Minutes - Investment - 2011-07-28COSTA MESA SANITARY DISTRICT
MINUTES OF INVESTMENT,OVERSIGHT COMMITTEE MEETING
July 28, 2011
CALL TO ORDER The meeting was called to order at 5:00 p.m. by Treasurer Marc Davis
ROLL CALL Committee Members Present:
President Bob Ooten (rotating committee member)
Director Art Perry (rotating committee member)
Mr. Scott Carroll, General Manager
Staff Members Present:
Mr. Marc Davis, Treasurer
Ms. Teresa Gonzalez, Accounting Manager
Ms. Joan Revak, Clerk of the District
Public Present: None
NEW BUSINESS Review of Investment Report
Mr. Davis reported that the District's portfolio was earning approximately 1.196%
as of June 30, 2011. The District's weighted average interest rate was 75 basis
points (0.748 %) above the daily effective yield of LAIF, which was 0.448% as of
June 30, 2011. The weighted average number of days to maturity for the
District's total portfolio was 755 days (2.07 years). Mr. Davis stated the average
duration of the underlying securities in LAIF as of June 30, 2011, the most current
information available, was 237 days.
Mr. Davis reported the District's investment portfolio is in compliance with its
liquidity limitations, which requires a minimum of 20.00% of the portfolio must
mature within one year. The percentage of the portfolio maturing in Tess than one
year as of June 30, 2011 was 45.35 %.
As of June 30, 2011, the District has adequate operating reserves necessary to
meet its obligations for the next six months.
During June, two investments were called and they were reinvested at the end of
the fiscal year. A Fannie Mae investment was purchased at 2.15% and it was a
five year security and the second was a Federal Farm credit at 1.25% that was a
three year security, both at a million dollars. Director Perry questioned whether
the District could have purchased a Fannie Mae. Mr. Davis replied, yes,
however, Staff typically keeps investments at the one million dollar block to be
able to remain somewhat diversified. Mr. Davis agreed with Director Perry that a
little more could have been earned, however, the funds would have been tied up
for a longer period of time.
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MINUTES OF INVESTMENT OVERSIGHT COMMITTEE MEETING
July 28, 2011
Page 2
Mr. Davis reported in July 2011, two more Fannie Mae securities were called.
The percentages were 2.37% and the other 1.5 %. The funds were reinvested.
Mr. Davis discussed the Statement of Investment Policy for Fiscal Year 2011 -12.
Although California Government Code 53646 allows the District Treasurer to
submit an annual investment policy to the Board of Directors for consideration, it
is not a requirement to do so. However, Staff believes it is prudent to continue
this practice. The Resolution adopting the Policy will be submitted to the Board at
the regular July 28, 2011 meeting at 5:30 p.m. for approval. Mr. Davis stated the
California Government Code, the investment authority rests with the Board and it
is the Board's responsibility to direct investments, unless the Board delegates that
function to the Treasurer. That authority is good for one year. Mr. Davis noted
there were only a couple of changes to the present Investment Policy. One is to
reduce the number of brokers /dealers that can work with the District by increasing
the limitation on portfolio value from $3,000,000 to $5,000,000. Another revision
limits an investment up to 30% in any single commercial bank. With regard to
Bankers' Acceptances, no more than 30% of bankers' acceptances may be
placed with any one commercial bank, a change from 25%. A change in Cash
Controls under Procedures that may be performed by auditors with respect to
cash receipts so the District is not dictating procedures the auditors should
perform. Revisions in Staff responsible for bank reconciliation preparation and
approvals were made. Ms. Gonzalez suggested a change in Staff responsible for
Accounting Records approval from Administrative Manager to Accounting
Manager. It was agreed that revision would be made to the policy and submitted
to the Board at the regular meeting. Mr. Davis stated those are the only changes
to the Investment Policy that will be presented to the Board at the regular Board
of Directors meeting.
Director Perry questioned Mr. Davis on unfunded liabilities and its effect on the
District. When accounting standard comes into play next year that liability will
have to be recorded on the District's books and an offsetting expense will occur.
It will not be a big deal if it is really small at this stage.
PUBLIC COMMENTS There were no items discussed under public comments.
ADJOURNMENT The meeting adjourned at 5:28 p.m.
Approved by:
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a Mesa �arrt District
=Board of: Dar: -ctorT
SL-p e26,3L,
President, Costa Mesa Sanitary District
Board of Directors