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President’s Message
By: Jesse Takahashi
“The Changing Tides of California Finance”
I hope those of you that were able to attend our 55th Annual Conference in Monterey last month enjoyed it as much as I did. We had a record attendance this year (approximately 950) with most of the increase coming from our Government attendees. The Conference offered some 35 general and concurrent sessions covering a wide range of technical and non-technical topics with two preconference sessions on Tuesday this year and an early-bird session on Wednesday morning featuring a conference favorite, GFOA Technical Services Director Stephen Gauthier. Little did he know, later that day Mr. Gauthier would also become the 28th recipient of the CSMFO Distinguished Service Award for his outstanding body of work and many contributions to improving the field of municipal finance.
The conference kicked off Wednesday at lunch with a performance by storyteller and sand artist Joe Castillo, featuring his unique SandStory design. This was followed by Don McMillan, who got everyone in a great mood with a few laughs by lightening the mood and finding the humor in our profession. Believe me, this was no easy task, but Don succeeded by showing us “The Funny Side of Municipal Finance.” What a great way to start off our 2 ½ day event.
After a long day of learning about GASB 68, Affordable Care Act, reading actuarial reports, building successful revenue measures and a plethora of other technical subjects, the Thursday night banquet entitled “Cruise the Night Away” allowed many of us to relax and network with colleagues, friends and business partners while enjoying food and entertainment. The surprise hit of the night was the karaoke lounge—who knew there were so many of you with talents other than accounting and finance! Friday’s General Session featured CalPERS’ notables, Alan Milligan, Chief Actuary and Cheryl Eason, CFO, who delivered their usual “bad” news but in a way that somehow seemed a little more palatable this time around. As Alan said, “it’s not new bad news, just old bad news.”
I would like to again thank the following committees and individuals who were instrumental in making this an outstanding conference:
Host Committee
- Drew Corbett, City of Menlo Park
- Jane Corpus, City of Milpitas
- Tori Hannah, City of Capitola
- Patty Kong, City of Mountain View
- Lauren Lai, City of Marina
- Marcus Pimentel, City of Santa Cruz
- Julie Porter, City of Monterey
- Karan Reid, City of Concord
- Tim Seufert, NBS
- Anna Van Degna, Stifel
Program Committee
- Viki Copeland, City of Hermosa Beach
- Ronnie Campbell, City of Camarillo
- Mary Bradley, City of Fremont
- Harriet Commons, Retired, City of Fremont
- Drew Corbett, City of Menlo Park
- Joan Michaels Aguilar, City of Dixon
- John Adams, City of Thousand Oaks
Administrative/Conference Support
- Melissa Dixon, Smith Moore & Associates
- Teri and Marisa Anticevich, and Janet Salvetti, Meeting & Association Management Services, Inc.
I would also like to thank again our generous sponsors and exhibitors for their commitment and support of our conference. It is this support that helps make our Annual Conference so successful year after year.
Be sure to check out our Facebook page and Guidebook Mobile App for pictures from the Conference. Many of these pictures are courtesy of our resident photographer, Chu Thai (City of Monterey Park), who did another fantastic job in capturing many memorable moments of our Conference.
Lastly, I wish to thank Past President Pamela Arends-King and our 2014 Board of Directors for the terrific job they did last year and welcome our newest Board members, Karan Reid (City of Concord) and Brent Mason (City of Riverside). I look forward to working with all of our volunteers on finding new ways to enhance the value of this organization to our members. If you have ideas on how to do this or wish to become more involved, feel free to contact me at jesset@cityofcampbell.com or CSMFO Executive Director Melissa Dixon at melissa.dixon@staff.csmfo.org.
Executive Director’s Message
By: Melissa Dixon, CAE
“The world is full of people too petrified to be silly. Don’t you be one of them.”
This is something my high school choir director used to say. It stuck with me, because I was absolutely “one of them” in high school—shy, quiet, scared of how other people saw me. The older I get, the less concerned I am about how I might look. Which is why, if you were around the bar on Thursday night at the Annual Conference, you saw me up at the front of the room, hogging the microphone. I love to sing, and while I may not have always been perfectly on pitch or right on beat, I sure did enjoy myself! I wanted to take a moment to commend everyone who participated in karaoke on Thursday night (particularly those I coerced). Getting up in front of your peers and ‘being silly’ (as my choir director would say) isn’t always easy…but the more you can let go and just let yourself play—whether it’s dancing or singing or taking a selfie on stage in front of 700 people—the more fun you’ll have, at our conferences and in life in general.“The world is full of people too petrified to be silly. Don’t you be one of them.”
I’m looking forward to seeing all of you again next year at the Disneyland Resort Hotel!
Like us on Facebook – SEE THE PHOTOS FROM THE 2015 ANNUAL CONFERENCE
Update Your Information with CSMFO!
Did you change jobs? Get a new email address? Make sure your information is correct with CSMFO! We will be pulling information for the CSMFO 2015-16 Membership Directory in the next couple weeks. Deadline to edit your information is Friday, March 13. (Not sure how to update your information? Contact Melissa Dixon: melissa.dixon@staff.csmfo.org.)
Get Your Own CSMFO Sweater or Polo TODAY! 
Did you notice the CSMFO staff wearing CSMFO sweaters and polo shirts at the Annual Conference? CSMFO is now offering those items, plus fleece jackets, available for purchase through Land’s End.
Special Discounted Registration Fee on GFOA’s 109th Annual Conference to State/Provincial Representatives and Presidents
By: Government Finance Officers Association
As mentioned in recent postings to Group Hub, we would like to offer GROA’s state/provincial representatives and presidents the government member early discounted registration fee of $380 on the GROA’s 109th Annual Conference. Submit the enclosed conference registration form (discount is written on the form) to the GFOA by May 1, 2015.
After I register for the conference, what’s next?
Reserve your hotel room through GFOA’s official housing company, Experient. Go to www.gfoa.org to reserve your housing online or to download the hotel reservation form to e-mail, fax, or mail to Experient.
Plan on attending the GFOA’s state/provincial representatives and presidents meeting on Saturday, May 30, 2015, at the Pennsylvania Convention Center (time and room number TBA). An agenda will be posted to Group Hub before the meeting date.
We look forward to seeing you in Philadelphia! Ouestions? Email conference@gfoa.org.
Opportunity is Knocking, Do You Hear It?
By: David M. Schiffman, Senior Financial Strategist, First Empire Securities
With the U.S. economy not quite on the path to full recovery, it should come as no surprise that cutting costs and generating revenue have become priorities for institutions, such as municipalities, banks, insurance companies and credit unions. What is surprising is that many of these institutions are eschewing their investment portfolio as a means to generate revenue. This comes at a cost, and it is important for institutions to know what that cost is.
Throughout the past five years, we have seen massive layoffs, spending cuts and overall margin compression, but for many institutions these “easy” decisions have already been made and their benefits have been exhausted. In circumstances such as these, an institution’s fixed income portfolio logically could play a bigger role in capturing incremental yield and income, yet in today’s low interest rate environment and the expectation that rates will be on the rise in the near future, many are keeping their assets on the sidelines.
By forgoing an investment in the bond market in the hopes of rates rising in the future, investors are incurring a hidden expense—the Opportunity Cost. The following example will help illustrate this concept.
The graph below shows the “accumulated income” an investor would forego over the next 30 months if they had $1 million earning 0.15 percent in a money market account rather than investing those funds in a 5-year U.S. agency bullet bond yielding 1.75 percent. The difference in this case is considerable.
Investors can also calculate a “breakeven yield” throughout the period to see if it will be “worth the wait” for yields to rise. In this example, an investor would need to earn 2.15 percent on a 3-year investment that they make 24 months from now in order to “breakeven” on investing in a 5-year bond today. With 3-year Agency bullets currently yielding about 1.10 percent, that would imply they need an increase of 105 basis points (1.05 percent) in yield over the next 2 years.
Accumulated Income Breakeven
Remember, this is just to BREAK EVEN! Most investors would most likely forgo current income if they thought they could earn MORE yield in the future. By requiring yields in the three-year part of the curve to almost double during the next 24 months, investors should seriously consider the likelihood, or unlikelihood, of that happening.
By quantifying another potential cost that institutions can reduce or eliminate, it may be prudent to evaluate current liquidity needs to determine how much forgone income is currently being lost. Other factors to consider that might make this an even more compelling decision relates to the asset class chosen to purchase, since a number of potential opportunities could offer even more yield than a 5-year agency bullet.
Depending on an investor’s risk tolerance, investment objectives and policy constraints, negotiable certificates of deposit, investment-grade corporate bonds, short average-life mortgage-backed securities or high quality municipal bonds may be an even better option. Hence the opportunity cost could be considered an even higher expense an institution is incurring by waiting for rates to rise, yet proactively managing liquidity could be thought of as a simple and effective strategy to improve profitability and income.
What if the Federal Reserve begins its tightening cycle soon and short rates begin moving higher? Won’t my liquidity fund pay a higher rate? Generally speaking, most short-term funds will see a slight increase in portfolio yields, but they will dramatically lag the movement in the Fed Funds rate, since these funds need to wait for maturities in order to reinvest assets at higher rates.
Therefore, investors trying to time the market in the hopes that we experience an appreciable move upwards in rates could easily reduce a hidden cost that many have never quantified. By proactively managing liquidity, investing regularly (think dollar-cost averaging) and being opportunistic in allocating funds to various asset classes to capture the best relative value, fixed income investors will avoid the pitfalls and costs associated with market timing. Knock, knock…
David Schiffman is a senior financial strategist at First Empire Securities, a member FINRA/SIPC. He can be reached at dschiffman@1empire.com.
CSMFO MiniNews Committee Member Spotlight
Name: Chu Thai
Agency: City of Monterey Park
Committee Vice Chair of: Technology Committee
Q: How long have you been in the municipal finance profession? Why did you choose this profession?
I’ve been in municipal finance since 1999, but I was working for cities since 1994 after graduating from Cal Poly Pomona. I am very happy in municipal finance, and my goal is to be City Manager. With a degree in Urban Planning and past experience in parks and recreation, I thought it would be good to get municipal finance experience. I moved over to the City of Tustin’s Finance Department, and then followed with the cities of Morgan Hill, Beverly Hills, South Pasadena, Stanton and now Monterey Park. I haven’t left municipal finance because there is so much to do, and Monterey Park is a fantastic place to work.
Q: How long have you been a CSMFO member? Served on a CSMFO committee?
I’ve been a CSMFO member for 16 years. I have been active with the Orange County, Peninsula, South Bay (L.A.) and San Gabriel Valley chapters, and attended events at other chapters. I’ve served on the Professional Standards and Recognition Committee, Career Development Committee, Technology Committee and Conference Site Selection Committee. I think many members have seen me around or recognize my name.
Q: What committee are you a part of now? Why did you become involved with CSMFO’s committee(s)?
I recently became Technology Committee Chairperson and truly enjoy what we are doing. Back around 2006, I was asked to join the Budget Committee by Agnes Walker. She helped introduce me to the CSMFO leadership and for that I am very grateful. I’ve learned that being involved in CSMFO truly pays off with increased knowledge and valuable professional relationships. If you are looking to expand your career, I suggest you volunteer for one of the many CSMFO roles.
Q: How did you come to be involved in the leadership of CSMFO?
I don’t consider myself in a leadership role at CSMFO. It’s a great organization and I’m just providing support to help build it up. We are made up of so many talented and professional individuals.
Q: What are your goals for the committee for the coming year, and how do they relate to the organization’s overall goals?
My current focus is to use our Facebook page to bring out the personalities of CSMFO members, places and events. I enjoy seeing photos and reading stories of who we are and what we do. Our website is also due for a facelift, so stay tuned.
Coaching Corner
“Boosting Your Career with CSMFO Member Benefits”
March 12, 2015 – 2:00 – 3:30 p.m.
Advance registration required for this no-charge webinar: https://attendee.gotowebinar.com/register/4368227021023976194
Are you getting the most from your CSMFO membership? Find out what you (and employees who aren’t members of CSMFO) are missing.
Webinar Topics:
- Where is CSMFO headed and how is it serving entire local government finance teams?
- What are key CSMFO member benefits?
- What career development opportunities are available to help you succeed?
- How can valuable recognition opportunities enhance your career and your agency?
- How can you get involved to enjoy the benefits CSMFO offers?
Presenter:
- Jesse Takahashi, CSMFO President, Finance Director, Campbell
- Steve Heide, CSMFO Membership Benefits Chair, Finance Manager, Chino Valley Independent Fire District
- Scott Catlett, CSMFO Career Development Chair, Assistant Finance Director, Riverside
- Mike Gomez, CSMFO Professional Standards & Recognition Chair, Financial Resources Manager, Riverside
- Margaret Moggia, CSMFO Board Member, CFO, West Basin Municipal Water District
Audience: all local government finance professionals
Welcome New CSMFO Members!
- Richard Packard, Associate, Standard and Poor’s, Out of State
- Lorraine Barnes, Accounting Technician, Barstow, Desert Mountain Chapter
- Hollie Villalobos, Accounting Technician, Barstow, Desert Mountain Chapter
- Natalie Klock, Finance Officer, Templeton Community Services District, Central Coast Chapter
- Shelley Reilly, Principal Financial Analyst, Santa Rosa, North Coast Chapter
- Matthew D’Avanzo, Sr. Vice President , First Empire Securities , Orange County Chapter
- Jackie Acosta, Director of Administrative Services, City of South Gate, Central Los Angeles Chapter
- Nancy Trujillo, Chief Financial Officer, Santa Margarita Water District, Orange County Chapter
- Gilbert Garcia, Finance & Technology Director, Ventura, Channel Counties Chapter
- Andrew Fass, Director, Public Agency Financial Advisory (PAFA), Sacramento Valley Chapter
- Sujata Jain, Controller, South Coast Air Quality Management District, Inland Empire Chapter
- Brianne Gros, Ms., Beverly Hills, Central Los Angeles Chapter
- Kyle Johnson, Accountant, Rialto, Inland Empire Chapter
- Amy Ketchum, Accountant, Santee, San Diego County Chapter
- JC Squires, Financial Manager, Orange County Treasurer-Tax Collector, Orange County Chapter
- Andrew Taylor, Sr Accountant, Midpeninsula Regional Open Space District, Peninsula Chapter
- Noah Daniels, Assurance Manager, McGladrey, Orange County Chapter
- Laura Creamer, Finance Officer, Novato, North Coast Chapter
- Rosendo Rodriguez, Finance Director, San Mateo County Mosquito & Vector Control Distric, Peninsula Chapter
- Ted Price III, CEO, GovInvest Inc., Channel Counties Chapter
- Jasmine Nachtigall, President, GovInvest Inc., Central Los Angeles Chapter
Chapter Meetings
Central Coast Chapter Meeting – March 12, 12:00pm – 1:30pm
CSMFO Annual Conference – Favorite Sessions
-Instructor: Central Coast Chapter Members Conference Attendees
San Gabriel Valley Chapter Meeting – March 18, 11:30am – 1:30pm
Finance Director to City Manager
-Instructor: Bryan Cook, City Manager, City of Temple City
Inland Empire & CMTA Div 8 Chapter Meeting – March 19, 11:30am – 1:30pm
Changes to Prevailing Wage Law
-Instructor: Michael Maurer, Best Best & Krieger, LLP
Channel Counties Chapter Meeting – March 26, 11:45am – 1:30pm
How To Catch A Thief & the External Auditors Role in Detecting Fraud
-Speaker: Ernie Cooper, JD, CPA/CFF, CFE, Vicenti, Lloyd & Stutzman LLP
Orange County Chapter and CMTA Division IX, Dave & Buster’s – April 9, 11:30am – 1:30pm
Sales and Property Tax Outlook for 2015
-Speaker: Paula Cone/Andy Nickerson, HdL Companies
Education Opportunities
Investment Accounting Training & Latest Developments, Kennedy Community Center
– March 10, 9:00am – 3:00pm
-Speaker: Debra Goodnight & Ken Al-Imam, C.P.A.
Introduction to Governmental Accounting, Livermore Area Recreation & Park District
– March 18, 9:00am – 4:30pm
-Speaker: Ahmed Badawi, Partner with Badawi & Associates
Introduction to Government Accounting, Lake Forest Sports Park and Recreation Center
– March 25, 9:00am – 4:30pm
Instructor: Ahmed Badawi
Career Opportunities
CSMFO provides government finance professionals with numerous resources for enhancing and advancing their careers. Visit the job opportunities page of the CSMFO website for a list of current job openings.