Coachella Valley Mosquito and Vector Control District

Board of Trustees Meeting

November 13, 2007

 

Agenda Item:  New Business

 

Discussion and/or approval to initiate a wire transfer of $1,500,000 from Desert Commercial Market Rate account to Local Agency Investment Fund (LAIF).

 

Background:

 

The District’s 2007 Investment Policy states the primary investment objectives shall be: (1) safety, (2) liquidity, and (3) return on investments. The Investment Policy allows up to 75 percent of the District’s investments to be held in LAIF.

 

The Local Agency Investment Fund is a voluntary program created by statute in 1977 as an investment alternative for California's local governments and special districts. It has grown from 293 participants and $468 million in 1977 to 2,622 participants and $15 billion in 2006. It is part of the Pooled Money Investment Account (PMIA), which began in 1955 with oversight provided by the Pooled Money Investment Board (PMIB) and an in-house Investment Committee. The PMIB members are the State Treasurer, Director of Finance, and State Controller.

 

LAIF offers local agencies the opportunity to participate in a major portfolio, which invests hundreds of millions of dollars, using the investment expertise of the Treasurer's Office investment staff. All investments are purchased at market, and a market valuation is conducted monthly

 

PMIA has Policies, Goals and Objectives for the portfolio to make certain that the goals of Safety, Liquidity and Yield are not jeopardized and that prudent management prevails.

The policies are formulated by investment staff and reviewed on an annual basis by both the Pooled Money Investment Board (PMIB), consisting of the State Treasurer Director of Finance and State Controller, and the Local Investment Advisory Board (LIAB), consisting of 5 members as designated by statute.

 

Safety

 

All securities are purchased under the authority of Government Code Section 16430 and 16480.4. Under Federal Law, the State of California cannot declare bankruptcy, thereby allowing the Government Code Section 16429.3 to stand. This Section states that “moneys placed with the Treasurer for deposit in the LAIF by cities, counties, special districts, nonprofit corporations, or qualified quasigovernmental agencies shall not be subject to either of the following: (a) transfer or loan pursuant to Sections 16310, 16312, or 16313, or (b) impoundment or seizure by any state official or state agency.”

 

Liquidity

 

During the 2002 legislative session, California Government Code Section 16429.4 was added to the LAIF’s enabling legislation. The Section states that “the right of a city, county, city and county, special district, nonprofit corporation, or qualified quasi-governmental agency to withdraw its deposited moneys from the LAIF, upon demand, may not be altered, impaired, or denied in any way, by any state official or state agency based upon the state’s failure to adopt a State Budget by July 1 of each new fiscal year.”

 

Yield

 

The yield for LAIF during the period ending September 30, 2007 is 5.24 percent, Desert Commercial Market Rate account is 3.91%. 

 

 

Account

Interest Rate

Current Balance

Transfer

New Balance

Estimated Monthly Return

New Return

Difference

LAIF

 

5.24%

$5,360,028

$1,500,000

$6,860,028

$23,405

$29,955

$6,550

Desert Commercial Market Rate

3.91%

$3,073,285

$(1,500,000)

$1,573,285

$10,014

$5,126

$(4,888)

 

 

 

 

 

 

Estimated Monthly Gain

$1,663

 

 

Staff Recommendation:

 

Approve the wire transfer of $1,500,000 from the Desert Commercial Market rate account with a yield of 3.91 percent to LAIF with a yield of 5.24 percent.

 

Fiscal Impact:

 

This will increase the District’s investment earnings by $1,663 a month without compromising the Districts investment objective of safety, liquidity, and return on investments.