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1999 05 12 IAB Minutes INVESTMENT ADVISORY BOARD Meeting May 12, 1999 I CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:30 P.M. by Chairperson Irwin, followed by the Pledge of Allegiance.. PRESENT: Board Members Brown, Bulgrin, Lewis, Mahfoud, Moulin, Osborne and Chairperson Irwin ABSENT: None OTHERS PRESENT: John Falconer, Finance Director and Debbie DeRenard, Secretary II PUBLIC COMMENT None III CONFIRMATION OF AGENDA Mr. Falconer requested page 5 of the Treasurers Report (Business Session No. 1) be replaced and an addition to the Investment Policy (Business Session No. 2) received from Board Member Moulin. Chairman Irwin advised that the Board has had two lengthy meetings regarding the Investment Policy and he would suggest that the Board separate the Investment Policy from the Board functions. Board concurred with the changes. IV CONSENT CALENDAR A. Approval of Minutes of Special Meeting of March 30, 1999 for the Investment Advisory Board. MOTION - It was moved by Board Members Osborne/Lewis to approve the Minutes of March 30, 1999. Motion carried unanimously. Page 1 of 6 Investment Advisory Board May 1 2, 1999 Minutes Approval of Minutes of Meeting of April 14, 1999 for the Investment Advisory Board. MOTION - It was moved by Board Members Lewis/Brown to approve the minutes of April 14, 1999. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for March 1999 Board Member Moulin advised that Page 3 - "Authorized Investments and Diversification" should be dated and the Money Market column -last sentence should read "par value per share of $1 ." In response to Board Member Osborne, Mr. Falconer advised that the percentage of 5.04% on Page 3 for Annualized Earnings of Pooled Cash Investments includes LAIF, Agency Paper and Treasury Bills and is the City's overall return of investments. The LAIF percentage of 5.1360% on Page 4 only includes LAIF. In response to Board Member Lewis, Mr. Falconer advised that the rate for money market mutual funds as of today are 4.01% with a yield of 4.08%. MOTION - It was moved by Board Members Lewis/Moulin to approve, receive and file the Treasurer's Report for March 31, 1999. Motion carried unanimously. B. Fiscal Year 1999/00 Investment Policy The Board reviewed the attached Investment Policy (Attachment No. 1) and changes/additions/deletions are shown in amended form. MOTION -It was moved by Board Members Lewis/Mahfoud to approve the amended draft 1999/00 Investment Policy and proceed for final approval at the June 1999 meeting. Motion carried with Board Member Moulin voting NO. (Board Member Moulin requested that the explanation of his NO vote be placed in the minutes - Attachment 2). Page 2 of 6 Investment Advisory Board May 1 2, 1999 Minutes Board Member Irwin advised that at this time the Board will discuss the Board functions as listed in Chapter 2.70, Section 2.70.030. Board Member Moulin presented a "short" and a "long" version of his suggested changes to Board functions. Chairman Irwin reviewed the board functions as stated in the Ordinance. In response to Chairman Irwin, Board Member Moulin advised that there are functions in the Ordinance that are not listed in Board functions. He advised that his proposed Board functions do not include "review account statements and verifications" and it doesn't "ensure accurate reporting." Chairman Irwin advised that he feels that the purpose of the Board is to "review account statements and verifications and ensure accurate reporting." Board Member Moulin advised that the Board discussed the functions at the last meeting and he feels that the functions should describe what the Board functions each month entail. He further advised that the Chairman has a different interpretation than the other Board Members. He questioned how the Board ensures accurate reporting. He advised that he has taken the approach that the information that the Board receives is the reports from the Treasurer. He further advised that he has reviewed the Investment Advisory Board minutes for the last two years and incorporated the functions into the proposed long version of the Board functions. Chairman Irwin advised that the original language in the Ordinance is awkward. Board Member Moulin advised that he was very careful with his choice of words so that not to take more responsibility for the Board's goals. Board Member Lewis commented that Board Member Moulin's version reads smoother than the original version. He further advised that he agrees that the Board does not ensure accurate reporting. There is nothing that the Board receives that would detect in the unlikely event that Staff decided to report bad information to the Board. He further advised that the Board is in place to make sure that Staff stays in line with the investment policy. Page 3 of 6 Investment Advisory Board May 12, 1999 Minutes Board Member Moulin advised that the other control that he looks upon positively is the segregation of duties and responsibilities in the Treasurers Office. Board Member Bulgrin advised that the Board does not "ensure accurate reporting." Board Member Mahfoud advised that he agrees with the short version proposed by Board Member Moulin. Board Member Brown advised that she agrees with the short version that is proposed by Board Member Moulin, adding that she basically has the same problem with the current Board functions that state the word "ensure." She further advised that the Board would be best to make the Board functions as brief and accurate as possible. Board Member Osborne advised that the short version as proposed by Board Member Moulin best describes the functions of the Board. Chairman Irwin advised that Board Member Moulin has proposed a document that he wrote after reviewing the minutes for the last two years. He further advised that the Board is not doing any duties differently and the intention has not changed. He further advised that he agrees that the Board does not review original documents or perform an audit function. The Board Members are not auditors, the Board is here as a citizens group formed by a citizens committee. The original structure of the Board was changed three years ago to more accurately define the duties of the Board. He further advised that there might be a communication problem with Council and the Board may need to conduct an education process to show what the Board is capable of performing. He stated that he is very leery of the Board writing up language for the Board functions and presenting it to the Council. Board Member Lewis advised that the Board recommends policies to the Council. He further advised that he feels this is no different. In response to Board Member Lewis, Chairman Irwin advised that he has not discussed board function changes with any member of the City Council. Page 4 of 6 Investment Advisory Board May 1 2, 1999 Minutes Board Member Lewis advised that if the proposed changes more accurately reflect the Board functions, the City Council reviews the minutes from each meeting and they are aware of the Board functions and they will understand the changes. Chairman Irwin advised that the individual members of Council don't have the same appreciation as the Board might have for the audit function. Board Member Brown advised that the opportunity is there for the Board to recommend changes to the City Council. She further advised that it has been her experience that when there is a need for direction or assistance the Councils' opinion has been communicated very clearly. It is her feeling that the Council will appreciate the Boards comments and changes. Board Member Lewis commented that the policy does not stay the same from year to year - so any changes to the Ordinance should be understood. Mr. Falconer advised that he agrees with the Board that the proposed changes to the Ordinance cannot be placed in the Investment Policy until they have been changed in the Ordinance and approved. He further advised that the proposed changes are legal issues that need to be discussed with the City Attorney and he would recommend that the Board leave the existing Board functions as they are now in the Investment Policy until the Ordinance has been changed. In response to Board Member Brown, Board Member Bulgrin advised that he would recommend placing the Board functions as an item on the July agenda. Mr. Falconer advised that the Board functions could be coordinated with the Investment Advisory Board work plan for FY 1999/00. The Board concurred. In response to Mr. Falconer, the Board concluded that the changes to the Ordinance should be brought back to the Board at the July 1999 meeting for discussion. Page 5 of 6 Investment Advisory Board May 12, 1999 Minutes MOTION - It was moved by Board Members Lewis/Osborne to Continue the discussion of the City Ordinance - Board Member functions until the July 1999 Investment Advisory Board meeting. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - April 1999 Noted and Filed. B. Pooled Money Investment Board Reports - January 1999 Noted and Filed. VII BOARD MEMBER ITEMS Board Member Moulin advised that he received the Minutes of the City Council Meeting of April 6th, 1999. He advised that he was surprised at the substantial discussion regarding the Y2K issue and he encouraged the Board to review the minutes. Mr. Falconer updated the Board on the conference in Brea, California that was attended by Staff, Board Members Irwin and Moulin. VIII ADJOURNMENT ' MOTION - It was moved by Board Members Lewis/Bulgrin to adjourn the meeting at 7:15 P.M. Motion carried unanimously. Submitted by: Debbie DeRenard Finance Secretary Page 6 of 6