"experience it All"*

R1

Each city should post its current and at least three most recent prior year budgets on the city's web site, and these budgets should be easily located. Each city's web site should have a search engine and a single search on the word "budget" should immediately link to the current budget. City Response: The City of Aliso Viejo's current budget and prior year budgets are available online. http://www.cityofalisoviejo.com/CityHall/Departments/FinancialServices/Budget.aspx OC Grand Jury Budget Transparency 2014 Page

R2

Each city's budget information should contain not only this year/next year budget projections, but should show at least five years of projected revenues and expenditures. Projections should be at the same level of detail and use the same line item structure as information for the current budget. City Response: The City of Aliso Viejo prepares a Five Year Strategic Plan that is updated regularly. This plan in conjunction with the budget provides the recommended information delineated by the Grand Jury. The current Five Year Strategic Plan and prior year strategic plans are available online. http://www.cityofalisoviejo.com/CityHall/Departments/FinancialServices/LongTermPlanning.aspx

R3

Each city's budget should show separate line items for predicted employee and predicted employer contributions for the city pension systems. City Response: The City of Aliso Viejo currently provides one line item depicting the sum total of retirement contributions. The split for retirement costs will be implemented in the next budget cycle.

R4

Each city's budget should provide trend data on the accumulation/drawdown of reserves and provide details on the city's policy for the size of its reserves and on the intended uses of such reserves. In particular any discussion of reserves should address possible use of reserves to accelerate amortization of unfunded pension liabilities. City Response: The City of Aliso Viejo's budget includes trend data and details for the uses of reserves and the City's obligations for retirement benefits. Also included in the appendixes section are the Budget Policy, Fund Balance Policy, Glossary and Fund descriptions. The City is currently included in a Risk Pool which was implemented by CalPERS effective with the June 30, 2003 actuarial valuations to protect small employers (those with less than 100 active members) against large fluctuations in employer contribution rates caused by unexpected demographic events. At this time the City does not have the ability to pay down its unfunded liability. The City does not have a side fund. As a result of the recently approved changes to pension risk pools by CalPERS the City's obligations are expected to reduce by approximately $37,000. In addition, going forward the City will have the ability to pay down its share of the pool's unfunded accrued liability. OC Grand Jury Budget Transparency 2014 Page

R5

Each city using CalPERS for one or more of its pension plans should identify the names and dates of the CalPERS Annual Valuation Report(s) which call out Annual Required Contributions (ARCs) for these plans and should provide a separate expenditure line item for predicted city catch-up contributions for the city pension systems based on these ARCs. A discussion of the risks associated with these CalPERS projections should also be provided by the city. City Response: The City of Aliso Viejo currently provides a synopsis of the current benefit formula and retirement rates in its budget. Trend information for the CalPERS Annual Valuation Reports and risk information associated with projections provided by CalPERS will be implemented in the next budget cycle.

R6

Each city which outsources fire or police services to OCF A and/or OCSD should require them to provide projections of future costs of service out at least five years into the future and require that these projected costs explicitly show the relationship of projected pension costs including amortization of unfunded liabilities. This level of pension cost information should be provided in budgeted expenditures for outsourced services. A discussion of the risks associated with these projections should also be provided by the agencies and incorporated in the city's budgets. City Response: The City of Aliso Viejo will request OCFA and OCSD to provide five year projections for pension costs and their amortization policies. Risk information associated with these projections will be implemented in the next budget cycle.

R7

Each city that has CalPERS as a provider for pensions should include a provision in their agreements with CalPERS that CalPERS will post their Annual Valuation Reports online. City Response: The City of Aliso Viejo will consult with CalPERS to clarify if this option can be implemented. . . OC Grand Jury Budget Transparency 2014 In addition, the City's Budget Transmittal provides an overview of the changes in revenues, expenditures, special revenue funds and initiatives on the horizon. I am pleased that our current practices are consistent with the recommendations of the Grand Jury. Please contact Gina Tharani, Director of Financial Services/City Treasurer at (949) 425- 2520 if you have questions or need additional information. Sincerely, \bigcup David Doyle City Manager Orange County Grand Jury Cc: Aliso Viejo City Council