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HomeMy WebLinkAbout2014-05-20 - Finance-Accounting Committee Meeting Agenda PacketYorba Linda '"Water District AGENDA YORBA LINDA WATER DISTRICT FINANCE - ACCOUNTING COMMITTEE MEETING Tuesday, May 20, 2014, 4:00 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. ROLL CALL COMMITTEE Director Phil Hawkins, Chair Director Michael J. Beverage STAFF Steve Conklin, Acting General Manager Delia Lugo, Finance Manager 3. PUBLIC COMMENTS Any individual wishing to address the committee is requested to identify themselves and state the matter on which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on this agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 4. ACTION CALENDAR This portion of the agenda is for items where staff presentations and committee discussions are needed prior to formal committee action. 4.1. Appropriations Limit for FY 2014/15 Recommendation: That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Adopting the Appropriations Limit for Fiscal Year 2014115. 4.2. FY 2014/15 Water Rate Increase Recommendation: That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Setting Water Rates Effective July 1, 2014 and Rescinding Resolution No. 13 -13. 4.3. Financial Reserves Policy for FY 2014/15 Recommendation: That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Adopting the Financial Reserves Policy for Fiscal Year 2014115 and Rescinding Resolution No. 13 -07. 4.4. Unaudited Financial Statements for the Period Ending March 31, 2014 (To be presented at the meeting.) Recommendation: That the Committee review the statements and provide a recommendation to the Board of Directors. 5. DISCUSSION ITEMS This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda may also include items for information only. 5.1. Investment Policy Annual Review 5.2. Investment Report for the Period Ending April 30, 2014 5.3. Budget to Actual Results for April 2014 5.4. Finance Department Transactions (Verbal Report) 5.5. Future Agenda Items and Staff Tasks 6. ADJOURNMENT 6.1. The next Finance - Accounting Committee meeting is scheduled to be held Monday, June 23, 2014 at 4:00 p.m. Items Distributed to the Committee Less Than 72 Hours Prior to the Meeting- Pursuant to Government Code section 54957.5, non - exempt public records that relate to open session agenda items and are distributed to a majority of the Committee less than seventy -two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http: / /www.ylwd.com /. Accommodations for the Disabled Any person may make a request for a disability - related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714 - 701 -3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885 -0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability - related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. Meeting Date To: From: Presented By Prepared By: Subject: SUMMARY: ITEM NO. 4.1 AGENDA REPORT May 20, 2014 Finance - Accounting Committee Steve Conklin, Acting General Manager Delia Lugo, Finance Manager Dept: Finance Delia Lugo, Finance Manager Appropriations Limit for FY 2014/15 Each year the District must adopt the Appropriations Limit and factors used to calculate this number, in accordance with Proposition 13, Government Code Section 7900 and Article XIIIB of the California Constitution. The Appropriations Limit assures government agencies do not assess and collect taxes in excess of the controlled limits. The District receives a relatively small amount of revenue from property taxes annually and it is historically well below the Appropriations Limitation each year. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Adopting the Appropriations Limit for Fiscal Year 2014/15. DISCUSSION: In 1977, California voters passed Proposition 13, which limited property tax assessments to 1 % of a property's market value and limited assessed value increases to 2% per year. Concurrent with the reduction of property taxes, the voters also passes Proposition 4, the Gann Spending Limitation Initiative, which added Article XIIIB to the California Constitution. Under Article XIIIB, a government agency is restricted in the amount of annual appropriations from the proceeds of taxes except taxes to pay voter - approved bond debt service. If proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates or through revised fee schedules. An excess in one year may be offset against a deficit in the following year, so effectively the limitation may be exceeded in a single year but not over any consecutive two -year period. District staff performed the required calculation to determine the appropriations limits for FY 2014/15, in compliance with the terms of Article XIIB of the California Constitution and the Government Code Section 7900. The starting point for computing the Appropriations Limit is the Appropriations Subject to Limitation in the Base Year of 1978/79. This number is multiplied by the controlled factors each successive year to determine the current year's appropriation limit. The State Department of Finance, Population Research Unit, provides inflation and population figures each year. These two are multiplied together to determine the final percentage by which the prior year's limit is increased (or decreased). The District's property tax revenue of $1,283,642, budgeted for FY 2014/15, is substantially lower that the calculated limitation of $6,025,347. Therefore, there are no excess appropriations that must be returned to the taxpayers. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors adopted Resolution No. 13 -08 on June 13, 2013, Adopting the Appropriations Limit for Fiscal Year 2013/14. ATTACHMENTS: Resolution No. 14 -XX - Appropriations Limit.doc Description: Resolution Type: Resolution GANN Calculation 2014- 15.xlsx Gann Calculation Backup Material RESOLUTION NO. 14 -XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2014/15 WHEREAS, under the terms of Article X111B of the California Constitution and Government Code Section 7900 et seq., all local agencies are required to establish, by resolution, an appropriations limit for each fiscal year; and WHEREAS, in June 1990, voters in the State of California approved Proposition 111 which amended Government Code Section 7900 et seq., modifying the method of calculation for the appropriations limit and requiring all local agencies to select, by resolution, the annual adjustment factors used to perform the calculations; and WHEREAS, the District staff has performed the required calculations to determine the limit for Fiscal Year 2014/15, in compliance with the above provisions and made the documentation used in the determination of the appropriations limit and other necessary determinations available to the public at least fifteen days prior to the date of this meeting. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District as follows: Section 1. That there is hereby adopted, pursuant to Article X11113 of the California Constitution and Government Code Section 7900 et seq., as amended by Proposition 111, an appropriations limit for Fiscal Year 2014/15 of $6,025,347. Resolution No. 14 -XX Adopting the Appropriations Limit for FY 2014/15 Section 2. The annual adjustment factors are the weighted average percentage change in the population of the cities within the District's jurisdiction, and the percentage change in the California Per Capita Income. PASSED AND ADOPTED this 12th day of June, 2014 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Robert Kiley, President Yorba Linda Water District ATTEST: Steven R. Conklin, Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law LLP Resolution No. 14 -XX Adopting the Appropriations Limit for FY 2014/15 2 Special District: Yorba Linda Water District Fiscal Year: 2014 -2015 Budget: _X_ or Actual REVENUE A. LAST YEAR'S LIMIT B. ADJUSTMENT FACTORS 1. Population % 0.93% 2. Inflation % -0.23% Total Adjustment % C. ANNUAL ADJUSTMENT $ BUDGET D. OTHER ADJUSTMENTS sub total E. TOTAL ADJUSTMENTS F. THIS YEAR'S LIMIT APPROPRIATIONS SUBJECT TO LIMITATION AMOUNT SOURCE 5,983,590 1.0093 1 (Weighted Avg Calc) 0.9977 (State Finance) 1.0070 (b1 *b2) 6,025,347 1 B *A 6,025,347 (C +D) 6,025,347 (A +E) Meeting Date: To: From: Presented By: Prepared By: Subject: STAFF RECOP AGENDA REPORT May 20, 2014 Finance - Accounting Committee Steve Conklin, Acting General Manager Delia Lugo, Finance Manager Delia Lugo, Finance Manager FY 2014/15 Water Rate Increase IIMENDATION: Dept: ITEM NO. 4.2 Finance That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Setting Water Rates Effective July 1, 2014 and Rescinding Resolution No. 13 -13. DISCUSSION: In June 2012, the Board held a meeting to consider a three -year rate increase as was noticed to the District's customers through the Prop. 218 process. The Board elected to move forward with the three -year rate increase. However, to allow the possibility that the District's financial situation might improve enough where the rate increase identified in the Notice of Proposed Water Rate Increase was not necessary, the Board elected to only adopt the first year of the three annual rate increases. In June 2013, the Board did a similar financial evaluation and elected to adopt the second year of the three annual increases, being a 2.5% rate increase. Through the preparation of the FY 14/15 Budget, it has become evident that the previously noticed 2.5% rate increase is necessary for this fiscal year, being the third of three annual rate increases. As a result, staff is presenting Resolution No. 14 -XX which sets the Water Rates Effective July 1, 2014. STRATEGIC PLAN: FR 2 -C: Implement an Approach to Ensure Reserves are Responsibly Funded ATTACHMENTS: Name: Resolution No. 14 -XX - Setting Water Rates.doc Description: Resolution Type: Resolution RESOLUTION NO. 14 -XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT SETTING WATER RATES EFFECTIVE JULY 1, 2014, AND RESCINDING RESOLUTION NO. 13 -13 WHEREAS, pursuant to Water Code Section 31007, the Board of Directors of the Yorba Linda Water District (YLWD) is required to set water rates at a level which will pay for the provision of water services; and WHEREAS, pursuant to Government Code Section 53756, YLWD may adopt a schedule of fees or charges authorizing automatic adjustments that pass through increases in wholesale charges for water; and WHEREAS, the Board of Directors previously adopted Resolution No. 13 -13, which established water rates effective July 1, 2013; and WHEREAS, YLWD has determined the unit cost of changes in rates from the Metropolitan Water District of Southern California (MWD), the Municipal Water District of Orange County (MWDOC) and Orange County Water District (OCWD) for FY 2014/15; and WHEREAS, YLWD has prepared a budget for FY 2014/15, which includes the unit cost of the MWD, MWDOC and OCWD pass- through applied to the commodity charge of YLWD rates in accordance with Government Code Section 53756; and WHEREAS, on April 26, 2012 the Board of Directors considered Water Rate Study 2012 which included recommended water rates for FY 2012/13, FY 2013/14 and FY 2014/15 and the Board of Directors determined that the water rate increases described in Water Rate Study 2012 are necessary and sufficient to cover, without exceeding, the cost to provide water service to each customer; and WHEREAS, pursuant to and in compliance with Proposition 218 (California Constitution Art. XIII D), the District on May 4, 2012 mailed a notice of water rate increase to all customers which included the proposed rates for FY 2012/13, FY 2013/14 and FY 2014/15, and the Board of Directors has received a proof of mailing; and WHEREAS, pursuant to Proposition 218 on June 21, 2012 the Board of Directors held a hearing regarding water rate and pass- through charges for FY 2012/13, FY 2013/14 and FY 2014/15 and heard and considered protests; and Resolution No. 14 -XX Setting Water Rates WHEREAS, on July 25, 2013 the Board of Directors adopted Resolution FY 2013/14 establishing water rates for the FY 2013/14 fiscal year; and WHEREAS, the Board of Directors desires to establish water rates for the FY 2014/15 fiscal year. NOW THEREFORE, the Board of Directors of the Yorba Linda Water District does hereby find, determine, and resolve the following: Section 1. Resolution No. 13 -13 is hereby rescinded. Section 2. Water rates for service defined in Section 3.8 of the Rules and Regulations of the Yorba Linda Water District are hereby amended as follows, to take effect on July 1, 2014: For All Potable Water Service: All Water Usage shall be charged at Basic Service Charge for: 5/8" and 3/4" Meters 1 " Meters 1 1/2" Meters 2" Meters 3" Meters 4" Meters 6" Meters $2.70 / 100 Cu. Ft. (includes FY 14/15 pass- through charge) $10.06 / Month $16.77 / Month $33.54 / Month $53.66 / Month $117.37 / Month $211.26 / Month $469.47 / Month Section 3. Additional rates and fees for service are as follows: 3.a Permanent Untreated Water Service: The current MWD Untreated Full rate, plus charges by MWDOC, plus any other fees, charges or penalties as may be imposed by MWD and /or MWDOC, plus $13 per acre foot. 3.b The charge for Temporary service as defined in Section 3.5.1 of the Rules and Regulations for Water Service shall be as follows: 3.5.1 TEMPORARY SERVICE: The rate per hundred cubic feet shall be two times the rate specified for all water service plus $2.50 per day for each day that the meter is available for use by the customer. A security deposit of $1,000 is required at the time of rental and the deposit will be returned within 15 days of the return of the meter. Resolution No. 14 -XX Setting Water Rates 2 3.c The monthly rates for Private Fire Service Protection, as defined in Section 3.6 of the Rules and Regulations for Water Service, shall be as follows: Meter Size Monthly Charge 4 inch $16.00 6 inch $35.00 8 inch $59.00 10 inch $94.00 PASSED AND ADOPTED this 12th day of June 2014 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Robert Kiley, President Yorba Linda Water District ATTEST: Steven R. Conklin, Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law, LLP Resolution No. 14 -XX Setting Water Rates 3 Meeting Date To: From: Presented By Prepared By: Subject: SUMMARY: ITEM NO. 4.3 AGENDA REPORT May 20, 2014 Finance - Accounting Committee Steve Conklin, Acting General Manager Delia Lugo, Finance Manager Dept: Finance Delia Lugo, Finance Manager Financial Reserves Policy for FY 2014/15 Attached is a reserve policy update for the 2014/15 budget year. Minor changes have been made, but the total dollar amount of requested reserves remains the same as the prior year. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors approve Resolution No. 14 -XX Adopting the Financial Reserves Policy for Fiscal Year 2014/15 and Rescinding Resolution No. 13 -07. DISCUSSION: On June 13, 2013 the Board of Directors approved Resolution No. 13 -07, which adopted the Financial Reserves Policy for Fiscal Year 2013/14. Attached is the proposed Financial Reserve Policy for FY 2014/15 for the Finance- Accounting Committee to review. Staff is not proposing any major changes in this presented policy. There has been a minor change in the updated account balances as presented in the Employee Liabilities Reserve since the reserve policy was last discussed at the Finance - Accounting Committee meeting on February 24, 2014. STRATEGIC PLAN: FR 2 -A: Review the Reserve Policy and Funding Levels Annually ATTACHMENTS: Name: Description: Resolution No. 14 -XX - Resolution Financial Reserves Policy.doc Type: Resolution Financial Reserves Policy - FY 14 -15 5.14.14.docx Policy Backup Material RESOLUTION NO. 14 -XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE FINANCIAL RESERVES POLICY AND RESCINDING RESOLUTION NO. 13 -07 WHEREAS, the purpose of the Yorba Linda Water District's (YLWD) Financial Reserves Policy is to ensure that the District continues to have sufficient funding available to meet its operating, non - operating, capital and debt service obligations; and WHEREAS, adequate reserves and sound financial policies maintain YLWD's bond ratings in the capital markets, provide financing flexibility and sustain debt covenant compliance; and WHEREAS, the District has completed a comprehensive Asset Management Plan and has prepared a rate study and five -year financial plan; and WHEREAS, the Financial Reserves Policy recommends establishing various reserve categories, defines the purpose and use of these funds and identifies target levels and priority funding of the reserves; and WHEREAS, the current policy is being revised as changes have been made to the existing Financial Reserves Policy. NOW THEREFORE, the Board of Directors of the Yorba Linda Water District does find, determine, and resolve: Section 1. The financial reserves policy is attached hereto as Exhibit "A ". Resolution No. 14 -XX Adopting the Financial Reserves Policy Section 2. This Financial Reserves Policy adopted herein takes effect on July 1, 2014 and Resolution No. 13 -07 is hereby rescinded on July 1, 2014. PASSED AND ADOPTED this 12th day of June 2014 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Robert R. Kiley, President Yorba Linda Water District ATTEST: Steven R. Conklin, Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law LLP Resolution No. 14 -XX Adopting the Financial Reserves Policy 2 RESERVE POLICY A. GENERAL POLICY: Maintaining adequate reserves is an essential part of sound financial management. The Yorba Linda Water District Board of Directors realizes the importance of reserves in providing reliable service to its customers, financing of long -term capital projects and funding availability for emergencies should the need arise. Interest derived from reserve balances shall be credited to the reserve account from which it was earned. B. CATEGORIES: YLWD shall accumulate, maintain and segregate its reserve funds into the following categories: Restricted and Designated Reserves 1. Board Designated Reserves; and 2. Contractually Restricted Reserves. C. SCOPE: This policy will assist the Board of Directors in establishing: 1. Target levels for reserve funds; 2. Requirements for the use of reserve funds; and 3. Periodic review requirements for each reserve. D. PERIODIC REVIEW: Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the annual budget process. The Finance - Accounting Committee will continue to review all reserve and investment balances monthly, with a quarterly report going to the full Board. E. RESTRICTED AND DESIGNATED RESERVES: 1. Board Designated Reserves: These are reserve funds earmarked for the purpose of funding such items as new capital facilities, repair or replacement of existing facilities and general operating reserves designated for a specific purpose and use by the Board of Directors. 1.0 Operating Reserve A. Definition and Purpose — Established to cover temporary cash flow deficiencies that occur as a result of timing differences between the receipt of operating revenue and expenditure requirements and unexpected expenditures occurring as a result of doing business. May 14, 2014 Page 1 of 4 B. Target Level — The Government Finance Officers Association (GFOA) recommends that funding should be no less than one to two months (or 8% - 17 %) of the District's annual operating budget. The District's current target will be a minimum of 8% and a maximum of 17% of the annual operating budget for both the water and sewer funds. C. Events or Conditions Prompting the Use of the Operating Reserve — This reserve may be utilized as needed to pay outstanding operating expenditures prior to the receipt of anticipated operating revenues. 1.1 Emergency Reserve A. Definition and Purpose — Established to provide protection recovery to the District and its customers for losses arising from an unplanned event or circumstance. The reserve level combined with YLWD's existing insurance policies should adequately protect YLWD and its customers in the event of a loss. B. Target Level — Established at a minimum level equal to $1,000,000 for the water fund and shall accumulate interest and annual contributions as determined by the District's annual operation to a maximum level of $4,000,000. The target for sewer will be a minimum of $250,000 and a maximum of $1,000,000. C. Events or Conditions Prompting the Use of the Emergency Reserve — This reserve shall be utilized to cover unexpected losses experienced by the District as a result of a disaster or other unexpected loss. Any reimbursement received by the District from insurance companies as a result of a submitted claim shall be deposited back into the reserve as replenishment for the loss. 1.2 Capital Replacement Reserve A. Definition and Purpose — Established to provide capital repair and replacement funding as the District's infrastructure deteriorates over its expected useful life. B. Target Level —The Board - approved 2010 Asset Management Plan recommended that the annual contribution to this reserve be at a minimum level of $1,820,000 for the water fund and $345,000 for the sewer fund, less money set aside for the Maintenance Reserve. Funding with available funds based on the District's operations shall be allocated quarterly. C. Events or Conditions Prompting the Use of the Capital Replacement Reserve — Through the annual budget process, staff shall recommend anticipated asset replacement projects. The Board of Directors shall take action to approve recommended project appropriations from the capital replacement reserve. Should unplanned replacement be necessary during any fiscal year, the Board of Directors may take action to amend the budget and appropriate needed funds as required. 1.3 Maintenance Reserve A. Definition and Purpose — Established to provide funding for non - scheduled capital asset repair and replacement. May 14, 2014 Page 2 of 4 B. Target Level — $200,000 subject to an annual review. C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve — Unplanned failure of assets including but not limited to pumps, motors and major facility repairs. 1.4 Debt Service Reserve A. Definition and Purpose — Established to provide funding for semi - annually scheduled debt service payments. B. Target Level — The District's highest annual debt service payment — currently $2,723,509. C. Events or Conditions Prompting the Use of the Debt Service Reserve — Semi - annual debt service payments will be made out of this fund, with funding on the water rate replenishing the fund annually. 1.5 Employee Liabilities Reserve A. Definition and Purpose — The purpose is to cover employees' accrued vacation and other compensatory time and to ensure the complete funding associated with the liability incurred for employees whom have met the requirements necessary for district paid health benefits at retirement. B. Target Level — The annual contribution will be $100,000 ($93,000 for water and $7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an analysis of current employees' vacation and sick time accrued and actuarial determinations of future retiree costs. As of November 2, 2011, an actuary determined that the District's Other Post Employment Benefit (OPEB) liability was $1,433,197. When combined with a liability on the District's books for vacation, compensatory and sick time of $1,000,383 at June 30, 2013, the target is projected to be approximately $2,433,580 for the combined water and sewer enterprises. C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve — This reserve may be used in the event that operating funds are not adequate to meet vacation, compensatory and sick time paid out or retiree medical cost obligations within the current year. 2. Contractually Restricted Reserves: These are funds held to satisfy limitations set by external requirements established by creditors, grant agencies or law. Examples include stipulated bond covenants and reserves held with a fiscal agent. 2.0 US Bank 2008 COP Reserve A. Definition and Purpose — Established to cover reserve requirements held with a designated fiscal agent (US Bank) for the 2008 Certificates of Participation. May 14, 2014 Page 3 of 4 B. Target Level — Funding shall be held in an amount equal to $2,147,096. C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve — This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt service payments not covered by the District within the specified billing and due dates. End of Policy Document May 14, 2014 Page 4 of 4 Meeting Date: May 20, 2014 ITEM NO. 4.4 AGENDA REPORT Dept: Finance Subject: Unaudited Financial Statements for the Period Ending March 31, 2014 (To be presented at the meeting.) STAFF RECOMMENDATION: That the Committee review the statements and provide a recommendation to the Board of Directors. ATTACHMENTS: Description: Type: Backup Material Distributed Less Than 72 Hours Prior to Unaudited Financial Stmts 03- 31- 14.pdf Backup Material the Meeting Backup Material Distributed Less Than 72 Hours Prior to the Meeting Yorba Linda Water District Summary Financial Report Water & Sewer Funds For The Period Ending March 31, 2014 Revenue (Operating): Water Revenue (Residential) Water Revenue (Commercial & Fire Det.) Water Revenue (Landscape /Irrigation) Water Revenue (Service Charge) Sewer Charge Revenue Locke Ranch Assessments Other Operating Revenue Total Operating Revenue: Revenue (Non- Operating): Interest Property Tax Other Non - Operating Revenue Total Non - Operating Revenue: Total Revenue Expenses (Operating): Variable Water Costs (G.W., Import & Power) Salary Related Expenses Supplies & Services Total Operating Expenses Expenses (Non- Operating): Interest on Long Term Debt Other Expense Total Non - Operating Expenses: Total Expenses Net Income (Loss) Before Capital Contributions Capital Contributions Net Income (Loss) Before Depreciation Depreciation & Amortization Total Net Income (Loss) Annual YTD YTD YTD YTD Budget Budget t Actual Under(Over) % of FY 2014 FY 2014 2 FY 2014 Annual Budget Budget $16,217,590 $12,163,193 $12,587,045 $3,630,545 77.61% 2,020,223 1,515,167 1,501,320 518,903 74.31% 4,794,156 3,595,617 3,430,331 1,363,825 71.55% 4,468,716 3,351,537 3,240,924 1,227,792 72.52% 1,550,530 1,162,898 1,165,265 385,265 75.15% 200,797 150,598 125,385 75,412 62.44% 717,749 538,312 775,542 (57,793) 108.05% 29,969,761 22,477,321 22,825,812 7,143,949 76.16% 87,000 1,264,672 509,150 65,250 948,504 381,863 94,527 861,289 579,439 (7,527) 403,383 (70,289) 108.65% 68.10% 113.81% 1,860,822 1,395,617 1,535,255 325,567 82.50% 31,830,583 23,872,937 24,361,067 7,469,516 76.53% 13,767,658 7,904,873 4,225,654 10,325,744 5,928,655 3,169,241 10,203,968 5,648,398 2,793,141 3,563,690 2,256,475 1,432,518 74.12% 71.45% 66.10% 25,898,185 1,815,317 77,400 19,423,639 1,361,488 58,050 18,645,507 1,301,241 20,223 7,252,683 514,076 57,177 72.00% 71.68% 26.13% 1,892,717 1,419,538 1,321,464 571,253 69.82% 27,790,902 20,843,177 19,966,971 7,823,936 71.85% 4,039,681 3,029,761 4,394,096 (354,420) 108.77% - - 625,028 625,028 0.00% 4,039,681 3,029,761 5,019,124 270,608 124.25% 6,897,941 5,173,456 5,451,625 1,446,311 79.03% ($2,858,260) ($2,143,695) ($432,501) ($2,425,759) 15.13% Backup Material Distributed Less Than 72 Hours Prior to the Meeting Yorba Linda Water District Water Fund For The Period Ending March 31, 2014 Salary Related Expenses Supplies & Services: Communications Contractual Services Data Processing Dues & Memberships Fees & Permits Insurance Materials District Activities, Emp Recognition Maintenance Non - Capital Equipment Office Expense Professional Services Training Travel & Conferences Uncollectible Accounts Utilities Vehicle Equipment Supplies & Services Sub -Total 6,987,204 Annual YTD YTD YTD YTD 212,528 Budget Budget Actual Under(Over) % of Annual 382,581 FY 2014 FY 2014 FY 2014 Annual Budget Budget Revenue (Operating): 70.33% 67,021 50,266 59,943 7,078 Water Revenue (Residential) $16,217,590 $12,163,193 $12,587,045 3,630,545 77.61% Water Revenue (Commercial & Fire Det.) 2,020,223 1,515,167 1,501,320 518,903 74.31% Water Revenue (Landscape /Irrigation) 4,794,156 3,595,617 3,430,331 1,363,825 71.55% Water Revenue (Service Charge) 4,468,716 3,351,537 3,240,924 1,227,792 72.52% Other Operating Revenue 681,074 510,806 700,366 (19,292) 102.83% Total Operating Revenue: 28,181,759 21,136,319 21,459,986 6,721,773 76.15% Revenue (Non- Operating): 560,839 356,099 391,686 47.62% 64,403 Interest 75,000 56,250 88,469 (13,469) 117.96% Property Tax 1,264,672 948,504 861,289 403,383 68.10% Other Non - Operating Revenue 501,200 375,900 547,215 (46,015) 109.18% Total Non - Operating Revenue: 1,840,872 1,380,654 1,496,973 343,899 81.32% Total Revenue 30,022,631 22,516,973 22,956,959 7,065,672 76.47% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 13,767,658 10,325,744 10,203,968 3,563,690 74.12% Salary Related Expenses Supplies & Services: Communications Contractual Services Data Processing Dues & Memberships Fees & Permits Insurance Materials District Activities, Emp Recognition Maintenance Non - Capital Equipment Office Expense Professional Services Training Travel & Conferences Uncollectible Accounts Utilities Vehicle Equipment Supplies & Services Sub -Total 6,987,204 5,240,403 5,005,510 1,981,694 74.80% 283,371 212,528 129,572 153,799 45.73% 504,089 378,067 382,581 121,508 75.90% 158,779 119,084 111,677 47,102 70.33% 67,021 50,266 59,943 7,078 89.44% 152,224 114,168 108,894 43,330 71.54% 278,293 208,720 258,677 19,616 92.95% 568,676 426,507 503,013 65,663 88.45% 23,390 17,543 10,518 12,872 44.97% 357,243 267,932 188,933 168,310 52.89% 121,534 91,151 76,877 44,657 63.26% 42,920 32,190 24,027 18,893 55.98% 747,785 560,839 356,099 391,686 47.62% 64,403 48,302 20,292 44,111 31.51% 48,389 36,292 20,938 27,451 43.27% 23,250 17,438 18,970 4,280 81.59% 83,700 62,775 21,214 62,486 25.35% 321,250 240,938 233,195 88,055 72.59% 3,846,317 2,884,738 2,525,420 1,320,897 65.66% Total Operating Expenses 24,601,179 18,450,884 17,734,898 6,866,281 72.09% Expenses (Non- Operating): Interest on Long Term Debt 1,815,317 1,361,488 1,301,241 514,076 71.68% Other Expense 71,400 53,550 20,223 51,177 28.32% Total Non - Operating Expenses: 1,886,717 1,415,038 1,321,464 565,253 70.04% Total Expenses 26,487,896 19,865,922 19,056,362 7,431,534 71.94% Net Income (Loss) Before Capital Contributions 3,534,735 2,651,051 3,900,597 (365,862) 110.35% Capital Contributions - - 517,675 517,675 0.00% Net Income (Loss) Before Depreciation 3,534,735 2,651,051 4,418,272 151,813 125.00% Depreciation & Amortization 5,598,638 4,198,979 4,459,326 1,139,312 79.65% Total Net Income (Loss) ($2,063,903) ($1,547,927) ($41,054) ($2,022,849) 1.99% Capital - Direct Labor (221,203) Backup Material Distributed Less Than 72 Hours Prior to the Meeting Yorba Linda Water District Sewer Fund For The Period Ending March 31, 2014 Annual YTD YTD YTD YTD Budget Budget Actual Under(Over) % of FY 2014 FY 2014 FY 2014 Annual Budget Annual Budget Revenue (Operating) Sewer Charge Revenue $1,550,530 $1,162,898 $1,165,265 $385,265 75.15% Locke Ranch Assessments 200,797 150,598 125,385 75,412 62.44% Other Operating Revenue 36,675 27,506 75,176 (38,501) 204.98% Total Operating Revenue: 1,788,002 1,341,002 1,365,826 422,176 76.39% Revenue (Non- Operating) Interest 12,000 9,000 6,058 5,942 50.48% Other Non- Operating Revenue 7,950 5,963 32,224 (24,274) 405.33% Total Non - Operating Revenue: 19,950 14,963 38,282 (18,332) 191.89% Total Revenue 1,807,952 378,706 493,500 11,441 97.73% 1,355,964 1,404,108 403,844 77.66% 107,354 0.00% Net Income (Loss) Before Depreciation 504,941 Expenses (Operating): 600,854 118,795 118.99% Depreciation & Amortization 1,299,298 Salary Related Expenses 917,669 688,252 642,887 274,782 70.62% Supplies & Services: (391,445) (402,912) 49.28% Capital - Direct Labor Communications 21,829 16,372 9,510 12,319 43.57% Contractual Services 38,751 29,063 29,933 8,818 77.24% Data Processing 11,951 8,963 8,406 3,545 70.34% Dues & Memberships 5,314 3,986 4,537 777 85.38% Fees & Permits 15,141 11,356 10,663 4,478 70.42% Insurance 20,947 15,710 19,470 1,477 92.95% Materials 19,099 14,324 34,718 (15,619) 181.78% District Activities, Emp Recognition 1,761 1,321 785 976 44.58% Maintenance 121,908 91,431 58,567 63,341 48.04% Non - Capital Equipment 16,417 12,313 16,528 (111) 100.68% Office Expense 3,231 2,423 6,052 (2,821) 187.31% Professional Services 37,425 28,069 19,817 17,608 52.95% Training 6,757 5,068 5,137 1,620 76.02% Travel & Conferences 4,062 3,047 1,529 2,533 37.64% Uncollectible Accounts 1,750 1,313 2,088 (338) 119.31% Utilities 7,100 5,325 2,235 4,865 31.48% Vehicle Equipment 45,899 34,424 37,746 8,153 82.24% Supplies & Services Sub -Total 379,342 284,507 267,721 111,621 70.58% Total Operating Expenses 1,297,011 972,758 910,608 386,403 70.21% Expenses (Non- Operating) Other Expense 6,000 4,500 - 6,000 0.00% Total Non - Operating Expenses: 6,000 4,500 - 6,000 0.00% Total Expenses 1,303,011 977,258 910,608 392,403 69.88% Net Income (Loss) Before Capital Contributions 504,941 378,706 493,500 11,441 97.73% Capital Contributions - - 107,354 107,354 0.00% Net Income (Loss) Before Depreciation 504,941 378,706 600,854 118,795 118.99% Depreciation & Amortization 1,299,298 974,474 992,299 306,999 76.37% Total Net Income (Loss) (794,357) (595,768) (391,445) (402,912) 49.28% Capital - Direct Labor (5,141) Backup Material Distributed Less Than 72 Hours Prior to the Meeting Yorba Linda Water District Water Fund For The Period Ending March 31, 2014 YTD Included in Actual Debt Service FY 2014 Calculation Revenue (Operating): Water Sales $ 20,759,620 $ 20,759,620 Other Operating Revenue 700,366 700,366 Total Operating Revenue 21,459,986 21,459,986 Expenses (Operating): Variable Water Costs (G.W., Import & Power) 10,203,968 10,203,968 Salary Related Expenses 5,005,510 5,005,510 Supplies & Services Sub -Total 2,525,420 2,525,420 Depreciation & Amortization 4,459,326 - Total Operating Expenses 22,194,224 17,734,898 Operating Income(Loss) (734,238) 3,725,088 NONOPERATING REVENUES (EXPENSES): Interest 88,469 88,469 Property Tax 861,289 861,289 Other Non - Operating Revenue 547,215 547,215 Interest Expense (1,301,241) Other Expense (20,223) (20,223) Total Non - Operating Expenses 175,509 1,476,750 Net Income (Loss) Before Capital Contributions (558,729) 5,201,838 Capital Contributions 517,675 - Net Change in Assets ($41,054) 5,201,838 DEBT SERVICE RATIO CALCULATION: Net Revenues $ 5,201,838 Debt Service $ 2,038,807 255% Backup Material Distributed Less Than 72 Hours Prior to the Meeting YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF NET ASSETS March 31, 2014 (With March 31, 2013 for comparison only) ASSETS March 2014 March 2013 CURRENT ASSETS: Cash and cash equivalents $ 12,350,939 $ 15,762,614 Investment 9,220,370 2,143,553 Accounts receivable - water and sewer services 2,616,634 2,756,727 Accounts receivable - property taxes - 102,192 Accrued interest receivable 18,332 8,095 Prepaid expenses & other deposits 253,942 1,084,105 Inventory 271,830 236,459 TOTAL CURRENT ASSETS 24,732,047 22,093,744 NONCURRENT ASSETS: Bond issuance costs 491,972 1,417,030 Other post - employment benefit (OPEB) asset 130,153 176,295 Capital assets: Non - depreciable 5,919,334 14,315,667 Depreciable, net of accumulated depreciation 192,567,703 186,415,180 TOTAL NONCURRENT ASSETS 199,109,162 202,324,172 TOTAL ASSETS 223,841,209 224,417,916 LIABILITIES CURRENT LIABILITIES: Accounts payable 4,468,957 2,177,655 Accrued expenses 791,603 651,514 Accrued interest payable 865,475 878,596 Certificates of Participation - current portion 735,000 705,000 Refunding Revenue Bond - current portion 275,000 260,000 Compensated absences 249,021 236,257 Customer and construction deposits 399,470 277,903 Deferred revenue 397,922 414,197 TOTAL CURRENT LIABILITIES 8,182,448 5,601,122 LONG -TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue 13,586,551 13,856,701 Compensated absences 788,568 748,148 Refunding Revenue Bond 7,795,000 8,070,000 Certificate of Participation 32,204,833 33,008,358 TOTAL LONG TERM LIABILITIES (LESS CURRENT PORTION) 54,374,952 55,683,207 TOTAL LIABILITIES 62,557,400 61,284,329 NET ASSETS: $ 161,283,809 $ 163,133,587 Backup Material Distributed Less Than 72 Hours Prior to the Meeting YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the period ended March 31, 2014 (With fiscal year ended March 2013 for comparison only) March 2014 March 2013 OPERATING REVENUES Water sales $ 20,759,619 $ 19,018,272 Sewer revenues 1,290,650 1,291,195 Other operating revenues 775,542 555,881 TOTAL OPERATING REVENUES 22,825,811 20,865,348 OPERATING EXPENSES Variable water costs 10,203,968 9,770,544 Personnel services 5,648,397 5,517,677 Supplies and services 2,793,141 2,949,119 Depreciation and amortization 5,451,625 5,087,132 TOTAL OPERATING EXPENSES 24,097,131 23,324,472 OPERATING INCOME /(LOSS) (1,271,320) (2,459,124) NONOPERATING REVENUES (EXPENSES): Property taxes 861,289 829,722 Investment income 94,527 93,823 Interest expense (1,301,241) (1,344,189) Other nonoperating revenues 579,439 655,021 Other nonoperating expenses (20,223) (34,709) TOTAL NONOPERATING REVENUES /EXPENSES 213,791 199,668 NET INCOME /(LOSS) BEFORE CAPITAL CONTRIBUTIONS & EXTRAORDINARY ITEM(S) (1,057,529) (2,259,456) EXTRAORDINARY ITEM(S) - CAPITAL CONTRIBUTIONS 625,028 350,819 CHANGES IN NET ASSETS (432,501) (1,908,637) NET ASSETS - BEGINNING OF YEAR 161,716,310 165,042,224 NET ASSETS - FOR PERIOD END MARCH 31, 2014 $ 161,283,809 $ 163,133,587 AGENDA REPORT Meeting Date: May 20, 2014 To: Finance - Accounting Committee From: Steve Conklin, Acting General Manager Presented By: Delia Lugo, Finance Manager Prepared By: Delia Lugo, Finance Manager Subject: Investment Policy Annual Review DISCUSSION: Dept: ITEM NO. 5.1 Finance The California Government Code says "the treasurer or chief financial officer of a 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 should be considered at a public meeting." As such, the District's current investment policy, as established in Resolution No. 13 -06, on May 9, 2013 is attached. After review of the current investment policy by the Finance Department, it has been determined that no changes are needed at this time. The changes to the investment policy in the previous year were made with the goal of meeting the standards of California Municipal Treasurer's Association's (CMTA's) Investment Policy Certification Program. Upon review of the District's Investment Policy, CMTA certified that the investment policy of Yorba Linda Water District complies with the current State statutes governing the investment practices of local government entities in the state of California, and that the District's investment policy qualified for the CMTA Investment Policy Certification Program. STRATEGIC PLAN: FR 2 -C: Implement an Approach to Ensure Reserves are Responsibly Funded ATTACHMENTS: Name: 2013 -05 -09 - Resolution No 13- 06.odf Description: Resolution No. 13 -06 Type: Backup Material 1 1 RESOLUTION NO. 13 -06 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT SETTING FORTH PUBLIC FUNDS INVESTMENT POLICY AND RESCINDING RESOLUTION NO. 11 -24 WHEREAS, California Government Code (CGC) Section 53600 sets forth guidelines for the investment of public funds and WHEREAS, the current Yorba Linda Water District (Yorba Linda Water District or District) Investment Policy was adopted by Resolution No. 11 -08 on December 22, 2011; and WHEREAS, the District is in possession of public funds that are not required for immediate expenditure, and are available for investment, and WHEREAS, a policy setting forth guidelines for the investment of said funds is necessary for compliance with the principles of sound financial management; and WHEREAS, the Board of Directors of the Yorba Linda Water District desire to adopt the Investment Policy set forth herein. NOW, THEREFORE, BE IT RESOLVED by Board of Directors of the Yorba Linda Water District as follows: Section 1. Exhibit 1 (Investment Policy — Yorba Linda Water District) is hereby adopted and deemed implemented concurrent with passage and adoption of this Resolution. Section 2. That Resolution 11 -24 is hereby rescinded immediately upon adoption of this Resolution. PASSED AND ADOPTED this 9th day of May 2013 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Directors Beverage, Collett, Kiley, Hawkins and Melton None Non( Non( Gary Melfon, President Yorba Linda Water District Resolution No. 13 -06 Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11 -24 1 1 ATTEST r 1;e LE)n Steven R. Conklin, 8ecretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur � iidman, Esq. Kidman Law, LLP Resolution No. 13 -06 Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11 -24 FMYorba Linda Water District INVESTMENT POLICY BOARD OF DIRECTORS Gary T. Melton, President Robert R. Kiley, Vice President Michael J. Beverage, Board Member Ric Collett, Board Member Phil Hawkins, Board Member Steven R. Conklin, Acting General Manager May 2013 TABLE OF CONTENTS Section 1 Policy Section 2 Scope Section 3 Delegation of Authority Section 4 Investment Objectives Section 5 Prudence Section 6 Ethics and Conflicts of Interest Section 7 Authorized Broker/Dealers Section 8 Authorized Investments Section 9 Review of Investment Portfolio Section 10 Investment Pools Section 11 Collateral ization Section 12 Safekeeping and Custody Section 13 Diversification and Maximum Maturities Section 14 Internal Controls Section 15 Performance Standards Section 16 Reporting Section 17 Investment Policy Adoption Appendix "A" Description of Authorized Investments and Restrictions Appendix `B" Glossary Investment Policy — Ma}- 2013 SECTION 1: POLICY 1.1 It is the policy of the Yorba Linda Water District ( "District ") to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. 1.2 The purpose of this policy is to provide guidelines for the prudent investment of funds of the District and to outline the policies for maximizing the efficiency of the District's cash management. The District's goal is to enhance the economic status of the District consistent with the prudent protection of the District's investments. This investment policy has been prepared in conformance with all pertinent existing laws of the State of California. SECTION 2: SCOPE 2.1 This Investment Policy applies to all fiends and investment activities of the District, except for the proceeds from capital project financing instruments, which are invested in accordance with provisions of their specific documents. These funds are accounted for as Enterprise Funds and are identified in the District's Comprehensive Annual Financial Report. SECTION 3: DELEGATION OF AUTHORITY 3.1 The authority of the Board of Directors to invest funds is derived from Section 53601 of the California Government Code ( "CGC "). Section 53607 of the CGC grants the Board of Directors the authority to delegate that authority, for a one -year period, to the District's Treasurer. Therefore, management responsibility for the investment program is hereby delegated to the District's Treasurer, who shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and their procedures in the absence of the Treasurer. The Treasurer shall establish procedures for the management of investment activities, including the activities of staff consistent with this Policy. 3.2 The Treasurer may retain the services of an outside investment advisor or manager as approved by the Board to assist with the District's investment program. Any investment advisor selected shall make all investment Investment Policy — Ma}- 2013 decisions and transactions in strict accordance with State law, and this Policy. SECTION 4: INVESTMENT OBJECTIVES 4.1 The primary objectives, in priority order, of the District's investment activities shall be: 4.1.1 Safety: Safety and preservation of principal is the foremost objective of the investment program. Investments shall be selected in a manner that seeks to ensure the preservation of capital in the District's overall portfolio. This will be accomplished through a program of diversification and maturity limitations, more fully described in Section 13, in order that potential losses on individual securities do not exceed the incorne generated from the remainder of the portfolio. 4.1.2 Liquidity: The District's investment portfolio will remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. Securities should mature concurrent with cash needs to meet anticipated demands. 4.1.3 Return on Investments: The District's investment portfolio shall be designed with the objective of attaining the best yield or returns on investments, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives. SECTION 5: PRUDENCE 5.1 The standard of prudence to be used by the designated representative shall be the "prudent investor" standard and shall be applied in the context of managing the overall portfolio. The meaning of the standard of prudent investor is explained in CGC Section 53600.3, which states that "when investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like I Investment Policy — Ma}- 2013 aims, to safeguard the principal and maintain the liquidity needs of the agency." 5.2 The Treasurer and delegated investment officers, acting in accordance with District procedures and the Policy and exercising due diligence, shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 5.3 Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. SECTION 6.0: ETHICS AND CONFLICTS OF INTEREST 6.1 Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impai their ability to make impartial investment decisions. Employees and investment officials shall disclose to the District's General Manager any material financial interests in financial institutions that conduct business with the District's boundaries, and they shall further disclose any large personal financial /investment positions that could be related to the performance of the District. SECTION 7: AUTHORIZED BROKER/DEALERS 7.1 The Treasurer will maintain a list of authorized broker /dealers and financial institutions that are approved for investment purposes. Broker /dealers will be selected for credit worthiness and must be authorized to provide investment services in the State of California. These may include "primary" dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15(C)3 -1 (uniform net capital rule). No public deposit will be made by the broker /dealer except in a qualified public depository as established by the established state laws. Before a financial institution or broker /dealer is used, they are subject to investigation and approval by the Treasurer- or his /her designated representative, and must submit the following: 3 Investment Policy — Ma}- 2013 7. 1.1 Certification of having read and understood this investment policy resolution and agreeing to comply with the District's investment policy; 7.1.2 Proof of Federal Investment Regulatory Authority certification; 7.1.3 Proof of State of California registration; 7.1.4 Audited financial statements for the institution's three (3) most recent fiscal years; 7.1.5 References of other public- sector clients that similar services are provided to. 7.2 If a third party investment advisor is authorized to conduct investment transactions on the District's behalf, the investment advisor may use their own list of approved independent broker /dealers and financial institutions. The investment advisor's approved list must be made available to the District upon request. SECTION 8: AUTHORIZED INVESTMENTS 8.1 The District is provided a broad spectrum of eligible investments under the CGC Sections 53601 et seq. Authorized investments shall also include, in accordance with CGC section 16429.1 et seq., investments into the Local Agency Investment Fund (LAIF) and the Orange County Treasurer's Commingled Investment Pool in accordance with CGC section 53684. Within the investments permitted by the CGC, the District seeks to further restrict eligible investment to the investments listed in Section 8.3 below. Percentage holding limits listed in this section apply at the time the security is purchased. Ratings, where shown, specify the minimum credit rating category required at purchased without regard to +/- or 1,2,3 modifiers, if any. 8.2 The purchase of any investment permitted by the CGC, but not listed as an authorized investment in this Policy is prohibited without the prior approval of the Board of Directors. 4 Investment Policy — Ma}- 2013 8.3 Within the context of these limitations, the following investments are authorized: TABLE 1 Permitted Investments`/ Deposits CA Government Code % of Portfolio Limits / Maturity Limits YLWD % of Portfolio Limits Maturity Limits Bank Deposits No % limit. 5 rears No % limit. 5 rears CD Placement Service 30% limit. 5 nears 30% limit. 5 rears Local Agency- Investment Fund (LAIF)^ No % or maturity limit No % or maturity limit Count- Pooled Investment Funds/' No % or maturit• limit No % or maturity limit Joint PoNvers Authority Funds (Ca1TRUST & CAMP)^ No %or maturity limit No %or maturity limit U.S. Treasury Obligations No % limit. 5 rears No % limit. 5 years U.S. Agency- Obligations No % limit, 5 rears No % limit. 5 years Negotiable Certificates of Deposit' 30% portfolio. 5 rears 30% portfolio. 5 years (lone% Market Funds* 20 1/o. 10% per issuer. no limit 20 %. 10% per issuer. no limit Medium -Term (or Corporate) Notes* 30% portfolio. 5 years 30% portfolio. 5 years Bankers Acceptances* 40 %, 30% per issuer. 180 days 10% max. 5% per issuer. 180 days Commercial Paper* 25 %. 10% per issuer. 270 daNs 25% max, 5% per issuer. 270 days * Please see Appendix A for more detailed descriptions and additional restrictions ^ Please see Section 10 for additional restrictions Please see Section 11 for additional restrictions Investment Policy — Ma}- 2013 SECTION 9: REVIEW OF INVESTMENT PORTFOLIO 9.1 The securities held by the District must be in compliance with Section 8 Authorized Investments at the time of purchase. The Treasurer shall at least quarterly review the portfolio to verify that all securities are in compliance with Section 8 Authorized Investments. In the event a security held by the District is subject to a credit rating change that brings it below the minimum credit ratings specified in Appendix A Authorized Investments, the Treasurer should notify the Finance - Accounting Committee - and through the Committee's minutes, the Board - of the change. The course of action to be followed will then be decided on a case -by -case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. SECTION 10: INVESTMENT POOLS 10.1 A thorough investigation of any investment pool or mutual fund is required prior to investing, and on a continual basis. The investigation will, at a minimum, obtain the following information: 10.1.1 A description of eligible investment securities, and a written statement of investment policy and objectives; 10. 1.2 A description of interest calculations and how it is distributed, and how gains and losses are treated; 10. 1.3 A description of how the securities are safeguarded (included the settlement processes), and how often the securities are priced and the program audited; 10. 1.4 A description of who may invest in the program, how often and what size deposit and withdrawal are allowed; 10. 1.5 A schedule for receiving statements and portfolio listings; 10. 1.6 Are reserves, retained earnings, etc. utilized by the pool/fund; 10. 1.7 A fee schedule and when and how it is assessed; 0 Investment Policy — Ma}- 2013 10.1.8 Is the pool /fund eligible for bond proceeds and /or will it accept such proceeds. SECTION 11: COLLATERALIZATION 11.1 Bank Deposits: Under provisions of the CGC, California banks and savings and loan associations are required to secure the District's deposits by pledging eligible securities with a value of 110% of principal and accrued interest. State law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the District's total deposits. 11.2 Waiver of Security: The Treasurer, at his /her discretion and in accordance with CGC section 53653, may waive security for the portion of any deposits as is insured pursuant to federal law. SECTION 12: SAFEKEEPING AND CUSTODY 12.1 All security transactions entered into by the District shall be conducted on a delivery- versus - payment basis. Securities will be held by a third party custodian designated by the Treasurer and evidenced by safekeeping receipts. The only exception to the foregoing shall be depository accounts and securities purchases made with (i) local government investment pools, and (ii) money market mutual funds, since those purchased securities are not deliverable. SECTION 13: DIVERSIFICATION AND MAXIMUM MATURITIES 13.1 The District will diversify its investments by security type and institution. With the exception of U.S. Treasuries, U.S. Agency Securities, FDIC Insured Certificates of Deposit and authorized pools, no more than 30% of the District's total investment portfolio will be invested in a single security type or with a single financial institution. 13.2 To the extent possible, the District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow and approved in advance by the Board of Directors, the District will not directly invest in securities maturing more than 5 years from the date of purchase. Investment Policy — Ma}- 2013 SECTION 14: INTERNAL CONTROLS 14.1 The external auditors will annually review the investments and general activities associated with the investment program. This review will provide internal control by assuring compliance with the Investment Policy and District policies and procedures. SECTION 15: PERFORMANCE STANDARDS 15.1 The investment portfolio will be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. 15.2 The District's investment strategy is passive. The performance of the District's investment portfolio will be evaluated and compared to an appropriate benchmark in order to assess the success of the investment portfolio relative to the District's Safety, Liquidity and Return on Investments objectives. This review will be conducted annually with the Finance - Accounting Committee. SECTION 16: REPORTING 16.1 Subject to CGC sections 53607 and 53646(b), the Treasurer will provide monthly investment reports to the District's Finance - Accounting Committee (and through the Committee's minutes, to the Board of Directors) and quarterly reports to the Board of Directors which provide a clear picture of the status of the current investment portfolio. The reports shall comply with the reporting requirements of CGC sections 53607 and 53646(b), respectively. SECTION 17: INVESTMENT POLICY ADOPTION 17.1 The District's Investment Policy will be adopted by resolution of the Board of Directors. The policy will be reviewed on an annual basis and modification, if any, must be approved by the Board of Directors. 8 Investment Policy — Ma}- 2013 APPENDIX "A" DESCRIPTION OF AUTHORIZED INVESTMENTS AND RESTRICTIONS The following descriptions of authorized investments, maximum maturities and limits are included here to assist in the administration of this policy. 1) BANK DEPOSITS The District may make bank deposits in accordance with California Government Code section 53630 et seq., which requires collateral. Per California Government Code Section, there are three classes of deposits: (a) inactive deposits, (b) active deposits and (c) interest - bearing active deposits. The collateral requirements apply to both active deposits (checking and savings accounts) and inactive deposits (non- negotiable time certificates of deposit). The maximum maturity shall be five years. No limit will be placed on the percentage total invested in this category. 2) CD PLACEMENT SERVICE — Government Code Sections 53601.8 and 53653.8 The District may invest in collateralized certificates of deposits in accordance with the requirements in California Government Code Sections 53601.8 and 53635.8. Purchases of certificates of deposit pursuant to Government Code Sections 53601.8, 53653.8, and 53601 shall not, in total, exceed 30 percent of District's investment portfolio. The maximum maturity is limited to five years. 3) THE STATE LOCAL AGENCY INVESTMENT FUND (LAIF) — Government Code Section 16429.1 The LAIF is a special fiend in the California State Treasury and an investment alternative for California's local governments and special districts created and governed pursuant to CGC Section 16429.1 et seq. and managed by the State Treasurer's Office. The District, with the consent of the Board of Directors, is authorized to remit money not required for the District's immediate need, to the State Treasurer for deposit in this fund for the purpose of investment. Principal may be withdrawn on one day's notice. The fees charged by LAIF are limited by statute. Investment of District funds in LAIF shall be subject to investigation and due diligence prior to 9 Investment Policy — Ma}- 2013 investing, and on a continual basis to a level of review described in Section 10 Investment Pools. No limit will be placed on the percentage total in this category. 4) ORANGE COUNTY TREASURER'S COMMINGLED INVESTMENT POOL ( OCCIP) — Government Code Section 53684 The OCCIP is a money market investment pool managed by the Orange County Treasurer's Office. OCCIP is more fully described in the glossary at Appendix B. The District has no funds invested in OCCIP at this time. Investment of District fiends in OCCIP would be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review described in Section 10 Investment Pools. There is no maturity limit. No limit will be placed on the percentage total in this category. 5) THE INVESTMENT TRUST OF CALIFORNIA (CALTRUST) — Government Code Section 53601(p) The Investment Trust of California (CaITRUST) is a local government investment pool organized as a joint powers authority pursuant to California Government Code Section 6509.7. Wells Capital Management, a wholly - owned subsidiary of Wells Fargo, is the portfolio manager for each of the CaITRUST funds. Investment of District fields in CaITRUST shall be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review described in Section 10 Investment Pools. No limit will be placed on the percentage total in this category. 6) CALIFORNIA ASSSET MANAGEMENT PROGRAM (CAMP) — Government Code Section 53601(p) The Trust is currently governed by a Board of five Trustees, all of whom are officials or employees of Public Agencies. The Trustees are responsible for setting overall policies and procedures for the Trust. The Program's Investment Adviser and Administrator is Public Financial Management, Inc. The amounts deposited in this category shall be limited to bond proceeds and are to be invested for the purpose of arbitrage management only. The District has no funds invested in CAMP at this time. Investment of District funds in OCCIP would be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review described in Section 10 Investment Pools. Proceeds may be invested in the Treasury Portfolio 10 Investment Policy — Ma}- 2013 and /or the Money Market Portfolio. There is no maturity limit. No limit will be placed on the percentage total in this category. 7) U.S. TREASURY OBLIGATIONS — Government Code Section 53601(b) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. The maximum maturity shall be limited to five years. No limit will be placed on the percentage total invested in this category. 8) U.S. AGENCY OBLIGATIONS — Government Code Section 53601(f) Federal agency or United States government- sponsored enterprise senior debt obligations, participations, mortgaged- backed securities or other instruments, including those issued by or fully guaranteed as to principal and interest by Federal agencies or United States government - sponsored enterprises. Examples of these securities include Federal National Mortgage Association, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation and Federal Home Loan Bank. The maximum maturity shall be limited to Eve years with no limit placed on the percentage total in this investment category. 9) NEGOTIABLE CERTIFICATES OF DEPOSIT — Government Code Section 53601(1) Investments are limited to deposits issued by a nationally or state - chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a state - licensed branch of a foreign bank. Individual investments shall be limited to Federal Deposit Insurance Corporation - insured limits of $250,000. Purchases of certificates of deposit pursuant to Government Code Sections 53601.8, 53653.8, and 53601 shall not, in total, exceed 30 percent of District's investment portfolio. The maximum maturity is limited to five years. 11 Investment Policy — Ma}- 2013 10) MONEY MARKET FUNDS — Government Code Section 53601(1)(2) Shares of a beneficial interest issued by diversified management companies that are money market fiinds registered with the Securities and Exchange Commission. The company shall have met either of the following criteria: (A) attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized rating services and (B) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years of experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). There is no maturity limit. A maximum of 20 percent of the portfolio may be invested in this category, and a maximum of 10 percent of the portfolio may be invested in any single issuer. If the District has funds invested in a money market fund, a copy of the fund's information statement shall be maintained on file. In addition, the Treasurer should review the fund's summary holdings on a quarterly basis. 11) MEDIUM -TERM (OR CORPORATE) NOTES — Government Code Section 53601(k) Medium -term notes are defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less. The corporation must be domestic, the notes must be domestic and the notes must be issued in the United States. The corporation must be rated A or its equivalent or better by a nationally recognized rating service. The maximum maturity is limited to five years and the maximum percentage allowable for investment is 30 percent of the investment portfolio in the aggregate. 12) BANKERS' ACCEPTANCES — Government Code Section 53601 (g) Bankers' acceptances, otherwise known as bills of exchange or time drafts, are drawn on and accepted by a commercial bank. Purchases are limited to bankers' acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System. Eligible bankers' 12 Investment Policy — Ma}- 2013 acceptances are restricted to issuing financial institutions with a short -term debt rating of at least "A -1" or its equivalent by a nationally recognized rating service. The maximum term may not exceed 180 days and the maximum percentage allowable for investment is 10 percent of the portfolio in the aggregate, and 5% for an individual issuer. 13) COMMERCIAL PAPER — Government Code Section 53601(h) Commercial paper rated the highest ranking or of the highest letter and number ratings as provided for by a nationally recognized rating service. The entity that issues the commercial paper shall meet either of the following two sets of criteria: (1) The corporation shall be organized and operating within the United States, shall have total assets in excess of $500,000,000, and shall have debt, other than commercial paper, if any, that is rated A or higher by a nationally recognized rating service. (2) The corporation shall be organized within the United States as a special purpose corporation, trust, or limited liability company, has program wide credit enhancements including, but not limited to, over collateralization, letters of credit, or surety bond, has commercial paper that is rated "A -1" or higher, or equivalent by a nationally recognized statistical - rating organization. Eligible commercial paper may not exceed 270 days' maturity and may not represent more than the 25 percent of the investment portfolio in the aggregate, and 5% for an individual issuer. 13 Investment Policy — Ma}- 2013 APPENDIX "B" GLOSSARY .AGENCIES: Federal agency securities and /or Government - sponsored enterprises. .ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benclunark should represent a close correlation to the level of risk and the average duration of the portfolio's investments. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for a commission. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a Certificate. Large - denomination CD's are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report of the District. It includes five combined statements for each individual fiind and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance- related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. 14 Investment Policy — Ma}- 2013 COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non - interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value (e.g., U.S. Treasury Bills.) DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. DURATION: A measure of the sensitivity of the price (the value of principal) of a fixed - income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S &L's, small business firms, students, farmers, farm cooperatives, and exporters. 15 Investment Policy — Ma}- 2013 FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per entity. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open - market operations. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, flu-ift institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder -owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed -rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by fiill faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FHA mortgages. The term "pass- throughs" is often used to describe Ginnie Maes. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to 16 Investment Policy — Ma}- 2013 be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase — reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer - lender to liquidate the underlying securities in the event of default by the seller borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers' acceptances, etc.) are issued and traded. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank: as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) - registered securities broker - dealers, banks, and a few unregulated firms. 17 Investment Policy — Ma}- 2013 PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state —the so- called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15(C)3 -1: See Uniform Net Capital Rule. 18 Investment Policy — Ma}- 2013 STRUCTURED NOTES: Notes issued by Govermment Sponsored Enterprises (FHLB, FNMA, SLMA, etc.) and Corporations, which have imbedded options (e.g., call features, step -up coupons, floating rate coupons, derivative -based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. TREASURY BILLS: A non - interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BONDS: Long -term coupon - bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon- bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker- dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. 19 Meeting Date: To: From: Presented By: Prepared By: AGENDA REPORT May 20, 2014 Finance - Accounting Committee Steve Conklin, Acting General Manager Delia Lugo, Finance Manager Dept: Kelly McCann, Senior Accountant Subject: Investment Report for the Period Ending April 30, 2014 SUMMARY: ITEM NO. 5.2 Finance Staff is submitting the April 2014 Monthly Investment Reports for the Committee's review. DISCUSSION: The Investment Portfolio Report presents the market value and percent yield for all District investments by institution. The Investment Report Summary includes budget and actual interest and average term portfolio information as well as market value broken out by reserve categories. The total yield for the month ending April 30, 2014 is 0.69 %. The overall increase in the investment balance from the previous month is approximately $579,268. A large balance change includes an increase in the Water Operating Reserve of $585,213, predominantly due to scheduled property tax apportionments received from the County of Orange. STRATEGIC PLAN: FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Name: Invst Rpt 4- 14.xlsx Description: Investment Report for Period Ending April 2014 Type: Backup Material Invst Agenda Backup - April 2014.xlsx Agenda Backup Backup Material Yorba Linda Water District Investment Portfolio Report April 30, 2014 I Market % Date of Percent) Value Par of Total Institution Maturity Yield Checking Account. $ 118,261 $ 118,261 Wells Fargo Bank 45,431 45,431 Pershing $ 163,692 $ 163,692 0.77% Total 0.00% Money Market Accounts: $ 54,970 $ 54,970 Wells Fargo Money Market 0.03% 7,576 7,576 US Bank (Revenue Bonds) 0.03% 3,632,361 3,632,361 Bank of the West 0.24% $ 3,694,907 $ 3,694,907 17.39% Total 0.24% Federal Agency Securities: $ 492,195 $ 500,000 Fannie Mae 05/25/18 1.14% 490,255 500,000 Federal Home Loan Bank 06/12/18 1.01% 497,505 500,000 Fannie Mae 06/12/18 0.80% 491,665 500,000 Federal Home Loan Bank 06/13/18 1.11% 491,895 500,000 Federal Home Loan Bank 06/20/18 1.14% 2,117,094 2,115,000 Federal Home Loan Bank 05/28/14 1.37% $ 4,580,609 $ 4,615,000 21.56% Total Barclays Bank 1.19% Certificates of Deposits: $ 244,250 $ 248,000 CIT Bank, Salt Lake 05/22/18 1.21% 244,059 248,000 Discover 05/22/18 1.21% 244,280 248,000 Goldman Sachs Bank 05/22/18 1.21% 244,317 248,000 Beal Bank 05/23/18 1.01% 245,828 248,000 Wells Fargo 04/27/18 0.90% 242,761 247,000 Barclays Bank 04/30/18 0.71% 245,031 248,000 State Bank of hidia 05/14/18 1.16% 246,144 249,000 Webster Bank 05/03/18 0.91% 244,233 248,000 American Express Centurion Bank 05/23/18 1.21% 242,365 248,000 GE Capital Bank 05/24/18 1.12% 248,126 249,000 Merrick Bank 05/24/17 0.75% 247,132 248,000 BMW Bank 05/24/17 0.90% 249,012 249,000 Firstbank Puerto Rico 05/24/16 0.74% 245,208 249,000 Oriental Bank & Trust 05/29/18 1.06% 245,285 249,000 Silvergate Bank 05/30/18 1.01% 245,188 249,000 Enterprise Bank & TR Co Lowell 05/30/18 1.01% 245,178 249,000 Safra National Bank 05/31/18 1.01% 244,201 248,000 Townebank Portsmouth 05/31/18 1.01% 245,203 249,000 Mascoma Savings Bank 05/29/18 1.01% $ 4,657,802 $ 4,719,000 21.93% Total 1.01% Pooled Investment Accounts: $ 4,339,378 $ 4,339,378 Local Agency Investment Fund 0.23% 3,805,072 3,807,398 CalTRUST Short and Medium Term 0.67% $ 8,144,451 $ 8,146,777 38.34% 0.44% $ 21,241,459 $ 21,339,375 100% Total Investments 0.69% Per Government Code requirements, the Investment Report is in compliance with the Yorba Linda Water District's Investment Policy, and there are adequate funds available to meet budgeted and actual expenditures for the next six months. Kelly D. McCann, Senior Accountant 4/30/14 Investment Summary Report Below is a chart summarizing the yields as well as terms and maturities for the month of April 2014: Average # of Month Portfolio Days to of 2014 Yield Maturity April 0.69% 497 Below is are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 17.47% 4/30/2013 4.75% 4/30/2014 Monthly - April $ 6,104 $ 10,690 Year -to -Date $ 94,563 $ 105,219 Budget 1,006,214 2012/2013 1,355,103 2013/2014 Interest Budget, April YTD $ 125,000 $ 72,500 Interest Budget, Annual $ 150,000 $ 87,000 Interest earned on investments is recorded in the fund that owns the investment. Investment Summary Comparison Between Current and Previous Month The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: March 2014 % Alloc April 2014 % Alloc Fund Description Balance 2/28/2014 Balance 3/31/2014 Water Operating Reserve Water Emergency Reserve Water Capital Project Reserve Water Reserve for Debt Service Maintenance Reserve Employee Liability Reserve COP Revenue Bond 2008 - Reserve Sewer Operating Sewer Emergency Reserve Sewer Capital Project Reserve Water Operating Sewer Operating $ 3,690,143 17.47% 1,002,376 4.75% 7,857,568 37.20% 2,728,489 12.92% 191,563 0.91% 100,000 0.47% 2,126,848 10.07% 389,576 1.84% 1,006,214 4.76% 1,355,103 6.42% $ 20,447,879 96.80% Wells Fargo Bank Checking (85,093) 299,405 214,312 $ 4,275,356 20.24% 1,005,031 4.76% 7,898,185 37.39% 2,728,996 12.92% 191,658 0.91% 100,038 0.47% 2,124,670 10.06% 389,755 1.85% 1,007,297 4.77% 1,402,212 6.64% $ 21,123,199 100.00% (233,572) 351,832 118,261 Totals $ 20,662,191 $ 21,241,459 Meeting Date: To: From: Presented By: Prepared By: AGENDA REPORT May 20, 2014 Finance - Accounting Committee Steve Conklin, Acting General Manager Delia Lugo, Finance Manager Dept: Kelly McCann, Senior Accountant Subject: Budget to Actual Results for April 2014 DISCUSSION: ITEM NO. 5.3 Finance Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a combined statement for both funds pertaining to the reporting month of April 2014. Through the month of April 2014, the District water revenue is 84.12% of annual budget, which is 5.2% higher than the historical trend for this point in the year. The majority of the Water Fund's individual Supplies and Services expenses are below budget, with the exceptions of Dues and Memberships, Materials, Insurance, and Uncollectible Accounts, still due to the previous months reported reasons. Overall, Sewer Supplies and Services expenses are trending below with similar noted exceptions as in the Water Fund. Reported expenses affiliated with the Sewer Materials account for 290.9% of its annual budget due to the previous months reported reason. STRATEGIC PLAN: FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Name, Apr 2014 consolidated stmt.xlsx Apr 2014 Water Stmt.xlsx Apr 2014 Sewer Stmt.xlsx Description: April 2014 Consolidated Statement Apr 2014 Water Stmt April 2014 Sewer Stmt Type: Backup Material Backup Material Backup Material Yorba Linda Water District Summary Financial Report Water & Sewer Funds For Ten Months Ending April 30, 2014 Annual YTD YTD YTD YTD YTD Budget Budget Actual Under(Over) Under(Over) %of FY 2014 FY 2014 FY 2014 Annual Budget YTD Budget Budget Revenue (Operating): Water Revenue (Residential) $16,217,590 $13,514,658 $13,934,703 $2,282,887 ($420,045) 85.92% Water Revenue (Commercial & Fire Det.) 2,020,223 1,683,519 1,665,286 354,937 18,233 82.43% Water Revenue (Landscape /Irrigation) 4,794,156 3,995,130 3,739,021 1,055,135 256,109 77.99% Water Revenue (Service Charge) 4,468,716 3,723,930 3,606,449 862,267 117,481 80.70% Sewer Charge Revenue 1,550,530 1,292,108 1,297,301 253,229 (5,193) 83.67% Locke Ranch Assessments 200,797 167,331 196,383 4,414 (29,052) 97.80% Other Operating Revenue 717,749 598,124 849,159 (131,410) (251,035) 118.31% Total Operating Revenue: 29,969,761 24,974,801 25,288,302 4,681,459 (313,501) 84.38% Revenue (Non- Operating): Interest 87,000 72,500 105,217 (18,217) (32,717) 120.94% Property Tax 1,264,672 1,053,893 1,308,550 (43,878) (254,657) 103.47% Other Non - Operating Revenue 509,150 424,292 654,393 (145,243) (230,101) 128.53% Total Non - Operating Revenue: 1,860,822 1,550,685 2,068,160 (207,338) (517,475) 111.14% Total Revenue 31,830,583 26,525,486 27,356,462 4,474,121 (830,976) 85.94% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 13,767,658 11,473,048 11,615,335 2,152,323 (142,287) 84.37% Salary Related Expenses 7,904,873 6,587,394 6,212,725 1,692,148 374,669 78.59% Supplies & Services 4,225,654 3,521,378 3,114,739 1,110,920 406,639 73.71% Total Operating Expenses 25,898,185 21,581,821 20,942,799 4,955,391 639,022 80.87% Expenses (Non- Operating): Interest on Long Term Debt 1,815,317 1,512,764 1,440,503 374,814 72,261 79.35% Other Expense 77,400 64,500 44,264 33,136 20,236 57.19% Total Non - Operating Expenses: 1,892,717 1,577,264 1,484,767 407,950 177,600 78.45% Total Expenses 27,790,902 23,159,085 22,427,566 5,363,341 816,622 80.70% Net Income (Loss) Before Capital Contributions 4,039,681 3,366,401 4,928,896 (889,220) (1,562,495) 122.01% Capital Contributions - - 623,361 623,361 (623,361) 0.00% Net Income (Loss) Before Depreciation 4,039,681 3,366,401 5,552,257 (265,859) (2,185,856) 137.44% Depreciation & Amortization 6,897,941 5,748,284 6,057,412 840,524 (309,128) 87.81% Total Net Income (Loss) A$2,858,260) A$2,381,883) ($505,155) ($2,353,105) ($1,876,728) 17.67% Yorba Linda Water District Water Fund For Ten Months Ending April 30, 2014 Annual YTD April YTD YTD YTD YTD Budget Budget Actual Actual Under(Over) Under(Over) % of Annual FY 2014 FY 2014 FY 2014 FY 2014 Annual Budget YTD Budget Budget Revenue (Operating): 24,601,179 20,500,983 2,181,177 19,916,075 4,685,104 584,908 80.96% Water Revenue (Residential) $16,217,590 $13,514,658 $1,347,658 $13,934,703 $2,282,887 ($420,045) 85.92% Water Revenue (Commercial & Fire Det.) 2,020,223 1,683,519 163,966 1,665,286 354,937 18,233 82.43% Water Revenue (Landscape /Irrigation) 4,794,156 3,995,130 308,690 3,739,021 1,055,135 256,109 77.99% Water Revenue (Service Charge) 4,468,716 3,723,930 365,525 3,606,449 862,267 117,481 80.70% Other Operating Revenue 681,074 567,562 60,551 760,917 (79,843) (193,355) 111.72% Total Operating Revenue: 28,181,759 23,484,799 2,246,390 23,706,376 4,475,383 (221,577) 84.12% Revenue (Non- Operating): - - - 517,675 517,675 (517,675) 0.00% Interest 75,000 62,500 8,744 97,213 (22,213) (34,713) 129.62% Property Tax 1,264,672 1,053,893 447,261 1,308,550 (43,878) (254,657) 103.47% Other Non - Operating Revenue 501,200 417,667 69,678 616,893 (115,693) (199,226) 123.08% Total Non - Operating Revenue: 1,840,872 1,534,060 525,683 2,022,656 (181,784) (488,596) 109.87% Total Revenue 30,022,631 25,018,859 2,772,073 25,729,032 4,293,599 (710,173) 85.70% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 13,767,658 11,473,048 1,411,367 11,615,335 2,152,323 (142,287) 84.37% Salary Related Expenses 6,987,204 5,822,670 504,755 5,510,265 1,476,939 312,405 82.35% Supplies & Services: Communications 283,371 236,143 17,304 146,876 136,495 89,267 51.83% Contractual Services 504,089 420,074 35,835 418,416 85,673 1,658 83.00% Data Processing 158,779 132,316 314 111,991 46,788 20,325 70.53% Dues & Memberships 67,021 55,851 556 60,499 6,522 (4,648) 90.27% Fees & Permits 152,224 126,853 22,739 131,633 20,591 (4,780) 86.47% Insurance 278,293 231,911 (623) 258,054 20,239 (26,143) 92.73% Materials 568,676 473,897 59,850 562,863 5,813 (88,966) 98.98% District Activities, Emp Recognition 23,390 19,492 1,181 11,699 11,691 7,793 50.02% Maintenance 357,243 297,703 34,655 223,588 133,655 74,115 62.59% Non - Capital Equipment 121,534 101,278 5,252 82,129 39,405 19,149 67.58% Office Expense 42,920 35,767 3,167 27,194 15,726 8,573 63.36% Professional Services 747,785 623,154 36,233 392,332 355,453 230,822 52.47% Training 64,403 53,669 1,421 21,713 42,690 31,956 33.71% Travel & Conferences 48,389 40,324 1,133 22,071 26,318 18,253 45.61% Uncollectible Accounts 23,250 19,375 7,625 26,595 (3,345) (7,220) 114.39% Utilities 83,700 69,750 4,843 26,057 57,643 43,693 31.13% Vehicle Equipment 321,250 267,708 33,570 266,765 54,485 943 83.04% Supplies & Services Sub -Total 3,846,317 3,205,264 265,055 2,790,475 1,055,842 414,789 72.55% Total Operating Expenses 24,601,179 20,500,983 2,181,177 19,916,075 4,685,104 584,908 80.96% Expenses (Non- Operating): Interest on Long Term Debt 1,815,317 1,512,764 139,262 1,440,503 374,814 72,261 79.35% Other Expense 71,400 59,500 24,041 44,264 27,136 15,236 61.99% Total Non - Operating Expenses: 1,886,717 1,572,264 163,303 1,484,767 401,950 87,497 78.70% Total Expenses 26,487,896 22,073,247 2,344,480 21,400,842 5,087,054 672,405 80.79% Net Income (Loss) Before Capital Contributions 3,534,735 2,945,613 427,593 4,328,190 (793,455) (1,382,578) 122.45% Capital Contributions - - - 517,675 517,675 (517,675) 0.00% Net Income (Loss) Before Depreciation 3,534,735 2,945,613 427,593 4,845,865 (275,780) (1,900,253) 137.09% Depreciation & Amortization 5,598,638 4,665,532 495,584 4,954,910 643,728 (289,378) 88.50% Total Net Income (Loss) ($2,063,903) ($1,719,919) ($67,991) ($109,045) ($1,954,858) ($1,610,874) 5.28% Capital - Direct Labor (22,502) (243,705) Yorba Linda Water District Sewer Fund For Ten Months Ending April 30, 2014 Annual YTD April YTD YTD YTD YTD Budget Budget Actual Actual Under(Over) Under(Over) % of FY 2014 FY 2014 FY 2014 FY 2014 Annual Budget YTD Budget Annual Budget Revenue (Operating) Sewer Charge Revenue $1,550,530 $1,292,108 $132,036 $1,297,301 $253,229 ($5,193) 83.67% Locke Ranch Assessments 200,797 167,331 70,998 196,383 4,414 (29,052) 97.80% Other Operating Revenue 36,675 30,563 13,066 88,242 (51,567) (57,680) 240.61% Total Operating Revenue: 1,788,002 1,490,002 216,100 1,581,926 206,076 (91,924) 88.47% Revenue (Non- Operating): 6,000 5,000 - - 6,000 5,000 0.00% Interest 12,000 10,000 1,946 8,004 3,996 1,996 66.70% Other Non - Operating Revenue 7,950 6,625 5,276 37,500 (29,550) (30,875) 471.70% Total Non - Operating Revenue: 19,950 16,625 7,222 45,504 (25,554) (28,879) 228.09% Total Revenue 1,807,952 1,506,627 223,322 1,627,430 180,522 (120,803) 90.02% Expenses (Operating): 1,299,298 1,082,748 110,203 1,102,502 196,796 (19,754) 84.85% Salary Related Expenses 917,669 764,724 59,572 702,459 215,210 62,265 77.25% Supplies & Services: (1,258) (6,399) 6,399 Communications 21,829 18,191 1,389 10,899 10,930 7,292 49.93% Contractual Services 38,751 32,293 2,704 32,637 6,114 (345) 84.22% Data Processing 11,951 9,959 24 8,430 3,521 1,529 70.54% Dues & Memberships 5,314 4,428 42 4,579 735 (151) 86.17% Fees & Permits 15,141 12,618 1,481 12,144 2,997 474 80.21% Insurance 20,947 17,456 (47) 19,423 1,524 (1,967) 92.72% Materials 19,099 15,916 20,844 55,562 (36,463) (39,646) 290.92% District Activities, Emp Recognition 1,761 1,468 89 874 887 594 49.63% Maintenance 121,908 101,590 13,126 71,693 50,215 29,897 58.81% Non - Capital Equipment 16,417 13,681 (854) 15,674 743 (1,993) 95.47% Office Expense 3,231 2,693 238 6,290 (3,059) (3,598) 194.68% Professional Services 37,425 31,188 1,971 21,788 15,637 9,400 58.22% Training 6,757 5,631 255 5,392 1,365 239 79.80% Travel & Conferences 4,062 3,385 83 1,607 2,455 1,778 39.56% Uncollectible Accounts 1,750 1,458 1,487 3,575 (1,825) (2,117) 204.29% Utilities 7,100 5,917 486 2,721 4,379 3,196 38.32% Vehicle Equipment 45,899 38,249 13,232 50,978 (5,079) (12,729) 111.07% Supplies & Services Sub -Total 379,342 316,118 56,550 324,266 55,076 (8,148) 85.48% Total Operating Expenses 1,297,011 1,080,843 116,122 1,026,725 270,286 54,118 79.16% Expenses (Non- Operating): Interest Expense - - - - - - 0.00% Other Expense 6,000 5,000 6,000 5,000 0.00% Total Non - Operating Expenses: 6,000 5,000 - - 6,000 5,000 0.00% Total Expenses 1,303,011 1,085,843 116,122 1,026,725 276,286 59,118 78.80% Net Income (Loss) Before Capital Contributions 504,941 420,784 107,200 600,705 (95,764) (179,921) 118.97% Capital Contributions - - (1,667) 105,687 105,687 (105,687) 0.00% Net Income (Loss) Before Depreciation 504,941 420,784 105,533 706,392 9,923 (285,608) 139.90% Depreciation & Amortization 1,299,298 1,082,748 110,203 1,102,502 196,796 (19,754) 84.85% Total Net Income (Loss) (794,357) (661,964) ($4,670) (396,110) (398,247) ($265,854) 49.87% Capital - Direct Labor (1,258) (6,399) 6,399