Lodi Finance Committee Meeting - December 17,2025
Lodi Finance Committee Meeting
Meeting Overview
The Lodi Finance Committee meets to address critical fiscal matters including investment policy oversight, internal controls review, and pension stabilization strategy. This agenda follows a productive November 19, 2025 special meeting where committee members requested additional research and clarification on key financial governance issues. The December meeting provides an opportunity to receive staff updates and continue strategic financial planning discussions.
Agenda Items Summary
| Section | Item | Description |
|---|---|---|
| Consent Calendar | B.1 | Approve November 19, 2025 Special Meeting Minutes |
| Regular Calendar | C.1 | Investment Policy / Internal Controls Discussion |
| Regular Calendar | C.2 | Pension Stabilization Policy Discussion |
Consent Calendar
Item B.1: Approval of Minutes
November 19, 2025 Special Meeting
This routine administrative item requests approval of the minutes from the November 19, 2025 special meeting. Consent Calendar items are considered routine and will be acted upon by one motion unless a member of the public requests separate consideration.
Key Context from November 19 Meeting
The previous special meeting addressed several important financial governance matters:
- Wells Fargo Fixed Income Presentation: John Williams, Executive Director from Wells Fargo, presented the City's Fixed Income Sales and Trading strategy, including information on daily, weekly, and monthly communications with Interim City Manager Lindsay.
- Investment Policy Review: Interim City Manager Lindsay provided an oral report reviewing the Investment Policy framework with committee members.
- Quarterly Investment Report: The Committee reviewed draft quarterly investment reports for the last three quarters of FY25 and discussed formatting for City Council presentation.
Outstanding Items from November Meeting
Committee members requested specific follow-up research:
- PARS Bonding Status: Vice Chair Nakanishi asked whether PARS (Public Agency Retirement Solutions) is bonded. Interim City Manager Lindsay committed to research and provide an update at the December meeting.
- Wells Fargo Investment in Non-Profits: Chair Hothi requested information on Wells Fargo investments into Lodi non-profits. Mr. Williams agreed to research this information and provide updates to City staff.
- Internal Control Checklist: Member Woehl asked if an established Internal Control Checklist exists. Interim City Manager Lindsay committed to research and provide an answer at the December meeting.
- Investment Report Formatting: Vice Chair Nakanishi requested a simplified report to include investment type, term, and liquid cash for City Council review, while the Finance Committee would continue receiving detailed reports.
Regular Calendar
Item C.1: Investment Policy / Internal Controls Discussion
This agenda item continues the Finance Committee's ongoing review of the City's Investment Policy and internal controls framework, with particular focus on addressing questions raised during the November 19 meeting.
Investment Policy Components
The Investment Policy governs how the City invests its funds and is critical to ensuring proper stewardship of public resources. Key areas include:
- Authorized investment types and instruments
- Maturity date restrictions and concentration limits
- Risk management and diversification requirements
- Reporting and transparency mechanisms
- Delegation of authority to the City Treasurer
Internal Controls Framework
Internal controls are essential procedures designed to ensure:
- Proper segregation of duties in financial transactions
- Authorization protocols for all investments
- Safeguards against fraud or mismanagement of public funds
- Accurate and timely record-keeping and reporting
- Compliance with state and federal regulations
- Regular review and verification of investment transactions
Member Woehl's November inquiry about an established Internal Control Checklist is particularly important for ensuring consistent and documented compliance with the City's investment policies and legal requirements.
Treasurer's Reporting Framework
During the November meeting, Interim City Manager Lindsay confirmed that future Treasurer's Reports will be provided to the Finance Committee for review before submission to City Council for approval. These reports will include:
- Investment transactions completed during the reporting period
- Information on investments that have matured and been reinvested
- Summary of current investment holdings by type and maturity
- Performance analysis and compliance verification
Committee Oversight Role
The Finance Committee serves a critical oversight function regarding the City Treasurer's investment activities. During the November meeting, Interim City Manager Lindsay reviewed the Finance Committee's purpose and the role of the City Treasurer, clarifying the committee's responsibility for ensuring proper financial governance and fiduciary duty to the City and its residents.
Item C.2: Pension Stabilization Policy Discussion
This agenda item focuses on reviewing the City's Pension Stabilization Policy, which was adopted by Resolution No. 2017-219 on December 6, 2017. The review comes after approximately eight years of policy implementation during a period of significant pension cost increases.
Policy Background and Rationale
The Pension Stabilization Policy was developed in response to a California Public Employees Retirement System (CalPERS) decision in February 2016 to reduce the discount rate (assumed future earnings rate) from 7.5% to 7.0%. This reduction resulted in substantial increases in projected pension costs to all participating agencies, including Lodi.
Financial Impact Overview
As of June 30, 2016 Actuarial Valuation:
| Plan | Total UAL | Funded Ratio |
|---|---|---|
| Miscellaneous | $56,549,380 | 68.4% |
| Safety | $74,281,718 | 58.4% |
| Combined Total | $130,831,098 | 63.4% |
UAL = Unfunded Accrued Liability represents pension benefits earned in the past that are not currently fully funded. A funded ratio below 100% indicates that plan assets are insufficient to cover all earned benefits.
Projected Cost Escalation
Original projections indicated that General Fund CalPERS costs would increase by 66.8% from fiscal year 2017-18 through 2022-23. Without intervention, analysis showed the City would be unable to meet its financial obligations by the end of fiscal year 2023-24 absent new revenue or significant service reductions.
| Fiscal Year | Normal Cost | UAL Payments | Total |
|---|---|---|---|
| 2017-18 | $2,708,300 | $4,660,130 | $7,368,430 |
| 2018-19 | $2,852,686 | $5,526,032 | $8,378,718 |
| 2019-20 | $3,301,352 | $6,501,212 | $9,802,564 |
| 2020-21 | $3,318,834 | $7,219,462 | $10,538,296 |
| 2021-22 | Not specified | Not specified | $11,460,815 |
| 2022-23 | Not specified | Not specified | $12,288,485 |
Policy Mechanics and Strategies
The Pension Stabilization Policy employs multiple coordinated strategies to address rising pension costs:
1. PARS Investment Strategy
The City invests General Fund balance in excess of 16% (based on the Comprehensive Annual Financial Report from the previous year) into an Internal Revenue Code Section 115 Trust account with Public Agency Retirement Solutions (PARS). This strategy allows for higher earnings potential than traditional municipal investments, though it carries greater risk exposure.
Benefits: Enhanced return potential to offset rising pension costs
Risk: Market volatility may result in investment losses if markets decline
2. Additional Discretionary Payments (ADP)
With City Council consent, PARS trust funds can be used to make Additional Discretionary Payments to either:
- The Safety Plan held by CalPERS, or
- The Miscellaneous Plan held by CalPERS
This provides flexibility to target urgent pension funding needs to the plan that most requires resources.
3. Proportional Allocation Framework
Pension Stabilization Resources (PSR) investments must be accounted for by source fund and made from all source funds in equal proportions to the actual allocation of CalPERS combined normal cost plus UAL cost. The General Fund serves as the base fund for calculating proportional requirements for other funds.
This ensures equitable distribution of pension funding efforts across all City departments and funds.
4. Fund Balance Protections
The policy prohibits investments that would cause any fund's projected year-end balance to fall below thresholds established in the City's Budget and Fiscal Policies. This protection ensures the City maintains adequate liquidity and financial stability while addressing pension liabilities.
5. Alternative Strategies
In addition to PARS investments, the City may:
- Pay Down Bases: Address specific line items assessed by CalPERS (created when actuarial assumptions are not met, such as prior investment losses, early retirement incentives, or changes to life expectancy assumptions).
- Prepay UAL: Make prepayments of Unfunded Accrued Liability to access CalPERS' return potential, though this strategy carries risk based on actual market performance.
Policy Effectiveness and Duration
The policy remains in effect until the combined Market Value of Assets at the two CalPERS Plans plus the Market Value of Assets in PARS exceed 80% of the combined "Entry Age Normal Accrued Liability" for both Safety and Miscellaneous plans as calculated by CalPERS in annual actuarial reports.
Strategic Objectives
The Pension Stabilization Policy serves multiple strategic purposes:
- Financial Stability: Provides resources to reduce pension liabilities and mitigate rising pension costs while maintaining service levels
- Service Protection: Avoids the need for significant service reductions required to meet growing pension obligations
- Benefit Protection: Preserves earned pension benefits for employees and retirees. Without City action, analysis showed Safety employees could face pension reductions of 64.8-69.8% or greater and Miscellaneous employees could face reductions of 57.1-63.1% or greater if the City were unable to pay CalPERS obligations.
- Recruitment and Retention: Provides assurance to current and future employees that the City is responsibly addressing pension liabilities
- Labor Relations: Maintains healthy labor-management relations by demonstrating commitment to honoring earned pension benefits
Items for Committee Review
The Finance Committee will likely evaluate:
- Current funded status of both the Safety and Miscellaneous plans versus 2017 baseline
- Performance of PARS investments relative to expectations and market benchmarks
- Whether the 80% combined funded status target remains appropriate
- Effectiveness of proportional allocation requirements in practice
- Compliance with fund balance protection thresholds
- Need for any policy adjustments based on actual experience versus 2017 projections
- Future funding strategy given CalPERS' most recent actuarial projections
Meeting Administration
Public Comment Information
Public Comment may be submitted in the following ways:
- In-person at the meeting
- Email to jlindsay@lodi.gov (received no later than two hours prior to the meeting)
- Mail to City Manager's Office, P.O. Box 3006, Lodi, CA 95241
- Hand delivery to City Manager's Office, 221 W. Pine Street, Lodi, CA 95240 (received no later than two hours prior to the meeting)
Public comment received via email, mail, or hand delivery will be provided to Committee Members and included in the official minutes record, but will not be read aloud at the meeting.
Accessibility & Accommodations
The City of Lodi is committed to providing accessible meetings for all participants. If you require accessibility accommodations:
Disability-related modifications or accommodations: Contact the City Clerk's Office at least 72 hours prior to the meeting date. Phone: (209) 333-6702
Language interpretation requests: Must be received at least 72 hours in advance of the meeting to ensure availability. Contact Olivia Nashed at (209) 333-6702.
Solicitudes de interpretación de idiomas: Deben ser recibidas por lo menos con 72 horas de anticipación a la reunión para ayudar a asegurar la disponibilidad. Llame a Olivia Nashed (209) 333-6702.
Meeting Broadcast and Access
- Telecast: Meetings of the Lodi City Council are telecast on SJTV, Channel 26
- Webcast: The City of Lodi provides live and archived webcasts of regular City Council meetings. Access via www.lodi.gov by clicking the meeting webcasts link
- Facebook: Members of the public may view and listen to the open session at www.facebook.com/CityofLodi/
Public Records Access
All staff reports or other written documentation relating to each item of business referred to on the agenda are on file in the Office of the City Clerk, located at 221 W. Pine Street, Lodi, and are available for public inspection. Agendas and staff reports are also posted on the City's website at www.lodi.gov.
Key Dates and Deadlines
- Meeting Date: Wednesday, December 17, 2025
- Meeting Time: 10:00 a.m.
- Location: Carnegie Forum - Large Conference Room, 305 W. Pine Street, Lodi
- Public Comment Deadline: Two hours prior to meeting (by 8:00 a.m.)
- Accessibility Request Deadline: 72 hours prior to meeting (by December 15, 2025)
- Language Interpretation Request Deadline: 72 hours prior to meeting (by December 15, 2025)
References & Resources
- City of Lodi Official Website
- California Public Employees Retirement System (CalPERS)
- City Council Meeting Webcasts Archive
- City of Lodi Facebook
- Contact: City Manager's Office, 221 W. Pine Street, Lodi, CA 95240 | Phone: (209) 333-6702 | Email: jlindsay@lodi.gov