REPORT:
Investment Oversight Committee
SYNOPSIS:
The Investment Oversight Committee met Friday, February 15, 2002 and
discussed various issues detailed in the Committee report. The next
Investment Oversight Committee meeting is scheduled for Friday, May 17,
2002 at 12:00 noon in Conference Room CC8.
RECOMMENDED ACTION:
Receive and file this report.
Michael D. Antonovich,
Investment Oversight Committee
Attendance: Present were Committee members Michael Antonovich,
Gary Burton, David E. Ertel, Paul Sundeen. Absent were Committee members
William A. Burke, Norma J. Glover.
Investment Committee Action Items:
Quarterly Report of Investments: Reviewed the quarterly
investment report to the Governing Board. For the month of November 2001,
the AQMD’s weighted average yield rate on total investments of $258,129,768
from all sources was 4.05%. The allocation by investment type was 78.0% in
the Los Angeles County Pooled Surplus Investment Fund (PSI); 11.5% in the
State of California Local Agency Investment Fund (LAIF); and 10.5% in
Federal Agency securities. The Committee approved the quarterly report.
Approval of Annual Investment Policy and Delegation of Authority to
Los Angeles County Treasurer to Invest AQMD Funds: The Committee
reviewed this item and discussed the proposed changes to the Investment
Policy. For 2002, the investment policy has been revised to incorporate the
provisions of AB 609, which affects the California Government Code section
on local agency investments. AB 609 (effective January 1, 2002) changes the
authorization for local agency investments from surplus money to money in
the treasury not required for the immediate needs of the local agency. AB
609 changes the definition of eligible banks for repurchase agreements,
revises the guidelines for investing in commercial paper by eliminating the
current dual percentage system and instead capping the total amount at 25%.
AB 609 adds negotiable CDs issued by savings associations and state and
federal credit unions to the list of financial institutions in which local
agencies may invest. It further prohibits the legislative body, treasurer or
other official having custody of the money from investing in negotiable CDs
of a state or federal credit union if a member of the legislative body or
other official or employee with decision-making authority also serves on the
board of directors or a committee of that credit union. The Committee
approved these modifications with an additional amendment prohibiting SPI
investments in securities under Credit Watch – Negative by any of the three
nationally recognized ratings agencies.
In addition, the Committee discussed the renewal of its delegation of
authority to its treasurer to invest and reinvest AQMD funds. The AQMD
Annual Investment Policy and the reauthorization of the Los Angeles County
Treasurer to invest and reinvest AQMD funds was recommended for approval at
the March 1, 2002 meeting of the Governing Board.
Investment Committee Discussion Items:
Financial Market Update: Terry McGuire (Sperry Capital)
briefed the Committee on the current interest rate market. In summary, Mr.
McGuire stated that currently the steepest part of the yield curve is in 1-3
year maturities. This portion of the curve provides the best risk/reward
tradeoffs to the investor. He also briefed the Committee regarding slower
economic growth around the world and that for the first time in ten years
the Gross Domestic Product went negative (3rd Quarter 2001).
Calendar Year 2002 Committee Meeting Dates: The Committee
discussed new meeting dates in light of the recent change to the Governing
Board meeting dates. For the remainder of CY 2002 the Committee has
scheduled Friday, May 17, Friday, August 16 and Friday, November 15 for the
quarterly Investment Oversight meetings.
Other Business: None
Public Comment: None
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