June 9, 2017

Battalion Chief, Matt Barnes Southern Marin Fire 308 Reed Blvd. Mill Valley, CA 94941

Dear Matt, Thank you for your outstanding work on the Marin County Regional Fire Academy 2017 -

your commitment of time and energy to this shared endeavor contributed to the success

of our new graduates and I appreciate all of your hard work. We will all benefit from the addition of these new firefighters to our teams. Your exceptional dedication as a primary instructor made the academy a success. The time and energy you put into the recruits will make the fire service better for the future. I look forward to working with you again in the near future.

Sincerely,

eber ief, Marin County Fire Department

-8-

MILL VALLEY FIRE DEPARTMENT 1 Hamilton Drive, Mill Valley, CA 94941

(415) 389-4130 • Fax (415) 389-4186 www.cityofmillvalley.org

June

Tom Welch Fire Chief

12, 2017

Fire Chief Chris Tubbs Southern Marin Fire Protection District

308 Reed Boulevard Mill Valley, CA 94941 Dear Chief Tubbs: On Saturday, May 20,2017, the City of Mill Valley held their

101h

Annual City-wide evacuation

drill. The drill represented a combined effort between the City of Mill Valley and the Southern Marin Fire Protection District that focused on the Edgewood/Homestead Valley neighborhoods. As you know, disasters do not take into consideration community boundaries while developing. To this end, the City of Mill Valley, Marin County Sheriff's Office and Southern Marin FPD conducted a multi-agency, multi-disciplined drill that exercised a number of emergency response and community evacuation components. On behalf of the City of Mill Valley, I wanted to thank Captain Paterson and Engineer Vollmer for their efforts as Division Supervisors within the Fire Branch. They both were instrumental in providing a challenging, professional experience for the eight participating departments. The training was a tremendous success. It improved situational awareness for participating agencies that will respond together during a major incident. Captain Paterson and Engineer Vollmer represented the Southern Marin Fire Protection District in the best light possible. Thank you for supporting this important fire and community training event.

c;;�� Tom Welch Fire Chief

-9-

i

i i

i

i j i i i i i i i i j i i i i i i i i i j j i i i i i

i

i

i

i

i

i

i

i

i

i

i

i

i

January to June 2017

i :

i

i

i

i

i

i

Shout Outsl

Just a quick summary of a few noteworthy calls and saves. I appreciate all your teamwork and care that you provide to your patients. If your name is not below, be sure to look for it next time. Heather

SMEMPS: J.Cox, M. Newman, D.Mcguire, J.Miller, R.Stewart: 102 year old fall, ltd trauma activation , c collar placed. Pt had c1-c2 fx- unstable. Dcd home w/special c-spine collar-no surgery. Z. Sweeney, K.Siegmund, P.Costello, J.Ferreira-Ciifton, C.Lawrence, K.Oreilly: This crew cared for a pt

w/an aortic dissection! Pt tx to MGH and Stanford -survived. S.Morlock, J. Stanic, D. Allen, J. Fesler, J. Golden, J. Pasquale, B. Stone: Cardiac Arrest w/ROSC. Pt had N-STEMI , went to cath lab. Pt survived. D. Young, E. Chapman, J. Chance, J. Oconnor: Pt. w/syncope then bystander cpr -> ROSC then vtach during transport-> ROSC again. Pt to cath lab for stent and lCD placement. He was dcd 6/9/17. RVPA (& MCFD}: Officer Stephen Barday, D. Galli, D. Hunn, C. Friscia, R. Hogan, D. Mahoney, M.Lui, T. Pastalka, S. Porter, A.VanDyke: Off duty FF who witnessed cardiac arrest did cpr w/ROSC. Tx MGH. Pt dcd dx with Pneumonia. G. Illingworth, C. Friscia, B. Galli, S. Gamba, D. Hunn, J. Peterson, I. Wilson: 20 foot fall from roof onto concrete driveway Ox splenic laceration (removed), facial fx, & closed head injury. After ICU, he was tx to acute rehab- oriented to his name and recovering well. K.Simmons, S.long: STEMI medic read-Bacon Award! C. Mahoney, W. Krakauer, M. Finnegan, J. Poppe, T. Standfield, A. Read, D. Stasiowski: Witnessed cardiac arrest with bystander cpr & Fairfax PO w/ ROSC. Pt intubated, cooled and tx to ICU. Pt dcd home.

MCFD ( & SMEMPS): K. Wallace: 74 year old male riding his bike and started to have CP. MCFD EMT requested flyout to JMMC-> pt +for STEMI J. Riddleberger, J.Cook: Pt w/sx of stroke. Tx to JMMC- got tpa! C.Dittman, D. Galli, M. Ford, B. Burkhard: Helo tx with needle decompression. Tx to JMMC-multiple injuries including splenic lac and hemopneumo. J. Riddleberger, N. Massuco: STEMI medic read. Bacon Award!

i

i

i

i

i

i

i

i

i

i

- 10 -

i

i

i

i

i

i

i

i

i

i

i i i

i

i j i j i i i i i i j i i i i i i j i i j j i i i i i

. face book. com/the ark news paper

JuLy 1 2. 2 0 1 7

.

THE ARK

l

TIBURO�

11

Firefighters contain 3-acre blaze in Tiburon open space By MAnHEW HOSE

more

[email protected]

infonnation

To lea11 more about creating defensiblespace to protect your home from wildfires, visit: arkn.

Fire crews were able to quickly extin­ guish a grass fire that burned

ws/DefSpace .

3 acres of

Tiburon Peninsula open space last week,

a tremendous impact on those structures

though the incident raised concerns that

and our ability to protect them," Pearce said.

tall grass from an exceptionally rainy win·

Following an exceptionally wet rainy sea·

ter could lead to an active summer fire sea­

son, the grass in the open space has experi·

son. The fire caught just after 5 p.m. july 6 in

enced "aggressive growth," which can lead

the dry grass of an open-space area known

to more intense fires as the grass dries out

as Middle Ridge, which abuts Gilmartin

over the summer, Pearce said.

Drive and includes Tiburon's iconic Hippy

"I hope it's an isolated incident, but I think

Tree.

it's going to be a pretty active fire season up

Crews from the Tiburon and Southern

and

Marin tire protection districts, along with

down the state, for sure," Pearce said

The Gilmartin fire is the second blaze

Mill Valley, Marin County and Corte Made­ ra fire departments, were dispatched to re­

to occur in Tiburon open space in the past

ports of the blaze atop the ridge.

year.

The fire approached the backyards of

Last October, a Heathcliff Drive resident

homes at 109 and 111 Gilmartin Drive, but

accidentally set off a 1.5-acre fire in the Old

a vegetation-free buffer zone prevented it

St Hilary's Open Space Preserve while try­

from spreading to the homes. At the top of the hill, a fire road kept the flames from heading farther north. With vegetation fueling the fire only available

HUOT KARlANI FORlitE A�K

ing to smoke out a yellowjacket nest. Fire­

A swath of so-called defensible space - a vegetation-free buHer zone sometimes called flrescaplng­ prevented a 3-acre fire on Tiburon's Middle Ridge open space from reaching the homes 109 and 111 Gilmartin Drive on July 6.

by two fire roads that prevented the flames

down the hill, the flames spread more slow­ ly and with less heat, according to Tiburon

by The Ark's press deadline, according to

ited those homes' defensible space- a term

firefighter Ehren Miller.

tire personnel.

describing the buffer zone between a home

fighters were helped in containing that fire from spreading. Reporter Matthew Hose covers the city of

Fire crews were able to dig trenches

The residents of the two Gilmartin Drive

and surrounding vegetation or wildland -

Belvedere, as well as crime, courts and

around the fire and had it controlled by 5:45

homes near the blaze were not home at the

with stopping the fire within feet of each

public safety issues on the Tiburon Penin­

p.m.

time of the fire, according to Miller.

home's backyard.

sula. Reach him at 415-944-4627 and on

The cause of the tire was still unknown

"I think having that defensible space had

Tiburon Fire Chief Richard Pearce cred-

- 11 -

Twitter at @matt_hose.

Elizabeth D Moyer PhD 1 Michael C Powanda PhD

415/383-0668 Fax: 415/383-6853

435 Marin Avenue Mill Valley, CA 94941

Tel:

[email protected]

moyer@ mpbiomed.com

14 July 2017 Fire Chief Chris Tubbs Southern Marin Fire District

308 Reed Boulevard Mill Valley, CA 94941 D2�1· Sir: On the

1ih of July my wife called 911 because I was experiencing a series of mild

symptoms, paresthesia of the left arm, slight nausea, anxiety and minor light headiness' that I construed as the possible onset of a heart attack. While Elizabeth was on the phone with the

911 operator, we could hear the response team coming from Station 4.

The team quickly assessed my situation which, while not life threatening, was still of concern. The exceedingly professional manner of the tearn provided comfort and care in a stress-filled situation (at least for us). Elizabeth and I hnve both worked with numerous surgeons and physicians in our research careers. We recognize when a person and a team are highly competent. Kenny, the paramedic who provided primary care, and this team are. I called Station

4 to find out who was on the team.

I was told that the team consisted

of Captain Cary Gloeckner, Fireman Adam Bollmer and Paramedics Larry Yoell, Robert Grady and Kenny O'Reilly. Having served in the Army I have observed that people who do their jobs well day in and day out often do not receive the recognition they deserve. Chief Tubbs, Elizabeth and I ask that this team be recognized for their extraordinary achievement of providing for the health and safety, day after day, of those who live in Southern iViarln. With best regards,

�07/�&hJt'll {!7o..Pa- /.v-Michael C Powanda PhD, LTC US Army Ret.

- 12 -

SOUTHERN MARIN FIRE PROTECTION DISTRICT FIRE PREVENTION 308 Reed Blvd., Mill Valley, California 94941 Phone: (415) 388-8 18 2 July 11, 2017 Adam Politzer, City Manager City of Sausalito 420 Litho Street Sausalito, CA 94965 RE: 333 Caledonia Street Change of Use Compliance Dear Adam, I am writing on behalf of the Southern Marin Fire District Board of Directors to let you know of some concerns expressed by members of our Board at our June 28th meeting regarding fire and life safety at 333 Caledonia Street. We learned at the meeting you are in the process of drafting a special "compliance plan" contract with the owner of the Art Gallery, the Fire District and the City. It is our hope that this letter reaches you in time to consider the two major points brought up by members of the board which are: 1) The length of time you are allowing for the change of use compliance (6 months) is too long considering most venues are required to be compliant prior to the new use being approved. The Board would like assurances that continued special exceptions will not put the public or the firefighters safety at risk. 2) Public outreach was discussed by board members after the fire district received several letters from the public asking to have input in the change of use for this location prior to approval. After questioning staff, we learned that the owner has already held several events like the one that is scheduled to take place on July 15'\ and while it is up to the City to issue permits for use, and although you have included us in the discussion making process, some of our Board members are greatly concerned about the public's safety and the potentia1 liability to the District and the City if something should go wrong. I hope you will take these concerns into consideration. We greatly appreciate our close working relationship with you and the City. Sincerely, Cathryn Hilliard, President Southern Marin Fire Protection District Board

- 13 -

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

EMPLOYEE RECOGNITION This month the Fire Chief is happy to share with the Board: 

This month the Fire Chief received a report from Marin County EMS recognizing the following employees for incident related actions: ENG/PM Ben Pope; FF Frank Schonig, FF/PM Drew Clason, ENG/PM Branson Treat, ENG/PM Yvette Blount, ENG Jeff Smiley, ENG Danny Gemma, ENG Adam Vollmer, ENG Pete Falk, ENG /PM James O’Connor, ENG /PM Kenny O’Reilly, ENG Mark Fischer, ENG Travis Fox, FF/PM Robert Grady, FF/PM Peter Gundolff, ENG Dean Raffaini and Captain Josh McHugh. (In Board Packet).



Chief Tubbs received a letter from Michael C. Powanda, Ph.D. with respect to our personnel and an incident on July 12, 2017 and recognized District personnel Captain Cary Gloeckner and Firefighters Adam Vollmer, Robert Grady, Larry Yoell, Kenny O’Reilly. A copy of this letter is in the Board Packet.

As a reminder for the Board, all communications received by the District recognizing our personnel are placed in the staff members Personnel File. Grand Jury Report: Marin’s Retirement Health Care Benefits – The Money Still Isn’t There. Last month the Fire Chief reported that on May 10 the Fire Chief and Director Perazzo were emailed early-release copies of the newest Grand Jury Report. The Report was released publicly on May 17, 2017. The District is required to respond within 90 days (August 17, 2017). The Report is titled, Marin’s Retirement Health Care Benefits: The Money Still Isn’t There. The report contains Nine (9) recommendations and Southern Marin Fire is required to respond to all nine recommendations. Tonight, the Board is being asked to review and approve a response to the Grand Jury Report. The draft response is included in the Board Packet in New Business. Grand Jury Report: The Budget Squeeze: How will Marin Fund Its Public Employee Pensions? On May 25, the Fire Chief and Director Perazzo were emailed early-release copies of the newest Grand Jury Report. The Report was released publicly on June 5, 2017. The District is required to respond within 90 days (September 5, 2017). The Report is titled, The Budget Squeeze: How will Marin Fund Its Public Employee Pensions? The report contains Three (3) recommendations and Southern Marin Fire is required to respond to all nine recommendations. Tonight, the Board is being asked to review and approve a response to the Grand Jury Report. The draft response is included in the Board Packet in New Business.

FINANCIAL / BUDGET Revenue Study Staff continues to work with our consultant on the Financial Health Study. There are still a few unanswered questions that the consultant is working on answering. We will present the final draft to the Finance Committee prior to bringing to the Full Board. We now anticipate that this will be during the month of August. Grants Last month Staff submitted an application for a Port Security Grant for the replacement of Fireboat Liberty. The Federal Government is scheduled to have a decision by September 1, 2017. These monies have already been set aside and are not in danger of being denied to the State due to the ongoing debate between the State and Federal Government regarding Sanctuary Cities. We do not know what will happen concerning future grant opportunities. We continue to listen and will update the Board regularly on new information we learn. - 14 -

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

PLANNING Annual Strategic Plan This month the Fire Chief gave direction to Battalion Chiefs Matt Barnes, Kai Pasquale and Mike St. John regarding their assignments. We will provide the Board with ongoing updates on our progress of the assigned Initiatives. The assignments are as follows: Battalion Chief Matt Barnes Initiative 1. Develop a Comprehensive Succession Management and Professional Development Plan. In this next Fiscal Year, we are planning to complete Objective 1C. This will complete this Initiative. Chief Chris Tubbs Initiative 2. Develop a Standard of Cover and Apply for Accreditation. In this next Fiscal Year, we are planning to complete Objective 2A. This will result in the completion of Objectives 2A, 2B, 2D, 2E, 2F. This will leave Objectives 2C, 2G, 2H and 2I for completion in the next two years. Battalion Chief Mike St. John Initiative 7. Define Organizational Values, Philosophy and Enrich our Culture. In this next Fiscal Year, we are planning to complete all three Objectives of this Initiative. This will complete this Initiative Battalion Chief Kai Pasquale Initiative 8. Development of a Capital Maintenance and Improvement Plan. In this next Fiscal Year, we are planning to complete Objectives 8A-C. This will leave Objectives 8D – E for the following two years. Battalion Chief Matt Barnes Initiative 9. Develop an IT Efficiency and Improvement Plan. In this next Fiscal Year, we are planning to complete the remaining element of Objective 9A, then also complete Objectives 9B and 9C. This will leave Objectives 9 D & E for the following two years. 2017 Urban Shield Urban Shield, the annual Bay Area Training Exercise involving Fire, EMS, Law Enforcement and other government agencies, is scheduled to occur September 7-11, 2017. The Southern Marin Fire District has participated in this federally funded training event for multiple years, including a competitive element where teams compete during specific events. The past two years the District has competed in the Fire Marine element. “Urban Shield has grown into a comprehensive, full-scale regional preparedness exercise assessing the overall Bay Area UASI Region's response capabilities related to multi-discipline planning, policies, procedures, organization, equipment and training. Urban Shield continues to test regional integrated systems for prevention, protection, response and recovery in our high-threat, high-density urban area. The exercise evaluates our existing level of preparedness and capabilities, identifying not only what we do well, but also areas in need of improvement. The previous years' After Action Reports are referenced and used to assist in prioritizing upcoming expenditures possible for the region so we may become more prepared for any type of critical event or incident in our area. The overarching goals of Urban Shield include striving for the capability to present a multi-layered training exercise to enhance the skills and abilities of regional first responders, as well as those responsible for coordinating and managing large-scale events. Urban Shield - 15 - is implemented to identify and stretch regional

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

resources to their limits, while expanding regional collaboration and building positive relationships. In addition, this exercise provides increased local business and critical infrastructure collaboration. Urban Shield challenges the skills, knowledge and abilities of all who participate. It not only improves regional disaster response capabilities, but provides a platform for national and international first responders, as well as the private sector, to work efficiently and effectively together when critical incidents occur.”i PROJECTS & INITIATIVES Annual Report Slated to be completed in the 2016/2017 fiscal year, was the development and deployment of an annual report. The Fire District last completed and distributed an Annual Report in 2004. Staff was unable to complete this report in 2016/2017 due to other priorities and demands. Chief Tubbs and ASM Kim have met and developed a work plan for completion of the Report this fiscal year. We are targeting a January 2018 timeline, with a report every following January. Mill Valley City Council / Shared Services In the Board Packet tonight is an item titled, Fire Department Shard Services – Update and Next Steps, drafted by Chiefs Welch and Tubbs. It will be delivered to the Mill Valley City Council at their first Council Meeting in August 2017. It summarizes the work accomplished to date, current challenges in the existing model, as well as opportunities, and recommendations for moving forward. Fire Season Update As of the writing of this report, our crews recently returned from a deployment to the Wall Fire in Butte County. Our Social Media Officer, Roberto Padilla, worked with those crews and deployed two messages to our social media platforms Deployed crews included: Engine 604: Jason Golden, Chris Dittmann, Tahoe Boaz and Jeff Smiley Division Supervisor: Matt Barnes Line Medic: Ben Pope. Strike Team Leader Trainee: Matt Bouchard Crews are already back out in the field. Crews currently deployed at the Detwiler Fire include: Field Observer (FOBS): Cary Gloeckner has been deployed to the Detwiler Fire effective July 19. Strike Team Leader Trainee: Kai Pasquale Field Observer (FOBS) Trainee: Ben Pope Marble Fire: Line Medic: Patrick Young Mobile Data Computer Project Chief Barnes will report on the status of hardware purchases, configurations and deployment. Chief Tubbs has been working closely with Chiefs Weber and Welch with the objective of influencing the MCSO to allow access to our CAD data using iOS devices and software. This has proved highly challenging but we believe we are making headway. We have scheduled a key meeting and will report on progress and outcomes from that meeting, next month.

- 16 -

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

Social Media & Communications The Social Media networks as a whole continue to grow. This past month we were able to post very relevant information that was shared by other regional partners. Such was the case with CHP. The departments Social Media presence has also been rich enough to have other fire service sites share that content specifically in delivering safety messages. Our content continues to be selective in nature and information relating to live working incidents continue to grow however, the district is ready to deliver during a major emergency.

Replacement of Rescue 9 On July 17, 2017, the SMEMPS Fire Chiefs met and received a final report and recommendation from the Rescue Truck Committee, on the replacement of Rescue 9. The recommendation was to select the Pierce bid. The Fire Chiefs will present and support the recommendation to the SMEMPS Governing Board at the August 2, 2017 Governing Board Meeting. Replacement of Ladder Truck / Reserve Ladder Truck Captain Martinez and his team have been working steadily on refining and finalizing a spec for the replacement of Truck 4. We anticipate having this process completed and an order ready to submit to Pierce, within about 60 days. Chief Matt Barnes has been tasked with assessing a staffing and training model for the new tillered-vehicle. Chief Barnes will make recommendations to Chief Tubbs that include an implementation plan before the vehicle arrives and is placed in to service. Chief Tubbs again reached out to San Rafael to discuss a shared ladder truck MOU. Chief Tubbs will be meeting with Deputy Chief Sinnott to finalize a draft for the Board to consider. Chief Tubbs has reached out to the Southern Marin Fire Chiefs to discuss shared costs for the new ladder truck. Chief Pearce has been unable to meet over the past couple of months. Chief Weber has been very busy with managing out of county deployments. - 17 -

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

Weed Abatement This last month crews began our new weed abatement program. This program was borne out of a clear need to provide greater education and awareness of the potential wild land fire threat in Marin County, as well as concerns that this year the risk across the State is more elevated. We have worked closely with our partners in Mill Valley, who have long had a well-matured weed abatement program. City of Sausalito Hazard Survey Captain Gloeckner has been working to map properties inside Sausalito City limits and rating their risk from wild land fire. We will be importing this data in GIS so that we can develop and share maps providing an illustration of the various risks, and levels of risk within the City. We are partnering with the City to use this information with the objective of acquiring funds that can then be dedicated to reducing this risk, in the highest areas first. To date, Captain Gloeckner has completed 161 properties. This project is taking a significant amount of time in part because of the nature of the work, and in part, because it must fit within other priorities that the crews must balance daily. Currently, we are focused on weed abatement throughout the Fire District and City of Sausalito. ESRI Conference – San Diego July 7-11 Chief Tubbs attended the Annual ESRI (Environmental Systems Research Institute) Conference in San Diego. ESRI is the leading international supplier of geographic information system (GIS) software, web GIS and geodatabase management applications. This software provides communities and organizations the ability to analyze and understand various issues, in a geospatial context. The Board was exposed to some of this type of analysis in our recent Deployment Analysis. The company is headquartered in Redlands, California. The trip was primarily and substantially funded by the National Information Sharing Consortium (NISC) and provided Chief Tubbs with a unique opportunity to attend this highly regarded annual conference. The conference provides the attendees an opportunity to explore and test-drive new software solutions that are transforming the world by unlocking data's full potential—powered by ArcGIS. Attendees can see, interact with and ask questions of applications being used in communities throughout the US, to improve the lives of our communities. Chief Tubbs is the liaison for the Marin County Fire Chiefs Association, to the MarinMap organization. MarinMap is the County GIS system. A recent example of where the Board had the opportunity to see GIS information was in the CWPP Presentation by Marin County Battalion Chief Christie Neill and the Deployment Analysis conducted by CityGate Associates. Center for Homeland Defense and Security – Master’s Program June 19-30 Chief Tubbs attended his first In Residence (IR) module of the Master’s Program through the Naval Post Graduate School / Center for Homeland Defense and Security. This distance-learning program is eighteen months long and culminates with a Master of Arts in Security Studies. The program is fully funded by the Department of Homeland Security. Students in the CHDS Programs have entered these programs with no specific expertise related to terrorism analysis but nevertheless, many have been called upon by their departments to respond to the growing need and more expertly understand the nature of terrorism and terrorist groups. Many of the critical analytical skills and tools used in this program are directly applicable to the challenges found in local communities. - 18 -

Southern Marin Fire Protection District July 2017 Board Report – Chief’s Report

COMMUNITY EVENTS National Night Out Lt. Stacie Gregory (Sausalito PD) is leading the efforts for this annual National event. The Southern Marin Fire District will be participating and supporting this event. Deputy Fire Marshal Fred Hilliard and Battalion Chief Scott Barnes are supporting Lt. Gregory by coordinating Southern Marin’s role and providing resources. The National Night Out is August 1, 2017

LABOR Battalion Chief MOU & Administrative Staff Labor Agreement The Negotiating Team met with the Battalion Chiefs on July 17 and provided an update based on the direction given the team by the Board. The Fire Chief provided the negotiating team with additional analysis for the Admin Work Group and their agreement. Chief Tubbs spent time collecting data for the upcoming Fire Chief Contract work. A draft Contract, absent information on wages beyond current rate, has been sent to Director St. John for review and direction.

COMMITTEE REPORTS CERT Captain Paterson is currently planning to deploy a CERT Training program this fall. As plans are finalized, we will provide details to the Board and community. Health & Wellness Committee We are currently in the process of deploying the second phase of our FireFlex Yoga Training program. Recently three back inversion tables were purchased and one placed at each fire station. Both of these elements are part of a prevention program that the committee has been focused on. Additionally, this month the committee has been working to identify individuals who will be part of the Peer Counselor Program. MERA The Fire Chief was unable to attend the June MERA Board Meeting. The July Board meeting was canceled due to a lack of agenda items. SMEMPS - The Governing Board did not meet this month. This month the Fire Chiefs met. An update to Rescue 9 is reported earlier in this document. The Chief also continued work on the Policy Documents, which is part of the SMEMPS Strategic Plan. This includes a new Financial Management Policy and Procedures, Plan of Operations Appendix, and the Joint Powers Agreement. The Chiefs also reviewed the draft CityGate Associates Deployment Analysis. The Chiefs will be contacting CityGate to answer a variety of questions the report has generated. Training and Safety Committee - Training & Safety Officer Battalion Chief Mike St. John had nothing to report. Sausalito Disaster Preparedness Committee - The Fire Chief did not attend the July meeting Respectfully,

Chris Tubbs Fire Chief , Southern Marin Fire District i

Alameda County Sheriff’s Office. “About Urban Shield.” Accessed July 19, 2017. http://www.urbanshield.org/about/urban-shield-training - 19 -

Southern Marin Fire Protection District Board Report – Operations June 2017 / July 2017

Operational Highlights The months of June and July have been very busy with District activities such as Community Outreach, Special Operations Calls and calls for service.

Zone 4

13%

16%

37%

Zone 9

Zone 1

Percentage of Calls for Each Zone within the Southern Marin Fire District Service Area for the Months of June / July Vehicle Accident Response showed a decrease in responses this month as the District responded to 19 vehicle accidents that ranged from no injuries, to major injuries.

5 Year overview of Vehicle Accidents and Locations of Accidents - 20 -

California Wildland Fires: The 2017 California Wildland Fire Season has been exceptionally busy this year. With hot temperatures and dry brush, California has seen triple the amount of Acres Burned compared to the 2016 Wildland Fire Season with approximately 20% more fires season from the same time last year. Southern Marin Fire District resources have been busy deploying resources to various fires throughout the state, operating under the California Master Mutual Aid System and agreements.        

Engine 604 was assigned as part of Local Government, Marin County Type III Strike Team, to the Wall Fire in Chico from July 9th through July 13th. Paramedic Ben Pope was assigned as a Line Paramedic to the Wall Fire in Chico on July 9, 2017 and then re-assigned to the Garza fire on July 13th. BC Barnes was assigned as a Division Supervisor Trainee to the Wall Fire from July 9th through July 13th . Captain Bouchard was assigned as Strike Team Leader Trainee with Marin and Sonoma County Office of Emergency Services (OES) Type 1 Strike Team to the Alamo Fire, in Southern California from July 9th through July 13th, BC Pasquale is currently assigned as a Strike Team Leader Trainee to the Detwiler Fire in Mariposa. Ben Pope is currently assigned as a Field Observer Trainee (FOBS T) to the Detwiler Fire in Mariposa, Cary Gloeckner is currently assigned as a Field Observer to the Detwiler Fire in Mariposa. Patrick Young is currently assigned as a Medical Unit Leader to the Marble Fire in Orleans.

All crews and personnel are doing well and those that have returned reported back numerous lessons learned and an invaluable increase in experience that they have already been able to apply to their daily duties serving the District.

Drone Program The District is actively working on the implantation of a Public Safety Drone Program and is in the early phases of developing policies, procedures, certifications, permits and permissions to implement this program. Fire Service based drones have proving to help search for missing victims and locate quicker than traditional methods – especially in areas much like the coast line in Golden Gate National Recreation Area and the Mt. Tamalpais watershed. Fire service drones are also very effective with providing “Over-Watch” during significant emergencies and structure fires by providing incident commanders with a “Birds Eye” view of the incident and with the increased technology such as Intra-Red and Thermal Imaging Drones have assisted with safer fire ground operations by providing real-time information and intelligence that allows for better or more informed decision making. Chief Barnes participated in a two day intensive Public Safety Drone course on July 29th and 30th in Sacramento, that was developed to help agencies with the initial phases of implementing their programs.

- 21 -

Summary In the Fire Chief’s Vision document, it includes one key target area: 1) Culture and Professionalism. During the months of March/April our activities and investments have focused on achieving this vision. Specifically, we have continued to invest our energies in the following:    

A culture that strives to perform to the highest level of professional standards and practices A safety minded workforce that continually strives to work as efficiently and safely as possible A culture of instilling the mindset of “we” before “I”. An organization that is on the leading edge of progression while learning from the past.

- 22 -

Southern Marin Fire Protection District Board Report – Finance Report

July 2017 1. 2016/17 Budget Highlights: 

 

As of June 30, we are at 95% of 99% of the total budget. More expenses and revenues will be trickling in through August, and a final report for 2016/17 will be presented to the Board in September. Property tax revenues total 1.9% higher than budgeted, or $231,000. Total revenues exceeded the budgeted amount by $1 million, largely due to strike team revenues (which are largely offset by overtime expenses) and aforementioned property taxes.

2. 2017/18 Budget: Not much activity to-date, with expenditures at 5% of 7%. 3. CERT Program: We expect to receive $30,000 from the County of Marin in July for 2017/18. No expenditures yet for 2017/18. 4. Pension Trust: With the Board’s approval, staff will setup a new trust in order to pre-fund the pension liability. We anticipate working with the finance committee to present a funding strategy for this trust to the board in the future. 5. Other Post-Employment Benefits (OPEB) Trust: SMFD’s OPEB Trust balance as of 5/31/17 is $2,811,115, reflecting an investment increase of $22,127 plus a $300,000 made in May. In addition, the District made another $75,000 contribution in June to the trust that is not yet reflected in the balance. For 2016/17, the District decreased the net OPEB liability by $41,820, by paying more in contributions than was annually required.

Thank you, Alyssa Schiffmann, Finance Manager

- 23 -

SMFD

Balance Sheet

July 20, 2017

June 22, 2017

ASSETS Checking/Savings 74900 · Operating Fund - County

5,834,515

6,502,195

Capital Replacement Fund

2,157,500

2,157,500

Unallocated Reserves

712,753

712,753

447 · Payroll - B of A 447

297,793

358,789

11000 · Prevention Fees Paypal Total Checking/Savings

4,192

3,153

9,006,752

9,734,390

Other Current Assets Accounts Receiveable

488,674

477,890

Loan Receiveable

-26

-105

Undeposited Funds

951

0

3,762,824

3,762,824

Deferred Outflows Prepaid Expenses Total Other Current Assets Total Current Assets

-20

32,728

4,252,404

4,273,336

13,259,156

14,007,726

Fixed Assets Equipment Accumulated Depreciation Buildings Land Total Fixed Assets

3,373,115

3,373,115

-4,749,911

-4,749,911

3,566,726

3,566,726

214,807

214,807

2,404,737

2,404,737

1,450,000

1,508,000

1,450,000

1,508,000

17,113,894

17,920,464

10,000

10,000

Other Assets Interagency Receivable Total Other Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Unavailable Revenue Use Tax Payable Claims Payable Payroll Liabilities Insurance Claims Payable Accounts Payable Total Current Liabilities

39

38

58,564

58,564

210

411

16,887

0

8,675

1,587

94,375

70,601

Long Term Liabilities OPEB OBLIGATION

121,887

163,707

DEFERRED INFLOWS

1,433,522

1,433,522

NET PENSION LIABILITY

6,033,143

6,033,143

COMPENSATED ABSENCES Total Long Term Liabilities Total Liabilities

755,094

789,096

8,343,646

8,419,468

8,438,021

8,490,069

Equity AMOUNT TO BE PROVIDED AMOUNT TO BE PROVIDED - PENSION FIXED ASSET FUND FUND BALANCE NET REVENUE Total Equity TOTAL LIABILITIES & EQUITY

-876,981

-952,803

-3,703,841

-3,703,841

2,404,737

2,404,737

11,701,750

10,148,270

-849,793

1,534,032

8,675,873

9,430,395

17,113,894

17,920,464

- 24 -

7/17/2017

SMFD Budget Report 2017/2018 4%

to July 20, 2017

Over/(Under) Budget

Budget

% of Budget

REVENUE PROPERTY TAX

0

12,610,000

(12,610,000)

0.0%

SPECIAL ASSESSMENT

0

855,000

(855,000)

0%

ERAF

0

800,000

(800,000)

0%

GRANT FUNDS

0

0

CELL SITE RENTAL

0

105,000

(105,000)

0%

CERT PROGRAM

0

30,000

(30,000)

0%

SAUSALITO OPEB REIMBURSEMENT

0

58,000

(58,000)

0%

GGNRA

0

345,000

(345,000)

0%

SMEMPS

0

575,000

(575,000)

0%

OVERTIME REIMBURSEMENTS

0

300,000

(300,000)

0%

PLAN FEES

2,137

200,000

(197,863)

1%

WORKERS' COMP REIMBURSEMENTS

2,133

50,000

(47,867)

4%

57

30,000

(29,943)

0%

0

20,000

(20,000)

0%

4,327

15,978,000

(15,973,673)

0%

221,626

5,620,000

(5,398,374)

4%

0 3,226

60,000 40,000

(60,000) (36,774)

0% 8%

224,852

5,720,000

(5,495,148)

4%

81,772

1,200,000

(1,118,228)

7%

501-0B · FLSA 501-0C · Out of Grade

5,728 1,449

145,000 30,000

(139,272) (28,551)

4% 5%

Total 501-O · OVERTIME

88,949

1,375,000

(1,286,051)

6%

86,504

1,095,000

(1,008,496)

8%

0

70,000

(70,000)

0%

-59

370,000

(370,059)

-0%

504-AAA · Retiree Medical (OPEB)

0

321,000

(321,000)

0%

504-B · Dental

0

110,000

(110,000)

0%

504-C · Vision

0

11,000

(11,000)

0%

504-D · Holiday Pay

0

259,000

(259,000)

0%

87,375

2,215,000

(2,127,625)

4%

9,500

210,000

(200,500)

5%

504-H · Clothing Allowance

0

20,800

(20,800)

0%

504-K · Workers Compensation

0

643,000

(643,000)

0%

11,082

278,000

(266,918)

4%

504-N · Long Term Disability

0

16,000

(16,000)

0%

504-O · Long Term Care Insurance

0

46,000

(46,000)

0%

338

8,500

(8,162)

4%

0

31,000

(31,000)

0%

REIMBURSEMENTS/REFUNDS INTEREST TOTAL REVENUE

0

0%

EXPENDITURES 501 · SALARIES 501-A · Base Salaries 501-B · Sick Buy-Out 501-C · Vacation Buy-Out Total 501 · SALARIES 501-O · OVERTIME 501-0A · Overtime

504 · EMPLOYEE BENEFITS 504-A · Health Benefits 504-AB · Retiree Health Savings 504-AA · Retiree Medical

504-E · District Share Retirement 504-G · Educational Allowance

504-L · Def.Comp. Employer %

504-S · Longevity 504-V · W/C Payroll Audit Adjustment

- 25 -

7/17/2017

SMFD Budget Report 2017/2018 4% 504-X · Life Insurance 504-Y · Payroll Taxes

to July 20, 2017

Over/(Under) Budget

Budget

% of Budget

-635 4,135

12,500 106,000

(13,135) (101,865)

-5% 4%

198,240

5,822,800

(5,624,560)

3%

511-A · General Office Supply

0

7,000

(7,000)

0%

511-B · Copier/Printer Expenses 511-C · Maps & Run Books

0 0

5,000 500

(5,000) (500)

0% 0%

Total 511 · OFFICE EXPENSE

0

12,500

(12,500)

0%

512 · POSTAGE

0

2,200

(2,200)

0%

513-C · Public Education

0

3,300

(3,300)

0%

513-F · Subscriptions

0

600

(600)

0%

513-G · Awards

0

2,800

(2,800)

0%

513-H · Office Equipment Replacement

0

2,000

(2,000)

0%

513-L · Photos

0

4,500

(4,500)

0%

513-O · Misc. Celebrations/flowers

0

1,400

(1,400)

0%

513-P · Shift Calendars

0

250

(250)

0%

513-Q · Station Flags

0

3,700

(3,700)

0%

513-S · Hydrant Supplies

0

1,300

(1,300)

0%

513-T · Computer Upgrades/Programs

0

8,000

(8,000)

0%

513-U · Misc. Computer Supplies 513-V · Software Subscriptions Services

0 44,576

1,500 57,000

(1,500) (12,424)

0% 78%

Total 513 · SPECIAL DEPARTMENT EXPENSE

44,576

86,350

(41,774)

52%

515-A · Uniforms/Boots

0

34,000

(34,000)

0%

515-B · Badges

0

1,800

(1,800)

0%

515-G · Personal Protective Equipment

0

44,000

(44,000)

0%

515-H · Misc Repairs/struc cloth

0

12,500

(12,500)

0%

515-I · Wildland - Safety Clothing

0

21,000

(21,000)

0%

515-N · Strike Team Equipment (OOC)

0

5,750

(5,750)

0%

515-P · New Employees

0

6,000

(6,000)

0%

515-T · Wildland Shelters

0

1,600

(1,600)

0%

515-U · Swiftwater Rescue Gear 515-V · USAR Equipment

0 0

9,100 4,950

(9,100) (4,950)

0% 0%

0

140,700

(140,700)

0%

2%

Total 504 · EMPLOYEE BENEFITS

511 · OFFICE EXPENSE

513 · SPECIAL DEPARTMENT EXPENSE

515 · CLOTHING & PERSONNEL SUPPLIES

Total 515 · CLOTHING & PERSONNEL SUPPLIES 517 · COMMUNICATIONS

373

16,000

(15,627)

517-B · Dispatch including CAD Service

517-A · Telephone

0

196,000

(196,000)

0%

517-C · Pagers + Voice Mail

0

300

(300)

0%

517-D · Cell Phones

0

18,000

(18,000)

0%

517-E · MERA Operating Costs

46,428

47,700

(1,272)

97%

517-F · MERA Bond Service

35,181

52,900

(17,719)

67%

517-G · Internet/IDSL

0

16,000

(16,000)

0%

517-I · Phone Repairs/Replacement

0

13,000

(13,000)

5,430

5,430

0

9,500

517-K · MERA-New Project Financing 517-L · MDC Connection

- 26 -

0 (9,500)

0% 100% 0%

7/17/2017

SMFD Budget Report 2017/2018 4% 517-M · MDC Service Contract

to July 20, 2017

Budget

Over/(Under) Budget

% of Budget

0

4,000

(4,000)

0%

87,412

378,830

(291,418)

23%

518-A · PG&E Station 4

0

13,000

(13,000)

0%

518-B · PG&E Station 9

0

10,000

(10,000)

0%

518-C · MMWD Station 4

0

2,500

(2,500)

0%

518-D · MMWD Station 9

0

1,600

(1,600)

0%

518-E · Richardson Bay Sanitation

0

1,060

(1,060)

0%

518-F · PG&E Station 1

0

6,500

(6,500)

0%

518-G · MMWD - Station 1

0

2,400

(2,400)

0%

518-H · Sanitation - Station 1 518-I · Sanitation - Sta 4

0 0

4,000 4,000

(4,000) (4,000)

0% 0%

0

45,060

(45,060)

0%

0

21,000

(21,000)

0% 0%

Total 517 · COMMUNICATIONS

518 · UTILITIES

Total 518 · UTILITIES

520 · BUILDING & GROUNDS MAINTENANCE 520-B · Janitorial Supplies 520-C · Unscheduled Repairs & Maint.

0

25,000

(25,000)

171

2,150

(1,979)

8%

2,607

5,500

(2,893)

47%

520-H · Carpets - Cleaning

0

3,000

(3,000)

0%

520-K · Kitchen Supplies 520-L · Sign Changes

0 0

4,000 650

(4,000) (650)

0% 0%

2,778

61,300

(58,522)

5%

521-A · Radio Repair

0

12,000

(12,000)

0%

521-B · Air Pak Maintenance

0

7,050

(7,050)

0%

521-C · Office Equip. Maint.

0

1,250

(1,250)

0%

521-E · Mechanical Systems - Contract

0

8,500

(8,500)

0%

521-H · Repairs & Unscheduled Maint.

0

21,000

(21,000)

0%

521-I · Ladder Testing

0

2,000

(2,000)

0%

521-J · Portable Equipment

0

6,000

(6,000)

0%

521-K · Extinguishers/Annual Maint.

0

1,000

(1,000)

0%

521-M · Gym Equipment Maintenance

0

6,000

(6,000)

0%

521-O · Copier Maint. Contract - Sta 9

0

3,500

(3,500)

0%

521-R · Hose Maint/Nozzle & Fittings 521-W · Dive Team Maintenance

0 0

4,450 7,600

(4,450) (7,600)

0% 0%

Total 521 · EQUIPMENT MAINTENANCE

0

80,350

(80,350)

0%

520-D · Sprinklers/Alarm System 520-E · Elevator Contract

Total 520 · BUILDING & GROUNDS MAINTENANCE

521 · EQUIPMENT MAINTENANCE

521-1 · VEHICLE MAINTENANCE 521-1A · Vehicle Repair 521-1B · Fuel 521-1C · Marine Division 521-1D · Fireboat Docking Fee Total 521-1 · VEHICLE MAINTENANCE

0

90,000

(90,000)

0%

275

40,000

(39,725)

1%

0 0

21,000 3,674

(21,000) (3,674)

0% 0%

275

154,674

(154,399)

0%

- 27 -

7/17/2017

SMFD Budget Report 2017/2018 4%

to July 20, 2017

Over/(Under) Budget

Budget

% of Budget

522 · MISCELLANEOUS EXPENSES 522-B · Logistics

0

500

(500)

0%

522-C · Administration 522-D · Training

0 0

500 750

(500) (750)

0% 0%

0

1,750

(1,750)

0%

Total 522 · MISCELLANEOUS EXPENSES

523 · SPECIALIZED SERVICES 523-A · Board Per Diem

0

8,400

(8,400)

0%

401

16,000

(15,599)

3%

523-C · Legal/Professional Fees

0

75,000

(75,000)

0%

523-D · Legal Postings

0

500

(500)

0%

523-E · Elections

0

7,820

(7,820)

0%

523-F · Haz Mat JPA

0

210,000

(210,000)

0%

523-G · Tax Collection Fees

0

170

(170)

0%

523-H · Flu Shots

0

7,150

(7,150)

0%

523-J · District Dinner

0

35,000

(35,000)

0%

523-K · New Employment

0

22,500

(22,500)

0%

523-L · Computer Consulting Services

0

10,500

(10,500)

0%

523-M · Audit

0

300

(300)

0%

523-N · Parcel Tax Refunds

0

40,000

(40,000)

0%

523-P · Dept. Physical Exams

0

30,000

(30,000)

0%

523-Q · Fitness Testing

0

2,000

(2,000)

0%

523-B · Payroll Processing/Bank Fees

523-R · Fire Investigation JPA

9,386

8,725

523-S · LAFCO Operating Expenses

0

28,500

(28,500)

0%

523-T · Team Building

0

7,650

(7,650)

0%

523-X · Promotional Test

0

1,000

(1,000)

0%

523-Y · CERT Program

0

30,000

(30,000)

0%

523-Z · Disaster Preparedness

0

12,500

(12,500)

0%

523-ZB · Vegetation Management

0

32,275

(32,275)

0%

523-ZC · Fire Prevention 523-ZG · Public Outreach

0 0

43,000 5,000

(43,000) (5,000)

0% 0%

9,787

633,990

(624,203)

2%

81,113 0

90,000 3,100

(8,887) (3,100)

90% 0%

81,113

93,100

(11,987)

87%

200 0

100,000 3,100

(99,800) (3,100)

0% 0%

200

103,100

(102,900)

0%

526-1A · General

1,450

2,200

(750)

66%

526-1B · FDAC 526-1C · Costco

440 0

440 110

0 (110)

100% 0%

1,890

2,750

(860)

69%

Total 523 · SPECIALIZED SERVICES

661

108%

524 · INSURANCE 524-A · Comprehensive Insurance 524-B · Volunteer Insurance Total 524 · INSURANCE

526 · TRAINING & CONFERENCES 526-A · Training 526-I · EMS Recertifications Total 526 · TRAINING & CONFERENCES

526-1 · MEMBERSHIPS & STAFF CONF.

Total 526-1 · MEMBERSHIPS & STAFF CONF.

- 28 -

7/17/2017

SMFD Budget Report 2017/2018 4%

to July 20, 2017

Budget

Over/(Under) Budget

% of Budget

526-2 · MEETINGS & TRAVEL EXPENSES 526-2A · Food/Meetings/Training

0

5,550

(5,550)

0%

526-2B · Transportation/Bridge Tolls

0

3,700

(3,700)

0%

526-2C · Bi-Monthly Reserve Meeting 526-2D · Strike Team Expenses

0 0

1,000 3,000

(1,000) (3,000)

0% 0%

0

13,250

(13,250)

0%

25,000

100,000

(75,000)

25%

583-4D · Hydrants

0

31,000

(31,000)

0%

583-4F · Hoses

0

12,000

(12,000)

0%

583-4H · Radios

0

17,000

(17,000)

0%

583-4K · Office Equipment

0

16,500

(16,500)

0%

583-4R · New Workstations

0

80,000

(80,000)

0%

583-4V · MDC iPad Program 583-4Z · One-Time Misc Equipment

0 0

3,000 5,000

(3,000) (5,000)

0% 0%

0

164,500

(164,500)

0%

Total 526-2 · MEETINGS & TRAVEL EXPENSES

527 · RENT 583-4 · EQUIPMENT

Total 583-4 · EQUIPMENT

583-5 · FUNDED FROM RESERVES 583-5B · Sta 4 Ext. Paint

0

30,000

(30,000)

0%

583-5H · Other Repairs

0

115,000

(115,000)

0%

583-5J · New Apparatus

0

1,565,000

(1,565,000)

0%

583-5T · Apparatus Door Replacement

0

42,000

(42,000)

0%

583-5U · Telestaff

0

5,000

(5,000)

0%

0 89,048

145,000 162,500

(145,000) (73,452)

0% 55%

89,048

2,064,500

(1,975,452)

4%

0

50,000

(50,000)

0%

854,120

17,106,704

(16,252,584)

5%

(849,793)

(1,128,704)

583-5V · Station 4 Remodel 583-5W · Misc One-Time Projects Total 583-5 · FUNDED FROM RESERVES 589 · CONTINGENCY TOTAL EXPENDITURES

NET EXCESS/(DEFICIENCY)

- 29 -

7/17/2017

SMFD Budget Report 2016/2017 99%

to June 30, 2017

Over/(Under) Budget

Budget

% of Budget

REVENUE 12,217,941

11,986,000

231,941

101.9%

SPECIAL ASSESSMENT

868,380

855,000

13,380

102%

ERAF

953,987

PROPERTY TAX

775,000

178,987

123%

58,259

0

58,259

100%

104,318

102,997

1,321

101%

CERT PROGRAM

22,500

0

22,500

100%

SAUSALITO OPEB REIMBURSEMENT

58,000

58,000

0

100%

GGNRA

339,398

322,592

16,806

105%

SMEMPS

574,745

480,000

94,745

120%

OVERTIME REIMBURSEMENTS

672,927

300,000

372,927

224%

PLAN FEES

86,715

100,000

(13,285)

87%

WORKERS' COMP REIMBURSEMENTS

78,881

75,000

3,881

105%

REIMBURSEMENTS/REFUNDS

36,997

30,000

6,997

123%

INTEREST

22,278

7,000

15,278

318%

16,095,327

15,091,589

1,003,738

107%

5,172,821

5,150,000

22,821

100%

19,013 30,488

20,000 30,000

5,222,322

5,200,000

22,322

GRANT FUNDS CELL SITE RENTAL

TOTAL REVENUE EXPENDITURES 501 · SALARIES 501-A · Base Salaries 501-B · Sick Buy-Out 501-C · Vacation Buy-Out Total 501 · SALARIES

(988) 488

95% 102% 100%

501-O · OVERTIME 501-0A · Overtime

1,192,065

1,200,000

(7,935)

99%

501-0B · FLSA 501-0C · Out of Grade

134,709 28,172

135,000 30,000

(291) (1,828)

100% 94%

Total 501-O · OVERTIME

1,354,946

1,365,000

(10,054)

99%

968,659

1,095,000

(126,341)

88%

0

45,000

(45,000)

0%

504-AA · Retiree Medical

346,841

370,000

(23,159)

94%

504-AAA · Retiree Medical (OPEB)

504 · EMPLOYEE BENEFITS 504-A · Health Benefits 504-AB · Retiree Health Savings

375,000

321,000

54,000

117%

504-B · Dental

95,955

110,000

(14,045)

87%

504-C · Vision

9,433

11,000

(1,567)

86%

242,232

246,000

(3,768)

98%

2,133,581

2,110,000

23,581

101%

221,558

230,000

20,800

20,400

504-K · Workers Compensation

623,296

643,296

(20,000)

504-L · Def.Comp. Employer %

258,397

260,000

(1,603)

99%

504-N · Long Term Disability

15,621

16,000

(379)

98%

504-O · Long Term Care Insurance

22,957

24,000

(1,043)

96%

504-D · Holiday Pay 504-E · District Share Retirement 504-G · Educational Allowance 504-H · Clothing Allowance

504-S · Longevity 504-V · W/C Payroll Audit Adjustment 504-X · Life Insurance

7,921

8,500

34,050

31,000

7,550

8,000

- 30 -

(8,442) 400

(579) 3,050 (450)

96% 102% 97%

93% 110% 94%

7/17/2017

SMFD Budget Report 2016/2017 99% 504-Y · Payroll Taxes

to June 30, 2017

Over/(Under) Budget

Budget

% of Budget

91,118

105,000

(13,882)

87%

5,474,967

5,654,196

(179,229)

97%

511-A · General Office Supply

6,634

7,000

(366)

95%

511-B · Copier/Printer Expenses 511-C · Maps & Run Books

4,307 54

2,200 1,500

2,107 (1,446)

196% 4%

10,995

10,700

295

103%

2,170

2,200

(30)

99%

218

3,000

(2,782)

7%

Total 504 · EMPLOYEE BENEFITS

511 · OFFICE EXPENSE

Total 511 · OFFICE EXPENSE

512 · POSTAGE 513 · SPECIAL DEPARTMENT EXPENSE 513-C · Public Education 513-F · Subscriptions

338

600

(262)

56%

513-G · Awards

3,258

4,100

(842)

79%

513-H · Office Equipment Replacement

1,926

2,000

(74)

96%

-157

4,000

(4,157)

-4%

322

1,400

(1,078)

23%

513-L · Photos 513-O · Misc. Celebrations/flowers 513-P · Shift Calendars

188

300

(112)

63%

1,774

4,150

(2,376)

43%

0

4,750

(4,750)

0%

800

8,000

(7,200)

10%

513-U · Misc. Computer Supplies 513-V · Software Subscriptions Services

2,070 31,044

1,500 40,000

570 (8,956)

138% 78%

Total 513 · SPECIAL DEPARTMENT EXPENSE

41,782

73,800

(32,018)

57%

18,812

30,000

(11,188)

1,622

1,200

513-Q · Station Flags 513-S · Hydrant Supplies 513-T · Computer Upgrades/Programs

515 · CLOTHING & PERSONNEL SUPPLIES 515-A · Uniforms/Boots 515-B · Badges 515-G · Personal Protective Equipment

422

63% 135%

34,713

43,750

(9,037)

79%

515-H · Misc Repairs/struc cloth

9,159

12,000

(2,841)

76%

515-I · Wildland - Safety Clothing

18,413

21,500

(3,087)

86%

2,463

3,400

(937)

72%

907

1,000

(93)

91%

0

6,000

(6,000)

515-T · Wildland Shelters

1,624

1,500

515-U · Swiftwater Rescue Gear 515-V · USAR Equipment

1,867 0

2,500 3,000

(633) (3,000)

75% 0%

89,580

125,850

(36,270)

71%

515-N · Strike Team Equipment (OOC) 515-O · Raingear 515-P · New Employees

Total 515 · CLOTHING & PERSONNEL SUPPLIES

124

0% 108%

517 · COMMUNICATIONS 517-A · Telephone 517-B · Dispatch including CAD Service 517-C · Pagers + Voice Mail

7,639

29,000

(21,361)

26%

185,991

196,293

(10,302)

95%

576

700

(124)

82%

517-D · Cell Phones

14,727

16,000

(1,273)

92%

517-E · MERA Operating Costs

45,569

45,569

517-F · MERA Bond Service

51,854

517-G · Internet/IDSL

11,505

517-I · Phone Repairs/Replacement

0

100%

51,855

(1)

100%

16,000

(4,495)

72%

2,218

2,500

(282)

517-K · MERA-New Project Financing

5,430

5,430

517-L · MDC Connection

4,892

9,300

- 31 -

0 (4,408)

89% 100% 53%

7/17/2017

SMFD Budget Report 2016/2017 99% 517-M · MDC Service Contract

to June 30, 2017

Over/(Under) Budget

Budget 10,000

340,704

382,647

518-A · PG&E Station 4

12,638

518-B · PG&E Station 9

13,587

518-C · MMWD Station 4

2,582

1,800

782

143%

518-D · MMWD Station 9

1,865

1,600

265

117%

518-E · Richardson Bay Sanitation

1,991

1,060

931

188%

518-F · PG&E Station 1

6,382

6,500

(118)

98%

518-G · MMWD - Station 1 518-H · Sanitation - Station 1

1,787 2,199

2,400 4,000

(613) (1,801)

74% 55%

43,031

45,860

(2,829)

94%

520-B · Janitorial Supplies

17,432

21,000

(3,568)

83%

520-C · Unscheduled Repairs & Maint.

30,412

25,000

5,412

122%

520-D · Sprinklers/Alarm System

2,017

2,100

520-E · Elevator Contract

7,935

5,500

2,435

Total 517 · COMMUNICATIONS

302

% of Budget

10,302

103%

(41,943)

89%

13,500

(862)

94%

15,000

(1,413)

518 · UTILITIES

Total 518 · UTILITIES

91%

520 · BUILDING & GROUNDS MAINTENANCE

520-H · Carpets - Cleaning 520-K · Kitchen Supplies 520-L · Sign Changes Total 520 · BUILDING & GROUNDS MAINTENANCE

(83)

96% 144%

0

3,000

(3,000)

0%

1,988 1,183

5,500 650

(3,512) 533

36% 182%

60,966

62,750

(1,784)

97%

6,356

12,000

(5,644)

11,629

11,000

521 · EQUIPMENT MAINTENANCE 521-A · Radio Repair 521-B · Air Pak Maintenance 521-C · Office Equip. Maint.

53%

629

106%

467

287%

717

250

521-E · Mechanical Systems - Contract

1,306

8,500

(7,194)

521-H · Repairs & Unscheduled Maint.

12,360

16,000

(3,640)

521-I · Ladder Testing

2,146

2,000

521-J · Portable Equipment

3,693

6,000

521-K · Extinguishers/Annual Maint.

1,154

900

521-M · Gym Equipment Maintenance

3,585

5,000

(1,415)

521-O · Copier Maint. Contract - Sta 9

0

8,000

(8,000)

0%

521-R · Hose Maint/Nozzle & Fittings 521-W · Dive Team Maintenance

977 8,311

1,000 8,800

(23) (489)

98% 94%

Total 521 · EQUIPMENT MAINTENANCE

52,233

79,450

(27,217)

66%

110%

146 (2,307) 254

15% 77% 107% 62% 128% 72%

521-1 · VEHICLE MAINTENANCE 521-1A · Vehicle Repair

109,767

99,800

9,967

521-1B · Fuel

29,570

40,000

(10,430)

74%

521-1C · Marine Division 521-1D · Fireboat Docking Fee

21,898 3,532

22,000 3,533

(102) (1)

100% 100%

164,767

165,333

(566)

100%

522-B · Logistics

438

500

(62)

88%

522-C · Administration

384

500

(116)

77%

Total 521-1 · VEHICLE MAINTENANCE

522 · MISCELLANEOUS EXPENSES

- 32 -

7/17/2017

SMFD Budget Report 2016/2017 99% 522-D · Training Total 522 · MISCELLANEOUS EXPENSES

to June 30, 2017

Over/(Under) Budget

Budget

% of Budget

0

750

(750)

0%

822

1,750

(928)

47%

523 · SPECIALIZED SERVICES 523-A · Board Per Diem

7,500

8,400

523-B · Payroll Processing/Bank Fees

12,299

10,600

1,699

(900)

116%

89%

523-C · Legal/Professional Fees

77,670

60,000

17,670

129%

523-D · Legal Postings

944

500

444

189%

523-E · Elections

991

85,000

(84,009)

1%

7,820

7,850

(30)

100%

199,554

190,000

158

3,100

(2,943)

5%

5,329

6,500

(1,171)

82%

523-F · Haz Mat JPA 523-G · Tax Collection Fees 523-H · Flu Shots 523-J · District Dinner 523-K · New Employment

9,554

105%

69

24,000

(23,931)

0%

523-L · Computer Consulting Services

20,258

30,000

(9,743)

68%

523-M · Audit

10,540

10,500

0

600

(600)

0%

523-P · Dept. Physical Exams

23,323

31,000

(7,677)

75%

523-Q · Fitness Testing

25,946

28,000

(2,054)

93%

411

2,000

(1,589)

21%

523-S · LAFCO Operating Expenses

8,231

8,231

(0)

100%

523-T · Team Building

1,351

7,000

(5,649)

19%

0

3,700

(3,700)

22,500

0

523-Z · Disaster Preparedness

4,604

523-ZB · Vegetation Management

8,184

523-N · Parcel Tax Refunds

523-R · Fire Investigation JPA

523-X · Promotional Test 523-Y · CERT Program

40

100%

0%

22,500

100%

12,500

(7,896)

37%

11,250

(3,066)

73%

14,143 5,254

11,500 5,000

2,643 254

123% 105%

Total 523 · SPECIALIZED SERVICES

457,078

557,231

(100,153)

82%

524 · INSURANCE 524-A · Comprehensive Insurance

79,481

85,000

(5,519)

94%

Total 524 · INSURANCE

79,481

85,000

(5,519)

94%

525 · GRANT FUNDED EXPENDITURES

61,211

0

61,211

100%

84,223 318

100,000 3,100

(15,777) (2,782)

84% 10%

84,541

103,100

(18,559)

0%

526-1A · General

2,150

2,100

50

102%

526-1B · FDAC 526-1C · Costco

440 0

440 110

0 (110)

100% 0%

2,590

2,650

(60)

98%

523-ZC · Fire Prevention 523-ZG · Public Outreach

526 · TRAINING & CONFERENCES 526-A · Training 526-I · EMS Recertifications Total 526 · TRAINING & CONFERENCES

526-1 · MEMBERSHIPS & STAFF CONF.

Total 526-1 · MEMBERSHIPS & STAFF CONF.

- 33 -

7/17/2017

SMFD Budget Report 2016/2017 99%

to June 30, 2017

Budget

Over/(Under) Budget

% of Budget

526-2 · MEETINGS & TRAVEL EXPENSES 526-2A · Food/Meetings/Training

6,168

5,550

526-2B · Transportation/Bridge Tolls

1,749

3,700

(1,951)

47%

526-2C · Bi-Monthly Reserve Meeting 526-2D · Strike Team Expenses

0 1,778

1,000 3,000

(1,000) (1,222)

0% 59%

9,695

13,250

(3,555)

73%

100,000

100,000

583-4D · Hydrants

42,658

66,500

583-4F · Hoses

10,012

10,000

583-4H · Radios

Total 526-2 · MEETINGS & TRAVEL EXPENSES

527 · RENT

618

0

111%

100%

583-4 · EQUIPMENT (23,842) 12

15,967

17,450

583-4K · Office Equipment

8,822

8,500

583-4R · New Workstations

31,651

97,000

(65,349)

33%

499

4,000

(3,501)

12%

7,294 4,803

8,300 6,500

(1,006) (1,697)

88% 74%

121,707

218,250

(96,543)

56%

0

30,000

(30,000)

0%

583-4T · Tool Upgrades 583-4U · Thermal Image Camera 583-4V · MDC iPad Program Total 583-4 · EQUIPMENT

(1,483)

64% 100%

322

92% 104%

583-5 · FUNDED FROM RESERVES 583-5B · Sta 4 Ext. Paint 583-5H · Other Repairs

1,023

40,000

(38,977)

3%

583-5J · New Apparatus

161,614

181,050

(19,436)

89%

583-5N · Type 3 Engine

403,012

415,000

(11,988)

97%

0

36,000

(36,000)

0%

583-5U · Telestaff

20,822

26,000

(5,178)

80%

583-5V · Station 4 Remodel 583-5W · Misc One-Time Projects

0 62,919

143,000 65,000

(143,000) (2,081)

0% 97%

649,390

936,050

(286,660)

69%

585 · DEBT SERVICE

58,869

58,870

(1)

100%

589 · CONTINGENCY

0

50,000

(50,000)

0%

TOTAL EXPENDITURES

14,483,846

15,293,937

(810,091)

95%

NET EXCESS/(DEFICIENCY)

1,611,481

583-5T · Apparatus Door Replacement

Total 583-5 · FUNDED FROM RESERVES

- 34 -

(202,348)

7/17/2017

Southern Marin Fire Protection District

Warrant List July 3, 2017 Date

Num

Name

Memo

Amount

Jul 3, 17 07/03/2017 808901405 City of Sausalito.

Q1 rent 2017/18

07/03/2017 808901406 Southern Marin Fire District

to payroll account 6/18-7/1/17

07/03/2017 808901407 SMPFA

Union dues 6/18-7/1/17

07/03/2017 808901408 SMFA

Assoc payroll deduction 6/18-7/1/17

07/03/2017 808901409 Wilmington Trust

Def comp 6/18-7/1/17 #eef03683617fb1ea

07/03/2017 808901410 Nationwide Retirement Solutions

Def Comp 6/18-7/1/17

07/03/2017 808901411 MARIN COUNTY RETIREMENT

6/18-7/1/17

07/03/2017 808901412 BCN

June 2017

07/03/2017 808901413 FDAC EBA

June dental/life/vision

-12,810.78

07/03/2017 808901414 KAISER PERMANENTE

July 000000463-0007

-78,229.73

07/03/2017 808901415 ANTHEM BLUE CROSS

July

-6,501.91

07/03/2017 808901416 Powers, Joann

June 2017 health benefit

-1,378.39

07/03/2017 808901417 MERA Fund 70030

Operating Budget 2017/18

07/03/2017 808901418 MERA Fund 70032

New Project Financing 2017/18

-5,430.00

07/03/2017 808901419 ARCHIVESOCIAL

Social media archiving 2017/18

-2,388.00

07/03/2017 808901420 ALAMEDA COUNTY FIRE DEPARTMENT

Repairs 07-01E

07/03/2017 808901421 AFSS NORTHERN DIVISION

Kim 6/16/17

07/03/2017 808901422 AT&T 824

BAN 9391050824

07/03/2017 808901423 APPLE INC.

Macbook Pro (1)

07/03/2017 808901424 BWS DISTRIBUTORS

battery pack/charger

07/03/2017 808901425 CITY OF MILL VALLEY

Fuel/repairs May

07/03/2017 808901426 CLEMENTS TREE SERVICE

-25,000.00 -200,000.00 -2,147.00 -923.00 -23,526.88 -2,078.86 -108,991.12 -159.00

-46,428.00

-760.67 -25.00 -400.82 -2,819.42 -456.34 -2,036.66 -1,312.50

07/03/2017 808901427 CFCA

Fire Chief Membership

-600.00

07/03/2017 808901428 DIAMOND WRAP FACTORY

New BC1 rig graphics

-402.50

07/03/2017 808901429 Emergency Equipment Management.

-830.50

07/03/2017 808901430 GOLDEN STATE EMERGENCY VEHICLE SE 09-01E repairs 07/03/2017 808901431 GOODMAN BUILDING SUPPLY

acct# 20091

07/03/2017 808901432 H & M MARINE SERVICES

Liberty quarterly inspection/zincs

07/03/2017 808901433 KIM, SUSAN

rmb mileage 2016/17

-1,644.43 -505.29 -2,185.00 -898.40

07/03/2017 808901434 LIGHTHOUSE UNIFORM COMPANY

-4,339.85

07/03/2017 808901435 LIEBERT CASSIDY WHITMORE

-2,640.00

07/03/2017 808901436 L.N. CURTIS & SONS

-7,702.14

07/03/2017 808901437 LIFEGUARD SYSTEMS, INC.

-905.60

07/03/2017 808901438 MPFA

Peer Fitness Training

-6,000.00

07/03/2017 808901439 MUNICIPAL EMERGENCY SERVICES

tail coat & pant (4)

-8,874.00

07/03/2017 808901440 MOC INSURANCE SERVICES

17/18 comprehensive insurance

-81,113.00

07/03/2017 808901441 MCERA

May 2017

-28,410.60

07/03/2017 808901443 PADILLA, ROBERTO

Social media trng

-15,000.00

07/03/2017 808901444 PROTECTION ONE ALARM MONITORING

333 Johnson St alarm

07/03/2017 808901445 PRIORITY 1 PUBLIC SAFETY EQUIP

BC1 rig lights, etc

07/03/2017 808901442 Marin IT

-2,604.39

07/03/2017 808901446 PG&E

-170.79 -22,753.25 -1,199.52

07/03/2017 808901447 Richardson Bay Sanitary District

2016/17 sewer charge

07/03/2017 808901448 SULLIVAN, CORDI

EMT rmb

- 35 -

-1,991.00 -200.00

Southern Marin Fire Protection District

Warrant List July 3, 2017 Date

Num

Name

Memo

Amount

07/03/2017 808901449 TARGETSOLUTIONS

7/1/17-6/30/18

-4,320.00

07/03/2017 808901450 VERIZON WIRELESS

Acct#942050785-0001

07/03/2017 808901451 US BANK OPERATIONS CENTER

MERA Bond service 2017/18

07/03/2017 808901452 WILD PHOENIX GRAPHICS

Vehicle striping

-999.88

07/03/2017 808901453 WOLFPACK GEAR, INC.

#17715 detachable day pack

-201.76

07/03/2017 808901454 THE CONFERENCE GROUP, LLC

Acct#DDAC-0001

07/03/2017 808901455 CHUN, KURT

June 21 board per diem

-100.00

07/03/2017 808901456 FLEMING, PETER

June 21 board per diem

-100.00

07/03/2017 808901457 HILLIARD, CATHRYN

June 21 board per diem

-100.00

-1,163.61 -35,181.42

-38.69

07/03/2017 808901458 MCERA

-28,410.60

07/03/2017 808901459 NHA ADVISORS

-16,493.75

07/03/2017 808901460 PERAZZO, THOMAS

June 21 board per diem

-100.00

07/03/2017 808901461 WALDECK, CHRISTINA

June 21 board per diem

-100.00

07/03/2017 808901462 WILLIS, STEPHEN

June 21 board per diem

-100.00

Jul 3, 17

-802,184.05

- 36 -

Southern Marin Fire Protection District

Warrant List July 17, 2017 Date

Num

Memo

Name

Amount

Jul 17, 17 07/17/2017 808901463

FDAC EBA

Reissued check for April/May dental/vision/life

-24,413.81

07/17/2017 808901464

MCERA

June retiree health

-28,410.60

07/17/2017 808901465

SolED SOLAR HOLDINGS 1, LLC

June

07/17/2017 808901466

AFLAC

Policy KNU95 May/June

-617.52

07/17/2017 808901467

ALLSTAR FIRE EQUIPMENT

SCBA supplies

-542.00

07/17/2017 808901468

ARAMARK UNIFORM SERVICES

June towel supplies

-487.30

07/17/2017 808901469

AT&T 128

6/25/17

07/17/2017 808901470

BARNES, MATT

Amazon: drone

07/17/2017 808901471

BIG 4 PARTY RENTAL

district dinner rentals

-62.72

07/17/2017 808901472

BUCK'S SAW SERVICE

oil

-42.58

07/17/2017 808901473

CITY OF MILL VALLEY

OT

07/17/2017 808901474

COLEMAN, MIKE

window tinting for E9, E604 & 11-01U

07/17/2017 808901475

Collins, Patti

repairs

07/17/2017 808901476

FDAC

17/18 Dues

07/17/2017 808901477

primer subassy 12V 09-01E GOLDEN STATE EMERGENCY VEHICLE SE

07/17/2017 808901478

HANSON, IAN

Officer 2A

07/17/2017 808901479

HILLIARD, FRED

mileage rmb

07/17/2017 808901480

KIM, SUSAN

Rmb district dinner supplies

07/17/2017 808901481

LIGHTHOUSE UNIFORM COMPANY

shirts (2)

07/17/2017 808901482

MSM, INC.

cleaning supplies

-1,917.06

07/17/2017 808901483

Marin County Tax Collector

LAFCO 2017/18

-9,385.76

07/17/2017 808901484

MCFCA

17/18 Dues

07/17/2017 808901485

NPFBA

1-time payment of liability

07/17/2017 808901486

OpenGov, Inc.

7/1/17-6/30/18

-6,000.00

07/17/2017 808901487

PG&E

7961811465-3 Sta 1 2016/17 true up

-4,113.64

07/17/2017 808901488

PRAXAIR

cylinder rent

07/17/2017 808901489

RICHARDS WATSON GERSHON

#212558

07/17/2017 808901490

SILVERADO AVIONICS, INC.

battery pods

-118.40

07/17/2017 808901491

TREAT, BRANDON

Paramedic recert

-200.00

07/17/2017 808901492

UNICORN GROUP

social media postcard

07/17/2017 808901493

VERIZON WIRELESS MDCs

6/23/17

07/17/2017 808901494

Vault RMS, Inc

Exposure Tracker 7/1/17-6/30/18

07/17/2017 808901495

WATERSTREET COMPANY

station 1 supplies

07/17/2017 808901496

WEST MARINE PRO

jackets, Liberty supplies

-938.38

07/17/2017 808901497

SMFA

Assoc payroll deduction 7/2-7/15/17

-923.00

07/17/2017 808901498

SMPFA

Union dues 7/2-7/15/17

07/17/2017 808901499

Southern Marin Fire District

to payroll account 7/2-7/15/17

07/17/2017 808901500

City of Sausalito.

Sta 1 phone

07/17/2017 808901501

MARIN COUNTY RETIREMENT

7/2-7/15/17

07/17/2017 808901502

Wilmington Trust

Def comp 7/2-7/15/17

-23,593.97

Nationwide Retirement Solutions

Def Comp 7/2-7/15/17

-2,107.76

07/17/2017 808901503 Jul 17, 17

-1,439.77

-12.32 -5,399.00

-1,248.64 -600.00 -10.85 -440.00 -1,644.43 -295.00 -99.88 -497.93 -100.40

-850.00 -74,048.06

-29.73 -2,070.00

-2,074.81 -222.62 -1,728.00 -5.43

-2,147.00 -200,000.00 -333.96 -113,412.13

-512,584.46

- 37 -

- 38 -

- 39 -

- 40 -

- 41 -

Southern Marin Fire Protection District Association Board Report -July Association President Jason Golden

Upcoming events 1. July 28th Jazz By the Bay event 2. August 11th Creekside Friday Oyster BBQ Behavioral Health Nothing to report Contract Negotiations 1. Chief Tubbs notified me by letter that the board is interested in beginning negotiations. I have replied to the Chief that we look forward to starting the process Shared Services 1. PowerPoint presentation Personnel Major Events 1. Congratulations to Engineer Boaz who tied the knot with his longtime girlfriend Lisa. They were married on July 4th in Sausalito in a private officiated by Lisa’s stepmother who was ordained for the occasion

- 42 -

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Stephen Willis, Vice President Thomas Perazzo – Dan St. John – Kurt Chun – Christine Waldeck – Peter Fleming

New Business Item Date July 19, 2017 Topic OPEB Funding Policy

Purpose The purpose of this policy is to ensure that the District is proactively addressing its Other Post-Employment Benefit (OPEB) liability by enacting strategies to accumulate adequate resources in a systematic and transparent manner. This policy also demonstrates to employees and the public how OPEB will be funded, provides guidance in making annual budget decisions, and promotes long-term, strategic planning.

Background In order to ensure that the District’s OPEB program is sustainable, the District has taken the following measures: • In June 2011, the District established an irrevocable OPEB Trust for the purpose of pre-funding OPEB. All funds contributed to this trust may be used only for retiree medical premiums. • In 2013, the District discontinued paying the Medicare surcharge for retirees, thereby decreasing the OPEB liability. • Effective January 1, 2014, the District closed the OPEB group by eliminating OPEB benefits for all employees hired on or after January 1, 2014. All employees hired on or after this date will receive contributions to a Retiree Health Savings (RHS) Account throughout their years of service, accruing no OPEB liability for the District. As of June 2017, the assets in the District’s OPEB Trust total $2.8 million. As of the most recent actuarial valuation on July 1, 2015, the District’s unfunded accrued liability was $7.1 million. The next actuarial valuation will be conducted as of 7/1/2018.

OPEB Funding Policy As required by GASB 45, an actuary shall conduct an actuarial valuation at least once every three years to determine funding progress as well as employer contributions for the next three fiscal years. The District intends to make periodic contributions to the OPEB Trust throughout each fiscal year which, combined with the pay-go current retiree medical premiums, will equal or exceed the 20-year level contribution amount as provided in the sample funding schedule of the actuarial valuation report. As of the date of this policy, that level contribution amount is $690,900 per year. The District intends to review and amend this funding policy periodically, coincident with preparation of the actuarial valuations, to ensure that the funding policy continues to meet the needs of the District. - 43 -

In order to achieve transparency to District employees, retirees, the Board and Southern Marin residents, the District will make available on the financial section of www.smfd.org, the following information: • • •

The District’s actuarial valuations. The District’s annual audit reports, which contain summarized current and historical information on the District’s OPEB plan, contributions to the OPEB Trust, and the funded status of the plan. The District’s annual operating budget, with clear appropriations to the OPEB Trust and pay-go costs.

All aspects of this Policy are subject to the review and approval of the Board and are subject to change, if deemed appropriate and in the best interests of the District.

Financial Impact The District is already in compliance with this OPEB Funding Policy. To discontinue OPEB contributions as per this policy would negatively impact the OPEB program by eliminating the advantage gained by investment returns in the Trust, and resulting in higher pay-go funding requirements for the next 30 years.

Options Considered 1. Proceed as per this policy by contributing at least the level contributions to the OPEB Trust (as determined by the actuarial valuation) until 2034, at which time the Trust will be fully funded and all contributions can cease. 2. Discontinue funding the OPEB Trust. This would result in lower pay-go requirements in the short-term (the next 10 years), but would result in increasingly escalating pay-go requirements, peaking at $982,000 in 2037 (see Sample Funding Schedule below). 3. Adopt a more aggressive funding policy. Pursuing this strategy would reduce the OPEB liability faster, but could have an adverse impact on the District’s annual budget. The District is already contributing more than the level contribution when budgetary conditions permit.

Recommendations Approval of Southern Marin Fire Protection District’s Other Post-Employment Benefit (OPEB) Funding Policy (Option 1 above).

Approved By

Attachments: Sample Funding Schedule (below)

- 44 -

- 45 -

Policy

Southern Marin Fire District

1200

CA Fire Policy Manual

OPEB Funding Policy 1200.1 PURPOSE

The purpose of this policy is to ensure that the District is proactively addressing its Other Post-Employment Benefit (OPEB) liability by enacting strategies to accumulate adequate resources in a systematic and transparent manner. This policy also demonstrates to employees and the public how OPEB will be funded, provides guidance in making annual budget decisions, and promotes long-term, strategic planning.

1200.2 BACKGROUND

In order to ensure that the District’s OPEB program is sustainable, the District has taken the following measures: •

In June 2011, the District established an irrevocable OPEB Trust for the purpose of prefunding OPEB. All funds contributed to this trust may be used only for retiree medical premiums.

•

In 2013, the District discontinued paying the Medicare surcharge for retirees, thereby decreasing the OPEB liability.

•

Effective January 1, 2014, the District closed the OPEB group by eliminating OPEB benefits for all employees hired on or after January 1, 2014. All employees hired on or after this date will receive contributions to a Retiree Health Savings (RHS) Account throughout their years of service, accruing no OPEB liability for the District.

As of June 2017, the assets in the District’s OPEB Trust total $2.8 million.

As of the most recent actuarial valuation on July 1, 2015, the District’s unfunded accrued liability was $7.1 million. The next actuarial valuation will be conducted as of 7/1/2018.

1200.3 POLICY

As required by GASB 45, an actuary shall conduct an actuarial valuation at least once every three years to determine funding progress as well as employer contributions for the next three fiscal years.

Copyright Lexipol, LLC 2017/07/05, All Rights Reserved. Published with permission by Southern Marin Fire District

***DRAFT*** - 46 -

OPEB Funding Policy - 1

Southern Marin Fire District CA Fire Policy Manual

OPEB Funding Policy

The District intends to make periodic contributions to the OPEB Trust throughout each fiscal year which, combined with the pay-go current retiree medical premiums, will equal or exceed the 20-year level contribution amount as provided in the sample funding schedule of the actuarial valuation report. As of the date of this policy, that level contribution amount is $690,900 per year. The District intends to review and amend this funding policy periodically, coincident with preparation of the actuarial valuations, to ensure that the funding policy continues to meet the needs of the District.

In order to achieve transparency to District employees, retirees, the Board and Southern Marin residents, the District will make available on the financial section of www.smfd.org, the following information:

•

The District’s actuarial valuations.

•

The District’s annual audit reports, which contain summarized current and historical information on the District’s OPEB plan, contributions to the OPEB Trust, and the funded status of the plan.

•

The District’s annual operating budget, with clear appropriations to the OPEB Trust and paygo costs.

All aspects of this Policy are subject to the review and approval of the Board and are subject to change, if deemed appropriate and in the best interests of the District.

Copyright Lexipol, LLC 2017/07/05, All Rights Reserved. Published with permission by Southern Marin Fire District

***DRAFT*** - 47 -

OPEB Funding Policy - 2

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Stephen Willis, Vice President Thomas Perazzo – Dan St. John – Kurt Chun – Christine Waldeck – Peter Fleming New Business Item Date July 19, 2017 Topic Establish a Pension Trust with Public Agency Retirement Services (PARS).

Background The District takes its pension and OPEB obligations very seriously, and continually examines all options to reduce pension and OPEB obligations and annual costs. When feasible and legally permissible, staff recommends responsive pension and OPEB measures that ensure the long-term fiscal viability and resiliency of the District. Currently, the District has an Other Post-Employment Benefits (OPEB) Trust with PARS, for the purpose of pre-funding post-retirement medical benefits. As of 6/30/17 this trust has a balance of $2.8 million that can only be used for OPEB. We propose expanding that trust to include pre-funding the unfunded pension liability through the PARS Pension Rate Stabilization Program (PRSP) in their IRS-approved combination 115 Trust. Assets from the OPEB Trust will be transferred to the combination trust, although the two fund balances will be tracked separately. Some of the measures the District has already taken to reduce pension liabilities include:   

In 2005 we introduced safety tier 2, which changed the formula from 3%@50 to 3%@55, raising the retirement age and thereby decreasing future pension costs. (This measure was encouraged by safety personnel.) In 2013 the District discontinued employee subvention contributions. Employees now pay 100% of their share of retirement contributions, thus reducing the District’s annual retirement costs. Prior to 2013 the District paid 50% of the employees’ portion of retirement contributions. In 2013 the California Public Employees’ Pension Reform Act (PEPRA) took effect, creating a mandatory safety tier with a formula of 2.7%@57 and establishing a cap on the amount of compensation that can be used to calculate a retirement benefit. In addition, the cost of living adjustment (COLA) was reduced from 4% to 3%, and pensions are calculated on a 3-year final average salary computation, instead of 1 year.

Authorizing participation in the Pension Rate Stabilization Program (PRSP) trust with PARS would be another substantial step in continuing to responsibly manage pension costs, and provide a mechanism by which the District will have the option to pre-fund a portion of the unfunded pension liability.

Purpose In the continuing effort to make governments’ long-term liabilities more transparent (for the benefit of governments and taxpayers alike), the Governmental Accounting Standards Board (GASB) Statements 67/68 - 48 -

require that the District disclose its Net Pension Liability (NPL) on the basic financial statements effective 6/30/2015. The District’s NPL as stated on the most recent (6/30/2016) audit is $6.03 million. By establishing a pension trust with PARS, the District would have the option of setting funds aside specifically for the purpose of pre-funding the unfunded pension liability. Pre-funding pension liabilities will provide the District with the following benefits: 

    

Trust assets can be transferred to MCERA at the District’s discretion: In the event of increased retirement contribution rates from MCERA, funds set aside in the PRSP trust could be used to offset the increased costs, thus eliminating fluctuations in the retirement budget from year to year (pension rate stabilization) Contributions and investment earnings in this exclusive pension benefit trust will partially offset the District’s unfunded pension liability. Adding the pension component to the District’s current trust will allow us to combine the assets between the two programs, resulting in lower fees. Potential for positive credit rating agency and investor consideration. Investment flexibility with Section 115 Trust (Govt. Code 53216) compared to restrictions on general fund investments (Govt. Code 53601). Investments can be tailored to the District’s unique demographics. Compliance with financial policy and best practices recommendations supported by the Government Finance Officers Association (GFOA) and other public finance standard setting bodies.

Financial Impact Approving this resolution has no financial impact. This resolution will authorize staff to establish the trust. There is no cost to setup and no fees will be incurred from PARS until funds have been contributed to the trust. Funding the trust in the future will have a cash impact because cash will be withdrawn from the District’s operating fund or cash reserves and deposited into the irrevocable trust account with the trustee. We anticipate offering an analysis and recommendation to the Board for funding the trust at a later date.

Options Considered 1. Approve the resolution to establish a trust for the purpose of pre-funding pension liabilities. Funding strategy to be explored at a later date. 2. Do not establish a pension trust with PARS. Recommendation Staff recommends that the Board approve the Resolution to adopt the Pension Rate Stabilization Program (PRSP) Trust with PARS.

Approved By

Attachments: Resolution

- 49 -

RESOLUTION 2017/2018-1 RESOLUTION OF THE BOARD OF DIRECTORS OF THE SOUTHERN MARIN FIRE PROTECTION DISTRICT APPROVING THE ADOPTION OF THE PUBLIC AGENCIES POST-EMPLOYMENT BENEFITS TRUST ADMINISTERED BY PUBLIC AGENCY RETIREMENT SERVICES (PARS) WHEREAS, the Southern Marin Fire Protection District (the “District”) is currently participating in the Public Agencies Post-Retirement Health Care Plan Trust for the pre-funding of its retiree health benefits and other post-employment benefits other than pension benefits (“OPEB”); and WHEREAS, the District desires to set aside funds for the purpose of pre-fundiang its pension obligation that will be held in trust for the exclusive purpose of making future contributions of the District’s required pension contributions and any employer contributions in excess of such required contributions at the discretion of the District; and WHEREAS, PARS has made available the Public Agencies Post-Employment Benefits Trust (the “Program”) for the purpose of pre-funding both pension obligations and/or OPEB obligations as specified in the District’s plans, policies and/or applicable collective bargaining agreements; and WHEREAS, the District is eligible to participate in the Program, a tax-exempt trust performing an essential governmental function within the meaning of Section 115 of the Internal Revenue Code, as amended, and the Regulations issued there under, and is a tax-exempt trust under the relevant statutory provisions of the State of California; and WHEREAS, the District can manage the pre-funding of its pension and OPEB obligations in a single trust under this Program, thereby gaining administrative and cost efficiencies; and WHEREAS, the District’s adoption and operation of the Program has no effect on any current or former employee’s entitlement to post-employment benefits; and WHEREAS, the terms and conditions of post-employment benefit entitlement, if any, are governed by contracts separate from and independent of the Program; and WHEREAS, the District’s funding of the Program does not, and is not intended to, create any new vested right to any benefit nor strengthen any existing vested right; and WHEREAS, the District reserves the right to make contributions, if any, to the Program. NOW THEREFORE, BE IT RESOLVED, 1.

The Board of Directors of the District hereby adopts the Public Agencies Post-Employment Benefits Trust, effective August 1, 2017; and

2.

The Board of Directors of the District hereby appoints the Finance Manager or his/her successor or his/her designee as the District’s Plan Administrator for the Program, to execute the Board’s instructions for any and all decisions and transactions to be made on behalf of the District; and The District’s Plan Administrator is hereby authorized to execute the PARS legal and administrative documents on behalf of the District and to take whatever additional actions are necessary to maintain the District’s participation in the Program and to maintain compliance of any relevant regulation issued or as may be issued; therefore, authorizing him/her to take whatever additional actions are required to administer the District’s Program; and - 50 -

3.

The Board of Directors of the District hereby authorizes the Plan Administrator, in accordance with Section 3.3 of the Public Agencies Post-Retirement Health Care Plan Trust adopted on June 22, 2011, to withdraw from said trust and direct the transfer of assets held in said trust to the OPEB Account established in the name of the District under the Public Agencies Post-Employment Benefits Trust, adopted herewith.

PASSED AND ADOPTED at a regular meeting of the Board of Directors of the Southern Marin Fire Protection District this 26th day of July, 2017, by the following vote: AYES: NOES: ABSENT: _____________________________________ President, Board of Directors ATTEST: ________________________________ Clerk to the Board

- 51 -

RESOLUTION 2017/2018-2 RESOLUTION OF THE BOARD OF DIRECTORS OF THE SOUTHERN MARIN FIRE PROTECTION DISTRICT ESTABLISHING A TAX RATE AS PER TAMALPAIS FIRE PROTECTION DISTRICT ORDINANCE NO. 15 AND ALTO RICHARDSON BAY FIRE PROTECTION DISTRICT RESOLUTION 96-97-1 WHEREAS, it has been determined by the members of the Board of Directors that, pursuant to the provisions of Section 53978 of the California Government Code, this Board may set a tax rate for the Special Tax on the improved and unimproved property located within this District and; WHEREAS, the Board intends to set the rate to meet the budgetary requirements of $855,000 to maintain the present level of fire protection; NOW, THEREFORE, be it resolved that the tax rate on improved and unimproved property shall be as follows: a) A special tax is imposed on each unimproved parcel in the sum of $45.00. The term “unimproved parcel” shall not include any property submerged by the waters of San Francisco Bay. b) A special tax is hereby imposed upon improved residential property in Zone #9 (formerly the Alto Richardson Bay Fire Protection District) at the rate of $90.00 per living unit. A special tax is hereby imposed upon improved residential property in Zone #4 (formerly Tamalpais Fire Protection District) at the rate of $90.00 thereof used and/or designed exclusively by one family as the phrase “family” is defined in Chapter 22.02 of the Marin County Code. c) A special tax is imposed upon improved business property at the rate of $.12 per square foot of structural improvement. d) A two dollar ($2.00) collection fee as charged by the County of Marin to each parcel.

PASSED AND ADOPTED at a regular meeting of the Board of Directors of the Southern Marin Fire Protection District this 26th day of July, 2017, by the following vote: AYES: NOES: ABSENT:

_____________________________________ President, Board of Directors Southern Marin Fire Protection District

ATTEST: ________________________________ Clerk to the Board

- 52 -

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Thomas Perazzo, Vice President Stephen Willis - Dan St. John – Kurt Chun – Peter Fleming – Christine Waldeck New Business Item Date: July 12, 2017 Topic: Southern Marin Fire District Response to Grand Jury Report – Marin’s Retirement Health Care Benefits: The Money Still Isn’t There Recommendation To accept the attached proposed response and direct Fire Chief to submit the response to Grand Jury as detailed in the Grand Jury Report. Summary In May of this year the Southern Marin Fire District received a Grand Jury report titled, Marin’s Retirement Health Care Benefits: The Money Still Isn’t There The report reviews and assesses the Other Post Employment Benefits (OPEB) of public employees within Marin County. Specifically OPEB benefits are post employment medical benefits. The report states that the Grand Jury’s review of OPEB in Marin County discovered that most public agencies are not adequately saving or implementing best practices for cost containment, warning of the consequences of this. The report concludes with seven separate findings and nine recommendations. The Southern Marin Fire District has been directed to respond to Recommendations R1 – R9. Staff has reviewed the report and assessed the findings and recommendations. Staff has drafted for the Board’s consideration, responses as required by law, to R1 – R9. Financial Impacts: None at this time. Options: None – we must respond to report by August 17, 2017. Background: Reference Attached Grand Jury Report. Approved By

Attachments: 1. Proposed Response to Grand Jury 2. Grand Jury Report – Marin’s Retirement Health Care Benefits: The Money Still Isn’t There

Response to Grand Jury Report: Marin’s Retirement Health Care Benefits: The Money Still Isn’t There. Pursuant to Penal Code Section 933.05, Southern Marin Fire District is required to respond to Recommendations: R1; R2; R3; R4; R5; R6; R7 R8; and R9. R1. Each Agency should adopt a formal, written policy for contributions to its OPEB Plan. We agree. The Southern Marin Fire District recently adopted such a policy and has been following it in practice for the past 3 years, in addition to paying more than the ARC since 2011/12. R2. Each Agency’s standard practice should be to consistently satisfy its formal, written OPEB contribution policy. We agree. Our policy dictates that the sum of our annual pay-go costs and Trust contributions are equal to the level contribution schedule (currently $691,000) as calculated in our actuarial valuation. For the last 3 years, our annual pay-go costs combined with trust contributions have exceeded that amount. R3. Each Agency’s OPEB contribution policy and practice should support a projection under GASB 75 that its OPEB plan assets will be sufficient to make all projected OPEB Benefit payments. We agree. We are currently working with our auditors and actuary to evaluate our OPEB plan under GASB 75 to ensure that the assets will be sufficient to make all projected OPEB benefit payments. R4. Each Agency that uses special reserve funds for Post-Employment Benefits should transition to a Trust Meeting the criteria of GASB 75. We agree. The Southern Marin Fire District transitioned to a section 115 trust in June 2011. This trust meets the criteria of GASB 75. R5. Each term of service, elected or appointed officials of each agency should take a public agency financial class. We agree. New Board Members of the Southern Marin Fire District Board of Directors all attend, at the beginning of their term, the Fire District Association of California’s Board of Directors Class - FDAC Good Governance and Best Practices Program. This program covers all aspects associated with the responsibility of being an elected official. One module of this program is focused solely on finance management of public funds. Additionally, all new Board members, as part of their orientation, receive a resource binder, which includes materials from the FDAC Good Governance and Best Practices Program. The purpose is for Board members to have a reference source readily available. Recently the Fire District implemented a program that provides the FDAC Good Governance and Best Practices Program training on an annual basis. R6. Each Agency should make its CAFRs, Audits and GASB valuations more readily understandable by the general public. We partially agree. While the Southern Marin Fire District seeks to provide all financial data in easy to understand formats; we also recognize that “readily understandable” is in the eye of the beholder and highly subjective. We strive to make all our information as understandable as we can. We are currently developing a document of our GASB valuations and our Audits that we believe will be more understandable by the general public, and posting it to our website. The Southern Marin Fire District labors to provide our community with transparent information about all District finances. As we have detailed in this report and other Grand Jury Reports, the District has implemented measures not recommended by the Grand Jury, that exceed what this and previous Grand Jury Reports have recommended – OpenGov being the most notable example.

R7. Each Agency should ensure that all of its public financial presentations are more readily understandable and scheduled during hours convenient for the public. We agree. The Southern Marin Fire District believes it has not only met this recommendation but has exceeded it. Financial information is available to the general public through a variety of methods, actual and electronic. The District Finance Committee meets monthly. The agenda and committee materials are provided and available to the general public. All finance reports are provided at the Finance Committee meetings, and the Monthly Board Meetings. Additionally, these documents are all available on the Fire District’s website. The Southern Marin Fire District is one of four public agencies in Marin County that use OpenGov™, an online financial portal that provides timely and accurate financial and performance data via the Internet. The Fire District continues to invest in this tool, providing additional tools to the general public. R8. Each Agency should have the following downloadable and text-searchable documents readily accessible on their website: the last five years of CAFRs/Audits and the last three actuarial reports. We agree. The Southern Marin Fire District provides 10 years of audits and all GASB valuations on our website; they are text-searchable PDF files. R9. Before the next round of bargaining begins, each agency should prioritize the cost containment strategies to be used, including reducing or eliminating OPEB benefits for future employees. We agree. The Fire District has in fact, already incorporated this into our business practice. Beginning in the 2012 negotiation process, both labor and management agreed to discontinue the practice of providing the existing OPEB benefits to new employees. In the most recent negotiation process, labor and management agreed to a defined contribution, Retirement Health Savings Account, for every employee hired since January 1, 2014. As a result, today 26% of the Fire District employees are not a part of the OPEB liability. The Fire District has contained this liability and is no longer adding to it.

2016–2017 MARIN COUNTY CIVIL GRAND JURY

Marin’s Retirement Health Care Benefits The Money Still Isn’t There Report Date: May 10, 2017 Public Release Date: May 17, 2017

Marin County Civil Grand Jury

Marin’s Retirement Health Care Benefits The Money Still Isn’t There SUMMARY Four years ago, the Grand Jury released a report titled Marin’s Retirement Health Care Benefits: The Money Isn’t There,1 that discussed the funding of public agency liabilities for retiree health benefits. They discovered that most agencies were neither saving adequately nor implementing best practice cost containment strategies, and warned of the consequences. Since then, some agencies have started paying more attention to their unfunded benefit liabilities and are choosing to prepay at least a portion of their liabilities, as financial advisors recommend. However, while 16 of the 39 agencies we studied in this report collectively decreased their unfunded liability by $108.1 million (the County of Marin reduced its unfunded liability by $88.3 million), the remaining 23 agencies collectively increased their unfunded liability by $41.9 million. This problem has been escalating for years and will not be magically gone tomorrow. Left unchecked, the growing liabilities may eventually challenge agencies’ fiscal health. The Grand Jury recognizes that all agencies face day-to-day operational challenges and that retiree health liabilities are likely not top-of-mind for many agencies. Officials and board members may not be expert at interpreting financial documents nor aware of the long-term implications of retiree health liabilities for their agency’s viability – but they need to be. In this report, we offer strategies to help Marin agencies deal with their Other Postemployment Benefits liability (primarily health benefits) and make it easier for the average person to understand the scope and potential effects of such liabilities on our communities.

1

“Marin’s Retirement Health Care Benefits: The Money Isn’t There.” Marin County Civil Grand Jury. 3 June 2013.

BACKGROUND Public employees are typically granted two retirement benefits: a pension and “Other Postemployment Benefits” (OPEB) – primarily retiree health care. This report is a follow-up to previous OPEB-related Marin County Grand Jury Reports from: 2004-2005,2 2006-2007,3 and 2012-2013.4 We wanted to see how local public agencies’ OPEB liabilities have changed since the 2012-2013 Report, and examine the impact of OPEB on agencies' financial health.

METHODOLOGY The Grand Jury, in order to understand the financial and historical details of OPEB plans: ■ Reviewed Marin County Civil Grand Jury OPEB-related reports and agency responses: 2004-2005, 2006-2007, and 2012-2013. ■ Distributed detailed financial questionnaires (and analyzed responses) to the same public agencies surveyed in the 2012-2013 Grand Jury Report (see Appendix A: OPEB Questionnaire to Public Agencies). ■ Researched OPEB legal issues. ■ Reviewed OPEB-related Governmental Accounting Standards Board Statements 43, 45, 74, and 75 (GASB 43, GASB 45, GASB 74, and GASB 75) and related literature. ■ Analyzed all Comprehensive Annual Financial Reports (CAFRs) and audits of public agencies since Fiscal Year 2012. ■ Analyzed GASB 45 Actuarial Valuations of OPEB benefits and liabilities, prepared for public agencies. ■ Watched city/town council audit and financial presentations. ■ Interviewed agency staff and consultants involved with the actuarial process. ■ Surveyed literature for examples and best practices of OPEB.

2

“The Bloated Retirement Plans of Marin County, Its Cities and Towns.” Marin County Civil Grand Jury. 9 May 2005. 3 “Retiree Health Care Costs: I Think I’m Gonna Be Sick.” Marin County Civil Grand Jury. 19 March 2007. 4 “Marin’s Retirement Health Care Benefits: The Money Isn’t There.” Marin County Civil Grand Jury. 3 June 2013.

May 10, 2017

Marin County Civil Grand Jury

Page 2 of 37

DISCUSSION If a public agency provides an employee with Other Postemployment Benefits (OPEB), and the employee meets specified periods of service and age, the agency will pay these benefits upon retirement to the employee (and to his/her spouse and/or dependents under some OPEB plans). The liability for providing these benefits is determined by an actuary and reported in an actuarial valuation. In accounting terminology, such a future financial obligation is called an Actuarial Accrued Liability (AAL). If an agency does not annually prepay their actuarialdetermined Annual Required Contribution (ARC), the agency creates an Unfunded Actuarial Accrued Liability (UAAL).

Retiree Health Care OPEB “principally involve health care benefits, but also may include life insurance, disability, legal and other services.”5 Health care insurance costs continue to rise. These increased costs affect both the active employees and retirees. Public agencies blend employees and retirees into a single health care plan to calculate a premium that applies to both groups. The blending causes active employees, who are statistically healthier, to pay more for their health care to defray some of the additional costs of retiree health care. The additional cost of retiree claims is called an implied rate subsidy. If retiree health insurance costs rise, and employees are not charged sufficient premiums, then the public agency will have increased liabilities from the implied rate subsidy shortfall.

From: “Retiree Health Care: A Cost Containment How-To Guide.” League of California Cities. Sep. 2016

5

“Other Postemployment Benefits (OPEB).” Governmental Accounting Standards Board.

May 10, 2017

Marin County Civil Grand Jury

Page 3 of 37

Prefunding vs. Pay-As-You-Go Public agencies can choose to either prefund their Actuarial Accrued Liability (AAL) or pay the annual retiree benefits as they come due (pay-as-you-go or pay-go). Prefunding into an OPEB trust fund allows the contributions to be invested, which can further reduce both the agency’s AAL and Unfunded Actuarial Accrued Liability (UAAL). While prefunding is a smart long-term strategy, it may affect an agency’s ability to pay its short-term bills. That is why some agencies choose pay-go – they do not have a sufficient budget or adequate cash flow. Basic aid school districts6 for example, depend upon local property tax distribution to cover both their short-term and long-term obligations. Nevertheless, prefunding OPEB liabilities is a widely accepted best practice. As the Government Finance Officers Association (GFOA) states, “It is widely acknowledged that the appropriate way to attain reasonable assurance that benefits will remain sustainable is for a government to accumulate resources for future benefit payments in a systematic and disciplined manner during the active service life of the benefitting employees.”7 The following graph shows a hypothetical example of the annual cost for an agency’s OPEB payments8 for a closed group (no new employees) and illustrates how prefunding could be less expensive than pay-go, using 7.25% as the assumed rate of return on investments:

6

Weston, Margaret. “Basic Aid School Districts.” Public Policy Institute of California. September 2013.

7

“Sustainable Funding Practices for Defined Benefit Pensions and Other Postemployment Benefits (OPEB).” Government Finance Officers Association. January 2016. 8 “Establishing an OPEB trust fund.” Milliman, Inc. 2014.

May 10, 2017

Marin County Civil Grand Jury

Page 4 of 37

The Actuarial Valuation Process Actuaries prepare their valuations using Actuarial Standards of Practice and applicable standards of the Governmental Accounting Standards Board (GASB). The accounting standards are issued as implementation guides. During the 2012-2016 time period, actuaries followed the GASB 459 implementation. The purposes of a GASB 45 actuarial valuation include: ■ Informing an agency of its retiree benefits’ financial future obligations, ■ Determining how much an agency should consistently prefund to ensure there will be sufficient funding for the retirees’ benefits, and ■ Determining and measuring the funded status and funding progress of an OPEB plan. The agency initiates the actuarial valuation process by providing basic data to the actuarial consultant, including: ■ Agency overview: agency directions and intentions for the valuation. ■ Valuation data: employee data, updates to health & welfare benefits and/or Memorandums of Understanding (MOUs), new resolutions about agency contributions, plan summaries and rates, and retiree benefits and other contributions paid recently. ■ Assumptions: rates of retirement, termination, disability, mortality, prefunding, and discount rates. Within a few months, the actuary arrives at a draft actuarial valuation report. The draft is shared with the finance or budget director, who can correct misunderstandings or misinterpretations. The final (GASB 45) valuation report is then used in the preparation of annual Comprehensive Annual Financial Reports (CAFRs) (See Appendix B: Example Actuarial Valuation Certification.) For agencies that have 200 or more employees, GASB 45 requires actuarial valuations at least biennially, and for smaller agencies at least triennially.

9

“Statement No. 45 of the Governmental Accounting Standards Board: Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.” Governmental Accounting Standards Board. June 2004.

May 10, 2017

Marin County Civil Grand Jury

Page 5 of 37

What Has Changed Since the 2012-2013 Report? In the 2012-2013 report “Marin’s Retirement Health Care Benefits: The Money Isn’t There,”10 the 2012-2013 Marin County Grand Jury reviewed the OPEB funding status of 40 local government agencies. Since one agency (Sewerage Agency of Southern Marin) responded that it was staffed by City of Mill Valley employees, only 39 agencies were examined. This year’s Grand Jury compared the financial information published in agencies’ Audits and Comprehensive Annual Financial Reports (CAFRs) for Fiscal Year 2012 (FY 2012) and FY 2016. (For an example of locating OPEB financial data, please see Appendix C: Finding Key OPEB Information in CAFRs or Audits.) By this comparison, the Grand Jury discovered: OPEB Highlights

FY2012

# of agencies that funded over 5% of their liability

FY 2016 11

18

2

0

26

21

$630.7 Million

$650.2 Million

$24.6 Million

$110.2 Million

Collective Unfunded Actuarial Accrued Liability (UAAL)

$606.1 Million

$540.0 Million

Collective Unfunded Actuarial Accrued Liability (UAAL) excluding County of Marin

$223.4 Million

$245.7 Million

# of agencies that funded between 1-5% of their liability # of agencies that had not funded any of their liability Collective 39-agency liability (AAL) Collectively set aside (OPEB plan assets)

Because agencies have very different budgets, we chose to compare liabilities as the percentage Unfunded Actuarial Accrued Liability (UAAL) change from Fiscal Year FY 2012 to FY 2016. As of April 19, 2017, the City of Larkspur, the Town of Fairfax, and the Central Marin Police Authority had not released their FY 2016 CAFRs. For those agencies, we therefore needed to use their “older” FY 2015 financial data and applicable GASB 45 actuarial valuation data instead. Those agencies are indicated with an asterisk [*] following their names throughout this report.

10

“Marin’s Retirement Health Care Benefits: The Money Isn’t There.” Marin County Civil Grand Jury. 22 May 2013.

May 10, 2017

Marin County Civil Grand Jury

Page 6 of 37

By reviewing agencies’ published financial documents, we were able to prove that the agencies reduced their unfunded liability by a combination of actions:

May 10, 2017

Marin County Civil Grand Jury

Page 7 of 37

■

Fully contributing their Annual Required Contribution (ARC) and establishing an investment account. By keeping up-to-date with actuarial payments, future financial obligations are kept in check.

■

Setting aside “substantial assets” for OPEB liability. Putting aside more money into a trust account for future OPEB benefits reduces the unfunded liability.

Since FY 2012, the overall unfunded liability of $606.1 million (UAAL) was reduced to $540.0 million. However, for agencies that have increased their UAAL, we found two basic causes: ■ Underfunding the Annual Required Contribution (ARC). Agencies that opt to use pay-go and not completely fund their ARC, compound their UAAL each year (i.e., it grows). ■ Not Reporting Implied Rate Subsidies. As described previously, the implied rate subsidy effectively requires public agencies to calculate an implied liability whenever their retirees participate in group medical plans, but pay the same premiums as active employees. Effective March 31, 2015, all actuarial valuations must include the implicit subsidy liability.11

The Liability Fear Newspapers regularly cover the looming unfunded pension crisis across America. Where will the money come from to pay the retirees’ pension? Less commonly reported is the looming unfunded OPEB crisis. “The logic has been that the OPEB funding problem is 25 years old, so it can wait another year or two — even though procrastinating simply makes the liabilities mushroom … The problem of zero-funded OPEB plans is often ignored.”12 In Marin County, for the 39 agencies we studied, the unfunded pension liability is $956.3 Million and the unfunded OPEB liability (UAAL) is $540.0 Million. Agencies need to look at their future budgets to decide if they will be able to pay an increasingly larger UAAL obligation. If they can, then the unfunded liability is simply an anticipated expense. If they cannot, then the unfunded liability is a much more urgent issue. To give some insight into the agency’s potential challenge paying off its UAAL obligation, we compared each agency’s most recent Annual Required Contribution (ARC) with its most recent total revenue. See Appendices D (municipalities), E (school districts), and F (special districts) for details. If an agency does not plan sufficiently for paying their OPEB liability, citizens may be asked to make hard choices: ■

Agencies may try to find the money. Agencies may reduce services (“crowd-out”), increase fees, attempt to raise taxes or issue bonds (with voter approval). If an agency

11

“Actuarial Standard of Practice No. 6.” Actuarial Standards Board. May 2014.

12

Miller, Girard and Link, Jim. ‘“New Normal” Retirement Plan Designs.’ Government Finance Review. Aug. 2009.

May 10, 2017

Marin County Civil Grand Jury

Page 8 of 37

proposes new taxes or bonds which may be used to reduce OPEB debt, the Grand Jury believes it should fully disclose that purpose, and not use language that is “virtually impenetrable, written by lawyers for lawyers who are also accountants.”13 ■

Retiree benefits may be reduced. “However, unlike pensions, OPEBs are typically not guaranteed or protected by state law. State and local governments have much more latitude to scale back OPEBs and share OPEB-related costs with retirees. Many have implemented several changes to that effect.”14

Approaching Cost Containment Over the years, many organizations have investigated reducing OPEB liabilities through cost containment strategies. Because of legal and political issues, these strategies may not be appropriate for every public agency. Rather than limit agencies to specific strategies, the Grand Jury wants to ensure that decision makers in the agencies are aware of the breadth and depth of these options to better inform any future liability-reducing actions. In 2006, Governor Schwarzenegger established the Public Employee Post-Employment Benefits Commission15 to identify the extent of unfunded OPEB liabilities and evaluate approaches for addressing the liabilities. The 34 recommendations contained in the Commission’s final report addressed both pension and OPEB funding. While some of these recommendations are now legally required or obsolete, the Grand Jury believes two recommendations are still warranted today: ✓ Public agencies providing OPEB benefits should adopt prefunding as their policy. As a policy, prefunding OPEB benefits is just as important as prefunding pensions. The ultimate goal of a prefunding policy should be to achieve full funding. ✓ Any employer considering the use of OPEB bonds should fully understand, and make public, the potential risks they bring. Such risks include: shifting costs to future generations and converting a future estimated OPEB liability into fixed indebtedness. In 2015, Smart Business Magazine highlighted cost containment strategies16 for company employee benefits, including: ✓ Consumer-Directed Health Plans (CDHPs). Combines a high-deductible plan with a health savings account. ✓ Adding Voluntary Benefits. Employees can add benefits as-needed with pre-tax dollars.

13

Herhold, Scott. “How ballot questions for bonds mislead voters.” The Mercury News. 22 Aug. 2016.

14

“Effective Advocacy & Key City Issues.” League of California Cities. 20 Jan. 2016.

15

“Funding Pensions & Retiree Health Care for Public Employees.” Public Employee Post-Employment Benefits Commission. Jan. 2008. 16 Pritts, Craig. “Benefit Renewals: Cost containment strategies that can control your health care costs.” Smart Business Pittsburgh. Sep. 2015.

May 10, 2017

Marin County Civil Grand Jury

Page 9 of 37

✓ Self-Funding the Health Plan. Employers directly pay for health care claims, and reduce their financial risk by purchasing stop loss insurance from an insurance carrier. ✓ Expanding Wellness Programs. Reportedly, 75% of health costs are preventable. ✓ Reduce Spousal Subsidies or Add Spousal Surcharges. In 2016, the League of California Cities OPEB Task Force17 listed a number of strategies that agencies could consider to reduce OPEB costs. The Grand Jury agrees that these strategies should be examined: ✓ Benefit Changes for Future Employees. Reduce benefits for new hires. ✓ Benefit Changes for Existing Employees. Reduce benefits for current employees (not retirees). ✓ Change Contributions to Fixed Amounts. Instead of paying a percentage of premiums, agencies would pay a fixed dollar amount as premiums increase. ✓ Limit Duration of Retiree Medical Benefit. Medical benefits would only extend until the retiree is eligible for Medicare. ✓ Close the Benefit to New Employees. Remove the benefit for new hires. ✓ Adopt or Increase Tenure Requirements. Require longer employment tenure before being eligible for benefits. ✓ Cover Only Retirees. Currently public agencies may cover the retiree’s dependents as well. ✓ Make Agency Insurance Secondary. If the retiree has access to additional health care (from a spouse, previous employer, or veteran’s program), use that primarily. ✓ Eliminate Retiree Health Care for New Employees. As pensions have become more generous, require retirees to pay for their own health care. ✓ Buy Down/Buy Out Benefits. Public agencies would pay a lump sum to reduce or eliminate their health care benefit. ✓ Adjust Health Care Plans. Changing the health care plans offered can reduce both employee and retiree health costs. ✓ League Health Benefits Marketplace (Exchange). This plan “provides cities the flexibility lacking in other group coverage medical plan designs to decouple and unbundle active employee and retiree costs, which is key to reducing OPEB liabilities.”18 ✓ Audit Retiree Medical Benefits. Ensure benefits are both compliant and not duplicative. 17

“Retiree Health Care: A Cost Containment How-To Guide.” League of California Cities. Sep. 2016

18

“Health Benefits Marketplace.” League of California Cities. Accessed Feb 2017.

May 10, 2017

Marin County Civil Grand Jury

Page 10 of 37

✓ Enroll Retirees in Medicare Part A. To the extent that some retirees are ineligible for full Medicare coverage and must pay for Medicare Part A, it may be more cost effective to pay for their enrollment in Part A. ✓ Utilize Federally Subsidized Prescription Plan for Medicare Retirees. As possible, use available subsidies. The Grand Jury recognizes that there is no one-size-fits-all acceptable solution to reduce unfunded OPEB liabilities, and that changing benefits requires a dialogue not only with agency staff but also union representatives. Therefore, we encourage agencies to clearly articulate the risk that the promised retiree benefits may not be able to be funded and to work with unions and staff to create a solution that is sustainable and fair for all parties, including the public.

Making a Dent The Grand Jury found that some agencies have made notable reductions in their unfunded liability (UAAL) and are implementing best practice cost containment strategies. Their efforts are highlighted below, as reported in their financial statements and actuarial valuations. The valuation dates shown in the charts are from the agencies’ actual valuation reports. Marin Community College District’s UAAL

Marin Community College District (“College of Marin”) decreased its UAAL by changing its OPEB funding policy. Through FY 2012, the district operated its OPEB plan solely on a pay-asyou-go basis (“pay-go”). However, during FY 2013, it established an irrevocable trust with the California Employers’ Retiree Benefit Trust (CERBT) to prefund its OPEB costs through CalPERS, in addition to its regular pay-go costs. County of Marin’s UAAL

According to the CAFRs and actuarial valuations, the County of Marin accomplished its improvements primarily by changing its OPEB funding policy. Through FY 2012, the County was a pay-go funder but had also contributed to a reserve intended to be used to fund its OPEB plan. In February 2013, the County entered into an irrevocable trust agreement with the CERBT to prefund the County’s OPEB costs through CalPERS, in addition to the regular pay-go

May 10, 2017

Marin County Civil Grand Jury

Page 11 of 37

contributions. The County transferred the reserve balance to the CERBT and began prefunding its full ARC during FY 2013. From FY 2013 through FY 2016, the County contributed 103.57% of its total ARC for that period. The most recent actuarial valuation reflects that the County also decreased its AAL by another factor within its control. It did not increase the maximum benefit for retirees eligible for its OPEB “Plan 3”: retirees hired between October 1, 1993 and December 31, 2007 and those hired earlier who elect Plan 3. Central Marin Sanitation Agency’s UAAL

Before FY 2012, the Central Marin Sanitation Agency (CMSA) contracted with CalPERS to administer its OPEB plan and entered into an irrevocable trust agreement with the CERBT to prefund future OPEB costs. City of Mill Valley’s UAAL

Through FY 2014, the City of Mill Valley’s CAFRs reflect that the City was funding its OPEB on a pay-go basis, plus some amounts to its trust account to prefund future OPEB costs. The most recent actuarial valuation noted the City’s increased trust account contributions and the City’s intent to consistently make total OPEB contributions greater than or equal to ARC each year. During 2013, Mill Valley implemented two OPEB cost-containment methods for new employees: (1) it increased their length of service required to be eligible for OPEB from 15 years to 20 years; and (2) it restricted any OPEB benefit to the employee only. In March 2017, the City started public discussions to eliminate OPEB benefits for American Federation of State, County and Municipal Employees (AFSCME) union members hired after January 1, 2017 and establishing a Retiree Health Savings Account, which is estimated to save $3,000/year for each employee.

May 10, 2017

Marin County Civil Grand Jury

Page 12 of 37

Novato Fire Protection District’s UAAL

Starting in FY 2012, the Novato Fire Protection District (NFPD) has contributed 110.49% of its total ARC. The District implemented a cost-containment method providing that a retiree reaching age 65 must change to Medicare, pay its premiums, and has the option to select a Medicare supplement plan through the district. However, NFPD will only pay a maximum of 80% of the applicable Kaiser Medicare supplemental rate.

A Fund Which Would Make a Dent The Grand Jury also found that at least three school districts in Marin County have established substantial Special Reserve Funds for OPEB: Mill Valley School District’s UAAL

San Rafael Elementary School District’s UAAL

San Rafael City High School School District’s UAAL

California law authorizes these funds and many school districts throughout the state have them. They are commonly referred to as a Fund 20, Special Reserve Fund for Postemployment Benefits. Such Funds may be an important step in financing future benefits, and these school districts should be commended for establishing a Fund 20. However, funds set aside for future benefits (as opposed to pay-go costs) should be considered contributions to an OPEB plan only “if the vehicle established is one that is capable of building assets that are separate from and independent of the control of the employer and legally protected from its creditors. Furthermore, the sole purpose of the assets should be to provide benefits under the plan. These conditions

May 10, 2017

Marin County Civil Grand Jury

Page 13 of 37

generally require the establishment of a legal trust.”19 The Mill Valley School District should also be commended for establishing a trust with CERBT. Yet, if a school district deposits its Fund 20 balance into a trust, the district will reduce (or further reduce) its UAAL.

GASB 75 Most Marin agencies began implementing Governmental Accounting Standards (GASB) Statement 45 for their OPEB financial reporting on July 1, 2009. Beginning July 1, 2017, agencies will switch to using GASB 75. The changes to OPEB reporting are similar to changes in the GASB reporting of net pension liability (GASB 67 and 68). It states, “Employers that participate in a defined benefit pension plan administered as a trust or equivalent arrangement are required to record the net pension liability, pension expense, and deferred outflows/deferred inflows of resources related to pensions in their financial statements as part of their financial position.”20 These changes have increased financial scrutiny, and triggered public agencies across the United States to make changes to their pension funding strategies.21 The primary objective of GASB 75 is to improve governmental accounting and financial reporting for OPEB, by improving the consistency, comparability and transparency of the information reported. 22 The new reporting standards will cause actuaries to change how they prepare their OPEB valuations and cause agencies to change their financial reporting. (See Appendix G: GASB 45 vs. 75 Overview for more details.) Three important changes are GASB 75’s requirements for biennial actuarial valuations, balance sheet liability reporting, and single blended discount rate. Biennial Actuarial Valuations. GASB 75 requires all agencies to obtain OPEB actuarial valuations biennially. In contrast, GASB 45 allowed agencies having fewer than 200 OPEB plan members to obtain such valuations triennially. This change affects several Marin agencies. Balance Sheet Liability Reporting. GASB 75 requires agencies to report their Net OPEB Liability (NOL) for agencies with an OPEB trust, or Total OPEB Liability (TOL) for agencies that do not have an OPEB trust, upfront on the face of their balance sheets. NOL and TOL are the equivalent of UAAL and AAL under GASB 45 with some technical differences. GASB 75 also requires disclosure of how and why OPEB liability changed from year to year. Single Blended Discount Rate. The discount rate is the rate used to discount future benefit payments (i.e. actuarial accrued liability) to a present value. A lower rate increases that liability, and a higher rate decreases that liability. Both GASB 45 and GASB 75 permit having higher 19

“City of Mill Valley, Actuarial Valuation of Other Post-Employment Benefit Programs As of July 1, 2014” Bickmore. Aug. 2015 20 “Notes to the Agent Multiple-Employer Defined Benefit Pension Plan GASB 68 Accounting Valuation Reports.” California Public Employees Retirement System. 30 Jun. 2016. 21 Farmer, Liz and Maciag, Mike. “Why Some Public Pensions Could Soon Look Much Worse.” Governing. 17 Mar. 2015. 22

“Summary of Statement No. 75: Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.” Governmental Accounting Standards Board. June 2015.

May 10, 2017

Marin County Civil Grand Jury

Page 14 of 37

long-term discount rates with full prefunding over the amortization period and plan assets exist. However, GASB 75 requires a single blended discount rate if the plan has some assets, but is projected to be insufficient to make benefit payments at some future point. The single rate combines the long-term rate when assets are projected to cover the payments and a municipal bond (lower) rate when assets are projected to be insufficient. The Grand Jury also notes that actuaries determined an Annual Required Contribution (ARC) under GASB 45, while GASB 75 uses the term Actuarially Determined Contribution (ADC). However, both terms have a similar meaning. The ARC represents a target contribution required to ensure there are sufficient savings to finance and cover the promised OPEB.23 GASB 75 similarly defines the ADC as also representing a target contribution to an OPEB plan, determined in conformity with Actuarial Standards of Practice (ASOP). ASOP No. 6, adopted in 2014, defines the ADC as a potential payment to prefund an OPEB plan, using a contribution allocation procedure that may include an amortization method.24 The ARC method may be used for the ADC.25 The Grand Jury believes that GASB 75 will cause a local public agency’s financial situation to look much worse. The agency “should expect a larger total OPEB liability because the single blended rate calculated under [GASB] 75 is likely to be lower than the discount rate under existing standards.”26 “The recognition of the Net OPEB Liability in the employer’s financial statements will likely be a significant increase in the amount of liability that was reported under prior GASB standards.”27 This change will likely increase scrutiny of the agencies’ balance sheet OPEB obligations, and force agencies to focus on addressing these liabilities. For example, the previous section (“Making a Dent”) shows that agencies following full prefunding policies with plan assets achieve the goal of reducing their unfunded OPEB liabilities. Under GASB 75, an agency can reach that goal with a prefunding policy and practice supporting a projection that plan assets will be sufficient to make all projected benefit payments.

“It’s Hard to Wrap Your Head Around This!” – Marin County Elected Official “One of the most important responsibilities a local elected official has is oversight of the agency’s spending.”28 However, understanding the ins-and-outs of financial and actuarial standards imposed on public agencies is not easy, as evidenced by the (above) official’s exclamation. Even if an elected official has business financial expertise, the standards that guide 23

"Guide to Implementation of GASB Statements 43 and 45 on Other Postemployment Benefits." Governmental Accounting Standards Board. 2005. 24 “Actuarial Standard of Practice No. 6.” Actuarial Standards Board. May 2014. 25

"GASB Approves New OPEB Employer Accounting Standard (No. 75)." Bartel Associates. July 2015.

26

McAllister, Brian and Spinellli, Connie and Belger, Diane. “Getting familiar with OPEB.” Journal of Accountancy. 1 Aug. 2016. 27 “GASB Issues Two Other Postemployment Benefit (OPEB) Related Exposure Drafts.” Milliman. Aug. 2014. 28

“Budgeting and Finance.” Institute for Local Government. Accessed Feb. 2017.

May 10, 2017

Marin County Civil Grand Jury

Page 15 of 37

public agencies differ significantly. If an elected official has trouble understanding these concepts, how can the average citizen hope to understand the annual Comprehensive Annual Financial Reports (CAFRs), budgets, or Audits? “Relatively few educational opportunities are provided to help trustees and policy makers understand how liabilities are calculated, in the role and sensitivity of actuarial assumptions, the impact that amortization periods and actuarial smoothing have on the retirement plan’s shortterm and long-term contribution rates, and of the full meaning of a plan’s funded status.”29 Therefore, the Grand Jury recommends that public agencies improve both their financial literacy and transparency: ■ Elected officials should take (and invite the public to attend) a financial literacy class such as one offered by: League of California Cities,30,31 UC Davis,32 ICMA University,33 Government Finance Officers Association,34 or the California State Association of Counties.35 ■ Financial documents issued by public agencies should be made easier to understand by the average resident. ■ Public financial presentations both by and to public agencies should be easier to understand. For example, the Government Finance Officers Association has established best practices for budget documents,36 and annually recognizes agencies with “Distinguished Presentation Awards.” Governing Magazine’s “Guide to Financial Literacy: Connecting Money, Policy and Priorities,”37 explains not only the terminology and purpose of various financial documents, it also offers essential questions that leaders should know to ask. Additional examples of classes and presentations can also be found in Appendix H (Example Financial Literacy Classes and Presentations).

29

Kehler, David. “Public Pension Plan Financing: The Devil’s in the Actuarial Details.” Society of Actuaries. 2010.

30

“New Mayors & Council Members Academy.” League of California Cities. Accessed Mar. 2017.

31

“Municipal Finance Institute.” League of California Cities. Accessed Mar. 2017.

32

Brinkley, Dr. Catherine. “Community Governance.” UC Davis. Spring 2016.

33

“Local Government 101 Online Certificate Program.” ICMA University.

34

“Government Finance Officers Association Training.” Government Finance Officers Association.

35

“California State Association of Counties Upcoming Courses.” California State Association of Counties.

36

“Making the Budget Document Easier to Understand.” Government Finance Officers Association. Feb 2014.

37

Marlowe, Justin. “Guide to Financial Literacy: Connecting Money, Policy and Priorities.” Governing. 2014.

May 10, 2017

Marin County Civil Grand Jury

Page 16 of 37

We Are Not Alone Marin County’s public agencies are not unique in facing the challenges of OPEB liabilities. “Total unfunded state other postemployment (OPEB) liabilities have increased, according to S&P Global Ratings' latest survey of U.S. states. For states that have completed new OPEB actuarial studies since our last survey (which used 2013 or prior studies), total liabilities increased $59.4 billion, or 12% over a span of two years.”38 In January 2016, California Controller Betty Yee “pegged the state’s unfunded liability for other post-employment benefits (OPEB) at $74.1 billion. That’s how much it will cost to allow workers to stay on their health plans after they retire until they’re eligible for Medicare, subsidize their premiums, and then provide them with supplemental benefits after Medicare kicks in. The benefit’s value can exceed $16,000 in the case of married couples and $20,000 in the case of retirees with children.”39 The City of San Luis Obispo (California) reduced their 2009 estimated $5.9 million OPEB liability to $4.2 million by changing their amortization period and changing from pay-go to prefunding their Annual Required Contribution (ARC). In January 2010, the City of Beverly Hills (California) eliminated OPEB liabilities for new non-safety hires by shifting from a defined benefit health plan to a defined contribution retiree health plan.40 South Lake Tahoe (California) collaborated with its stakeholders to reduce OPEB liability by 73 percent by creating a new insurance plan.41

Sharing Our Data Despite the fact that agencies’ OPEB financial documents are publicly available, the Grand Jury spent an enormous effort to gather the documents (not all of the documents were available online, nor text-searchable), extract the data, and analyze it. With the rise of the Open Data Movement (examples include: Data.gov, the Data Foundation, OpenGov, Marin County’s Open Data Portal, and the City of Sausalito’s Budget Transparency Tool), we wanted other organizations – including future Grand Juries – to be able to leverage our public data. Therefore, we have created a data portal consisting of all the Comprehensive Annual Financial Reports (CAFRs) and Audits for the 39 agencies we researched for FY 2011– FY 2016 along with a spreadsheet containing validated data extracted from those and other financial reports (including Annual Required Contributions (ARCs), discount rates, amortization periods, and the change of assets, liabilities, and unfunded liability). This information is available online, for free access here: https://goo.gl/fSqOfX. 38

Spain, Carol. “Rising U.S. State Post-Employment Benefit Liabilities Signal An Unsustainable Trend.” Standard and Poors. 7 Sep. 2016. 39 Eide, Stephen and Disalvo, Daniel. “Phase out costly perks for retired state workers.” San Diego Union Tribune. 1 Apr 2016. 40

“Retiree Health Care: A Cost Containment How-To Guide.” League of California Cities. Sep. 2016

41

Kerry, Nancy. “Reducing Unfunded Liabilities for Other Post-Employment Benefits.” Western City. May 2015.

May 10, 2017

Marin County Civil Grand Jury

Page 17 of 37

CONCLUSION Other Postemployment Benefits (OPEB) are just one of many financial obligations that public agencies face. Since the amount of the Annual Required Contribution (ARC) is a relatively small percentage for many agencies’ annual total revenue, it is easy for them to not be too concerned (especially when faced by a much larger underfunded pension benefit). However, unlike pensions, agencies have more opportunities to reduce their OPEB obligations. The Grand Jury sees the delicate balance that agencies are facing: attracting new employees, negotiating with existing employees and retirees, and responsibly managing expenses in the public’s interest. While some Marin agencies continue to reduce their unfunded OPEB liability, we are concerned that many agencies still have not yet done so. We hope that this report will give the agencies the additional reminders and tools to address this looming financial burden before more drastic measures need to be taken.

FINDINGS F1.

Many of the municipalities have decreased their UAAL obligation since FY 2012.

F2.

Some of the schools that have increased their UAAL obligation (since FY 2012) are setting aside OPEB contributions into reserve funds (rather than irrevocable trust funds).

F3.

Many of the special districts have increased their UAAL obligation since FY 2012.

F4.

Some of the agencies that stated they comply with their actuarial funding guidelines, are not in compliance as shown in their CAFRs.

F5.

GASB 45 has increased the agency’s reporting transparency, but the information in these financial reports is difficult for the average person to understand.

F6.

GASB 45 permits an agency with a full ARC funding policy in its GASB 45 valuation to increase its discount rate, thereby decreasing its OPEB liability and ARC payments.

F7.

Upcoming GASB 75 reporting will further improve an agency’s OPEB reporting transparency.

RECOMMENDATIONS R1.

Each agency should adopt a formal, written policy for contributions to its OPEB plan.

R2.

Each agency’s standard practice should be to consistently satisfy its formal, written OPEB contribution policy.

May 10, 2017

Marin County Civil Grand Jury

Page 18 of 37

R3.

Each agency’s OPEB contribution policy and practice should support a projection under GASB 75 that its OPEB plan assets will be sufficient to make all projected OPEB benefit payments.

R4.

Each agency that uses special reserve funds for Postemployment Benefits should transition to a trust meeting the criteria of GASB 75.

R5.

Each term of service, elected or appointed officials of each agency should take a public agency financial class.

R6.

Each agency should make its CAFRs, Audits, and GASB valuations more readily understandable by the general public.

R7.

Each agency should ensure that all of its public financial presentations are more readily understandable and scheduled during hours convenient for the public.

R8.

Each agency should have the following downloadable and text-searchable documents readily accessible on their website: the last five years of CAFRs/Audits and the last three actuarial reports.

R9.

Before the next round of bargaining begins, each agency should prioritize the cost containment strategies to be used, including reducing or eliminating OPEB benefits for future employees.

REQUEST FOR RESPONSES Pursuant to Penal code section 933.05, the grand jury requests responses as follows: From the following governing bodies: Municipalities ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

City of Belvedere (R1-R9) City of Larkspur (R1-R9) City of Mill Valley (R1-R9) City of Novato (R1-R9) City of San Rafael (R1-R9) City of Sausalito (R1-R9) County of Marin (R1-R9) Town of Corte Madera (R1-R9) Town of Fairfax (R1-R9) Town of Ross (R1-R9) Town of San Anselmo (R1-R9) Town of Tiburon (R1-R9)

May 10, 2017

Marin County Civil Grand Jury

Page 19 of 37

School Districts ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Dixie Elementary School District (R1-R9) Kentfield School District (R1-R9) Larkspur-Corte Madera School District (R1-R9) Marin Community College District (R1-R9) Mill Valley School District (R1-R9) Novato Unified School District (R1-R9) Reed Union School District (R1-R9) Ross School District (R1-R9) Ross Valley School District (R1-R9) San Rafael City Schools (R1-R9) Shoreline Unified School District (R1-R9) Tamalpais Union High School District (R1-R9)

Special Districts ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Central Marin Police Authority (R1-R9) Central Marin Sanitation Agency (R1-R9) Kentfield Fire Protection District (R1-R9) Las Gallinas Valley Sanitary District (R1-R9) Marin Municipal Water District (R1-R9) Marin/Sonoma Mosquito & Vector Control District (R1-R9) Marinwood Community Services District (R1-R9) North Marin Water District (R1-R9) Novato Fire Protection District (R1-R9) Novato Sanitary District (R1-R9) Ross Valley Fire Department (R1-R9) Ross Valley Sanitary District (R1-R9) Southern Marin Fire Protection District (R1-R9) Tiburon Fire Protection District (R1-R9)

The governing bodies indicated above should be aware that the comment or response of the governing body must be conducted in accordance with Penal Code section 933 (c) and subject to the notice, agenda and open meeting requirements of the Brown Act. Note: At the time this report was prepared information was available at the websites listed.

Reports issued by the Civil Grand Jury do not identify individuals interviewed. Penal Code Section 929 requires that reports of the Grand Jury not contain the name of any person or facts leading to the identity of any person who provides information to the Civil Grand Jury. The California State Legislature has stated that it intends the provisions of Penal Code Section 929 prohibiting disclosure of witness identities to encourage full candor in testimony in Grand Jury investigations by protecting the privacy and confidentiality of those who participate in any Civil Grand Jury investigation.

May 10, 2017

Marin County Civil Grand Jury

Page 20 of 37

GLOSSARY Actuary: A professional dealing with the assessment and management of risk for financial investments, insurance policies, and any other ventures involving a measure of uncertainty.42 Actuarial Accrued Liability (AAL): The portion of the actuarial present value benefits allocated to prior years of employment—and thus not provided for by future normal costs.43 Actuarially Determined Contribution (ADC): “A target or recommended contribution to a defined benefit OPEB plan for the reporting period, determined in conformity with Actuarial Standards of Practice based on the most recent measurement available when the contribution for the reporting period was adopted.”44 Annual Required Contribution (ARC): The ARC is the employer’s periodic required contribution to a defined benefit OPEB plan. The ARC is the sum of two parts: (1) the normal cost, which is the cost for OPEB benefits attributable to the current year of service, and (2) an amortization payment, which is a catch-up payment for past service costs to fund the Unfunded Actuarial Accrued Liability (UAAL) over the next 30 years.45 Despite the name “Annual Required Contribution,” the contribution is not legally required. California Employers’ Retiree Benefit Trust (CERBT): This trust fund is dedicated to prefunding Other Post Employment Benefits (OPEB) for all eligible California public agencies. Even those not contracted with CalPERS health benefits can prefund future retiree benefits such as health, vision, dental, and life insurance.46 California Public Employees' Retirement System (CalPERS): An agency in the California executive branch that serves more than 1.7 million members in its retirement system and administers benefits for nearly 1.4 million members and their families in its health program.47 Discount Rate: A percentage rate required to calculate the present value of a future cash flow.48 Governmental Accounting Standards Board (GASB): “The independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.”49

42

“Definition of 'Actuary'.” Investopedia.

43

“Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board. 44 “Statement No. 75 of the Governmental Accounting Standards Board.” Governmental Accounting Standards Board. No. 350. June 2015. 45 “GASBhelp.” Governmental Accounting Standards Board. 46

“California Employers’ Retiree Benefit Trust (CERBT) Fund.” CalPERS. Accessed March 2017.

47

“CalPERS Story.” CalPERS. Accessed March 2017.

48

“Fixed Income Bond Terms.” Corporate Finance Institute.

49

“FACTS about GASB.” Governmental Accounting Standards Board. 2012–2014.

May 10, 2017

Marin County Civil Grand Jury

Page 21 of 37

Implied Rate Subsidy: The implicit rate is an inherent subsidy of retiree health care costs by active employee health care costs when health care premiums paid by retirees and actives are the same.50 Net OPEB liability: Introduced in GASB 75, the liability of employers and nonemployer contributing entities to employees for benefits provided through a defined benefit OPEB plan that is administered through a trust.51 GASB 45 uses Unfunded Actuarial Accrued Liability (UAAL) to connote a similar liability. Other Postemployment Benefits (OPEB): Benefits (other than pensions) that U.S. state and local governments provide to their retired employees. These benefits principally involve health care benefits, but also may include life insurance, disability, legal and other services. 52 Pay-As-You-Go Funding (Pay-go): With pay-as-you-go funding, plan contributions are made as benefit payments become due and funds necessary for future liability are not accumulated. That is, contributions made are for current retirees only, causing the majority of retiree health benefits liability to be considered unfunded.53 Public Employees' Retirement System (PERS): The retirement and disability fund for public employees in California. Unfunded Actuarial Accrued Liability (UAAL): The excess of the Actuarial Accrued Liability (AAL) over the actuarial value of assets.54

50

“Glossary: Implied Rate Subsidy.” Milliman.

51

“Summary of Statement No. 75: Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.” Governmental Accounting Standards Board. June 2015. 52 “Other Postemployment Benefits (OPEB).” Governmental Accounting Standards Board. 53

“Glossary: Pay-as-you-go funding.” Milliman.

54

“Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board.

May 10, 2017

Marin County Civil Grand Jury

Page 22 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies

May 10, 2017

Marin County Civil Grand Jury

Page 23 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 24 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 25 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 26 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 27 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 28 of 37

APPENDIX A: OPEB Questionnaire to Public Agencies (cont’d)

May 10, 2017

Marin County Civil Grand Jury

Page 29 of 37

APPENDIX B: Example Actuarial Valuation Certification

Source: “City of Novato Retiree Healthcare Plan.” City of Novato, California. January 1, 2014.

May 10, 2017

Marin County Civil Grand Jury

Page 30 of 37

APPENDIX C: Finding Key OPEB Information in CAFRs or Audits Where can people find important OPEB-related information in an agency’s financial reports?

Example from a Municipality’s Comprehensive Annual Financial Report (CAFR) (note: no prefunding contributions made):

NOTE 10 - Postemployment Benefits Other Than Pensions

Example from a Municipality’s Comprehensive Annual Financial Report (CAFR): Required Supplementary Information Schedule of Funding Progress (unaudited) Other Postemployment Benefits Plan As of June 30, 2016 The Schedule of Funding Progress presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend information from the actuarial studies is presented below:

Actuarial Valuation Date July 1, 2008 July 1, 2011 July 1, 2014

May 10, 2017

Actuarial Accrued Liability (AAL) (a) $ 1,747,300 $ 1,941,900 $ 1,628,827

Actuarial Value of Assets (b) $$$-

Unfunded AAL (UAAL) (a-b) $ 1,747,300 $ 1,941,900 $ 1,628,827

Funded Ratio (b/a) 0% 0% 0%

Marin County Civil Grand Jury

Covered Payroll (c) $ 3,725,600 $ 4,068,100 $ 1,999,530

UAAL as a % of Covered Payroll [(ab)/c] 46.9% 47.7% 81.5%

Page 31 of 37

APPENDIX C: Finding Key OPEB Information in CAFRs or Audits (cont’d) Example from School District’s Audit:

Funded Status and Funding Progress - OPEB Plans As of July 1, 2014, the most recent actuarial valuation date, the District did not have a funded plan. The actuarial liability (AAL) for benefits was $189,127 and the unfunded actuarial accrued liability (UAAL) was $189,127.

May 10, 2017

Marin County Civil Grand Jury

Page 32 of 37

APPENDIX D: Marin Municipalities’ ARC as a Percentage of Total Revenue The amount of an agency’s annual required contribution (ARC) can be compared to its total revenue.

Municipality

UAAL FY 2012

UAAL FY 2016

UAAL Change

ARC FY 2016

Total Revenue FY 2016

City of Belvedere

$374,116

$1,036,193

662,077

$118,105

$7,855,000

City of Larkspur*

$7,493,551

$13,698,307

6,204,756

$1,165,424

$20,705,625

City of Mill Valley

$24,481,979

$20,156,488

(4,325,491)

$2,157,955

$39,916,000

$2,786,000

$3,673,318

887,318

$262,000

$47,954,000

$24,295,000

$32,727,000

8,432,000

$2,148,000

$100,490,000

$6,646,550

$5,730,670

(915,880)

$428,391

$20,603,504

$382,720,000 $294,375,000

(88,345,000)

$21,937,000

$602,627,000

City of Novato City of San Rafael City of Sausalito County of Marin Town of Corte Madera

$11,790,000

$9,704,000

(2,086,000)

$1,855,000

$21,324,384

$1,024,300

$835,400

(188,900)

$116,600

$9,212,366

$417,000

$383,000

(34,000)

$36,000

$10,081,926

Town of San Anselmo

$1,941,900

$1,628,827

(313,073)

$147,364

$19,216,454

Town of Tiburon

$2,900,736

$3,629,754

729,018

$296,848

$11,341,758

Town of Fairfax* Town of Ross

Municipalities: FY 2016 ARC as Percentage of Total Revenue

May 10, 2017

Marin County Civil Grand Jury

Page 33 of 37

APPENDIX E: Marin School Districts’ ARC as a Percentage of Total Revenue The amount of an agency’s annual required contribution (ARC) can be compared to its total revenue.

School District

UAAL FY 2012

UAAL FY 2016

UAAL Change

ARC FY 2016

Total Revenue FY 2016

Dixie Elementary

$1,057,000

$1,128,416

71,416

$114,463

$25,361,193

Kentfield

$1,432,000

$1,340,399

(91,601)

$199,312

$19,712,081

Larkspur-Corte Madera

$207,671

$189,127

(18,544)

$24,585

$21,966,152

Marin Community College

$6,604,85

$877,366

(5,727,491)

$261,064

$59,700,959

$2,159,158

$4,662,117

2,502,959

$945,212

$50,815,837

$823,300

$1,503,161

679,861

$175,235

$94,185,666

Reed Union

$2,730,727

$5,867,732

3,137,005

$855,510

$25,711,228

Ross School

$2,085,000

$3,086,992

1,001,992

$338,061

$8,748,369

Ross Valley

$1,838,000

$1,561,792

(276,208)

$98,513

$29,323,920

San Rafael Elem

$5,462,058

$6,200,000

737,942

$880,377

$53,530,867

San Rafael HS

$4,943,154

$5,400,000

456,846

$726,362

$37,919,147

Shoreline Unified

$1,798,111

$2,013,470

215,359

$286,133

$14,823,677

Tamalpais Union HS

$3,892,000

$3,053,537

(838,463)

$505,711

$92,371,238

Mill Valley Novato Unified

School Districts: FY 2016 ARC as Percentage of Total Revenue

May 10, 2017

Marin County Civil Grand Jury

Page 34 of 37

APPENDIX F: Special Districts’ ARC as a Percentage of Total Revenue The amount of an agency’s annual required contribution (ARC) can be compared to its total revenue.

School District

UAAL FY 2012

UAAL FY 2016

UAAL Change

ARC FY 2016

Total Revenue FY 2016

Central Marin Police*

$7,493,551

$15,155,425

7,661,874

$1,321,032

$11,087,891

Central Marin Sanitation

$2,872,049

$2,496,424

(375,625)

$301,327

$16,952,527

Kentfield Fire

$2,004,784

$2,146,412

141,628

$195,606

$5,014,333

Las Gallinas Valley Sanitary

$1,985,486

$2,094,980

109,494

$211,861

$12,976,695

Marin Municipal Water

$34,264,000

$33,104,000

(1,160,000)

$3,683,000

$62,502,430

Marin/Sonoma Mosquito

$12,030,407

$15,038,000

3,007,593

$1,542,000

$8,638,747

Marinwood CSD

$4,422,797

$6,477,757

2,054,960

$518,769

$5,837,007

North Marin Water

$3,470,834

$4,085,375

614,541

$384,385

$17,912,719

$16,751,185

$13,567,350

(3,183,835)

$1,596,595

$27,838,320

Novato Sanitary

$6,112,283

$6,313,211

200,928

$452,506

$19,299,289

Ross Valley Fire

$4,917,120

$5,121,615

204,495

$485,075

$9,598,396

Ross Valley Sanitary

$302,766

$693,717

390,951

$109,118

$23,623,985

Southern Marin Fire

$5,285,282

$7,089,540

1,804,258

$916,153

$14,038,197

Tiburon Fire

$2,269,028

$2,182,181

(86,847)

$249,592

$7,184,792

Novato Fire Protection

Special Districts: FY 2016 ARC as Percentage of Total Revenue

May 10, 2017

Marin County Civil Grand Jury

Page 35 of 37

APPENDIX G: GASB 45 vs. GASB 75 Overview GASB 4555,56

GASB 7557,58,59,60

Effect

Actuarial valuations required every 2 or 3 years (based on number of OPEB plan members), with optional alternative measurement method if fewer than 100 plan members.

Actuarial valuation required every 2 years for all OPEB plans, with optional alternative measurement method if fewer than 100 plan members.

More current picture of actuarial liability.

No single discount rate is required when an employer contributes less than ARC but has some plan assets.

Requires single discount rate that reflects (1) a long-term rate on plan assets to the extent they are projected to always be sufficient to cover projected payments, and (2) a municipal bond (lower) rate for the years when plan assets are not projected to cover projected payments. The projection must be based in part on whether the employer has a policy and practice to make its benefit payments.

Improves consistency, comparability and transparency of OPEB liability reporting.

Only “net OPEB obligation” required on face of balance sheet. Unfunded liability (UAAL) reported in plan notes in CAFR (Comprehensive Annual Financial Report) or Audit.

Net OPEB Liability (NOL) reported on the face of the balance sheet. NOL equals actuarial accrued liability (TOL) minus market value of plan assets (FNP). NOL same as UAAL with some technical differences.

Financial reporting of OPEB liabilities parallels GASB 68 for pension reporting.

Provides for limited disclosures in financial statement notes and required supplementary information schedules.

Provides for more extensive disclosures in financial statement notes and schedules. The note disclosures include (1) an explanation of how and why the NOL changed from year to year, (2) a description of contribution requirements and how they are determined, (3) a statement of assumptions and other inputs used to measure, (4) detailed information about the discount rate used, and (5) NOL calculations with 1% increases and decreases in medical trend rate and discount rate.

Improves transparency of OPEB liability reporting.

Six acceptable actuarial cost methods

Must use a single actuarial cost method (entry age actuarial cost method).

Improves consistency, comparability, and transparency of OPEB liability reporting

Permits a choice between open or closed amortization periods.

Must use a defined closed period amortization for expenses.

Improves consistency, comparability, and transparency of OPEB liability reporting

Long-term liability is more accurately stated.

55

"Summary of Statement No. 45: Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions." Governmental Accounting Standards Board. June 2004 56 "Guide to Implementation of GASB Statements 43 and 45 on Other Postemployment Benefits." Governmental Accounting Standards Board. 2005. 57 “Summary of Statement No. 75: Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.” Governmental Accounting Standards Board. June 2015. 58 “Overview of GASB Statements 73, 74, and 75.” Milliman. March 2016 59 60

"Brief Summary of New OPEB Accounting Standards: GASB 74 and 75." Bartel Associates. July 2015. "GASB Approves New OPEB Employer Accounting Standard (No. 75)." Bartel Associates. July 2015.

May 10, 2017

Marin County Civil Grand Jury

Page 36 of 37

APPENDIX H: Example Financial Literacy Classes and Presentations County Financial Reporting and Budgeting for Nonfinancial Professionals

Financial Management: Debt and Investment of Public Funds

Understand and interpret county financial reports This course provides the tools for decision-makers, elected officials, senior managers – other than accountants and auditors – who want to have an overview understanding of government financial reporting. Participants discuss budgets, financial statements and the audit, and at the 30,000’ level what each of those is saying (or not saying!). Participants should bring questions about terms or concepts they have encountered as part of their interaction with county and government financial reporting. The discussion reviews terms and definitions used with government financial reporting and strategies on how to read financial statements and auditor reports to identify critical information and understand what it means … in plain English!

Make informed decisions about the use of public resources Elected and appointed officials make critical decisions on the issuance and administration of debt, and the investment of public funds, but may have little experience or depth of knowledge on this complicated subject. This class provides a foundation on understanding debt, debt capacity, options, and county policy on debt. It examines the fiduciary responsibilities of elected and appointed officials and then explores investment of public funds. An overview of prudent investment policy, portfolio strategy and the role of the investment advisors are also explored.

From: California State Association of Counties

From: “Michigan State Employees: Retiree Health Actuarial Valuation.” Gabriel Roeder Smith & Company. 30 Sep. 2015

May 10, 2017

Marin County Civil Grand Jury

Page 37 of 37

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Thomas Perazzo, Vice President Stephen Willis - Dan St. John – Kurt Chun – Peter Fleming – Christine Waldeck

New Business Item – Draft Response to Grand Jury Report Date: July 12, 2017 Topic: Southern Marin Fire District Response to Grand Jury Report – The Budget Squeeze: How will Marin Fund its Public Employee Pensions? Recommendation To accept the attached proposed response and direct Fire Chief to submit the response to Grand Jury as detailed in the Grand Jury Report. Summary In June of this year the Southern Marin Fire District received a Grand Jury report titled, The Budget Squeeze: How will Marin Fund its Public Employee Pensions? The report reviews and assesses the pensions of public employees within Marin County. The report characterizes the status of pension liability as “worse than you thought”. The report concludes with ten separate findings and eight recommendations. The Southern Marin Fire District has been directed to respond to Recommendations R3, R4, and R8. Staff has reviewed the report and assessed the findings and recommendations. Staff has drafted for the Board’s consideration, responses as required by law, to R3, R4 & R8. Background: Reference Attached Grand Jury Report. Financial Impacts: None at this time. Options: None – we must respond to report by September 5, 2017. Approved By

Attachments: 1. Proposed Response to Grand Jury 2. Grand Jury Report – The Budget Squeeze: How will Marin Fund its Public Employee Pensions?

Draft Response from Southern Marin Fire to Grand Jury Report: The Budget Squeeze: How will Marin Fund Its Public Employee Pensions? Pursuant to Penal Code Section 933.05, Southern Marin Fire District is required to respond to Recommendations: R3; R4; and R8.

R3. Agencies should publish long‐term budgets (i.e. covering at least five years), update them at least every other year and report what percent of total revenue they anticipate on pension contributions. We agree. The Southern Marin Fire District has this information available via Opengov™, the Districts Online Financial portal. As financial data is dynamic, we believe that providing the information via OpenGov™ provides our constituency with more accurate and timely information with regards to budget projections and actual expenditures. OpenGov™ data is updated monthly. The Southern Marin Fire District is currently working with OpenGov™ to design and deploy a report on the portal, specific to the Total Percent of Revenue allocated to Pension Contributions. We expect to have this report posted within 90 days. R4. Each Agency should provide 10 years of audited financial statements and summary pension data for the same period (or links to them) on the financial page of its public website. We agree. The Southern Marin Fire District provides 10 years of audits posted on our website from 2006/07 through 2015/16, and a link to the Marin County Employees’ Retirement Association’s (MCERA) valuation archives. Effective 6/30/2015 for the Southern Marin Fire District, pension information is disclosed in the financial statements of the audit, instead of only in the notes, as per Governmental Accounting Standards Board (GASB) Statement No. 68. In the 6/30/2014 and prior audits, pension information is disclosed only in the notes section of the audit, and even then, readers were directed to the Marin County Employees’ Retirement Association (MCERA) for more detailed information. Due to the length of the OPEB and MCERA valuation reports, we agree it would be helpful to provide a historical summary of the data from both reports, in order to make the information more readily understandable. We are currently working on such a document and will have it posted on our website within sixty days. R8. Public Agencies and public employee unions should begin to explore how introduction of defined contribution programs can reduce unfunded liabilities for public pensions. We agree. The Southern Marin Fire District has engaged in these discussions with our labor groups since 2005. There are a variety of mechanisms to aid in the management of pension liability:

In 2005 we introduced a new retirement tier, which changed the formula to 3% @ 55 (from 3% @ 50), raising the retirement age and thereby decreasing future pension costs. In 2013 the District discontinued employee subvention contributions (prior to 2013 the District was picking up 50% of each employee’s retirement contribution). Employees now pay 100% of their share of retirement contributions, thus reducing the District’s annual retirement cost. In 2013 the California Public Employees’ Pension Reform Act (PEPRA) took effect, creating a mandatory retirement tier with a formula of 2.7% @ 57, establishing a cap on the amount of compensation that can be used to calculate a retirement benefit, decreasing the cost of living adjustment (COLA) from 4% to 3%), and changing the final average compensation (FAC) to three years instead of one year. This has lowered current and future costs. We have previously researched the possible implications of moving to a Defined Contribution (DC) program, but have not taken the step of conducting our own cost/benefit study. A cost/benefit comparison must compare a DC program with the same level of benefits as the existing Defined Benefit (DB) program for it to be a true comparison. Otherwise, such a conversion would simply be shifting the cost from the employer to the employee, and a mutual agreement would be hard to come by. We are aware that other governmental agencies have performed such studies and concluded that switching to a DC plan was not a viable solution. For now, we believe that offering a DB program offers many advantages to our workforce, and we intend to work collaboratively with our employees to ensure the financial sustainability of our organization and pension program.

2016–2017 MARIN COUNTY CIVIL GRAND JURY

The Big Picture Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

Report Date: June 8, 2017 Public Release Date: June 19, 2017

Marin County Civil Grand Jury

The Big Picture Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits SUMMARY This year, the Grand Jury published two reports that examined the issue of employee retirement funding facing Marin’s public agencies. We found that collective unfunded pension liability for the 46 public agencies we studied in Marin County is $1.0 billion1 and unfunded retiree health care (OPEB) liability is $548.1 million. Together, these 46 public agencies’ liabilities exceed $1.5 billion – and are growing. While the Grand Jury conducted separate investigations on pension and retiree health care, we believe that publishing a consolidated report, which provides the total of current unfunded liabilities, provides a more comprehensive perspective to the public. While there are significant differences between the OPEB and pension obligations, the combined impact has serious implications for the county’s public agencies, taxpayers and employees. The Grand Jury suggests that an agency wishing to reduce its unfunded liabilities might start by first reducing its unfunded OPEB liability, which is more straightforward than reducing its unfunded pension liability.

BACKGROUND Public employees are typically granted two retirement benefits: a defined benefit pension and “Other Postemployment Benefits” (OPEB) – primarily retiree health care. Defined benefit pension plans guarantee the employee a predictable future income stream in retirement that is protected by California Law.2 Similarly, if the employee meets specified periods of service and age, the agency will provide OPEB upon retirement to the employee (and for some agencies, to his/her spouse and/or dependents). The present value of OPEB and pension liabilities is determined by an actuary and reported in an actuarial valuation. The OPEB valuation is based on a number of variables, including: agency’s annual prefunding contribution, prefunding rate of return, retiree lifespan, and anticipated expenses. If the amount set aside to pay for these future financial obligations is insufficient, the benefit is referred to as unfunded. The key difference between pension and OPEB obligations is that agencies do not have a choice about how much to contribute to their pension plans on an annual basis. The annual contribution amount is calculated by the pension plan administrator and agencies are obligated to make the contributions. A portion of an agency’s yearly contributions is the amortization of the unfunded 1 2

“The Budget Squeeze: How Will Marin Fund Its Public Employee Pensions?” Marin County Civil Grand Jury. June 2017. “California Public Employee Retirement Law (PERL) January 1, 2016.” CalPERS.

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

liability (Net Pension Liability, or NPL). Consequently, when the net pension liability increases, yearly contributions also increase. Unlike pensions, however, OPEBs are typically not guaranteed or protected by state law. “State and local governments have much more latitude to scale back OPEB and share OPEB-related costs with retirees. Many have implemented changes to that effect.”3 The pension plan administrators for Marin's public employees (CalPERS, CalSTRS, and MCERA) recently reduced their discount rates to reflect a prolonged period of disappointing investment returns. The math is inescapable; a lower discount rate means that the NPL will be higher, which will increase the annual payments required to amortize the liability. The lowered rates are not yet fully reflected on agencies’ latest financial reports, and will cause public agencies to increase their contributions annually to achieve their pension funding goals. In short, the problem is significant, and will only get worse.

METHODOLOGY In order to understand the financial and historical details of pension and OPEB plans, the Grand Jury: ■ Reviewed Marin County Civil Grand Jury reports and agency responses. ■ Researched legal issues. ■ Reviewed Governmental Accounting Standards Board Statements (GASB) and related literature. ■ Analyzed all available Comprehensive Annual Financial Reports (CAFRs) and Audits of public agencies since Fiscal Year 2012. ■ Analyzed GASB 45 Actuarial Valuations of OPEB benefits and liabilities, prepared for public agencies. ■ Watched city/town council audit and financial presentations. ■ Interviewed agency staff and consultants involved with the actuarial process. ■ Interviewed staff and management from selected public agencies and selected pension fund administrators. ■ Reviewed literature for examples and best practices of public pensions and OPEB.

3

“Effective Advocacy & Key City Issues.” League of California Cities. 20 Jan. 2016.

June 8, 2017

Marin County Civil Grand Jury

Page 2 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

DISCUSSION The Grand Jury analyzed the following Marin public agencies’ financial reports: ■ Municipalities (12): City of Belvedere, City of Larkspur, City of Mill Valley, City of Novato, City of San Rafael, City of Sausalito, County of Marin, Town of Corte Madera, Town of Fairfax, Town of Ross, Town of San Anselmo, and Town of Tiburon. ■ School Districts (16): Bolinas-Stinson Union School District, Dixie Elementary School District, Kentfield School District, Larkspur-Corte Madera School District, Marin Community College District, Marin County Office of Education, Mill Valley School District, Novato Unified School District, Reed Union School District, Ross School District, Ross Valley School District, San Rafael City Schools - Elementary, San Rafael City Schools - High School, Sausalito Marin City School District, Shoreline Unified School District, and Tamalpais Union High School District. ■ Special Districts – Safety (6): Central Marin Police Authority, Kentfield Fire Protection District, Novato Fire Protection District, Ross Valley Fire Department, Southern Marin Fire Protection District, and Tiburon Fire Protection District. ■ Special Districts – Utility (12): Central Marin Sanitation Agency, Las Gallinas Valley Sanitary District, Marin Municipal Water District, Marin/Sonoma Mosquito & Vector Control District, Marinwood Community Services District, North Marin Water District, Novato Sanitary District, Richardson Bay Sanitary District, Ross Valley Sanitary District, Sanitary District # 5 Tiburon-Belvedere, Sausalito Marin City Sanitation District, and Tamalpais Community Services District. The Grand Jury chose several balance sheet and income statement items to provide context in calculating the relative burden that pension and OPEB obligations placed on each agency. We focused on two metrics: 1) The percentage of revenue spent on pension and OPEB contributions each year and 2) The Net Pension Liability (NPL) + Unfunded Actuarial Accrued Liability (UAAL) as a percentage of cash on the balance sheet. The first metric indicates how much of an agency’s budget is spent on yearly retirement contributions. The second metric addressed the question of whether an agency had sufficient financial resources to pay down pension and OPEB liabilities in order to reduce their future yearly contributions.

June 8, 2017

Marin County Civil Grand Jury

Page 3 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

Using the latest Comprehensive Annual Financial Reports (CAFR) and Audits, the Grand Jury summarized the agency retirement liability as: Agencies

Revenue

Pension + OPEB Contributions

Contributions as % of Revenue

Cash

Net Pension Liability (NPL)

OPEB UAAL

Liability % of Cash

Total Liability

Municipalities

$928.2 M

$114.3 M

12.3%

$662.4 M

$475.6 M

$387.6 M

$863.1 M

130.3%

School Districts

$618.9 M

$35.6 M

5.8%

$348.0 M

$387.3 M

$38.3 M

$425.6 M

122.3%

Special Districts Safety

$75.6 M

$15.7 M

20.8%

$35.6 M

$52.3 M

$45.3 M

$97.6 M

274.0%

Special Districts Utility

$190.6 M

$18.6 M

9.8%

$130.2 M

$109.1 M

$77.0 M

$186.1 M

143.0%

FY 2016 Total

$1.8 B

$184.2 M

10.2%

$1.2 B

$1.0 B

$548.1 M

$1.6 B

133.7%

(The pension report looked at all of the 46 agencies, while the OPEB report – which was a follow up to the Grand Jury’s 2013 report – looked at a subset. The unfunded retiree health care liability of this subset is $540 million.4) As of May 4, 2017, the City of Larkspur, the Town of Fairfax, and the Central Marin Police Authority had not released their FY 2016 CAFRs. For those agencies, we therefore needed to use their “older” FY 2015 financial data instead. Those agencies are indicated with an asterisk [*] following their names throughout this report. Appendix A contains a detailed breakdown of selected FY 2016 public agency balance sheet data. Appendix B contains selected FY 2016 public agency income statement data. Over the past two years, the agencies that manage pension funds announced lowered discount rates: ■ In early 2015, MCERA cut its discount rate from 7.50% to 7.25%. ■ In December 2016, CalPERS voted to reduce its discount rate from 7.5% to 7.0% over three years. ■ In February 2017, CalSTRS announced that it will cut its rate first to 7.25% and then to 7.00% by 2018.5 The full effect of these decreased discount rates will start to appear in FY 2017 financial documents: The three-year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans… Additionally, many CalPERS employers will see a 30 to 40 percent increase in their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the Fund to a fully funded status over the long-term.6

4

“Marin’s Retirement Health Care Benefits: The Money Still Isn’t There.”Marin County Civil Grand Jury. May 2017. Myers, John. “California Teacher Pension Fund Lowers its Investment Predictions, Sending a Bigger Invoice to State Lawmakers.” LA Times.com. 1 Feb. 2017. 6 “CalPERS to Lower Discount Rate to Seven Percent Over the Next Three Years.” CalPERS. 2015 Dec. 21. 5

June 8, 2017

Marin County Civil Grand Jury

Page 4 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

The Grand Jury believes that pension discount rates are likely to continue to decrease. Agencies’ OPEB liabilities are also increasing from OPEB underfunding, upcoming GASB 75 reporting requirements, and increasing health care expenses.

CONCLUSION The combined financial impact of pension and OPEB liabilities will affect the budgeting priorities in coming years for all of these agencies. For some, the relative size of the problem will force them to consider noticeable reductions in services. For further detail on these subjects – including our methodology, findings and recommendations – we refer the readers to the 2016-2017 Grand Jury’s reports Marin’s Retirement Health Care Benefits: The Money Still Isn’t There and The Big Squeeze: How Will Marin Fund Its Public Employee Pensions.

Sharing Our Data Despite the fact that agencies’ financial documents are publicly available, the Grand Jury expended an enormous effort to gather the documents (not all of the documents were available online nor text-searchable), extract the data, and analyze it. With the rise of the Open Data Movement (examples include: Data.gov, the Data Foundation, OpenGov, Marin County’s Open Data Portal, and the City of Sausalito’s Budget Transparency Tool), we wanted other organizations – including future Grand Juries – to be able to leverage our public data. Therefore, we have created a data portal consisting of all the Comprehensive Annual Financial Reports (CAFRs) and Audits for the agencies we researched for FY 2011 - FY 2016 along with a spreadsheet containing validated data extracted from those and other financial reports (including Annual Required Contributions (ARCs), discount rates, amortization periods, and the change of assets, liabilities, and unfunded liability). This information is available online here: https://goo.gl/oYfQNp. Note: At the time this report was prepared information was available at the websites listed.

Reports issued by the Civil Grand Jury do not identify individuals interviewed. Penal Code Section 929 requires that reports of the Grand Jury not contain the name of any person or facts leading to the identity of any person who provides information to the Civil Grand Jury. The California State Legislature has stated that it intends the provisions of Penal Code Section 929 prohibiting disclosure of witness identities to encourage full candor in testimony in Grand Jury investigations by protecting the privacy and confidentiality of those who participate in any Civil Grand Jury investigation.

June 8, 2017

Marin County Civil Grand Jury

Page 5 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

GLOSSARY Actuarial Accrued Liability (AAL): The portion of the actuarial present value benefits allocated to prior years of employment—and thus not provided for by future normal costs.7 Actuary: A professional dealing with the assessment and management of risk for financial investments, insurance policies, and any other ventures involving a measure of uncertainty.8 Comprehensive Annual Financial Report (CAFR): A report issued by a government entity that includes the entity’s audited financial statements for the fiscal year as well as other information about the entity. The report must meet accounting standards established by the Governmental Accounting Standards Board (GASB).”9 Audited financial reports may be referred to as “audit reports” or “financial statements” by various public agencies. California Public Employees' Retirement System (CalPERS): An agency in the California executive branch that serves more than 1.7 million members in its retirement system and administers benefits for nearly 1.4 million members and their families in its health program.10 California State Teachers’ Retirement System (CalSTRS): A pension fund in California established in 1913 to manage the retirement benefits of public school educators. Governmental Accounting Standards Board (GASB): “The independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.”11 Marin County Employees Retirement Association (MCERA): A pension fund in Marin County, CA. that manages the retirement assets and benefits of several municipalities and public agencies. Net Pension Liability (NPL): The total pension obligation of an organization for its employees less the value of assets held to fund those benefits. Other Postemployment Benefits (OPEB): Benefits (other than pensions) that U.S. state and local governments provide to their retired employees. These benefits principally involve health care benefits, but also may include life insurance, disability, legal and other services.12 Public Employees' Retirement System (PERS): See CalPERS. Unfunded Actuarial Accrued Liability (UAAL): The excess of the Actuarial Accrued Liability (AAL) over the actuarial value of assets.13

7

“Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board. 8 “Definition of 'Actuary'.” Investopedia. 9 “Comprehensive Annual Financial Report (CAFR).” Municipal Securities Rulemaking Board. 10 “CalPERS Story.” CalPERS. Accessed March 2017. 11 “FACTS about GASB.” Governmental Accounting Standards Board. 2012–2014. 12 “Other Postemployment Benefits (OPEB).” Governmental Accounting Standards Board. 13 “Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board.

June 8, 2017

Marin County Civil Grand Jury

Page 6 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX A: FY 2016 Public Agency Balance Sheet Data Municipalities

Assets

Cash

Net Position

Net Pension Liability (NPL)

City of Belvedere

$10,054,000

$3,595,630

$5,678,000

City of Larkspur*

$45,030,851

$14,151,668

$24,277,367

City of Mill Valley

$61,952,000

$17,919,732

$4,017,000

$25,010,100

City of Novato

$375,695,895

$59,936,536

$291,122,782

$32,111,535

City of San Rafael

$300,378,000

$66,009,979

$141,542,000 $142,323,127

City of Sausalito

$93,777,974

County of Marin

$1,992,947,827

$28,955,501

$27,987,699

$3,080,855

Total Liability

$1,036,193

$4,117,048

40.9%

114.5%

$9,046,789 $13,698,307

$19,635,621

Liability Liability % of % of Assets Cash

OPEB UAAL

$22,745,096

50.5%

160.7%

$20,156,488

$45,166,588

72.9%

252.0%

$3,673,318

$35,784,853

9.5%

59.7%

$32,727,000 $175,050,127

58.3%

265.2%

$25,366,291

27.0%

87.6%

$408,896,116 $1,390,055,902 $203,688,484 $294,375,000 $498,063,484

$5,730,670

25.0%

121.8%

Town of Corte Madera

$78,944,247

$15,323,517

$47,275,642

$14,263,877

$9,704,000

$23,967,877

30.4%

156.4%

Town of Fairfax*

$11,962,960

$2,463,991

-$1,376,349

$6,078,042

$835,400

$6,913,442

57.8%

280.6%

Town of Ross

$19,557,803

$10,528,331

$13,434,401

$3,548,143

$383,000

$3,931,143

20.1%

37.3%

Town of San Anselmo

$29,217,215

$6,606,250

$10,925,168

$5,299,442

$1,628,827

$6,928,269

23.7%

104.9%

Town of Tiburon

$63,662,493

$21,441,460

$52,944,160

$5,412,997

$3,629,754

$9,042,751

14.2%

42.2%

$3.1 B

$655.8 M

$2.0 B

$469.5 M

$387.6 M

$857.1 M

27.8%

130.7%

Total

School Districts Bolinas-Stinson Union

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability Liability % of % of Assets Cash

$4,810,121

$2,828,769

$1,406,313

$3,039,017

$412,018

$3,451,035

71.7%

122.0%

Dixie Elementary

$32,522,470

$18,194,342

-$11,279,305

$18,296,623

$1,128,416

$19,425,039

59.7%

106.8%

Kentfield

$36,650,017

$16,899,110

-$6,602,777

$13,427,307

$1,340,399

$14,767,706

40.3%

87.4%

Larkspur-Corte Madera

$63,370,037

$6,262,719

-$20,314,913

$15,695,360

$189,127

$15,884,487

25.1%

253.6%

$297,031,000

$17,857,000

-$5,569,000

$45,723,000

$877,366

$46,600,366

15.7%

261.0%

$71,319,233

$44,767,583

$39,274,235

$21,263,747

$862,966

$22,126,713

31.0%

49.4%

Marin Community College District Marin County Office Of Education Mill Valley

$90,032,772

$21,001,383

-$22,426,359

$33,102,435

$4,662,117

$37,764,552

41.9%

179.8%

$144,877,763

$29,605,956

-$7,019,803

$60,585,951

$1,503,161

$62,089,112

42.9%

209.7%

Reed Union

$52,162,124

$10,224,426

-$650,150

$17,787,987

$5,867,732

$23,655,719

45.4%

231.4%

Ross

$35,969,694

$4,473,827

$7,390,298

$5,578,419

$3,086,992

$8,665,411

24.1%

193.7%

Ross Valley

Novato Unified

$64,424,216

$18,159,492

-$13,237,323

$20,577,136

$1,561,792

$22,138,928

34.4%

121.9%

San Rafael City Schools - Elementary

$123,144,010

$50,000,124

-$15,195,483

$33,037,132

$6,200,000

$39,237,132

31.9%

78.5%

San Rafael City Schools - High School

$109,218,754

$54,037,304

-$17,227,292

$28,004,648

$5,400,000

$33,404,648

30.6%

61.8%

Sausalito Marin City

$27,255,480

$4,092,629

$2,360,366

$3,502,310

$107,144

$3,609,454

13.2%

88.2%

Shoreline Unified

$22,411,328

$7,043,760

-$2,374,726

$10,009,533

$2,013,470

$12,023,003

53.6%

170.7%

$203,339,657

$42,522,717

$7,712,183

$57,699,928

$3,053,537

$60,753,465

29.9%

142.9%

$1.4 B

$348.0 M

-$63.8 M

$387.3 M

$38.3 M

$425.6 M

30.9%

122.3%

Tamalpais Union HS Total

June 8, 2017

Marin County Civil Grand Jury

Page 7 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX A: FY 2016 Public Agency Balance Sheet Data (cont’d) Special Districts Safety Central Marin Police Authority* Kentfield Fire Protection District Novato Fire Protection District Ross Valley Fire Department

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability % of Assets

Liability % of Cash 14932.2%

$16,470,963

$178,725

-$1,124,490

$11,532,085

$15,155,425

$26,687,510

162.0%

$9,789,704

$3,507,855

$2,947,286

$4,310,797

$2,146,412

$6,457,209

66.0%

184.1%

$35,403,303

$15,930,859

$10,305,465

$17,430,800

$13,567,350

$30,998,150

87.6%

194.6%

$3,008,924

$1,338,192

-$6,955,625

$7,800,931

$5,121,615

$12,922,546

429.5%

965.7%

Southern Marin Fire Protection District

$13,349,870

$9,102,154

$7,896,367

$6,033,143

$7,089,540

$13,122,683

98.3%

144.2%

Tiburon Fire Protection District

$11,652,619

$5,564,687

$5,444,495

$5,232,050

$2,182,181

$7,414,231

63.6%

133.2%

$89.7 M

$35.6 M

$18.5 M

$52.3 M

$45.3 M

$97.6 M

108.8%

274.0%

Total

Special Districts Utility

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability Liability % of % of Assets Cash

Central Marin Sanitation Agency

$106,391,299

$14,974,538

$45,625,458

$6,643,602

$2,496,424

$9,140,026

8.6%

61.0%

Las Gallinas Valley Sanitary District

$81,480,447

$20,316,117

$63,883,215

$2,098,373

$2,094,980

$4,193,353

5.1%

20.6%

$16,947,252 $243,058,604

$69,753,895

$33,104,000 $102,857,895

22.4%

606.9%

Marin Municipal Water District

$460,030,200

Marin/Sonoma Mosquito & Vector Control District

$19,472,738

$11,634,371

$8,780,059

$4,135,340

$15,038,000

$19,173,340

98.5%

164.8%

Marinwood Community Services District

$6,784,666

$2,387,836

-$470,389

$3,322,116

$6,477,757

$9,799,873

144.4%

410.4%

North Marin Water District

$136,897,391

$5,411,426

$92,672,784

$8,619,837

$4,085,375

$12,705,212

9.3%

234.8%

Novato Sanitary District

$201,851,460

$19,742,079 $108,547,505

$3,528,249

$6,313,211

$9,841,460

4.9%

49.9%

Richardson Bay Sanitary District

$17,826,465

$1,595,379

$16,376,465

$1,101,797

$939,582

$2,041,379

11.5%

128.0%

Ross Valley Sanitary District

$122,064,345

$18,937,993

$66,824,699

$4,506,476

$693,717

$5,200,193

4.3%

27.5%

Sanitary District # 5 Tiburon-Belvedere

$30,527,780

$5,434,555

$20,083,181

$1,786,666

$802,868

$2,589,534

8.5%

47.6%

Sausalito Marin City Sanitary District

$46,001,842

$11,215,025

$39,986,927

$1,863,054

$2,249,556

$4,112,610

8.9%

36.7%

$8,062,948

$1,575,641

$1,239,870

$1,756,793

$2,684,959

$4,441,752

55.1%

281.9%

$1.2 B

$130.2 M

$706.6 M

$109.1 M

$77.0 M

$186.1 M

15.0%

143.0%

Tamalpais Community Services District Total

June 8, 2017

Marin County Civil Grand Jury

Page 8 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX B: FY 2016 Public Agency Income Statement Data Municipalities

Revenue

Expenses

Pension Contribution

OPEB Contribution

Total Contributions

Contributions as % of Revenue

City of Belvedere

$7,855,000

$7,404,000

$327,816

$18,824

$346,640

4.4%

City of Larkspur*

$21,009,094

$16,693,255

$802,226

$328,289

$1,130,515

5.4%

City of Mill Valley

$39,916,000

$38,133,000

$2,551,885

$2,172,659

$4,724,544

11.8%

City of Novato

$47,954,000

$42,687,000

$2,604,320

$267,682

$2,872,002

6.0%

City of San Rafael

$100,490,000

$110,893,000

$19,339,577

$2,194,000

$21,533,577

21.4%

City of Sausalito

$26,588,325

$24,491,036

$1,763,040

$464,325

$2,227,365

8.4%

County of Marin

$611,801,000

$554,877,000

$48,302,323

$26,079,404

$74,381,727

12.2%

$23,593,928

$20,264,214

$1,810,099

$939,000

$2,749,099

11.7%

Town of Fairfax*

$9,212,366

$8,630,597

$1,276,895

$168,648

$1,445,543

15.7%

Town of Ross

$9,264,385

$7,320,448

$1,339,398

$114,820

$1,454,218

15.7%

Town of San Anselmo

$19,216,454

$19,350,623

$466,182

$85,847

$552,029

2.9%

Town of Tiburon

$11,341,758

$11,029,817

$753,153

$105,580

$858,733

7.6%

$928.2 M

$861.8 M

$81.3 M

$32.9 M

$114.3 M

12.3%

Town of Corte Madera

Total

School Districts Bolinas-Stinson Union

Revenue

Expenses

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

$4,070,898

$4,252,221

$254,367

$62,030

$316,397

7.8%

Dixie Elementary

$25,361,193

$24,220,753

$1,463,819

$129,394

$1,593,213

6.3%

Kentfield

$19,712,081

$18,964,836

$1,065,278

$69,252

$1,134,530

5.8%

Larkspur-Corte Madera

$21,966,152

$23,618,998

$1,214,607

$19,944

$1,234,551

5.6%

Marin Community College District

$67,403,849

$82,922,415

$3,922,649

$1,507,929

$5,430,578

8.1%

Marin County Office Of Education

$56,776,827

$55,642,573

$1,851,569

$121,963

$1,973,532

3.5%

Mill Valley

$50,815,837

$47,724,947

$2,592,161

$719,258

$3,311,419

6.5%

Novato Unified

$94,185,666

$91,973,207

$4,150,779

$89,921

$4,240,700

4.5%

Reed Union

$25,711,228

$24,983,096

$1,333,084

$640,925

$1,974,009

7.7%

$8,748,369

$8,844,112

$440,091

$115,448

$555,539

6.4%

Ross Valley

$29,323,920

$29,952,113

$1,621,067

$98,511

$1,719,578

5.9%

San Rafael City Schools - Elementary

$62,306,271

$59,610,089

$2,888,024

$97,185

$2,985,209

4.8%

San Rafael City Schools - High School

$37,919,147

$39,926,631

$2,009,294

$203,492

$2,212,786

5.8%

Ross

Sausalito Marin City

$7,421,237

$7,798,127

$253,588

$0

$253,588

3.4%

Shoreline Unified

$14,823,677

$14,594,704

$723,686

$111,627

$835,313

5.6%

Tamalpais Union HS

$92,371,238

$88,169,381

$5,256,408

$583,425

$5,839,833

6.3%

$618.9 M

$623.2 M

$31.0 M

$4.6 M

$35.6 M

5.8%

Total

June 8, 2017

Marin County Civil Grand Jury

Page 9 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX B: FY 2016 Public Agency Income Statement Data (cont’d) Special Districts Safety Central Marin Police Authority* Kentfield Fire Protection District Novato Fire Protection District Ross Valley Fire Department Southern Marin Fire Protection District Tiburon Fire Protection District Total

Special Districts Utility

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

Revenue

Expenses

$11,087,891

$12,682,790

$1,486,735

$100,000

$1,586,735

14.3%

$5,014,333

$4,243,041

$951,986

$287,506

$1,239,492

24.7%

$27,838,320

$21,367,857

$4,848,895

$1,779,203

$6,628,098

23.8%

$9,598,396

$8,237,907

$1,119,907

$485,075

$1,604,982

16.7%

$14,911,632

$12,863,646

$2,072,079

$692,858

$2,764,937

18.5%

$7,184,792

$7,604,639

$1,471,646

$425,512

$1,897,158

26.4%

$75.6 M

$67.0 M

$12.0 M

$3.8 M

$15.7 M

20.8%

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

Revenue

Expenses

Central Marin Sanitation Agency

$16,952,527

$16,834,929

$936,613

$292,702

$1,229,315

7.3%

Las Gallinas Valley Sanitary District

$12,976,695

$7,881,853

$295,427

$211,861

$507,288

3.9%

Marin Municipal Water District

$62,502,430

$68,704,175

$5,725,637

$4,053,217

$9,778,854

15.6%

Marin/Sonoma Mosquito & Vector Control District

$8,638,747

$8,584,599

$968,417

$419,203

$1,387,620

16.1%

Marinwood Community Services District

$5,837,007

$6,013,031

$321,909

$153,530

$475,439

8.1%

North Marin Water District

$17,912,719

$17,534,252

$828,792

$168,935

$997,727

5.6%

Novato Sanitary District

$19,299,289

$16,587,829

$280,935

$242,322

$523,257

2.7%

$2,993,714

$3,239,823

$77,297

$106,061

$183,358

6.1%

Ross Valley Sanitary District

$23,623,985

$19,998,903

$543,759

$200,000

$743,759

3.1%

Sanitary District # 5 Tiburon-Belvedere

$6,264,746

$4,558,920

$1,781,586

$93,664

$1,875,250

29.9%

Sausalito Marin City Sanitary District

$8,391,876

$5,167,530

$276,804

$283,349

$560,153

6.7%

Tamalpais Community Services District

$5,245,439

$5,655,202

$308,274

$32,863

$341,137

6.5%

$190.6 M

$180.8 M

$12.3 M

$6.3 M

$18.6 M

9.8%

Richardson Bay Sanitary District

Total

June 8, 2017

Marin County Civil Grand Jury

Page 10 of 10

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Thomas Perazzo, Vice President Stephen Willis - Dan St. John – Kurt Chun – Peter Fleming – Christine Waldeck

New Business Item Date July 19, 2017 Topic Grand Jury Report – The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits Recommendation To receive the Grand Jury Report. No Action or Response is Required. Summary In June of this year the Southern Marin Fire District received a Grand Jury report titled, “The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits?” Background Reference Attached Grand Jury Report. Financial Impacts None at this time. Approved By

Attachments: 1. Grand Jury Report – The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

- 57 -

2016–2017 MARIN COUNTY CIVIL GRAND JURY

The Big Picture Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

Report Date: June 8, 2017 Public Release Date: June 19, 2017

- 58 -

Marin County Civil Grand Jury

The Big Picture Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits SUMMARY This year, the Grand Jury published two reports that examined the issue of employee retirement funding facing Marin’s public agencies. We found that collective unfunded pension liability for the 46 public agencies we studied in Marin County is $1.0 billion1 and unfunded retiree health care (OPEB) liability is $548.1 million. Together, these 46 public agencies’ liabilities exceed $1.5 billion – and are growing. While the Grand Jury conducted separate investigations on pension and retiree health care, we believe that publishing a consolidated report, which provides the total of current unfunded liabilities, provides a more comprehensive perspective to the public. While there are significant differences between the OPEB and pension obligations, the combined impact has serious implications for the county’s public agencies, taxpayers and employees. The Grand Jury suggests that an agency wishing to reduce its unfunded liabilities might start by first reducing its unfunded OPEB liability, which is more straightforward than reducing its unfunded pension liability.

BACKGROUND Public employees are typically granted two retirement benefits: a defined benefit pension and “Other Postemployment Benefits” (OPEB) – primarily retiree health care. Defined benefit pension plans guarantee the employee a predictable future income stream in retirement that is protected by California Law.2 Similarly, if the employee meets specified periods of service and age, the agency will provide OPEB upon retirement to the employee (and for some agencies, to his/her spouse and/or dependents). The present value of OPEB and pension liabilities is determined by an actuary and reported in an actuarial valuation. The OPEB valuation is based on a number of variables, including: agency’s annual prefunding contribution, prefunding rate of return, retiree lifespan, and anticipated expenses. If the amount set aside to pay for these future financial obligations is insufficient, the benefit is referred to as unfunded. The key difference between pension and OPEB obligations is that agencies do not have a choice about how much to contribute to their pension plans on an annual basis. The annual contribution amount is calculated by the pension plan administrator and agencies are obligated to make the contributions. A portion of an agency’s yearly contributions is the amortization of the unfunded 1 2

“The Budget Squeeze: How Will Marin Fund Its Public Employee Pensions?” Marin County Civil Grand Jury. June 2017. “California Public Employee Retirement Law (PERL) January 1, 2016.” CalPERS. - 59 -

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

liability (Net Pension Liability, or NPL). Consequently, when the net pension liability increases, yearly contributions also increase. Unlike pensions, however, OPEBs are typically not guaranteed or protected by state law. “State and local governments have much more latitude to scale back OPEB and share OPEB-related costs with retirees. Many have implemented changes to that effect.”3 The pension plan administrators for Marin's public employees (CalPERS, CalSTRS, and MCERA) recently reduced their discount rates to reflect a prolonged period of disappointing investment returns. The math is inescapable; a lower discount rate means that the NPL will be higher, which will increase the annual payments required to amortize the liability. The lowered rates are not yet fully reflected on agencies’ latest financial reports, and will cause public agencies to increase their contributions annually to achieve their pension funding goals. In short, the problem is significant, and will only get worse.

METHODOLOGY In order to understand the financial and historical details of pension and OPEB plans, the Grand Jury: ■ Reviewed Marin County Civil Grand Jury reports and agency responses. ■ Researched legal issues. ■ Reviewed Governmental Accounting Standards Board Statements (GASB) and related literature. ■ Analyzed all available Comprehensive Annual Financial Reports (CAFRs) and Audits of public agencies since Fiscal Year 2012. ■ Analyzed GASB 45 Actuarial Valuations of OPEB benefits and liabilities, prepared for public agencies. ■ Watched city/town council audit and financial presentations. ■ Interviewed agency staff and consultants involved with the actuarial process. ■ Interviewed staff and management from selected public agencies and selected pension fund administrators. ■ Reviewed literature for examples and best practices of public pensions and OPEB.

3

“Effective Advocacy & Key City Issues.” League of California Cities. 20 Jan. 2016.

June 8, 2017

Marin County Civil Grand Jury - 60 -

Page 2 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

DISCUSSION The Grand Jury analyzed the following Marin public agencies’ financial reports: ■ Municipalities (12): City of Belvedere, City of Larkspur, City of Mill Valley, City of Novato, City of San Rafael, City of Sausalito, County of Marin, Town of Corte Madera, Town of Fairfax, Town of Ross, Town of San Anselmo, and Town of Tiburon. ■ School Districts (16): Bolinas-Stinson Union School District, Dixie Elementary School District, Kentfield School District, Larkspur-Corte Madera School District, Marin Community College District, Marin County Office of Education, Mill Valley School District, Novato Unified School District, Reed Union School District, Ross School District, Ross Valley School District, San Rafael City Schools - Elementary, San Rafael City Schools - High School, Sausalito Marin City School District, Shoreline Unified School District, and Tamalpais Union High School District. ■ Special Districts – Safety (6): Central Marin Police Authority, Kentfield Fire Protection District, Novato Fire Protection District, Ross Valley Fire Department, Southern Marin Fire Protection District, and Tiburon Fire Protection District. ■ Special Districts – Utility (12): Central Marin Sanitation Agency, Las Gallinas Valley Sanitary District, Marin Municipal Water District, Marin/Sonoma Mosquito & Vector Control District, Marinwood Community Services District, North Marin Water District, Novato Sanitary District, Richardson Bay Sanitary District, Ross Valley Sanitary District, Sanitary District # 5 Tiburon-Belvedere, Sausalito Marin City Sanitation District, and Tamalpais Community Services District. The Grand Jury chose several balance sheet and income statement items to provide context in calculating the relative burden that pension and OPEB obligations placed on each agency. We focused on two metrics: 1) The percentage of revenue spent on pension and OPEB contributions each year and 2) The Net Pension Liability (NPL) + Unfunded Actuarial Accrued Liability (UAAL) as a percentage of cash on the balance sheet. The first metric indicates how much of an agency’s budget is spent on yearly retirement contributions. The second metric addressed the question of whether an agency had sufficient financial resources to pay down pension and OPEB liabilities in order to reduce their future yearly contributions.

June 8, 2017

Marin County Civil Grand Jury - 61 -

Page 3 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

Using the latest Comprehensive Annual Financial Reports (CAFR) and Audits, the Grand Jury summarized the agency retirement liability as: Agencies

Revenue

Pension + OPEB Contributions

Contributions as % of Revenue

Cash

Net Pension Liability (NPL)

OPEB UAAL

Liability % of Cash

Total Liability

Municipalities

$928.2 M

$114.3 M

12.3%

$662.4 M

$475.6 M

$387.6 M

$863.1 M

130.3%

School Districts

$618.9 M

$35.6 M

5.8%

$348.0 M

$387.3 M

$38.3 M

$425.6 M

122.3%

Special Districts Safety

$75.6 M

$15.7 M

20.8%

$35.6 M

$52.3 M

$45.3 M

$97.6 M

274.0%

Special Districts Utility

$190.6 M

$18.6 M

9.8%

$130.2 M

$109.1 M

$77.0 M

$186.1 M

143.0%

FY 2016 Total

$1.8 B

$184.2 M

10.2%

$1.2 B

$1.0 B

$548.1 M

$1.6 B

133.7%

(The pension report looked at all of the 46 agencies, while the OPEB report – which was a follow up to the Grand Jury’s 2013 report – looked at a subset. The unfunded retiree health care liability of this subset is $540 million.4) As of May 4, 2017, the City of Larkspur, the Town of Fairfax, and the Central Marin Police Authority had not released their FY 2016 CAFRs. For those agencies, we therefore needed to use their “older” FY 2015 financial data instead. Those agencies are indicated with an asterisk [*] following their names throughout this report. Appendix A contains a detailed breakdown of selected FY 2016 public agency balance sheet data. Appendix B contains selected FY 2016 public agency income statement data. Over the past two years, the agencies that manage pension funds announced lowered discount rates: ■ In early 2015, MCERA cut its discount rate from 7.50% to 7.25%. ■ In December 2016, CalPERS voted to reduce its discount rate from 7.5% to 7.0% over three years. ■ In February 2017, CalSTRS announced that it will cut its rate first to 7.25% and then to 7.00% by 2018.5 The full effect of these decreased discount rates will start to appear in FY 2017 financial documents: The three-year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans… Additionally, many CalPERS employers will see a 30 to 40 percent increase in their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the Fund to a fully funded status over the long-term.6

4

“Marin’s Retirement Health Care Benefits: The Money Still Isn’t There.”Marin County Civil Grand Jury. May 2017. Myers, John. “California Teacher Pension Fund Lowers its Investment Predictions, Sending a Bigger Invoice to State Lawmakers.” LA Times.com. 1 Feb. 2017. 6 “CalPERS to Lower Discount Rate to Seven Percent Over the Next Three Years.” CalPERS. 2015 Dec. 21. 5

June 8, 2017

Marin County Civil Grand Jury - 62 -

Page 4 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

The Grand Jury believes that pension discount rates are likely to continue to decrease. Agencies’ OPEB liabilities are also increasing from OPEB underfunding, upcoming GASB 75 reporting requirements, and increasing health care expenses.

CONCLUSION The combined financial impact of pension and OPEB liabilities will affect the budgeting priorities in coming years for all of these agencies. For some, the relative size of the problem will force them to consider noticeable reductions in services. For further detail on these subjects – including our methodology, findings and recommendations – we refer the readers to the 2016-2017 Grand Jury’s reports Marin’s Retirement Health Care Benefits: The Money Still Isn’t There and The Big Squeeze: How Will Marin Fund Its Public Employee Pensions.

Sharing Our Data Despite the fact that agencies’ financial documents are publicly available, the Grand Jury expended an enormous effort to gather the documents (not all of the documents were available online nor text-searchable), extract the data, and analyze it. With the rise of the Open Data Movement (examples include: Data.gov, the Data Foundation, OpenGov, Marin County’s Open Data Portal, and the City of Sausalito’s Budget Transparency Tool), we wanted other organizations – including future Grand Juries – to be able to leverage our public data. Therefore, we have created a data portal consisting of all the Comprehensive Annual Financial Reports (CAFRs) and Audits for the agencies we researched for FY 2011 - FY 2016 along with a spreadsheet containing validated data extracted from those and other financial reports (including Annual Required Contributions (ARCs), discount rates, amortization periods, and the change of assets, liabilities, and unfunded liability). This information is available online here: https://goo.gl/oYfQNp. Note: At the time this report was prepared information was available at the websites listed.

Reports issued by the Civil Grand Jury do not identify individuals interviewed. Penal Code Section 929 requires that reports of the Grand Jury not contain the name of any person or facts leading to the identity of any person who provides information to the Civil Grand Jury. The California State Legislature has stated that it intends the provisions of Penal Code Section 929 prohibiting disclosure of witness identities to encourage full candor in testimony in Grand Jury investigations by protecting the privacy and confidentiality of those who participate in any Civil Grand Jury investigation.

June 8, 2017

Marin County Civil Grand Jury - 63 -

Page 5 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

GLOSSARY Actuarial Accrued Liability (AAL): The portion of the actuarial present value benefits allocated to prior years of employment—and thus not provided for by future normal costs.7 Actuary: A professional dealing with the assessment and management of risk for financial investments, insurance policies, and any other ventures involving a measure of uncertainty.8 Comprehensive Annual Financial Report (CAFR): A report issued by a government entity that includes the entity’s audited financial statements for the fiscal year as well as other information about the entity. The report must meet accounting standards established by the Governmental Accounting Standards Board (GASB).”9 Audited financial reports may be referred to as “audit reports” or “financial statements” by various public agencies. California Public Employees' Retirement System (CalPERS): An agency in the California executive branch that serves more than 1.7 million members in its retirement system and administers benefits for nearly 1.4 million members and their families in its health program.10 California State Teachers’ Retirement System (CalSTRS): A pension fund in California established in 1913 to manage the retirement benefits of public school educators. Governmental Accounting Standards Board (GASB): “The independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.”11 Marin County Employees Retirement Association (MCERA): A pension fund in Marin County, CA. that manages the retirement assets and benefits of several municipalities and public agencies. Net Pension Liability (NPL): The total pension obligation of an organization for its employees less the value of assets held to fund those benefits. Other Postemployment Benefits (OPEB): Benefits (other than pensions) that U.S. state and local governments provide to their retired employees. These benefits principally involve health care benefits, but also may include life insurance, disability, legal and other services.12 Public Employees' Retirement System (PERS): See CalPERS. Unfunded Actuarial Accrued Liability (UAAL): The excess of the Actuarial Accrued Liability (AAL) over the actuarial value of assets.13

7

“Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board. 8 “Definition of 'Actuary'.” Investopedia. 9 “Comprehensive Annual Financial Report (CAFR).” Municipal Securities Rulemaking Board. 10 “CalPERS Story.” CalPERS. Accessed March 2017. 11 “FACTS about GASB.” Governmental Accounting Standards Board. 2012–2014. 12 “Other Postemployment Benefits (OPEB).” Governmental Accounting Standards Board. 13 “Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45.” Governmental Accounting Standards Board.

June 8, 2017

Marin County Civil Grand Jury - 64 -

Page 6 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX A: FY 2016 Public Agency Balance Sheet Data Municipalities

Assets

Cash

Net Position

Net Pension Liability (NPL)

City of Belvedere

$10,054,000

$3,595,630

$5,678,000

City of Larkspur*

$45,030,851

$14,151,668

$24,277,367

City of Mill Valley

$61,952,000

$17,919,732

$4,017,000

$25,010,100

City of Novato

$375,695,895

$59,936,536

$291,122,782

$32,111,535

City of San Rafael

$300,378,000

$66,009,979

$141,542,000 $142,323,127

City of Sausalito

$93,777,974

County of Marin

$1,992,947,827

$28,955,501

$27,987,699

$3,080,855

Total Liability

$1,036,193

$4,117,048

40.9%

114.5%

$9,046,789 $13,698,307

$19,635,621

Liability Liability % of % of Assets Cash

OPEB UAAL

$22,745,096

50.5%

160.7%

$20,156,488

$45,166,588

72.9%

252.0%

$3,673,318

$35,784,853

9.5%

59.7%

$32,727,000 $175,050,127

58.3%

265.2%

$25,366,291

27.0%

87.6%

$408,896,116 $1,390,055,902 $203,688,484 $294,375,000 $498,063,484

$5,730,670

25.0%

121.8%

Town of Corte Madera

$78,944,247

$15,323,517

$47,275,642

$14,263,877

$9,704,000

$23,967,877

30.4%

156.4%

Town of Fairfax*

$11,962,960

$2,463,991

-$1,376,349

$6,078,042

$835,400

$6,913,442

57.8%

280.6%

Town of Ross

$19,557,803

$10,528,331

$13,434,401

$3,548,143

$383,000

$3,931,143

20.1%

37.3%

Town of San Anselmo

$29,217,215

$6,606,250

$10,925,168

$5,299,442

$1,628,827

$6,928,269

23.7%

104.9%

Town of Tiburon

$63,662,493

$21,441,460

$52,944,160

$5,412,997

$3,629,754

$9,042,751

14.2%

42.2%

$3.1 B

$655.8 M

$2.0 B

$469.5 M

$387.6 M

$857.1 M

27.8%

130.7%

Total

School Districts Bolinas-Stinson Union

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability Liability % of % of Assets Cash

$4,810,121

$2,828,769

$1,406,313

$3,039,017

$412,018

$3,451,035

71.7%

122.0%

Dixie Elementary

$32,522,470

$18,194,342

-$11,279,305

$18,296,623

$1,128,416

$19,425,039

59.7%

106.8%

Kentfield

$36,650,017

$16,899,110

-$6,602,777

$13,427,307

$1,340,399

$14,767,706

40.3%

87.4%

Larkspur-Corte Madera

$63,370,037

$6,262,719

-$20,314,913

$15,695,360

$189,127

$15,884,487

25.1%

253.6%

$297,031,000

$17,857,000

-$5,569,000

$45,723,000

$877,366

$46,600,366

15.7%

261.0%

$71,319,233

$44,767,583

$39,274,235

$21,263,747

$862,966

$22,126,713

31.0%

49.4%

Marin Community College District Marin County Office Of Education Mill Valley

$90,032,772

$21,001,383

-$22,426,359

$33,102,435

$4,662,117

$37,764,552

41.9%

179.8%

$144,877,763

$29,605,956

-$7,019,803

$60,585,951

$1,503,161

$62,089,112

42.9%

209.7%

Reed Union

$52,162,124

$10,224,426

-$650,150

$17,787,987

$5,867,732

$23,655,719

45.4%

231.4%

Ross

$35,969,694

$4,473,827

$7,390,298

$5,578,419

$3,086,992

$8,665,411

24.1%

193.7%

Ross Valley

Novato Unified

$64,424,216

$18,159,492

-$13,237,323

$20,577,136

$1,561,792

$22,138,928

34.4%

121.9%

San Rafael City Schools - Elementary

$123,144,010

$50,000,124

-$15,195,483

$33,037,132

$6,200,000

$39,237,132

31.9%

78.5%

San Rafael City Schools - High School

$109,218,754

$54,037,304

-$17,227,292

$28,004,648

$5,400,000

$33,404,648

30.6%

61.8%

Sausalito Marin City

$27,255,480

$4,092,629

$2,360,366

$3,502,310

$107,144

$3,609,454

13.2%

88.2%

Shoreline Unified

$22,411,328

$7,043,760

-$2,374,726

$10,009,533

$2,013,470

$12,023,003

53.6%

170.7%

$203,339,657

$42,522,717

$7,712,183

$57,699,928

$3,053,537

$60,753,465

29.9%

142.9%

$1.4 B

$348.0 M

-$63.8 M

$387.3 M

$38.3 M

$425.6 M

30.9%

122.3%

Tamalpais Union HS Total

June 8, 2017

Marin County Civil Grand Jury - 65 -

Page 7 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX A: FY 2016 Public Agency Balance Sheet Data (cont’d) Special Districts Safety Central Marin Police Authority* Kentfield Fire Protection District Novato Fire Protection District Ross Valley Fire Department

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability % of Assets

Liability % of Cash 14932.2%

$16,470,963

$178,725

-$1,124,490

$11,532,085

$15,155,425

$26,687,510

162.0%

$9,789,704

$3,507,855

$2,947,286

$4,310,797

$2,146,412

$6,457,209

66.0%

184.1%

$35,403,303

$15,930,859

$10,305,465

$17,430,800

$13,567,350

$30,998,150

87.6%

194.6%

$3,008,924

$1,338,192

-$6,955,625

$7,800,931

$5,121,615

$12,922,546

429.5%

965.7%

Southern Marin Fire Protection District

$13,349,870

$9,102,154

$7,896,367

$6,033,143

$7,089,540

$13,122,683

98.3%

144.2%

Tiburon Fire Protection District

$11,652,619

$5,564,687

$5,444,495

$5,232,050

$2,182,181

$7,414,231

63.6%

133.2%

$89.7 M

$35.6 M

$18.5 M

$52.3 M

$45.3 M

$97.6 M

108.8%

274.0%

Total

Special Districts Utility

Assets

Cash

Net Position

Net Pension Liability (NPL)

OPEB UAAL

Total Liability

Liability Liability % of % of Assets Cash

Central Marin Sanitation Agency

$106,391,299

$14,974,538

$45,625,458

$6,643,602

$2,496,424

$9,140,026

8.6%

61.0%

Las Gallinas Valley Sanitary District

$81,480,447

$20,316,117

$63,883,215

$2,098,373

$2,094,980

$4,193,353

5.1%

20.6%

$16,947,252 $243,058,604

$69,753,895

$33,104,000 $102,857,895

22.4%

606.9%

Marin Municipal Water District

$460,030,200

Marin/Sonoma Mosquito & Vector Control District

$19,472,738

$11,634,371

$8,780,059

$4,135,340

$15,038,000

$19,173,340

98.5%

164.8%

Marinwood Community Services District

$6,784,666

$2,387,836

-$470,389

$3,322,116

$6,477,757

$9,799,873

144.4%

410.4%

North Marin Water District

$136,897,391

$5,411,426

$92,672,784

$8,619,837

$4,085,375

$12,705,212

9.3%

234.8%

Novato Sanitary District

$201,851,460

$19,742,079 $108,547,505

$3,528,249

$6,313,211

$9,841,460

4.9%

49.9%

Richardson Bay Sanitary District

$17,826,465

$1,595,379

$16,376,465

$1,101,797

$939,582

$2,041,379

11.5%

128.0%

Ross Valley Sanitary District

$122,064,345

$18,937,993

$66,824,699

$4,506,476

$693,717

$5,200,193

4.3%

27.5%

Sanitary District # 5 Tiburon-Belvedere

$30,527,780

$5,434,555

$20,083,181

$1,786,666

$802,868

$2,589,534

8.5%

47.6%

Sausalito Marin City Sanitary District

$46,001,842

$11,215,025

$39,986,927

$1,863,054

$2,249,556

$4,112,610

8.9%

36.7%

$8,062,948

$1,575,641

$1,239,870

$1,756,793

$2,684,959

$4,441,752

55.1%

281.9%

$1.2 B

$130.2 M

$706.6 M

$109.1 M

$77.0 M

$186.1 M

15.0%

143.0%

Tamalpais Community Services District Total

June 8, 2017

Marin County Civil Grand Jury - 66 -

Page 8 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX B: FY 2016 Public Agency Income Statement Data Municipalities

Revenue

Expenses

Pension Contribution

OPEB Contribution

Total Contributions

Contributions as % of Revenue

City of Belvedere

$7,855,000

$7,404,000

$327,816

$18,824

$346,640

4.4%

City of Larkspur*

$21,009,094

$16,693,255

$802,226

$328,289

$1,130,515

5.4%

City of Mill Valley

$39,916,000

$38,133,000

$2,551,885

$2,172,659

$4,724,544

11.8%

City of Novato

$47,954,000

$42,687,000

$2,604,320

$267,682

$2,872,002

6.0%

City of San Rafael

$100,490,000

$110,893,000

$19,339,577

$2,194,000

$21,533,577

21.4%

City of Sausalito

$26,588,325

$24,491,036

$1,763,040

$464,325

$2,227,365

8.4%

County of Marin

$611,801,000

$554,877,000

$48,302,323

$26,079,404

$74,381,727

12.2%

$23,593,928

$20,264,214

$1,810,099

$939,000

$2,749,099

11.7%

Town of Fairfax*

$9,212,366

$8,630,597

$1,276,895

$168,648

$1,445,543

15.7%

Town of Ross

$9,264,385

$7,320,448

$1,339,398

$114,820

$1,454,218

15.7%

Town of San Anselmo

$19,216,454

$19,350,623

$466,182

$85,847

$552,029

2.9%

Town of Tiburon

$11,341,758

$11,029,817

$753,153

$105,580

$858,733

7.6%

$928.2 M

$861.8 M

$81.3 M

$32.9 M

$114.3 M

12.3%

Town of Corte Madera

Total

School Districts Bolinas-Stinson Union

Revenue

Expenses

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

$4,070,898

$4,252,221

$254,367

$62,030

$316,397

7.8%

Dixie Elementary

$25,361,193

$24,220,753

$1,463,819

$129,394

$1,593,213

6.3%

Kentfield

$19,712,081

$18,964,836

$1,065,278

$69,252

$1,134,530

5.8%

Larkspur-Corte Madera

$21,966,152

$23,618,998

$1,214,607

$19,944

$1,234,551

5.6%

Marin Community College District

$67,403,849

$82,922,415

$3,922,649

$1,507,929

$5,430,578

8.1%

Marin County Office Of Education

$56,776,827

$55,642,573

$1,851,569

$121,963

$1,973,532

3.5%

Mill Valley

$50,815,837

$47,724,947

$2,592,161

$719,258

$3,311,419

6.5%

Novato Unified

$94,185,666

$91,973,207

$4,150,779

$89,921

$4,240,700

4.5%

Reed Union

$25,711,228

$24,983,096

$1,333,084

$640,925

$1,974,009

7.7%

$8,748,369

$8,844,112

$440,091

$115,448

$555,539

6.4%

Ross Valley

$29,323,920

$29,952,113

$1,621,067

$98,511

$1,719,578

5.9%

San Rafael City Schools - Elementary

$62,306,271

$59,610,089

$2,888,024

$97,185

$2,985,209

4.8%

San Rafael City Schools - High School

$37,919,147

$39,926,631

$2,009,294

$203,492

$2,212,786

5.8%

Ross

Sausalito Marin City

$7,421,237

$7,798,127

$253,588

$0

$253,588

3.4%

Shoreline Unified

$14,823,677

$14,594,704

$723,686

$111,627

$835,313

5.6%

Tamalpais Union HS

$92,371,238

$88,169,381

$5,256,408

$583,425

$5,839,833

6.3%

$618.9 M

$623.2 M

$31.0 M

$4.6 M

$35.6 M

5.8%

Total

June 8, 2017

Marin County Civil Grand Jury - 67 -

Page 9 of 10

The Big Picture: Funding Marin’s Public Employee Pensions & Retirement Health Care Benefits

APPENDIX B: FY 2016 Public Agency Income Statement Data (cont’d) Special Districts Safety Central Marin Police Authority* Kentfield Fire Protection District Novato Fire Protection District Ross Valley Fire Department Southern Marin Fire Protection District Tiburon Fire Protection District Total

Special Districts Utility

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

Revenue

Expenses

$11,087,891

$12,682,790

$1,486,735

$100,000

$1,586,735

14.3%

$5,014,333

$4,243,041

$951,986

$287,506

$1,239,492

24.7%

$27,838,320

$21,367,857

$4,848,895

$1,779,203

$6,628,098

23.8%

$9,598,396

$8,237,907

$1,119,907

$485,075

$1,604,982

16.7%

$14,911,632

$12,863,646

$2,072,079

$692,858

$2,764,937

18.5%

$7,184,792

$7,604,639

$1,471,646

$425,512

$1,897,158

26.4%

$75.6 M

$67.0 M

$12.0 M

$3.8 M

$15.7 M

20.8%

Pension Contribution

OPEB Contribution

Total Contributions

Pension Contribution as % of Revenue

Revenue

Expenses

Central Marin Sanitation Agency

$16,952,527

$16,834,929

$936,613

$292,702

$1,229,315

7.3%

Las Gallinas Valley Sanitary District

$12,976,695

$7,881,853

$295,427

$211,861

$507,288

3.9%

Marin Municipal Water District

$62,502,430

$68,704,175

$5,725,637

$4,053,217

$9,778,854

15.6%

Marin/Sonoma Mosquito & Vector Control District

$8,638,747

$8,584,599

$968,417

$419,203

$1,387,620

16.1%

Marinwood Community Services District

$5,837,007

$6,013,031

$321,909

$153,530

$475,439

8.1%

North Marin Water District

$17,912,719

$17,534,252

$828,792

$168,935

$997,727

5.6%

Novato Sanitary District

$19,299,289

$16,587,829

$280,935

$242,322

$523,257

2.7%

$2,993,714

$3,239,823

$77,297

$106,061

$183,358

6.1%

Ross Valley Sanitary District

$23,623,985

$19,998,903

$543,759

$200,000

$743,759

3.1%

Sanitary District # 5 Tiburon-Belvedere

$6,264,746

$4,558,920

$1,781,586

$93,664

$1,875,250

29.9%

Sausalito Marin City Sanitary District

$8,391,876

$5,167,530

$276,804

$283,349

$560,153

6.7%

Tamalpais Community Services District

$5,245,439

$5,655,202

$308,274

$32,863

$341,137

6.5%

$190.6 M

$180.8 M

$12.3 M

$6.3 M

$18.6 M

9.8%

Richardson Bay Sanitary District

Total

June 8, 2017

Marin County Civil Grand Jury - 68 -

Page 10 of 10

- 69 -

- 70 -

- 71 -

- 72 -

- 73 -

- 74 -

- 75 -

- 76 -

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Thomas Perazzo, Vice President Stephen Willis - Dan St. John – Kurt Chun – Christine Waldeck – Peter Fleming

STAFF REPORT – FIRE DEPARTMENT SHARED SERVICES – UPDATE AND NEXT STEPS

Date July 26, 2017 Topic Fire Department Shared Services – Update and Next Steps Recommendation Receive pretention, discuss, provide direction and identify members to join the Executive Shared Management Committee. Summary The Mill Valley Fire Department (City) and the Southern Marin Fire Protection District (District) have been sharing Battalion Chiefs since August 1, 2014. Smart, forward leaning structural changes are needed to ensure a continuation of excellent service. Background Since August 2014, Mill Valley Fire Department and the Southern Marin Fire Protection District have closely collaborated to achieve our shared goal: Identify and implement programs, processes and partnerships that results in cost savings or cost avoidance for both organizations’ and all communities served; increase organizational efficiencies; enhance firefighter and citizen safety; and strengthen mission resiliency through improved service. Thus far, through a focused joint effort, we have identified numerous efficiencies and service improvements for both departments and have created several programs to capture those benefits: o

Created a combined Battalion Chief (BC) program. - 77 -

o o o o

o o o o o o o

Staffing one on-duty BC per shift, to lead operations for both organizations instead of one on-duty BC per shift for each organization. Realized cost savings by having one shared BC overtime list. Developed a BC task book program for qualified Captains to work out of grade as a BC. Expanded Mill Valley BC command experience by covering water rescue, technical rescue and higher severity incidents in Golden Gate National Recreation Area (GGNRA), San Francisco Bay and Golden Gate Bridge.  Created a dedicated Training Officer (TO) program. Moved one BC from shift work to a 40-hour work week, and rotated the position between both organizations. Provides consistent training across all shifts (A, B & C) in both organizations. Improved regional partnerships throughout Marin County. Improved compliance with local, state and federal regulations. Improved reliability in the command structure in the event of multiple calls. Created and deployed a joint Training and Safety Committee.

Efficiency of combined BC and dedicated TO program Saved over $500,000 in annual operating costs, and $1.5 million since the inception of this initiative, across both organizations. However, over the last three years of focused effort and maturing relationships, we have also identified a few challenges/opportunities for expanding shared services with the goal of improved efficiencies and services. Challenge 1: Clarity of Leadership. There has been limited success so far in combining various large programs such as Logistics and Fire Prevention, using the BC/TO model. Development of a combined organizational chart has been challenging for three reasons: unity of command; scale of programs and department budgets. Our current shared services model has two ultimate supervisors, both Fire Chiefs and both in different Fire Departments. This has created uncertainty and confusion among subordinate ranks because of unclear unity of command, where one employee could potentially get directives from two different supervisors, across department lines. The BC/TO program encompassed four individuals with clearly defined operational roles, however, Logistics and Fire Prevention programs encompasses different apparatus, equipment, municipal codes and operating/capital budgets. - 78 -

Challenge 2: Succession Planning. Succession planning is a key organizational dynamic and requires immediate focus. It is anticipated that two of the four BCs (both from Mill Valley FD) will retire within 1-5 years. Within the next year it is anticipated Battalion Chief Mike St. John will retire. At the moment, Mill Valley Fire Department has one member qualified to test for Battalion Chief. Five years or less, Battalion Chief Scott Barnes will retire and Mill Valley Fire Department will likely have one member qualified to test for Battalion Chief. The Southern Marin Fire Protection District will likely have no retirements within five years and has several candidates qualified for the position of Battalion Chief. After five years, all bets are off with regards to succession planning. Discussion: Essential to the delivery of fire services is an efficient organizational structure that divides and distributes the responsibility and authority to ensure the timely, efficient, effective and safe delivery of services to the community. Several command and control concepts affect the delivery of efficient service including: chain of command, unity of command, span of control, division of labor and use of the exception principle.  Unity of Command is the principle that each member of the fire department answers to only one boss which starts with the Fire Chief and continues down to the newest firefighter.  Span of control refers to the maximum number of personnel or events that can be controlled/managed by one individual (usually five to seven).  Division of labor refers to the dividing and delegating responsibilities based on function, then subdividing into numerous tasks necessary to successfully complete the mission.  Exception principle a method or plan of supervision (as of a business) under which only significant deviations from normally expected results or conditions are brought to the attention of a supervisor for consideration and decision.  Traditionally, small departments (1or 2 stations) have the Fire Chief managing a majority of the administrative functions as well as the incident command responsibilities on larger incidents. In medium sized departments (5 stations and above), a strong division of labor exists between administrative functions and service delivery, such as incident command. Mill Valley Fire Department is a small municipal department and Southern Marin Fire Protection District is a medium sized fire protection district. Although our service territories are directly adjacent to each other and face similar hazards and risks, each has different governance structures, different financial models and different labor groups. Despite numerous challenges, over the last three years we have explored many opportunities to share services and have delivered many shared benefits. Beyond the - 79 -

savings and efficiency of implementing the BC/TO program, the following benefits could only have been achieved through developing a close working relationship and a focus on identifying shared opportunities including:        

Developed a consistent fleet design and maintenance approach for new apparatus. Realized savings through group equipment purchasing of a new Type 3 (wildland) fire engine. Realizing savings through a group equipment purchase of a new Type 1 (structure) fire engine. Realized savings through combined Computer Aided Dispatch (CAD) terminal purchasing. Realized efficiencies by combining infection control programs. Realized efficiencies in delivering Emergency Medical Services (EMS). Realized efficiencies through an improved division of labor and consistency on Fire Prevention including vegetation management, training and community education. Identified new challenges that need attention to align results with our stated goal.

Both Chief Tubbs and Chief Welch agree that our current arrangement requires further refinement to address more difficult issues that include: pending succession planning challenges; combined intra-team dynamics; organizational cultures and more efficient/delineated work flows among management and subordinate staff. Given the challenges listed, both Chief’s agree that our current system is not sustainable for the long term without adjustment. Typically, fire departments that do not have the appropriate level of administrative support become fragile operations that provide questionable customer service. They depend upon limited or no turnover in their chief officer ranks and limited absences and turnover in their line operations. For example, in the event of a vacancy due to longterm illness/injury or retirement/resignation of a firefighter, other firefighters would need to increase their overtime substantially to fill the on-duty gap. Smaller fire departments rely on a limited number of individuals taking on multiple administrative and operational responsibilities, which can and does, in some cases, result in critical tasks being delayed or other work being abandoned. Since responding to 911 calls is the highest priority, other administrative responsibilities of the department will always be deferred because the same firefighters are responsible for completing both activities. This is a key concept when considering expanding the relationship between the Mill Valley Fire Department and the Southern Marin Fire Protection District. By having a larger workforce for both administration and operations, we can improve our overall capacity by reducing - 80 -

duplication of effort, improving focus of our team dynamics, clearly delineating assignments, and increasing training for specialization of skills. With the increasing requirements for firefighter’s ongoing qualifications, certifications, specialization and safety compliance in the fire service, larger departments have greater flexibility to handle changes and personnel issues than smaller fire departments do. Both Mill Valley FD and Southern Marin FPD suffer from the vulnerabilities associated with smaller departments. However, by operating together, we can develop resiliency, which creates a more dependable service to our communities. Generally, fire service shared services is a worthy goal, and where possible can produce a right-sized, sub-regional fire agency over time that is the best long-term alternative for efficiency and effectiveness. A broader shared services model allows for:  

 

Effective use of personnel, especially in filling staffing vacancies. Specialization of command and support staff will provide capacity that smaller agencies struggle to establish and maintain. Expansion chief officer candidate pool will allow for more effective succession planning. Combination of all existing command and support staff will reduce overlap and allows for stabilization of support services, while it increases operational effectiveness.  

  These shared service models are not unique to our area. Fire service agencies across the United States have increasingly moved to this model as a way to realize efficiencies, both operationally and financially. As a matter of fact, numerous studies have been conducted in Marin County assessing the value and need for fire service consolidation (at various levels) and a majority have concluded that the taxpayers and employees alike would see great benefit from more of these shared services models, rather than less. Currently, Larkspur and Corte Madera are operating as one department, through the creation of a Joint Powers Agreement (JPA). San Anselmo, Ross, Fairfax and Sleepy Hollow are currently governed by the Ross Valley Fire Authority. Since 1980, Mill Valley Fire Department, Southern Marin Fire Protection District, Tiburon Fire Protection District and Marin County Fire Department have been working under a JPA for the provision of emergency medical services, through the Southern Marin Emergency Medical Paramedic System (S.M.E.M.P.S).

- 81 -

A shared services agreement does not need to include all employees top-to-bottom. Some shared services agreements are successful remaining at the administrative level. The key to success is that the shared service model chosen is fully agreed to by all the stakeholders, there is clarity in how the agreement is translated in day to day operations, and that there is clarity in those areas not shared through the agreement that are the responsibility of the individual agency. Some successful partnerships consist of contracts for service, where one agency contracts for one function from another agency, such as a training officer or a fire apparatus mechanic. Any shared services agreement has to take into account the total scope of operations that must be supported, including the existing size and makeup of each agency’s capabilities by function. After that inventory is completed, then determine whether a shared services agreement leads to efficiencies or improved services. If so, a key question is what cost sharing or reimbursement formula will be equitable to all parties involved. Typically, cost sharing formulas use service demographics and operational service measures to determine cost sharing or reimbursements in the joint operation.

- 82 -

Table 1

Population Calls for Service Assessed Value Minimum # of Firefighters on Duty Each Day Number of Stations Department Budget Total Number of Positions Administration Full Time Equivalent (FTE) Positions Fire Prevention FTE Line Incident Command Line FTE

City of Mill Valley FD 14,403 2,509

Southern Marin FPD

Total

28,700 3000

43,103 5,509

Approx. $4 Billion 6

Approx. 10 Billion 15

14 Billion

2

3

5

$5,506,498

$17,106,704

$22,613,202

25

53

78

2 (including Fire Chief

4 (including Fire Chief)

6

0

2

2

2

2

4

23

45

68

21

Table 1 - lists common demographics and operational fire service measures for the two departments: In the fire service, Administration (Management) includes all of the processes needed to provide service to the community, plus all of the longer range planning for the future of the organization. Labor-intensive organizations, like the fire service, are trending towards flatter leadership structures with an emphasis on reducing overhead redundancies, in-turn improving efficiencies in service. The structure of any fire department has to address how many positions and what functions are needed across all functions, including the administrative support team, to ensure it is meeting all legal and regulatory requirements, as well as the mission of the organization.

- 83 -

The fire department structure refers to the relationship between the people, assignments and the chain-of-command. Staffing and assignments need to be sufficient to ensure that the staffing strategies match the organizational goals. Staffing strategies take into account the complexity of issues, standardization and decision making processes. Adding to the complexity includes the risks and hazards present, the number of tasks required, the span of control and the geographic layout of the department. Standardization of the structure refers to the goals, rules, policies, procedures, job specifications and training standards. Decision-making refers to the location and level of decision authority necessary to make the structure and systems work. A fire department size of either the City or District, especially when combined, needs to have a management team that is appropriately sized, adequately trained and supported. There are increasing regulations to be dealt with in operating fire services to include:  Hiring and employment practices  Employee training and supervision of line employees  Legal functions such as labor negotiations  Public record requests  Grand Jury reports  Budget management  Strategic planning  Environmental regulations impacting service delivery and analysis. The above list requires an equally serious commitment to leadership and general management functions. Based on the issues in managing fire services, both Chief Tubbs and Chief Welch envision the minimum personnel to run a five-station agency, which has a combined annual budget of Approx. $23,000,000 that is geographically concentrated and faces the risks and hazards of our area:         

One (1) Fire Chief One (1) Deputy Chief One (1) Training Battalion Chief Three (3) A-B-C Shift Battalion Chiefs One (1) Fire Marshal – Community Risk Reduction Two (2) Fire Inspectors Human Resources Generalist One (1) Office Manager One (1) Assistant - 84 -

 

One (1) Chief Financial Officer One (1) Financial Analyst  

Creating a two-agency fire department, the Administration team typically provides the opportunity to further reduce and/or improve the effectiveness through appropriate staffing. More importantly for smaller agencies, shared management agreements, such as the planning and coordination of training, oversight of EMS services, Fire Marshal and Fire Prevention (also known as Community Risk Reduction) services increases the effectiveness of these positions because a larger, more robust Administrative unit permits greater specialization and division of labor among staff. Currently, at varying degrees, both departments are understaffed for some Administrative, Command and Community Risk Reduction positions. While on-duty fire station crews can assist with some Administrative programs, the line personnel do not have the education and training to undertake all of the needed Administrative duties, and often their work schedules, and priority in responding to 911 calls, are not in alignment with the type of work support needed. The criteria for setting the needed positions in a shared services Administration include:     

Provide for a lean, but appropriate chain of command. Identify appropriate staffing for the support services. Streamline position descriptions, where overlaps exist. Increased use of non-sworn positions. Improve service with dedicated positions, instead of shared functions. - 85 -



Increased the depth of resources to cover for injury/illness and career succession.

Based upon our analysis of both departments’ workloads, both Chief Tubbs and Chief Welch can envision a merger into a single Administrative team. There are several ways to achieve this goal by way of various legal mechanisms. We believe that merging the two administrative teams will: 1. Reduce overlap among both administrative teams separately 2. Improve effectiveness and efficiency for both organizations. 3. Create one outward facing regional administration for our employees and communities alike. 4. Achieve modest savings / avoid unnecessary costs. Governance Options: Politics plays an extensive role in the formation of a consolidated fire department. At the heart of the political challenges is the notion of equity in financial responsibility, fiduciary trust, service levels and governance responsibility. Legal obstacles can also exist in the formation of a consolidated management team. There are many methods and levels that local entities can work together for the common good of the communities served. However, which one is the best and to what level should the formation occur? The decision of service levels belongs exclusively to the elected officials charged with governance. Decisions are commonly based on a quality cost/benefit analysis relative to proposed changes. There are several methods of consolidating two fire department management teams into one right sized team. Under any method, both parties need to have a framework within which they can have on-going conversations and make mutual decisions on the level and costs of their fire services. These methods are commonly called the governance model, that is separate from the cost-sharing model. The options include:  Annexation/Detachment – The District annexes the City’s Fire Department. The City would be required to transfer sufficient revenue to the District to support a portion of the expenses of both organizations. This option is not relevant in our current reality of a shared management structure, however, could become relevant should a broader shared services become agreeable. The transfer of funds usually includes a portion of property tax. Any other source of revenue is either not allowed to be received by under state law or is inherently unstable year to year. This process requires a Local Agency Formation Commissions (LAFCO) oversight. More specifically, in 2001 as part of a comprehensive rewrite of LAFCO law (Government Code Section 56133) was established that require cities and districts to receive approval to provide “new” or “extended” services outside their boundaries by contract less certain exemptions. As of January 1, 2016, all cities and - 86 -

special districts must receive LAFCO approval before entering into contracts to provide new or extended fire protection services if either of the following conditions apply:  Contracts that transfer responsibility for providing fire protection services in more than 25% of the area within the jurisdictional boundaries of any public agency affected by contract or agreement: or  Contracts that changes the employment status of more than 25 % of the employees of any public agency affected by the contract or agreement.  According to California Government Code Section 5750. On and after the effective date of a consolidation, the consolidated district succeeds to all of the powers, rights, duties, obligations, functions, and properties of all predecessor districts, which have been united or joined into the consolidated district. The territory of a consolidated district, all inhabitants within that territory, and all persons entitled to vote by reason of residing or owning land within the territory are subject to the jurisdiction of the consolidated district and, except as otherwise provided in this chapter, have the same rights and duties as if the consolidated district had been originally formed under the principal act.

 Joint Powers Authority – When multiple cities or other local government agencies seek to provide consolidated services and yet want to retain a greater measure of fiscal and operational oversight that either an independent or dependent district would allow, they usually turn to the creation of a JPA. California law allows an almost infinite variety of shared services between governmental agencies and permits the partners to create almost any governing structure that meets the local needs for fiscal and operational control. For example, a JPA with a board composed of elected officials from each of the partner agencies is the most common form. Funding can similarly be provided to the JPA by each partner agency according to any formula that parties find agreeable. For employment/payroll purposes, the JPA can contract with either of the partner agencies to serve as the “home base or payroll parent” for all of the employees. Alternatively, the JPA could separately employ the personnel under a new employer relationship. o

According to California Government Code Section 6502 Joint Powers Authority (California Government Code):  If authorized by their legislative or other governing bodies, two or more public agencies by agreement may jointly exercise any power common to the contracting parties, including, but not limited to, the - 87 -

authority to levy a fee, assessment, or tax, even though one or more of the contracting agencies may be located outside this state. o

Several forms are possible for governance. A common approach is to have a board of elected from each agency. The board could have the responsibility to review the budget and operational policy and then make recommendations back to the full board or council. This would in effect create a subcommittee of both governing agencies. Or, the new governance structure could be empowered with greater responsibilities.

o

The provisions/exemptions of LAFCO would be present under this arrangement.

 Contract for Services – Another option includes a shared fire service provided by having one agency take the lead and act as the service provider while the other agency pays a “fair share” under contract arrangements. It is not uncommon for only one agency to provide fire service to a portion or or all of a neighboring agency at an agreed contractual cost. All of the savings and operational efficiencies that might be found in consolidation under the JPA can be realized in a contractual arrangement too. However, the disadvantage is that day-to-day policy control rests with the elected officials of the parent agency providing the service. Unless there is a close and common vision regarding how to operate the service, conflict can arise between the partners, with the agency “buying” the fire service from their neighbor feeling they “pay” but have little control over the nature and quality of service.  The California Government Code Section 53060 provides the necessary authority and latitude for the legislative body of any public or municipal corporation or district to contract out key services to entities that possess the necessary expertise (California Government Code of Regulation Section 53060):  The legislative body of any public or municipal corporation or district may contract with and employ any persons for the furnishing to the corporation or district special services and advice in financial, economic, accounting, engineering, legal, or administrative matters if such persons are specially trained and experienced and competent to perform the special services required. The authority herein given to contract shall include the right of the legislative body of the corporation or district to contract for the issuance and preparation of payroll checks. The legislative body of the corporation or district may pay from any available funds - 88 -

such compensation to such persons as it deems proper for the services rendered. Recommendations: Several opportunities for additional fire service efficiencies for the City of Mill Valley and the Southern Marin Fire Protection District exist. Chiefs Tubbs and Chief Welch recommend the following: 1.

The City and District should assemble a joint Shared Management Executive Committee to include two members each from the Southern Marin Fire Protection District Board of Directors and Mill Valley City Council as well as the District Fire Chief, Mill Valley Fire Chief, Board President and the Mill Valley City Manager. The Committee would report to the District Board of Directors and City Council and could perform the following scope of work: i. Explore opportunities/challenges to expand shared services beyond the progress made to date. ii. Perform cost/benefit analysis of each opportunity/challenge. iii. Evaluate appropriate governance models. iv. Prepare a final report with recommendations for consideration by the District Board of Directors and City Council. v. Present findings to the District Board of Directors and City Council for consideration. 

If the District and City have determined there is enough common ground relative to a single shared management team or some variation, both Chief Tubbs and Welch encourage the inclusion of Marin Professional Firefighters, IAFF Local 1775 into the foundation building and formation processes. In conclusion, both Chief Tubbs and Chief Welch subscribe to the theory of 1+1=3. The essence of this concept is that the organizations separately serve their communities at their current levels. By bringing the organizations closer together into a shared management team or similar endeavor, the result must first not take away any services currently provided and second the new management team must provide a net improvement in service that could not be achieved separately. If answered honestly, the 1+1=3 concept provides a strong “why” and acknowledges that if you are not able to achieve 3 then you should question “why” you are advocating for that direction.

- 89 -

Efficiencies in services are fast becoming a way for communities to improve services to their communities while containing costs and managing the bottom line. The decision on services levels or the desire to consolidate with other agencies rests exclusively with the elected body(s), which is a direct representative of the community. Services levels are the result of a cost/benefit analysis based on risks, service requirements and funding. Both Fire Chiefs agree that the potential from savings, by optimizing the leadership organizational structure is possible, but should not be the motivation for undergoing a shared management structure. The motivation for progressing the relationship with a shared management structure should rest on efficiencies, improved services and better work flows with cost containment elements. Shared management at various levels are legally possible, however, can have regulatory challenges such as seen with LAFCO. We believe there are positive opportunities for reducing Administrative duplications thus containing costs and improving the efficiency and effectiveness of services provided.

Financial Impacts Financial Analysis underway Options 1. Not Applicable Approved By

Attachments: None

- 90 -

Southern Marin Fire Protection District Board of Directors Cathryn Hilliard, President Thomas Perazzo, Vice President Stephen Willis - Dan St. John – Kurt Chun – Peter Fleming – Christine Waldeck

New Business Item Date July 19, 2017 Topic Southern Marin Fire Deployment Performance Measures Policy Recommendation To adopt Performance Measures Policy (Exhibit A), and direct Fire Chief to report monthly on the adopted policy performance. Summary At the September 2016 Board Meeting, Stu Gary, of CityGate, LLC, presented his findings and recommendations from the Deployment Analysis completed for the Fire District. One of the key findings and recommendations (F1, R3) including the need to adopt a Deployment Measures Policy. The analysis provided a recommended policy, based on the analytics from the report, for the Board to consider and adopt. Exhibit A details the recommended Policy for the Board to consider. This policy, once adopted, will be formatted for the District’s Lexipol Policy Program. The adoption of a deployment measures policy is a requirement for the Accreditation Process. Financial Impacts None at this time. We are working to identify possible tools such as monitors in the fire stations, that provide real time feedback on turnout and travel time. As labor and management work to identify these tools and resources, any that result in a budget or resource need will be brought before the Board for review and approval. Options Do not adopt Deployment Measures Policy. The Fire Chief does not recommend implementing this option. It will unnecessarily expose the District to risk and it will

- 91 -

prohibit the District from pursuing and achieving Agency Accreditation. Adopting this standard is both a Best Practice, and Smart Practice within the Fire Service. Background The Board of Directors and Fire Chief initiated the Deployment Analysis study in late 2015. The study compiles CAD data, incident NFIRS (National Fire Incident Reporting System) data, and a variety of community demographics, all of which synthesize into the identification of a risk and threat analysis for our community, as well as an analysis of how well we deploy and respond to these identified threats and risks. The report found that the Fire District is doing many things well, but also found areas for the Board and District to consider, with possible modifications in current practice. One such example was the lack of an adopted deployment measures policy. More simply put, a policy that adopts response time standards, (speed and weight), for the categorized risks within our community. The report further articulates the importance of adopting a policy, as well as provides a data based recommendation on what those policy specifics should be. The Fire Chief recommends adopting the attached draft policy and further direct the Fire Chief to report monthly, on this adopted policy. This was previously brought before the Board in October 2016 but some questions from the Board were asked of the Fire Chief, specifically with regards to the relevance of “meet & confer” requirements. Setting standards and levels of service is a management right, and is specifically cited in the bargaining agreement with our firefighters. Setting a Performance Standard is one of these management rights. It should be noted that the intent of this policy is not disciplinarian regarding our staff. Organizations that have chosen this path with regards to deployment performance measures, have found it to be very unsuccessful and un-safe. Instead success has come from management and labor partnering to implement practices that optimize success. It is a result of management saying, “here is the target we - 92 -

want to hit”, providing the labor group with the tools to optimize success, and then supporting their innovation to achieve those objectives. This is The Fire Chief’s approach to this policy.

Approved By

Attachments: Exhibit A: Deployment Measures Policy

- 93 -

Southern Marin Fire Protection District 308 Reed Boulevard Mill Valley, California 94941 Phone: 415 388-8182

Fax: 415 388-8181

Proposed Performance Measures recommended for adoption by the Southern Marin Fire District Board of Directors: Distribution of Fire Stations Fires: To control small fires, the first due unit should arrive within 9:30 minutes/seconds, 90% of the time from receipt of the call in the Marin County Sheriff’s Office Communications Center. This equates to a 90-second call process time, a two (2) minute turnout time, and a six (6) minute travel time in the most populated areas. EMS: To treat medical patients, the first due unit should arrive within 9:30 minutes/seconds, 90% of the time from receipt of the call in the Marin County Sheriff’s Office Communications Center. This equates to a 90-second call process time, a two (2) minute turnout time, and a six (6) minute travel time in the most populated areas. Technical Rescue: Respond to technical rescue emergencies as efficiently and effectively as possible with enough trained personnel to facilitate a successful rescue. Achieve a travel time for the first company in for size-up of the rescue within 8 minutes travel time or less, 90% of the time. Assemble additional resources for technical rescue capable of initiating a rescue within a total response time of 11:30 minutes/seconds, 90% of the time. Safely complete rescue/extrication to ensure delivery of patient to a definitive care facility. Hazardous Materials: Provide hazardous materials response designed to protect the community from the hazards associated with uncontrolled release of hazardous and toxic materials. The fundamental mission of the District response is to minimize or halt the release of a hazardous substance so it has minimal impact on the community. It can achieve this with a travel time for the first company capable of investigating a HazMat release at the operations level within 6 minutes travel time or less, 90% of the time. After size-up and scene evaluation is completed, a determination will be made whether to request additional resources from the District’s multiple-agency hazardous materials response partnership. Multiple-Unit Effective Response Force (ERF) for Serious Emergencies: To confine fires near the room of origin, to stop wildland fires to under three acres when noticed promptly, and to treat up to five medical patients at once, a multiple-unit response of a minimum of one ladder truck, four engines (two of which are via mutual aid), one medic unit, and one Battalion Chief totaling 17-18 personnel (based on unit staffing) should arrive within 11:30 minutes/seconds from the time of 9-1-1 call receipt in fire dispatch, 90% of the time. This equates to a 90-second dispatch time, 2-minute company turnout time, and 8minute drive time spacing for multiple units in the most populated areas.

- 94 -