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Minutes - Investment - 2009-12-17COSTA MESA SANITARY DISTRICT Meeting Date Item Numbe 01128/10 V.3. MINUTES OF INVESTMENT OVERSIGHT COMMITTEE MEETING December 17, 2009 CALL TO ORDER The meeting was called to order at 5:00 p.m. by Treasurer Marc Davis ROLL CALL Committee Members Present: Director Gary Monahan (rotating committee member) Director Arthur Perry (rotating committee member) Mr. Donald McIntyre, Interim District Manager Staff Members Present: Mr. Marc Davis, Treasurer Ms. Sherry Kallab, Administration Manager Mr. Thomas Fauth, Operations Manager Ms. Joan Revak, Office Manager /Clerk of the District Ms. Teresa Gonzalez, Accountant NEW BUSINESS Review of Treasurer's Report Mr. Davis reported that the District's portfolio was earning approximately 1.66% as of November 30, 2009, compared to LAIF earning approximately 0.61%. The portfolio was budgeted to obtain 2% earnings for the fiscal year, which it obtained during the first two months, but in the Fall some sizable securities with yields in the 3 %'s were called. The funds from the called securities were transferred to LAIF due to the District's slow period of cash collection. To date, the District has received the first two tax apportionments and, therefore with additional cash available, Mr. Davis recently purchased new securities. Two new federal home loan securities in the amounts of $1 million at a 2.5 year maturity and 1.55% yield, and $500,000 at a 4 year maturity and 2.55% yield, were purchased. Mr. Davis estimates that the District will stay below the 2% earnings for the remainder of the fiscal year. Director Perry inquired about the collection of property tax payments and Mr. Davis responded that it appears that we are below normal if compared to last year. The total received from the 1 St and 2nd apportionments is 19% of the annual charge compared to 39% last year. The first two apportionments did not include payments up through the December 10th due date. The next apportionment, scheduled to be received during the week of December 21St will include payments up through December 10th. Once the 3rd apportionment has been received, we will be able to determine if the 20% cash drop will remain. The District is positioned well from a liquidity standpoint with 56% of the portfolio maturing in less than a year. Mr. Davis made a reference to the Yield Curve Data of the November 30, 2009 Treasurer's Report and reported that the District's yield is doing well compared to the benchmarks, being only below the 5 year T -Note. Mr. Davis • MINUTES OF INVESTMENT OVERSIGHT COMMITTEE MEETING December 17, 2009 Page 2 also made a reference to the Maturities Distribution schedule on page 11 and noted that the new securities will redistribute the portfolio and fill the gap in the 2 — 3 year column. Annual Audit for 2009 -10 Mr. Davis made a reference to the 2008 -09 annual audit report and stated that the report is in the Board packet and will be discussed at tonight's Board meeting. Diehl, Evans and Company has audited the District for the past five years. Coming up during the beginning of calendar year 2010, the District will be issuing an RFP to obtain proposals for the 2009 -10 annual audit. Due to the state of the economy, Mr. Davis estimates that the District can obtain a favorable contract that will consist of a three -year base period with two one - year options. Director Perry inquired if there is a requirement for us to change auditors and Mr. Davis responded that there is none. The District's Operations Code does not require us to change auditors. The District has been very happy with Diehl, Evans and Company, they have been very responsive, and therefore will allow them to bid. With the RFP, the District plans to test the marketplace and see what else is out there. Staff will be evaluating the proposals and will determine if interviews are necessary. Once the evaluation is completed (sometime in the Spring) staff will bring its recommendation to the Board of the audit firm to perform the annual audit for 2009 -10. CalPERS Rates for 2010 -11 In October 2009, CalPERS released their actuarial report for the year ending June 30, 2008 and based on this actuarial report the employer rate for 2010- 11 will be 11.889 %. The employer rate decreased from the 2009 -10 rate of 12.605 %. This drop in rate equates to a budgetary savings of approximately $7,200. The big change will be in the 2011 -12 employer rate, which is still pending the calculation of the total CalPERS loss for the year ending June 30, 2009. PUBLIC COMMENTS There were no items discussed under public comments. ADJOURNMENT The meeting adjourned at 5:25 p.m. Approved by: Secretary, Costa` esa Sanitary District Board of Directors resident, Board of Directo