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FEB 111991 FINANCE CMD REB\INVPOL97 Santa MOnica, California CouncIl Meeting of February 11. 1997 STAFF REPORT TO Mayor and City Council FROM City Staff SUBJECT Recommendation to Revise City Investment Policy and Delegate Investment Authonty to City Treasurer INTRODUCTION This report recommends that the City Council authonze technical reVISions to the City's Investment Policy and delegate Investment authonty to the City Treasurer for a penod of one year, from March 1, 1997 to February 28. 1998 These actions are necessary to comply wIth a new State law BACKGROUND Effective January 1, 1996 State law requires that the Investment policy and any matenal changes In the policy be considered by Council annually at a public meeting The Council last approved the Investment policy on January 23, 1996 The revised policy Incorporated the Council adopted prohibItion on dOing bUSiness WIth companies operating In Burma and State legislative mandates adopted In the aftermath of the Orange County bankruptcy The changes to the Investment Policy are outlined below DISCUSSION The following changes have been Incorporated In the attached City's Investment6CF .;1 - ~~~rl .. - FE8 , 1 1991 1 Attachment A to Investment Policy The Iistmg of City of Santa Monica Funds has been updated to Include three funds recently approved by the City Council Stormwater Fund. Vehicle Management Fund, and the Citizens Option for PubliC Safety Fund 2 Attachment B to Investment Policy Descriptions of City fmanclal assets specifically excluded from the proVIsions of the City'S Investment Policy have been updated With the names of mstltutlons now acting as trustees for the City 3 Attachment C to Investment Policy The Summary of State of California Statutes Applicable to MUnicipal Investments has been updated to reflect a complete listing of authOrized Investments The shaded portions of the Investment PoliCY and Its attachments Indicate where additions have been made, and the Irned through portions Identify deletions Section 711 of the Santa MonIca City Charter delegates to the Treasurer authOrity for Investing City funds S8 109 limits the authOrization of the legislative body to delegate Investment authOrity to a one-year perlod, renewable annually In accordance With thiS new requirement, approval of thiS staff report Will delegate Investment authOrity for the City to the City's Revenue ManagerfTreasurer Investment Oversight bv Elected Officials The California Debt AdvIsory Commission (CDAC), which IS chaired by the State Treasurer, has compiled a list of questions which they recommend elected officials ask staff concerning Investment policies. Investment practices and cash management The response to each of the questions IS contamed In Attachment B The COAC also recently completed a report, Local Agency Investment GUidelines Recommendations for Implementing Recent Statutory Changes to the California Government Code The proposed revised Investment policy IS In compliance with these gUidelines. and In many Instances, surpasses the recommended mInimum requIrements BUDGET/FINANCIAL IMPACT There are no budget or financial Impacts resultmg from thiS staff report RECOMMENDATION Staff recommends that Councrl approve the attached reVISions to the City'S Investment Policy, and delegate to the City Revenue ManagerlTreasurer Investment authority for the one-year period of March 1, 1997 through February 28. 1998 Prepared by Mike Denms, Director of Finance Ralph Bursey, City Revenue ManagerlTreasurer Attachments ReVised City Investment Policy Oversight Questions For Elected OffiCials Attachment A Revised 2/97 INVESTMENT POLICY for the CITY OF SANTA MONICA A PURPOSE The purpose of establishing a formal Investment policy IS to set broad gUidelines within which the City Treasurer IS to lawfully Invest City funds These gUidelines do not supersede applicable State laws and City codes B SCOPE This Investment policy applies to all cash and finanCial Investments of the vanous funds of the City of Santa MOnica as Identrfled In the City's Comprehensive Annual Financial Report, with the exception of those financial assets explicitly excluded from coverage by these policies for legal or operatIOnal reasons All City Funds are listed In Attachment A and all cash and financial Investments which are excluded from coverage by this rnvestment policy are Identified In Attachment B C ADMINISTRA TION 1 An Investment Committee shall be established consIsting of the Director of Fmance, City Treasurer/Revenue Manager, and a representative from the City Manager's Office 2 The Investment Committee wrll meet at least once each calendar quarter to review and evaluate prevIous Investment activity and Yield, to review the current status of all funds held by the City, to discuss anticIpated cash requirements and Investment activity for the next quarter. and to recommend Investment strategy to the City Treasurer 3 All rnvestment policies and all changes to those policies must be approved by a majority of the Investment Committee 4 Any two members of the Committee may call a special meeting, and three members shall constitute a quorum 5 Minutes will be published of all Investment Committee meetings 6 The Investment Committee will meet at least annually with the City's outSide auditors to review accounting controls and to design adequate audit procedures to Identify any non- compliance with the City Investment polley 7 The City Investment polICY Will be reViewed annually by the Investment Committee and submitted annually to the City Council - 1 - D INVESTMENT OBJECTIVES The primary objective of all City Investments shall be safety The secondary objective shall be liqUidity The third objective shall be to achieve a return 1 "Safety" means that the overall value of City funds shall not be diminished In the process of securing and Investing those funds or over the duration of the Investments 2 LiqUidity means that funds shall be made available to meet all antIcipated City obligations and a prudent reserve shall be kept available to meet unanticipated cash requirements Availability has two aspects, liqUIdity and the scheduling of cash flows LiqUidity IS the ability to change an Investment Into Its cash equivalent on short notice at Its prevailing market value Scheduling of cash flows means that Investments are to mature or are to be converted Into cash In tandem with the City's antIcipated cash requirements 3. Achieve a return means to earn the optimum Interest Income from City funds commensurate with the objectives of safety and availability of the principle rnvested At no time shall funds be rnvested In any security that could result In zero rnterest accrual If held to maturity E INVESTMENT AUTHORITY DELEGA liON In accordance With the Santa Monica City Charter, Section 711, the City Treasurer IS responsible for conducting the City's Investment transactions The Treasurer may delegate thiS authOrity to the ASSIstant Treasurer or, In extraordinary Circumstances, to the Director of Frnance F PRUDENCE 1 Investments shall be made With Judgment, care, skill, prudence, and diligence under circumstances then prevallmg, whIch persons of prudence actmg In a like capacIty and familIarity With those matters would use rn the conduct of funds of a like character and With like alms, to safeguard the prinCipal and maintain the liqUidity needs of the City ThiS standard of prudence shall be applied In the context of managing an overall portfoliO Investment officers acting In accordance With written procedures and exercIsing due diligence shall be reheved of personal responSibility for an indiVidual security's credit risk or market pnce changes, prOVided that deViations from expectations are reported In writing to the Director of Finance In a timely fashion, and appropnate action IS taken to control adverse developments 2 Investment officers shall aVOid any transactions that might Impair publiC confidence In the Santa Monica City government 3 Where It IS otherwise consistent With the Judiciary and statutory obligations of the City Revenue Manager/Treasurer, preference In selectrng Investments shall be gIven to those finanCial institutIOns which have demonstrated Involvement In the development or rehabilitation of lOW-income affordable housmg 4 Investments In repurchase agreements shall be made only With fmanclal InstitutIOns With which the City has an executed master repurchase agreement The fmanclal mstltutlon must be a primary dealer of the Federal Reserve Bank of New York - 2 - G RECORDS AND REPORTS 1 Records of all Investment transactions will be kepc and monthly reports will be made to the Investment Committee and the CIty Manager detailing and summarizing all transactions and stating the present status of City Investments 2 As of the end of the fiscal year, the City Revenue ManagerlTreasurer will make a report to the DIrector of Finance detailing the present status of City rnvestments, as required by the Government Accountrng Standards Board (GASB) statement No 3 H DIVERSIFICA TION 1 All City funds whIch are not required for ImmedIate cash expendItures or to maintain reqUired compensating cash balances shall be Invested In Interest bearing Investments or accounts 2 To reduce overall portfolio risk while attempting to attain market rates of return consistent WIth the primary objectives of safety and avallablllty of funds, Investments shall be diversified across types of Investments, matUritIes of those Investments, and Institutions I n which those Investments are made Generally, the portfolio IS to be Invested In U S Treasury and Federal Agency securitIes With a modest addition of BAs and CDs a Investment Instruments I nvestments shall be made only In those Instruments speCIfically authOrIZed by Callforma State laws, and to no greater an extent than authorrzed by those laws Said laws are summarized In Attachment C AdditIOnal City gUidelines are as follows Instruments AdditIonal Cltv GUIdelines U S Federal AgenCies - 33 1/3% of portfolio, maximum for each agency Banker's Acceptances (SA) 10% max per Issuer, 40% max overall Certificate of DepOSit (CD), 10% max per Issuer, 30% max CommerCial Paper (CP) all (CD), 15% max overall {ePl NOTES * Fedl National Mortgage Assn {FNMAl, Fedl Home Loan Mortgage Corp (FHLMCL Fedl Home Loan Bank{FHLBL Student Loan Marketing Assn (SLMAl, Tennessee Valley AuthOrity (TV Al, and any other U S Federal agency or Instrumentality b MaturIties Maturities of indiVidual Investments shall be diverSified to meet the followmg objectives \ No Investment Will be purchased whIch matures more than three years from the date of purchase unless speCifically recommended by a unanrmous vote of the Investment Committee No Investment Will be purchased which matures more than - 3 - five years from the date of purchase without the additional approval of the City Manager and the prior approval of the City Council II The average weighted maturity of all pooled City Investments shall not exceed 18 months (547 days) III To minimiZe the risk of having to make unusually large Investments at times when Interest rates are temporarily very low, Investments will be scheduled to mature so that dUring any given month there will be a comparable magnitude of funds to be reinvested These investible funds will be estimated based on scheduled matufltles plus anticipated revenues minus anticipated expenses IV To the maximum extent practical, monthly operatIOnal cash requirements will be met by uSing anticipated revenues and maturing Investments However, as an aspect of active portfolio management, It may be financIally benefiCIal to the CIty to sell Investments from time to tIme v To reduce the market and Interest rate risks which would result from the excess concentration of assets In a specifiC matunty, a specifiC Issue or a specific class of secufltles, no more than 5 0% of the City's investible funds may be Invested In any Single Issue maturing In a given month The only exceptions are U S Treasury SeCUrities, to which an alternate limit of 10% will apply c Institutions To minimize the risk to the City's overall Investment portfoliO from the default by a Single institution In which City funds are on depOSit or Invested, the follOWing poliCies shall be observed I City funds shall only be deposited In a financial institutIOn whose performance has been reliable and whose safety rating, as determined by the Investment Committee or a reputable Independent rating service selected by the Investment Committee, IS In the upper 60% of ItS peer group These same standards apply to institutions In which seCUrities owned by the City are held In safekeeping Exceptions to these standards may be made on an mdlVldual baSIS If they are unanimously recommended by the Investment Committee II The City shall not depOSit, In the form of certificates of depOSit, time or demand depOSIts, or SImIlar lr\struments, In a Single institutIOn more than 10% of the City's investible funds III No Single Institution shall have, In cumulative total, as depOSIts and Investments (other than safe kept Investments) more than 50% of the Clty's investible funds d Repurchase Agreements I nvestments In repurchase agreements are allowable and shall be made only With fmanclal institutIOns With which the City has an executed master repurchase agreement The financial institution must be a pnmary dealer of the Federal Reserve Bank of New York The market value (bid price plus accrued Interest) of the collateral shall be valued at 102 % or greater of the funds borrowed against those secuntles and the value shall be adjusted no less than quarterly The counterparty Will deliver the underlymg securities to the City by book entry r phYSical dehvery r or by third party - 4 - custodIal agreement The transfer of underlYing seCUrities to the counterparty bank's customer book-entry account may be used for book-entry delivery I RELA TIONSHIPS WITH FINANCIAL INSTITUTIONS 1 The City may only purchase statutorily authorized Investments, not purchased directly from the Issuer, from either an institution licensed by the state as a broker! dealer, from a national or state chartered bank, from a federal or state savings institution, from a brokerage fIrm designated as a pnmary government dealer by the Federal Reserve Bank, or from a member of a federally regulated seCUrities exchange 2 All financial Institutions with which the City conducts Investment actIvities must agree In writing to undertake reasonable efforts to prevent Illegal and/or Imprudent transactions involving City funds Should It come to the attention of the City Revenue Manager/Treasurer that City funds have been Involved In illegal and!or Imprudent transactions, thiS will be reported to the City Council along with options for dealing with the SItuation 3 Primary government seCUrities dealers which report to the New York Federal Reserve are preferred for conducting transactions of all eligible seCUritIes other than non-negotiable certificates of depOSit Other security dealers who wish to engage In transactIOns with the City must meet the City's reqUirements for reliabIlity and safety, and any purchases made by the City from such secondary sources shall require third party safekeeping or delIVery of the securities to the City 4 To ensure Yields consistent with thiS policy and to prOVIde for the objective Investment of City funds, the City's Investment procedures shall be deSigned to Include transactions with several firms that compete directly for pubhc bUSiness, and to encourage competitive bidding on transactions Such bids shall be on file with the City Treasurer's Office and copies shall be prOVided to the Director of Finance monthly J. SOCIAllY RESPONSIBLE INVESTING C"'-.rr.1 1.1 I ^ r-ro'll roo ^ ... r""inl .......'\.1' .1-_ t""_.......L ^.L_____ n_I._.. _-..1__...._-1 nf.o1-"nr:- I,...~..__.I n___I....L._..... "'1_ V\JU I I I r1.1 I '.........,...,,1.. I "VLI....... ~ - tin::;: tJUULlI r\lrn....all I UIH..y CUUfoJL'lJU.;JJ I/jV...J \.......UUII\."U I U:::;:';:'VIUUVI I I".V 709 1 C8~~ v~v-g5 1~5':.I,dc~ ~y City CuuliCi: ~.s5U:i.iLiCrII ~~u nJ':'o'....... r"'tr"'aC" f...^_!-1r,:n....~ UUfL """'''''v, IVi I Li.;;,/vl BURMA POLICY - In accordance with the City of Santa MOnica Council Resolution No 8966 CCS (11/28i95l, the Investment of City funds are restricted as follows 1 No Investments are to be made In banker's acceptances which are connected with the military government of Burma, ItS agencies, or private Burma corporations 2 No Investments are to be made In commercial paper or equities of United States corporations which have direct Investments In Burma or with the military government of Burma 3 FinanCial transactions shall only be done With banking! finanCial InstitutIons that do not make loans to the military government of Burma or ItS agencies - 5 - K COMMUNITY REINVESTMENT ACT (CRA) The City will Invest funds only In those financial Institutions which have a CRA rating (as determined by the appropnate regulatory body) of "Outstanding" or "Satisfactory" L CUSTODY AND SAFEKEEPING OF SECURITIES AND CITY FUNDS 1 Wherever practical, all City Investments shall have the City of Santa Monica as its the registered owner, and all Interest and principal payments and withdrawals shall indicate the City of Santa Monica as the payee All securities shall be safekept with the City Itself or with a qualified fmanclal institution, contracted by the City as a third party All seCUrities shall be acquired by the safekeeping mstltutlon on a "delivery-vs-payment" (DVP) baSIS In other words, the security must be delivered before funds are released The DVP baSIS for delivery applies also to the delivery and safekeeping of repurchase agreement collateral 2 anginal caples of non-negotiable certificates of depOSit and confirming caples of all other Investment transactions must be delivered to the City. M PERFORMANCE STANDARDS The Investment portfolio will be deSigned to obtain at least a market level rate of return, given budgetary and economic cycles (3 or more years) cycles and given the City's Investment risk and cash flow needs The City'S portfolIO management approach IS active, necessitating penodlc restructunng of the portfolio to take advantage of current and anticipated interest rate movements In addition, the portfolio IS pnmanly Invested In U S Treasury and Federal Agency securities Given thiS strategy, the performance benchmarks shall be the rolling average of 6- month and 12-month U S Treasury bills, traded on the secondary market as reported In the Federal Reserve System's monthly report of Interest rates N IMPLEMENTATION The City Treasurer IS responsible for conducting and reporting on all City Investments To faCIlitate thiS function, the Treasurer will prepare and maintain an Investment Procedures Manual to detail operating procedures to be practiced by the Treasury In investing City funds All such procedures shall be In accordance with applicable State laws, City codes and the Investment policies set by the Investment Committee All procedures will be subject to review and approval by the Investment Committee The manual will expliCitly Include a current listing of all City of Santa Monica financial institution depOSit and Investment accounts, a current list of all finanCial institutions With which the City currently IS authOrized to conduct Investment transactions, a current copy of State laws pertinent to City Investments, a descfJptlon of specific controls to ensure the proper execution of the City Investment POliCY, and caples, With instructions, of all Investment reports required by law or by City Investment policy 0 INDEMNIFICA TION OF INVESTMENT OFFICIAL$ Any Investment officer exercIsing hiS or her authonty With due diligence and prudence, and In accordance With the City of Santa Monica Investment Policy, will not be held personally liable for any indiVidual Investment losses or for total portfolio losses - 6 - ATTACHMENT A City of Santa MOnica Funds for Cash Pooling The following listed City of Santa Monica funds shall have their cash balances pooled for Investment purposes except for any fund or portion of one or more funds which IS specifically Identified for excluSion In Attachment B of the City Investment Policy FUND NUMBER FUND NAME 01 GENERAL FUND 11 BEACH RECREATION FUND 12 HOUSING AUTHORITY FUND 13 DISASTER RELIEF FUND 14 TORCA FUND 15 LOW/MODERATE INCOME HOUSING FUND 16 REDEVELOPMENT-DOWNTOWN FUND 17 REDEVELOPMENT-EARTHQUAKE RECOVERY 18 REDEVELOPMENT-OCEAN PARK FUND 19 COMM DEV BLOCK GRANT FUND 20 MISCELLANEOUS GRANTS FUND 22 CITIZENS OPTION FOR PUBLIC SAFETY FUND 25 WATER FUND 27 SOLID WASTE MANAG EMENT FUND 29 RENT CONTROL FUND 30 PIER FUND 31 W ASTEW A TER FUND 32 AUDITORIUM FUND 33 AIRPORT FUND 34 STORMWA TER FUND 37 CEMETERY FUND 41 TRANSPORTATION FUND 42 TRAFFIC SAFETY FUND 43 GAS TAX FUND 51 CABLE COMMUNICATIONS FUND 52 SPECIAL A VIA TION FUND 53 PARKS AND RECREATIONAL FUND 54 VEHICLE MANAGEMENT FUND 56 SELF fNS-COMPRE FUND 57 SELF INS-BUS FUND 58 SELF INS-AUTO FUND 59 SELF INS-W/C FUND 77 PARKING AUTHORITY FUND 80 GENERAL TRUST FUND 81 DEFERRED COMP FUND 82 CEMETERY PERPETUAL CARE FUND 84 FED REV SHARING FUND 85 DEBT SERVICE FUND 89 MAUSOLEUM ENDOWMENT FUND 99 GENERAL SERVICE FUND - 7 - ATTACHMENT B City of Santa MOnica FinancIal Assets Excluded from the Coverage of the City Investment Polley The followmg listed City of Santa MOnica finanCIal assets are specifically excluded from coverage of the City Investment Polley ThIs exclusIOn does not exempt the administrators of these exempted assets from exercIsing due dIligence and prudence In the management of the assets Almort Certificates of Partlcloa~lon - Under the terms of the trust agreement between the CIty of Santa Monica and the fiscal agent (U S Trust Company of California) for the City of Santa Monica Certificates of PartiCipation (COP's1 (1995 Airport Facilities Refunding Senes A and Senes Bl. certain speCifiC funds must be held by the fiscal agent, to (I) refund the City of Santa Monica Certificate of PartiCipation (Airport Facilities) (the "Pnor Certlflcates"L (II) fund a reserve fund for the CertIficates, and (III) pay the costs Incurred In connection with the execution and delIvery of the Certificates Audltonum Box Office Trl,J$t - Established by City CounCil Resolution 4243 to hold In trust Santa MOnica CIVIC AuditOrium box office operatIOn receipts for each mdlvldual permIttee Fund held In thiS trust are managed by the AuditOrium through a checking account at ;Irst Interstate 8ank Wells Fargo Bank and are accounted for in Fund 32, the AudItOrium Fund These funds are not Invested Cemeterv Peroetual Care Fund Investments - The City CounCil authorized the Investment consulting firm of RNC Capital Management to manage these Investments In accordance wIth parameters approved by the CounCIl They are accounted for In Fund 82, the Cemetery Perpetual Care Fund Cltv Emplovees Deferred Comoensatlon - Established by City Council Resolution 6759 and authonzed under contract No 5697, these funds are managed under contract by the Public Employees BenefIt Services Corporation (PEBSCO), and are accounted for 10 Fund 81, the Deferred Compensation Fund Downtown Redevelopment Lease Revenue Bonds - Under the terms of the trust agreement between the Redevelopment Agency of the City of Santa MOnica for Lease Revenue Bonds, 1992, and Da"k of America First Trust of California (fiscal agent) certam speCifiC funds must be held by the fiscal agent, for payment of prinCipal and Interest and for reserve requirements The amount of funds held by the fiscal agent vanes from year to year as the bonds mature The funds are accounted for In the 85 Fund, the Debt Service Fund. Llbrarv Book Purchase Account - Established by City CounCil Resolution 5088 to facIlitate book purchases, these funds are managed by the LIbrary through a checking account with rlrst Interstat~ Gailk Wells Fargo Bank There IS a $100 00 limit per transaction Funds are accounted for In Fund 01, the General Fund These funds are not Invested M~lIn Library Improvements Project G 0 Bonds - Under the terms of the trust agreement between the CIty of Santa Monica and the fIscal agent (First Trust of California) for the City of Santa Monica General Obligation Bonds (Main Library Improvements ProJect), Series 1990, certain speCifiC funds must be held by First Trust of California for the acquIsition of certain real property, for construction and Improvement needs, for pnnclpal and Interest payments, and for reserve reqUIrements The funds are accounted for In Fund 01, the General Fund and Fund 85, the Debt Service Fund Mausoleum Perpetual Care Fund Investments - On July 8, 1986, the City Council amended the MuniCipal Code, Section 7300 et al , to create the new Mausoleum Perpetual Care Fund RNC Capital Management, the Investment counselor for the Cemetery Perpetual Care Fund, was also deSIgnated to manage these funds In accordance wIth parameters approved by the CounCIl These funds are accounted for In Fund 89, the Mausoleum Perpetual Care Fund - 8 - Ocean Park Redevelooment ProJects - Under the terms of the trust agreement between the Redevelopment Agency of the City of Santa Monica and the Fiscal Agent (08f1k of America) (First Trust of California) for the Redevelopment Agency of the City of Santa Monica Ocean Park Redevelopment Projects Tax Allocation Refunding Bonds, Series 1992, certain specifiC funds must be held by the fiscal agent, to (I) refund the Agency's Ocean Park Redevelopment Projects Tax Allocation Refunding Bonds, Series 1988A, (Ill refund the Agency's Ocean Park Redevelopment Project Tax AllocatIOn Refinancing Bonds, Series 1988B, (III) prOVide funds to repay a portion of certam promissory notes of the Agency, {Iv} fund a reserve account for the Refundmg Bonds, and (v) pay the costs of Issuance Incurred wIth the Issuance of the Refundmg Bonds The funds are accounted for In Fund 85, the Debt Service Fund Parking Authority Lease Revenue Bonds - Under the terms of the trust agreement between the Parking Authority and the fIscal agent (Galik of An,ellGal (FIrst Trust of California} for the ParkIng Authority of the City of Santa Monrca Lease Revenue Bonds, 1992, certain speCifiC funds must be held by the fiscal agent, for construction and Improvement needs, for principal and Interest payments, and for reserve requirements The funds are accounted for rn Fund 85, the Debt Service Fund Petty Cash - Section 1513 of the City Charter prOVIdes for the establishment of petty cash funds for use by department heads to make cash expenditures of a minor nature Petty cash funds are managed by each indiVidual department and are accounted for In each department's financIal records These funds are not Invested Santa Monica Rehabilitation Loan Funds - These funds were established by City CounCil ResolutIOn to promote low cost housrng by proViding loans to rehabilitate homes These funds are held In trust by the First Federal Savings Bank of California, and are administered by the Resource Management Department and the Finance Department The funds are accounted for In Fund 19, the Community Development Block Grant Fund Wastewater Enteronse Revenue Bonds - Under the terms of the trust agreement between the City of Santa Monica and the fiscal agent, (Dank of AI' ,errca) {First Trust of Califorma), for the City of Santa Monica Wastewater Enterprise Revenue bonds (Hyperron Project), 1993 Refunding Series, certain speCifiC funds must be held by the fiscal agent for payment of prinCIpal and Interest and for reserve requirements The funds are accounted for In the 31 Fund, the Wastewater Enterprise Fund Workers' ComoensatlOn Account - ThiS checking account was established at First Interstate Bank {now Wells Fargo Bank) In accordance WIth CIty CounCIl ResolutIOn 6692 to prOVIde a means to administer the City's contract With the workers' compensatIon msurance adjusters It IS administered by the Risk Management DIVISion of the City Manager's Office and Finance departments and account for In Fund 59, the Self-Insurance Workers' Compensation Fund These funds are not Invested The follOWing accounts for the City of Santa Monica appear on the books for accounting purposes, but are not City assets and are excluded from coverage of the City Investment Policy Bail Bond Account. ThiS IS a c1earmg account established at rlrst Interstate D~nk Wells Fargo Bank for the operatIOnal convenience of the courts and the Police Department In processing bail bond payments It IS administered by the Police Department and the Finance Department Downtown Redevelooment Lease Revenue Bonds Escrow Account - As a result of the Issuance of the Downtown Redevelopment Lease Revenue Bonds, Series 1992 (Downtown Redevelopment Refunding Project of 1992), an escrow fund was established With Union Bank for purposes of payment of prinCipal of and, premium and Interest payments With respect to the 1978 Lease Revenue Bonds, Series 1992 (Downtown Redevelopment Project of 1978) - 9 - Ocean Park Redevelooment Profects Tax Allocation Bonds Escrow Accounts lRefundlna Bonds. Serres 1988A and Reflnanclno Bonds. Serres 1988B) - As a result of the Issuance of the Ocean Park Redevelopment Projects Tax Allocation Refunding Bonds, Serres 1992, escrow funds were established with Bank of Amerrca (now with First Trust of California) for purposes of payment of (I) the prrnclpal of and accrued Interest on the 1 988 Bonds coming due on and prror to the Redemption Data and, (II) the RedemptIon Price for the 1988 Bonds on the Redemption Date Parking Authorrtv Bonds Escrow Fund - As a result of the Issuance of the City of Santa MOnica Certificates of ParticipatIOn (Third Street Mall ProJectl, 1986, the Parkmg Authorrty Revenue Bonds of 1966 were placed In "defeasance" With the fIscal agent, Bank of Amerrca The Investment securrtles held are suffiCient to provide for the balance of the revenue bond's prrnclpal and Interest payments The defeasance of these bonds was accounted for In Fund 77, the Parking Authorrty Fund Third Street Mall Certificates of PartlclOatlOn Escrow Account - As a result of the Issuance of the Parking AuthOrity Lease Revenue Bonds, Senes 1992 (CIty of Santa MOnica Refundmg Improvements Project of 1992). an escrow fund was established With First Interstate Bank (now Wells Fargo Bank) for purposes of payment of prrnclpal and, premium and Interest payments With respect to 1986 ThIrd Street Mall Certificates of Participation coming due after the Issuance of the refunding bonds Wastewat~r Enterorrs~ Revenue Bonds Escrow Account - As a result of the Issuance at the City of Santa Monica Wastewater Enterprise Revenue Bonds (Hyperron ProJect). 1993 Refunding Serres, an escrow fund was established With Bank of Amerrca (now With First Trust of California) for purposes of payment of prrnclpal of and, premium and Interest payments With respect to the Wastewater Enterprrse Revenue Bonds, 1991 Serres A through the date that the bonds are redeemed - 10 - . . could not be scheduled dU::"lng non-wc::"k;: hours, W" !""";... proper advance notlflcat~o~ ~o the Depa~~ment Head, C~ lllness or inj'..lry c: any memoer of the employee's household. B. Employees covered herel~ shall accrue slck leave wlth pay on the followlng basls, provlded that oermanent part-tlme eIT'ployees shall accrue slck leave In t.hat proportlon as t.he number of hours budgeted fo~ the posltlon bears to the full-tlme work week- (1 ) Followlng the completlon of the :lrst SlX (61 calenday months of contlnuous serVlce, SlX (6) worklng days. (2 } Thereafter, one (l) worklng day for each completed calendar month of serVlce. C. The foregolng beneflts are cumulative subJect to the followlng restrlctlons: (1) No more than one-hundred-thlrty (130) working days may be applled agalnst slck leave for any one (1) lllness. D Any employee who lS absent because of slckness or other physlcal dlsablll':y shall notlfy hls/her Department Head or other lmmedlate superlor offlcer as soon as posslble but ln any event lTI accordance wlth department rules and regulatlons. 4 C4 Leave of Absence Wltnout Pay A permanent employee covered hereln may be granted a leave of absence wlthout pay upon appllcatlon approved by the Department Head and the Clty Manager. Such leave may not exceed one (1) year's tlme. Upon explraClon of the leave, the employee shall be rel.Dstated to the pOSltlon held before the leave was granted Such leave shall be granted only In those cases where an employeeTs record of serVlce and qualiflcations make it deslrable for the City to retaln the employee's serVlces even at the cost of some lTICOnVenlence to the Clty 32 ----- --- ----- Legal Authonzed Investment Limit (%} Other Constraints Medium-Term Corporate 30% Maximum maturity 5 years, bonds must be Notes rated In top three rating categories by two of the tl,ree lergest a nationally recognized rating serVices Shares of benefiCial Interest 1 G % 20 % No more than 10% may be Invested In any Issued by diversified one mutual fund Funds are Invested In management companies seCUrities and obligations authOrized by sub- (mutual funds) diVISions (a) through (m) of Section 53601- and 53635, (any of the authOrIZed Investments for local agencies) the Investment company must be an hIghest ranking prOVided by not less than two of the three largest nationally recognIzed rating services OR must have the Investment advisor registered With the SEC With no less than 5 yrs experience and have assets under mgmt In excess of $500 mllhon Money Market Funds 20% The money market funds must have an average weighted maturity of 90 days or less and abIde by SEC regulatIons; Funds must receive the highest ranking by 2 of the 3 largest natIOnally recognized rating agencies OR retain an investment advisor who IS registered, or exempt from registratIOn, With the SEC and has at least 5 years' experience managing money market funds In excess of $500 million. Collateralized Certificate of No limit Maximum maturity 5 years. Banks deposit DeposIt not to exceed the total of paid-In capital surplus S&Ls deposit not to exceed the greater of total net worth or $500,000 State and Federal credit unions deposit shall not exceed the greater of the total of unpaired capital and surplus or $500,000 Must be collateralized to 110% of the CD value by other eligible seCUrities Mortgage Securities 2 [, % 2Q % Maximum maturity 5 years; bonds must be rated In top two rating categories by a nationally recognized rating servIce Shall not exceed 95% of the mortgage security's fair market value Local Agency $ 20 million Monies are Invested In pooled state fund Investment Fund managed by State Treasurer MaXimum, 10 (LAIF) transactions per month - 12 - Legal Authorized Investment Limit (%) Other Con$tralnts County Pooled Investment No limit Funds Prohibited investments Include seCUrities not listed above, as well as inverse floaters, range notes, Interest only stripS denved from a pool of mortgages ~collatefa1ized mortgage obligations}, and any security that could result In zero interest accrual If held to matunty, as specified In sectIOn 53601 6. Bond Proceeds Bond proceeds may be Invested In accordance with the State Code provIsions. - 13 - GLOSSARY AGENCIES Federal agency securities ASKED The pnce at which securities are offered BANKERS' ACCEPTANCE (BAl A draft or bill of exchange accepted by a bank or trust company The accepting InstItution guarantees payment of the bill, as well as the Issuer BASIS POI NT A baSIS pOint equals one one-hundredth of 1 % ( 01 %) BID The pnce offered for secuntles BOOK ENTRY SECURITIES All U S Treasury and Federal AgenCies are malntarned on computerized records at the Federal Reserve now known as "wlreable" seCUrities BRO KER A broker brmgs buyers and sellers together for a commiSSion paid by the initiator of the transaction or by both Sides, he does not position In the money market, brokers are active In markets In which banks buy and sell money and In Interdealer markets COLLATERAL Securrtles, eVidence of depOSit or other property which a borrower pledges to secure repayment of a loan Also refers to securrtles pledged by a bank to secure depOSits of public monies COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) The offiCial annual report for the City of Santa Monica It Includes five combined statements and baSIC financial statements for each Individual fund and account group prepared In conformity with GAAP It also Includes supporting schedules necessary to demonstrate compliance with flnance- related legal and contractual prOVISions, extensive Introductory materral, and a detailed Statistical Section CERTIFICA TE OF DEPOSIT (CD) A time depOSit with a speCifiC maturity eVidenced by a certificate Large-denomination CD's are tYPically negotiable COMMERCIAL PAPER (CP) An unsecured promissory note with a fixed maturrty no longer than 270 days Public offenngs are exempt from SEe regIstratIon The largest Issuers Include General Motors Acceptance Corporation (GMAC), General ElectriC Capital Corporation (GECC) and other major corporations COUPON (a) The annual rate of mterest 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 DELIVERY VERSUS PAYMENT (DVP) There are two methods of delivery of seCUrities delivery versus payment and delivery versus receipt (also called free) 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 securrtles DEBENTURE A bond secured only by the general credit of the Issuer - 14 - DISCOUNT The difference between the cost pnce of a security and Its value at maturity when quoted at lower than face value A security selling below anginal offering price shortly after sale also IS considered to be at a discount DISCOUNT SECURITIES Non-Interest bearing money market Instruments that are Issued at a discount and redeemed at maturity for full face value (e g , U S Treasury bills) DIVERSIFICA TION DIViding Investment funds among a vanety of secuntles and Issuers offering Independent returns FEDERAL CREDIT AGENCIES Agencies of the Federal government set up to supply credit to vanous classes of institutions and individuals, e g , S&L's, small business firms, students, farmers, farm cooperatives, and exporters FEDERAL FUNDS Non-Interest beanng deposits held by member banks at the Federal Reserve Also used to denote "Immediately available" funds In the clearing sense "Fed Funds" also used to refer to these funds 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 OPEN MARKET COMMITTEE (FOMC) Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents The President of the New York Federal Reserve Bank IS a permanent member while the other Presidents serve on a rotating basIs The Committee penodlcally meets to set Federal Reserve gUidelines regarding purchases and sales of Government Securities In the open market as a means of Influencing the volume of bank credit and money FEDERAL RESERVE SYSTEM The central bank of the United States created by Congress and consisting of a seven-member Board of Governors In Washington, DC, 1 2 Regional Banks and about 5,700 commercial banks that are members of the system FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) A federal agency that Insures financial Institutions' deposits, currently up to $100,000 per deposit. FEDERAL HOME LOAN BANKS (FHLB) The Institution that formerly regulated and lent to savings and loan associatIOns The Federal Home Loan Banks played a role analogous to that played by the Federal Reserve Banks Vis-a-VIS member commercial banks However, those responsibilities have been assumed by the Office of Thnft SupervIsion and the FDIC FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) A U S Corporation and Instrumentality of the U S government Through Its purchases of conventional mortgages, It prOVides liqUidity to the mortgage markets, much Irke FNMA FHLMC'S Securities are highly liqUid and widely accepted FHLMC assumes and guarantees that all security holders will receive timely payment of pnnclpal and Interest FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FNMA, like GNMA was chartered under the Federal National Mortgage Association Act In 1938 FNMA IS a federal corporation working under the auspices of the Department of Housing & Urban Development, H U D It IS the largest single proVider of reSidential mortgage funds In the United States Fannie Mae, as the corporation 1$ called, IS a pnvate stockholder- owned corporation The corporations purchases Include a vanety of adjustable mortgages and second loans In addition to fixed-rate mortgages FNMA's securities are - 15 - also highly liquid and are widely accepted FNMA assumes and guarantees that all seCUrity holders will receive timely payment of principal and Interest GOVERNMENTAL NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae) Securities guaranteed by GNMA and Issued by mortgage bankers, commercial banks, savings and loan associations and other institutions Security holder IS protected by full faith and credit of the U S Government Ginnie Mae securities are backed by FHA, VA or FMHM 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 be liquid If the spread between bid and asked prices IS narrow and reasonable sIze can be done at those quotes LOCAL AGENCY INVESTMENT FUND (LAIF) 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 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 MA TURITY 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 OPEN MARKET OPERATIONS Purchases and sales of government and certam 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 that submit daily reports of market activity and positions and monthly fmanclal 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 PRIME RATE The rate at which banks lend to their best or "prime" customers Also known as the "reference rate" 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 state (the so-called legal list) In other states, the trustee may Invest In a security If It is one which would be brought by a prudent person of discretion and Intelligence who IS seeking a reasonable Income and preservation of capital 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 or the current Income return - 16 - 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 REPURCHASE AGREEMENT (RP OR REPO) A holder of securities selis these securities to an Investor with an agreement to repurchase them at a fixed price on a fixed date The secunty "buyer" In effect lends the "seller" money for the penod of the agreement, and the terms of the agreement are structured to compensate him for thiS Dealers use RP extensIvely to finance their posItions Exception When the Fed IS said to be dOing RP, It IS lending money, that IS, Increasing bank reserves SAFEKEEPING A service to customers rendered by banks for a fee whereby securities and valuables of all types and descnptlons 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 dlstnbutlon SEC RULE 15C3-1 See Uniform net capital rule STUDENT LOAN MARKETING ASSOCIATION (SLMA) A U S Corporation and Instrumentality of the US government Through Its borrowings, funds are targeted for loans to students In higher education InstItutIOns SLMA's seCUrities are highly liqUid and are Widely accepted SECURITIES & EXCHANGE COMMISSION Agency created by Congress to protect Investors In securities transactions by administering securities legislation SETTLEM ENT DATE The date on whIch a trade IS cleared by delivery of seCUrities against funds ThiS date may be the same as the trade date or later TENNESSEE VALLEY AUTHORITY (TVA) A U S Corporation created In the 1930's, to electrify the Tennessee Valley area, currently a major utility headquartered In KnoXVille Tennessee TVA's securities are highly liqUid and are Widely accepted. TREASURY BILLS A non-Interest beanng discount secunty 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 BOND Long-term U S Treasury secuntles having initial maturities of more than ten years TREASURY NOTES Intermediate term coupon bearing U S Treasury seCUrities having initial matUrities of from one to ten years 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 pnce With the adjustment spread over the period from the date of purchase to the date of maturity of the bond 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 - 17 - - --- public Issues are spread among members of underwriting syndicates Liquid capital Includes cash and assets easily converted Into cash TRADE DATE The date on which a transaction IS Initiated or entered Into by the buyer and seller WH EN-ISSUED TRADES TYPIcally, there IS a lay between the time a new bond IS announced and sold, and the time when It IS actually Issued Durrng this Interval, the security trades "WI", "when, as, and If Issued " YIELD TO MATURITY The rate of return Yielded by a debt security held to maturity when both Interest payments and the Investor's capital gain or loss on the security are taken mto account G ';FINANCFTREAS';SHARE',INVEST2 POL - 18 - Attachment B Oversight Questions For Elected Officials 1 Do ll'e have an mvestment pahey? fVhen lvaS If last revzelt'ed and approved by the government board? Yes. the elt} has a \\Tltten mvestment polIcy The pohcy IS revle\ved and approved annually by the CIty CounCIl It was last renewed and approved January 23. 1996 In 1992 the pohcy was a\varded the CertIficatIOn of Excellence Award from the I\lulliclpal Treasurers ASsociatIOn of the Umted States & Canada 2 Is the mvestment pohey conSIstent lJ/7th current Califorma eode requrremenfs? Yes. the Investment pohcy IS conSIstent WIth current Cahforma code reqUlrements and IS updated penodlCally to conform to changes m State/CIty law/regulatIons "\ What specific restrlctIOns doe!> the mvestment pohcy nnpose on the SeleellOn of l11vestment ~ wIndes? o CredIf standards o Jlarunty range o ConcentratlOn by ope In addItIOn to the State of CalIfornIa Statutes, and the specific restnctlOns outlIned helO\v. the Investment pohcy reqUIres that. '"Investments shall be made \vlth Judgement. care. skIll. prudence. and dIlIgence under CIrcumstances then prevaIlmg. \vhlch persons of prudence actmg m a lIke capacny and fmmhanty WIth those matters \vould use m the conduct of funds of a hke character and \vlth hke anTIS, to safeguard the pnnclpal and mamtmn the hqUIdny needs of the Cny" Also. "Investment officers shall aVOId any transactlons that mIght Impmr pubhc confidence m the Santa MOllica CIty government " CredIt Standards - To Immmlze the nsk to the CIty's overall mvestment portfolIo from the default by a smg1e InStItutIOn wnh \vhlch Cny funds are depOSIted or mvested. CIty funds can only be deposited In a finanCIal mstltutIOn whose performance has been rehable and whose safety ratmg. as determmed by the Investment CommIttee or a reputable mdependent ratmg ser\"1ce selected by the Investment CommIttee. IS m the upper 60% of Its peer group These same standards apply to InstItutIons In ",'hlch securItIes owned by the CIty are held for safekeepmg Exceptions to these standards may be made on an mdl\'Idual baSIS If they are unammously recommended by the Investment CommIttee ~'latunty Range - ),10 Investment can be purchased whIch matures more than three years from the date of purchase unless specIfically recommended by a unanimous vote of the Investment CommIttee :-To Inyestment can be purchased WhICh matures more than five years from date of purchase '\'Ithout the addmonal approval of the CIty Manager and the pnor approval ofthe CIty CouncIl The average weIghted matunty of all pooled CIty mvestments cannot exceed 18 months (547 days) ConcentratIOn - To reduce the market and Interest rate nsks WhICh would result from the excess concentratIOn of assets In a speCific Issue or a speCIfic class of securitIes, no more than 5% of the CIty's In,.estIble funds may be Invested In any SIngle Issue matunng In a gIven month The only exceptIOn IS U S Treasury secuntIes, to \VhICh an alternatIve lImIt of 10% applIes 4 rVhat speqfic restrlctwns does the polrc.vplace on the use of reverse repurchase agreements? The Inyestment polIcy IS conSIstent \\lth State statutes applIcable to mumclpal Investments and places a number ofrestnctIOns on reverse repurchase agreements "Reverses" must be made \vnh pnmary dealers of the Federal Reserve Bank ofNe\v York and the secuntIes used for the agreement must have been held by the Insurer for at least 30 days The maXImum maturIty IS 92 days and there IS a limit of 20% of the portfolio OperatIonally. the Treasurer does not. and has not, utIlized reverse repurchase agreements III the Cny's Investment portfollo Any declSlon to do so ,vould have to be approved by the Investment CommIttee 5 Are all of the mvestmenrs on the most recent 5chedule of lf1vestmenrs conslstenr WIth the l11vcsfment pohcJ' and government code reqwremenrs? Yes. all mvestments are consistent 'VIth the lllvestment pohcy and government code reqUIrements The mformatlOn report prunded to the Council each month detaIlmg mvestment actIYltles would note any activItieS whIch VIOlate the CIty's current lllvestment pollcy (Exceptlons and VIOlatIOns SectIOn) )Jo exceptIOns and/or VIOlatIOns have occurred 6 i-Vhat are the restnctWf15 of the l11vestment pO!zCJ.' It'lth respect to the presentatzon of 111vefitments on the lnl'estment schedule. and IS the presentatwn consIstent with those requrrements) The Investment polley reqUlres that the }.ilomhly Cash and Investment Report (mvestment schedule) detaIl and summarIze all transactIOns for the reportmg penod and present the status of City myestments The presentatIOn IS conSIstent \"l.th those restnctIOns and follo\vs the current State reportmg reqUIrements 7 Are the llH'estments on the schedule adequately dlwrsified? o bv lssuer ') o b.v matunty? o by dollar amount') o bv dealer ') Yes. Investments are adequately dIversified The mvesuuent polIcy reqUIres that mvestments be diversIfied across types ofmvestments (mcludmg Issuers). matuntIes of those lllyestments. dollar amounts mvested and mstltutlOns m which those mvestments are made (bids from seyeral firms that compete directly for publIc bUSIness are obtamed for each transactIOn) 8 Are the YIelds for the mdIVIdual mvestments consIstent lnth market levels for comparable maturIty lengthS'? Yes The Investment Polley specrfically states that. "The mvesUUent portfolIo WIll be deSigned to obtam at least a market lewl rate of return. gIven budgetary and economIC cycles (3 or more years) and gIven the CIty'S mvestment rIsk and cash fio\\' needs" To further ensure YIelds consIstent WIth thiS polley and to proVIde for the objectIve Investment of Cny funds. bids from several firms that compete dHectly for publIc busmess are obtamed for each transactIon Such bIds are tile \\Ith the Cny Treasurer's Office and copIes are proVIded to the DIrector of Fmance monthly 9 Are bank reconcIlzatIOns done In a rzmef.v manner. and are the.v done bJ' staff outszde the Il1vestment area') Yes Bank statements are receIved by the Cny on a monthly baSIS. and reconClhatlOns are completed by the Accountmg DlvlslOn shortly after the statements are receIved 10 rVhat It'ere the findmgs oflhe last annual audlt 111 the areas of cash management and 1111'estment pract1ces;> Dunng the FY 1994/95 audIt (latest mformatlOn avatlabkl the audItors noted that the commumcanon of cash and mvestment actiVItIeS between the Accountmg and Treasury DIVISIOns should be m \\Tltmg rather than wrbally RevIsmg those polIcIes \\'ould Increase the accuracy of both Accountmg and Treasury records and reduce the time reqUIred for reconcIliatIOns of bank. accounts 11 rVhat actIOns have been taken 111 response to thoseJindmgs, if any? The City AccountIng and Treasury staffhave developed a more formalIzed process for commumcatlOn of cash and Investment actl\'1tIes - - --- - ~--- 12 At u4wt pomt zn mne are cm,h needs greatest. and lrhat IS the plan to meet those reqwremenrs? H01l wdl changes 111 revenue e"(pectatwns affect the ablllty to meet rhose needs? On-gomg cash needs are fauly consIstent throughout the year All cash needs are met unhzmg the City's cash tlo\\' from mcomIng reyenues. maturIng Investments and CIty funds In the State's Local Agency Investment Fund (LAIF) \vhlch has mmledmte hqUIdlty To meet those needs ""hen revenue expectatlons change. Investment strategIes are adjusted to proVIde adequate lIqUIdIty ~