2006 09 13 IABNOR N
P.O. Box 1504
LA QUINTA, CALIFORNIA 92247-1504
78-495 CALLE TAMPICO
LA QUINTA, CALIFORNIA 92253
AGENDA
INVESTMENT ADVISORY BOARD
Study Session Room — Special Meeting
78-495 Calle Tampico- La Quinta, CA 92253
September 13, 2006 - 6:30 P.M.
I CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
(760) 7 7 7 - 7 0 0 0
FAX (760) 777-7101
II PUBLIC COMMENT- (This is the time set aside for public comment on any matter not scheduled on the agenda.)
III CONFIRMATION OF AGENDA
IV CONSENT CALENDAR
Approval of Minutes of Meeting on July 12, 2006 for the Investment Advisory Board
V BUSINESS SESSION
A. Transmittal of Treasury Report for June and July, 2006
B. Fiscal Year 2006/07 Work Plan — Review of Investment Policy
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report - August 2006
B. Pooled Money Investment Board Reports — May and June 2006
C. Minutes of City Council Investment Advisory Board Work Plan
D. Joint Meeting with Investment Advisory Board and City Council
VII BOARD MEMBER ITEMS
VIII ADJOURNMENT
Investment Advisory Board
Minutes
July 12, 2006
It was agreed by the Board to present to Council the four listed items on the
work plan in addition to the last item discussed, with a total of five items to be
discussed for the 2006/07 Investment Board work plan.
MOTION — It was moved by Board Members Moulin/Olander to approve the
2006/2007 Work Plan. Motion carried unanimously.
VII CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report— June 2006
Mr. Falconer commented that LAIF has gone up by $60 billion.
Noted and Filed
B . Pooled Money Investment Board Reports — April 2006
Mr. Falconer commented that the state budget for the upcoming budget
looks good.
Noted and Filed
C. Distribution of Investment Polices for Fiscal Year 2006/2007
Noted and Filed
Vill BOARD MEMBER ITEMS
None.
IX Adjournment
MOTION - It was moved by Board Members Moulin/Olander to adjourn the meeting
at 6:35 p.m. Motion carried unanimously.
S mitt d b
1
Vianka Orrantia
Secretary
2
T4ht 4 �wQ�rw
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Director/Treasurer
SUBJECT: Treasurer's Report for June 30, 2006
DATE: July 31, 2006
Attached is the Treasurer's Report for the month ending June 30, 2006. The report is submitted to
the City Council each month after a reconciliation of accounts is accomplished by the Finance Department.
The following table summarizes the changes in investment types for the month:
Investment
Beginning
Purchased
Notes
Sold/Matured
Other
Ending
Change
Cash (3)
$ 1,269,464
(1)
$ (1,419,388)
($149,924)
($1,419,388)
LAW
26,278,644
3,500,000
0
0
29,778,644
3,500,000
US Treasuries (2)
145,638,583
45,000,000
(45,209,000)
$ (616,789)
144,812,794
(825,789)
US Gov't Sponsored Enterprises (2)
34,829,496
41,129
34,870,625
41,129
Commercial Paper (2)
8,973,538
3,000,000
(9,000,000)
15,022
2,988,560
(5,984,978)
Corporate Notes
0
0
Mutual Funds
1 5,884,200
1
1 1
257,227
5,626,973
257,227
Total
$ 222,873,925
$ 51,500,000
$ 55,885,615
$ 560,638
$ 217,927:672
$ 4,946,253
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Code; and is in conformity with the City Investment Policy except as follows:
The Federal Home Loan Bank maximum was exceeded on January 18, 2006, as reported on page 2, and
is expected to come into conformity on December 15, 2006. As of June 30, 2006, the market value of the investment
was $7,627,682 and the amortized cost plus accrued interest was $7,6661,572 for an unrealized loss of,$33,890.
Management intends to hold the investment to maturity.
As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months. The City of
La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York
Monthly Custodian Report to determine the fair market value of investments at month end.
l ld' L 00
John M. Falconer Date
Finance Director/Treasurer
Footnote
(1) The amount reported represents the net increase (decrease) of deposits and withdrawals from
the previous month.
(2) The amount reported in the other column represents the amortization of premium/discount for the
month on US Treasury, Commercial Paper and Agency investments.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank.
2
Treasurer's Commentary
For the Month of June
Cash Balances — The portfolio size decreased for the month by $4.9 million to $217.9 million
with the decrease attributed to pass thru payments from the 2"d secured property tax
settlement being made.
Investment Activity — A large amount of investments ($48 million) were made in June with
the reinvestments yielding 100-150 basis points more than the maturing investments. Due to
the City's short maturities, no investment is currently yielding less than 3% and after July
171h no investment will be yielding less than 4%. At month end, the sweep had $5.2 million
balance and yielded 4.24% which primarily consisted of outstanding warrants. While this
rate is lower than the LAIF rate of 4.70% for next day funds, the sweep account allows the
City to take advantage of earning interest on warrants that have been released but have not
been cleared by our bank. The sweep was instituted based upon the raising interest rates and
earned $ 10,250 in cash for the month. The bank fees for the month were $ 1,998 which
resulted in a net increase of $ 8,252 in real savings.
Portfolio Performance — The overall portfolio performance increased another 23 basis points in
June from 4.60% to 4.83% mainly because of the large number of maturing investments in
June. At the end of June, the portfolio yield is still below the six month Treasury rate of
5.11 %, which increased by 27 basis points from the previous month for a 28 point
difference.* With the short average maturity of 103 days, the portfolio yield should continue
to increase based upon rising short term interest rates and the short average maturities of the
portfolio. At this time last year, the portfolio was yielding 2.83% and the benchmark was at
3.22% for a 39 point difference so we have made some progress in meeting our benchmark.
As reported last month, it still continues to be extremely difficult to meet our benchmark in a
rising short term rate environment as the Federal Reserve Board raised their rate another 25
basis points at their June meeting. The Treasurer has not been investing in longer than six
months Treasury securities or in more than one year GSE's based upon the yield curve to take
advantage of yield spreads.
Future Thoughts
The Treasurer will continue to invest in relatively short term maturities to take advantage of
the inverted yield curve.
3
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City of La Quints
Reconciliation of Actual and Surplus Funds
City, Redevelopment Agency and Financing Authority
June 30, 2006
Balance of Actual Funds 217,927,672
Less Petty cash Fulls (1.000)
Less Nat -Surplus Funds (1,299,545)
Balance of Surplus Funds #16,627,127
City Cash 6 Investments
ZBank =nts
Name-AVailsbil'
Surplus
T
Book
Wells Fargo -Demand
No
Cheddng
18,740)
Wells Fargo - Sweep
No
Sweep
63.886
Pedy Cash- Demand
No
WA
1.000
:$(149
Wells Far ohbusi -Demand
Yes
Checking3930
Total -Bank Accounts
924
U. S. Treasury
Amortized
Custodian - Availabil'
Surplus
issuer/Type
Value
Bank of New York - Damand
Yes
U.S. Treasury Bill
8,859,761
Bank of New York - remand
Yes
U.S. Treasury Bill
9,965,891
Bank of New York - Demand
Yes
U.S. Treasury Bill
4,902,144
Bank of New York - Demand
Yes
U.S. Treasury Bin
9,824.415
Bank of New York - Demand
Yes
U.S. Treasury Bill
3,970.669
Bank of New York - Oemand
Yes
U.S. Treasury Note
4966,696
Bank of New York -Demand
U.S. Treasury Bill
14:751,625
Bank of New York - Demand
Yes
U.S. Treasury Bill
4:942.319
Bank of New York - Demand
Yes
U.S. Treasury BIII
4902,533
Bank of Neal York - Demand
Yea
U.S. Treasury Bin
4 872 871
Total - U.S. Treasury71,958,924
U. S. Government Sponsored Enterprises
Custodian-Availablf Surplus
IssuerR
Amortized
Value
Bank of New York -Demand
Yes
FHLB
4,982.582
Bank or New York - Demand
Yes
FHLB-Discount
2.940.965
Bank of New York -Demand
Yea
FHLB
1,992,177
Bank of New York - Demand
Yes
FHLB
7.498.734
Bank of New York -Demand
Yes
FNMA
4.969,897
Bank of New York - Demand
Yes
FHL Mortgage
2,501.476
Bank of New York - Demand
Yes
FARM CREDIT
4,996.559
Bankof New York -Demand
Yes
FNMA
4,988235
Total - U.S. Govemment Secur.1.
54,870,625
Prime Comm r
Coian-A
Surplus
issuerflype
VBuke
Bank of New York -Demand
Yes
Citicorp Funding Inc
2,988,560
Yes
Ves
Total- Prime Commerdal Paw,
2,988,560
Local Agency Investment Fund
Name-Availabil'
Sur us
TypeBook
WF-City-Demand
Yes
State Pool
26.040.629
'IF -RDA -Demand
Yes
State Pool
3730015
Total - State Pool
29,778,644
Total City Investments
Total City Cash & Investments
Fiscal Agant Investment
Surplus
Ad'
Surplus
Ves
—Yes
E
E
E
E
3,930
3,930
E 3,930
Surplus
Surplus
Yes
Ad
Yes
8,859,761
8,859.761
9,965,891
9,965,891
4,902,144
4,902,144
9.824,415
9,824,415
3,970,669
3. 70.669
4,966,696
4,966,696
14, 751, 625
14, 751, 625
4,942,319
4,942,319
4,902,533
4.902,533
4,872,871
4872,871
71,958,924
71,958924
Surplus
Yes
Adi
Surplus
Yes
4,982,582
4.982.582
21940,965
2,940.965
1,992,177
1,992,177
7.498,734
7,498.734
4.969,897
4,969,897
2,501,476
2,501.476
4,996,559
4,996,559
4988235
4 988.235
1 34,870,625 1 - I 34,870,625
Surplus
Surplus
Yes
Adj
Yes
2.986,560
-
2,988,560
219881560
-
2,988,560
Surplus
Surplus
I
Yes
Ad
Yes
26,040,629
(1,454,399)
24,586,230
3 738 015
1
_ 3 738 015
29,778,644
1,454,399
28,_19 ,9 5
Ali Funds
Surplus
Actual %
Yes
ffi3,854
1454,399 E
130050.0888%
0.0018%
Surplus
No
Ad
Surplus
No
14,751,625
14,751.625
14 751,625
1
14,751,625
Surplus Surplus
No AdNo
All Funds Surplus
Actual% Yes
33.0196% 33.2179%
All Funds Surplus
Actual %_ Yes
16.0010% 16.0971%
Surplus
No
Adj
urplus
No
All Funds
Actual %
Surpua
Yes
1.3714%
1.3796%
Surplus Surplus All Furls Surplus
No Ad' No Actual % Yes
13.6645% 13.0751%
139,598,753 139,596,753 1,454,399 1]8,142,354 14,751,825 14,751,625 64.0585X 83.7898%
179,448,8291 139,500,6831 11,454.399 138,146,284 14.597.777 1 1.454,399 1 052,170 87.9877% 63.7715X
Pontolio - Cily In merits
Amortized
Custodian-Availe' d
Surplus
lesuer/F
Value
2002 RDA U.S. Bank-CIP
Yes
U.S.Treasury BOl
9,758,452
2004 Finance Authority LIP
Yea
U.S.Treasury 801
29.259,748
2004 Finance Authority -CIA
Yes
U.S.Treasury Bill
9,113,623
2004 Finance LIP
Yea
U.S.Treasu Note
24712047
Total - U.S. Treasury
72,853.870
Portfolio - M1RuaI Funds
Trustee -Availabtl'
Surplus
Money Market
Mutual Fund
Book
Value
Civic Center U.S.Sank- Project
YES
1st American
292
Civic Carter U.S.Bank -DebtSvc
YES
1st American
-
19W RDA U.S. Bank - Debt Svc
YES
1st American
59
1995 RDA U.S. Bank -CIP
YES
tat American
1995 RDA U.S.Bk-Special Fund an
YES
1stAmerican
2004 Fin Auth -1995 US Bank - Escrow
YES
tat American
1998RDAU.S.Bank-CIP
YES
tat American
-
1 998 RDA U.S. Bank - Dot Svc
YES
1s2 American
45
1998 RDA U.S.Bank - Special Fund
YES
tat American
17
1998 RDA U.S.Bank-CIP
YES
tat American
-
2001 RDA U.S. Bank - Dbt Svc
YES
1st American
134
2001 RDA U.S. Bank -CIP
YES
1st American
2002 RDA U.S. Bank -Obt Svc
YES
tat American
103
2002 RDA U.S. Bank -CIP
YES
tat American
992,155
2003 Takabte RDA U.S. Bank - CIS
YES
let American
87
2003 Taxable RDA U. S. Bank -COI
YES
let American
2003 Taxable RDA U. S. Bank-CIP
YES
tat American
-
2004 Fin Auth US Bank - CIP
YES
let American
4.633,836
2004 Fin Auth US Bank - COI
YES
at American
245
Subtotal - Mutual Fund
I
I5,626,973
Surplus
Surplus
Yee
Ad
Yes
9,758.452
9,758,452
29.269.748
29,269.748
9,113,623
9,113,623
24,712,047
24 712,047
72,853,870
7218531870
Surplus
Yes
Ad"
Surplus
Yes
292
292
59
59
45
45
17
17
134
134
103
103
992.155
992,155
87
87
4.633,836
4,633,836
245
245
5.626,973
5,626,973
Surplus
No
Adi
Surplus
No
All Funds
Actual %
Surplus
Yes
33.4303%
33.6310%
Surplus
No
Adi
Surplus
No
All Funds
Actual %
Surplus
Yes
2.5820%
2.5975%
Total Fiscal Agent Investments 78,480,843 78,480,843 - 78,480,847 - 38.0127% ]8.2285%
Grand Total 217,927,872 218,061,528 1,454,399 218,827,127 1 14.597,771 1.454,399 18,052,770 100. 100.0000%
SurplPdNo6,718,265E1,299,545
5,263,886)
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ceity/ 4�a�w
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Director/Treasurer
SUBJECT: Treasurer's Report for July 31, 2006
DATE: August 31, 2006
Attached is the Treasurer's Report for the month ending July 31, 2006. The report is submitted to
the City Council each month after a reconciliation of accounts is accomplished by the Finance Department.
The following table summarizes the changes in investment types for the month:
Investment
Beginning
Purchased
Notes
Sold/Matured
Other
Ending
Change
Cash (3)
$ (149,924)
(1)
$ (1,500,938)
($1,650,862)
($1,500,938)
LAW
29,778,644
2,758,079
(500,000)
0
32,036,723
2,258,079
US Treasuries (2)
144,812,794
10,000,000
(10,000,000)
$ 326,431
145,139,225
326,431
US Gov t Sponsored Enterprises (2)
34,870,625
2,500,000
(12,500,000)
(89,950)
24,780,675
(10,089,950)
Commercial Paper (2)
2,988,560
12,000,000
(3,000,000)
(50,592)
11,937,968
8,949,408
Corporate Notes
0
0
Mutual Funds
5,626,973
1
18,989
5,645,962
18,989
Total
$ 217,927,672
1 $ 27,258,079
$ 27,481,949
$ 185,889
$ 217,889,691
1 $ 37,981
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Code; and is in conformity with the City Investment Policy except as follows:
The Federal Home Loan Bank maximum was exceeded on January 18, 2006, as reported on page 2, and
is expected to come into conformity on December 15, 2006. As of July 31, 2006, the market value of the investment
was $7,487,282 and the amortized cost plus accrued interest was $7,514,351 for an unrealized loss of $27,059.
Management intends to hold the investment to maturity,
As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months. The City of
La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York
Monthly Custodian Report to determine the fair market value of investments at month end.
oo�
John M. Falconer Dad
Finance Directorrrreasurer
Footnote
(1) The amount reported represents the net increase (decrease) of deposits and withdrawals from
the previous month.
(2) The amount reported in the other column represents the amortization of premium/discount for the
month on US Treasury, Commercial Paper and Agency investments.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank.
13
Treasurer's Commentary
For the Month of July
Cash Balances - The portfolio size were unchanged for the month of July.
Investment Activity - A large amount of investments ($24.5 million) were made in July with
the reinvestments yielding 50-150 basis points more than the maturing investments. Due to
the City's short maturities, no investment is currently yielding less than 4.4%. At month end,
the sweep had $674,872 balance and yielded 4.62% which primarily consisted of
outstanding warrants. While this rate is lower than the LAIF rate of 4.85% for next day
funds, the sweep account allows the City to take advantage of earning interest on warrants
that have been released but have not been cleared by our bank. The sweep was instituted
based upon the raising interest rates and earned $ 14,410 in cash for the month. The bank
fees for the month were $ 1,803 which resulted in a net increase of $ 12,607 in real savings.
Portfolio Performance - The overall portfolio performance increased another 13 basis points in
June'from 4.83% to 4.96% mainly because of the large number of maturing investments in
late June and July. At the end of June, the portfolio yield is still below the six month
Treasury rate of 5.06%, which decreased by 5 basis points from the previous month for a 10
point difference ( versus 28 points in June). With the short average maturity of 95 days, the
portfolio yield should continue to increase based upon rising short term interest rates and the
short average maturities of the portfolio. At this time last year, the portfolio was yielding
2.87% and the benchmark was at 3.54% for a 67 point difference so we have made some
progress in meeting our benchmark. The Treasurer has not been investing in longer than six
months. Treasury securities or in more than one year GSE's based upon the yield curve to take
advantage of yield spreads.
Future Thoughts
The Treasurer will continue to invest in relatively short term maturities to take advantage of
the inverted yield curve.
14
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City of La Ouima
Reconciliation of Actual and Surplus Funds
City, Redimlopmerit Agency and Financkrg Authority
July 31, 2006
Balance of Actual Funds 217,B89,692
Less Petty cash Funds (1,000)
Less Non -Surplus Funds (1,454,399)
Balance of Su 1, Funds 121. 434,293
City Cash A Imrestme its
BaMc Accoums
Name-Availablf
surplus
T
Beek
Wells Fargo - Denial
No
Checkmg
S (2,347, 199)
Wells Fargo - Sweep
No
Sweep
S 674,872
Pegy Gash - Denial
No
N/A
1,OOU
Wells F ou.L - Denial
Yes
Check'
20 465
Total - Bank Accounts
5 7,650,862
U. S. Treawry
Amortized
CUsbdbn- Availabif
S us
Issuer/T
Value
Bank of New York - Demand
Yes
U.S. Treasury BIN
8,696,603
Bank of New York - Demand
Yes
U.S. Treasury BIN
9.752,408
Bagk of New York - Demand
Yes
U.S. Treasury Bill
4,922,780
Bank of New York - Demand
Yes
U.S. Treasury 841
9,865,651
Banc of New York - Demand
Yes
U.S. Treasury Note
3,974,898
Bank of New York - Demand
Yes
U.S. Treasury Nob
4,972,307
Bank or New York - Demand
Yes
U.S. Treasury BIN
14,813,222
Bank of New York - Demand
Yes
U.S. Treasury Bill
4,962,187
Banc of New Yost - Demand
Yes
U.S. Treasury Bill
4,923.087
Bank of New York - Demand
Yes
U.S. Treasury BIN
4.894 645
Total - U.S. Treasury
71.977,788
U. S. Government Sponsored Emerpdses
Custlian - Avaitabr'
S
Issuer77
Amortized
Value
Bank of New York - Demand
Yes
FHLB
4,985,796
Bank of New York - Demand
Yes
FHLB-Discount
2,952,403
Bank of New York - Demand
Yes
FHLB
1,993563
Bank of New York - Demand
Yes
FHLB
7,498:934
Bank of New York - Demand
Yes
FNMA
4,973,738
Bank of New York - Demand
Yes
FHL Mortgatre
2.376,241
Total - U.S. Govemmen Securities
24,780,675
Prime Commercial Paper
Custodian • AvaBabi
Su lus
Issuer/T
Book
Value
Bank of New York - Demand
Yes
Citicorp Funding Inc.
4.204
Bank of New York - Demand
Yes
GE Capital Corp
6,606
Bank of New York - Demand
Yes
Wells Fargo
:2,986,544
Bank of New York - Demand
Yes
American Honda Fill
0,614
Total - Prime Commercial Pape(
f 1,937,968
Local Agency Investment Fund
Name -Availabif
Surplus
TypeBook
LAW - City -Demand
Yes
State Pool
28,256.575
LAIF- RDA - Demand
Yes
State Pool
3,780,1de
Total - State Pool
32,036,723
Total City Investments
Total City Cash 8 I—stments
Fiscal A nt Irwestmelds
Surplus
Yes
Ad'
Surplus
Yes
$
S
S
S
20 l
20.465
$ 20,465
S
S 20,465
Surplus
Surplus
Yes
Ad'
Yes
8,896,603
8,896,603
9,752.408
9,75Z,408
4.922,780
4,922,780
9,865,651
9,865,651
3.974.898
3,974,898
4,972,307
4,972,307
11,813,222
14,813,222
4,962,187
4,962,187.
4,923,087
4,923,087
1894 645
4 8916d5
71,977788
71,977,71i8
Surplus
Yes
Ad'
Surplus
Yes
4,985,796
4,985.796
2,952,403
2,952,403
1,993,563
1,993.563
7,498,934
7,498.934
4,973,738
4,973,738
2,376,241
2,376,241
Surplus
Yes
-Ad'
Surplus
Yes
2,974,204
2,9742014
2,986,606
2,986:606
2.986,544
2,986.544
2,990,614
2,990614
f1,937,968
11,937,968
Surplus
Surplus
Yes
Ad'
Yes
28,256,575
(3,126,726)
25,129,849
3,780,148
3,780 148
32,036,723
3,126.726
Z8,909,997
Surplus
No
Ad'
Surplus
No
$(2.347,199)
$ 3,801,598
$ 1,454,399
$ 674,872
$ (674.872)
$
1,000
1,000
f 1.671,327
$ 3.126,726
1 1 455,399
Surplus
No
Ad'
Surplus
No
Surplus Surplus
No Adj No
Surplus Surplus
No Ad" No
Surplus
No
Ad'
Surplus
No
All Furls Surplus
Actual % Yes
-0.7577% 0.0096%
AN Funds Surplus
Actual % Yes
33.0340% 33.25620
AN Furls Surplus
Actual % Year
11.3730% 11.4495%
All Furk)s Surplus
Actual % Yes
5.4789% 5.5157%
AN FundsE13.3.57'U.S%
Actual %
14.7032%
I r 646891- 83.5766%
1J8,082,2921 140,753,619 3,126,728 137,826,693 1,671,327 3,126,728 1,{55,]99 6].BNSX 6J.5683%
Porlfplb •City Inveshnems
Amortized
Custodian-AvaBa
S
' Issfler7T
Value
2002 RDA U.S. Bank-CIP
Yes
U.S. Treasury Bill
9,801,486
2004 Finance Authority CIP
Yes
U. Treasury Bill
29.399.850
2M Finance Authority CIP
Yes
U.S.Treasury BIB
9.148,871
2004 Finance AuthorityCIP
Yes
U.S.Treasul Big
24,811 230
Total -U.S. Treasury
73.161,437
Portfolio - Mutual Funds
Trustee - AvailabN'
Surplus
Money Market
Mutual Fund
Book
Value
Civic Center U.S.Bank - Pril
YES
tat American
293
Civic Center U.S.Bank - Debt Sur:
YES
1st American
1994 RDA U.S. Bank -Debt Svc
YES
1st American
1995 RDA U.S.Bank -CIP
YES
1st American
1995 RDA U.S.Bank - Special Fund
YES
1st American
2004 Fin Au0r - 1995 US Bank - Escrow
YES
1st American
1998 RDA U.S.Bank -CIP
YES
1st American
1998 RDA U.S.Bank - CIA Svc
YES
1st American
429
1998 RDA U.S.Bank - Special Fund
YES
1st American
18
1998RDAU.S.Bank-CIP
YES
1stAmerican
2001 RDA U.S. Bank - CIA Svc
YES
1 at American
2001 RDA U.S. Bank - CIP
YES
1st American
2002 RDA U.S. Bank - Dbt Svc
YES
tat American
2002 RDA U.S. Bank - CIP
YES
1st American
996,212
2003 Taxable RDA U.S. Bank - IDS
YES
1st American
2003 Taxable RDA U. S. Bank-CO1
YES
1st American
2003 Taxable RDA U. S. Bard
YES
tst American
20l Fin Aum US Bank - CIP
YES
1st American
4,648.765
2004 Fin Auth US Bank - COI
YES
1st American
245
Subtotal - Mutual Fund i
i
1
5,645,962
Surplus
Surplus
Yea
Atli
Yes
9,801,486
9,801.406
29,399,850
29,399,850
9,148,871
9,148,871
24,011,230
24,811,230
73,161,437
73,161,437
Surplus
Yes
Ad
Surplus
Yes
293
293
429
429
18
18
996.212
996,212
4,648,765
4.648,765
245
245
5,645,962
5,645,962
Surplus
No
Ad
Surplus
No
AN Funds Surplus
Actual % Yes
33.5773% 33.8031%
All -Funds Surplus
Actual % Yes
2.5912% 2.6086%
Total Fiscal Agent Investments 74W7,798 78,807,389 78.807,399 36.1885% 38.4117%
21
Grand Total 217,869,691 219,581,016 3,128,728 218,434,292 1,871,127 3,128,726 1,455,388 100.0000X 100.0000%
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d � �
INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: September 13, 2006
ITEM TITLE:
Fiscal Year 2006/07 work Plan — Review of Investment Policy
BACKGROUND:
At the July 18, 2006 City Council meeting, Staff was asked to return to the
Investment Advisory Board to consider broadening the options available for the
Treasurer to invest in.
Attached please find the historical changes that have been made to the investment
policy. Areas of discussion that the Investment Advisory Board may want to
consider are:
Changing the buy and hold policy
Changing the two year restriction
Allowing for callable GSE's
Changing or eliminating the dollar limitations on GSE's, Commercial Paper
and CorpSoraate Notes S "' �p
RECOMMENDATION:
Provide Staff direction for possible recommendations to the City Council for
changes to the Fiscal Year 2006/07 Investment Policy.
YJohn M. Falcone , Finance Director
INVESTMENT ADVISORY BOARD
Meeting Date: September 13, 2006
ITEM TITLE:
Transmittal of Treasury Report
for June and July 2006
BACKGROUND:
Business Session: A
Attached please find the Treasury Report for June and July 2006.
RECOMMENDATION:
Review, Receive and File the Treasury Report for June and July 2006.
A, 4M - 1""'
John M. Falconer, Finance Director
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INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: September 13, 2006
TITLE:
Month End Cash Report — August 2006
BACKGROUND:
This cash report is not a complete Treasury Report (exclude petty cash, deferred
compensation and fiscal agent balances) but would report in a timely fashion
selected cash balances.
RECOMMENDATION:
Information item only.
l� G
John M. Falconer, Finance Director
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FRB: H.15--Selected Interest Rates, Web -Only Daily Update --August 31, 2006
Page 1 of 4
H, l 5
Selected Interest Rates (Daily)
Skip to content
Release Date: August 31, 2006
Weekly release dates and announcements I Historical data I Data Download
Daily update Other formats: Screen reader I ASCII
About
Data
I wd
The weekly release is posted on Monday. Daily updates of the weekly re4 ase ar
through Friday on this site. If Monday is a holiday, the weekly release��"iaiTT"""fie
after the holiday and the daily update will not be posted on that Tuesday.
FEDERAL RESERVE STATISTICAL RELEASE
H.15 DAILY UPDATE: WEB RELEASE ONLY
SELECTED INTEREST RATES
For use at 4:15 p.m. Eastern Time
Yields in percent per annum
August
31,
2006
2006
2006
2006
Instruments
Aug
Aug
Aug
28
29
30
Federal funds (effective) 1 2 3
5.25
5.23
5.25
Commercial Paper 3 4 5
Nonfinancial
1-month
5.21
5.21
5.19
2-month
5.20
5.21
5.20
3-month
n.a.
5.21
5.21
Financial
1-month
5.24
5.23
5.24
2-month
5.24
5.26
5.25
3-month
5.27
5.27
5.26
CDs (secondary market) 3 6
1-month
5.29
5.29
5.29
3-month
5.36
5.36
5.35
6-month
5.42
5.43
5.41
Eurodollar deposits (London) 3 7
1-month
5.32
5.33
5.33
3-month
5.39
5.40
5.39
6-month
5.44
5.45
5.43
Bank prime loan 2 3 8
8.25
8.25
8.25
Discount window primary credit 2 9
6.25
6.25
6.25
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
5.10
5.10
5.08
3-month
4.97
4.94
4.92
6-month
4.98
4.96
4.94
Treasury constant maturities
Nominal 10
1-month
5.17
5.19
5.16
3-month
5.10
5.07
5.05
6-month
5.18
5.16
5.14
1-year
5.08
5.06
5.03
2-year
4.88
4.87
4.83
http://www.federalreserve.gov/Releases/HI5/update/ 8/31/2006 3
FRB: H.15--Selected Interest Rates, Web -Only Daily Update --August 31, 2006
Page 2 of 4
3-year
4.80
4.79
4.76
5-year
4.77
4.77
4.72
7-year
4.77
4.77
4.72
10-year
4.80
4.79
4.76
20-year
5.01
5.00
4.98
30-year
4.94
4.93
4.91
Inflation indexed 11
5-year
2.31
2.30
2.31
7-year
2.30
2.31
2.30
10-year
2.28
2.29
2.28
20-year
2.28
2.28
2.26
Inflation -indexed long-term average 12
2.23
2.23
2.22
Interest rate swaps 13
1-year
5.46
5.46
5.42
2-year
5.30
5.31
5.25
3-year
5.25
5.27
5.20
4-year
5.25
5.27
5.20
5-year
5.27
5.29
5.22
7-year
5.31
5.32
5.26
10-year
5.36
5.37
5.31
30-year
5.47
5.48
5.44
Corporate bonds
Moody's seasoned
Aaa 14
5.61
5.60
5.57
Baa
6.53
6.53
6.50
State & local bonds 15
Conventional mortgages 16
n.a. Not available.
Footnotes
1. The daily effective federal funds rate is a weighted average of rates on broke
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the curr
figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. On a discount basis.
5. Interest rates interpolated from data on certain commercial paper trades settl
Depository Trust Company. The trades represent sales of commercial paper by deale
issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are
30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page
(www.federalreserve.gov/releases/cp/).
6. An average of dealer bid rates on nationally traded certificates of deposit.
7. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.
8. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.
commercial banks. Prime is one of several base rates used by banks to price short
loans.
9. The rate charged for discounts made and advances extended under the Federal Re
credit discount window program, which became effective January 9, 2003. This rate
adjustment credit, which was discontinued after January 8, 2003. For further info
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate
for the Federal Reserve Bank of New York. Historical series for the rate on adjus
http://www.federalreserve.gov/Releases/H15/update/ 8/31/2006 4
FRB: H.15--Selected Interest Rates, Web -Only Daily Update --August 31, 2006 Page 3 of 4
well as the rate on primary credit are available at www.federalreserve.gov/releas
10. Yields on actively traded non -inflation -indexed issues adjusted to constant m
30-year Treasury constant maturity series was discontinued on February 18, 2002,
on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasu
factor for adjusting the daily nominal 20-year constant maturity in order to esti
nominal rate. The historical adjustment factor can be found at
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositei
Source: U.S. Treasury.
11. Yields on Treasury inflation protected securities (TIPS) adjusted to constant
Source: U.S. Treasury. Additional information on both nominal and inflation -index
found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ind
12. Based on the unweighted average bid yields for all TIPS with remaining terms
more than 10 years.
13. International Swaps and Derivatives Association (ISDA(R)) mid -market par swap
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based o
at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Pa
ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
14. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and A
rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds o
15. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Th
16. Contract interest rates on commitments for fixed-rate first mortgages. Source
-------------------------------------------------------------------------------
Note: Weekly and monthly figures on this release, as well as annual figures avail
Board's historical H.15 web site (see below), are averages of business days unles
-------------------------------------------------------------------------------
Current and historical H.15 data are available on the Federal Reserve Board's web
(www.federalreserve.gov/). For information about individual copies or subscriptio
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-7
electronic access to current and historical data, call STAT-USA at 1-800-782-8872
Description of the Treasury Nominal and Inflation -Indexed Constant Maturity Series
Yields on Treasury nominal securities at "constant maturity" are interpolated by
from the daily yield curve for non -inflation -indexed Treasury securities. This cu
the yield on a security to its time to maturity, is based on the closing market b
actively traded Treasury securities in the over-the-counter market. These market
calculated from composites of quotations obtained by the Federal Reserve Bank of
constant maturity yield values are read from the yield curve at fixed maturities,
and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yiel
maturity, for example, even if no outstanding security has exactly 10 years remai
Similarly, yields on inflation -indexed securities at "constant maturity" are inte
daily yield curve for Treasury inflation protected securities in the over-the-cou
inflation -indexed constant maturity yields are read from this yield curve at fixe
currently 5, 7, 10, and 20 years.
-------------------------------------------------------------------------------
Weekly release dates and announcements I Historical data I About
http://www.federalreserve.gov/Releases/H15/update/ 8/31/2006 5
FRB: H. 1 5--Selected Interest Rates, Web -Only Daily Update --August 31, 2006 Page 4 of 4
Daily update Other formats: Screen. reader I ASCII
Statistical releases
Home I Economic research and data
Accessibility I Contact Us
Last update: August 31, 2006
http://www.federalreserve.gov/Releases/H 15/update/ 8/31 /2006
Phil Angelides, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund {LAIF}
PMIA Performance Report
P8/10/20P06W4.914W61
8/11/2006
4.91
4.86
162
8/12/2006
4.91
4.86
162
8/13/2006
4.91
4.86
162
8/14/2006
4.91
4.87
160
8/15/2006
4.96
4.87
161
8/16/2006
4.95
4.87
162
8/17/2006
4.96
4.87
162
8/18/2006
4.97
4.87
165
8/19/2006
4.97
4.88
165
8/20/2006
4.97
4.88
165
8/21 /2006
4.97
4.88
163
8/22/2006
4.97
4.88
162
8/23/2006
4.98
4.88
160
LAIF Performance Report
Quarter ending 6/30/06
Apportionment Rate: 4.53%
Earnings Ratio: .00012403658695943
Fair Value Factor: .998185821
PMIA Average Monthly Effective Yields
July 2006
4.849%
June 2006
4.700%
May 2006
4.563%
Pooled Money Investment Account
Portfolio Composition
$59.5 Billion
07/31 /06
Corporate Bor
1.56%
Commercial Paper
12.75%
Time Depo:
13.44%
Reverse Treasuries
Loans -0.42% 4.48% Mortgages
IQ QA0/ 1.10%n
CDs/BNs
23.42%
4gencies
29.81 %
7
Recent Bill Auction Results Page 1 of 1
TreaswrwI Di
r
Recent Bill Auction Results
Security
Issue
Maturity
Discount
Investment
Price
Term
Date
Date
Rate °io
Rate %
Per $100
CUSIP
14-DAY
09-01-2006
09-15-2006
5,170
5.252
99.798944
912795TV3
28-DAY
08-31-2006
09-28-2006
5.100
5.191
99.603333
912795XX4
91-DAY
08-31-2006
11-30-2006
4.960
5,093
98,746222
912795YGO
182-DAY
08-31-2006
03-01-2007
4.970
5.169
97.487389
912795YV7
28-DAY
08-24-2006
09-21-2006
5.075
5.166
99.605278
912795XW6
92-DAY
08-24-2006
11-24-2006
4.975
5,109
98,728611
912795YF2
182-DAY
08-24-2006
02-22-2007
4.975
5.174
97.484861
912795YU9
28-DAY
08-17-2006
09-14-2006
5.075
5.166
99.605278
912795XV8
91-DAY
08-17-2006
11-16-2006
4.980
5.114
98.741167
912795YE5
182-DAY
08-17-2006
02-15-2007
5.030
5.233
97.457056
912795YT2
28-DAY
08-10-2006
09-07-2006
5,135
5.227
99.600611
912795XUO
91-DAY
08-10-2006
11-09-2006
4.990
5.124
98.738639
912795YD7
182-DAY
08-10-2006
02-08-2007
4.990
5.190
97,477278
912795YS4
28-DAY
08-03-2006
08-31-2006
5.120
5.212
99.601778
912795XT3
91-DAY
08-03-2006
11-02-2006
4.975
5.108
98.742431
912795YC9
182-DAY
08-03-2006
02-01-2007
4.975
5.174
97.484861
912795YR6
28-DAY
07-27-2006
08-24-2006
4.920
5.007
99.617333
912795XS5
91-DAY
07-27-2006
10-26-2006
4.975
5,108
98.742431
912795YB1
182-DAY
07-27-2006
01-25-2007
5.060
5,265
97,441889
912795YQ8
28-DAY
07-20-2006
08-17-2006
4.850
4.936
99.622778
912795XR7
91-DAY
07-20-2006
10-19-2006
4.965
5.098
98 744958
912795YA3
182-DAY
07-20-2006
01-18-2007
5.090
5.297
97.426722
912795YPO
28-DAY
07-13-2006
08-10-2006
4.805
4.890
99.626278
912795XQ9
91-DAY
07-13-2006
10-12-2006
4.925
5.056
98,755069
912795XZ9
182-DAY
07-13-2006
01-11-2007
5.105
5.313
97.419139
912795YN5
28-DAY
07-06-2006
08-03-2006
4.735
4.819
99.631722
912795XPI
91-DAY
07-06-2006
10-05-2006
4,955
5.088
98.747486
912795XY2
182-DAY
07-06-2006
01-04-2007
5.090
5.297
97.426722
912795YM7
28-DAY
06-29-2006
07-27-2006
4.775
4,859
99.628611
912795XN6
91-DAY
06-29-2006
09-28-2006
4.905
5.036
98.760125
912795XX4
182-DAY
06-29-2006
12-28-2006
5.110
5.318
97.416611
912795YL9
28-DAY
06-22-2006
07-20-2006
4.600
4.681
99.642222
912795XMS
91-DAY
06-22-2006
09-21-2006
4.830
4.958
98.779083
912795XW6
182-DAY
06-22-2006
12-21-2006
5.055
5.260
97.444417
91279SYKI
28-DAY
06-15-2006
07-13-2006
4.645
4,727
99.638722
912795XLO
91-DAY
06-15-2006
09-14-2006
4,800
4.926
98,786667
912795XVB
182-DAY
06-15-2006
12-14-2006
4,925
5.121
97.510139
912795Y34
28-DAY
06-08-2006
07-06-2006
4.700
4.783
99.634444
912795XK2
91-DAY
06-08-2006
09-07-2006
4.710
4,833
98,809417
912795XUO
182-DAY
06-08-2006
12-07-2006
4.815
5.004
97.565750
912795YH8
Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method.
http://www.treasurydirect.gov/RI/0FBills 8/31/2006 8
FRB: Commercial Paper Rates and Outstandings
Page 1 of 3
Federal Reserve Release
Commercial Paper
Release I About I Outstandings I Volume statistics I Year-end I Data Download
Data as of August 30, 2006
Commercial Paper Rates and Outstanding
Derived from data supplied by The Depository Trust Company
Posted August 31, 2006
Discount rates
AA
A2/P2/F2
AA
AA
nonfinancial
nonfinancial
financial
asset -backed
1-day
5.23 5.29 5.23 5.25
7-day 5.22 5.29 5.24 5.27
15-day 5.18 5.32 5.23 5.27
30-day 5.19 5.38 5.24 5.27
60-day 5.20 5.37 5.25 5.29
90-day 5.21 5.38 5.26 5.28
Yield curve
1Vlrrney market basis
— .— — A,4 tf"inistl
...,....... /l2iP2/P— risfintctz1
,�,_....,. AA 1''irtireca1
1 7 15 30
D
ays to Maturity
•17
Percent
5.3
http://www.federalreserve.gov/releases/cp/ 8/31/2006 9
FRB: Commercial Paper Rates and Outstandings
Page 2 of 3
Discount rate spread
Thirty -day A2/P2/F2 less AA nonfinancial commercial paper (daily) Basis points 120
svmul - 100
-Pwal, i4ay moving avg
- 80
- 60
- 40
20
0
2001 22002 2003 2004 2005 2006
Discount rate history
7birty-day commercial paper (daily)
— — — AA nonfinancial
.......... A2/P2/ R oontinaftial
AA financial
Outstandings
Weekly (Wednesday), seasonally adjusted
Percent
M
2
1
0
http://www.federalreserve.gov/releases/cp/
8/31/2006 10
FRB: Commercial Paper Rates and Outstandings
Page 3 of 3
Billions of dollars
Nonfinancial nancial (right wale)
Finarwiat (left scale)
1 �
41-
tA ,
Mlt
M' M
MM
MM
Billions of dollars
2005
250
210
170
fi '1,J
130
2006
RZ
The daily commercial paper release will usually be available before 11:00am EST. However, the Federal
Reserve Board makes no guarantee regarding the timing of the daily commercial paper release. When
the Federal Reserve Board is closed on a business day, rates for the previous business day will be
available through the Federal Reserver Board's Data Download application. This policy is subject to
change at any time without notice.
Release j About I Outstandings I Volume statistics I Year-end I Data Download
Home I Statistical releases
Accessibility I Contact Us
Last update: August 31, 2006
http://www.federaireserve.gov/releases/cp/ 8/31 /2006 11
INVESTMENT ADVISORY BOARD
Meeting Date: September 13, 2006
TITLE:
Pooled Money Investment Board Report
for May and June 2006.
BACKGROUND:
Correspondence & Written
Material Item B
The Pooled Money Investment Board Report for May and June 2006 is included in
the agenda packet.
RECOMMENDATION:
Receive & File
n M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF MAY 2006 WITH MAY 2005
(DOLLARS IN THOUSANDS)
MAY 2006 MAY 2605CHANGE
Average Daily Portfolio
$ 62,884,641 $
61,691,707 $
+1,192,834
Accrued Earnings
$ 243,715 $
149,634 $
+94,081
Effective Yield
4.563
2.856
+1.707
Average Life -Month End (In Days) 151 170 -19 1
Total Security Transactions
Amount
$ 27,496,447
$
27,059,361
$.
+437,086
Number
577
554
+23
Total Time Deposit Transactions
Amount
$ 2,713,300
$
2,643,300
$
+70,000
Number
144
112
+32
Average Workday Investment Activity
$ 1,373,170
$
1,414,412
$
-41,242
Prescribed Demand Account Balances
For Services
$ 281,421
$
422,582
$
-141,161
For Uncollected Funds
$ 308,585
$
258,524
$
+50,061
1
2
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
TYPE OF SECURITY
Government
Bills
Bonds
Notes
Strips
Total Government
Federal Agency Coupons
Certificates of Deposit
Bank Notes
Bankers' Acceptances
Repurchases
Federal Agency Discount Notes
Time Deposits
GNMAs
Commercial Paper
FHLMC/Remics
Corporate Bonds
AB 55 Loans
GF Loans
Reversed Repurchases
Total (All Types)
INVESTMENT ACTIVITY
Pooled Money
Other
Time Deposits
Totals
PMIA Monthly Average Effective Yield
Year to Date Yield Last Day of Month
May 31, 2006
DIFFERENCE IN
PERCENT OF
PERCENT OF
PORTFOLIO FROM
AMOUNT PORTFOLIO
PRIOR MONTH
$ 1,767,250
0
1,895,486
0
$ 3,662,736
$ 9,712,988
13,367,403
1,860,512
0
0
6,727,999
7,768,496
245
12,130,091
687,859
870,537
6,526,593
0
(198,900)
$ 63,106,558
NUMBER
AMOUNT
677
$ 27,496,447
19
138,979
144
2,713,300
740
$ 30,348,726
4.563
3.788
E
2.80
0.00
3.00
0.00
5.80
16.39
21.19
2.95
0.00
0.00
10.66
12.29
0.00
19.22
1.09
1.38
10.34
0.00
(0.31)
100.00
APRIL 2006
-2.01
0.00
-1.04
0.00
-3.05
-1.06
+2.65
+0.05
0.00
0.00
+2.60
-0.18
0.00
+0.26
-0.04
-0.09
-0.83
0.00
+0.31
NUMBER
AMOUNT
558
$ 27,064,052
40
259,608
160
4,770,000
758
$ 32,093,660
4.305
3.696
K
Pooled Money Investment Account
Portfolio Composition
$63.1 Billion
Corporate E
1.38%
Commercial Paper
19.22%
Time DE
12.2
05/31 /06
Reverses
-0.31 Treasuries
Loans 5.80%
Af% Mortgages
3
CDs/BNs
24.14%
Agencies
26.05%
ii
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF JUNE 2006 WITH JUNE 2005
(DOLLARS IN THOUSANDS)
JUNE'i2006-IF JUNE 2005 CHA'iVGE
''
Average Daily Portfolio $ 63,221,434 $ 62,955,506 $ +265,928
Accrued Earnings $ 244,211 $ 153,623 $ +90,688
Effective Yield 4.700 2.967 +1.733
Average Life -Month End (In Days)
152
165 -13 1
Total Security Transactions
Amount
$ 34,216,523
$
30,725,808
$
+3,490,715
Number
712
628
+84
Total Time Deposit Transactions
Amount
$ 3,603,500
$
2,993,500
$
+610,000
Number
173
154
+19
Average Workday Investment Activity
$ 1,719,092
$
1,532,696
$
+186,396
Prescribed Demand Account Balances
For Services
$ 269,143
$
417,656
$
-148,513
For Uncollected Funds
$ 198,973
$
164,958
$
+34,015
1
5
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
TYPE OF SECURITY
Government
Bills
Bonds
Notes
Strips
Total Government
Federal Agency Coupons
Certificates of Deposit
Bank Notes
Bankers' Acceptances
Repurchases
Federal Agency Discount Notes
Time Deposits
GNMAs
Commercial Paper
FHLMC/Remits
Corporate Bonds
AB 55 Loans
GF Loans
Reversed Repurchases
Total (All Types)
INVESTMENT ACTIVITY
June 30, 2006
DIFFERENCE IN
PERCENTOF
PERCENT OF PORTFOLIO FROM
AMOUNT PORTFOLIO PRIOR MONTH
$ 1,662,496
0
1,596,680
0
$ 3,259,176
E
9,948,438
13,642,402
1,135,045
0
0
7,754,099
7,853,495
242
11,751,579
673,737
910,665
6,409,082
0
0
63,337,960
JUNE 2006
NUMBER AMOUNT
Pooled Money 712 $ 34,216,523
Other 58 554,540
Time Deposits 173 3,603,500
Totals 943 $ 38,374,563
PMIA Monthly Average Effective Yield 4.700
Year to Date Yield Last Day of Month 3.873
2
2.62
-0.18
0.00
0
2.52
-0.48
0.00
0.00
5.14
-0.66
15.71
+0.32
21.54
+0.35
1.79
-1.16
0.00
0.00
0.00
0.00
12.24
+1.58
12.40
+0.11
0.00
0.00
18.56
-0.66
1.06
-0.03
1.44
+0.06
10.12
-0.22
0.00
0.00
0.00
-0.31
100.00
MAY 2006
NUMBER
AMOUNT
577
$ 27,496,447
19
138,979
1"
2,713,300
740
$ 30,348,726
4.563
3.788
L
Pooled Money Investment Account
Corpora
1.4
Commercial Paper
18.56%
Time Del
12.40
Portfolio Composition
$63.3 Billion
Loans Treas u nesMortg ages
10.12% 5.14 /0 1.Ofi%
3
CDs/BNs
23.33%
Ngencies
27.95%
7
INVESTMENT ADVISORY BOARD
Meeting Date: September 13, 2006
ITEM TITLE:
Correspondence & Written
Material Item C
Minutes of City Council Investment Advisory Board Work Plan
BACKGROUND:
Attached please find the minutes of the July 18, 2006 meeting regarding the Fiscal
Year 206/07 Work Plan.
RECOMMENDATION:
Informational item only.
M- J'e"e Ali
ohn M. Falconer, Finance Director
8
City Council Minutes
N
July 18, 2006
MOTION — It w ouncil Members Sniff/Kirk to approve the
a endar as recommended and amended with the a t
tion of Item
Nos. 8 and 9; and with Item Nos. 4, 5, 10, 13, and 14 iapproved by
RESOLUTION NOS. 2006-070 through 2006-075 r pectly. Motion
carried unanimously.
Item Nos. 8 and 9:
MOTION — It was moved by Council Merr�lrs Sniff/Osborne to approve the
following resolutions:
RESOLUTION NO. 2006-076
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA,
CALIFORNIA, GRANTING AN XTENSION OF TIME FOR THE COMPLETION
OF IMPROVEMENTS AS PECIFIED IN THE APPROVED SUBDIVISION. -
IMPROVEMENT AGREE NT FOR A PERIOD OF ONE YEAR FOR TRACT
MAP 31681-1, ANDA SIA, CORAL OPTION, LLC.
and;
RESOLUTION NO. 2006.077
A RESORUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA,
CALWC INIA, GRANTING AN EXTENSION OF TIME FOR THE COMPLETION
eOF PROVEMENTS AS SPECIFIED. IN THE APPROVED SUBDIVISION
I ROVEMENT AGREEMENT FOR A PERIOD OF ONE YEAR FOR TRACT
AP 31681-2, ANDALUSIA, CORAL OPTION, LLC.
Mo ounce Member Kirk ABSENT due to a potential conflict
of interest.
BUSINESS SESSION
1. CONSIDERATION OF INVESTMENT ADVISORY BOARD 2006/2007 WORK
PLAN.
Finance Director Falconer presented the staff report.
Council Member Henderson referred to a discussion at a previous Council
meeting about the possibility of giving the Treasurer the same investment
options as an investment advisor, and asked if that would be coming back to
Council for consideration.
9
City Council Minutes 5 July 18, 2006
Mr. Falconer stated he didn't recall there being a consensus to pursue that
issue, and noted it's not included in the Investment Policy for 2006/2007.
Council Member Henderson stated she recalled there being a consensus, and
would be hesitant to approve the recommendation to use an outside
professional firm until Council receives a recommendation from the
Investment Advisory Board (IAB) and the Finance Director regarding
broadening of those investment options. She suggested the
recommendation to use an outside professional firm remain a consideration
after looking at the possibility of expanding the Treasurer's investment
options.
In response to Council Member Kirk, Mr. Falconer stated the IAB is
recommending two IAB members participate on the evaluation committee for
an RFP for audit services.
Council Member Osborne noted it would be the Council's discretion as to
which investments a professional firm would be allowed to use. He stated
he supports using an outside firm to increase the City's rate of return, while
maintaining the safety of the principal. He asked how long the current
auditing firm has been utilized by the City.
Mr. Falconer stated he believes it has been since 1993.
Council Member Osborne spoke in support of going with a new firm to
maintain independence and get a fresh look at the finances. He supports the
proposed work plan.
Council Member Sniff noted the investment policy can be amended to give
the Treasurer additional investment opportunities. He indicated he supports
staying with the current auditing firm, and would oppose making a change.,
Mayor Adolph asked if there is a way to realistically estimate how much
profit the City would make by using a professional investment firm, and if
the Finance Director is comfortable with making the change.
Mr. Falconer advised the profit would depend on the firm's expertise and
available resources, and it would be balanced against the interest -rate
environment and fees charged by the firm. He pointed out a portfolio
manager does not have a buy -and -hold strategy and can actively manage the
portfolio. They also don't have the same limitations as the treasurer as to
what they can invest in commercial paper and government sponsored
entities. A professional firm could probably generate enough profit to cover
10
City Council Minutes . 6 July 18, 2006
the cost of the firm .but the Council has to consider the liability. He stated
he envisions using a portfolio manager in the 2-5 year range, and doesn't see
the interest -rate environment in that range any better than the 3-6 months
range. He is somewhat concerned as to whether or not a portfolio manager
could generate the extra income but the majority of the IAB members feel
it's warranted.
In response to Council Member Henderson, Mr. Falconer advised the buy -
and -hold strategy is a City -imposed policy. He confirmed the IAB could
discuss the limitations on the treasurer as policy changes and recommend
changes if Council wants to go that direction.
Council Member Henderson stated she would like the IAB to have those
discussions, and bring it forward to Council as possible policy changes. She
doesn't have a problem with IAB members serving on an RFP evaluation
committee but noted the current firm has respectability and experience, and
she hopes they are not marked down because they are the current firm.
Christina Deniel, Chairperson for the Investment Advisory Board, stated the
overall feeling of the Board is that the work of a professional money manager
should not be delegated to staff. The Board also feels the current
investment restrictions should be maintained if the investments are not
handled by a professional firm. She stated the Board doesn't feel the
portfolio discretion should be expanded within the hands of finance staff that
doesn't have the proper knowledge.
Council Member Henderson stated she probably would not approve of any
buy -and -trade strategy but there are other issues to consider such as the
dollar limit of investments.
Council Member Osborne stated he feels staff and the Board are doing a
great job given the current rate of return and the existing structure.
MOTION - It was moved by Council Members Sniff/Osborne to approve the
Investment Advisory Board 2006/2007 Work Plan.
Council Member Kirk asked if the motion means the City will consider using
an outside professional firm.
Council Member Osborne stated it's . his understanding that the IAB will
continue looking at that issue.
Motion carried unanimously.
11
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item D
Meeting Date: September 13, 2006
ITEM TITLE:
Joint meeting with Investment Advisory Board and City Council
BACKGROUND:
The joint meeting with the City Council and the Investment Advisory Board will be
held on October 24th at 7:15 p.m. at City Hall in the Study Session Room.
RECOMMENDATION:
Information only.
hn M. Falconer, Finance Director
BOARD MEMBER ITEMS
P.O. Box 1504
LA QUINTA, CALIFORNIA 92247-1504
78-495 CALLS TAMPICO (760) 7 7 7 - 7 0 0 0
LA QUINTA, CALIFORNIA 92253 FAX (760) 777-7101
July 18, 2006
Cristina Deniel, Chairperson
Investment Advisory Board
City of La Quinta
P.O. Box 1504
La Quinta, CA 92247
Dear Chairperson Deniel:
I would like to take this opportunity to thank you and the members of the
Investment Advisory Board for your efforts with regards to the City's
investment portfolio. I appreciate the information shared with me in your
memorandum dated June 16, 2006. This information helped to alleviate my
concerns.
Again, thank you for all your hard work.
Sincerely,
Lee Osborne, Council Member
City of La Quinta
mra
LA QUINTA
U Quinta Irmbnents 9�ai8 U�
Inaccurate editorial
An article published July 31 reasonably
U11111161 iMLN
`not trying to
learn English'
is great myth
Colorado Congressman Tom Tancredo
says immigrants aren't learning English
fast enough.
He buys into the myth that many don't
want to learn English at all. That's why he
has a zero -tolerance approach to language
acquisition.
For little kids, he believes in total im-
mersion; none of that bilingual-ed stuff
that helps children actually learn subjects
while they're making
the transition.
For adults, he ex-
pects the same. results,
even though they
might have other
things to do — such as
work two low -wage
jobs to make ends
CII,My meet.
RODRIGUEZ "We are Balkanizing
and bilingualizing
America to our detri-
ment," he told me via his mobile phone
from D.C. two weeks ago.
Bilingualizing? What language is he
speaking?
Tancredo has a flair for the dramatic.
He cited the Basque separatists in Spain,
the Franco-Anglo culture wars in Quebec
and even the Muslim riots in suburban
Paris as examples of what dould happen in
America if bilingualism and biculturalism
are encouraged.
He spoke of a need for immigrants to
"sever" ties to their past, as he claims his
Italian grandparents did.
Easier said than done
That's why he was one of just 33 mem-
bers of Congress to vote against the reau-
thorization of the Vot-
ing Rights Act last
month, along with his CITIZENS
Republican cohort, SHOULD
Rep. Joel Hefley. The
law protects minority SPEAK
groups from being ENGLISH, HE
stripped of their right
to vote. Too; bad it SAYS. I
couldn't protect thou- AGREE, BUT
sands of eligible black
voters in Florida who IT'S EASIER
were purged from the SAID THAN
voter rolls during the
2000 presidential elec- DONE.
tion. The elections _
commissioner called it
an unfortunate mistake, akin to "Oops!"
Tancredo's main problem with the Vot-
ing Rights Act is that it mandates election
ballots be printed in the language of an
ethnic group if such citizens make up 5
percent or more of a municipality's adult
population.
In Tancredo's view, we should do away
with government interpreters or instruc-
tions in foreign languages.
Citizens should speak English, he says. I
agree, but it's easier said than done.
Every ESL class I called in the Denver
area was full last week. Same in Tabcre-
do's hometown of Littleton.
Patsy Jaynes, the coordinator of the
adult ESL program at Littleton Public
Schools, told me, "Every chair is always
filled."
"I think there's a lot of misunderstand-
ing out there," Jaynes said. "Immigrants
want to be a part of this society. They
want to talk to the teachers of their chil-
dren. They want to be able to navigate the
bus system, the banking system. They
want to be able to become productive cit-
izens."
Mastering new language
That explains why at Centro San Juan
Diego, a multiservice agency run by the
Archdiocese of Denver, enrollment for fall
English classes is already full— a month
before classes begin.
The summer session was overflowing: 70
in the beginner class, 60 in intermediate
and 35 in advanced English. The center
could use more volunteer teachers.
The classes, which cost $20 a month, re-
quire dedication: five hours of class time
each week, not including time required for
homework assignments.
"The reality is that people do want to
learn English," said Vicky Carrasco, a co-
ordinator at the center. "There are cou-
ples who study together. Many also take
GED classes if they don't have high school
diplomas. They want to improve their
lives."
THE watt ON AiDs
OUR VOICE
City must remain conservative
when investing publics funds
1
Advisory board suggests
letting firm handle portfolio
We can't fault city leaders for trying to
raise revenues that doesn't involve higher
taxes. Municipalities, especially growing
ones, often need additional dollars to hire
new police officers, build and maintain
roads, to pay for community -building
events such as festivals and more.
To that end, the La Quinta Investment
Advisory Board for the second consecutive
year has recommended farming out man -
THE ISSUE: to Quinta is agement of its port -
considering allowing outside, folio to a profes-
professional firms handle some sional firm. With
of the city's investment portfolio. some $228 million
WE SUGGEST: The city should cash xeserves
keep stay conservative with ,
public funds. even letting a pri-
WHAT DO YOU THINK? vate firm garner a
Should municipalities farm out
their investment portfolios? half -percentage
Send a letter via the Web: point more on a
www.thedesertsun.com/letters small fraction of
that amount could
be enough to pay for salaries and equip-
ment of two new police officers.
Appealing as that sounds, though, La
Quinta ought to resist letting a private firm
handle all of its investments. The city at
best might cautiously experiment with out-
side management of a small proportion of
funds but shouldn't move beyond that.
Don't gamble with public money
There's little doubt that La Quinta could
earn far more on its reserves. Most of its
investments are safe, conservative bets,
such as U.S. Treasury notes, government -
sponsored enterprises Fannie Mae and
Freddie Mac or money market mutual
funds composted of U.S. Treasury bills.
But public monies aren't funds with which
to wheel and deal.
A potential problem of letting a private
company handle a municipal portfolio is
the city becomes too vulnerable to the
market's ups and downs. While the econ-
omy may be good this year and allow for
two new officers to be hired, there's a very
real risk that those officers would be given
the pink slip in down years. That directly
affects public safety. Theoretically, some
of the new revenue would be placed in the
reserves to soften the downturns. But by
being more conservative and opting to live
within its mgans, the city avoids the poten-
tial pitfalls of bear markets.
Another issue is deciding who would
oversee the private investment firm.
Whether it be the elected council, a special
commission or
director, tthere YOUR CITY'$ NEWS
should be some Find out the latest
in La Quinta news:
expertise in in- www.thedesertsun.com
vesting to en- /laquinta
sure adequate
oversight, City Councilwoman Terry Hen-
derson noted. The city's finance director
now oversees those dollars under strict in-
vestment rules'. While it may be fine for
any one of those individuals to risk their
personal wealth, far more caution is need-
ed when public money is involved.
Going private with a large percentage of
funds ultimately may be a can of worms
that city leaders won't want to open. Hir-
ing a private firm to handle large amounts
of public funds raises the potential for con-
flicts of interest and can give the appear-
ance of impropriety that damages City
Hall's and the council's reputations. This
occurred a few years ago when La Quinta
allowed a private company to handle its
portfolio. In any case, the city will have to
face the scrutiny of every resident investor
who second guesses the decision to hire
and fire a private investment company, not
to mention where funds were placed.
Play it safe
Rather than take on these new problems,
the city ought to take a more conservative
approach to improving its yields: Explore
changes to the city's investment policy,
which limits the amount La Quinta can in-
vest in each source. That policy is overly
restrictive, City Finance Director John
Falconer said. He believes more flexibility
would allow the city to see the same or
similar yields as an outside firm might pro-
vide. It would be achieved with the same;
conservative types of investments that the
city now utilizes.
Next month, the city's Investment Advi-
sory Board will continue to explore
changes to •improve yields. The board
should focus more on loosening the rules
just enough so a public official can bring
higher yields when investing public
monies.
YOUR V01
45th Congressional Dishic
Bono obligated to
"No debate required" (E
me the letter writer shoulc
the history books. Debate;
in the days of the Greeks
The Kennedy -Nixon deba
brought them into our hor
vision.
There is no valid reason f
bent or a challenger to refu
debate with their opponent:
that the people be allowed 1
where they stand on import
Yes, there have been fim
where debates have been d
people — Hitler's Nazi Ge
in's iron fisted rule of Russ
tro's current terror filled n:
to name just a few. Is that
the letter writer would have
We the people elect our r
tives, and they are responsi
Why should they not be rep
spell out exactly where the,
defend their past actions at
against any valid attack?
Any candidate who won)
should forfeit the privilege
public office.
MICHt
P,
Catiledrai City sales tax
Measure Qgood fo
This November Cathedra
dents have the opportunity
real difference in improving
of life for those who live, we
in our city ("Sales tax lesser
evils," Aug. 16). Measure C
as much as $6 million addit
lars to the general fund. T i
the city to address public sa
by being able to have adequ
bers of both fire and police:
available to respond to the i
needs of our community.
In addition to public safer
funds could be used improv
that are in such a state of di;
These funds would also be i
able to provide recreational
ties for our most valuable as
dral City's children.
The proposed sales tax inc
equates to an increase of on;
one spends $500 for taxable
member that amount when
Starbucks buying a mocha h
again when voting in Noverr
ART
catl
Indian Wells City Council
Lax offers great exp
Martin Lax would make a
dition to the Indian Wells Q
cil. I've known Martin as a E
colleague for more than 10 y
accomplished attorney with
experience, he has worked fo
in Washington, D.C., the U.
ney's Office in New York, fe.
judges in New York and Los
and two prestigious law fum:
his law degree, Martin earne4
and runs his own law firm, sl
in business, real estate, emph
and elder abuse law.
Highlights of his communii
include board member of Fri
Rancho Mirage Library and 1
ers Big Sisters of the Desert,
unteer at Pacific Life Open, l
Springs Film Festival and CE
ity Challenge. He has comple
Leadership Coachella Valley
and has served as court-appo:
diator.
Martin is committed to imr
the already high quality of life
an Wells.
MARK GER
Pali