May 24, 2012

 

REPORT OF THE FINANCE-AUDITING COMMITTEE/
COMMITTEE OF THE WHOLE

 

Honorable Board of Directors
Golden Gate Bridge, Highway
  and Transportation District

Honorable Members:

A meeting of the Finance-Auditing Committee/Committee of the Whole of the Golden Gate Bridge, Highway and Transportation District (District) was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Thursday, May 24, 2012, at 10:20 a.m., Chair Stroeh presiding.

Committee Members Present (7): Chair Stroeh; Chair Pahre; Directors Cochran, Eddie; Moylan and Sobel; President Reilly (Ex Officio)
Committee Members Absent (2): Elsbernd, Grosboll,
Other Directors Present (8): Directors Arnold, Campos, Fredericks, Rabbitt, Renée, Sears, Snyder and Theriault

Committee of the Whole Members Present (15): Directors Arnold, Campos Cochran, Fredericks, Moylan, Pahre, Rabbitt, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (4): Directors Chu, Elsbernd and Mar; Second Vice President Grosboll

Staff Present: General Manager Denis Mulligan; Auditor-Controller Joseph Wire; District Engineer Ewa Bauer; Secretary of the District Janet Tarantino; Attorney David Miller; Attorney Molly Kaban; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Bus Transit Division Teri Mantony; Deputy General Manager/Ferry Transit Division James Swindler; Deputy General Manager/Administration and Development Kellee Hopper; Director of Human Resources Harvey Pye; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC; John Bell, Mercer Health & Benefits, LLC; William Baldazo, Mercer Health & Benefits, LLC; Steve Ratto, Mercer Health & Benefits, LLC


1. Ratification of Previous Actions by the Auditor-Controller

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan outlined commitments, disbursements and investments made on behalf of the District. The report also included a copy of the District’s Investment Report from PFM Asset Management, LLC (PFM). Copies of the staff report, with attachments, are available on the District’s web site at www.goldengate.org or from the Office of the District Secretary.

At the meeting, Nancy Jones, of PFM, reported that the economy remains slow, and is expected to remain so for the near future. The Federal Reserve Board (the Fed) is keeping interest rates low to stimulate borrowing but, until the employment rate improves, economic change is unlikely. She reported that some longer-term investment rates have hit new lows. PFM will sell District holdings whenever a profit can be made; however, the Fed remains pessimistic.

Ms. Jones stated that the certificates of deposit listed on page 3 of the Investment Report are legal investments. She indicated that economic problems have caused interest rates to rise in all countries of Europe.

She concluded by stating that the District’s portfolio is currently earning 1.80%.

Discussion ensued, including the following inquiry:

  • Director Campos inquired as to whether the banks with which the District conducts business are financially secure or whether bank foreclosures are taking place within the District’s boundaries. In response, Ms. Jones stated that, while some banks may foreclose on properties within the District’s boundaries, JPMorgan Chase Bank, N.A. is financially secure. She added that the District’s portfolio does not include many American banks.

Staff recommended and the Committee concurred by motion made and seconded by Directors MOYLAN/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the following actions by the Auditor-Controller:

  a. The Board of Directors has no commitments and/or expenditures to ratify for the period April 1, 2012 through April 30, 2012;
  b. Ratify investments made by the Auditor-Controller during the period April 17, 2012, through May 14, 2012, as follows:
 
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Deutsche Bank LLC, Commercial Paper
04/18/12
07/30/12
5,166,487.77
0.44
Bank of Nova Scotia Houston CD
04/30/12
10/18/13
9,028,800.00
0.76
Bank of Tokyo Mitsu. Commercial Paper
05/01/12
08/30/12
7,165,353.64
0.40
Deutsche Bank LLC Commercial Paper
05/01/12
08/30/12
9,000,000.00
0.50
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the
Board, investments maturing between May 15, 2012, and June 11, 2012, as well as the investment of all other funds not required to cover expenditures that may become available; and,
  d. Accept the Investment Report for April 2012, as prepared by PFM.
     
 
Action by the Board at its meeting of June 8, 2012 – Resolution
CONSENT CALENDAR

AYES (15): Directors Arnold, Campos Cochran, Fredericks, Moylan, Pahre, Rabbitt, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

     
2. Authorize Budget Adjustment(s) and/or Transfer(s)
   
  a. There were no “Budget Adjustment(s) or Transfer(s)” to be acted upon at this meeting.
     
3. Authorize Actions Related to Grant Programs
     
  a. Authorize Receiving Allocations of State Transportation Assistance and Proposition 1B Funds and Authorize Entering into Memoranda of Understanding to Pass-Through the Funds to Lifeline Transportation Project Sponsors in Marin County

In a memorandum to Committee, Director of Capital and Grant Programs Gayle Prior, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize receiving allocations of State Transportation Assistance and Proposition 1B funds, and to authorize entering into Memoranda of Understanding to pass through the funds to Lifeline Transportation Project sponsors in Marin County.

The staff report stated that the Lifeline Transportation Program (LTP), whose objective is to address mobility issues and transportation needs for low-income residents, is administered by the Transportation Authority of Marin (TAM), and funding comes from four sources: 1) State Transit Assistance (STA); 2) Proposition 1B; 3) Federal Job Access and Reverse Commute funds; and, 4) Federal Job Access and Reverse Commute funds.

The staff report further stated that the TAM Board has approved Third Cycle LTP funds in the amount of $726,457.00 for the District’s Advanced Communications and Information System (ACIS) project. The District’s Board, by Resolution No. 2012-028 at its meeting of April 27, 2012, authorized actions relative to the application and award of these LTP funds, to support the ACIS project.

The staff report stated that the TAM Board has also approved Third Cycle LTP funds for the following projects:

PROJECT
SPONSOR
PROJECT LTP FUNDS

Marin Transit Novato Bus Stop Improvements (Prop 1B) $985,000.00
Marin Transit Canal Neighborhood Transit Service (STA) 430,002.00
San Rafael City Schools San Rafael City School Shuttle 158,268.00
TOTAL   $1,573,270.00

As stated in the staff report, because the District is the only eligible recipient in Marin County for STA funds or Proposition 1B funds, TAM has requested that the District act as a conduit to disburse and administer these funds. San Rafael City Schools has agreed to contribute 4%, ($6,330.00) of their LTP project grant funds to the District to administer the grant for a three-year period.

The staff report also stated that the District is currently negotiating with Marin County Transit District (Marin Transit) to determine the administration fee for the grant funds. Once the amount is determined, TAM will allocate up to 4% of the available grant funds to the District, which will provide the District up to $62,930.00 for administration of the LTP over a three-year period, contingent upon a grant administration fee agreement with Marin Transit. If the availability of STA and Proposition 1B funds is reduced, the allocation to the District for administrative expenses may be reduced proportionally.

Finally, the staff report stated that the funds requested for the LTP projects have no net impact on the District as they are designated for the LTP projects that TAM has approved and will be passed through to the LTP project sponsors.

Copies of the staff report are available on the District’s web site at www.goldengate.org or from the Office of the District Secretary.

At the meeting, Mr. Wire briefly summarized the staff report.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/EDDIE to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of Whole recommends that the Board of Directors approve actions relative to receiving allocations of State Transportation Assistance (STA) and Proposition 1B (Prop 1B) funds, as follows:

 

    a.

Authorize the General Manager, or his designee, to receive allocations of STA and Prop 1B funds, in the estimated amount of $1,573,270.00, to fund three Lifeline Transportation Program (LTP) projects in Marin County, as follows:

PROJECT
SPONSOR
PROJECT LTP FUNDS

Marin Transit Novato Bus Stop Improvements (Prop 1B) $985,000.00
Marin Transit Canal Neighborhood Transit Service (STA) 430,002.00
San Rafael City Schools San Rafael City School Shuttle 158,268.00
TOTAL   $1,573,270.00
 
    b. Authorize entering into Memoranda of Understanding with the LTP project sponsors to pass through the funding and related grant requirements for specified LTP projects approved by the Transportation Authority of Marin;  
 

with the understanding that the District will be compensated in the amount of up to $62,930.00 for administration of the LTP over a three-year period, contingent upon a grant administration fee agreement with the Marin County Transit District.

Action by the Board at its meeting of May 24, 2012 – Resolution
NON-CONSENT CALENDAR

AYES (15): Directors Arnold, Campos Cochran, Fredericks, Moylan, Pahre, Rabbitt, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

   
4.

Approve Renewal of the Health and Benefit Insurance Plans

     
  a. Staff Report

In a memorandum to Committee, Director of Human Resources Harvey Pye, Deputy General Manager/Administration and Development Kellee Hopper and General Manager Denis Mulligan reported on staff’s recommendation to approve the renewal of the District’s Health and Benefits Insurance Plans at an estimated renewal cost increase of 5%.

The staff report provided background information on the District’s Stop Loss and Employee Assistance Program coverage, and comments regarding the impact on the District’s health plans of national health care reform under the Patient Protection and Affordable Care Act (PPACA). The staff report stated that group health plans in existence on March 23, 2010, when health care reform was enacted, have established “grandfathered” status. These plans have exemptions from, or special treatment under, certain health care reform provisions as long as they maintain the requirements of grandfathered status. However, the requirements of grandfathered status include limitations on an employer's ability to make cost containment changes to the benefits plan.

The staff report also provided information about premium sharing between the District and its employees, stating that premium sharing would result in specific revenue to help offset the total cost to the District of its health and benefits plans. The District’s Health and Benefits Insurance Plan will remain in compliance with regulations outlined under the PPACA.

Copies of the staff report are available on the District’s web site at www.goldengate.org or from the Office of the District Secretary.

     
  b. PowerPoint Presentation

At the meeting, Mr. Pye stated that this PowerPoint presentation (PowerPoint) was prepared in order to give Committee members an overview of the District’s Health and Benefits Insurance Plans, including health, vision and dental insurance; an employee assistance program; life insurance; flexible spending accounts; and, deferred compensation. A line graph depicting the increase in the total health benefits cost per employee in 2011 compared to 2012, was followed by a cost projection for all medical benefits provided by the District, through June 30, 2013.

Steve Ratto, of Mercer Health & Benefits, LLC (Mercer), was introduced by Mr. Pye, and briefly discussed the District’s current medical benefits, stating that the District offers self-insured vision and dental insurance, and also offers life insurance and flexible spending accounts.

He indicated that health benefit costs per employee continue to rise faster than inflation or wages, with increases expected for 2012. He noted that the cost to the District for Kaiser insurance remains flat, with no change in the annual premium. The cost for Stop-Loss coverage renewal will rise 51%, while other insurance rates will increase between 1% and 7%.

He reported that Mercer requested prices from ten insurance carriers in order to optimize the Stop-Loss coverage for the District. Ten carriers were approached, and of them, three declined to quote and seven were financially not viable.

     
  c. Discussion by the Committee

Discussion ensued, including the following inquiries:

  • Director Snyder inquired as to whether new employees may enroll only in a Health Maintenance Organization (HMO), and not in a Preferred Provider Organization (PPO). In response, Mr. Pye stated that new employees must choose an HMO for the first two years of their employment.
  • Director Rabbitt inquired as to the reason that the Kaiser coverage renewal will remain flat. In response, Mr. Pye stated that, with the District’s plan, Kaiser earns the same amount per year regardless of the District’s premium amount or its claims.
     
  d. Recommendation by the Committee

Staff recommended and the Committee concurred by motion made and seconded by Directors REILLY/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors approve the renewal of the District’s Health and Benefits Insurance Plans, at an estimated renewal cost increase of 5%, as follows:

a. Kaiser Foundation Health Plan, at a cost of $6,942,000.00, for a one-year term, effective July 1, 2012;
b. Blue Shield of California Preferred Provider Organization (PPO) Plan, a self-funded Plan, at an estimated cost of $9,027,000.00, for a one-year term, effective July 1, 2012;
c. Blue Shield of California Health Maintenance Organization (HMO) Plan, at an estimated cost of $2,743,000.00, for a one-year term, effective July 1, 2012;
d. Medical Stop-Loss Coverage with Blue Shield of California, at a cost of $658,000.00, for a one-year term, effective July 1, 2012;
e. CVS Caremark Prescription Drug Plan, a self-funded Plan, at an estimated cost of $4,037,000.00, in year three of a three-year rate guarantee, effective July 1, 2013;
f. OptumHealth Behavioral Solutions, at a cost of $23,000.00, for a one-year term, effective July 1, 2012, with the understanding that the renewal fully insured rates are guaranteed for three years (July 1, 2012 through June 30, 2015);
g. Vision Service Plan of California, a self-funded Plan, at a cost of $257,000.00, for a one-year term, effective July 1, 2012, with the understanding that the administration fees are in the second year of a three-year rate guarantee (July 1, 2011 through June 30, 2014);
h. Delta Dental Plan of California, a self-funded Plan, at a cost of $2,765,000.00, for a one-year term, effective July 1, 2012, with the understanding that the administration fees are in the second year of a two-year rate guarantee (July 1, 2011 through June 30, 2013);
i. Group Life, Accidental Death & Dismemberment and Dependent Life Plan, with Minnesota Life, at a cost of $104,000.00, for a one-year term, effective July 1, 2012, with a three-year rate guarantee (July 1, 2012 through June 30, 2015); and,
j. Health Reimbursement Account (HRA), at an estimated cost of $1,141,000.00, for retirees already enrolled in the HRA program and associated administrative fees for Extend Health, at a cost of $4.00 per month per HRA account;
    with the understanding that requisite funds are available in the FY 12/13 Bridge, Bus Transit, Ferry Transit and District Divisions’ Operating Budgets.

Action by the Board at its meeting of May 24, 2012 – Resolution
NON-CONSENT CALENDAR

AYES (15): Directors Arnold, Campos Cochran, Fredericks, Moylan, Pahre, Rabbitt, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

     
5. Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Ten Months Ending April 2012)

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a schedule comparing categories of Golden Gate Bridge (Bridge) traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for ten months ending April 2012. Copies of the staff report are available on the District’s web site at www.goldengate.org or from the Office of the District Secretary.

Action by the Board – None Required

     
6.

Monthly Review of Financial Statements (for Ten Months Ending April 2012)

     
  a. Statement of Revenue and Expenses

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided financial statements entitled, Statement of Operating Revenues and Expenses for Ten Months Ending April 2012. Copies of the staff report are available on the District’s web site at www.goldengate.org or from the Office of the District Secretary.

Action by the Board – None Required

     
  b. Statement of Capital Programs and Expenditures

In a memorandum to Committee, Director of Capital and Grant Programs Gayle Prior, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided financial statements entitled, Statement of Capital Programs and Expenditures for Ten Months Ending April 2012. Copies of the staff report are available on the District’s web site at www.goldengate.org or from the District Secretary’s Office.

Action by the Board – None Required

     
7.   Closed Session

Attorney David Miller, at the request of Chair Stroeh, reported that the following matter was included on the Finance-Auditing Committee Agenda for May 24, 2012, listed as Agenda Item No. 7.a.1

    "7. Closed Session
“Conference with Legal Counsel – Existing Litigation

“Pursuant to Government Code Section 54956.9(a)
 
     

“a.  Report of York Risk Services Group, Inc.

  1. Forrest Becker vs Golden Gate Bridge, Highway and Transportation District”

He reported that staff will prepare a report on this Workers’ Compensation claim, to be provided to the Board, but that no Closed Session will take place today. 

 
       
8.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 10:41 a.m.

       

 

Respectfully submitted,

s/ J. Dietrich Stroeh, Chair
Finance-Auditing Committee