budget season so we should start off with testimony for today's meeting anyone who wishes to give testimony will be presented an opportunity up to three minutes only to speak means to keep speaking yellow means you have thirty seconds and or it means you're done show us some requests testimony from our district offices so this morning a man a man who brought a lot of notoriety to maui county and i'm talking about gary panels a couple of his passing was sudden and unexpected and that gentleman had done i've had the honor and pleasure of working for the peach you will see gary people like nick faldo and others big name golfers i had a lot of respect and the loss of gary is has been taken very hard in the golfing community so mr chair just wanted to note that s junior golf that have benefited from a couple of golf tournaments not only the economic benefit for this community but the non profits who have been a big intricate part of the golf tournament so mr chair i just wanted to bring that so everyone keep your phones either off or silent and that includes department heads anyone in this to hear his thoughts that starts at five in the evening and goes until ten at night friday we move back to holland here and that's how we do those that want to learn how to dance hula three songs those who want to learn to play music three songs and at the end of the day those who were taught the hula and were taught how to play will combine and make us more performance our objective is to have people that we are really looking forward to having this type of information through and that's why we came to the council for us was to have some help and assistance in moving forward with this project thank you for questions think you have many many of you know our family i will not point to the issues that uncle george is talking about it is a celebration but what i will talk about is the whole thing or the journey that has taken to get us to this point where we are today it was never a question of the royal order to ask of our county for any kind of monies to help them in any event i took it amongst myself to go ahead and sixty five to today ladies and gentlemen still exist as practitioners and culture advises of our law who we we are still here and we were never go away we don't choose to how we still step up to their plea to celebrate this time that we are privileged to be in and blessed to be a part of to acknowledge very fabric foundation of this i choose to recognize them and the highest of my abilities whether it is with the help of the county or not i'm a hollow you folks for even considering us and considering the value we may bring to the community or to the state of hawaii and those who have gone before us is what it's about it's not about the royal or of coming we are just one ily ily one stone in this big pacific ocean that is laid before us and there are many many many and we are seeing them unfold today you know it i know it if you model and watch what's happening in front of us today you can see  model thank you ali any questions for the gentleman mr coe thank you mr chair and thank you for your comments very heartfelt i just want to know how much you guys were asking for the beginning it was two hundred thousand and as anyone who has put on a festival where there be a day or t to understand how the word of jubilee came to existence was not something that we celebrated as just a commoner's in the past but it was something that celebrated by our more ease of those of the higher class and when they celebrate it it did not celebrate a day it was not a birthday the wedding it was a time to celebrate the reasons why so with this title we chose to celebrate that week and a lot of people a while but that's that's laden you know pretty heavy well you know it's about time we don't just think about it but we do and celebrate a full heartedly and with it came with a heavy burden of course and one of that is the cost for that two hundred thousand there was a lot of  a was a learning curve for me and i thought i feel privileged and blessed to have even participated in it and i guarantee you will be part of this whole thing now it won't be the accept if that's that's that's it and do the best we can with that ok and this is this is event is coming up morning everybody morning happy easter i don't have my usual collection of documents with me this morning because of the celebrating this weekend which was wonderful with family here in maui this year but i did get a chance to go over some of the materials that were going to be presented this morning and when i took a look at this agenda i would probably be in good standing to be able to say that this is the agenda of mobile money within departments between departments additions later than the original timing for them so any of us who really got involved in some of those issues before need to be caught up with where they're at today the first thing that i would like to bring up is budget and finance eight parentheses one on page one of our agenda today i got a number of questions over the weekend if water is a public trust why is there a proprietary fund in the department of water i don't know that answer but i heard it as a question often enough that i think it would be wonderful if that could be explained when that's brought up today what is  proprietor proprietary fund of the county of maui for the department of water thank you when we see this as being a request a budget request for a new fund for the department of water supply they were groans all over the place in the public at large what do you mean more money i said i don't know added onto what because there have been a number of layers in requests for money but it does look when it states in here the purpose of this proposal is to amend appendix a of physical year tw budget that's the one we're ending by adding a new grant for the department of water supply to enable the county to receive a grant from the state of hawaii wellhead protection program and that amount would be forty six thousand dollars sounds like matching funds that the state is is requesting of us and i know those of us who served on the up country oversight an advisory committee back in the beginning of the millennium  that we had information on the one nine hundred eighty four well had protection set up we worked with that and then we didn't hear particularly what happened to that just so that people know when you have a well protection you've got a well in the immediate circumference around that closest to it is most highly looked upon because of potential negative stuff that the becoming out  what is in that well and then there's a second around it and then a third around it so there are three different it's a conferences that talk about the water safety coming from well heads and we knew way back when that there were difficulties because of what was happening in the agricultural industry so agriculture were all in favor of no question about that it needs to be healthy soil healthy water on my way down today when i was driving and they were talking about what was going to happen cns land and the fact that they would have to be remediation done for the soil because of the stuff that has been put in by way of water and soil additions over the years so it's been an  for a long time it continues to be an issue some of it was addressed way back when so hopefully we don't get rid of all the records and we will be able to go back and build on sound thinking for them so management for his report of the fiscal year as well as record communications letter for the fisker indian june thirtieth two thousand and fifteen so at this and the last one is this management advisory report which is a byproduct  finance society it was just that they for mission was needed from the state of always us to get the information and get that information audited by their auditors so that we could or department of finance could get those numbers into the counties kafir so starting on page nineteen to peach twenty one this is our independent auditor's  report the main thing here on page twenty on page twenty is our opinions on the financial statements here we state that the financial statements are fairly presented or a clean opinion  on to teach thirty nine this is where the county's financial statements begin the main thing i wanted to touch on in the current year's kaffir is i guess the implementation of a new accounting standard which is accounting for pensions if you look on page thirty nine there are three new things that got presented here  see here the net pension liability that is reflected in the financial statements is about three hundred thirty seven point seven million dollars to get this recorded  the current year and reflect this you are calling for the pensions unrestricted net position of the colony was adjusted for two by three to forty eight point six million dollars thus showing this negative under strict and net position of two hundred seventy three million dollars it's moving on to page seventy six along with the implementation of the new pension a colony there were some modified disclosures that needed to be done on page eighty the disclosure here discloses the actual pension expense for the year so this is a change in the colony for pensions in the past the colony would just recognize the contributions made to in comparison to the actual contributions made to the pension plan that year of thirty point two million i also want to point out on page ninety two to ninety three this is actual disclosure of the implementation of that new accounting principle and how that affected the net position of both the government activities and business type activities a little behind in this one thank you pair of questions when you say net position of the beginning of the year is restated is that the amount of actual cash we have or i'm not quite sure what you know you have the  previously reported and then restated what's ok so the net position at the beginning of the fiscal year was i guess what was reported in the prior year kaffir along with the adjustment for the net pension liability i guess recording that you gaspy was also a little prior to another prior period it just meant for direct ignition of some revenue so there is another adjustment that was made in there but if you look on back on th thirty nine sixty million dollars of that invested in cap capital assets your infrastructure and here your buildings and you also have some other restricted funds that are restricted for different purposes whether it be projects highways in streets and what's what's remaining there is i guess what's left at this at this point by having to record this ability you have a deficit in unrestricted that position or what's left reflects the contributions made of twenty eight million and what you had already prepared at the end of fiscal year fourteen or three point four four million so you end the year with the actual net asset five point three million increase in accrued pollution re mediation offset by a decrease of four point eight million the lengthier closure and post lose your cos ph twenty through thirty seven is actually management's management management prepares a response i guess it gives highlights as it relates to the financial seventy four this is a breakdown of your long term obligations here and within this no it was something that was recorded during the current year of crude and pollution we mediation of five point two seven million think if i read overall i see some improvements and we are seems to be moving in the right direction especially in our retirement system and pension plans so well thank audit report of course that always intrigues me and that i like to spend my time on is looking at the findings if there's anything stated significant and looking at noticing the discrepancy may be in the numbers and what you know how we were told during my committee and then what's written here so looking forward to the follow up i guess will be getting more detailed look into that  so thank you for bringing that point out but nothing at this time receivable of seven point eight million we have sewer charges of two point three and landfill charges outstanding of three point eight are those as a percentage of the revenues collect of those three funds are those reasonable amounts that you feel are a reasonable percentage of revenues or should we be concerned about any one of those accounts the percentage of revenues i guess that that's a management call whether or not that's something you guys are going to push on to collect on the receiving bulls let's see real property taxes outstanding on that kind of stuff you guys have ability to put means are properties in order to collect these grow property taxes so the collectability there is not a major issue when lot of that we know is pretty collectable now on your your landfill charges and your other major funds that are sitting there there is an allowance that management has set up to allow for the on collectibility of some of that amount of four hundred fifty one thousand dollars so i said that says your question is really looking more for your sense of whether this is what you see in other organizations or whether you within one year of the cash advances see general fund cash in advance of the floor of the bond and they're supposed to be repeated within one year of the advance you stated on pete sixty three so we replenishing our cash flow within the appropriate time or am i losing interests are supposed to be earning more short term portfolio e potential areas that we would need to one i think we should be really at least recognizing the areas that our department does good work in because there's many areas our department in our people do good work but for this committee we're interested in also some of the areas of weakness and how we can support the department in addressing those weaknesses and getting it off the management considerations so questions you would like to present regarding the kaffir chair miss crawford chair one of the just the first brought up and i do have highlights in my version in regards the proprietary funds and the meaning and how that's applied fifty one think you missed the so before you could turn in a truce mr cochran so no one and it goes down into proprietary fun and it sort of breaks down the deficit and it i guess in regards to the department of water supply in particular and that was the question on the floor on public trust so how does this fit into something that's considered a public trust and i'm seeing that perhaps it's in regards to the services that we provide through the department to the service to the community that collection we take for the service is what basically this fund is for if you can clarify please correct so  proprietary fund is just a colony term for how these funds are called for and reported within the financial statements so many of the proprietary funds are business like activities i mean the they sell services or the they're collecting revenues for services provided and they have operational costs so the treatment of the proprietary fund and the revenues and expenditures are the i mean just for common purposes that's how they're treated take in to that part ok well very good thank you hopefully that explains the concerns i guess that been heard in the community to chair so i just wanted to clarify that for not only myself but for them to testify report has to be read in the entirety for one to understand if they just take a portion of it it would be very very difficult for them to understand so it has to be read from the letter of the auditor's until the end sorry but the question of the question that i had was on page forty it lists the expenses and and how they're whether they're covered by charges for services or grants property grants or capital grants and mr sowerby may not have an answer to this question but of the four hundred twenty three million that we are showing as being utilized during that year hundred fifty three million or about thirty six percent of that is is for charges or is funded by charges for services or operating or capital grants and i'm just wondering if thirty six percent ratio is something that we should be comfortable with or whether that there's any  any perspective that they could share with us whether that's a low amount compared to other governmental entities or whether that's a recently high  amount on these kinds of items it's not something where i mean we can provide insight i mean we're historians or we can tell you but i guess what has happened and it really depends on i guess the type of services and the colony itself when you look at this report versus the previous year and the previous year of thirty forty fifty i see progression but my idea of progression may not be what i ask in us do you find us to where we're doing most of this and i read the report you're sure i see the weaknesses but they're not that larry like refused to be do you feel we're in a very strong financial position in what and how we do it i told you was not going to  an easy question will jump back two feet which is obviously you're an independent so that's why i ask you this question i mean as it relates to your department of finance and i guess what they put together as it relates  to the financial schedules and the information that they provide to us at you know the our ability to conduct audit i mean for us it's been good i mean we've had good relationships with them and i think it provides us the right information  when we need to meet with whoever with throughout the colonnade the different departments they're very open and they provide us everything we need ability we have access to everything that we actually need to about the role of the county auditor please in the securing of the independent auditor and the responsibilities of a calf or because of accounting order to still has some responsibilities as part of this process is that the good you just give us some comment or book your specific rule i know it's not as much as the independent auditors embodies to have a responsibility over on a contract to perform this audit one thing to note is that the financial statements are these counties financial statements they're not the auditors financial statements basically the auditor is here to audit the work and come up with an opinion and that opinion is that where the financial statements appear fairly or not in this case they have opined that is a clear  that there is it does reflect fairly for the county i'm ali in terms of the financial statement i think number victorian is correct is very difficult to understand because of all the complexities steps required reckoning says that we recognize the unfunded liabilities for pensions so basically the liability existed but it's the first time we have to put it on the face of  financial so what happened if you look at the financial statements we accrued over a three hundred million dollar unfunded liabilities what does that mean that means our long term liabilit had a significant increase so much soul that it took away all of our unrestricted earnings in other words if we took all our assets and subtracted the liabilities the remain became far less once again these liabilities existed for a long time because we weren't fully funding the pension and the help in affects so as mr sowerby said in two thousand and eighteen yes it is something that many many governments face there are some in this apologies in better position than us there are some municipalities that are in worse position than us but the fact of the matter is that these are real that would need to be addressed to some form some form or fashion forward i think the biggest thing about this kaffir is the recognition to see how it looks on the financial statements and the impact is quite large  but i think that's my major comment on the kaffir you know because there's a lot of other things in here but the biggest change to me was the accrual of the pension liabilities it the bond rating companies know it so this is not going to shock anybody on the financial world they are aware of financial statements and how it was a book and how we are going to book in the future before your chair it is still a structural imbalance i don't like showing the negative numbers so heavy and saying that it's going to be a long journey this session that that my unhappiness with the deficient structure bar and he's going to be a big topic for you how much we will consider we didn't have to show before but we're going to show and it's not a good number for me minus two hundred fifty million dollars for the questions for the auditors on the calf or if we are then going to move on to the single audit report so members one was her name any further questions on the care for mr axelrod do you have any additional comments you'd like to share sir very happy to allow you to share some and complaints and other matters based on an audit of financial statements performed in accordance to government auditing standards so on peach six well actually note here that we did  also report on the schedule of expenditures of federal ward on page nine here's this is our opinion on each of the federal major programs and i guess the one change here this year is that we actually issued a qualified opinion on the section eight housing choice vulture's program  there's one compliance requirement within the program that we felt that i guess finding number twenty fifteen that zero one two the reporting compliance requirement in which we felt that that colony did not materially comply with this requirement further down the speed the we did issue and modify it opinion on the remaining two program page eleven this is our report the schedule of expenditures of federal wards whoi state at the last sentence that in our opinion the schedule of expenditures disparity stated that all material respects awards this is dollars from sixty one point three million in federal fiscal year twenty fourteen a main change here is the decrease in the expenditure of  funds i guess just the classification that department of health the from the state of hawaii classify the funds that were being received this is state funds versus federal funds and therefore not included in the schedule of expenditures of federal  but that was the main decrease in twenty fourteen the federal expenditures for your e p a funds were sixteen point seven million in the current year it's only four point seven so that's the majority of this decrease in y expenditures on page twenty three of the sing audit report is the summary of the auditors results here's a summary of the audit both on the financial statements and on the federal wards  top of the page we did issue a modified opinion on the financial statements we did not know any material weaknesses but we did know significant deficiencies in internal control wausau going to other federal wards programs that were audited as major programs this year is that section eight housing ptrace both choose how we planning and construction and in the capitol grounds for drinking water state revolving funds those are the three major programs findings on a major programs and what not then the audit he does not qualify so right now i believe last twenty four teen twenty thirteen there were significant in that respect i was curious on the state department of health changing of what they considered b p a money that is now not for federal but state are they change it because of the are substantial drop in what we receive from the prior year of sixty one versus forty forty nine whatever it was so would you explain to me if you know why that was changed and continue to do i guess d b l whether it be federal their federal portion or the state funds it's still it still maintains its compliance requirements it needs to be used for qualified projects and it the fish put in money the state lol just money out when the state gets repeat then the state takes to create it if they use that money again and state money not federal money is that what i read heard you say correct so that monies must up right so occasional so that's was the cause of this ship stench will drop in what we consider federal funding vs state funding we meet the same amount or maybe more but because it's revolving fun money that has been paid back the state now takes to create all this is our money and we're in the you are money not federal money but in essence it was for money i started this all i may bring back but anyway let's not get confusing i don't think the public wants to hear that but but in other would like to hear a little bit more about the concern about the section eight vouchers it's over ok well we get i guess we could go over that finding it's twenty fifteen after any comments on the single audit report that you like to share at this time i'm happy to give you an opportunity to share your thoughts if you wish to again mr cherry very similar n getting all these findings taken care of there are some that are here to do than there are some of that's a little bit more difficult and it takes a little bit more resources to do but  my team my staff are willing to do this with you so again we're going to go through it and if you had guys have any suggestions as a committee for us to do we are willing to work with you mr chairman thank you very much fight just to be clear the fenian is the opinion of the auditor in terms of when the audit these grants so it is his professional opinion that it was significant enough to qualify the opinion so i'm not exactly sure the ramifications of the qualified opinion in terms of what it's going to mean to section eight housing i think the department probably has a better handle on that but it is what it is is a qualified opinion i think that is probably the most major fight scenes in this single report there are various other findings some which are repeat some i think there's a couple new ones but to me the most significant finding is qualified opinions section b so why don't you or misty's be so there's good understanding of us the difference between a qualified and  compliance means that the director material compliance requirements of the federal program we we feel that the colony would have materially complied with those requirements  disqualified opinion as it relates to a specific compliance requirement that we feel that the colony didn't comply materially comply with and that's the basis for for reporting the reporting compliance requirement that we of what we're looking at is we didn't feel that the colony comply with that requirement and therefore we qualified her opinion on instances where you know a qualified opinion will come out once you know that auditors judgment and what they feel is not compliance could qualify that opinion things such as material question costs in cases where there were spent in not in compliance with the program requirements that could qualify a program  know a little bit more about the details and i'd certainly like to hear what our staffs reply to it from i just wanted to mention that  within the finding that will be transmitted home there is the management response section in that instance the department has taken some corrective action just to be clear you know when i mean you have a so clear in your mind when you see department for us we're not sure the talk you have or finance department or housing and human concerns a part if you can help us through clear i'm sorry city department of housing human concern housing division they have taken some proactive action on it and it's in the report itself so i don't want to give you the impression that it's like dire it's just something that i personally and the reason i asked the question is because they started this review mentioning that it was a quality good report and particularly pointing out this finding that it was because although it's in the book the public is not looking at this book what they hear is what they hear is they on their sunday really run i want us to give the opportunity to talk about exactly what this is and how it's being fixed and that's where i'm going to that's very fair the section eight housing vouchers is a program run by the u s department of housing and urban development and they have a lot of reporting requirements they have this  their the section eight housing program also submit for the whole program to and in that case didn't fall under this finding but for a second housing choice vultures program they're required to submit this data and this data needs to reconcile the type back to the financial information of the colony when we were trying to get the information and look at how they were supporting that information that was being submitted to hud we found a lot of errors and we fall and this is where we were unable to  worked with different people in the prior year and i guess during the current year we were trying to get information and other trying to get new people in but we're having a lot of difficulty getting that this is getting that support  i know subsequently too i guess trying to get this done there's a sixty day transmitter requirement that they needed to get the information in so i'm not sure if that was due to rushing or what but that information was then a revised and i can say that by march thirty first which is the ultimate deadline to what they have corrected their from a shouldn't have submitted and we've worked with have been put in place if i recall looking through the that vast one hundred twenty pages of this current budget in this particular department i think one of their goals is to hone in on section eight and so my question to you here has i don't think department how is it is here in the gallery what that entails because they didn't get from that wall how it was going to address this per se this almost seems like more internally within the department i think the pools in the budget is to reach out and educate people in regards to what the program is how do you properly apply how do you get qualified what are you know things of that nature i thought but i'm not sure if mr or whoever has been working in conjunction with department knows a little bit more in regards to the budget and what they're looking to do to address this fine thank you here is the chair thank you for a question that's very good question because our staff have been very very active in reaching out to the department in fact thank you for lending your chamber last week for i trust training and i it's my understanding that they had about almost fifty people attended from departments in this particular case mr chair and i will just say this because i want to thank miss jane sit there in the we had tried earlier last year in which the chair to have an accountant housed in finance support him to pay but that one has changed now but they i was told that they hired an out of town that  house there and it's my understanding that this particular accountant that has since been hired has been trained with all the programs that they need to get this particular  order and i want to see how it will work out a little bit later on but our department the department finance is still willing to work with any department as far as this the consultants that have experience in this particular crap i think will help us comply with the requirements of the needs to go they brought him in to help them i guess educate them on exactly what they needed to do and how to get the spec installation process done i spoke to the director there and  requested that the recommended that maybe they should bring this person in or this company in to kind of help them again this coming year and so that you know we don't come up with this issue again and that she should agree so looking forward determination so i guess it's just like mr log and mr tucker she said it's opinions so are not legal there by federal people can go hey they said so if you're your cut you know because their opinion upon what we're doing and so here we have our professional people to you know put an eye to everything we do to give us tools so thank you thank you for your  going to move into each section yes ok ok so just a little bit more clarification when we talk about noncompliance and what have you but you also identified certain deficiencies  the one material weakness that we identified would be on the compliance side where we just went over this finding and that's where you know a deficiency in internal controls is based on the f inancial side could the people doing their work in their normal course of work well not i guess prevent or detect a misstatement from occurring in the financial statements and on the complaint say would not prevent detect noncompliance with compliance requirements so material weakness is where it's probable that it wouldn't detect a material misstatement now a significant deficiency is just deficiencies an advisory report there's findings that we just came across during the audit that we just felt that we would just communicate to you guys but they did significant deficiency within the single audit report part one of the issues that was brought up is piro policies and procedures manual needs to be better applied throughout the county in the department of water supply so this mr  forms or what cannot be located or was not signed by an employee and i guess just to give you perspective accrued vacation is thirty two point seven million dollar liability on the books of the co so you know having proper support for these that leave taken you know was something that we felt should be part of you thank you very much do also from issues with how each department does hiring practices and there's no standard practice per se every department pretty much wings it on their own they'd be on the make up over interview committee or selection criteria and what is this something that we need to be more aware of regarding a structure or policy that we should how is within all the apartments that i'm not sure i think you know the county does use the standard forms this is the f one india two for applications of leave so there is a standard process that's in place i think some of this stuff it's may be side we looked at forty employee records and for the department of water we looked at forty so each one was just forty and forty one and then the other side was three that's all you came with too so it's when we're looking at their leave records were requesting their documents for to support the lead taken and they could have twenty lead requests  the instances where we can't support all i mean that's that's the findings that's no it actually your period is one one for the year but a fiscal year we select p periods out of the year and we try and get the support within that peeper it so in in the cases that they have time off leave whether it be sick or vacation we ask for any supporting requesting documents ok mr chairman i just want to get your not better handle on what this specifically means you know if it's really that bad or it's just you know you've done these random checks in here's what you fall maybe we need to do more random checks so more you know specific checks to see how severe if it is a severe problem you know i think that's another issue that we can discuss at least a moment but i just you know i just want to get a handle on this because it's important if we stay in percent of a random then i'd like to go more specific ways to cheer and see if that they perceive continues to grow or cochran and so on these instances the people had actually taken believe and you are backtracking to see if there is correlating paperwork to show they were properly signed off to take those leaps so that means we did expend money for their paid vacation or sick leaves as you stated we have a thirty two point seven million liability and that obviously contributed to that dollar that total and now we don't really have a backup i guess peeper to verify i guess in a sense but so in these instances it was there ever could you figure out like a dollar amount that this would have added up to at all just a roundabout figure i guess that we don't have with us right now but you are correct i mean you  payroll records reflect that the took time off but i guess the supporting request off saying that the they did take that time off was missing so i guess if they were ever to question that i got paid vacation but i didn't take off they would have that form to see yes i you know i think i'm off in the cases that it's missed the forms are missing only the payroll records would reflect the fact that they have  practice and i see they're we do have a i guess sir to operate payroll policies and procedures manual and in that particular manual steps were not followed obviously signatures were gotten one as in rectify the issue department has been spoken to and work something out to better address this so it does not re every tree months mr chair because our payer system right now is kind of decentralize and has the responsibility of the department department heads they are the ones that know when there's enough are taking  vacation taking off so we want them to take that responsibility and also we have to have that opportunity to make sure that we can also look in audit their particular process and the should be importing their time ie they have the ability to import their time if they have their computers and to have their supervisors approve it and i think that's what the audit there have seen as far as the cation that we are asking we did not in this particular before we did not pay extra it's the other way around that we they do not have the supporting document that they are on vacation and ship so it's not it's not that we lost money and we took a vacation from your earned vacation without the you approving it that's how th know just a comment in regards to this i hope to mr director that you look forward into the neighbor islands or the outlying districts also as to how this is handled i pad several  complaints likewise you know no no employees signature or employees signature it is not the employee's signature so i think those are some of the things that the internal controls have to improve is have you done any further checking to see if there is a higher or lower percentage of a larger group in the chair i i know my staff have cron a report for they do be do all departments and whatever diary sold was discuss with the department this was saved or no check that we had done i think it was shared with them about two months ago as far as the percentage mr chair i don't have that number right now but we did run a report that  so please return at eleven o'clock for us to continue the review of the audits that  members as you notice in the report of the auditors he has presented us i believe with twelve findings or various standings mature weakness or significant deficiency we have seen some of the frame teams and so forth those that are repeats it's something we work on during the budget process with a specific departments or divisions that  account for i guess the costs that are being incurred on the projects and then once completed these construction projects from attraction and progress to the respective capital asset account whether it be building or infrastructure or whatnot and because it's such a manual process and it actually takes the information and communication from the project managers to say ok this is complete there is instances where there is a lot of projects that are actually presentation and i believe the part of finance has been you know working on it a lot to to get this improved i believe in the past it was just an annual process but you know i believe and has worked on it more than just at year end also you know they are improving the process is just that because it's very manual it does take a lot of time that statement and that position there is a classification of construction in progress and it's moving those completed projects out of that that number and putting it into their respective account whether it be building or project engineers in a specific department or in general all departments to do corporate improvements just in general and we also noted that within water too there was some instances that i to be closed off and move in at this point you recommend to us establishing procedures to maintain returns currently that this is something that is absent it is performed and i yeah and has been working on getting the information put together timely it's the communication and the time the communication from the project engineers if they don't notify her that the project is done she's not going to be able to know and close it off and have a transfer so that i first report what is the rule of the report i mean you know  letting them know that the  closed director do you dirty do you would you like to share anything about how we doing this process currently on the construction management mr chair the high fuss system that we have  lack of communication from departments we would be very limited in finding out which project has close in sometimes we can see it because we do that last instead of in the put struction in progress books so again what the audit found is that we might be overstating our construction in progress that is business like the type that we need to depreciate and if we are booking them properly our books is cleaner the way it is right now it's that's why it's a part of the significant efficiency is just because we are behind in moving this particular assets to the proper fund booking and it so again i think if i'm not mistaken i have asked for a resource to do this last time but we weren't successful in getting it so we just try to do us must we can communicate with the department see if we can get a better handle of it but yes it is a matter of more we are stating this particular asset side there being that construction in progress or is it is it in the a copy  assets that we already had that we can depreciates accordingly understand that we need to we need to work on that because that it provides accuracy but there's actually there's not really a cost incurred by the county because we're not on a private company that guess this is one of those things yes we have to be accurate but it's not really costing us money it's just cost in this accuracy correct it that's my understanding of here but i would really love this particular significant deficiencies get off the books if i can clean it up because it has been lingering as my one of  those occurring quite a bit and i have worked very hard in my department to get the staff work overtime to do it it doesn't cost us far as a you have a significant division one to see that we booked them properly we try to work as hard as we can do the best of our resources to get this right mr chair again it's  the materiality of the classification of presentation on the statement on that position itself is it's a significant the actual classification it's i guess showing it as construction in progress when it really those sixty nine mil and daughter seen twenty five million that should have been capitalized in prior years so that sixty nine million is oversta additions of which twenty five million of those additions had dates and services that should have been transferred in the prior year so they were close they were should have been closed now ok and showed expenditure what have you prior but they are showing during the prior prior years right ok you know seems kind of significant to me chair again i mean we're not losing but it's just not so we can understand it appears the problem during the construction and it's erode after the construction whether or not to place it under capital or maintenance is that one of the to transfer the project to capital as it's a manual process so i'm just asking whether or not that is part of the issue of whether or not it's normal maintenance and repairs or a but the main issue right now is closing off the construction of progress and moving it up to  wouldn't we know prior to even going to construction or what it is because council makes a determination on what we funding but it's a capital improvement project between him requests so i'm trying to understand why is there that i would need to look into i mean i don't have that right in front of me right now but yet i don't do that precise number but you know i mean you know to me sorry i mean point i think we were trying to get to is the transfer of the of command so to speak from a project you close to c a p coordinator over all person be kind over seen this so from that particular project regardless of what department we're talking about project engineers some sort that you mentioned then they're done with the project they recorded the say hey ms mr c a p courtney to are done so then that person or whoever that person will now notify finance as you mentioned and finance it put it into the category of you know out of the construction in progress section to closed out whatever under infrastructure fire department whoever would like i guess what is the chain of command and where is the disconnect i guess in a sense from a project you know we find it as mr holcombe a says big department takes  starts a project when it's completed now paperwork goes to your department that's really close to the projects and they know what percentage of the project is and when it's completed like i have mentioned earlier sometimes we are able to determine at our challenge mr cherish that we have turned over challenges as far as what the project manager is also so by the time the project is done maybe different near our best to do this getting this into the proper classification a smartarse we can and often times and i see it that i have to ask my staff at the accounts to work overtime bill cannot look at this again and it's used really almost by the time that the auditors are with us so again it's a challenging situation thank you and so and i heard your point chair in regards to we appropriate money to certain projects so we know what that capital asset is from from the start and that would be up to management to follow through with the project and project close the project we're happy but that dollar amount we have that figure but i'm looking at something such as an exploratory well in west maui which we gave ten mil now it didn't pan out something happen occurred now we didn't they don't expend all that but the project closed so i guess that dollar amount now turns into carry over is that where that would go see so that kind of came to my mind where yeah we gave money to something but no it never got fully expended but yet the project collapsed so there's that fund that was given for a particular item that never really got expended so i'm thinking it should show project close but capital might money's still you know encumbered and sort of sitting and i guess carry over you depends how they different projects so that there's a lot of things that can happen to that money we say is being returned to the off duty again depending upon the department's requirements and priorities in what they convince  as much as we do in the in the questions in this area department i would think that especially if it was online the they wouldn't get a paycheck you should have that can control their saying if it's not signed or authorized no paycheck and that won't happen again just a director thank you it's a good question but again our payroll system is by exemption basis meaning that if there is no exemption you get paid your regular paycheck so if you did not sign for an application to leave you will get your basic pay a so that's how we are getting paid ok so all two thousand five hundred employees you have your personality  pay your grade and all of that so unless there is an exemption recorded at that particular pay period you will get paid your stand of salaries if you have over time those are exemption so we entered accordingly that is why mystery solved is finding today the to say that it wasn't signed and all of that they can come back to us and say look i did not take that do his you can utilize his authority and do what he can internally first to address this issues but he is aware of our most concerns regarding the system so the director is moving forward mr white but each are director your response would indicate that the two instances were automated timecard did not have an wasn't signed off with the overtime be paid or would they just receive their their normal paycheck i have to look at the specific findings on that on the the document doesn't get to us early enough and we make adjustment to the next pay period so that's how we do it it's not like that we cannot make adjustments as soon as we find out th mr chair and we have some of those that i have been working on to make sure that those documents have still get to us in timely basis again as i mentioned we and we at the time i guess was in the process of the conversion to this made a payroll processing fist so now it's complete conversion is done as a curre system will have to continue to be in place for those areas but i'm taking it's very minimal as in which departments or agencies that cannot do to the largest tax you're mentioning do work with them in a way that we can help them but department can have a time keeper for them to get it to dog system and yet those are some of the sheets in the computers so again it's it's it's a work in progress of all of us yeah great thank you very much and you mention the pira policies and procedures manual is new so this is something that just got written thank you just trying to correlate if if this is a recurring thing and i and yes it is but yet we're converting into a new system but yet it's still reoccurring hopefully it's just the working out the kinks thing right now and next year we will not have th what we have and our staff are now not giving up in trying to get it done properly so that effort i think i want to thank my staff were doing so because they're not giving up i think  maintaining all adequate internal controls we need to be consistent procedures to make sure everybody hears questions in this area members mr white what type of contract was to find any any indication that they had had the same level of contract before and have done pretty good or at this been something they weren't aware of that collecting the money and sometimes we just have one person bring it to us for the deposit there's another thing that we have done though and we are incorporated and  our what are the mostly i am guessing because why are we still dealing with cash mostly or a survey shin and again we are working with parks department to use our credit card point and pay again the challenge in the credit card at the moment we are not able to absorb the the the pay the oh yes we are very actively discussing all our options with the department in fact that it did the director sitting in the gallery that's his at the track that he had put on and he he ha and they did away with it is just because it was too much for the people that the one i use credit card because once we do that the people of the cast we all share in the burden of having that and a lot of a credit card users they get benefits from and as far in all of that so that that's their reason that we are passing it along to the users because they get benefits from your seeing their credit card so they choose two people a credit card the reason the transaction for your convenience free directory is that correct that's correct we make it that's my you know in this day of credit card it should be available thank you any other questions in this area member's mr coach maybe we can do without it when we go through the department but it's one of those things of how much money do we say when somebody uses a credit card do we save the two and a half percent  too much bills and let enough money right now yeah ok thank you any other questions in this area let's move for anything any questions on seven which is a  grant programs you have comments from our auditors those two instances or receive oboes for one hundred ninety two thousand dollars department or departments were involved one is the housing one is ninety two thousand and mary's office one is about nine hundred thousand that's i guess different than reconciling back to what sitting at my sense of what what we're looking at is in these grant receivables the deferred revenue or molds is a lot of different grants that are set up with him making sure that that amount that is reported as receivable or amounts that have been received and actually tied back to the mall to do whether it be from the federal agency or grant the agency so any questions for the auditors regarding logical access and access security want one thing i did want to ask is your recommendation number three when you see a monitor vendor access into us is there a current security issue with we are very open and supportive to improve our security standards we look at mr kirky as there are eighty professional to give us guidance in these areas members questions on this in this area and there for a number eight i believe we also had the standing committee review with mr kirk you recently on some of this item so i'm ok with any of the questions members a government areas and actually having a formal steering committee to look at the i guess performance i t risk assessment and address the different risks that the colony of fisa as it relates to i t would  be something that would address these types of issues whether or not it's backup and recovery x is accessed security logical access and assoc security and recovery procedures and determining i guess where where the counties risks actually lie assessment and governance requirements correct in that i mean primarily looking over your financial reporting systems and i guess the controls over the system i mean i mean the support of what you're what you're recommending because it's something that they believe risk management is moving forward or a t's moving forward on it so i think as the chairman of this committee i'm quite happy with are professionals already moving forward on so i hope to communicate to that too that we're not standing still on this area we're moving forward or i'm ok with this kind of ten relates to both eight and nine you know some of the access procedures and i'm i'm kind of surprised that both of those are in here how  much how much have you worked with mr burke herky on what his backup policies are i mean i'm really surprised that we don't have any form i guess what your i mean the mean is not written down in a policy statement because i've been doing back up yes correct i've been doing backups it's just no formal policy and procedure related to the this move to eleven any questions regarding the centralized position to monitor federal program complaints this is this what we gave you mr baez mr baez why don't you come forward please chair and members sandy buzz budget director thank you very much for appropriating even though i didn't request it a position in my division this during this big budget session  individual that i hired is from within the county she was actually managing the grant subsidies that we give out and making sure that the nonprofits were meeting compliance requirements and so transitioning her to the federal grant monitoring is it's different but it's similar so what we're doing is working i have my senior budget specialist and i working with her and with the different managers to learn right now she's just basically collecting what current procedures are happening how many ages are reconciling their reports that you know as a member of a mention the quarterly reports and other reports that go to the federal agencies and then tying that back into ifas and you know we're finding some deficiencies in the types of reports that we get out of life isn't what the graham manages have access to and so we're working on those and will be writing up policies and procedures on working with the great managers to assure that the reconciliation to happen in the department of finance has done a good job in reviewing the  already working on regarding the reporting of there from your ifas projects yeah i believe so in any exceptions to you know normal reports then you know we're starting to review those and tried to look and see why we may have some outstanding receivables from prior years and working with the departments and so should we are actively working on three thank you so much members questions on this for mr bars or thing this person only focus on this and that's enough to fill a full time job it probably would be and i have are doing other tasks as well so you know we have a hard worker who's very skilled at getting things done figuring stuff out so she's assisting us in other areas as well in our division but majority of her focus is specifically on this she will be also  acquired for the county as well so it's the management software working on just the ground subsidy section at this time but eventually it has the ability to manage and monitor the federal grant receivables as well and it was very good i'm glad we finally have a body here to look into this and hopefully next year it will not be in the bill clinton thank you i think you have any other questions for over the auditors on this one keep the last item i believe we already have had discussions that was brought up by ms rice are there additional questions regarding a financial human consumes is working on she's aware of it and she's working on it so additional questions break ok because after that we have our state representatives coming in for retirement system this afternoon so we will bring up the water audit at this time which page of others actually i guess it's second to the last page of the auditors letter is the discussion about adjustments that  were were corrected by management and other adjustments that were not corrected because of that they were not considered material in nature and i'm just wondering there five different adjustments i dislike the auditors  comments on me on what those amounts were and i know they sometimes are considered immaterial because the budget is so big but i'd just like to have a sense of what some of where the net pension liability unfunded pension liabilities is schools d i think people know water supply had to recognise twenty four million dollars of liability for future pension and we also issue a clean opinion or unmodified opinion on the department of water supplies financial statements that is to you stole my thunder but it is seven six and seven as it relates to the net pension liability you'll see in the middle of page seven on the non current liabilities the net and liability record of twenty point two twenty four point two million dollars is reflected within the department of water supply financial statements department also carries the similar disclosures to the colonies kafir and relating to these pensions  clean unqualified opinion thank you very much and i am really excited to see the pension liability and here i think this is really good you know we have this idea that although we have money but you know when you take into consideration these for your work mr coach miss krypto destroy the questions i will ask mr meyer deputy from the water department if you would like to come forward  some comments regarding the auditor's report please we'd be happy to hear from you is our number two man from the department of water supply and how if you want to come down not to go through an audit and to receive the satisfaction of having your books looked into very carefully testing the sampling done and believe it or not at all it's also a pleasure to receive the comments of exceptions because we all we all care and improve our business and there were a few things brought up this year that we knew about but it did allowed us to devote and good afternoon committee chair and council members yes we'd like to thank the auditors we feel we have a very good working relationship our staff is hard working in trying to get things done and correctly and we were very closely with department of finance too but yes thank you and we look forward to our next audit chart the members any questions for either  chair with your indulgence not a question but i would like to thank holly and the staff for the wonderful work this makes me feel a lot more comfortable you know we hear so much negative about our what did i mean and it really is undeserved and thank you very very much thank you for coming any questions either for our water department representatives or or auditor's members that can stay misc i think  i was part of water had i guess it was the disconnect between the closing out of projects with the finance department and thereby having assets bigger than what they should have been type of thing so where do you have comments towards that properly this is a question of coordination between the two divisions our engine earing division in particular the capital improvements group and the fiscal group many times when a project is  effect finished and the assets are put in service the engineering folks don't regard that project as really being done or closed out because there are as built drawings there are more t agreements there are finish work details that need still need to be completed so the c i p engineers are still very much involved in managing that project they're not ready to sign off on the final cost of the project and as a result they don't instruct the fiscal group to close it out capitalize it and begin depreciating that asset so it stays as work in progress construction progress that's something that requires regular periodic attention and we do have a system now in place to do that on a regular basis it's initiated by the fiscal group and they literally sit down and work with the construction engineer this last audit we did have some cleanup work they would say i want to say an abnormally high volume of material that was still in the in progress accounts that should have been  this is the continuation of this morning's recess meeting of march twenty eighth two thousand and sixteen of the budget in finance committee we are going to take out of order from the end and that this time bring up b f fifty two a dish one under the heading of presentations of other post employment benefits this afternoon we are pleased to introduce two people who have flown here to share information with us that is mr west machida there at your budget and finance as well as tom williams executive director of the state's employee retirement system so gentlemen if you would come forward and i would look forward to your presentation in your comments to be invited here provide you an update as it relates to the status of the employee retirement system joining me as the model who's in the back of the room but you know her well her offices are just across the street and of he always raises the bar by saying that in any case we have a fairly full agenda but not as full as yours so what we're going to do is try to go through these items fairly quickly and make sure we afford an opportunity to focus on those areas that are most important should you course you have the hard copies of before you so i don't need to read all of this i think there are a couple of areas though that we're going to spend a little bit more time on and that would relate to the investments the funded status on funded liabilities and some of the legislative proposals that we've dealt with this session but most importantly i think the opportunity to respond to your questions and hopefully we'll have some answers  pretty straightforward i think were an important part of the state a huge economic impact we one hundred nineteen thousand members and beneficiaries in the system we have a breakdown there i think it's something like one in eight boys of the state is impacted by our member of the retirement system so you could see that it's of significant importance to a substantial number of our citizenry this is just a chart that shows the information we just showed prior to one hundred and nineteen thousand people but you can see how that membership has grown over the last decade or so this is from two thousand through two thousand and fifteen things seem to have stable all stabilize as we are known as a mature retirement system we've got more people and we're beginning to retire than we're higher and so to speak this is another way we're looking at the same set of information but this is merely the retirees and beneficiaries the active employees are not reflected here and again there's a pretty sharp ladder or increase in terms of the numbers of retirees we see in two thousand and three something  f thirty thousand as member retirees and now up in the twenty fifteen it's approaching for less than forty five thousand so not a very very long time but a significant increase  same information in the shows that by year it seems that in two thousand and twelve things kind again tapered off but they're on the increase again break out of active members this is always interest to those we speak with they'd like to see how the impact that they have on the system and molly counties both at their end about sixty seven thousand approximate members twenty four hundred fifty as of june thirtieth and fifteen that number may have increased modestly one way or the other but we think this is probably accurate as to the representation of mali county and the program breakout of retirees and beneficiaries as of june again here we show that in maui county we have a thousand and eighty six retirees sixty two individuals on disability retirement one hundred twenty eight beneficiaries receiving benefits again for that total of twelve hundred seventy a year in retirement benefits and i talk regularly of the folks who tell me how important that is and we hope to be able to continue to meet those obligations and to the long term future and you'll see the impact of those benefits to increase over time we are forecasting that and thirty years there will be paying three times what we do today three point five billion dollars in thirty years but one point one today is not  insignificant average annual pension of course is significant disparity and the pension depends upon what you saw it was in the years of service and what professions you're in but the average attention is about twenty six thousand five hundred dollars a year that's you know fairly substantial as a core component of someone's retirement benefits obviously it's important for individuals saving today to have some independent supplemental retirement of the sometimes referred  to but i think it's interesting to note too that over fourteen thousand of our members who are working today are eligible for retirement so you've got to treat them real well otherwise they're going to come to our offices and retire and we'll talk about a couple of things that are occurring that that us stimulated some interest in retirement a little further on as we go the dollars contributed the total contribution of nine hundred thirty nine million dollars a year in contributions and i guess i want to contrast that to the one point one billion dollars that we pay out you know apart from the investment earnings we'd be in a net loss circumstance but investment aren't paid all to play the largest role in a mature a plan and generally between sixty and seventy percent of every benefit dollar is derived from the investment earnings so that's one of the reasons we're trying to focus on our investments and we're go talk about the staff and one of the structural reforms we're making in order to stabilize and increase investment returns over time without incurring spawning increasing the risks of the program and  see there mowing counties proportion is thirty one million for sixty eight as a fiscal year two thousand and fifteen funding you know we can get funded from contributions from employers and employees there is now a twenty four percent contribution required on the pay for the public safety workers police and fire and sixteen point five for all other employees and again those employer twelve you see those and different contributions depended upon when you join the system but the member contributions are equal to about two hundred twenty two million dollars on an annual basis we'll get to something that's pretty important it's probably pretty close to that right now we've had some pretty dramatic downturns in the first part of the year in december and january but the markets are stabilized and come back and so we're probably pretty good and close on that  lows so we had about a seven point nine percent return on the actual where zero value and that was versus an expected return of seven and three quarters percent you may be aware that number of funds are as included as the cited that it would be prudent to lower that expected return so in a phased manner the board has decided to lower that from seven and three quarters to seven and a half sand began in july one of twenty seventeen it had sort of ratcheted down from seven and three quarters to seven point six five seven point five five began in july one of this year and then will be seven and a half from july want to twenty seventeen going forward until such time as there's a decision that long term returns would suggest otherwise vast amounts of this is a typical pie chart sure and the allocation of our assets it looks like a lot of public pension funds the only thing i would suggest to you is that the big blue part in the red part those are all equity investment equities while they may be forty fifty sixty percent of portfolios assets they represent about ninety ninety five percent of the portfolio is risky and so we're always trying to find some way to balance that risk and not to be exposed to one asset class so heavily and we've got a methodology that we're employing were implemented as we speak that will help to lower the risk exposure of our equities this is the risk base allocation and you see a big blue part there both actual as well as and this is represented in a significant change in the way in which we view risk because we look at investments that behave similarly in different and uncertain economic environments and what we can find is that we are trying to group whether they are from private equity or equity or real estate because in certain economic environments these things all move in  tandem if you will and to reduce the risk we're trying to uncorrelated investments and there are sectors that are proven to be uncorrelated this is just another depiction of where we are at on the left and why we're trying to simplify things by melding if you will a lot of assets where for example we've got us that could be an international equity we've now all packaged that into something called growth for you and we begin to analyze these sectors as to how they provide return to well as risk relative to the corresponding sectors funded status crude liabilities are twenty three point two three liability is eight point seven seven billion dollars and under the current structure of the program and that's looking at the contribution levels and the benefit levels that currently apply the fun targeted to be fully funded and twenty six years but of course that depends upon all of those actually wirral assumptions being borne out being realized and some of those are not only the investment assumptions but they relate to the demographics they relate to the mortality assumptions that we employ underlying these liabilities and one of the great things about living in hawaii is that you've got an exceedingly long life expectancy relative to the rest of the state and of course that creates its own wonderful benefits but it also creates challenges for people who are paid monies out when and so what we're in the midst of doing is we're having an experience study we do this every five years to determine what if anything has changed demographically and we look at the investments options as well but this year we'll see if there is should be any change in the mortality tables  reflect increase like jeopardy in the sense that there probably will that's what our actuaries are beginning to single funded ratio how much do we have relative to how much we go and that's the sixty two point two percent funded ratio it's not so terribly good as you can see we're in the bottom quartile among pup pension funds it's not because there's been an app management i think it's a good result of a number of factors one relates to the several downturns we've experienced over the last decade particularly the one most recent one in two thousand and eight two thousand and nine when most public pension funds declined about between thirty and thirty five percent but significantly  d one of the things i've learned is that for a number of years it was habit or practice perhaps that the excess earnings of the funds were siphoned off and used toward the general fund and what that  course does is takes away any cushion you might have had to absorb the blows that occur when there is the market downturn and so we're experiencing that now but the structural changes that have been implemented as well as the contribution rate increases and the like we think if everything works the way we hope it will and we will work toward then again we're going to be moving forward for funding we don't want to move in the other direction but it does require great that diligence at this juncture to make sure that we don't move in the negative direction and that's why we're trying to reduce the risk in the portfolio shows you when we think would be fully funded it looks like something twenty thirty nine or thereabouts again assuming all those a borne out we talked a little bit about the unfunded liability and assumed investment return rate going down to seven and a half by one july i want to seventeen another look at the same chart so i won't bore you with that but it gets back to the eight point seven billion dollars we've talked about and this tension liability of course we are under new accounting laws are required to break that out by employer sponsor segment and you can see here the state of why has the largest part of that liability the six point two billion dollars county of my three hundred sixty seven three hundred sixty eight million dollars that unfunded liability is ascr the county this is too small for me to rebut what it's basically showing is the contribution of growth rate in the numbers of dollars forecast out to twenty twenty three  looks like the growth rate is declining in terms of contributions but the overall dollar amounts increasing benefit payments and liabilities there are reflected there just another way of looking at some of the same data  there were a number of legislative proposals that were introduced in the most recent session of impacting some and all we've been responding to over the last couple of months i've clarification in some respects it allows a clarifies that employers can make their contributions on a month in advance if you will right now the legislation appears to suggest to require that employers make their contributions on a monthly basis and as it relates to the state the monies are put into the state coffers at the bennett at the beginning of the year and if they told those out to the retirement system one twelfth each month would have results in it that delay and  have in those monies to invest so by the state invest in those monies at the beginning of the year in large measure it allows us to put those monies to work earlier and reduce the unfunded liability and i think wes and some of his an suggested that over a twenty year period it could be as much as five hundred million dollars just by putting the money the sit in there already in two months or early there's also a bill related to unclaimed property and we think everybody ought  entitled to and should receive his or her retirement benefits the reality is that in some instances we find that we've lost touch with these individuals and we really have a methodology in place to try to locate these people through a bunch of services and the like but even despite our best efforts some time we lose track because they moved to the mainland or whatever and right now those monies once we can't locate them particularly at age seven and a half when they're required to begin receiving benefits unclaimed property fine and when they came back and asked for those monies we would commit to pay them out but in the interim they would be in the arrest on portfolio professionally managed low fees as opposed to the unclaimed property fund that are in a very very marginal low rate of interest so i'm going wrong direction you don't want to do that again investment personnel one of the things we're trying to do is just to allow that the investment person  we hire can be exempt from civil service right now the requirement is that they largely are civil service employees and we think it improves our ability to recruit and to retain competent staff by having the we have worked with other legislators who demanded that this be made available so that's something that's moving its way through the legislature as well there are a number of bills that i think that hit home for you all here  represent efforts on behalf of legislators to respond to the to the loss and benefits in the last opportunities these individuals have and they range from trying to provide additional years of service to some retirement incentives membership is particularly problematic because it would jeopardize our tax exempt status you can't have private employees accruing benefits in a public plan without risking the tax status of the entire program and we won't talk about the others necessarily but we think that this first privatization affects about fourteen hundred sixty five employees on the payroll as of the time we checked and the kind of benefits that are being offer they range from five million to about eleven million dollars in terms of the cost of those benefits but the major impact our asses to the unfunded liability because the programs assume that the fourteen hundred employees are going to continue  employee retirement system in the contributions will be coming in over the lifetime of those individuals and those retiring those contributions will terminate when these end of jewels are privatized and while there's a net gain of about thirty five million because some people who are in the fund who won't earn benefits won't pass going for it there are the two hundred and thirteen million dollar negative impact on the unfunded liability because of that last payroll  county and work here a few years and retires where does that get charged year is for the counties like so during the twenty year their tenure with the state the state as an employer would be making the contributions on behalf of the employee as well as if they're in a contributory plan then the employee member would also make contributions so up until the point that the separate from service from the state and then they go into the counties then the county will start to make contributions on behalf of their employee for how many years they work for the county so it's a split in terms of the contributions between the state in the county and when it's paid off it's charged now actually when it's paid out to the employee just paid out to charges already been made it's a pooled fin probably doesn't matter it is a correction that's made if there is a under contribution as an example then the pool of assets would have to make up their contribution ok all right thank you thank you mr carroll any questions is if that passes that means that the folks that essentially will start working for kaiser will still get retirement benefits are they going to be contributing as well and who is going to be contributing the employer portion well the intent of the bill twenty four forty five would allow the employees who are transferred over to kaiser to continue employment in the or coverage if you will in the employees retirement system but that fact in and of itself is problematic from our perspective because the tax qualification of the ers requires that we service only governmental workers  public sector employees and it's my understanding that on july one these individuals would no longer be public sector governmental employees they convert to be employees of  allow them to continue then it would jeopardize the tax status of the entire fun we would be subject to other pension regulations there is one color for that apprise applies to the private sector and we don't comply with the requirements risk of the i then we don't want to because they're very different than those that apply to governmental plans and if we were to lose our tax exempt status we couldn't make contributions on a tax deferred basis as is the case today and the entire contribution of the value of benefits would be tax at the time people receive them as a put in a lump sum as opposed to spread out over their retirement years so i believe the bill contemplates letting them stay in the system but we are opposing that bill because it jeopardizes the benefits for all those who remain so we don't think that that's a solution quite frankly thank you mr chair and if i were getting too far astray from the subject that is an important issue because there are a few people who are just getting close to where they can retire from that and then they're going to be switched over to people who are near retirement and want to more of the bills would allow people to start up to five years earlier than they would normally retire so they'd be tacked on a number of years so they wouldn't normally be eligible for thirty five years from now they let  begin retirement there was one of the bills that would allow one month of service for each year of service a maximum of three years there is also an effort to  these bills and we've cost that for the legislature each of those we've not taken a position pro or against except for the one that would jeopardize the tax that is of the system  chair it's interesting that things that you would think would have been ticking curd of on the negotiations table without trying to be solved by a law which is not what i think is the right we're to do it you sir they queue for being here because every year when you folks come up it's very late means some time not somewhat disturbing but very like me if far as what you are you bring forward i guess my question is fall really in the area of  because i you mentioned it we now see that incline as far as the number of employees that the state and county are employing and you mentioned that  ills that are near we and there here both for every aspect medical all the expense factors are much higher here than here and some of the changes we've made in the laws also preclude them getting what these people will be getting when they get to that point all that being said i guess my question is being what it is knowing that hopefully our investments hold steady and that's one of those  know next year the year after do you believe it limiting hiring is first thing i guess is the first question i would have that would help and secondly looking at retirement as being a methodology of capping our unfunded mandate you know which it will but getting these many people retired we know we're going to pay them debt and they're the younger ones coming in our new ones coming in we know they're going to build towards that employed or not and it just illustrates the me the dangers of trying to inject humor into these presentations because i wasn't really concerned that these fourteen thousand people would leave us with that we should be terribly concerned about it because each of them has an individual circumstance and you know and many will want to work because they're in good health to go along with the you know for whole whole full ride of reasons and i don't want to suggest that the rate of hiring of state employees is continuing to grow because even if it were static you know the contributions are set based on the actual employee population and and play in that benefit over time we do assume a payroll growth rate frankly i think you have to address the benefit formulas and those are things that the legislature and the board has already tinkered with to just those benefits accrue and going forward ok and and i thank you because again there is a human element i'm sorry we only look at numbers but there are real people out there that are affected by this either here and now going tomorrow or coming in the day after it doesn't make a difference at this point there are human factors that sometimes i believe we government and even in the private sector look at numbers more than we look at people and that's what we're all about people and i don't want that lost in the shuffle the other question i had is these contributions that you actually put down here between police and fire generally employees and in the change in two thousand and twelve there's a gradual increase peach twelve by the way and look at  see where these contributions have stated the increase as far as their contributions are concerned right do you think that we that that's something that we also got to keep moving towards adding a little bit more a little bit more question they get more they need to contribute more i want your take on that well we always try to match the contributions with the the liabilities with the benefit of cruel and to the extent those liabilities are increasing it requires an increase in the contribution and i mentioned earlier the demographic changes that underlie our liabilities and our payout and many instances you know when these plans were first form particularly for police and fire individuals worked fifty or fifty five you had to stop word and health precluded their continued receipt of benefits but now we're seeing because of a lot of technological  changes in health care that people are living a lot longer to receive in those benefits longer so it is probable that there will be some additional contributions required going forward because there will be additional payments required going forward reflecting this improved life expectancy and other factors quite frankly if they get salary increases that higher than you know into the pay the rates you all know about the spike in issues that relate to public pensions and the like and so there are a number of variables that input into that and i would like to say to that it's so important for all of i know wes and i and our board quite frankly we have to understand the numbers but it's all about the people that's why we do what we and then how long would you be before you look at it again two years is that would you say i recently did i missed it there is no set time frame question for you can look at it and we review it every year to see if it's reasonable but generally you make these changes over longer periods of time because you know we've got a long term perspective we're not looking at just the next six months what's happening you know in that glow around the globe so we're trying to look at generally five to ten years so we just made some is there is a current policy where the board worry a practice that if you hit more than seven point five percent  they did from the seventies and that's why we're in this bottom twenty five percent because i've been following this for so long the seventies and i'm now a happy beneficiary terry i can do that anymore since two thousand and five two thousand  billion one point seven billion over a thirty seven year period so much for legislative leadership and more concern about keeping the jobs than doing the job and have to review the statute to understand the distinction between what maybe it requires but i don't believe at present that there are any constraints apart from prudent on what we can invest and we tend to have the full array of investment strategies and opportunities available to us i think historically there had been limitations in most public plant where they limited the amount of exposure to stocks  the income type investments most of those have gone by the wayside and i don't believe that they constrain ers in any way today cares what you we fought the rest follows section one nineteen of the way right statutes and so all of the investments conform to those statutory provisions what parameters does the trustees have from  responsibility to those trustees say or regarding the loss of a lot of that money and then well again i do want because of my relative inexperience to seek advice of those with greater knowledge of the system but i don't think that the trustees normally bear liability for losses that may occur in the system there are some prudent investor statutes and others that would expose an individual to personal loss if in fact they made purposefully intentionally knowingly unwise decisions but  and vestment consulting firms we hire professional general investment we have so called private alternative investment consultants we have real estate investment consultants and it's typically in an analysis that takes place both by investment managers and our investment consultants that leads us to a particular investment and we don't make the investments really and i saw only that stand alone way to really look at those investments as to how it integrates with the rest of the investment in the program because again that focus i mentioned earlier that we're looking at lauren the risk in each investment of any substance that you put into a portfolio changes that risk return profile positively or negatively so there's always an effort to integrate investments that have the best or highest probability of achieving our goals of improving return with lower rest so you know it's unlikely that board members will be assessed penalties for of failed investment and hopefully while you can't guarantee all of them that the failed ones would be modest and really relative to the ones that produce strong and positive returns i have been a trustee of the employee's retirement system the managers that are hard by the retirement system are have discretion in terms of what investing we do monitor them we do have policies that oversee those managers and the investments that the they do make that if there are any losses as an example and the performance isn't up to par that we will review them to make sure that  we put them on notice that their performance either has to improve if not then they are subjected to certain consequences and so we do check on that secondly we do have  securities litigation program now that we take a look at whereby if it's found their companies have committed fraud or other mismanagement of some kind we do have counsel that would take a look at that and we will go after the companies whether it be as a participant or lead we will go after them to ensure that we're made whole and so there are things that we do look at to make sure that we go through our proper due diligence trustees to ensure that the phone is either made whole or that it's not suffered losses as a result of others well you know for me when he's make the right decision we all benefit but when you don't we as an employer have to know so from a you know employees perspective why would in the county of my only if we were asked to be able to leave the state system to go to another system to have better earning dollars and better returns to further reduce our obligations fast and sooner let's see california as we've been in discussions california have asked us if we wanted to and we were interested to join cal trusts california counties program for investment and they have a big part in a big influence on the market for us to get potentially better earnings for this county why wouldn't the state although a companies like us and those opportunities because it's our obligation we train to address address and eliminate well i think it's a policy decision as to whether or not member entities counties or employers can so called disaffiliate from a retirement system generally there are laws that either specify the conditions under which an organization might or in some instances in fact it's not allowed but that's what legislators determine whether or not you have that capacity or not those that do allow so called withdrawal or  that your withdrawal leave no obligations in the system that are unfunded so to the extent that there are these unfunded liabilities they generally are accelerated they're paid upfront before an entity could allow to be withdrawn let me just say that from an investment perspective i think the investment team at the us has had results as good as or better than a significant number of other public pension funds and it's not because they've gambled or made bat on one sector or another it's because they've got a competent staff and they've diversified in a meaningful way not only domestically but globally and so while you know there are any number of entities that may hold out past performance as you know and as to why you might want to go with them you know whether that's going to be borne out in the future and not but one can one can never know but i don't know of any other maybe there are other counties that have withdrawn from and other public pension funds to go with the into z that you describe but i think that the county's best options are within the system here that it has even greater influence or control over than maybe one approved fund so everybody shares the state has always statutorily made its fair share contribution you may be referring to the guess the next topic of discussion which is on the health benefits side which is not a pooled fine but are tracked by my employer so as an example go through it later on but you see the difference between county i'm always funded status versus the state of always an example i might be going ahead of schedule but the county of ma is funded ratio for the health benefits side is about thirty three point four percent the state is two point seven percent so there's a big disparity between the two but it is track separately so collectively you're going to see the funded ratio of the health benefits side of about seven percent in total but the county of ma is way ahead of the state in terms of what it's been able to put in and find that health benefits system and we'll get to th became finance director one of the things that we tried to do is we tried to make sure that we could control whatever within our our jurisdiction that we didn't have to do so any statutory changes or amendmen so one of the things that we have done as a state is that instead of giving one twelve every month of the contribution we are now giving everything up front at the beginning of the year because our analysis have shown  done for different scenarios for different changes over the long run in terms of down years versus up years and all of them point to the fact that if we are able to do this at the beginning of the year over an extended period of time we can reduce future contribution levels by half a billion to billions of dollars and so we have done that analysis and we have done that  this past fiscal year and we will continue to do so as long as monies are available and as long as i am finance director here and again you know i know what you just say mr much either but as i understand constitutional like our which we are required to pay our obligations so you know from we get nervous when you see it with funding available because for me the legislature has no choice but to fund the required by law and i should clarify that cherry actually we will make that payment because the funds will be available at the beginning of the year are all the other counties following the same practice you were mr machida because it's better for your investment portfolio to have all these cash upfront for potential and that is correct the one thing too is that when we make that contribution at the beginning of the year versus throughout the year it also helps out all of our brother and sister counties as well to say because the pool fund vary so whatever is reduced is enjoyed by everybody so we are we are going to recommend or at least present that to all of the counties to make sure th right so now they do that because of the new reporting requirements so they will split out as executive director william said mention in his presentation they split out the net pension liability  this is done on a yearly so that's the way we're able to give you the information all of the member segments and always liability and we'll be able to do that going forward every year thank you mr chair and county council members it's a pleasure again for me to be here really appreciate it thank you and mr as i'm going through the presentation if there is anything that you need to know or ask about please feel free to do so because i'm here to try to answer all your questions my presentation will be much shorter than mr williams but don't be misled by the number of slides because they are equally if not pension or retirees versus active ok thank you so in fact if you don't mind because one of the first slides that we're going to go through is really the total membership and so but before then this is the  agenda that i'll be covering today so i'll have about eleven slides or so that would cover the membership data some of the benefit comes in in going through some of the valuation information but let me get to the question inherent here if you don't mind so we have here in terms of total membership data and so this is with respect to the health benefit side of the system versus the pension side so cheer you asked about deferred and activist think you so those are the individuals left state or county government employment but at some point down the road would be eligible for health benefit when they retire and so those are the individuals so you have about sixty six hundred of those individuals currently i believe in the pension side we have about one thousand or so but this represents the health benefits  so that's what they are rich or they are individuals that at some point down the road so the they probably have about ten years or more of service so they will be eligible to get some defray mint off of their premiums when they do retire so they either get fifty percent of their premiums paid for seventy five percent or one hundred percent so this represents the councell we wanted to do a comparative analysis one of the things that unlike the pension side on the health benefits side valuation analysis is done every other year so it's not done every year it's done every other year so twenty thirteen in tw fifteen there was a valuation report in director had mentioned you just recently got the value which report for twenty fifteen so the next one that would come up would be twenty seventeen wanted to give you an idea in terms of the roman counts in terms of so for all of the the members where there are enrolling in whether it be medical drug dental vision or life insurance everybody wants to be in a life insurance plan so that's where you get the biggest counts and this doesn't speak to some of the members maybe all saw on their spouses or families coverage as opposed to with the e u t f so this isn't necessarily speak to how many of those are with their spouse or coverage this is for the county of mali so wanted to break up between the entire health system versus the county of mali so if you as you can see here this is probably representative of the entire system as well to where most would be in the life insurance and medical plans now this is probably what you are really interested in and this is really the valuation report for the health benefits and so we want to split it out between all employers and the county of mali so the the president and let me just concentrate maybe on the county of mali for the councils benefit so the present value of benefits is five hundred forty six million dollars of which the unfunded liability is two hundred ninety seven min or thirty three point four percent funded ratio so the count here molly has one of the better funded ratios amongst all of the employers and although all employers funded ratio blends into six point seven percent indicated earlier the state of hawaii i believe is about two point four or so percent this unfortunately the state brings down that funded ratio when you consider all employers the minimum contributions saw about three years ago there was an act man of legislation that requires prefunding of the op ed so pip is other post employment benefits and so there was a graduated in of the contributions that are required from twenty percent all the way to eventually one hundred percent in fiscal year twenty one thousand so it goes from twenty percent one year to forty percent the next year sixty percent the following year eighty percent and then finally one hundred percent in fiscal year twenty nineteen and so when i see those fees ins is really the annual required contributions so it's a percentage of the annual required contribution so when you look at four twenty seventeen which is the next fiscal year the minimum contribution required by law is sixty percent of the a annual required contribution so for the county of mali that represents one point seven million dollars the piers you go portion for twenty seventeen is fifteen point six million dollars now the subsequent year after twenty seventeen it's eighty percent so that's part of the phase in so it's eighty percent of the annual required contributions of our twenty eight team instead of the nine point seven which represent sixty percent for twenty seventeen twelve is projected to be twelve point five million dollars which represents eighty percent of the required contribution and the pay you go man for twenty eighteen is estimated to be seventeen point three million so what shows here is that there's a steady increase in the requirement not only because of the phase in period but from the peer you go from also what's needed on an annual basis to pay the employer's fair share for the retirees as well too but let's talk about what the future holds for all of us because it's one thing to talk about the current and the near future but let's talk about into the far future as well because as you well know since i've been here for the past five or six years during this presentation one of the things and one of the issues i'd like to bring up is the escalating contribution requirements and how each employer would have to take a look at that as to how that fits into their budget how that fits into the other program services that need to be done or need to be executed so when you look at those est future contribution requirements so what i've done is looked at twenty seventeen versus twenty twenty five twenty thirty five and then finally in twenty forty four and the reason why i look at twenty forty four is that n d i s because when they actually looked at the health benefit contribution requirements they're looking to pay down or close to within a thirty year period twenty forty four represents a period actually twenty forty five represents a period where it gets close to that so i wanted to take a look at all of the requirements before then twenty twenty five so it increases the any required contribution increases so you look at the first column the arc from one billion dollars in twenty seventeen to projected to be one point three billion in twenty twenty five but it's projected to increase to one point nine billion in twenty thirty five and finally two point three billion in two thousand and forty four so this is looking at all employers benefit look at the additional cost the final column were pretty funny so just by virtue of the fact that prefunding occurs in between that time period look at this stabilization of that requirement yes it goes up from three hundred seven million to four hundred thirty one million but then when you look at twenty forty four it goes back down to three hundred million so what you really see is the benefit of the prefunding rather than escalating it tapers off this is a really busy schedule but what this shows and you have it in your report in your evaluation report it has every year the projections so rather than this previous schedule where i try to summarize in increments this your shows it by year every single fiscal year this is the schedule for me in particular that i pay particular attention to as finance director because it really shows what the future requirements will be on an annual basis and one of the goals that we wanted we want to try to do is to reduce the contribution levels going forward even if the benefits have to be maintain doing other things to reduce those contribution levels as an example making those and they're required contributions at the beginning of the year versus throughout the year let me also state this in two thousand and fourteen there was no requirement to make contributions no mandated requirement i should say the state did contribute one hundred million dollars because of that hundred million dollars in two thousand and fourteen and there were some extra contributions that were made in two thousand and fifteen along with the favorable experience future contributions are being reduced as a result of that by about twenty five million per year to about forty million per year so it really that talk about legislation because you t f is not able to invest in the same way that the retirement system is so because of that it's expected return is lower than the retirement system but we are planning to see if we can change that there is legislation currently making its way through the legislative process that will if it's passed and signed into law will allow  invest in if it wants to in the same way that the retirement system is able to think but this is chair this is based on a seven percent expected return this is a graphical representation of really what the prefunding does when you look at that solid blue line that really shows that the unfunded liability will be paid off if everything all the other assumptions hold true it will be paid off in twenty four to forty six or so i know it seems like a far distance away or a time period away but really going from that solid blue line to the dotted lines where where you really have a point where you might one ever be able to pay down i think this is a really important graphical representation of what the prefunding does  and really hoping to ensure that it's paid off within a reasonable time period so as not to burden future taxpayers and future generations mayor's state of the county address ma we county has highest bond rating of any employer within the state of oil and that is true i just recently came back from a bond rating presentation about a month ago or so the high debt levels which includes the unfunded liabilities is a major factor in the rating of the financial stability of the employers and so this when you have a plan in it's looked upon favorably from the bond rating agencies in any downgrade or negative change to the outlook  employer in terms of the binary millions of dollars in better pricing in which means which translates to better interest rates lower costs for the employers and just to to show you where currently the make up of the distributions are allocations are so when mr williams talked about the equities and how much equities were allocated in the pension system when you really look at the e t f it's not nearly as much twenty four for us equities percent nineteen percent for international so when you see sixty percent or so for the pen system you're really looking at about forty three percent for the so hands in the long run the difference between the seven after expected return versus the seven percent return this is the performance over the last four years of the e t f so as you can see here and i think what's important to know is that really when you look at tw you know the plan did very well it could be not only its peer group but also its policy benchmarks and although its beat in its policy benchmarks in the subsequent years the peer group for twenty thirteen and twenty fourteen had outperformed not for twenty fifteen though but when you compare the erases returns to s returns they're they're not comparable because they're not able to invest in the same way  all have to invest in the same way that the earth is able to do so so we are lobbying we're pushing hard for this to get passed and i by the way i also sit on the board of the f i recently got appointed so it was important for me to make sure that we protect both systems not only the pension side but the health benefits side as well and then when you look at the second bullet what's important to no here because it really helps with the unfunded liability of the health benefits what it does is it fixes when you retire it fixes the definition of a dependent venit fishery so for some people when they retire the me add on family members after they retire which increases the premium costs and the coverage we felt that it should be fixed at the point of retirement and not anyone at it in their after so hence this legislation or this proposal and this will help with the unfunded liability going forward so far is made its way through the legislative process we're not sure if it's going to be approved at the end of the legislation or lisita process but again we are pushing to see to make sure that this is something else that we will see through and again so the point of it all is that there's a lot more to be done so even though there's a plan in place we are still looking at other ways to to address the liability issues because what we what we don't want to happen is anything that's been happening to the municipalities throughout the united states whereby you know they fall short and members are not able to enjoy the deservedly earned we don't want that to happen so we are still trying to do their thing to protect to deal with the un for their liabilities in a positive way questions if there's any that's directed to me mr jenner ok thank you very much just machida do you get to participate or have some kind of a c in collective bargaining proposal on the people it is being negotiated would have on us yes so not only from the salary and current fringe benefits standpoint but also from the long term liability standpoint so even when we go t i've been watching you over the years and the presentations become more impressive every year and i really like the emphasis on the legislation i think it's made a big difference you know this has been an elephant in the room long before i got here and i've been here ten years and i think we're making progress and i want to thank you for that but i do have a question i'm kind of curious you know this legislation that you mentioned where you're trying to get the ability to do different investments better investments is there any particular area in investing that you are precluded from doing that you'd like to do well as an example in the private equity area or far reaching i mean it's been from the retirement system standpoint it's been a very good thing to have had over these last several years or so we've seen the fruits of those investments come to play and so that's just one example councilwoman yeah other thing that i'm interested in is what about international invest how does that go do we have enough could we do more when you look at the asset allocation mix between the e t f and the retirement system i believe when we go back to the slide international equity represents nineteen percent the retirement system i believe has over twenty percent international committee and so well while there may be some benefits to doing that we also have to remain cautious because years and i to be here ten years i watched this develop into something that is much more palatable understandable and more importantly workable i think we saw pie in the sky when we first walked in the stores and now reality  it was only three years ago so we've made tremendous progress much that year and i've crossed the legislature that ministrations all have began to realize that if we don't make changes within our system itself again as i told mr williams you know the concerning factors the number of retirees you know them we're living longer and the cost of medical i mean it is not going to go down if anyway it's going to continue to rise exponentially and it's going to the point where i don't know how people can afford i mean i recently had to d hospital in vegas and the bill was forty two thousand dollars not my medical coverage did you know they covered it after because it was an emergency stay of forty two thousand dollars i could have stayed at one of  first didn't want to pay it and then actually lange got involved and i hate to see us get to that point but that's what it seems to be we get litigious about paying bills but how do you address that rising cost because there is the other side of going to if a doctor or practitioner or a physician's aid doesn't provide enough to actually not shop that is not completed usually if they find because you did not run that specific test which might be ten all your fall to have a certain disease which may be incurable or maybe life changing how do you just well councilman i think one of the things that is being looked at is wellness programs as well good so that's one thing that's being looked at because obviously you know if there's programs such as those people can participate in hopefully to reduce the amount of visits that need to occur also i think some of the carriers are taking a proactive approach in terms of health screenings doing earlier whole screenings that's something else that's being looked at while we can you know control necessarily everything i think we can do is try to minimize the impact the future impacts of those are a couple of the things that is being looked at and while it may take a little while for those to come to fruition or be implemented i think they need to be discussed in seriously looked at as a way to mitigate future increasing costs just to say this this is not it's not only us i was on a plane yesterday this young lady was flying in from work job interview at my medical group from canada canada now icecap how much you can we achieve inserted in all aspects of medical coverage this doctor is kept at a certain level and because she's kept at a certain level she gets yumi were twenty five months and the rest of the year she has to work for free because of this also medicine the system so she's coming here to look at a job and then i started to worry about rand sent forward and everything she said i'm from toronto no big deal so my jaw dropped and i said ok i hope you find something because we're little we're really short of doctors and practitioners still here in hawaii but she's coming from canada and the canadian system is in dire need they're in very very bad financial shape right now and has like well i guess welcome to the world maybe this is a global issue but i mean we'll only get to give our little world and we can't worry about everybody else but it is something that's happening right now because we have a critical shortage of doctors but it's a philippines what it struck canada wherever they're coming up because they feel they can retrieve more here even under medicare and they can where they are now so i thought i was very interesting i made for an interesting flight back from from california study with that lady and her husband and we had a lot of time we said next to each other going over all of this  don't people this is not much better on the other side of the fence in fact you much cases when you jump over you find it worse off take care let's get back to sorry the benefits and how much we still wait thank you or market value of assets has been increased because of the money we've contributed our market value assets of grown by one hundred twenty two million roughly but the value of present or present value of benefits has grown by sixty six million so the net result is that although we've put in one hundred twenty two we've only seen or unfunded liability in front of the actuarial accrued liability dropped by about sixty two million so is that something that we can expect to have continued to happen with the cost of medical going up i'm sorry   value of assets has grown from twenty roughly twenty seven million two hundred forty nine or up one hundred twenty two million we've only taken sixty two million dollars off of our unfunded actual ly accrued liability so is this something that we can assume is going to continue because of the continuing increases and medical costs and i'm assuming that's increase in cost plus growth in number of employees you know and that could happen i think what's important to remember on this on this page in this section is what jumps out to me in particular is the fact that you go from a seven seven percent funded ratio to thirty three point four percent from the ratio so to me that shows that you're doing there are the right things are happening because you have increased it in my eyes significantly in the last three years and so i don't necessarily look at it also from a dollar standpoint but i also look at it from a percentage standpoint so you have change your portion it's not funded from ninety three percent to sixty six percent and in my eyes that's pretty substantial although i think we're doing the right thing it's just a little frustrated that we're putting in a lot of money in and we're only gaining on the problem by half in and i think that there's a good point cause when i think it will grow if this legislation also is passed to allow you have to invest in the same way as the u s you're going to see a shift because in the long run the return should be much better than what you'd have could get now under its current statutory provisions but that brings up another question chair you know let me just say you do you know why it versus the help was given to a different types of investment limitations i'm not sure why at a time in me in maybe because like anything else when you start to find initially you want to be more conservative in not until you're able to build a significant corpus i'm not sure though that's something you know i could check back and see if there's anything in the in the minutes what had transpired on the health benefits system side suffering interesting that you don't have the same options as their retirement site and you know which are and hopefully we can correct maybe a minute or so i can check for that it's up to the chair if you want to if you can you can get back to us i am just interested in seeing what the what the comparison is between the two this is and page eleven  would be good to see what the euro's was able to achieve in two thousand in the same years two thousand and twelve two fifteen ok so in two thousand and about eighteen percent and in two thousand and fifteen it earned about almost four percent ok ok thank you thank you  mr coach are there any other questions members you would like to ask mr my cheetah as it regards to other post employment benefits i think  everything else you'd like to share mr machida with us we are going to you know any additional comments you may share well first of all i want to thank you because without your assistance we couldn't have gone as far as we have so i really appreciate from this his counsel has helped us you know moving forward and so really appreciate your efforts as well as publicly with the state legislature with  ministration and then with even the other employees but i think it takes a collective effort to get through this it's it is a large liability it's one that needs to be addressed and even though there's plans in place there still needs to be more done and can be done in in my eyes and so i want to thank you all for that i really appreciate it i we also want to thank you for your good job in a very important and responsible position mr machida because thousands of employees and retirees depend on the five to be able to have them a good retirement and a healthy retirement so we appreciate your efforts mr  director do you have any closing comments you wish to share i just want to thank you the chair for looking into this and i know it's up by that time and that document was provided to you and of course to the budget office also for the committed at this time i'm going as mr bobbsey if he is in new york we need comments on this i will good afternoon chair members and thank you for hearing this item regarding a grant to the them and help them with their celebration we have the director of the office of economic development to the office of the mayor here as well you know restless and to provide details we have provided a responses to been in contact with the organization and we have told them that they will need to have a grant to us a s a p as soon as you take action on this side and we will be working with them to try to expedite that it will not mr coach thank you mr chair and you know i'm i did have a question i was curious as to why it went from two hundred to sixty but it sounds like that's not going to be entertained so  the other question i would have i guess it would be for the group why it's coming in so late you know because of the things next week where we're kind of being pushed up against the wall here if i can ask them which which person would you like to direct your question to repeat state your question for mr highly yeah i was just curious as to how i mean it looks like you've been planning this for a while how it's  there were a week before and we're we're finally getting yes that's a good question time of its inception from what i had received from my my group  carry this ball and fulfill this it was in november of two thousand and fifteen so when i received that position of cha i had approached the colony of december of two thousand and fifteen so the question of why we're here today now about two months later  really can't answer that i don't know it went back and forth on far as discussions between other council or budgeting or it's it's in your house it was in your house that the bar was left so where it went from there i don't know but i'm just glad we're finally here talk about because it's an either or sure and of course i would have liked to be able to discuss the difference between what you said you needed and what we were recommending but you know we have some information in our mind but it isn't you know definitely going to take what is it sixty thousand we're recommending and what you're going to exactly do with that can you  too there as we do one hundred fifty years later whether it be the majesties from japan europe china me jeremy to be here to acknowledge that that relationship that it was then to today and the hope was to have them to come here to mali to hold to sanction this one again again that relationship with us such as you go out and do your sister cities but this is something that has been established way in the past and those treaties or those acknowledgement at that time still exist today so some of those burdens or monies would have been required to bring these people over and that would have been some of the bigger ball of the money spent besides media advertisement and getting those that that we i know you've all received my e mails i know i have made a real commitment of myself to send those e mails out to you so i could get some kind of reply or you know ok so people who need them came cont enjoy get educated in pollard if anything to me we have more knowledge of what the royal order actually is what they stand for what the light the culture of the practitioners of today mayor economic development program total operating appropriations and total appropriations operating and kept it lee improvement projects from enough all related communications and allowing staff to make non motion passed as seven eyes to excuse miss cochran and mr guzman in this would go forward to the counsel for final approval thank you very much for your presence this afternoon poor paul coverdell forensic sciences improvement act for mr baez we have a communication dated march tenth two thousand and sixteen with the proposed bill for an ordinance as it pertains to one grant revenue schedule of grants by departments and programs department of police and this is for a grant in the amount of seven thousand four hundred and ten dollars mr burroughs i think it is chair appreciate response but amount of seven hundred seven thousand two hundred ten dollars will be received as a part of this grant to use for the purchase of portable field presumptive gunshot residue and explosive here ready to execute once the council approves this grant agreement should you think it has a representative from the department why did you come sir and since you've made the effort to be here and be very patient why don't we bring you down and allow you to if you could to introduce yourself please thank you aloha twenty year olds with the maui police department police evidence specialist and  said a c s i type guy so i want to give us some comment please if you can regarding this portable detection system of the discreet will assist the department with certainly thanks again chair as well as the council for hearing us  we were very fortunate to be able to compile a grant to help us as an island community in this effort because of the fact that when a gun shot is fired a clock starts ticking there are up to four hours after the gun is fired to recover evidence from the hands of the person who fired the weapon and as you know even sometimes hano with the traffic can be stretching it quite a bit so in order for us to be able to sample those hands we are requesting these three units one will be on one molex and one here in central this will help us to be able to make sure we retrieve those samples within that four hour thank you mr couch thank you mr chairman i i totally support this my only concern is the fact that we actually need to use this name in hopefully we don't have to use it very often them very often thank you very question and your comment i will say that we average around eighty five cases per year involving a firearm doesn't mean that it's been discharged ok so yes that was part of our rationale for justifying the grant through the federal system also be able to assist you besides guns gunshots illegal aerials and fire so it could be used for such thing however we want to try to keep it for mainly gunshot residue as well as explosives detection that requires like a second set of things you have to purchase to go into that so it could be done you know because every year we seem to get a lot more illegal combustible so again if this helps you in being in your enforcement and ability to convict those that are doing illegal activities i commend you in your department for moving this forward thank you for the questions on this request members thank you very much for being here this afternoon thank you very much the chair will entertain a motion to move forward to count so the proposed bill for an ordinance to pass on first again we appreciate the expeditious review of this grant we did receive from the power water supply notification of another grant from the state of oil in this one specifically for well head protection program so we do have thank you very much for those comments misplaced this is under your jurisdiction of course i'm in full support of this i think it's very important we have been trying very hard to get this legislation through the water committee  unsuccessfully but we're not done it's very very important that we protect our wells because this is our water sources and you know widow the bad publicity that we've been hearing about contaminated water we have to take this seriously and so i'm very you know this has been around for the last eight nine years this is not something new you know we've been looking for funny for a long time so i'm glad to see we finally got to disappoint and it's not just flint michigan it is all the other  today in our real society thank you no three michigan is just an example of dumb government but that's another story and i won't go there but this is other traits that we really have to be very seriously so i want to thank the department for all their hard work because i've been following this for the concerns this is specifically regarding the strategic prevention framework partnerships for success program and this is let's see i grant in the amount of one hundred  out of the alcohol and drug abuse division of the state department of health and we do have the deputy director of how the new concern from the gentry sheetal here to answer any questions about this project look forward to good afternoon budget and finance chair help comma and council members in the summer of twenty fifteen very short window for counties were invited to and we were invited by the department of health alcohol and drug abuse division and the subject and title of the grand is county court a nation for substance abuse prevention system molly county has been awarded one hundred  thousand for fiscal year sixteen seventeen and if funds available also for fiscal year eighteen the grant period scheduled for this fiscal year is june first twenty sixteen to september twenty nine twenty sixteen four months the goal of the requested service is to identify and hands and sustain a statewide substance abuse prevention system by using the state prevention framework process to develop and implement a comprehensive substance abuse prevention system and handsome and planned for each county and also to support each county agency to serve as a local resource for seven so buz prevention providers in the county we will have the opportunity to use these funds number one to build partnerships and enhance collaborative efforts to address the substance abuse issues of the county number to assess substance abuse problems in the county and number three strength strengthen the capacity of the county prevention workforce to address substance abuse problems of the county the department is not adding any new county personnel to this partnership for success for success grant but will be able to subcontract out the data collection a party agency to assist you with this request yes we have and again since is that officially i don't want you to disclose it since you take action first but it's good to know the force of already taking steps  implemented soon as possible so thank you for that is bellow any questions for resource yes i do thank you thank you for being here so when you say to a nonprofit that i am with the full amount or is it possible to have it break down so each island can come up with a strategic plan for its prevention in regards to substance u e thank you for that question this grand is going to enable us to also budget in for community outreach community i guess different yes i guess different or i guess provide community input and community dialogue as well for each of them because you know it well i can see speak from it has its own process in fact one that they've been going through for several months now trying to come up with a community strategic plan s when you when you come from the other island and try to create this dialogue or forum it to me it makes a difference if you have your participation from a nonprofit does the treatments and prevention i listen but what i hear you see it will be just one nonprofit who will be expanding it dialogue to the other island is that the state right now had put in a sorry right now we are in the really early stages of how are even going to put this together because it that this grant actually has been before a dad from samhsa way back in two thousand fourteen fifteen and only now in december that they could come forward and to put this all together so i like your idea i like that we can dialogue with your strategic plan on maui and i will be sure to put that into our into our planning thank you know it appreciate that and we have i think more then as well as our high school middle school as well as to other non profit entities i wanted to comment that on the not easy i've already talked with joelle and she kind of knew about this grant coming down and we had some good conversations and the coalition for drug fiscal year two thousand and sixteen budget for the county of maui as it pertains to appendix a part one great revenue schedule of grants by departments in programs department of housing and human concerns strategic prevention frame partnerships for success and allow staff to make any non substantive non substantive changes and there is no filing of this item so moved a second motion by  planning design construction of a gym football field tennis courts and baseball field for the most complex i think they were dreaming for four hundred thousand dollars but it's a it's a decent start the  from has been working with the legislature on getting this this funding in there for her island they were able to appropriated however have not so far spent the money and so  urging we asked for the delegation of those funds to the county so the department of the county general services dags has now authorized the delegation of those funds to the county we do need to encumber the funds before june thirtieth otherwise they will lapse it's a pretty quick turnaround that we're going to need to do  director of parks recreation was unable to be here this afternoon i was going to send a staff person but i don't see the staff person here so between myself and remember we can try to answer as many questions we're kind of looking as you know jim is in a deteriorated state it's in the tsunami zone as prone to floods and all kinds of termites and everything else you could ever think of this kind of holding we have had initial discussions about some land that may be available and this could possibly go towards you know looking at the acquisition and starting to do some needs assessments for the community over there and what exactly we should be building because we want to make sure that you know we're building something that's appropriate to what the communities needs are and what their desires are and then we'll look at the funding similar as to what we've done in other and yes you did mr chair director was on the unavailable so he was going to be sending over his planning and development division chief but i don't see  got elected hearing the chatter farm my island community and at the time the only state representative many karen myself had conversation with a dream that perhaps we can come up with a complex but not so much to include football feel of baseball fields but more to do with the because struction of a new g m ryssdal com i'm sure you're familiar with  pretty dangerous but we utilize it what we have the ceilings are just about falling apart but the whole intent is looking at it as some sort of emergency shelter which would include the well as the fact that it's now in flood zone area work where i removed the fire department we moved the police and the intent is to move the police department all for those reasons of flooding as to the help of senator english is this they help to help my office and staff to try and navigate to where it was and then lo and behold it showed up and that's why we're having just this small window to put it all together so we were talking started with some of the private landowners there is nothing definite now but there is some encouraging hopes that it there's some possibility the intent is to go above that conoco as to what it will show so members this is appreciate what the governor has delegated the monies to the county for us to try and follow through with something but and hopefully of our various school programs on a military from the high school to the intermediate school to our elementary schools or military and that is why this is part of  mr think of the actual title in here referencing the state of hawaii is just the funding source for those funds not necessarily the intended use of the product the product of those  funds if you noticed any of the revenues that we just reviewed they all said state of hawaii and then the grant title and from you know the the mayor's concern regarding this you know he's been have an adequate facility so if you know thing that we would be moving forward with even without the state funds requested i'm sure yes the kids that are going to the school will benefit from this but it's not specifically for a school like other school gyms are you know and again is a part of it is to try and understand the parameters of this project and and so you know my thing is look at what the county provides in return infrastructure and other ways of support that we would consider that is a fair consideration and that is why i found it interesting that this was so in the short time it and in fact this is one of her last works that she put up for the island and when she called me she says we got it now let's go for it and  what's her part to oh it was the fact that we're talking an emergency shelter possible emergency shelter her thought to was ending the concept to participate and in and then charge them for housing usually we we don't have well we don't have the infrastructure often teams cannot come over because we lack the infrastructure and if anything in response to how it would be for our elementary all the way up to our high school kids i call that having them a new gym for the gym rats you know that's what it's all we will look at the no furthering the police departments relocation or possible relocation and you know if there are sites available that could accommodate those  you know both are joint the cost of infrastructure is reduced different things like that will look at those factors but we at this point this funding is the only funding that's available the county hasn't put any monies into it just some efforts and we will happily received this money so that we can start pushing forward our efforts to get this this needs a little more work  of the specifics that are involved in the complex as well as the use of the funds are flexible so if the most complex appropriation you know is deemed to be used phase one two and three and all of these items may be included in all of the phases but it's really up to how future appropriations are set forth if we want to include the emergency with representatives from the land owner that we're looking into the different sites and it's sounds very promising the next is to bring the administration on to the table  already included aspect of their master plan so it does align with what the needs of of have you know of the county are and have been identified but part of my problem is