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.
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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;
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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.
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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.
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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'
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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.
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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.
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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.
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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.
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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