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By: Pamela Arends-King, City of Tustin
This fall I have attended the Washington Finance Officers Association (WFOA) and the Oregon Municipal Finance Officers Association (OMFOA) conferences and I look forward to attending the Alaska Government Finance Officers Association conference this month in Anchorage. The conferences I have attended have been excellent and the people I met very gracious and welcoming.
One subject that was discussed at both conferences and also at the PERS conference last week was cyber security. The gentleman teaching the cyber security courses at WFOA talked about a city where its direct deposit funds for payroll (over $400,000) were deposited into accounts throughout the mid-west instead of into employee bank accounts and those funds were immediately transferred from the mid-west accounts to an account in Ukraine. The thieves were able to access the City’s data files that housed the direct deposit bank information and change all the accounts to the account in the mid-west by sending a phishing email to a city employee. Phishing is defined as an attempt to acquire sensitive information such as usernames, passwords, credit card detail and money by appearing as a trustworthy source in an electronic communication such as an email. Apparently the employee received an email that included a website link. Because the email appeared to be from someone she knew, she clicked on the link. That triggered the application that made it possible for the payroll deposit to be sent to the wrong bank accounts. This is just one example of many that were shared in the sessions I attended.
At the OMFOA conference the subject of cyber security and business identity theft was discussed. Business identity theft is becoming a serious problem. A good example of business identity theft is that correspondence is sent to the accounts payable department of an entity stating a vendor’s bank account has changed for its ACH payment. The business receiving the correspondence uses the new information and pays the invoice only to find out that the funds were sent to a bank account overseas and they still owe their vendor for the outstanding invoice.
To help prevent the City of Tustin from being a victim we have started to regularly inform our employees through email of any hacking trends that the City may be receiving through email and we are now discussing having mandatory cyber security training for all employees on a regular basis. We are also implementing additional steps to confirm if correspondence received by our vendors is legitimate by calling the vendors, researching the vendors’ websites and paying attention to any irregularities of invoices.
I hope you found this information useful, and you all have a fantastic Thanksgiving with your family and friends.
Executive Director’s Message
By: Melissa Dixon, CAE
If you haven’t already, you’ll soon be receiving your membership renewal notices for 2015. I hope you find value in CSMFO, and you continue to support your professional organization.
Want to make the most of your membership? Now is the time that President-Elect Jesse Takahashi will start thinking about his committee appointments for 2015. If you’re interested in volunteering for one of the standing committees (listed below), please contact me at firstname.lastname@example.org.
Conference Site Selection
Professional Standards & Recognition
Also, don’t forget there are 20 chapters throughout the state who would most likely love having additional help putting on meetings and other chapter functions. Don’t be afraid to volunteer—you’ll be surprised what a rich, rewarding experience it can be!
2015 CSMFO Annual Conference
“The Changing Tides of California Finance”
By: Tim Seufert, NBS
The CSMFO 2015 Annual Conference should be on your calendar! Networking, sessions and fun are all part of the plan. Come early and stay late to take advantage of all the offerings in the Monterey area.
The overall educational plan is almost final at this point. For the preconference on Tuesday, there are now two sessions being offered:
- IT session: Phil Bertolini, Deputy County Executive/CIO, Oakland County, Michigan will address IT issues relevant to CSMFO members. This proved to be a very popular session last year (but this won’t be a repeat of last year!), and will likely fill up.
- Revenues session: “All you wanted to know about Municipal Revenues – The Update” will drill down on the basics on municipal revenues as well as recent trends and developments. Veterans Michael Coleman (CSMFO Local Government Consultant), Lloyd deLlamas (HdL), and Tim Seufert (NBS) will be on the panel.
On Tuesday, there will also be golf (with an 8 am start, so arrive early) and tennis tournaments, as well as an optional wine tasting and tour.
For the Wednesday “Early Bird” time, we also now have two programs:
- GFOA update: Stephen Gauthier from GFOA will present on topics near and dear to many CSMFO members, and has been a well-recommended session in years past.
- Innovative public/private projects: There will be an informative hands-on tour and discussion of Monterey-area projects.
In addition, the Exhibit Hall will open in the morning, earlier than usual. This will be a good time to talk with vendors about services and products available for your organization.
The educational sessions during the conference will feature a broad range of topics, from accounting and financial reporting to budget and financial planning, from treasury/debt management to leadership development and innovation and information technology. A sampling of the confirmed sessions are as follows:
- GASB: David Bean, CPA, will discuss what you need to know about recent and possible future GASB standards.
- Water rates: We will have a session on the drought and its effect on water rates.
- The economy: We will have an update on the economy and predictions for 2015.
- CalPERS: An update from Alan Milligan, Chief Actuary, and Cheryl Eason, CFO, is planned.
- Debt Management: We will have a session focusing on Post-Issuance Compliance and the impact of the Municipal Advisor’s Rule.
- Treasury Management: We will have a session focusing on current market development and how those trends will likely impact the investment market.
- Leadership Development: Two sessions with Neil Kupchin are on tap, including one on developing the next generation of high performers.
On Thursday, the day will start with a Fun Run/Walk, and end with a wild reception and party, with lots of diverse entertainment!
Monterey is the place for the Annual Conference, from February 17-20, 2015 at the Monterey Conference Center in downtown Monterey, California. Lodging will be at the Portola Plaza Hotel. The express intent of the Conference is to enhance knowledge and training of the membership. Registration is now open at www.csmfo.org/csmfo-2015-annual-conference/.
If you have not done so, make your hotel reservations now (the hotel can be reached at (888) 222-5851 and the email address is email@example.com), and get ready for an extra-special Annual Conference in Monterey.
Vote Now for Your 2015 Board of Directors!
Each year the CSMFO membership elects a Northern California Board member, a Southern California Board member and a new President-Elect. This year the nominees are:
- John Adams, City of Thousand Oaks
- Margaret Moggia, West Basin Municipal Water District
- Karan Reid, City of Concord
- Stuart Schillinger, City of Brisbane
- Brent Mason, City of Riverside
- Rick Teichert, City of Moreno Valley
Good luck to this year’s nominees!
Keeping Governmental 457(b) Plans on Track
By: Edward Wagner – Managing Director, SageView Advisory Group
As government agencies consider freezing their defined benefit plans or withdrawing from state plans, many are turning to 457(b) and 401(a) defined contribution plans to help their employees prepare for a financially secure retirement. One example of this new defined contribution trend is the STARS program (www.STARSca.org). Thirteen years ago, Regional Government Services Authority, partnered with other Northern California agencies to form a pool of government 457 and 401 plans to address the concern of rising defined benefit costs and to utilize efficiencies of scale. This pooled program, along with other similar programs in the private sector, were formed to help smaller groups provide a quality benefit on par with much larger groups. This pooled approach allows a single governing body to monitor and reduce fiduciary risk through consistent processes, as well as enhance the participant experience with a focused approach to communication and education.
Set up properly, governmental plans can be straightforward and flexible. Not set up properly, they can be expensive administrative quagmires that can lead to fiduciary concerns for plan sponsors and unsatisfactory outcomes for participants. For these reasons, the IRS has been paying closer attention to these plans for the past several years.
The traditional approach of using multiple providers can lead to suboptimal results
Many plans are set up using multiple providers, but a multi-provider plan design can sometimes result in higher costs, fragmented communication, and concerns about fulfilling fiduciary duties.
Higher costs: In a multi-provider environment, plan sponsors lose the economies of scale they might gain if they consolidated all plan assets with one provider. This can mean high retail pricing for their investments. A single provider can offer an open-architecture platform that includes low-cost, flexible revenue-share-class investments —which can make a big difference in participant investment results.
Fragmented communication: Additionally, participant communication may be fragmented and sporadic, resulting in low participation and substandard investment outcomes.
Fiduciary concerns: Multi-provider plans also may be faced with administrative complications that don’t stand up to IRS scrutiny. According to a study of IRS audits, the most common administrative errors related to use of multiple providers are:
- Excess contributions caused by weak communication among providers.
- Failure to enforce the “first day of the month” requirement for contribution elections and changes.
- Distributions that don’t meet the “unforeseeable emergency” criteria.
- Failure to operate the plan in compliance with the plan document(s).
- Lack of coordination of maximum loan amounts among the providers.
- Failure to default loans as required under IRC section 72.
It’s true that governmental plans aren’t subject to ERISA requirements. But, as an article in the Journal of Pension Benefits points out, these plans are subject to state law and, in many cases, state fiduciary laws are based on principles very similar to those underlying ERISA – including modern portfolio theory, prudent person rule, and the use of generally accepted investment principles. In other words, in most states, a plan sponsor’s fiduciary duty is to select, monitor, and prudently review the performance of all plan providers and the components of each plan offered. This would include the plan’s investments, costs and fees. Using multiple providers can make this a complex, time-consuming task, prone to errors.
Using a single provider can mean a smoother-running plan
Consolidating under a single provider can make a lot of sense for many governmental plans.
- Streamlined, consolidated investment choices may help reduce costs and fees and make it easier for participants to make investment decisions.
- Consistent, focused participant communications and education may help improve plan participation and increase participant satisfaction.
- Simplified administration generally leads to fewer errors and helps increase peace of mind for plan sponsors.
As always, pay attention to details
Aside from the issues specifically related to using multiple providers, it’s becoming more and more important for plan sponsors to be well-educated in the details of their plans so they stay in safe fiduciary waters. Today’s retirement plan market, for both private and public sectors, has evolved significantly from years ago. There are more options for the end consumer, which is good for the participant, assuming the plan sponsor is carefully weighing all those options and using appropriate benchmarks and criteria when making decisions for their employees.
For more information on the STARS plan or how to contact someone about analyzing your existing plan’s competitiveness with relation to the market, please go to www.STARSca.org.
 Gregory E. Seller and Marilyn R. Collister, “IRS Audits of Government 457 Plans,” Focus on 457
 Fred Reish and Brice Ashton, “Fiduciary Rules Applicable to “(b)” Plans,” Journal of Pension Benefits
Keep in mind that all investing involves market risk, including the possible loss of principal.
Registered Representative with and securities offered through Cetera Advisor Networks LLC, member SIPC
1920 Main Street, Suite 800, Irvine, CA 92614 T: 949.955.1395 | SageView is not affiliated with Cetera Advisor Networks
CSMFO MiniNews Committee Member Spotlight
Name: Jason Al-Imam
Agency: City of Los Alamitos
Vice Chair of: Professional Standards and Recognition Committee
Q: How long have you been in the municipal finance profession? Why did you choose this profession?
I have 11 years of experience in municipal finance. I began my career at Conrad and Associates where I worked for six years predominantly in the performance of audits of city governments. I have also had the opportunity to serve as Controller for the City of Riverside and on November 12, 2014 will begin service as the Administrative Services Director for the City of Los Alamitos.
I chose my profession because I recognize the important role that finance professionals play in maintaining the proper stewardship of public funds. I feel privileged to be part of the municipal finance community.
Q: How long have you been a CSMFO member? Served on a CSMFO committee?
I have been a member of CSMFO for five years. This is my first year serving on a CSMFO committee.
Q: What committee are you a part of now? Why did you become involved with CSMFO’s committee(s)?
I am a Vice Chair on the Professional Standards and Recognition Committee. I joined the Committee because I wanted to be a part of the collaborative process, which has allowed me to meet a lot of great people with the same interest of enhancing our profession.
Q: What are your goals for the committee for the coming year, and how do they relate to the organization’s overall goals?
One of CSMFO’s primary goals is to enhance the knowledge and skills of finance professionals throughout California. Along these lines, the CSMFO 2014-2016 Action Plan tasked to the Professional Standards and Recognition Committee the responsibility for establishing an inventory of existing professional standards and to determine if gaps exist. The Committee has begun to inventory the professional standards and is working with the Technology Committee to make these “best practices” and other resources more accessible.
Once the Committee has catalogued the best practices and has determined where gaps exist the Committee will work with the appropriate authoritative standard-setting bodies (e.g., Government Finance Officers Association, California Committee on Municipal Accounting, etc.) to establish uniform professional standards and, in certain situations, additional standards or “best practices” that may be developed through CSMFO.
Q: How did you come to be involved in the leadership of CSMFO?
CSMFO is a great resource and I found that there are a lot of opportunities to contribute and get involved. With my experience in auditing and financial reporting, I felt that the Professional Standards and Recognition Committee was a good fit in light of the new responsibility tasked to the Committee.
Upcoming CSMFO Webinars
“Interpreting the New PERS Actuarial Reports” 10:00 – 11:00 a.m.
Thursday, November 20, 2014
- What’s new in the reports?
- Where can you see the impact of all of the recent changes in assumptions, new methods, and pooling?
- What resources are available to address additional questions?
- Fritzie Archuleta, Senior Pension Actuary, CalPERS
- Julian Robinson, Senior Pension Actuary, CalPERS
“Creating and Managing Reserves for Your Agency” 2:00 – 3:30 p.m.
Wednesday, December 17, 2014
- How to create and use reserves in your water agency.
- Types of reserves commonly implemented, when they are suitable, and the appropriate levels.
- Other strategies to consider, including emergency and drought surcharges.
- Sanjay Gaur, Senior Manager, Raftelis Financial Consultant
- Todd Rydstrom, Asst. General Manager & CFO, SF Water, Power & Sewer
- Kathy Cortner, Chief Financial Officer, Mojave Water Agency
Welcome New CSMFO Members!
- Steven Andersen, Manager, Macias, Gini & O’Connell LLP, South San Joaquin Valley Chapter
- AnnMarie Boylan, Chief Administrative Officer, UC Davis Health Systems, Sacramento Valley Chapter
- Angela Colton, Program Manager, San Diego, San Diego County Chapter
- Saboohi Currim, Consultant, Retired, Orange County Chapter
- Michelle Daggett Short, Sr. Accountant, San Juan Capistrano, Orange County Chapter
- Pam Derby, Consultant, CPS HR Consulting, Sacramento Valley Chapter
- Allison Edmisten, Finance Analyst III, San Bernardino County, Inland Empire Chapter
- Dylan Feik, Administrative Services Director, Auburn, Sacramento Valley Chapter
- Masami Higa, Assistant Finance Director, Vernon, Central Los Angeles Chapter
- DeAnna Hilbrants, Finance Director, City of Sonoma, North Coast Chapter
- Meegan Jessee, Deputy CFO, County of Butte, Sacramento Valley Chapter
- Lucille Jose, Finance Manager, Superior Court of California, County of Monterey, Monterey Bay Chapter
- Jeff Kawar, Deputy Director, San Diego, San Diego County Chapter
- Jason Klinghoffer, Director, Mischler Financial Group, Inc., Orange County Chapter
- Yun-Gyung Moore, Administrative Services Officer II, Tulare County, South San Joaquin Valley Chapter
- Anna Nicholas, Accountant I, Turlock, Central Valley Chapter
- Anthony Rapista, Assistant Vice President, Piper Jaffray & Co., South Bay Chapter
- Russell Reyes, Managing Director, Piper Jaffray & Co., South Bay Chapter
- Richard Romero, Finance Manager, El Centro, Imperial County Chapter
- Tiffany Salas, Accountant, Reedley, Central Valley Chapter
- Nadine Silva, Accountant II, Turlock, Central Valley Chapter
- Chris Somers, Regional Vice President Govt. Sales, Lincoln Financial Group, East Bay Chapter
- Ed Starrs, CEO, MyECheck, Inc, Sacramento Valley Chapter
- Andrea Tevlin, Independent Budget Analyst, San Diego, San Diego County Chapter
- Shirley Tupaz, Investment Operations Analyst, Sacramento, Sacramento Valley Chapter
- Brooke Woodcox, Finance Director, Rio Dell, North Coast Chapter
San Gabriel Valley Chapter Meeting – November 19
Data Security and PCI Compliance – What Your City Should Be Thinking About
-Speakers: Paul Dawkins, Government Banker, JP Morgan
Inland Empire & CMTA Div 8 Chapter Meeting – November 20
Year-End GASB Updates
-Speakers: Eadie & Payne, LLP
Channel Counties Chapter Meeting – November 20
“A Special Thanksgiving Message: Expressing Thankfulness in the Workplace”
-Speaker: Neil Kupchin
Intermediate Governmental Accounting, Shafter, CA
– November 13, 8:00 a.m. – 5:00 p.m.
- Susan Mayer
CAPPO – RFP Development Semiar, San Luis Obispo, CA
–November 14, 8:00 a.m. – 1:00 p.m.
- Point of Contact – Brad Wilkie, Management Services Director, Lompoc
2014 CSMFO Annual Weekend Training Seminar, San Jose, CA
–November 21, 9:00 a.m. – 12:00 p.m.
- Point of Contact – Mark Uribe, Assistant Director of Finance, Camarillo
Power of Fiscal Policies/Long Term Financial Planning, highland, CA
– January 27, 8:30 p.m. – 4:30 p.m.
- Bill Statler – Director of Finance & Information Technology, City of San Luis Obispo
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.