HomeMy WebLinkAbout10-01-2013 b4 appointments investment oversight committee
FROM: Michael Codron, Assistant City Manager
Prepared By: Sheryll Schroeder, Interim City Clerk
SUBJECT: APPOINTMENTS TO THE CITY INVESTMENT OVERSIGHT COMMITTEE,
INCLUDING ONE COUNCIL MEMBER AND ONE MEMBER OF THE PUBLIC
RECOMMENDATION
Discuss and select one Council Member and one member of the public to serve on the City’s
Investment Oversight Committee.
DISCUSSION
Background
The City Investment Oversight Committee reviews investment policy and portfolio performance on
a quarterly basis, and reviews and makes recommendations as appropriate regarding the City’s
investment policies and practices at least annually. Current membership includes the City Manager,
Assistant City Manager, Director of Finance & IT (Treasurer), Finance Operations Manager and the
City’s Independent Auditor.
On April 9, 2013, the City Council reached consensus to increase the composition of the Committee
to add one Council Member and one member of the public. This change in the composition of the
committee is reflected in the City’s budget and fiscal policies, included in the 2013-15 Financial
Plan. The public appointment will have a Conflict of Interest Form 700 reporting requirement.
In August, the City Clerk advertised for applications from the public, with a closing date of August
16, 2013. One application was received
ALTERNATIVE
The City Council may direct staff to reopen the application period to procure additional
applications.
ATTACHMENT
City Investment Policy (2013-15 Financial Plan Pages H-12 through H-14)
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
Application for public member
T:\Council Agenda Reports\2013\2013-10-1\Investment Oversight Committee
Meeting Date
Item Number Oct. 1, 2013
B4 - 1
BUDGET REFERENCE MATERIALS
BUDGET AND FISCAL POLICIES
REVENUE DISTRIBUTION
The Council recognizes that generally accepted accounting principles for state and local governments discourage
the “earmarking” of General Fund revenues, and accordingly, the practice of designating General Fund revenues
for specific programs should be minimized in the City's management of its fiscal affairs. Approval of the
following revenue distribution policies does not prevent the Council from directing General Fund resources to
other functions and programs as necessary.
A. Property Taxes. With the passage of Proposition 13 on June 6, 1978, California cities no longer can set
their own property tax rates. In addition to limiting annual increases in market value, placing a ceiling on
voter-approved indebtedness, and redefining assessed valuations, Proposition 13 established a maximum
county-wide levy for general revenue purposes of 1% of market value. Under subsequent state legislation,
which adopted formulas for the distribution of this countywide levy, the City now receives a percentage of
total property tax revenues collected countywide as determined by the State and administered by the County
Auditor-Controller. The City receives 14.9% of each dollar collected in property tax after allocations to
school districts.
Accordingly, while property revenues are often thought of local revenue sources, in essence they are State
revenue sources, since the State controls their use and allocation.
With the adoption of a Charter revision in November 1996, which removed provisions that were in conflict
with Proposition 13 relating to the setting of property tax revenues between various funds, all property tax
revenues are now accounted for in the General Fund.
B. Gasoline Tax Subventions. All gasoline tax revenues (which are restricted by the State for street-related
purposes) will be used for maintenance activities. Since the City's total expenditures for gas tax eligible
programs and projects are much greater than this revenue source, operating transfers will be made from the
gas tax fund to the General Fund for this purpose. This approach significantly reduces the accounting efforts
required to meet State reporting requirements.
C. Transportation Development Act (TDA) Revenues. All TDA revenues will be allocated to alternative
transportation programs, including regional and municipal transit systems, bikeway improvements, and other
programs or projects designed to reduce automobile usage. Because TDA revenues will not be allocated for
street purposes, it is expected that alternative transportation programs (in conjunction with other state or
federal grants for this purpose) will be self-supporting from TDA revenues.
D. Parking Fines. All parking fine revenues will be allocated to the parking fund, except for those collected by
Police staff (who are funded by the General Fund) in implementing neighborhood wellness programs.
INVESTMENTS
A. Responsibility. Investments and cash management are the responsibility of the City Treasurer or designee. It
is the City’s policy to appoint the Director of Finance and Information Technology as the City’s Treasurer.
H-12H-12
Attachment 1
B4 - 2
BUDGET REFERENCE MATERIALS
BUDGET AND FISCAL POLICIES
B. Investment Objective. The City's primary investment objective is to achieve a reasonable rate of return
while minimizing the potential for capital losses arising from market changes or issuer default. Accordingly,
the following factors will be considered in priority order in determining individual investment placements:
1. Safety 2. Liquidity 3. Yield
C. Tax and Revenue Anticipation Notes: Not for Investment Purposes. There is an appropriate role for tax
and revenue anticipation notes (TRANS) in meeting legitimate short-term cash needs within the fiscal year.
However, many agencies issue TRANS as a routine business practice, not solely for cash flow purposes, but
to capitalize on the favorable difference between the interest cost of issuing TRANS as a tax-preferred
security and the interest yields on them if re-invested at full market rates.
As part of its cash flow management and investment strategy, the City will only issue TRANS or other forms
of short-term debt if necessary to meet demonstrated cash flow needs; TRANS or any other form of short-
term debt financing will not be issued for investment purposes.
As long as the City maintains its current policy of maintaining fund/working capital balances that are 20% of
operating expenditures, it is unlikely that the City would need to issue TRANS for cash flow purposes except
in very unusual circumstances.
D. Selecting Maturity Dates. The City will strive to keep all idle cash balances fully invested through daily
projections of cash flow requirements. To avoid forced liquidations and losses of investment earnings, cash
flow and future requirements will be the primary consideration when selecting maturities.
E. Diversification. As the market and the City's investment portfolio change, care will be taken to maintain a
healthy balance of investment types and maturities.
F. Authorized Investments. The City will invest only in those instruments authorized by the California
Government Code Section 53601.
The City will not invest in stock, will not speculate and will not deal in futures or options. The investment
market is highly volatile and continually offers new and creative opportunities for enhancing interest
earnings. Accordingly, the City will thoroughly investigate any new investment vehicles before committing
City funds to them.
G. Authorized Institutions. Current financial statements will be maintained for each institution in which cash
is invested. Investments will be limited to 20 percent of the total net worth of any institution and may be
reduced further or refused altogether if an institution's financial situation becomes unhealthy.
H. Consolidated Portfolio. In order to maximize yields from its overall portfolio, the City will consolidate cash
balances from all funds for investment purposes, and will allocate investment earnings to each fund in
accordance with generally accepted accounting principles.
I. Safekeeping. Ownership of the City's investment securities will be protected through third-party custodial
safekeeping.
J. Investment Management Plan. The City Treasurer will develop and maintain an Investment Management
Plan that addresses the City's administration of its portfolio, including investment strategies, practices and
procedures.
H-13H-13
Attachment 1
B4 - 3
BUDGET REFERENCE MATERIALS
BUDGET AND FISCAL POLICIES
K. Investment Oversight Committee. As set forth in the Investment Management Plan, this committee is
responsible for reviewing the City’s portfolio on an ongoing basis to determine compliance with the City’s
investment policies and for making recommendations to the City Treasurer (Director of Finance and
Information Technology) regarding investment management practices.
Members include the City Manager, Assistant City Manager, Director of Finance & Information
Technology/City Treasurer, Finance Operations Manager, the City’s independent auditor, one City Council
member, and one member of the public.
The member of the public shall be appointed by the City Council in accordance with the City’s process for
appointing advisory body members.
L. Reporting. The City Treasurer will develop and maintain a comprehensive, well-documented investment
reporting system, which will comply with Government Code Section 53607. This reporting system will
provide the Council and the Investment Oversight Committee with appropriate investment performance
information.
APPROPRIATIONS LIMITATION
A. The Council will annually adopt a resolution establishing the City's appropriations limit calculated in
accordance with Article XIII-B of the Constitution of the State of California, Section 7900 of the State of
California Government Code, and any other voter approved amendments or state legislation that affect the
City's appropriations limit.
B. The supporting documentation used in calculating the City's appropriations limit and projected appropriations
subject to the limit will be available for public and Council review at least 10 days before Council
consideration of a resolution to adopt an appropriations limit. The Council will generally consider this
resolution in connection with final approval of the budget.
C. The City will strive to develop revenue sources, both new and existing, which are considered non-tax
proceeds in calculating its appropriations subject to limitation.
D. The City will annually review user fees and charges and report to the Council the amount of program
subsidy, if any, that is being provided by the General or Enterprise Funds.
E. The City will actively support legislation or initiatives sponsored or approved by League of California Cities
which would modify Article XIII-B of the Constitution in a manner which would allow the City to retain
projected tax revenues resulting from growth in the local economy for use as determined by the Council.
F. The City will seek voter approval to amend its appropriation limit at such time that tax proceeds are in excess
of allowable limits.
FUND BALANCE AND RESERVES
A. Minimum Fund and Working Capital Balances. The City will maintain a minimum fund balance of at
least 20% of operating expenditures in the General Fund and a minimum working capital balance of 20% of
H-14H-14
Attachment 1
B4 - 4
RECEIVED
OCT 012013
111111111 , j,;,�, �.:I , ,1 1 SLO CITY CLERK
council MCMORAn UM
DATE: October 1, 2013 AGENDA
CORRESPONDENCE
TO: City Council
Date to - I - 13 Item#
VIA: Katie Lichtig, City Manager
FROM: Michael Codron, Assistant City Managers ra�
SUBJECT: Item B4 - Investment Oversight Committee Appointments
This memo is intended to clarify the role of the Investment Oversight Committee, and
alternatives available to the City Council at tonight's meeting.
The City Budget and Fiscal Policies provide the following guidance regarding the
Committee:
Investment Oversight Committee. As set forth in the Investment Management Plan,
this committee is responsible for reviewing the City's portfolio on an ongoing basis to
determine compliance with the City's investment policies and for making
recommendations to the City Treasurer (Director of Finance and Information
Technology) regarding investment management practices.
Members include the City Manager, Assistant City Manager, Director of Finance &
Information Technology /City Treasurer, Finance Operations Manager, the City's
independent auditor, one City Council member, and one member of the public.
The member of the public shall be appointed by the City Council in accordance with the
City's process for appointing advisory body members.
The process for appointing advisory body members includes establishing a subcommittee
of the City Council. The subcommittee is responsible for interviewing applicants and
making a recommendation to the Council regarding appointments.
As this is the first time a public 'member will be appointed to the committee, there is
currently no Council subcommittee. As a result, staff wanted to identify this step as an
additional alternative action available to the City Council.
Additional Alternative
The Council may appoint two Council Members as the' Chair and Vice -Chair of
the Council Sub - Committee for the Investment Oversight Committee, and direct
the subcommittee to interview applicant(s) for the committee and make a
recommendation regarding appointment to the City Council.
RECEIVED
Goodwin, Heather SEP 3 0 2013
SLO CITY CLERK
From: Schroeder, Sheryll
Sent: Monday, September 30, 2013 4:28 PM
To: Goodwin, Heather; Lichtig, Katie; Codron, Michael
Subject: FW: Item 134 - Appointment to Investment Oversight Committee
Agenda correspondence for Item 134 on the Oct. 1, 2013 Council Agenda. AGENDA
CORRESPONDENCE
Sheryll Schroeder Date II Item 2,
Interim City Clerk --=L —
City of San Luis Obispo
(805) 781 -7102
From: Kevin P. Rice [mailto:kriceslo @gmail.com]
Sent: Monday, September 30, 2013 4:25 PM
To: Schroeder, Sheryll
Cc: Marx, Jan; Ashbaugh, John; Smith, Kathy; Carpenter, Dan; Christianson, Carlyn
Subject: Item B4 - Appointment to Investment Oversight Committee
CITY CLERK: PLEASE INCLUDE IN PUBLIC COUNCIL CORRESPONDENCE.
Dear City Council:
I wholeheartedly support the appointment of Mr. Steve Barasch to the City Investment Oversight Committee for
the following reasons:
(1) Mr. Barasch is the only applicant for this appointment.
(2) Mr. Barasch is the logical choice as he has personally followed and raised interest in city investment issues
for many years.
(3) Mr. Barasch suggested and advocated for creation of a citizen position on the City Investment Oversight
Committee resulting in the creation of this Brown Act committee.
(4) Mr. Barasch seeks to bring further transparency to city investments and his involvement will further the
public's interest and public policy.
(5) It is extremely important to add a citizen viewpoint and include citizen transparency.
Please appoint Mr. Barasch forthwith to this committee.
Sincerest regards,
Kevin P. Rice
RECEIVED
SEP 26 2013
acEn6A coiznEsponoencc
_`�il .O CITY CLERK
Cit r of San Luis Obispo
September 26, 2013 AGENDA
CORRESPONDENCE
TO: Mayor Marx & Members of the City Council Date f (? i3 Item# L?
FROM: Sheryll Schroeder, Interim i lerk
VIA: Katie Lichtig, City Manager
SUBJECT: Council Agenda Item B4, Investment Oversight Committee
As mentioned in the staff report for the Investment Oversight Committee, Council has
received one application. The staff report reflects one application, but does not list the
applicant's name. A copy of the application for Stephen Barasch is available in the Council
Reading File.