2009 01 14 IABP.O. Box 1504
LA QUINI-A, CALIFORNIA 92247-1504
78-495 CALLE TAMPICO
LA QUINIA, CALIFORNIA 92253
AGENDA
INVESTMENT ADVISORY BOARD
Study Session Room
78-495 Calls Tampico- La Quinta, CA 92253
January 14, 2009 - 4:30 P.M.
CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
(760)777-7000
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
A. Approval of Minutes of Meeting on December 10, 2008 for the
Investment Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for November 2008
B. Continued Consideration of the Fiscal Year 2008/2009 Work Plan
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report and other selected Financial Data -
December 2008
B. Pooled Money Investment Board Reports - October 2008
VII BOARD MEMBER ITEMS
VIII ADJOURNMENT
N+�
INVESTMENT ADVISORY BOARD
Meeting
December 10, 2008
CALL TO ORDER
Regular meeting of the La Quinta Investment Advisory Board was called to order at the
hour of 4:30 p.m. by Chairman Ross, followed by the Pledge of Allegiance.
PRESENT: Board Members Ross, Rassi and Park
ABSENT: Board Members Moulin and Deniel
OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Senior
Secretary and Mr. Bryan Gruber of Lance Soll & Lunghard,
LLP, CPA
II Public Comment — None
III CONFIRMATION OF AGENDA —
Chairman Ross suggested that Section VI, item A be the first item of
discussion. Board concurred.
Chairman Ross suggested to staff that Section V, item B be postponed for
discussion until the January meeting when Board Member Moulin is present.
Board concurred.
AT THIS TIME SECTION VI, ITEM A WAS DISCUSSED
Mr. Bryan Gruber of Lance Soll, & Lunghard, LLP, CPA presented the Audited
Financial Statement. Mr. Gruber advised that he would review the audit as it
relates to the cash and investments and the City's reporting requirements as it
is disclosed in the City's Comprehensive Annual Financial Report. Mr. Gruber
further advised that the firm conducts two interim audits during the fiscal year
and one additional audit at year-end. Mr. Gruber advised that this year's audit
was subject to additional audit requirements based on the auditing standards,
which consisted of an in-depth and detailed review of internal controls, (as part
of the interim audit review were a review of internal controls specifically related
to investments), in addition to a walk-thru of transactions and investment
purchases. Mr. Gruber advised that there were no deficiencies or findings to be
reported relating to their review of investments. Also included in the interim
and year-end audits were a review of the investments for compliance to the
Investment Policy, a year-end audit of the city's cash and investments through
confirmation of third party, (banking and institutions) and an audit of the
reconciliation of cash and investments.
Investment Advisory Board
Minutes
December 10, 2008
Mr. Gruber advised that the City did not record the GASB market value
adjustment, therefore this item was reported and disclosed as an audit
difference and considered to be immaterial to the financial statements. Mr.
Gruber summarized the firm's audit review of the Comprehensive Annual
Financial Report (CAFR) and it's compliance with GASB Statement 40, along
with a summary of GASB Statement 40. Mr. Gruber advised that there were no
material violations to be noted. Mr. Gruber reviewed the footnote on page 45,
which discloses the city's cash on hand as of June 30, 2008 at $197,368,414
in addition to the city's investment policy and restrictions and limitations. Mr.
Gruber further advised that the footnote also discloses the city's policy as it
relates to credit rating along with the credit ratings as of June 30, 2008. Also
disclosed in the footnote was segmented time distribution of the portfolio as of
June 30, 2008. Mr. Gruber advised that GASB Statement 40 requires a
disclosure of investments with issuers that exceed 5% of the portfolio which is
reflected on page 47 of the CAFR. Mr. Gruber further advised that the
statement and the footnote disclose the city's risk related to custodial credit
risk.
In response to Chairman Ross, Mr. Gruber advised that the interim audit was
subject to additional standards that were not previously implemented, and
therefore resulted in the in-depth and detailed audit.
In response to Board Member Park, Mr. Gruber advised that all audits are
scheduled.
In response to Chairman Ross, Mr. Gruber advised that the LAIF balances are
confirmed directly through the LAIF Pool.
In response to Board Member Park, Mr. Gruber advised that they do no review
LAIF's audits.
In response to Chairman Ross, Mr. Gruber advised that the reporting of post
retirement benefits is a result of GASB Statement 45 which requires all cities to
report their liabilities associated with other posted benefits provided, which will
be implemented by June 30, 2009. In response to Chairman Ross, Mr. Gruber
advised that the number of retirees and the amount of benefits to be paid out
will determine the liability and its materiality.
Board Member Rassi complemented Mr. Gruber on his overview.
In response to Chairman Ross, Mr. Falconer advised that with the new
statement of auditing standards the firm cannot conduct two roles within a city,
2
Investment Advisory Board
Minutes
December 10, 2008
(i.e. management service and audit firm). Mr. Gruber advised that these two
functions are required to be separated.
In Board Member Moulin's absence, Mr. Falconer asked Mr. Gruber to comment
on the cash flow statement within the Treasurer's report.
Mr. Gruber advised that a cash flow analysis is performed by the City to
determine cash needs for the next six months, along with determining how
much should be invested and how much should remain liquid. Mr. Gruber also
advised that part of the audit is to audit the cash flow analysis and advised that
there were no findings to be reported.
Chairman Ross on behalf of the Board thanked Mr. Gruber for his report.
Noted and Filed
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on November 12, 2008 for the
Investment Advisory Board.
MOTION - It was moved by Board Members Park/Bassi to approve the
minutes of November 12, 2008. Motion carried unanimously.
V BUSINESS SESSION
A. Transmittal of Treasury Report for October, 2008
Mr. Falconer presented and reviewed the staff report advising the Board
that the portfolio has declined by $7 million due to the construction
activities, with the main construction project on 48`" Avenue and Adams.
The payments for 48`h Avenue and Adams are near complete with the
retention on the contract remaining. Mr. Falconer advised that the
average portfolio has increased slightly by four days to fifty-five days,
with investments mainly in T-Bills; as a result the yields will decline in the
upcoming months, with the current yields down slightly by three basis
points.
Mr. Falconer advised that upon review of the sweep account and the
decrease of the sweep earnings it was decided to discontinue the sweep
account at this time, as a result that bank costs will be paid out of the
earning analysis.
3
Investment Advisory Board
Minutes
December 10, 2008
In response to Chairman Ross, Mr. Falconer advised that correct term
when the bank fees are more than the earnings is net decrease.
In response to Board Member Rassi, Mr. Falconer advised that the city
has never paid hard dollar costs on the sweep account previously due to
the interesting earnings on the account.
Mr. Falconer advised that the last of the GE Capital commercial paper
held by the City matured at 5.2% and was rolled into a T-Bill at 1.368%.
He further advised that due to the current economy, he would not be
investing in commercial paper at this time.
Chairman Ross commended staff on incorporating the suggested changes
to page 7 of the Treasurer's Report. Chairman Ross stated that the
words "Bond Draw" were still reflected in the second column under
"Investments Sold/Matured Section," and it was his recollection that they
were to be removed. After general discussion amongst the Board and
staff it was agreed that staff review the previous meeting minutes and
report back to the Board with their findings.
Mr. Falconer advised that page 9 reflects a major change in the cash flow
due to a purchase of the Washington Street Apartments near Darby
Street, purchased in the month of October for $4.1 million.
MOTION - It was moved by Board Members Park/Bassi to approve,
receive and file the Treasury Report for October 2008. Motion carried
unanimously.
B. Continued Consideration of the Fiscal Year 2008/2009 Work Plan
The Board agreed to continue discussion of the Fiscal Year 2008/2009
Work Plan to the January meeting.
MOTION - It was moved by Board Members Park/Bassi to approve the suggested
changes and continue the discussion of the Fiscal Year 2008/09 Work
Plan to the January meeting. Motion carried unanimously.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. City of La Quinta FY 2007/2008 Audited Financial Statements
Noted and Filed
4
Investment Advisory Board December 10, 2008
Minutes
B . Month End Cash Report - November, 2008
Mr. Falconer presented and reviewed the Month End Cash Report
advising that the interest rates have declined and page 3 of the report
reflects the following for the month of November: 3-month Bill was
previously at 1.5% and is now down at .005%; 6-month Bill was
purchased at $2 million with the bill yielding on December 11, 2008 at
2.3%. Mr. Falconer also advised that page 11 reflects the LAIF rates
with a slight decline from September 30, 2008 at 2.77% to the month of
October 30, 2008 at 2.51 % with the overall portfolio at $63 billion.
General discussion ensued amongst Board the regarding the economy and
foreclosures within the city.
Noted and Filed
C. Pooled Money Investment Board Report - September, 2009
In response to Chairman Ross, Mr. Falconer advised that most cities at
this time are reducing their investments in LAIF due to immediate cash
needs but also advised that if other agencies need to invest their monies
that LAIF would be a safe investment at this time. Mr. Falconer advised
that due to the current California economy there might be some
hesitation to invest in LAIF for fear of the state impounding funds, which
the state cannot do.
Noted and Filed
D. November 25, 2008 Joint Meeting Minutes with the City Council
Mr. Falconer advised that the meeting minutes for the joint meeting with
City Council were not available; upon availability they would be
forwarded to the Investment Board. Mr. Falconer also advised that
during the joint meeting staff was directed to include in the agenda the
Marketing and Economic Development Marketing Plan.
Chairman Ross advised that these items derived from his question
regarding business incubator activities.
In response to Board Member Rassi, Mr. Falconer advised that the
Economic Development Division in the City Manager's office prepares the
reports.
F
Investment Advisory Board December 10, 2008
Minutes
VII BOARD MEMBER ITEMS
Chairman Ross advised that there was one item for discussion but due to Board
Member Deniel's absence that this item would be discussed at the next
scheduled meeting.
VIII Adjournment
MOTION - It was moved by Board Members Rassi/Park to adjourn the meeting
at 5:30 p.m. Motion carried unanimously.
Su itted
Vianka Orrantia,
Senior Secretary
f3
INVESTMENT ADVISORY BOARD Business Session: A
Meeting Date: January 14, 2009
ITEM TITLE:
Transmittal of Treasury Report
for November 30, 2008
BACKGROUND:
Attached please find the Treasury Report November 30, 2008
RECOMMENDATION:
Review, Receive and File the Treasury Report for November 30, 2008
1 \ �X4�
John M. Falconer, Finance Director
Twyl 4 a(fli oubtro
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Director/Treasurer
SUBJECT Treasurers Report for November 30, 2008
DATE: December 31, 2008
Attached is the Treasurer's Report for the month ending November 30, 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
Ending
Change
Cash (3)
$ (1,475,933)
$ 1,334,690
(1)
$ (141,243)
$ 1,334,690
LAIF
US Treasuries (2)
47,887,947
1,600,000
(2,500,000)
0
46,987,947
(900,000)
US Gov't Sponsored Enterprises (2)
38,857,460
47,863,266
25,000,000
(11,000,000)
(86.099)
48,622
63,771,361
36,911,888
24,913,901
(10.951,378)
Commercial Paper (2)
21,973,372
(15,000,000)
20,804
6,994,176
(14,979,196)
Corporate Notes
4,988,692
934
4,989,626
934
Mutual Funds
90,276
703
1
90,979
703
Total
$ 160, 185,080
$ 27,935,393
$ 28,500,000
$ 15,739
$ 159,604,734 1
$ 580,346
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 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.
John M Falconer Date
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.
2
Treasurer's Commentary
For the Month of November 2008
Cash Balances — The portfolio size decreased by $580,000. There was no major reason for
the decrease other than normal cash receipts and disbursements.
Investment Activity — The average maturity of the portfolio increased by 9 days to 64 days at
the end of November. The Treasurer follows a buy and hold investment policy and has not
sold investments before maturity to take advantage of market conditions. Maturing
commercial paper and Agency Paper was replaced with U.S. Treasury Bills. The sweep
account earned $112 in interest income for the month of November and the bank fees for the
month were $ 1,841 which resulted in a net decrease of $ 1,729 in real savings.
Portfolio Performance — The overall portfolio performance decreased by twenty five (25) basis
points from the prior month and ended at 2.36% for the month, with the pooled cash
investments yielding 2.38%. The portfolio yield will continue to decrease because of market
conditions and the treasurer's decision to limit reinvestments in U.S. Treasury securities due
to the credit crisis. With the average maturity of 64 days, the portfolio yield should continue
to drop downward based upon reinvestments at lower rates. The Treasurer has several longer
term investments helping to keep yields higher as interest rates but they will gradually mature
and result in a lower yield. At this time last year, the portfolio was yielding 4.96% which
reflects the current interest rate environment.
Future Thoughts
Due to the current liquidity crisis impacting financial and business institutions the Treasurer is
concentrating on safety first and foremost. In the short term, the Treasurer will be
maintaining LAIF balances at the maximum allowable percentage because its rate declines
slower in a declining rate environment. The Treasurer will not be investing in corporate notes,
commercial paper or GSE's due to the current economic conditions affecting the financial
markets; but instead will be investing in short term (less than one year) U.S. Treasury Bills.
Bond proceeds will be laddered in three- and six-month Treasury bills as they mature.
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n
b
C C
N
W
'a
cN
m
Id
Nmr
o m b„
rOC
b x m m m
W NKbOU�F'
o
u
Z 0
c
W
m
2
OM of La Quints
RecanoLatron of Actual and Surplus Funds
CM. RedevebpmeM Agency Meet Finanwp Audw1M
November 30, 2008
Balance OF Actual Funds 15g60 ]3d
Less Party cash Funds (1,250)
Less N—Surplus Funds 627261
Balance of Su Ius Funds g 158,]]6,223
L Cash 6lmasbwnb
Bank ii wunls
Surplus
Surplus
Name: gvada11 1
Sur lug
T
Book
You
Ad
Yes
Welk FaryoOemand
No
Checking
8 (102d,]32)
$
g
W¢us Faryo-Svre80
NO
Sweep
8W,230
_
Peet casn-Demand
No
NA
1,250
_
WeFd -Demand
Yee
CMcb
$ 991
$ 991
Back
Total -Bank Acwunk
$ 141243
$ 991
991
U S Treasury
n
CustodiaAvandbil
Surplus
IssMYT
Amort¢ed
Surylus
Suglu s
Value
Yes
Atl
Yes
Bank of New York Demand
Yes
T�kdl
4,9c5542
4,%5542
4.9M542
Bankof New York - Demand
ye g
T-Bill
9,9IS,C06
4,955,542
20,608
Bank Ol New York-cemaM
Yes
T-Bill
4969,1d6
9,975,008
22,3W
Bank Of New York - Demand
Yes
T-BJI
9,933,792
4,969,146
Bankof New Ymk demand
Yes
T�
9,933,I92
22 tG8
Bank of New York - Demand
Yeg
TBJI
Bill
,983.722
190],)22
],9]0815
15,115
15,115
TOWLUB Treasury39]9]855
9,931.084
4886,150
SYryIYe
No
AO
$urplYs
No
pII FUMs
Actual Y.
Surplus
Ves
g (f,026.]32)
$ 1851993
g BZ).281
BBJ 230
S (883,330)
t R50
1350
S id0253
g Nd.]6J
$ B2B.511
-0.0885%
-0.0006%
Surylus
No
qd
Smpvs
No
qII FUMs
getual%
Surplus
Ves
21935]%
d @33%
U S Government Sponsored EMermad A has Surylus Surplus Surplus Suglus All Funds Surylus
GWbOun-AvdiW011 Su r Issue rR Value Year
Ad Yea No M No ACNaI He Yes
Bank of New YOM- Demarq Year FHLB 1998,hat 1,998,841 1,990,631
Brink of New YorkDemdnd Yew FIDE4,956,938 4,956,938 4,956,938
Bank Of New YOM-Demand Yes FFOB 9,999,384 9,999,384 9,999384
Bonk of New York-08mdnd Ves Fr bdk Am 4,49],56d a 497,554 4,49],564
Bank of New York - Demand Yes FHLB 9,999423 9,99Bd23 9,999423
Bdnkol New YOrk Demand, Yes FHLB 2,9701M 2,9I0A84 2,970, 184
Bank of New York- Demand you Friend. Mac 2489,754 2A89754 2489,754
TotaLUS Gov¢mmeM Secund¢5 36911,888 36,911888 36,911,888 231271% 29]]62%
Mndwm Term No@
Bpok
SurOlua
Surylus
CUModlan� AvailaEll
Su lus
IsguerR
Value
Yes
Ad
Year
Bank of New YOh-DemdM
Ves
US Bancorp
3,003,idB
3,002,148
3,gp2.160
Bank of New YOM�Demand
YeS
GeneealEkctnc Ca ital
198I4]0
ten
19W O8
ad, Mealum Term Pa r
d,909026
d909.620
4,9119b28
Pnme Commereal Paper
Book
Surplus
Surplus
Custodan-AvailaEN
Su lus
Issuer?
Value
Ves
An.
Yes
Bank of New VOM-Demand
Ves
Nestle Cap Corp
d995,1J]
1,995,133
U995133
Sank of New York OemaM
Yes
pTBT
1999,943
1,9990d3
1999 W3
TOral. Pnme Com..w—..Pa r
6.994,1]8
.aw, ]6
g,994,1]6
Prolessbnally Manapedp�unt
Name 'AVdllabcl
Su LM
Tviia
Book
Surplus
Yes
qd
Surplus
Yes
Total - Pmlesswnal Manallead Acwunl
Local Ape, lnvesimeM Fund
Surylus
Surplus
Name-AvMllabcl
Su led
T e
Seek
Year
Ad
Yes
Wf-CM-Demarq
Yes
Seale Pml
30,226W5
3822B4OI5
(9E8)63)
3],25],312
LIIF- RDA-IJemdnd
Yes
51ate Pool
0,]61,W2
8,]618i2
e]618I2
To1dL State Pwl
16,9W,90
d6,98]9d]
9tdtdjh
IS chir184
EnE�:MAll Funds Suryus
Actual% Yes
31262% 4025M/.
Surplus
No
Ad
Surplus
No
All FUMs
g:Ua a
Surplus
Yes
03822Y.
SBd21°F
Surplus
No
AM
Surpus
No
AIIFun
Actual%
Surplus
Yes
Surplus
No
AO
Surplus
No
All—F.rgs
A. Y.
Surplus
Ves
29 tl02%
]]1239%
TONI CM InvasOmnds 1]5,9]1,d83 105,819,)31 988j6] 99,901,03d ]5.0109% 60 Y]dX
Total CM Cash S lnwNenb 1JS,SdO$dg 105,813,730 9661 98,900,0.1] 1d0,232 8Nj6] 83],511 N932dX ]O 58]6X
FlFulp MlnvasbryMi
POMeIA Cry In, dry, is
Cus dean-Availadll!
SYr lus
Issuera is
AmeNzed
V.I.Ves
Surylus
Adl
Surplus
York
2W2ROAUS Bank-0IP
2W4FInanm AM -0IP
Yes
Yes
USTreasury Bill
USTreasu BIII
13,984,545
9,988,961
13,9Bd 545
9,988951
13,9&,SdS
9988961
Total Us ireasu
2],9T3.508
23,9I3,506
23 B]35C6
Porifolro-Mutual Furgs
Times - Availabil
Sur lus
Money Market
Mu[val FurM
Book
Value
Surplus
you
Atl
Surplus
Yes
Civic Decker U S Bank -Pmptl
YES
1sf Alrenca'
CO., Cern¢rUSBanx-DOW Svc
YES
1st American
1994 ROAUS Bank-DebtSvc
YES
ist American
1995 RDA U S Bank -CIP
YES
151 Ameman
1995 RDA U S Bank - Speadl Fund
YES
15iAmencan
211pd Fin Audi U$Bank -E6GOw
YES
islAmencan
1998 RDA U S Bank-CIP
YES
1st A:.ao
1998 RDA U S Bank - Dan Svc
YES
1st Amen.n
1Y95 RDA U S Ban; Spetlal Fund
YES
151 A:O-a
1998 RDA U S Bank - DIP
YES
1si Ame-an
20o1ROA US Bank - Ohl Svc
YES
1st American
2001 RDA US Bank CIP
YES
hat American
2002 RDA US Bank - Dan Svc
YES
IN American
2002 RDA US Bank - OF
YES
IN Anedcre
84,975
84,975
84,975
2003 Tasa5k RDA U S Bank - OS
YES
1st Accordion
2W3 Tai RDA S Barib001
YES
let Amenpn
2003Taxam RDA S Si
YES
tat American
2004 Fn AOh USBank CIP
YES
tat Amenwn
680d
6.W4
6.001
2004 in AUIh US Bank - COI
YES
19 American
SUMOUL MUIuaI FUM
90979
0979
50,979
Surylus
No
Ad,Na
Suglus
qII FUMs
Ali!
Surplus
Yes
1502nd%
193390Y.
Surplus
NO
Ad
Surplus
No
All'unds
Actual%
Surplus
Yes
0!i]Mk
00]34%
Total Fbc.I All lnvasb and.
N,ON,1651
24,096,d65
29,ON,d]5I
- - 15 W]8X 19HNX
Grand TObl
1S.6W]N
160352 9Gj6] I636.511 ID0000 10000WX
129,878.215
968]634J,986,516
10
City of La Conte
Comparative Rates of Interest
November 30, 2008
Year
Month
FY 02/03
July 2002
August 2002
Sep12002
Oct2002
Nov 2002
Dec 2002
Jan 2003
Feb 2003
Mar2003
Apr2003
May 2003
June 2003
FY 03/04
July 2003
August 2002
Sept 2003
Oct2003
Nov 2003
Dec2003
Jan 2004
Feb 2004
Mar 2004
Apr2604
May 2004
June 2004
F Y04/05
July 2004
August 2004
Sep12004
Oct 2004
Nov 2004
Dec 2004
Jan 2005
Feb 2005
Mar2005
Apr2005
May 2005
June 2005
FY 05106
July 2005
August 2005
Sept 2005
Oct 2005
Nov 2005
Dec 2006
Jan 2006
Feb 2006
Mar2006
Apr2006
May 2006
June 2006
FY 06107
July 2006
August 2006
Sept2006
Oct 2006
Nov 2006
Dec 2006
Jan 2009
Feb 2009
Mar2009
Apr2007
May 2009
June 2009
FY 07/08
July 2007
Augus120W
Sept 2009
Oct2009
Nov 2007
Dec 2009
Jan 2008
Feb 2008
Mar2008
Apr2008
May 2008
June 2008
FY 08109
July 2008
August2008
Sept2008
Oct 2008
Nov 2008
Dec 2008
Jan 2009
Feb 2009
Mar2009
Apr2009
May 2009
June 2009
Anne mid Eamm s
Pooled Cash
Fiscal A ent
verel
Ol
246%
100%
205%
245%
129%
209%
246%
126%
210%
241%
100%
208%
232%
100%
202%
223%
100%
180%
2 11%
080%
162%
199%
059%
194%
201%
075%
198%
198%
072%
196%
186%
093%
154%
193%
049%
140%
166%
062%
143%
165%
045%
135%
165%
049%
126%
159%
048%
136%
164%
048%
138%
169%
059%
141%
158%
030%
139%
165%
030%
138%
150%
050%
133%
150%
050%
133%
154%
050%
136%
169%
04Y%
162%
173%
050%
168%
193%
060%
159%
199%
107%
168%
199%
114%
192%
199%
143%
193%
189%
223%
208%
200%
225%
212%
216%
226%
222%
216%
267%
243%
229%
269%
249%
249%
290%
258%
259%
310%
283%
265%
311%
289%
264%
311%
281%
309%
348%
320%
333%
351%
334%
390%
353%
355%
381%
363%
369%
411%
400%
406%
414 %
401%
409%
421%
445%
431%
430%
446%
437%
469%
448%
460%
494%
498%
483%
493%
500%
496%
494 %
601%
499%
498%
501%
499%
500%
502%
501%
504%
503%
503%
508%
504%
506%
518%
512%
516%
519%
513%
519%
521%
503%
515%
520%
514%
515%
520%
505%
516%
519%
488%
510%
521%
AN%
612%
519%
485%
508%
516%
486%
506%
511 %
485%
502%
503%
483%
498%
495%
343%
445%
458%
333%
422%
412%
324%
385%
409%
283%
369%
345%
329%
341%
314%
327%
317%
3 09%
1 94%
2 86%
299%
193%
299%
316%*
192%
288%
281%
192%
264%
266%
261%
261%
238%
236 %
236%
Three Month
172
1 64%
2 69%
139
162%
260%
121
1 55%
249%
109
1 29%
2 30%
163
1 29%
2 31 %
139
116%
210%
131
120%
195%
117
118%
198 %
92
119%
186%
94
1 10%
1 80%
123
086%
190%
131
0 98%
1 65%
110
106%
163%
80
101%
164%
121
1 04%
1 60%
98
103%
157%
119
099%
155%
140
100%
1 53%
120
101%
144%
155
101%
147%
139
119%
145%
139
1 38 %
143%
209
1 93%
143%
214
1 94%
1 60%
172
198%
167%
167
1 95%
1 A%
112
204%
189%
113
239%
200%
145
2 56%
2 13%
109
256%
226%
104
285%
239%
120
285%
239%
93
309 %
272%
64
311%
286%
113
322%
299%
93
354%
308%
84
369%
318%
96
395%
332%
65
395%
346%
96
416%
364%
68
420%
381%
112
444%
396%
93
458%
404%
110
463%
414%
92
474%
431%
69
484%
456%
98
511%
490%
95
506%
485%
48
499%
495%
53
500%
502%
69
496%
510%
fit
494%
513%
80
490%
513%
64
498%
516%
45
495%
516%
69
488%
521%
42
484%
622%
32
481%
525%
85
481%
525%
129
460%
526%
109
459%
525%
129
400%
523%
116
395%
514%
99
334%
496%
123
339%
480%
96
231%
462%
86
209%
416%
94
1 50%
3 98%
82
190%
340%
63
192%
309%
80
214%
289%
62
190%
188%
229%
218%
299%
51
169%
189%
214%
208%
278%
39
142%
179%
196%
213%
299%
29
090%
140%
172%
209%
271%
64
015%
049%
104%
145%
257%
11
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12
INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: January 14, 2009
ITEM TITLE:
Continued Consideration of the Fiscal Year 2008/2009 Work Plan
BACKGROUND:
As part of the work plan, the Investment Advisory Board is asked to review the
Investment Policy and may any recommendations for the City Council's
consideration in June of each year.
RECOMMENDATION:
Continued consideration of this item with a recommendation to the City Council of
any changes to the Fiscal Year 2008/09 Investment Policy.
John M. Falconer, Finance Director
Unapter2./U1NvrJ1MLNI ADVINUKY I3UAKU Page 1 of I
La Quinta Municipal Code
Up Previous Next Main Collapse Search Print No Frames
Title 2 ADMINISTRATION AND PERSONNEL
Chapter 2.70 INVESTMENT ADVISORY BOARD
2.70.010 General rules regarding appointment
A. Except as set out below, see Chapter 2.06 for general provisions.
B. The investment advisory board (the board) is a standing board composed of five members from the
public that are appointed by city council.
C. Background in the investment field and/or related experience is preferred. Background information will
be requested and potential candidates must agree to a background check and verification.
D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a
change in circumstances warrants, each board member will provide the city council with a disclosure statement
which identifies any matters that have a bearing on the appropriateness of that members service on the board.
Such matters may include, but are not limited to, changes in employment, changes in residence or changes in
clients. (Ord. 383 § 1, 2003: Ord. 287 § 1 (part), 1996; Ord. 268 § 1, 1995; Ord. 222 (part), 1993)
2.70.020 Board meetings.
The board usually will meet monthly, but this schedule may be extended to quarterly meetings upon the
concurrence of the board and the city council. The specific meeting dates will be determined by the board
members and meetings may be called for on an as needed basis. (Ord. 336 § 1 (part), 2000: Ord. 287 § 1 (part),
1996; Ord. 222 (part), 1993)
2.70.030 Board functions.
A. The principal functions of the board are: (1) review at least annually the city's investment policy and
recommend appropriate changes; (2) review monthly treasury report and note compliance with the investment
policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports
provided by the city treasurer; (4) meet with the independent auditor after completion of the annual audit of the
city's financial statements, and receive and consider the auditor's comments on auditing procedures, internal
controls, and findings for cash and investment activities, and (5) serve as a resource for the city treasurer on
matters such as proposed investments, internal controls, use of change of financial institutions, custodians,
brokers and dealers.
B. The board will report to the city council after each meeting either in person or through correspondence at
a regular city council meeting. (Ord. 336 § 1 (part), 2000: Ord. 287 § 1 (part), 1996; Ord. 269 § 1, 1995: Ord.
222 (part), 1993)
http://gcode.us/codes/laquinta/view.php?topic=2-2_70&showAll=1&frames=on 12/11/2008
A 1 1 Alit VW-gV 1 -1
John Falconer
From: donbarm@aol.com
Sent: Friday, August 08, 2008 3:44 PM
To: John Falconer
Subject: Cash Flow Forecasts
John, in my Google search of cash flow forecasts, I noted a couple of web sites that may be helpful
http;//%vww.estoref foa.org/StaticContetit/statiepafes/TMO40.7.htm
hfp://www t .worldbank.org/publ icsector/pe/befaO5/Executionfmis.doc
Also noted is the Ethics and Conflicts of Interest section of the IP of Bloomington, Minnesota. Please
copy and distribute at the next meeting of the IAB. For information only
Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from conducting personal
business activity that could conflict with proper execution of the investment program, or which could
impair their ability to make impartial investment decisions. Investment officials shall annually disclose
to the City Clerk any material financial interests as required by state statute on an annual Statement of
Economic Interest form. Employees and officers shall subordinate their personal investment transactions
to those of the City, particularly with regard to the time of purchases and sales, and shall refrain from
undertaking personal investment transactions with the same individual with whom business is conducted
on behalf of the City.
Don
It's time to go back to school! Get the latest trends and gadgets that make the grade on AOL Shoo piny.
2
8/8/2008
4. Treasury and Government financial management information systems
4.1 Managing cash
Cash (mostly in the form of money held at the bank) is a scarce resource and must be
managed to provide optimum benefit. Some cash is held for transaction needs and some
is held against contingencies. But above this level, idle balances should be invested in a
form that gives quick access and little risk in order to earn interest. Money can be
borrowed, but this costs money and should be carefully controlled because it increases
financial risk. Borrowing may also take time to put in place and this will effect how
much cash has to be held for contingencies. A government is ill-advised to borrow, if it
already has the available cash resources because the rate of interest on borrowing is
higher than the rate of interest received on surplus cash balances, which in many cases
may be zero.
With such principles in mind, governments monitor movements in their cash resources.
They seek reports on cash balances (e.g. bank statements from the central bank). They
also consider the likely incidence of cash flows both inward and outward. A cash flow
occurs when the cash actually moves, so cash flows have very little to do with accrual
accounting, which is based on different principles. To estimate cash flows involves
forecasting cash flows associated with revenues and expenditures (both current and
capital); and with borrowing and lending (including repayments). Expected cash
balances can be forecast at dates into the future. Often cash flow forecasts are carried out
monthly showing cash balance (positive or negative) at each month -end for the following
12 months. Forecast balances provide input to revenue, expenditure and borrowing
policies. For instance a large expected cash surplus implies the need to invest cash, while
a large expected deficit implies the need to borrow. The cash flow profile will also
indicate for how long surplus funds are likely to be available to invest and for how long
cash deficits will persist and therefore the period over which borrowing will be needed.
The ease of monitoring and managing bank balances depends on their number, the
efficiency of the banks involved in supplying information and how quickly the sums
involved can be transferred to alternative (temporary) uses. Obviously a treasury single
account will be easy to monitor and manage. But a system in which spending agencies
keep their own bank accounts (maybe more than one for each agency as in Mongolia)
does not permit easy monitoring or management.
4.2 Bank accounts
In some cases, government's cash resources are held in many bank accounts (hundreds or
even thousands in the case of the republics formerly part of the Soviet Union at the time
of and its break). In such cases, cash management is more complex and less efficient.
Borrowing may occur even though sufficient cash resources may exist for borrowing to
be unnecessary. The problem is two -fold. Multiple batik accounts make it very difficult
to monitor aggregate cash resources. And releasing the idle money from all of these
accounts is also extremely cumbersome. In addition where spending agencies have their
3
own bank accounts, MOF control is weaker because these agencies have greater control
over their own spending. MOF receives financial statements from them but is not party
to detailed transactions.
A treasury single account (TSA) avoids these difficulties. A TSA receives all
government revenues, and out of it come all government expenditures. Or at least that is
the case in principle. In practice, exceptions are necessary (for instance public
enterprises are likely to retain their revenues, hold bank accounts and make their own
payments from them). The case in favour of a TSA is clear enough. Establishing one is
not always straight -forward:
• spending agencies may be unwilling to give up their bank accounts
• paying revenues into a single bank account is often physically impossible at
locations outside the capital city
• the central bank may be happy to administer the TSA but may not wish to be
involved in "retail" banking. Anyway it is unlikely to have a sufficiently
extended branch network to operate the TSA without help
• the participation of the commercial banks is essential. They have branch
networks and are active in retail banking. But their services have to be paid
for (either via interest/fees or via a concession which allows them to hold
money in transit longer than is strictly necessary). Of course such costs have
to be set against the interest gains expected from establishing a TSA
• a mechanism is needed between the central bank and the commercial banks so
that they open credits in response to specific government needs, and pay
surplus cash balances into the TSA at regular intervals
4.3 The need for treasury systems
The word treasury has several meanings. In this context it refers to related functions of
the Ministry of Finance in the fields of budget execution, accounting, management of
debt and cash, financial control and banking (See paper two for a more detailed
discussion). Essentially, a treasury system addresses these issues in an integrated
manner. It is therefore a type of government financial management information system.
Treasury systems address problems of missing information, weak and fragmented
information systems, inadequate and inappropriate controls and the adverse impact on
decision -making arising from such deficiencies. When in 1993 the IMF advised
Government of Moldova on setting up a government treasury system, it listed the
following "severe problems" facing budget management:
Poor short-term control over expenditures as reflected in large fiscal deficits
and significant expenditure arrears
n
• Lack of current information about the magnitude of expenditures
• Highly inefficient cash management, reflected in the large amounts of
involuntary lending to government.... at the same time significant cash
balances lie idle
• As -yet undeveloped capacity to borrow from sources other than the banking
System...
• A system of budget classification that undermines efforts to improve
forecasting, analysis and management
Other countries experience different problems such as:
• Budget execution systems lacking appropriate information, controls and links
with accounting
• Accounting systems which are incomplete and untimely; cannot be reconciled
with each other; cannot communicate with each other; require manual transfer
of data; generate financial statements only with difficulty; do not respond
easily to users' needs for information; lack reliable information
• Existence of multiple bank accounts, aggravating problems of control and
rendering efficient cash management very difficult or impossible
• Break -down of system of budgetary control
• Lack of timely information on public finances for decision -making and
accountability purposes
• Line ministries entering into large commitments without MOF having prior
knowledge; line ministries frustrated by abrupt changes in funding (lack of
stability in budget allocations)
Treasury systems are designed to address such issues.
4.4 Functional processes of a treasury system
Hashim and Allan write about information systems for fiscal management (1998). They
identify the following eight processes: macro -economic forecasting; budget preparation;
budget execution, accounting and fiscal reporting; cash management; debt management;
revenue administration; personnel administration; and auditing. In practice, treasury
modernization projects tend to concentrate on only three of these: budget execution,
accounting and fiscal reporting and cash management. However they also have to
address the last phase of budget preparation (finalization of the budget and in -year
5
changes to it) and auditing (the needs of auditors are covered in system design). Other
fiscal management processes are commonly covered by separate, stand-alone systems.
In summary, treasury modernization projects usually cover:
• The enacted budget including supplementary and revised budgets, budget
allocations, budget transfers and warrants to incur expenditure
• Accounting and reporting including the general ledger of government
• Banking and cash management (via a single treasury account)
• And by implication, the audit trails needed for auditing
Treasury systems differ from country to country. For instance, the project to improve
Ukraine's treasury system focuses on the following: legal regulatory and operational
framework (guidelines, procedures, regulations, forms and operating manuals); budget
classification and coding; developing better methods of forecasting expenditures and
managing cash; improving fiscal reporting; developing detailed functional specifications
of the treasury ledger system; and training and institutional development. The detailed
functional specifications for the Ukraine general ledger provide the capability to:
• Record initial and revised budgets
• Distribute budget appropriation and authority to incur expenditure to spending
units
• Record expenditure in the form of cash and commitments against budget and
authority to incur expenditure
• Allocate funds to spending units
• Permit checks on the availability of appropriation, funds allocation and
commitments prior to approving payment
• Print consolidated payment instructions to banks
• Record revenue and other receipts against appropriate account heads
• Print checks (or instruct electronic payment) against payment instructions
• Consolidate data, facilitate reporting, provide for easy data retrieval for MOF,
ministries, spending units etc.
':7
4.5 Introducing a treasury system
Assessment and planninE
• Analysis of status quo and justification for introducing a treasury system
• Identification of public finance components to be covered, government
entities to be covered and their interface with the treasury system
• Adequacy of institutional processes: budget process and act; classification and
coding system; banking arrangements; accounting records; basis of
accounting; financial statements; the treasury itself
• Analysis of user needs; matching with national capacity; choice of approach
(the old system computerized or a new system with bells and whistles?)
• Analysis of relevant skills to create the system; to manage its implementation;
to provide technical back-up; to operate the system (users) and to use its
outputs
Specification
To embark on the modernization process, the system design has to be specified,
permitting bidding documents to be prepared and contractors to submit bids. The
specification has several components:
Functional design Each public finance component and each element making
up each component will be specified (for instance data to be entered, its
format, the classifications and codes to be used, the sub -divisions of the
general ledger into which data are to be sorted, the format and destination of
planned reports, the built-in controls, the content of screen data displays etc.).
Also included will be the functions of each organizational entity involved, the
data flows between them and specifications for how their actions are to be
communicated and reflected in records (e.g. approvals, rejections etc.).
• Software This involves the choice of IT platform and of software
applications (whether off -the -shelf, customized or created anew); the
protocols for information exchange, requirements for suppliers to provide
technical back-up, etc.
Banking The banking services to be offered (by Central Bank/second tier
banks); establishment of Treasury Single Account and sub -accounts;
authoriization and format of instructions to bank; means of accepting
instructions and processing transactions; bank statements; arrangements for
the clearing of balances to TSA; other banking services.
7
• Hardware configurations.
• Staffing requirements.
• Project supervision arrangements
Implementation
• Resolving institutional inadequacies (laws, procedures, coding schemes,
institutional deficiencies etc.)
• Training staff
• Creating or customizing software
• Testing the adequacy of programs and systems
• Piloting the system at selected locations
• Validation
• Extending the system
• Validation
• Abandoning the old system
4.6 Challenges
• How to develop/ acquire/retain the necessary expert resources?
• How to deal with staff redundancy caused by the move to computerized
systems?
• How to negate possible illicit pressures in procurement?
• How many processes should be integrated? In principle, the more integrated
processes, the larger advantages from computerization. But the more modules
there are to integrate, the more difficult it is to achieve a working system.
• What to do about processes either not computerized or not part of the treasury
system (problem of interfaces)?
• Treasury projects are usually slow in implementation, the causes being the
subject of debate. The multi -stage nature of implementaion; the need for
G
E
testing, piloting, fine-tuning, training and extensive adoption; and
procurement complications are all possible candidates. How to deliver
something timely and of good value?
The control implications of treasury systems are also the subject of debate.
Treasury systems increase the information available to the ministry of finance,
and therefore its possibilities of control and power. Depending on country
circumstances and system design this may result in an over -intrusive ministry
of finance and resentful spending agencies. How to give line ministries a
genuine stake in the new system?
Sources
Asian Development Bank, "Cash management and the treasury function", Chapter 8 of
Managing Government Expenditure, 1999.
IMF (1993), "Red books" on the introduction of treasury systems such as Moldova:
setting up a government treasury system Washington.
Organization for Economic Cooperation and Development (2001) Managing Public
Expenditures: A Reference Book for Transition Countries. Richard Allen and D.
Tommasi, editors. (Chapter 9)
World Bank (1998), formation systems for government fiscal management, Ali Hashim
and Bill Allan, PREM, Washington.
World Bank (date?), Information systems strategies for public financial management,
Hywel M. Davies, Ali Hashim and Eduardo Tatero, Discussion Paper 193, Washington.
US Government (1998), Core financial management system requirements Joint
Financial Management Improvement Program, Washington.
7
Annex
Assessing a treasury system
(based on notes by Ali Hashim)
Policy framework and institutional setting
1. Status of the budget law with specific emphasis on:
• receipt and custody of public funds; consolidated fund
• public expenditure controls and significance of control by appropriation
• role and responsibilities of the central bank and second tier banks
• role of MOF and its departments (in particular those responsible for treasury
functions)
• asset and liability management (including public debt)
• accounting records, reports and statements and their audit
• financial regulations
2. Budget classification system and chart of accounts:
• How complete?
• Compliant with IMF?
• Sufficient for control purposes?
3. Payment processing:
• Does a treasury single account (TSA) exist and where is it located?
• Which entity/entities control/s the TSA/bank accounts and how?
• Are payment requests of spending units routed through the treasury or are they
sent directly to the bank/s
4. Steps in the budget execution cycle. Which agencies carry out the following?
• Recording of appropriations
• Distribution of appropriations/sub-appropriations
8
10
• Budget revisions and transfers
• Funds allocations
• Spending limits (cash; commitment; authority to incur expenditure or
"warrant")
• Cash allocations
• Commitment controls
• Payment controls
• Receipt of tax and non -tax revenue
• Loan accounting
5. Institutional arrangements for cash management
• Which agency is responsible?
• On what basis are revenue and expenditure forecasts made?
• How frequently are agencies required to produce estimates of cash
requirements?
• How does government determine periodic cash requirements?
• What are the links between cash and debt management?
Functional design
6. How is the treasury system designed: how do the processes listed in point four above,
operate?
7. What is the coverage of the system?
• Number of ministries
• Number of spending units
• Size distribution of payments (number/value)
• Number of transactions of various types
0
11
• Application to central/local government
• Coverage and treatment of extra -budgetary funds
8. Are there subsidiary accounts of the TSA? How frequently are these accounts cleared
to the TSA? Can idle balances build up in these accounts?
9. What information is recorded for receipts? Are taxes deposited directly in the TSA or
are they first paid to second tier banks? How large is the "float" of undeposited receipts?
10. How long does it take for a payment instruction to be processed and acted upon?
How many stages are there in this process and are they all strictly necessary?
11. How quickly are accounting reports made for budgetary and accountability
purposes? What is the required standard for timeliness? What is the normal delay and to
what is it attributable?
12. Is payroll automated and how does it interface with the treasury system? Which
agency carries out payroll processing? How are persomtel-related transactions sourced,
recorded and authorized?
l3. What other parts of government's financial management systems are automated (e.g.
debt management, tax administration, customs administration, personnel management,
pensions) and how do these interface with the treasury system?
Information technology
14. Technical architecture:
• Hardware/software platform
• Number and nature of sites
• Nature of communications between the nodes of the network; volume and
nature of transactions at each node; means of transferring information to and
from the treasury; and to and from the Central and other banks
• Application software: custom -developed; off -the -shelf; or customized?
• Degree of automation of spending units' processes
• Nature of information security and other controls
• Internet/intranet capabilities
10
12
Management training and institutional capacity
15. Which government agency manages information systems?
• How does this agency relate to the treasury, ministries, spending units etc?
• Who is responsible for the functional design of the treasury system?
• Are changes to the functional design easy to accomplish?
• How are information systems supervised?
16. What are the training arrangements (technical, end -user, end -user support, technical
maintenance, change management, foreign/local, start-up/ongoing)?
17. How many staff have been trained and in what subjects (financial staff, technical
staff)? Are there problems of staff loss to the private sector?
18. Technical staffing issues: number of technical staff in place to build/maintain the
system; types of technical staff available; salaries/compensation of technical staff.
11
13
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Page 1 of 14
Inside This Issue
Feature Articles and Resources
• Getting Started with Cash Flow Forecasting
• Steps to Cash Flow Forecasting
Enhancing CashForecasting
• Seven Ways to Enhance Cash Forecasting
• Useful Resources on Cash Flow Forecasting
Economy and Interest Rates
• Panel of Economists' Economic_ Outlook
• Interest Rate Outlook
. Snapshot of Economy and Interest Rates
Investment Performance Benchmarks
• Performance Benchmarks
• 10-Bill Index
o Money Market Fund Index
o LGIP Index
o Key Rates Cash Markets
o Relative Value Yield Chart
A[
Volume 25,
Tip for Printing
1. Go to "File, "Page Setup
2. Change all margins to .05 or less.
Getting Started with Cash Flow Forecasting
By Keith Sawdon
Many of us responsible for investing the public's funds have many tools in place
to help us. We have a written investment policy that has been adopted by our
oversight board, a sound system of internal controls (for investment activity) that
has been reviewed by our external auditors, solid methods for competitively
bidding our securities purchases, and we have developed a good set of reports
that help convey our investment activity.
11 In Brief: Cash Flow Forecastinq 11
flow forecasting is an estimate of receipts and disbursements during a given
I. When used as a cash management guide, this tool can lead to the optimization
Is as well as insuring sufficient liquidity is present to meet liabilities. Cash
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forecasting is distinct from governmental accounting and budgeting in that the forecast
is done with intent to measure the organization's ability to meet needs in light of
resources with the ultimate goal of negating the need for any short-term borrowing and
to avoid the liquidation of any long-term securities (investments). When done on an
organizational level, spending patterns can be coordinated to mitigate any potential
shortfalls and level off flow of funds.
One tool that may be overlooked is a cash flow forecast. To effectively manage
the public's funds, it is important to know your future cash flow position.
What is Cash Flow Forecasting? Cash flow forecasting is the process of
predicting cash flow (at least on a monthly basis) for the purpose of managing
liquidity needs and for investment control. An accurate forecast provides the
investment official with the essential information needed for making sound
investment decisions.
A good cash flow forecast should answer the following questions:
. How much cash is available?
. When will it become available?
. How long will it be available?
Building a good cash flow forecasting model takes time and effort. Are the
benefits greater than the costs? To answer that question it is important to
understand the benefits of cash flow forecasting. Those benefits include:
improved investment earnings, ensured liquidity, and identification of any cash
flow shortfalls.
Improved investment earnings and ensured liquidity go hand in hand. If you do
not know when funds will be needed for disbursements, your tendency will be to
only hold investments with exceptionally short maturities. This ensures that you
will be able to meet your payment obligations — but to get that liquidity,
investment yield is normally given up (in an upward sloping yield curve
environment). If you can predict when funds will actually be needed, you will still
be able to ensure liquidity, and at the same time, improve investment
performance by taking advantage of longer maturities in an upward sloping yield
curve environment.
Another benefit of cash flow forecasting is that it can help identify any periods
where you may actually have a negative cash position requiring some form of
short-term financing.
The type of forecast you undertake will, in part, depend on the time and
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resources you have available to commit to the program and the benefits to be
received. For the most part, building cash flow models that provide you with
monthly estimates (of your cash position) will be the norm. But some
governments may need weekly estimates, and very large investment portfolios
may need daily estimates. The forecast timeframe chosen should be based on
the time and resources available.
How to Build a Cash Flow Forecast. First, start with your current cash and
investment balances. Then, look back at your actual cash collection and
expenditure history by month. Apply the actual receipts collected or expenditures
made against your amended budget for that year. The result is a percentage that
represents actual cash collections or expenditures made against the budget for
that month. Once you have looked back in history for three years, apply the
three-year monthly average of those monthly percentages against the current
year's budget.
History will be a good predictor of normal, recurring operating revenues and
expenditures, but it doesn't address all the issues you will need to forecast.
Issues such as new revenue sources or capital spending programs (nonrecurring
expenditures) have no history to look back to, so you will need to work with
departmental personnel to determine when funds will be coming in and when
funds will be going out.
Whenever you are working with historical data, remember that changes in the
economy, state law, user fees, etc., can cause the past data to give a false
reading on future cash positions. That is why it is important to validate your
forecasting model. Compare your projected cash position with the actual cash
position. This comparison of actual to predicted helps you ensure that historic
cash activity can be a good predictor of the future and that the assumptions that
you used are correct. If you have large variances between actual and predicted
you need to ask, "What caused the variance? Do I need to change my
assumptions? Has something changed?" Finding out why will help you improve
your cash flow forecast for the future.
Just Do It. Like exercising, getting started is the hardest part of cash flow
forecasting. Like most of us, the hardest part of exercising is not using the
equipment, it is getting to the room to use the equipment. Once you get to your
exercise room, using the exercise equipment is not that bad. Cash flow
forecasting is the same. Once you have decided that you need or want a
forecasting model, getting going is the hardest part. But once you begin to gather
your historical data and build the model, the process tends to flow pretty
smoothly. It is the getting going that is the hardest. Once the forecast model is
laid out, keeping it updated requires only a few hours a month. All in all, the
benefits are worth the effort.
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KEITH SAWDON is the chief deputy treasurer for Oakland County Michigan and author of the Association of
Public Treasurers publication Cash Flow Forecasting.
TOP
Steps to Cash Flow Forecasting
By Lee Buffington
When most of us analyze our personal budgets, we know our fixed expenses like
rent, mortgage, insurance, and utilities. We also can plan for elective
expenditures like a new car or a nice vacation. In addition, most of us know the
amount of our paycheck and when we will receive it. In other words, we are in
control.
In the public sector, however, we do not always know what to expect. The
legislative body may decide to spend our money on an unanticipated project. Or
perhaps the state legislature will work their magic on what was once our
expected revenue. Budgets are frequently built based on expected yearly
expenditures, while cash inflows and outflows vary by month. Expenditures and
receipts may balance at the end of the year, but chances are they will not
balance month -by -month, which results in negative balances.
Why Should You Forecast? A good cash flow forecast enables good cash flow
management and reduces the need for borrowing. Forecasting also helps
maximize investment earnings by showing when funds will be available for
investment. As a finance officer, forecasting gives you the confidence to certify
that you have sufficient funds to cover the next six months of expenditures.
How to Do a Cash Flow Forecast.
1. Decide on the time period your forecast should cover. For us, a 16-month
forecast provides a better view into the future than the typical 12-month
forecast. We use a 16-month forecast because California counties only have
a positive cash flow three or four times a year, so it takes 16 months to
include up to two income cycles in the forecast.
2. Review your accounting history for revenue and expenditures — get the
general picture.
3. Create a simple, one -page forecasting form to begin tracking your revenue,
expenditures and investments.
a. Use tracking categories that are simple and meaningful to you.
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b. Include the following: net cash flow balance, negative cash flow,
and maturing securities that could be called.
c. Use your morning bank report and daily forecast to determine
how much money you need to place each day to be fully invested.
4. Start with what you know and gradually build up the reliability of your
forecast. Remember: keep it simple.
5. Monitor and fine tune your forecast. Beware of fluctuations in near term
numbers. Watch the revenue side for significant changes. Review heavy
user expenditure patterns. Monitor the incidental user. Make adjustments to
your forecast to accommodate changes.
Lee Buffington is the tax collector -treasurer of San Mateo County, California.
Top
Enhancing Cash Forecasting
By Kathy King -Griswold, CTP, CBM
A recent survey conducted by the Association of Financial Professionals of
Canada revealed that the most important issue among financial professionals is
improving the cash forecasting process. Due to the inverted yield curve, the
economic slowdown, and the lack of general liquidity in the market, cash flow
forecasting has become more important during recent years. An accurate
estimate of future revenues and expenditures allows the treasury officials to gain
greater visibility into business performance. It also helps to keep decision making
on track and maximize investment opportunities. A good cash forecast gives an
organization sufficient time to devise remedies for anticipated temporary cash
shortfalls and arrange short-term investments for temporary cash flow surpluses.
Cash forecasting is important, but organizations often find it difficult to accurately
identify a correct estimate. Some factors that contribute to poor quality forecasts
include:
1. Manual processes
2. Seventy-five percent of treasury's time spent on data collection, which
results in time lost for analyzing positions and effective management
3. Inconsistent assumptions
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4. Junior -level forecast responsibility
5. Lack of incentives and accountability in business units.
Cash flow plans are living entities and must constantly be modified as new
information becomes available on future cash inflows and outflows. Each budget
should be analyzed and the cash flow effect should be determined. After
reviewing the budget, look for significant discrepancies between the planned and
actual figures and make timely adjustments to the model. Some previous
experience is necessary t o make proper adjustments. The last step in the
process is to review and approve the cash flow forecast. Review by upper
management will help to insure the accuracy and reliability of the forecast.
Seven Ways to Enhance Cash Forecastin
1. Improve availability of data and quality of information — The availability and
quality of cash management data is a particularly important hurdle to enhance
cash flow forecasting. The following can be used to improve the availability and
quality of data:
o Treasury workstations
o Account structure — using a single master account to collect all cash
inflows and disperse vs. multi accounts.
o Treasury Intranet site —can improve the quality of input and allow for
easier sharing of information stored in spreadsheet files. This may also
assist in finding a "home" for unclaimed and un-posted receipts and
disbursements, which improves the quality of bank account
reconciliations.
o Use specific knowledge from business units — business units generate
their cash flow forecasts when creating their annual plans because
treasury would not be able to forecast certain expenditures or receipts for
business units because they are not aware of all activities at that level.
o Manage the expectations of management — Treasury should take extra
precautions in presenting forecasts to management and identify
assumptions very clearly.
2. Provide treasury with greater payment visibility by migrating vendors to e-
payments.
3. Calculate the opportunity cost of inaccuracy — it makes a clear difference how
the comparison between forecast and actual is fed back to the sources. This
helps to provide a practical understanding of the importance of accurate
forecasting.
4. Statistical analysis — comparing forecasts to the actual cash flow that was
processed by banks can reveal correlations and consistent behavior. This
comparison can reveal opportunities for improving the predictability of a
forecast.
5. Use Treasury more as a planning resource or internal consultant and less as a
payment processor.
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6. Continually monitor and adjust performance to the cash forecast.
7. Use technology that integrates bank data into forecasting solution.
In conclusion, the reliability of cash flow forecasting has become more important
in recent years due to internal and external pressures. An improved cash flow
forecast can produce many benefits including: more cash available for internal
lending and external investment opportunities, less adjustment transactions, and
earlier warning signals. However, because cash flow forecasting involves many
individuals across an organization, improvement projects require a strong
commitment and a skilled, dedicated, and multi -disciplinary project team.
Kathy King -Griswold, is the assistant treasurer for the University of Rochester in Rochester, New York.
Top
Useful Resources on Cash Flow Forecasting
• GFOA Recommended Practice, Use of Cash Flow Forecasting in Ooerations
• Use of Cash. Flow Forecasting_ in Operations,_ Nova Scotia M un icipal_ Finance
Corporation
Daily forecast (San.Mateo County, California)
Monthly forecast (San Mateo County, California)
• Cash forecast (City, of UniversityPark, Texas)
TOP
Cash Management -Related Sessions at the GFOA Annual
Conference
The upcoming GFOA conference in Anaheim, California on June 10-13, 2007 will
include the following sessions related to cash management and banking
relations. More information on the GFOA conference is available on GFOA's Web
site.
Paper or Plastic? Using Purchasing Cards to Reduce Costs and Maintain
Control. Purchasing cards have the potential to simplify purchasing, reduce
paperwork, expedite delivery of services, and cut costs while maintaining
effective internal controls in the treasury function. But, as with all tools, it is
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GH'GA treasury Management
important to know how purchasing cards should be used and how to prevent
potential abuse. Learn how leading governments use purchasing cards to
improve their procurement processes in this informative session. The session will
feature a panel of representatives from the card industry, banking, and
government.
Fraud Prevention Techniques for Treasurers. Payment fraud does not go
away, it just goes digital. Learn effective techniques to protect your government
against payment fraud in an increasingly complex banking environment. In this
session, fraud prevention experts share the latest practices and technologies for
avoiding fraud in check payments as well as in the accounts payable and
accounts receivable functions.
Preparing for the Worst of Times: Treasury Management in Emergencies.
Earthquakes... hurricanes... terrorist attacks. The list of threats seems go grow,
and they all affect a local government's treasury management activities. While
you can't control when a disaster occurs, you can control your government's level
of preparedness. By knowing your vulnerability and what actions to take in
advance, you can reduce the impact on your treasury activities. This session will
introduce disaster response tools for the treasury function. Speakers will illustrate
how these have been applied successfully in recent disasters including Hurricane
Katrina.
Technologies for the Treasury Function. New technologies that help
governments move from paper to electronic payment hold great efficiency
potential for government agencies. Speakers will introduce promising
technologies that can help treasurers improve productivity while maintaining
financial controls. Topics will include: electronic check processing, electronic bill
presentment and payment, and the mobility trend" —the use of mobile devices
such as cell phones and PDAs to manage treasury functions.
Getting the Most From Your Banking Relationships. New banking
technologies have enabled many governments to reduce operating costs in the
finance department by including new services in their banking agreements.
Banks can provide customized reporting, easy access, and improved multi -factor
security. Speakers at this session will discuss the new services available, key
components of a banking relationship review, and
Maximizing the Benefits of Remote Check Deposit. "Remote Capture" is a hot
topic in the banking industry. What is it and how can your government benefit
from this technology? What key factors can make or break remote capture? This
session will feature local government treasury managers who will discuss their
experience with remote capture, the challenges they encountered, and the
lessons they learned.
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wAn uocument tcetnevai
53644. If an agreement is not made:
(a) Active deposits and interest thereQ
upon the deman easurer or other
subj o any penalties which may be pres
regulation.
(b) Inactive deposits are subject to
days before withdrawal.
53645. Interest sha
follows:
(a) For
shall be c
quarter%a
u—axect t ithdrawal
authorized icial,
cribed federal law or
ice of at least thirty
computed and paid by the depository, as
deposits upon which interest
uted on the average daily balance
shall be paid o .
is payable, interest
for the Galen ar
For i eposits, interest shall be computed on a 360-day
and shall be paid quarterly.
53646. (a) (1) In the case of county government, the treasurer may
annually render to the board of supervisors and any oversight
committee a statement of investment policy, which the board shall
review and approve at a public meeting. Any change in the policy
shall also be reviewed and approved by the board at a public meeting.
(2) In the case of any other local agency, the treasurer or chief
fiscal officer of the local agency may annually render to the
legislative body of that local agency and any oversight committee of
that local agency a statement of investment policy, which the
legislative body of the local agency shall consider at a public
meeting. Any change in the policy shall also be considered by the
legislative body of the local agency at a public meeting.
(b) (1) The treasurer or chief fiscal officer may render a
quarterly report to the chief executive officer, the internal
auditor, and the legislative body of the local agency. The quarterly
report shall be so submitted within 30 days following the end of the
quarter covered by the report. Except as provided in subdivisions
(e) and (f), this report shall include the type of investment,
issuer, date of maturity par and dollar amount invested on all
securities, investments and moneys held by the local agency, and
shall additionally include a description of any of the local agency's
funds, investments, or programs, that are under the management of
contracted parties, including lending programs. With respect to all
securities held by the local agency, and under management of any
outside party that is not also a local agency or the State of
California Local Agency Investment Fund, the report shall also
include a current market value as of the date of the report, and
shall include the source of this same valuation.
(2) The quarterly report shall state compliance of the portfolio
to the statement of investment policy, or manner in which the
portfolio is not in compliance.
(3) The quarterly report shall include a statement denoting the
ability of the local agency to meet its pool's expenditure
requirements for the next six months, or provide an explanation as to
why sufficient money shall, or may, not be available.
(4) In the quarterly report, a subsidiary ledger of investments
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wttio Liucuirlelll metrleval
Page 7 of 23
may be used in accordance with accepted accounting practices.
(c) Pursuant to subdivision (b), the treasurer or chief fiscal
officer shall report whatever additional information or data may be
required by the legislative body of the local agency.
(d) The legislative body of a local agency may elect to require
the report specified in subdivision (b) to be made on a monthly basis
instead of quarterly.
(e) For local agency investments that have been placed in the
Local Agency Investment Fund, created by Section 16429.1, in National
Credit Union Share Insurance Fund -insured accounts in a credit
union, in accounts insured or guaranteed pursuant to Section 14858 of
the Financial Code, or in Federal Deposit Insurance
Corporation -insured accounts in a bank or savings and loan
association, in a county investment pool, or any combination of
these, the treasurer or chief fiscal officer may supply to the
governing body, chief executive officer, and the auditor of the local
agency the most recent statement or statements received by the local
agency from these institutions in lieu of the information required
by paragraph (1) of subdivision (b) regarding investments in these
institutions.
(f) The treasurer or chief fiscal officer shall not be required to
render a quarterly report, as required by subdivision (b), to a
legislative body or any oversight committee of a school district or
county office of education for securities, investments, or moneys
held by the school district or county office of education in
individual accounts that are less than twenty-five thousand dollars
($25,000).
(g) Except as provided in subdivisions (h) and (i), each city,
county, or city and county shall submit copies of its second and
fourth quarter reports to the California Debt and Investment Advisory
Commission within 60 days after the close of the second and fourth
quarters of each calendar year. Any city, county, or city and county
not required to submit a report pursuant to subdivision (h) or (i)
shall file with the commission a written statement within 60 days of
the end of the second and fourth quarters of the calendar year
stating the distribution and amount of its investment portfolio and
that it is therefore not subject to this reporting requirement. This
subdivision shall become inoperative on January 1, 2007.
(h) A city shall not be required to submit a quarterly report to
the commission if, during the entire reporting period, the city has
maintained 100 percent of its investment portfolio in (1) the
treasury of the county in which it is located for investment by the
county treasurer pursuant to Section 53684, (2) the Local Agency
Investment Fund created by Section 16429.1, (3) National Credit Union
Share Insurance Fund -insured accounts in a credit union, in accounts
insured or guaranteed pursuant to Section 14858 of the Financial
Code, or in Federal Deposit Insurance Corporation -insured accounts in
a bank or savings and loan association, or (4) in any combination of
these.
(i) A county or city and county shall not be required to submit a
quarterly report to the commission if., during the entire reporting
period, the county has maintained 100 percent of its investment
portfolio in (1) the Local Agency Investment Fund created by Section
16429.1, (2) National Credit Union Share Insurance Fund -insured
accounts in a credit union, in accounts insured or guaranteed
pursuant to Section 14858 of the Financial Code, or in Federal
Deposit Insurance Corporation -insured accounts in a bank or savings
and loan association, or (3) in any combination of these.
(j) The city, county, or city and county investor of any public
funds, no later than 60 days after the close of the second quarter of
25
http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdoelD=3 7913612549+1 +O+O&WAISacti... 9/2/2008
wruo vUcuuicui ncuicvai
rage o vi Z1
each calendar year and 60 days after the subsequent amendments
thereto, shall provide the statement of investment policy required
pursuant to this section, to the California Debt and Investment
Advisory Commission.
(k) In recognition of the state and local interests served by the
actions made optional in subdivisions (a) and (b), the Legislature
encourages the local agency officials to continue taking the actions
formerly mandated by this section. However, nothing in this
subdivision may be construed to impose any liability on a local
agency that does not continue to take the formerly mandated action.
53647. (a) Interest on all money deposited belongs to, and shall be
in o the general fund of, the loca age
rep sented by the officer making the deposit, unless otherwise
directe law.
(b) Notw standing the provisions of subdivision (a), and except
as otherwise dir ed by law, if the governing body of the local
agency represented b he officer making the deposit so directs, such
interest shall be paid t he fund which contains the principal on
which the interest accrued.
53647.5. Notwithstanding any other provision law, interest
earned on any bail money deposited in a bank acco pursuant to
Section 1463.1 of the Penal Code and Section 53679 of 's code
shall, if the board of supervisors so directs, be allocate r the
SUPsin that county
53648. s ar is e, the treasurer may '
moneys in, and enter into contracts with, a state or nationa bank,
savings association or federal association, federal or sta credit
union, or federally insured industrial loan company, pur ant to a
federal law or a rule of a federal department or agen adopted
pursuant to the law if the law or rule conflicts w' this article in
regulating the payment of interest on deposits public moneys by
any of the following:
(a) Banks which are Federal Reserve S em members or whose
deposits are insured by the FeXe osit Insurance Corporation.
(b) Savings associations or associations which are federal
home loan bank members or whosts are insured by the Federal
Savings and Loan Insurance rporation.
(c) State or federal edit unions whose accounts are insured by
the National Credit U 'on Share Insurance Fund or guaranteed by the
California Credit ion Share Guaranty Corporation or insured or
guaranteed purs nt to Section 14858 of the Financial Code, unless a
member of th egislative body of a local agency, or any person with
investmen ecisionmaking authority of the administrative office,
manager' office, budget office, auditor -controller's office, or
trea rer's office of the local agency, also serves on the board of
di ctors, or any committee appointed by the board of directors, or
e credit rn -e eei3ererrera - ._o�1he state or
aral credit union.
(d) A federally insured industrial loan company.
26
http://www.leginfo.ca.gov/cgi-bin/waisgate? WAISdoc1 D=37913612549+1 +0+0& WA1Sacti... 9/2/2008
ATTACHMENT 2
MEMORANDUM
TO La Quinta City Council
FROM John M. Falconer, Finance Director/Treasurer
SUBJECT: Treasurer's Report for June 30, 2008
DATE July 31, 2008
Attached is the Treasurer's Report for the month ending June 30, 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
Be innin
Purchased
Notes
SoId/Maturetl
Other
Endin
Change
Cash (3)
$ (612,892)
(1)
$ (921.482)
$ (1,534,374)
$ (921.482)
LAIF
50.778.392
3.750.000
(6,000.000)
0
48,528.392
(2,250.000)
US Treasuries (2)
57.855,865
29,000,000
(44.000,000)
(170.210)
42,685.655
(15.170,210)
US Gov't Sponsored Enterprises (2)
59.818,389
16,500 000
(16,500,000)
(105,758)
59.712,631
(105.758)
Commercial Paper (2)
29,949.962
23,000,000
(25,000,000)
(49,778)
27.900,184
(2,049,778)
Corporate Notes
7,966,638
4,720
7,971,358
4,720
Mutual Funds
2.704.547
9,399,892
1
12,104.439
9.399,892
Total
$ 208,460.901
$ 81,649,892
$ 92,421 482
$ 321,026
$ 197,368,285
1 $ 11,092,616
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 Quinta, 1 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 Quinla 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
hn 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_
27
Treasurer's Commentary i
For the Month of June
Cash Balances - The portfolio size decreased by $11.00 million to $197.4 million. The major
reason for the decrease was the payment of pass through tax increment payments in June
million.
Investment Activity - The average maturity of the portfolio increased by 17 days to 80 days
at the end of June. The six month US Treasury benchmark increased by 22 basis points and
ended the month at 2.14%. The Treasurer follows a buy and hold investment policy and has
not sold investments before maturity to take advantage of market conditions. June was a
very busy month in terms of the number of trades most notably the reinvestment of bond
proceeds in three and six months Treasury bills. Treasury Bills decreased and the Mutual
Funds increased to pay for Housing Program costs. The sweep account earned $1,504 in
interest income for the month of June and the bank fees for the month were $ 1,939 which
resulted in a net decrease of $ 435 in real costs.
Portfolio Performance - The overall portfolio performance decreased by twenty nine (29)
basis points from the prior month and ended at 2.88% for the month, with the pooled cash
investments yielding 3.09%. The overall portfolio yield (including bond proceeds) was
seventy four (74) basis points over the benchmark, which has decreased by fifty one (51)
basis point from the one hundred twenty five (125) basis point difference in May. With the
average maturity of 80 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. 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 5.10% and the benchmark was at 4.81 % 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.
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. Maturing GSE's will be rolled over to the
highest yield on curve taking into consideration cash flow needs or in medium term notes.
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ATTACHMENT 3
LQ IAB 2008-09 Work Plan Item -
Review Content and Presentation of Monthly Treasurer's Report
The IAB is charged with the duty of reviewing the Monthly Treasurer's Report
"MTR" to note that:
I. Deposits in financial institutions and investments are authorized and do not
exceed limitations established by the IP, and
2. Cash deposits and investments provide adequate cash flow to satisfy
anticipated obligations.
The MTR addresses item 1 in "Authorized Investments and Diversification" and
item 2 in "Cash Flow Analysis".
The IAB in concert with the Treasurer will study these and other schedules in the
MTR to determine if the information is sufficient or excessive with emphasis on the
two critical reporting areas. An objective is to simplify and streamline the reports
cohere possible and make them more understandable by non -accountants.
a,
Page I of 1
John Falconer
From: Donbarm@aol.com
Sent: Saturday, July 19, 2008 10:32 AM
To: John Falconer; ted@theodoreross com
Subject: IAB Work Plan- MTR
Attachments: IAB Work Plan - MTR 2008-9.doc
John and Ted:
prepared a brief description of what I suggest be covered in the review of the MTR. It is included as an
attachment to this email
It may be helpful to fumish that information to the CC at or before our joint meeting to review and approve the
IAB's 2008-09 work plan.
My preliminary thoughts on the review of the MTR include the following:
1. Assign an identifying number or letter to each schedule and include a table of contents.
2. Consider rearranging the "Authorized Investments and Diversification" schedule in the format of the
schedule in section X of the IP for 2008-09,
3. Recognizing that I am a cash Flow addict, I believe that the determination of the projected cash Flow to
meet reasonably anticipated obligations
is the most important monthly task of the Treasurer and review area of the IAB. I suggest that the IAB
and the Treasurer study the current process,
attempt to improve it, disclose the principal assumptions used and revise the current "Cash Flow
Analysis".
4. The major tasks in the preparation of the MTR should be subjected to a cost -benefit evaluation to assure
that the Treasurers resources are being allocated
in a manner commensurate with the importance of the task.
Don
Get fantasy football with free live scoring. SAin uo for FanHouse Fantasy_Football today.
8/7/2008 42
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: January 14, 2009
TITLE:
Month End Cash Report for December 2008 and
Other selected Financial Data
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.
John M. Falconer, Finance Director
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1,Kli: Commercial Paper Kates and uutstandmgs
Page 1 of 3
Federal Reserve Release
line wcflj���
Release I About I Announcements I Out ridings I Volume statistics I Year-end I Maturity Distribution
Data Download Program (DDP)
Data as of January 6, 2009
Commercial Paper Rates and Outstanding
Derived from data supplied by The Depository Trust & Clearing Corporation
Posted January 7, 2009
Discount rates
[Term]
nonfinancial
nonfinancial
financial
asset -backed
1-day
0.06
1.12
0.06
0.38
7-day
0.12
1.99
0.11
0.61
15-day
0.06
1.70
0.30
0.46
30-day
0.08
2.49
0.30
0.60
60-day
0.18
1.78
0.45
0.39
90-day
0.22
2.03
n.a.
0.65
I fade data Insumcient to support calculation of the uU-clay AA tinanciaIrate for January ti, zuuu.
Yield curve
Money market basis
— — — AAnonfanancial
........... A2/P2 nonfinancial
—.— AA Iinmicial
ram...
r"
Kra
F'
r — - —
1 7 15 30
Days to Maturity
M
Percent
3,5
3.0
2.5
2.0
1.5
1.0
ME
En
0.0
3
http://www.federalreserve.gov/releases/ep/ 1/7/2009
rr n. %-ununcmuu rupci name o mm vuwiauuiuga
rage / of J
Discount rate spread
Thirty -day A21P2 less AA nonfinancial commercial paper (daily) Basis points
— spwsd
— — — spread, 5-day moving avp
S00
700
600
500
400
300
200
100
0
2001 2002 2003 2004 2005 2U06 2007 2008
Discount rate history
Thirty -day commercial paper (daily) Percent
— — — AAiiunfinaietal
--------- A2/P2 nonfinancial
AA flnair6fl
2001 2002 2003 2004 2005 2006 2007 2008
Outstandings
Weekly (Wednesday), seasonally adjusted
7
6
5
4
3
I
http://www.federalreserve.gov/releases/ep/
4
1/7/2009
rtcn: �-ommerciat raper tcares ana vutstanamgs
rage .s or s
1190
1090
990
890
790
690
M
490
Billions of dollars
--- ?tierntinanciai {aight .colc}
—.— himaa4ciat ti<Yt se;xlct
t
tr
tt �
� � 4
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Billions of dollars
---t?90
250
1 �� 1210
(t�� t
i 170
2001 2002 2003 2004 2005 2000 2007 2008
130
go
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)
Home I Statistical releases
Accessibility I Contact Us
Last update: January 7, 2009
5
http://www.federalreserve.gov/releases/cp/ 1/7/2009
ciw i�a�c�, vvcu-vuty liauy upaate--January /, 2009
Page 1 of 4
Federal Reserve Statistical Release
14,15
Selected Interest Rates (Daily)
sk,p to content
Release Date: January 7, 2009
Weekly release dates I Historical data I Data Download Program (DDP) About I Announcements
Daily update Other formats: Screeu reader I ASCII
- ---- -a-�� Data tbwnload
Program
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 January 7, 2009
2009 2009
Instruments
Jan
Jan
5
6
Federal funds (effective) 1 2 3
0.11
0.09
Commercial Paper 3 4 5 6
Nonfinancial
1-month
0.05
0.08
2-month
0.15
0.18
3-month
0.20
0.22
Financial
1-month
0.26
0.30
2-month
0.28
0.45
3-month
n.a.
n.a.
3-month nonfinancial or financial
posted by CPFF 7
-
Without surcharge
1.18
1.18
With surcharge
2.18
2.18
CDs (secondary market) 3 8
1-month
0.47
0.33
3-month
1.15
1.27
6-month
1.45
1.73
Eurodollar deposits (London) 3 9
1-month
0.90
1.00
3-month
1.75
1.75
6-month
2.50
2.30
Bank prime loan 2 3 10
3.25
3.25
Discount window primary credit 2 11
0.50
0.50
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
0.04
0.05
3-month
0.14
0.14
6-month
0.32
0.31
1-year
0.41
0.42
6
http://www.federalreserve.gov/Releases/H15/update/ 1/7/2009
- -W .aawawi lv�a, vv �u-vmy Zany upua/G--january /, zuu7
rage 2 or 4
Treasury constant maturities
Nominal 12
1-month
0.05
0.05
3-month
0.14
0.14
6-month
0.32
0.31
1-year
0.43
0.45
2-year
0.78
0.80
3-year
1.08
1.10
5-year
1.67
1.68
7-Year
2.07
2.07
10-year
2.49
2.51
20-year
3.37
3.41
30-year
3.00
3.04
Inflation indexed 13
5-year
1.86
1.82
7-year
2.08
2.00
10-year
2.34
2.09
20-year
2.64
2.65
Inflation -indexed long-term average 14
2.71
2.70
Interest rate swaps 15
1-year
1.31
1.29
2-year
1.60
1.55
3-year
1.91
1.89
4-year
2.15
2.16
5-year
2.31
2.34
7-Year
2.58
2.62
10-year
2.82
2.88
30-year
3.03
3.18
Corporate bonds
Moody's seasoned
Aaa 16
5.05
5.05
Baa
8.31
8.28
State & local bonds 17
Conventional mortgages 18
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. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Pr
excluded from relevant indexes, nor is any financial or nonfinancial commercial p
directly or indirectly affected by one or more of the Federal Reserve's liquidity
the rates published after September 19, 2008, likely reflect the direct or indire
7
http://www.federalreserve.gov/Releases/H15/update/ 1/7/2009
I 1 . ,...., -Oc,o�Lou iuicioNr nares, W Co -vary many upame--January /, Guug Page 4 of 4
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 � Historical data Data Download.Proo raru_(DDP)_.� About I Announcements
Daily update Other formats: Screen reader I ASCII
Statistical releases
Homc I Economic research and data
A_cccssibility I Contact Us
Last update: January 7, 2009
http://www.federalreserve.gov/Releases/H15/update/ 1/7/2009
Bill Lockyer, State Treasurer 14
Inside the State Treasurer's Office
Local Agency Investment wand (LAIF)
PMIA Performance Report
Data
Vally
ybdd
Quarter to
Average
Maturity
firt
12/16/2008
2.41
2.61
233
12/17/2008
2.39
2.60
231
12/18/2008
2.36
2.60
234
12/19/2008
2.29
2.60
241
12/20/2008
2.29
2.59
241
12/21/2008
2.29
2 59
241
12/22/2008
2.26
2.59
238
12/23/2008
2.23
2.58
235
12/24/2008
2.21
2.57
233
12/25/2008
2.21
2.57
233
12/26/2008
2.16
2.57
231
12/27/2008
2.16
2.56
231
12/28/2008
2.161
.561
231
12/29/2008
2.17
2.55
234
Loar
33.83
Corporate Boi
0.53%
Commercial
7.65%
LAIF Performance Report
Quarter ending 9/30/08
Apportionment Rate: 2.77%
Earnings Ratio: 0.00007595384447805
Fair Value Factor: 0.999137696
PMIA Average Monthly Effective Yields
Nov 2008 2.568%
Oct 2008 2.709%
Sep 2008 2.774%
Pooled Money Investment Account
Portfolio Composition
$62.7 Billion
11/30/08
Reverses
-0.16% Treasuries
4c g401
Time Deposits 5.43%
13.60%
Aortgages
1.72%
Agencies
22.09%
41
-11111L LXXX AUL.L1VXJ IXVJUltJ
Page 1 of 1
Home > Institutional > Announcements, Data & Results > Latest Auction Data > Recent Bill Auction Results
Recent Bill Auction Results
Security
Issue
Maturity
Discount
Investment
Price
Term
Date
Date
Rate %
Rate %
Per $100
CUSIP
4-WEEK
01-08-2009
02-05-2009
0.060
0.061
99.995333
91279SK26
70-DAY
01-08-2009
03-19-2009
0.100
0.101
99.980556
912795K83
13-WEEK
01-08-2009
04-09-2009
0.150
0152
99.962083
9127951-33
26-WEEK
01-08-2009
07-09-2.009
0.320
0,325
99.838222
912795M99
4-WEEK
01-02-2009
01-29-2009
0.030
0.030
99,997750
912795J93
62-DAY
01-02-2009
03-05-2009
0.140
0.142
99.975889
91279SK67
13-WEEK
01-02-2009
04-02-2009
0.050
0.051
99.987500
91279SL25
26-WEEK
01-02-2009
07-02-2009
0.250
0.254
99.874306
912795Q87
4-WEEK
12-26-2008
01-22-2009
0.000
0.000
100.000000
912795185
13-WEEK
12-26-2008
03-26-2009
0.040
0.041
99.990000
912795K91
26-WEEK
12-26-2008
06-25-2009
0.285
0.289
99.856708
9127951165
4-WEEK
12-18-2008
01-15-2009
0.000
0.000
100.000000
912795377
13-WEEK
12-18-2008
03-19-2009
0.050
0.051
99.987361
912795K83
26-WEEK
12-18-2008
06-18-2009
0.270
0.274
99.863500
9127951,157
52-WEEK
12-18-2008
12-17-2009
0.590
0.601
99.403444
912795S69
4-WEEK
12-11-2008
01-08-2009
0.000
0.000
100.000000
912795J69
13-WEEK
12-11-2008
03-12-2009
0.005
0.005
99.998736
912795K75
26-WEEK
12-11-2008
06-11-2009
0.300
0.305
99.848333
912795M40
278-DAY
12-11-2008
09-15-2009
0.390
0.396
99.698833
912795V81
4-WEEK
12-04-2008
01-02-2009
0 040
0.041
99,996778
912795151
13-WEEK
12-04-2008
03-05-2009
0.050
0.051
99.987361
912795K67
26-WEEK
12-04-2008
06-04-2009
0.430
0.437
99,782611
912795Q79
4-WEEK
11-28-2008
12-26-2008
0.050
0.051
99.996111
912795344
13-WEEK
11-28-2008
02-26-2009
0.150
0.152
99.962500
91279SK59
26-WEEK
11-28-2008
05-28-2009
0.490
0.498
99.753639
91279SM24
328-DAY
11-28-2008
10-22-2009
1.000
1.021
99,088889
912795S44
4-WEEK
11-20 2008
12-18-2008
0.100
0.101
99.992222
912795336
13-WEEK
11-20-2008
02-19-2009
0.150
0.152
99.962083
912795K42
26-WEEK
11-20-2008
05-21-2009
0.840
0,855
99.575333
91279SL90
52-WEEK
11-20-2008
11-19-2009
1.040
1.063
98.948444
912795551
254-DAY
11-18-2008
07-30-2009
1.050
1.071
99.259167
912795Q95
182-DAY
11-14-2008
05-15-2009
0.990
1.009
99.499500
912795V32
4-WEEK
11-13-2008
12-11-2008
0.070
0.071
99.994556
912795J28
13-WEEK
11-13-2008
02-12-2009
0.355
0.360
99.910264
912795K34
26-WEEK
11-13-2008
05-14-2009
0.990
1.009
99.499500
912795182
4-WEEK
11-06-2008
12-04-2008
0.320
0.325
99.975111
9127951-95
77-DAY
11-06-2008
01-22-2009
0.420
0.426
99.910167
912795385
13-WEEK
11-06-2008
02-05-2009
0.530
0.538
99.866028
912795K26
26-WEEK
11-06-2008
05-07-2009
1.100
1.122
99.443889
91279SL74
238-DAY
11-06-2008
07-02-2009
1.330
1 358
99.120722
912795Q87
Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method.
Freedom of Information Act I Law & Guidance I Privacy & Legal Notices I Website Terms & Condition
U.S. Department of the Treasury, Bureau of the Public Debt
10
http://www.treasurydirect.gov/RI/OFBills 1/7/2009
City of La Qumta
Cash Flow
Budget to Actual
November 30, 2008
Cash Basis
Account
Actual
11/08
Accroal/
Adjustment
Ad usted Total
11/08
Vanance
Over Untler
Notes
Property TaEETBudget
O,378
Sales Tax
,230
,738
293,496
505.800
28,144
293,496
349,880
505,800
96,266
(63,498)
(3,938)
Stotuto TTransient
ry ax from RDq b ciry321,]36
Ibteloaupancy
Devebper fees declined due b
Other reven
Revenues
651
997
1,200932
2,321,964
28, 144
2,350,f08
1,375719
1,346,889
decrese b developments,mteresl1200,932
decreasetl 25M
Expenditures
Salaries 8 Fringe Benefits
Other expenditures
Subtotal
1,003,808
3, 125218
41129,026
825.032
1095,743
1,920775
825,032
1095,743
1920775
(178,776)
2029,475
2208,251
Police B Fire Invoices not pad
210,870
-
247,435
254,209
247,435
254.209
36,564
254.209
Redevelopment Agency
Debt Semce (Principal interest/Pass Through)
Subtotal
Statutory Tax pavmenttoLity
210,870
501,644
501,644
290773
575,956
575,956
575956
Capital Projects
Total Ex enditures
4,915,852
2,988,375
2,996,975
1,917,477
Net RevenueslExpentlltures
1,218,855
676,411
28,144
648,267
366
NOTE 1
Expenditures are budgeted at 8 34% per month
Difference between actual and budget
DEPARTMENT
(Unde)
Overspent
Notes
GENERAL GOVERNMENT
(162,nt 2,307)
CITY CLERK
(10,904)
COMMUNITY SERVICES
(92.526)
FINANCE
(28,315)
BUILDING 8 SAFETY
(110,495)
PUBLIC SAFETY
(1,422,923)
Did not receive November Police invoice
PLANNING
(126,735)
PUBLIC WORKS
384,526
SUBTOTAL -GENERAL FUND
2338,731
Library
Gas Tax
Federal Assistance
JAG Grant
Slesf(Cops) Revenue
Indian Gaming
Lighting 8 Landscaping
ROTC
Development Agreement
CV Violent Crime Task Force
(2,113)
AB 939
Quimby
(2,919)
Infrastructure
Proposition I
-
South Coast Air Quality
(2,219)
Transportation
-
Parks 8 Recreation
Civic Center
Library Development
-
Community Center
Street Facility
-
Park Facility
Fire Protection
Arts In Public Places
(15,594)
Interest Allocation
Equipment Replacement
(58,545)
Information Technology
(29,424)
Park Maintenance Facility
(1,925)
SilverRock Golf
33,563
Overseedug
SilverRock Reserve
LO Public Safety Officer
(167)
Finance Authority
(1,047)
Capital Improvement
Total
2,419,121
11
INVESTMENT ADVISORY BOARD
Meeting Date: January 14, 2009
TITLE:
Pooled Money Investment Board Report
for October 2008
BACKGROUND:
Correspondence
& Written Material Item B
The Pooled Money Investment Board Report for October 2008 is included in the
agenda packet.
In addition, the State Treasurer's website has a commentary on AB55 Loans which
has been attached.
RECOMMENDATION:
Receive & File
John M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF OCTOBER 2008 WITH OCTOBER 2007
(DOLLARS IN THOUSANDS)
OCTOBER 2008 OCTOBER 2007 CHANGE
Average Daily Portfolio $ 61,664,368 $
Accrued Earnings $ 141,878 $
Effective Yield 2.709
Average Life -Month End (in Days) 241
Total Security Transactions
Amount
$
36,406,085 $
Number
743
Total Time Deposit Transactions
Amount
$
6,797,900 $
Number
237
Average Workday Investment Activity
$
1,963,817 $
Prescribed Demand Account Balances
For Services
$
866,017 $
For Uncollected Funds
$
106,114 $
1
58,832,193 $ +2,832,175
255,977 $-114,099
5.137 -2.428
+44 I
32,620,714 $ +3,785,371
682
+61
6,336,490
$
+461,410
230
+7
1,770,782
$
+193,035
301,005
$
+566,012
119,908
$
-13,794
BILL LOCKYER
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
OCTOBER 31, 2008
DIFFERENCE IN
PERCENT OF
PERCENT OF PORTFOLIO FROM
TYPE OF SECURITY AMOUNT PORTFOLIO PRIOR MONTH
Government
Bills $ 6,706,727 8.97 +4.70
Bonds 0 0.00 0
Notes 3,489,068 5.48 +1.97
Strips 0 0.00 0
Total Government $ 9,195,795 14.46 +6.67
Federal Agency Debentures
$ 10,681,428
16.78
-0.01
Certificates of Deposit
6,200,016
8.17
-11.36
Bank Notes
300,000
0.47
-0.31
Bankers' Acceptances
0
0.00
0
Repurchases
0
0.00
0
Federal Agency Discount Notes
5,226,365
8.21
+4.36
Time Deposits
8,646,000
13.58
-0.20
GNMAs
149
0.00
0.00
Commercial Paper
4,220,807
6.63
-7.75
FHLMC/Remics
1,084,215
1.70
0.00
Corporate Bonds
363,449
0.57
-0.02
AB 55 Loans
11,845,253
18.61
+1.18
GF Loans
6,987,500
10.98
+6.97
Reversed Repurchases
-98,500
-0.15
-0.46
Total (All Types)
$ 63,652,477
100.00
OCTOBER2008
SEPTEMBER2008
NUMBER
AMOUNT
NUMBER
AMOUNT
Pooled Money
743
$ 36,406,085
959
$ 46,707,550
Other
14
312,151
16
53,774
Time Deposits
237
6,797,900
161
3,172,000
Totals
994
$ 43,516,136
1136
$ 49,933,324
PMIA Monthly Average Effective Yield
2.709
2.774
Year to Date Yield Last Day of Month
2.763
2.780
4
Pooled Money Investment Account
Portfolio Composition
$63.7 Billion
Lo;
29.!
Corporate Bonds
0.57%
Commercial Paper
6.63%
10/31 /08
Reverses
-0.15% Treasuries
14.45%
Time Deposits CDs/BNs
13.58% 8.64%
3
rrtgages
1.70%
Agencies
24.99%
AL LUMI iV111111011LJ
rage i or 2
f Cai-i ornia. State `. i-eaS rd'YL r
Pooled Money Investment Account
AB55 Loan Comments
The Pooled Money Investment Board (PMIB) on Dec. 17, 2008, unanimously voted to limit the further servicing of
loans to bond -funded infrastructure projects (AS 55 Loans). The PMIB took this action to ensure that the Pooled
Money Investment Account (PMIA) continues to meet its primary responsibility to provide appropriate liquidity
ongoing to all Pool participants. The PMIB determined the loan restrictions were necessary because the State cannot
issue either commercial paper or bonds — the two essential methods of repaying AS 55 loan expenditures.
The inability to issue debt is directly attributable to the State's worsening fiscal condition. Current projections by the
State Controller show the State will run out of cash to pay its bills in February, while the Department of Finance
projects a budget shortfall of $40 billion through FY 2009-10. Until the Legislature and Governor enact a credible
solution to the budget problem, Treasurer Lockyer has determined the State will not be able to sell bonds.
In light of these recent developments, I wanted to stress two points:
1. The PMIB's limits on further AS 55 expenditures do NOT suggest, imply, or connote any credit concerns with
the loans themselves, the agencies responsible for the loans, or the pending bond sales backing the loans. The
AS 55 Loans, therefore, remain credible obligations within the PMIA portfolio until -- not if -- the State can sell
bonds or commercial paper, and provide the PMIA the funds necessary to pay back the expended principal and
interest.
2. Assets held in the Local Agency Investment Fund (LAIF) are not affected in ANY way. Our city, county, school
and special district partners can rest assured -- there is no reason for concern about the safety or availability of
LAW funds. They belong to you. The State cannot touch them
AB 55 Loans
AS 55 Loans are lines of credit extended by the PMIB to State agencies or departments to provide funds for startup
costs or progress payments on authorized bond projects. After a vetting process that includes verification of the
project, the legal authority for bond issuance, and the ability of the borrower to repay the expended line of credit, the
PMIB agrees to the department or agency request and the line of credit is provided by the Pool. All lines of credit are
granted for a period of 364 days, bear the interest rate of the daily Pooled rate from the day before, and may be
increased or extended upon request of the borrower.
The State created the AS 55 Loan Program in response to the Tax Reform Act of 1986. The objective of the program
was to minimize the requirement to track arbitrage earnings and rebates of excessive earnings on bonds. The line of
credit was considered more of a service to the requesting agency or department than an investment.
Because the AS 55 Loan Program was a service, the PMIB's primary responsibilities to the PMIA continued to be
preserving capital, maintaining prudent liquidity to PMIA participants, and earning appropriately competitive
incremental returns for all commingled funds.
As long as adequate liquidity remains available on demand, the PMIA can continue to maintain the AS 55 lines of
credit. However, when the draws on these lines of credit encroach on the prudent level of liquidity for PMIA
participants, the PMIB has a legal duty to consider whether to continue funding AS 55 loans. The State's cash flow
crisis placed the PMIA in exactly that position. And that is why the PMIB took action on Dec. 17, 2008, to significantly
restrict further expenditures of AS 55 Loans.
Since the AS 55 Loan Program started more than 20 years ago, the PMIA has been able to facilitate AS 55 Loans
and to provide sufficient liquidity for all PMIA participants. The PMIA has been able to carry out both functions
http://www.treasurer.ca.gov/pmia-laif/news/ab55.asp 1/7/2009
a.vau �UHHHcrus rage L Ot 1
because the State has been able to successfully sell commercial paper or bonds, or both.
Now the nationwide credit crunch and the State's budget crisis have combined to close the bond market to the State.
Monthly draws on AB 55 lines of credit were averaging approximately $660 million a month. Faced with a continued
drain on the PMIA's resources, and considering the PMIA's responsibility to provide necessary liquidity to all
participants, the PMIB correctly, though with great regret, voted to limit further AB 55 expenditures.
The suspension of the Pool's provision for continued lines of credit does NOT indicate any likelihood of default,
insolvency, bankruptcy, or any other credit deficiency involving either the loan project, the bond program underlying
the loan project, or the department or agency responsible for the project.
Since the PMIB's action limited interim funding of qualified bond projects through the PMIA loan program, the AB 55
Loans will remain open project loans until the State once again has access to the commercial paper and municipal
bond markets. There is no issue with the credit of the borrowing department or agency, and there is no challenge to
the authority to issue the project bond. For those reasons, the current AB 55 Loans will continue accruing interest to
the PMIA. The principal and interest on these AB 55 Loans will be paid back to the Pool when - not if - the State sells
the bonds related to the loans.
Should you have any further questions or concerns, please do not hesitate to call me.
Daniel S. Dowell
Director of Investments
http://www.treasurer.ca.gov/pmia-laif/news/ab55.asp 1 /7/2009