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2008 03 12 IABP.O. Box 1504 LA QuINTA, CALIFORNIA 92247-1504 78-495 CALLF. TAMPICO LA QUINTA, CALIFORNIA 92253 AGENDA INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calls Tampico- La Quints, CA 92253 March 12, 2008 - 4:30 P.M. (760) 777-7000 FAX (760) 777-7101 1 CALL TO ORDER a. Pledge of Allegiance b. Roll Call 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 A. Approval of Minutes of Meeting on February 13, 2008 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for January 2008 B. Continued Consideration of Fiscal Year 2008/09 Investment Policies & Work Plan Items C. California Municipal Treasurer's Conference - San Francisco, CA, April 22 - 25, 2008 VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report and other selected Financial Data - February 2008 B. Pooled Money Investment Board Reports - December 2007 VII BOARD MEMBER ITEMS VIII ADJOURNMENT INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: March 12, 2008 ITEM TITLE: Transmittal of Treasury Report for January 31, 2008 BACKGROUND: Attached please find the Treasury Report January 31, 2008 RECOMMENDATION: Review, Receive and File the Treasury Report for January 31, 2008 John M. Falconer, Finance Director f � f MEMORANDUM TO' La Quinta City Council FROM: John M Falconer, Finance Director/Treasurer SUBJECT. Treasurer's Report for January 31, 2008 DATE February 29, 2008 Attached is the Treasurer's Report for the month ending January 31, 2008. 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 Endino Chan e Cash (3) $ (1,712,144) $ 3,591,167 (1) $ 1,879,023 $ 3,591,167 LAIF 44,433,616 8,315,780 (4,400,000) 1,500,000 49,849,396 5,415,780 US Treasuries (2) 49,260,540 142,715 49,403,255 142,715 US Gov't Sponsored Enterprises (2) 44,748,232 10,000,000 47,164 54,795,396 10,047,164 Commercial Paper (2) 19,925,829 20,000,000 (10,000,000) (27,478) 29,898,351 9,972,522 Corporate Notes 7,942,719 4,879 7,947,598 4,879 Mutual Funds 8,979,214 15,359 1 8,994,573 15,359 Total 1 $ 173.578,006 1 $ 41,922,306 $ 14,40Q000 $ 1,667,280 $ 202,767,592 $ 29,18926 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. As Treasurer of the City of La Quint@, 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. 3/31 2©©� 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 January Cash Balances — The portfolio size increased by $29.2 million to $202.6 million. The major reason for the increase was $24.9 million in tax increment from the 1" installment of property taxes. Investment Activity — The average maturity of the portfolio decreased by 27 days to 96 days at the end of January. The six month US Treasury benchmark decreased by 108 basis points and ended the month at 2.31 %. The Treasurer follows a buy and hold investment policy and has not sold investments before maturity to take advantage of market conditions. The Treasurer invested the months increasing cash balances into $10 million of Farm Credit Paper, $10 million in Commercial Paper and $7 million in LAIF. The sweep account earned $3,279 in interest income for the month of January and the bank fees for the month were $ 2,030 which resulted in a net increase of $ 1,249 in real savings. Portfolio Performance — The overall portfolio performance decreased by twenty three basis points from the prior month and ended at 4.22% for the month, with the pooled cash investments yielding 4.58%. The overall portfolio yield (including bond proceeds) was one hundred ninety one (191) basis points over the benchmark, which has increased by eighty five (85) basis point from the (106) basis point difference in December. The reason for the drastic decrease in the benchmark was because of the two Fed lowerings in January. With the average maturity of 96 days, the portfolio yield should remain at these levels for the next three months with a small downward trend based upon reinvestments at lower rates and the 1 s` installment of property taxes at the end on January requiring investing. The Treasurer has more of a barbell maturity schedule with the longer term investments helping to keep yields higher as interest rates will gradually be falling. At this time last year, the portfolio was yielding 5.16% and the benchmark was at 4.98% so we have made significant progress in meeting our benchmark. In the short term, the Treasurer has been investing more in LAIF because its rate declines slower in a declining rate environment and in Commercial Paper. The Treasurer has not been investing in Treasury securities because of their low yield, except for bond proceeds to ensure that the funds are available for capital projects, e.g. SilverRock and Vista Dunes Courtyard Homes and the CVHC project at 481h and Adams. Future Thoughts The Treasurer will continue to invest in short term maturities to take advantage of the yield curve — Commercial Paper with 30 to 90 day maturities and Bond proceeds will be laddered in three- and six-month Treasury bills as they mature. 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U a U° _0 10 0 o E cdi m'2ya a Zm 'o m dd E rnrny Em IL > d U U d ry 9 c d m y (n J N E N E N t0 E a t O d d a m C _ Ml c a a m 9 N rn u, c N U C w E y L dCO a T U«0 = p.- r >> C NddE °Um uuO j E 0 E Ch OC C LCOQJ E --_ E C LL LL LL LL �? N > C U DCZ>>> QJ d c z O F- C mZ 5 ` aa J J 7 a` 2 a LL a§o$rcMi. E m ay r'Env� "e o,a Eg°'a a oa o Anna A 2nn3 F mm mg �n�8y«»ma �N�eNm �oN�m �m Q�ed3m�m� No�nSA�� NNNm 3NmeNm�n mSSe mg »mm'«m °oWvdwr NNN� g�mm�mo w 22Ne$1m � » e g o NgaK gSo��$�e =� m NBgmN�� gmNs'e gNN Nn$N�mnsognna Lnnnn "�n $ene&mod a�m3emm� v�eem°n'm^o' aF�8m v v=��m&mrvm Eey.nmmSmrvv Ewunimm $V Ervn�p?mnSa P' ryas$ gnn ml m S�m $a�sm �$anm3 a e o n ^m `o1_g mm E'38m'✓. na� w ��sNm n'3 �mNNm EmR5.�°- n� 9PNN -gam 1-14 Rag aw 8 s � � n �8a' E mcYC E mGvi Nov E m '„oz E '.aEy c IEEE oag m icEz'c pp mart��'LLro '^ny EE•Mg9'?wE$=a S9NNE�=3 �9NNE8>- r�i%n»a`i�sr ruin»a`ciEr �un»a`ci�r �ciw»n`u° LdY of La COMB Reconciliation of Aos al and Sur lua Funds DM. Fac avelopnrenl Agency and Flnanun0 AuBgrfty January31,2000 Balance of Actual Funds r2,76],592 Less Petty caSn FUMa iLplp) lass kh:rSurplus Funds (2,270.178) Balana ol5m Ius Funds $ 20496414 CHI Cask B lasimanents BBank Acwunla Nank Acaiublli $u lua T Baia Suplus V¢s Atl Su glu9 VGS W¢Ils Fago - Demand No LM1ebrng $ 1,082,213 $ y Wake Fargo-S..P No Swe¢0 ]S6,dW Petty Cask- Canard No WA 1,000 Walls Fa IHousr Demand Vas CMcki $ 39 dM 5 39,d01 E 3910d Total - Bank Acmums $ I,B]9,023 y 39,101 S - y 39,dOd U S Treasury LlIslOtllaroAvaiubilit Surlus Issuer? a AmgNzed Va4rc Surplus Yes Atl Surplus Yes Total U S Treasu USGovemmem Sponsored EmerpdseI Arrwrtlze0 Surplus Surplus Oumuniam A-1pbrlrr Su Ius Issuer? Value Yes AO Yes 6ank01 New Y0rk-DemaM Y¢s FredOrt Mdc 2,971.096 2,9I1.Wd 2,971,0% Bank Ol New York-OemaM Yes Facde, Mac 9,00,693 9,950,89,3 9,950,6W Bank Ol New York-DemaM Yea FHLB 1.999,450 1,999d50 1.999,650 Bankol New YOM1-Demand Yes FFCB 4. 59.530 4959,530 4,959,530 Bank Ol New York -Demand Yes FFCB 9,99663d 9996,634 9,996634 BanF of New Yoh 0ein Yes Fredtlm Mac 4,470,322 4p]0322 4,470,34 Bank Of New York Demand Yes FHLB 7,999541 7,%9,541 ],gal Bank Or Naw York. De,and Yes FHLB 9,993,3]] 9,993,3]] 9,993,3]] Bank Ol New YOemaM Yes Freddie Mac 2154755 2454755 2454 755 Total. U 5 GDvernmenl Searr4es 61,795,396 5d,)95.386 54,795?W Mndium Term Noie Book Suplus 5urqu5 Luabdlan. AvdiuMl Su us IssuerR Value Yes ptl Yea aank of New YOh.DemaM Yes Gereral EaMCCapW 2,66],d]2 3,88),IJ2 2,98],033 Bank of New VOM-Damara Yes UB BanCoq 3,OW,5]0 3,W6,530 3,W6,530 Sank of New YOM-DemdnO ye Gereral Electric Ca llal 19I3 W8 19b 616 19T363B Total-M¢dium Term pa r T,9d],598 ),94],589 1-1... Puma Commercial Paper Custodian A,..I.b.14 Surplus Issuer? Book Value Surplus yes Ad Surplus Yes Bankol N¢w Yod -Demand Yes Amencan E.P.. Card 4987,199 4.987,199 4,987.199 Bank a(New YoM-Demand Yes John Deere 4,999,367 1,09,357 4,999.367 Bank of New York- Demand Yes Nestle Capital Corp 4,972,076 4.972076 4,972,076 Bank of New York - D¢mand Yes file Fargo 4,980,601 49B0801 kful 1 Bank of New m York- Deand Yes Untied Panel Servce d,980, 113 49BW0,113 4980,113 Bank of New York - Demand Yes Inlemalbnal Leue 4978)95 4,B,i95 4,978.795 Tool- PJme Commercial Paper 29,896,351 29,098,351 29,898,351 Local ABemyl"'"alFund Sm1lus Surplus Name-AaJ Surplus Type Book Yes Atl Yas LAIF-Lily-D¢mdM Yes 51ate Pool ]6,W3,1@ 38.9aJ,162 (631,558) 38,5115-0 LAIF- RDA - Demand Yes Slats POD1 10,99fi 250 109W,254 109r16,254 TOUl- SIale Pool I49,a69398 69,849.J96 d3t,559 19A1i.63] Surplus No Ad Surplus No AIIPonds Aqudl% Surpus Y¢s $ 1,082213 $ 1,16],965 $ 2,2)0,1]0 'SEA. $ OS6,doh) - ,,OW 1.000 E 1,W9,519 1 $ 431559 $ 2,211,1]0 0916IX 0019IY Surplus No ptl Surplus NO All FUMa Actual% Surplus Yes O COW% 1 00000% Surplus W Atl Surplus NO All Funds equal % Sal yes 27 0237% 27 3299% Suplus No Ad Surplus NO All Furks Acual% Suplus Yes J 9198% 39N0% Surplus NO AO Surplus No All Funds Aqual% Surplus You 1d]0.51% 149122% Surylus No Ad Surplus Np All FUMa Actual% Surplus Yes 2a 5815% 2d fill]°h Total Lhy lmastnwnfs 113690,Tg1I 143,g90,T41 431,559 113.059,183 - I]03]29X ]O.tS]>X T.Ul Chy Lash 6 lnvisOnxnts tH,]69 i64j 142,530,145 431,559 112,099.5661 1.939,619 1 431.559 I22]1,1)5 ]1.1996X ]o.8]]IX Fiscal A rat lnwsbneW Painful. - City I"Onakern Amorllaed Surplus Surplus nkodan-Avatladia 6u Ius Issrcr? Vdlup Yes M yes 2002 RDA US Bank-0IP Yes US Treasury 581 13,626188 13,826,188 13,826188 20M Finance AulMuly-CIP Yes US Treasury Bill : 5,96719 5,963,719 5,963719 2WI Finance A"Z",-C1P Yes USTreasury BAl 966D,301 9.853301 9A60,301 20I Finance Autlionl -CIP Yes USTreasu Bill 19,753047 19753017 19753047 TOW LUS Treasu 49403255 49,403255 49403255 POMaIw- Mrsral Funds Trualee-Assiodd Su Ius Morey Market MoaI Fu Wdj Book Value Surplus Yes Ad Surplus Yes Clvrc Cans, U$ Bank PrOac1 YES islAmeucan 663 403 453 Ca¢Cankr U S Bank - Data Svc YES 151 Ahkn a 1094 RDA U S. Bank -Debt Svc YES 151Amencan 1995 RDA U S Bank -CIP YES 1st Amenwn 1995 RDA U S Bank -Special Fund YES 1MAmencan 2W4 Fin Alai-1995 US Bank -Esuow YES 1st Amenwn 199E RDA U S Bank -CIP YES 1st Ammon 1996 RDA U S Bank -Dbl Svc YES 151 pmenwn 1996 RDA U S Bank - Specal Fur. YES 1st Arri 1998 RDA U S Bank -CIP YES 111 A. a.. 200I RDA US Bank - DM Svc YES 1st An.non 200I RDA U S Bank- CIP YES lid Arnenon 2002 RDA U5 Bank - DM Svc YES iq Anual 2W2 RDA US Bank - LIP YES let Amencan 2.672,150 2,672,150 2,672,150 2003 T.211, RDA US Bank -DS YES 1at Amerrsan 2WJTakable RDA U, S Bask-CCI YES let Aral 2003 Taxable RDA S Bank-0IP YES let Amenwn 2W4 Fm Au1b U5 Bank.CIP YES fat Amercan 6,321,960 6.321960 6,321,960 2m, Fn Auth US Bank-001 YES lat American $ubbUI. M..l Fund 6,99d,5]3 0.9945i3 B,PoI,S]3 Surylus NO Ad Surylus Na qll Funds Acual Smplua z4 J645% zd fides°w Surplus No AG Surplus No All Funds Acual % Surplus Yes d e359% 4 a062% Total Fiscal Agent lnvssbnerds 59.39).R9 58.397,929 59,]9),R9 - 3t 9001X 29,1366X Grand TOUT iO3,)6),592 20.927,973 431,559 iW,a96,dL 1.939,619 1 431,559 13,3)1,1)9 t00,00M 100.0000 A N b N N M N N M ybj P O m b O M p N ^ m m m P n A M NO A f N OI N^ N pp N b M N N. A N M N 6 al N CM') O N E p N N O^ O O f O N n M_ A^ M N N O N O O N 10 O M T N N p C M W A m M b CI O A N p^ a0 O M b Q P e0 OI d V! 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The Investment Policy is attached for the Board's review. RECOMMENDATION: Continued review of the Investment policies for approval by City Council in June 2008. 4 <.. John M. Falconer, finance Director and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or Assistant City Manager shall approve in writing all purchases and sales of investments prior to their execution by the City Treasurer. Vill CONFLICT OF INTEREST Investment responsibilities carry added duties of insuring that investments are made without improper influence or the appearance of improper influence. Therefore, the City Manager, Assistant City Manager, hers of the Ir�t dvis_ and the City Treasurer shall adhere to the State of California Code of Economic Interest and to the following: ► The City Manager, Assistant City Manager, inefters of frtvestrr# dv Board and the City Treasurer shall not personally or through a close relative maintain any accounts, interest, or private dealings with any firm with which the City places investments, with the exception of regular savings, checking and money market accounts, or other similar transactions that are offered on a non- negotiable basis to the general public. Such accounts shall be disclosed annually to the City Clerk in conjunction with annual disclosure statements of economic interest. ► All persons authorized to place recommend or approve investments shall report Son "s W' e061COMinic interest to the City Clerk kinship relations with principal employees of firms with which the City places investments. IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City of La Quinta Investment Policy maintains a listing of financial institutions which are approved for direct investment purposes. In addition a list will also be maintained of approved broker/dealers selected by credit worthiness, who maintain an office in the State of California. 1. Broker/Dealers who desire to become bidders for direct investment transactions must supply the City of La Quinta with the following: ► Current audited financial statements; ► Proof of National Association of Security Dealers Certification; ► Trading resolution; ► Proof of California registration; ► Resume of Financial broker; and ► Completion of the City of La Quinta Broker/Dealer questionnaire which contains a certification of having read the City of La Quinta Investment Policy. The City Treasurer shall evaluate the documentation submitted by the 7 broker/dealer and independently verify existing reports on file for any firm and individual conducting investment related business. The City Treasurer will also contact the following agencies during the verification process: 10. SeeWity DealeF's Public Disclosure Report File 1-800-289-9999 ► State of California Department of Corporations 1-916-445-3062 All Broker/Dealers selected by the City Treasurer to provide investment services will be approved by the City Manager subject to City Council approval. The City Attorney will perform a legal review of the trading resolution/investment contract submitted by each Broker/Dealer. Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S. Treasury Department regulations. Each mutual fund shall provide a prospectus and statement of additional information. 2. Financial Institutions will be required to meet the following criteria in order to receive City funds for deposit or investment: A. Insurance - Public Funds shall be deposited only in financial institutions having accounts insured by the Federal Deposit Insurance Corporation (FDIC) B. Collateral - The amount of City of La Quinta deposits or investments not insured by the FDIC -shall be 1 10% collateralized by securities' or 150% mortgages' market values of that amount of invested funds plus unpaid interest earnings. C. Disclosure - Each financial institution maintaining invested funds in excess of the FDIC insured amount shall furnish the City a copy of the most recent Annual Call Report. The City shall not invest in excess of the FDIC insured amount in banking institutions which do not disclose to the city a current listing of securities pledged for collateralization in public monies. X AUTHORIZED INVESTMENTS AND LIMITATIONS The City Treasurer will be permitted to invest in the investments summarized in the Appendix A. K. STATE OF CALIFORNIA AND CITY OF LA QUINTA LIMITATIONS Rl XI INVESTMENT POOLS There are three (3) types of investment pools: 1) state -run pools, 2) pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee i.e. County Pool; and 3) pools that are operated for profit by third parties. The City of La Quinta Investment Policy has authorized investment with the State of California's Treasurers Office Local Agency Investment Fund commonly referred to as LAIF. LAIF was organized in 1977 through State Legislation Section 16429.1, 2 and 3. Each LAIF account is restricted to a maximum investable limit of $40 million. In addition, LAIF will provide quarterly market value information to the City of La Quinta. On an annual basis the City Treasurer will submit the Investment Pool Questionnaire to LAIF. Also, prior to opening any new Investment Pool account, which would require City Council approval, the City Treasurer will require the completion of the Investment Pool Questionnaire. XII PAYMENT AND CUSTODY OW _ _ The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain appropriate evidence of the City's ownership of securities and other eligible investments. Such custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or seller only after receiving evidence that the City has legal, record ownership of the securities. Even though ownership is evidenced in book - entry form rather than by actual certificates, this procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of securities. XIII INTEREST EARNING DISTRIBUTION POLICY Interest earnings are generated from pooled investments and specific investments. 1. Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5% of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized 13 INVESTMENT ADVISORY BOARD Business Session: C Meeting Date: March 12, 2008 TITLE: California Municipal Treasurer's Conference - San Francisco, CA April 22-25, 2008 BACKGROUND: Each year the City budgets funds for the Treasurer and two Investment Advisory Board members to attend the Treasurer's Conference. Staff is requesting the names of those interested in attending be given by March 14th, in order to take advantage of the discounted registration deadline of April 4th. RECOMMENDATION: Select up to two Board members to attend the Treasurer's Conference. John M. Falconer, Finance Director Tuesday, April 22 Pre -Conference Workshop 8:30 am. — S: 00 p.m. EOC Disaster & Cost Recovery Training for Treasury /Finance Professionals Mike Martinet, Executive Director, Office of Disaster Management, Area G (Area G is an independent local government authority located in Los Angeles) Continental Breakfast & Lunch Included The response following a disaster may last only a few days or weeks, but the post disaster cost recovery process typically goes on for years. In some cases the cost recovery process will last for a decade or more. Ironically, training for getting through this long drawn out recovery period is seldom available. Jurisdictions can, and often do, lose millions of dollars because they are not prepared to deal with the disaster cost recovery documentation process. The EOC Disaster & Cost Recovery Training for Treasury/Finance Professionals program provides a broad overview of disaster cost recovery processes, including requirements for obtaining and retaining federal disaster assistance grants. The training includes detailed information on disaster response cost documentation and disaster assistance eligibility guidelines. The training includes actual FEMA case studies, group exercises and illustrative examples taken from actual disasters. Each student receives a CD-ROM with spreadsheets and forms to help track and organize disaster related costs. Wednesday, April 23 Conference Opening Session 9:19 a.m. THE DIAMOND TOUCH, Dr. Nate Booth We're all familiar with The Golden Rule, "Treat others in the way you would like to be treated." The Golden Rule is a powerful principle, but it has one shortcoming. Everyone wants to be treated differently. If you're a service provider, your customers/clients want to be served differently. If you're a salesperson, your customers/clients want to be influenced differently. If you're a leader, your people want to be led differently. This variety of desires is what makes all relationships interesting and challenging. It's also the reason you can't take a cookie -cutter approach to service, influence and leadership in today's diverse world. The good news is this variety of desires creates tremendous opportunities for the companies and people who understand and practice The Diamond Touch. Here are a few of the dynamic and impactful strategies you will learn: • Why a "one -size -fits -all" relationship philosophy is doomed to fail in our highly individualized world. • How to quickly "get on the same wavelength" with almost anyone you meet. • The two questions you need to ask to quickly and precisely discover what people want and how they want it. • How to use the Five Lifestyle Groups as a guide to apply The Diamond Touch. • How to use Value Links to connect your service or idea to people's unique desires. • Four Costly Mistakes most people make when dealing with customers/clients. • Three 60-second strategies for dealing with difficult people. • How to consistently get what you want in life by giving others what they uniquely desire. 10:45 a.m. LIFE BALANCE - How to Create a Life that's not just Busy, But Well Lived Dr. Nate Booth The demands on your time and attention are intense — work, family, and personal time are all clamoring for your immediate attention. Congratulations: you're intensely wanted! The challenge lies in allocating the appropriate time and attention to each area of your life. Life Balance will show you how to enjoyably get the right things done. Then, the end of the day, you'll feel the rewards of a life that's not just busy, but well lived! Here are a few of the dynamic and impactful strategies you will learn: • How to crystallize what is truly important in your life. • How to consistently do the things that are important, not just urgent. • How to create balance and synergy among the various roles in your life. • How to effectively jump off the harder/faster/more treadmill. • How to set and achieve balanced goals that produce quality results. - • How to create a weekly guide that will assist you in enjoyably accomplishing the important goals in your life. • How to break the vicious cycle of procrastination and crisis. • How to make time for renewal of body, mind, and spirit. • How to turn your days into an upward spiral of living and learning. 12:00 p.m. Luncheon State Treasurer, Bill Lockyer California State Treasurer Bill Lockyer will share the latest news from the Local Agency Investment Fund (LAIF), news from the State Treasurer's Office and what's happening in Sacramento. 2: 00 p.m. California and Regional Economic Outlook Gary Zimmerman, Chief Economist, Federal Reserve Bank San Francisco Gary will provide insight directly from the Federal Reserve Bank on California and the Western States that comprise the Twelfth Federal Reserve District. What does the Federal Reserve Bank view to be on the economic horizon in the Western States and what economic factors they focus on to help shape their economic policy. Concurrent Sessions 3:30 p.m. Investment Performance Toolkit - Finding the right tool for the job Dave Witthohn CFA — Director, MBIA Asset Management Compare and contrast the different types of performance measurements used in reporting investment performance for local governments. Explore how these various measurements can be used to inform the government's different constituents. Doesn't everyone want total return? What about book yield? The GIPS standards, are they really the standard? Time weighted returns vs. dollar weighted returns, how are they different and what do they measure? Many governments use weighted average yield to maturity (WAY) as their performance measure. Is that accurate? How does WAY differ from amortized cost? Do cash flows affect the return calculation? What part does risk play in measuring performance? Finally learn new ideas about how to present investment performance information to the public. 3:30 p.m. GASB 45 — Ouch ... I have my OPEB number now what! John Bartel, President, Bartel and Associates Now that agencies are finally completing their Other Post Employment Benefit (OPEB) calculations what are the numbers telling us and is it really that bad? What are the ranges of impact (as a percent of payroll) and are more agencies in trouble that reported by the media and how are cities implementing the results. What options in the marketplace are available for agencies to deposit their Annual Required Contribution (ARC) and why are so many agencies delaying obtaining their OPEB calculations? Get all your OPEB questions and answers in this informative session. 3:30 p.m. New Technologies for Managing Debt John T. Deleray, Vice President, Wells Fargo Bank Debt management technology cannot only streamline debt issuance and management, but may also save money for your government. With more tools available than ever before, treasurers can use technology -based products and the web to assist in selling bonds, reinvesting bond proceeds, monitoring trustee activities, adhering to disclosure responsibilities and managing the pre- and post -issuance document process. Thursday, April 24 7.45 a.m. Business Session (Plated Breakfast) All conference attendees will enjoy breakfast with their CMTA colleagues during the Annual Business Meeting. Note: please plan on having at least one individual from your agency attend this meeting as voting will take place, thank you. 9:00 a.m. LAIF - Portfolio Decisions from Soup to Nuts Pam Milliron, Administrator, LAIF Christine Solich, Assistant Director of Investments, LAIF The LAIF investment team will share how they go about evaluating, selecting, purchasing and monitoring the LAIF portfolio. Obtain insights on how LAIF goes about selecting which investments to purchase, including the research and due diligence before adding or subtracting investments into the LAIF portfolio. 10:30 a.m. Check fraud in a paperless world — (electronic deposits) Greg Lister, President, SafeChecks The risks of remote deposit capture In the rush to adopt the latest and greatest financial technologies, many Treasury Managers may unknowingly set their municipalities or agencies up for a very big financial fall. The current cause c&bre is "remote deposit capture," aka eDeposit or the electronic conversion of paper checks into electronic images. The indemnity provision says that if a loss occurs because the paying bank received a substitute check instead of the original check, a claim can be filed against the bank that presented the substitute check to the paying bank and the loss can be charged back. A loss can be charged back up to one year AFTER the injured party discovers the loss. In some cases the risk to the converting municipality or agency is 14 months. Find out how to mitigate the risks of remote deposit capture. 12: 00 p.m. State Controller, John Chiang California State Controller John Chiang will provide us with information on programs and assistance his office is able to provide to local agencies. Including updates on the State Mandated reimbursements, disbursements by the State and new efficiencies his office is able to provide. In addition the Controller will share his views on the State Budget and impacts to local government. Concurrent Sessions 2:00 p.m. Synchronizing portfolio cash flow with planned expenditures and revenues Kevin C. Schultze, Director Portfolio Strategy Group, Stone & Youngberg Management of an investment portfolio for a public entity should use the portfolio's cash flow to complement budgeted expenditures and revenues. Better cash flow management can result in higher returns and less vulnerability to unplanned changes in revenues and expenditures. Through the use of straightforward, easily designed analytics, the portfolio manager can structure a more efficient portfolio, yet still adhere to statutory and policy constraints. 2:00 p.m. Guard your Electronic Transactions — be safe rather than SORRYI Christine Herrera, Vice President, Bank of the West Technology is a great asset to have in managing your treasury operations but too often we hear of systems that have been compromised by hackers who are attempting and sometimes successful in, and making, illegal transactions from the agency's bank account. Learn the latest in cutting edge technology that is now being used to assist treasurers in managing their security systems and learn about the best possible solutions to managing your electronic transactions. 2:00 p.m. The changing economic environment and suggested investment strategies. Kevin Giddis, Managing Director -Fixed Income Trading, Morgan Keegan & Co Karl Moerbe, Managing Director -Fixed Income Research, Morgan Keegan & Co Investment "times are-a-changin"- Fed finds are at 3% after being lowered by 1.25% within eight days and more adjustments are expected, 3-month T-bills have fallen below 2%, a slowing economy, bond insurance companies being downgraded and a federal stimulus package. What do all these mean for agencies managing the portfolio and how might they affect the investment strategy? 3:1 S p.m. Nuts & Bolts This is an opportunity for Government Associates and Commercial Associates to meet independently to ask questions and have your questions answered by your colleagues. 4:00 p.m. Nuts & Bolts, Combined Wrap-up This is the time for the Government and Commercial Associates to meet as a group and discuss common issues. Friday. April 25 9: 00 am The Investment Environment: Smoke in 2007...Fire in 200811 Gary Schlossberg, Senior Economist, Wells Capital Management The housing slump, falling dollar, credit "squeeze" and still -simmering "boom" in energy and other commodity prices have created the most challenging operating environment for businesses, consumers and local government investors in recent memory. Gary will summarize it all up to help us forecast and plan appropriate investment strategies in 2008 and looking ahead to 2009. 10.30 a.m. State Budget Outlook Michael Cohen, Director of Administration, Legislative Analyst's Office Hear the Director of State Administration from the Legislative Analyst's Office provide an update on the State's financial outlook for the coming year, the latest on proposed state take reductions in local government revenues and insight into the Governor's and Legislature's 2008-2009 plan to balance the Budget. CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION Conference Registration Form Parc 55 Hotel, San Francisco April 23 - 25, 2008 You must be a current CMTA Commercial Associate Member to register. If you need to verify that your membership is current, please contact Debbie Michel at CMTA's Sacramento office at (916) 658-8209. If you have any questions regarding conference registration, call Mike Reynolds at the City of Redlands at (909) 557-8767. Please use a separate form for each registrant (photocopies accepted). (THIS FORM IS NOT VALID FOR COMMERCIAL ASSOCIATE MEMBERS.) Name (Please print or Type) Organization Mailing Address City State Zip E-Mail Address Name you prefer on Badge Spouse/Guest Name Is this your fast CMTA Conference? (yes or no) Will you be attending the Thursday evening Banquet? _ Reeistration Fees: Pre -Conference Seminar [Active or Government Associates] Pre -conference Seminar only Pre -Conference Seminar if also attending conference Conference Active or Government Associate Early Includes all meals, receptions & Thursday Banquet Regular Late Special dietary needs? (yes or no) (yes or no) $ 170.00 $ $ 160.00 $ Postmarked (on or before 03/07/08) $ 305.00 $ (on or before 04/04/08) $ 330.00 $ (after 04/04/08) $ 390.00 $ Second registrant from same organization Early (on or before 03/07/08) $ 275.00 Includes all meals, receptions & Thursday Banquet Regular (on or before 04/04/08) $ 300.00 Late (after 04/04/08) $ 400.00 Daily Conference Registration Wednesday Thursday Daily Rate _x $ 225.00 Available only if another person from your same agency has paid full conference registration Includes breakfast & lunch only Additional Meals: Spouses & Guests Wednesday Lunch Thursday Lunch Thursday Banquet X $ 45.00 X $ 45.00 X $ 85.00 Total Fees Please make checks payable to "CMTA Annual Conference". Mail to: CMTA Annual Conference, Attn: Bill Gallardo, Financial Services Director, City of Brea, 1 Civic Center Circle, Brea, CA 92821. Advance registrants unable to attend may receive a refund of the registration fee less $25.00 processing fee by submitting a written request to CMTA at the same address by April 09, 2008. No refunds will be made if requested after that date. Substitute attendees will be accepted at any time. INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: March 12, 2008 TITLE: Month End Cash Report February 2008 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. ohn M. Falcon111JJer, Finance Director Y n N N m m N n m A n m m n p m m N Q y ry b o o m o m n m o ai e M m m v n m rv� n o v e n a'- ry m v m n m N Y i Y O O O N n V r M N m i 0 O O n mN n O N O m ZE O O O O O N N N 0 N IOp m m m N U> O O O Q Q � 0N N C m {V C Om O O O A m m A A m O N mnv mm��Mj mNm N W m W m (0 m m m O N O O W N ty t+i VI O O t7 O O O O m m O Q N N N O O O R' J t0 n m m M n m m O m w N m m m m N m A m m 0 m 0 m 0 0 0 0 m 0 y,LL N Q N a ry o O v mo o in A m m m m v v m ry m M m m 20 N m iy yo 0m o 0 0 0 3 0 m M o 0 0 0 n Jo o n m m m » � 0 � v a o 3 vmi a N N N N W IL A N O m m p m m O m N N m m m N N N N O OT N N m o a Num- onm� c? a co 0o a! dm mm S p 3W<W Lo o E N W ry� O Q Y W W V A Q Ep n U n m u u ry, m J W U W 1`p m m NEL 8 a d W W O. O O m m O H a 2 LL W Q a Q W - Q 2 1CCCCM 13111 HU(:1011 MCSUlls rugu I Ut I Ireasur 'grec < Recent Bill Auction Results Security Issue Maturity Discount Investment Plice CUSIP Term Date Date- Rao: W. Rate% Per$100 14-DAY 03-03-2008 03 17-2008 2 S50 2.588 99 900833 912795UF9 28-DAY 02-28-2008 03-27-2008 2.320 2 363 99.819556 91279SD57 91-DAY 02�26-2008 05 29 2008 2.160 2.208 99 454000 91279SE64 182-DAY 02-28-2008 08-28 2038 2.070 2.127 98.953500 912795G39 19-DAY 02-2/-2008 03 1/ 2008 2 400 2.443 99.873333 9127951JE9 28-DAY 02-21-2008 03-20 7008 2.360 2.404 99.816444 91279SD40 91-DAY 02-21-2008 05-22-20n8 2 200 2.249 99.443889 912795E56 182-DAY 02-21 2008 08 21 7908 t.040 2.096 98.968667 912795G21 60-DAY 02-15-2008 04-15-2008 2.510 2.563 99,581667 912795UD1 28-DAY 02-14-2008 03-t3-2n08 2.500 2.547 99,805556 912795D32 63-DAY 02-14-2008 04 1/-2008 2.440 2491 99.573000 912795D81 91-DAY 02-14-2008 05-15-2008 2 250 2.301 99,431250 912795E49 182-DAY 02-14-2008 08-14-2008 2.080 2.137 98.948444 912795F97 28-DAY 02-07-2008 03 06-2008 2.210 2.251 99.828111 912795D24 91-DAY 02-07-2008 05-08-2008 2 230 2.280 99.436306 912795E31 182 DAY 02 07-2008 08 07 2008 2.160 2.220 98.908000 912795F89 28-DAY 01-31-2008 02-28-2008 2 050 2.087 99.840556 912795C90 91-DAY 01-31-2008 05-01-2008 2,335 2.388 99.409764 912795E23 182-DAY 01-31-2008 07 31 2008 2..310 2.376 98,832167 912795F71 28-DAY 01-24-2008 02-21-2008 1 750 1.782 99 863889 912795C82 91-DAY 01-24 2008 04 24 ?008 2.370 2.424 99.400917 912795D99 182-DAY 01-24-2008 07-24-20,08 2,400 2.470 98,786667 91279SF63 28-DAY 01-17-2008 02-14-2008 3.080 3.139 99,760444 912795C74 91 DAY 01-17-2008 04-17-2008 3.080 3 156 99.221444 912795D81 182-DAY 01-17-2008 07-17-2008 2.950 3.045 98.508611 912795F55 28-DAY 01-10-2008 02-0/ 2008 3.240 3 302 99./48000 912795C66 91-DAY 01-10-2008 04-10-2008 3.180 3.259 99.196167 912795D73 182-DAY 01-10-2008 07-10-2008 3.170 3.275 98 397389 912795F48 28-DAY 01-03-2008 01-31-2008 3.000 3.057 99,766667 91279SC58 91-DAY 01-03-2008 04-03-2008 3.310 3394 99.163306 912795D65 182-DAY 01-03-2008 07-03-2008 3.390 3.507 98.286167 912795F30 28-DAY 12-27-2007 01-24-2008 3.040 3 098 99,763556 912795C41 91-DAY 12-27-2007 03-27-2008 3 280 3.363 99.170889 912795D57 182 DAY 12-27-2.007 06-76 2008 3.490 3.612 98.235611 912795F22 28-DAY 12-20-2007 01-17-2008 2.750 2,802 99,786111 912795C33 91-DAY 12-20-2007 03-20-2008 3.000 3.0/3 99.241667 912795D40 182-DAY 12-20-2007 06-14-2008 3.280 3.391 98.341778 912795E98 28-DAY 12-13-2007 01-10-2003 2, 890 2945 99.775222 912795C25 91-DAY 12 13 2007 03 13 N008 3 000 3.073 99,241667 912.79SD32 182-DAY 12-13-2.007 0612 2008 3.190 3.296 98,387278 912795E80 Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method. http://www.treasurydirect.gov/RI/OFBills 3/3/2008 3 r1CD: l.umnicruQt rupcl RaLcS attu VUtSURluttlg'J r Qr,G 1 ul J Federal Reserve Release Commercial Paper Release I About I Announcements I Outstandings I Volume statistics I Year-end I Maturity_ Distribution Data Download Program_(DDP) Data as of February 29, 2008 Commercial Paper Rates and Outstanding Derived from data supplied by The Depository Trust & Clearing Corporation Posted March 3, 2008 Discount rates Term AA nonfinancial A2/P2 nonfinancial AA financial AA asset -backed 1-day 2.96 3.57 2.99 3.46 7-day 3.10 3.55 2.94 3.56 15-day 2.84 3.52 2.94 3.46 30-day 2.79 3.50 2.91 3.37 60-day 2.60 3.42 2.98 3.30 90-day 2.50 3.28 3.01 3.19 Yield curve Money market basis - - - AA ronlinam rd ....._.._ A2/112 nontinanciol -- AA lfm:n,. i,E 7 IS �0 Days to Maturity 60 Percent 90 4.2 4.0 3.8 3.6 3.4 3.0 1.8 2.6 2.4 Discount rate spread http://www.federalreserve.gov/Releases/CP/ 3/3/2008 4 rrcts: eommerctai raper crates anu uw6wnumgs ragc�uii Basis points 1 60 t40 120 100 80 60 40 20 0 2001 2002 2M) 211-14 2005 2006 2007 Discount rate history Percent 7 6 5 4 3 t 0 2001 2002 2003 2004 2M5 2006 2007 Outstandings Weekly (Wednesday), seasonally adjusted http://www.federaireserve.gov/Releases/CP/ 3/3/2008 5 rrvD. ♦,vnuucrciai raper Rates MAJI vuuLauwugs Billions of dollars Billions of dollars rage .s or .s 1190 1090 990 890 790 690 590 490 4 1 ---- Awnlitt.ifmml nmot ,ialul 1� — —. Pr.�.na'ml ilclt.ca4c: II YIlk, t Y q 1 TR f �t.ty It`,t I1 t t,� I fti"li VO 2 W I 2W2 )IW 2(lt)4 2005 2006 2007 250 210 170 130 90 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 Reserve Board's Data Download Program (DDP). This policy is subject to change at any time without notice. Release I About I Announcements I Outstandings I Volume statistics I Year-end I Maturity Distribution Data Download Program (DDP) Hame J Statistical releases Accessibility I Contact Us Last update: March 3, 2008 http://www.federalreserve.gov/Releases/CP/ 3/3/2008 6 i 1� . iiucic�L nULU�, VVUU-v uy ijwiy upualc--rcoruary [.7, GVVB rage 1 014 Federal Reserve Statistical Release HA5 Selected interest Rates (Daily) 11.q1 101 001GV Release Date: February 29, 2008 Weekly release dates I I listorical data I Data DoN�nload Program (DDP) I About I Announcements Daily update Otherformats: Scrcen reader I ASCII P111pttagram Gown"= Pro The weekly release is posted on Monday. Daily updates of the weekly release are p through Friday on this site. If Monday is a holiday, the weekly release will be p 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 February 29, 2008 2008 2008 2008 2008 Instruments Feb Feb Feb Feb 25 26 27 28 Federal funds (effective) 1 2 3 3.00 2.85 2.93 3.06 Commercial Paper 3 4 5 Nonfinancial 1-month 2.87 2.78 2.82 2.96 2-month 2.70 2.69 2.70 2.69 3-month n.a. n.a. n.a. 2.57 Financial 1-month 2.95 2.92 2.93 2.92 2-month 2.95 3.08 2.88 2.87 3-month 3.18 3.17 3.01 2.98 CDs (secondary market) 3 6 1-month 3.10 3.10 3.11 3.09 3-month 3.07 3.07 3.07 3.04 6-month 3.03 3.02 3.02 2.96 Eurodollar deposits (London) 3 7 1-month 3.15 3.15 3.18 3.18 3-month 3.10 3.10 3.12 3.12 6-month 3.05 3.05 3.07 3.05 Bank prime loan 2 3 8 6.00 6.00 6.00 6.00 Discount window primary credit 2 9 3.50 3.50 3.50 3.50 U.S. government securities Treasury bills (secondary market) 3 4 4-week 2.31 2.30 2.17 2.05 3-month 2.15 2.09 1.94 1.86 6-month 2.07 2.03 1.97 1.90 Treasury constant maturities Nominal 10 1-month 2.34 2.34 2.21 2.08 3-month 2.20 2.14 1.98 1.90 6-month 2.13 2.09 2.02 1.95 1-year 2.13 2.07 2.02 1.92 2-year 2.13 2.04 2.01 1.87 7 http://www.federalreserve.gov/Releases/H 15/update/ 3/3/2008 11v . 11.10-vcicc Lcu IIucicsL naLes, VVeU-unry uany upu=--reoruary G7, zuu5 rage L oI 4 3-year 5-year 7-year 10-year 20-year 30-year Inflation indexed 11 5-year 7-year 10-year 20-year Inflation -indexed long-term average Interest rate swaps 13 1-year 2-year 3-year 4-year 5-year 7-year 10-year 30-year Corporate bonds Moody's seasoned Aaa 14 Baa State & local bonds 15 Conventional mortgages 16 n.a. Not available. Footnotes 2.39 2.32 2.25 2.10 2.98 2.92 2.89 2.73 3.41 3.36 3.33 3.17 3.91 3.88 3.85 3.71 4.65 4.64 4.62 4.51 4.67 4.66 4.65 4.55 0.71 0.60 0.57 0.39 1.19 1.10 1.08 0.91 1.53 1.44 1.42 1.26 2.01 1.98 1.96 1.84 12 2.01 1.98 1.96 1.84 2.83 2.82 2.72 2.63 3.00 2.95 2.83 2.73 3.31 3.25 3.14 3.03 3.62 3.55 3.45 3.34 3.89 3.82 3.72 3.60 4.28 4.22 4.15 4.01 4.67 4.60 4.54 4.40 5.21 5.17 5.13 5.00 5.68 5.68 5.65 5.55 6.99 6.98 6.96 6.88 5.11 6.24 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 deals 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.federaireserve.gov/boardciocs/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/ 3/3/2008 8 rrcn: n.iJ--3etecieu lraeresr naies, weu-vmy uauy vpuate--reoruary /y, /Dvrs rage s 014 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 Asa rates through December 6, 2001, are averages of Aaa utility and A rates. As of December 7, 2001, these rates are averages of Asa 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 E.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 Maturi 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 I Historical Mats I Data Download Program (DDP) I About I Announcements 9 http://www.federalreserve.gov/Releases/H 15/update/ 3/3/2008 i ivy. ii. irvcicucu imp icot i�awo, . �U-�L I Ly a auy vFuaw--r cviucuy <7, <vuo i ary Y vi Y Daily update Otherformats: Scrmi reader j ASCII Statistical releases Home I Economic resexch and data Acccssibility I Contact Us Last update: February 29, 2008 10 http://www.federalreserve.gov/Releases/H 15/update/ 3/3/2008 Bill Lockyer, State Treasurer Inside the State Treasurer's Office Lac,F. ;`:��ency Investment Fund (WAIF) PMIA Performance Report Date Daily Yield Quarter to Date Yield Average Maturity inch s 2/14/2008 4.15 4.51 209 2/15/2008 4.13 4.50 209 2/16/2008 4.13 4.49 209 2/17/2008 4.13 4.49 209 2/18/2008 4.131 4.48 209 2/19/2008 4.111 4.47 206 2/20/2008 4.091 4.46 208 2/21/2008 4.061 4.46 206 2/22/2008 4.04 4.45 207 2/23/2008 4.04 4.44 207 2/24/2008 4.04 4.43 207 2/25/2008 4.02 442 203 2/26/2008 4.02 4.42 202 2/27/2008 3.99 4.411 02 Corporate Bon 0.53% Commercial Pape 9.72% Time Deposit: 13.92% LAIF Performance Report Quarter ending 12/31/2007 Apportionment Rate: 4.96% Earnings Ratio: 0.00013544408962064 Fair Value Factor: 1.000679115 PMIA Average Monthly Effective Yields January 2008 4.620% December2007 4.801% November 2007 4.962% Pooled Money Investment Account Portfolio Composition $65.8 Billion 01/31/08 Mortgages Treasuries 181% Loans 4.27% �vaiorvb 22.98% Agencies 33.24% 11 }� \ ` () ) \�\ \} \\ \ ))§ �\\\ \ \ \ " , }§ )" i} +& }( § \/:=,sa;syl=:= k (� r :/K }{ - - - k § - \( &�)y\(5 \} &\�} )! - §§§«!y®i/)}[!,U _ _ 76 \ \\\ \} }\)\\ k) \ (}\ ()()}j\j))(\\\\ 12 INVESTMENT ADVISORY BOARD Meeting Date TITLE: March 12, 2008 Correspondence & Written Material Item B Pooled Money Investment Board Report for December 2007 BACKGROUND: The Pooled Money Investment Board Report for December 2007 is included in the agenda packet. This report is available on-line at www.treasurer.ca.gov. RECOMMENDATION: Receive & File �34 � l ohn M. Falconer, Finance Director POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF DECEMBER 2007 WITH DECEMBER 2006 (DOLLARS IN THOUSANDS) DECEMBER 2007 DECEMBER 2006 CHANGE Average Daily Portfolio $ 69,946,588 54,439,522 $ +5,507,066 Accrued Earnings $ 243,786 $ 237,173 $ +6,613 Effective Yield 4.801 5.129 -0.328 Average Life -Month End (In Days) 204 183 +21 Total Security Transactions Amount $ 29,629,407 $ 30,236,268 $ -606,861 Number 621 634 -13 Total Time Deposit Transactions Amount $ 3,796,000 $ 3,380,600 $ +415,500 Number 190 173 +17 Average Workday Investment Activity $ 1,671,270 $ 1,680,838 $ -9,568 Prescribed Demand Account Balances For Services $ 356,968 $ 251,189 $ +105,769 For Uncollected Funds $ 182,522 $ 165,426 $ +17,096 BILL LOCKYER TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) DECEMBER 31, 2007 DIFFERENCE IN PERCENT OF TYPE OF SECURITY AMOUNT PERCENT OF PORTFOLIO FROM PORTFOLIO PRIOR MONTH Government Bills $ 784,700 1.25 -2.91 Bonds 0 0.00 0 Notes 2,220,428 3.63 +2.19 Strips 0 0.00 0 Total Government $ 3,005,128 4.78 -0.7-2 Federal Agency Coupons $ 8,609,313 13.69 +0.23 Certificates of Deposit 11,890,060 18.90 +0.19 Bank Notes 1,300,000 2.07 -0.05 Bankers' Acceptances 0 0.00 0 Repurchases 0 0.00 0 Federal Agency Discount Notes 10,086,511 16.04 +8.35 Time Deposits 9,083,995 14.44 -0.16 GNMAs 181 0.00 0 Commercial Paper 7,943,547 12.63 -6.73 FHLMC/Remics 1,206,056 1.92 -0.07 Corporate Bonds 374,616 0.69 -0.02 AS 55 Loans 8,412,777 13.38 -0.39 GF Loans 979,200 1.56 -1.29 Reversed Repurchases 0 0.00 -0.65 Total (All Types) $ 62,890,384 100.00 INVESTMENT ACTIVITY DECEMBER 2007 NOVEMBER 2007 NUMBER AMOUNT NUMBER AMOUNT Pooled Money 621 $ 29,629,407 645 $ 31,190,986 Other 17 161,432 64 1,325,526 Time Deposits 190 3,796,000 205 4,586,500 Totals 828 $ 33,586,839 904 $ 37,103,012 PMIA Monthly Average Effective Yield 4.801 4.962 Year to Date Yield Last Day of Month 5.105 5.167 Corporate l3c 0.59% Commercial Paper 12.63% Time Dep( 14.44% Pooled Money Investment Account Portfolio Composition $62.9 Billion 12/31 /07 Treasuries es Morta 4.78 /0 Mortgages Loans 1.92% 3 CDs/l3Ns 20.97% Agencies 29.73% BOARD MEMBER ITEMS Don's Possible Changes to Statement of Investment Policy for 2008-09 The following possible changes are suggested to conform more explicitly to government code, streamline the policy and modify terms with the objective of using simpler and generally more descriptive and understood words. I INVESTMENT POLICY The City of La Quinta's policy is to deposit and invest public funds that: ➢ Safeguard principal. ➢ Provide liquidity. ➢ Earn a market rate of return. The Statement of Investment Policy sets -forth the permissible deposits and investments of the City's funds and the limitations thereon. H ' AUTHORITY Pursuant to Sections 35607 and 35608 of the Government Code and Ordinance 3.08.010 of the City, the authority of the City Council to invest and reinvest funds of the City or to sell or exchange securities so purchased, and to deposit securities and receipts for safekeeping is delegated to the City Treasurer. The Government Code limits the period of delegation to one year. The City Council renews this delegation of authority to the Treasurer for one year in conjunction with the yearly adoption of the Investment Policy This delegation of authority to the City Treasurer includes responsibility for managing the investment program. The City Treasurer shall establish written procedures for the operation of the investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or Assistant City Manager shall approve in writing all purchases and sales of investments prior to their execution by the City Treasurer. M The three objectives of the City of La Quinta's investment activity are mandated by Section 53600.5 of the Government Code and are prioritized in the order listed. 1_Safeguard Principal Protection of principal is the foremost objective of the investment activity. The City of La Quinta shall endeavor to preserve its capital funds by depositing and investing only in permissible transactions, conducted in a controlled manner to minimize the possibility of loss or misappropriation through malfeasance or otherwise. Investment risk shall be mitigated by diversifying the portfolio over different issuers and investment instruments as allowed by the investment policy. Diversification is not required for investments with principal and interest backed by the full faith and credit of the United States Government (Prepare a new section on investment risks.) 2. Provide Liquidity Providing liquidity is the second investment objective. The investment portfolio shall maintain cash and currently maturing investments to satisfy all obligations that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore, since all possible cash demands cannot be accurately anticipated and estimated, the portfolio should be diversified and consist of securities with active secondary or resale markets. However, the City's policy is to hold securities and other investments to maturity. Accordingly, investments shall not be sold prior to maturity except in the following circumstances. ► A declining credit quality security could be sold early to minimize loss of principal; ► Liquidity needs of the portfolio require that the security be sold. 3. Earn a Market Rate of Return The third and least important objective is to earn a risk -based market rate of return. Risk -based means that the rate of return considers the risk associated with the investment by the market in measuring equivalent or commensurate yield. The portfolio shall be structured to earn a risk -based market rate of return throughout economic and business cycles, taking into account the investment risk constraints and liquidity needs. The investment policy limits investments to relatively low risk securities in expectation of earning a market rate of return relative to the risk being assumed. Pertinent Government Code Sections — Consider adding as footnote or Appendix 53607. The authority of the legislative body to invest or to reinvest finds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency, who shall thereafter assume lid] responsibility for those transactions until the delegation of authority is revoked or expires, and shall make a monthly report of those transactions to the legislative body. Subject to review, the legislative body may renew the delegation of authority pursuant to this section each year. 53608. The legislative body of a local agency may deposit for safekeeping with a federal or state association (as defined by Section 5102 of the Financial Code), a trust company or a state or national bank located within this state or with the Federal Reserve Sank of San Francisco or any branch thereof within this state, or with any Federal Reserve bank or with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System, the bonds, notes, bills, debentures, obligations, certificates of indebtedness, warrants, or other evidences of indebtedness in which the money of the local agency is invested pursuant to this article or pursuant to other legislative authority. The local agency shall take from such financial institution a receipt for securities so deposited. The authority of The legislative body to deposit for safekeeping may be delegated by the legislative body to the treasurer of the local agency, the treasurer shall not be responsible for securities delivered to and receipted for by a financial institution until they are withdrawn from the financial institteion by the treasmer. X AUT1�F@IiVZE $ " NT6 M ArTATIGW The City Ti;ee9arervrilhbe permitted to invest in the investments summarized in the Appendix A. Authorized Investments and Limitations ity of La Quinta Maximum (See Appendix A for Additional Information) Maximum Maturity Checking & Savings Accounts with Federal Deposit Insurance Corporation. & Sweep Accounts 85% Portfolio 3 years Certificate of Deposits, with interest earnings paid monthly. 60% Portfolio 3 years U.S. Treasury Bills, Strips, Notes and Bonds. 100% Portfolio 5 years U.S. Government Securities and Federal Government Securities ( except any collateralized mortgage obligation (CMO) or structured note which contains embedded rate options): - Government National Mortgage Association (GNMA) 100% Portfolio 3 years - Federal National Mortgage Association (FNMA) 20,000,000 3 years - Federal Home Loan Bank Notes & Bonds (FHLB) 20,000,000 3 years - Federal Farm Credit Bank (FFCB) 20,000,000 3 years - Federal Home Loan Mortgage Corporation (FHLMC) 20,000,000 3 years Prime Commercial Paper 15% Portfolio 90 days Local Agency Investment Fund (LAIF) 25% Portfolio 3 years Money market mutual funds regulated by the Securities and Exchange Commission 60% Portfolio 60 days and whose portfolios consist only of US Treasury Securities or GSE's maintaining a par value and 20% of per share of $1. surplus funds Investment Agreements for bond proceeds and/or reserve funds. N/A Corporate Notes 10% 3 years STATE OF CALIFORNIA AND CITY OF LA QUINTA LIMITATIONS As provided in Sections 16429.1, 53601, 53601.1, and 53649 of the Government Code, the State of California limits the investment vehicles available to local agencies as summarized in the following paragraphs. Section 53601, as now amended, provides that unless Section 53601 specifies a limitation on an investment's maturity, no investments with maturities exceeding five years shall be made. The City of La Quinta Investment Policy has specified that no investment may exceed three years, except the projected annual dollar amount, as detailed in Section V, may be invested in U.S. Treasury bills, notes and bonds; with maturities between 2 and 5 years, with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 16429.1 and by LAIF procedures, local government 0 City pf La Quinta Statement of Investment Policy July 1, 2007 through June 21, 2008 Adopted by the City Council on June 19, 2007 1 GENERAL PURPOSE The general purpose of this document is to provide the rules and standards users must follow in administering the City of La Quinta cash investments. II INVESTMENT POLICY It is the policy of the City of La Quinta to invest public funds in a manner which will provide a diversified portfolio with safety of principal as the primary objective while meeting daily cash flow demands with the highest investment return. In addition, the Investment Policy will conform to all State and local statutes governing the investment of public funds. III SCOPE This Investment Policy applies to all cash and investments, except as furtherdetailed in Section XVII of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing Authority, hereafter referred in this document as the "City". These funds are reported in the City of La Quinta Comprehensive Annual financial Report (CAFR) and include: All funds within the following fund types: ► General ► Special Revenue ► Capital Projects ► Debt Service ► Enterprise ► Internal Service ► Trust and Agency ► Any new fund types and fund(s) that may be created. IV OBJECTIVES The primary objective, in order of priority, of the City of La Quinta's investment activity shall be: 1. Safety Safety of principal is the foremost objective of the investment program. Investments of the City of La Quinta shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio in accordance with the Dermitted .. to mitigate credit risk and interest rate risk. A. Credit Risk Credit Risk - is the risk of loss due to the failure of the security issueror. backer. 12 Credit risk may be mitigated by: ► Limiting investments to the safest types of securities; ► Pre -qualifying the financial institutions, and broker/dealers, which the City of La Quinta will do business with�a . Divemifying the investment p9galie 69 that potential losses An individ, a4 seGuititoes will be manimozed. B. Interest Rate Risk Interest Rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. Interest rate risk may be mitigated by: ► Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and ► By investing operating funds primarily in shorter -term securities. 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all of the City of La Quinta's anticpated cash needs that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore since all possible cash demands needs cannot be anticipated the portfolio should be diversified and consist of securities with active secondary or resale markets. Securities shall not be sold prior to maturity with the following exceptions: ► A declining credit quality security could be sold early to minimize loss of principal; ► Liquidity needs of the portfolio require that the security be sold. 3. Yield V MAXIMUM MATURITIES It is the policy of the City of La Quinta to hold securities and other investments of cash in financial instruments until maturity, thus avoiding the risk that the market value on investments fluctuates with overall market interest rates. The hold until maturity policy shall not prevent the sale of a security to minimize loss of principal when the issuer or backer suffers declining credit worthiness. The hold until maturity policy requires that the City of La Quinta's investment portfolio is structured so that sufficient funds are available from maturing investments and other sources to meet anticipated cash needs. To meet anticipated cash needs, it is essential that the Treasurer have reasonably accurate, diligently prepared cash flow projections. Annually, the Treasurer shall project the amount of funds not expected to be disbursed within five years. For FY 2007/08, the amount of such funds was $8 million. Funds up to that amount may be invested in U.S. Treasury bills, notes and bonds maturing between 3 and 5 years. For all other funds, investments are limited to three years maximum maturity, with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. VI The City shall follow the Uniform Prudent Investor Act as ado ted b the State of California in Probate Code Sections 16045 through 16054. Section 16053 sets forth the terms of a prudent person which are as follows: Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion, and intelligence exercise in the professional management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. VII DELEGATION OF AUTHORITY 11