LGC Update Summer Investment Conference

1
LGC UpdateSummer Investment Conference

• Sara Shippee
• July 17, 2008

2
Agenda

• LGC Staffing
• 203s Cash Investment Issues
• Odds Ends
• OPEB King Kong has arrived!
• Portfolio Statistics from 203 Reports

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LGC Staff Changes

• Debt Management
• Jasmin Liguori - Administrative staff
• Dean Cunningham Debt Analyst

4
LGC Staff Changes

• Fiscal Management
• Departures
• Michael Phillips leaving next week
• Additions
• Becky Dzingeleski Accountant - contracts
• New Accountant II to report in August
• Change in assignments
• George Harris Systems Accountant - AFIRs

5
LGC Contacts for Cash Investments

• Michael Phillips [phone] until 7/23
• After this date TBD
• Cash Investment questions
• LGC 203 review and processing
• Sara Shippee [phone]
• Cash Investment questions
• New developments products

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LGC 203 Reporting

• Included on 203 report ANY CASH and INVESTMENTS
  INCLUDED IN THE UNITS FINANCIAL STATEMENTS
• Petty Cash
• Deposits CDs
• Investments
• Trust accounts agency funds including OPEB
• Bond proceeds even if held by escrow agent
• Cash from blended component units if they do not
  file separately e.g. water districts

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LGC 203 Reporting - continued

• Please classify holdings properly
• Deposit accounts (any which are collateralized
  regardless of custodian) should be presented in
  sections II or III
• Investments in proper classifications including
  the new categories
• OPEB Investments State Treasurer
• OPEB Investments Other (provide details)
• Hospital Investments with State Treasurer

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LGC 203 Reporting - continued

• We encourage filing by email
• Put name of primary govt. on subject line of
  email
• For name line of form include any units for which
  you are reporting e.g. TDA, Soil Water
  Conservation District
• Please fax any supporting documentation
  e.g. collateral reports, portfolio listings
• INV 91 due for June 30th
• Due date is July 25th but flexible

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LGC 203s

• Email completed form to address below
• lgc0203_at_nctreasurer.com
• Fax collateral reports and other pertinent data
  to 919-807-2398
• Questions call Michael [phone] - until
  7/23. New assignment will be made soon and
  posted to web. Phone duty personnel should be
  able to assist as well or direct questions to me.
• New pooling bank memo - 1104

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Cash Investment Issues

• Out-of-State banks
• G.S. 159-31 requires use of in-state banks
• No provision to allow advance deposits into
  out-of-state banks for cafeteria plans or
  insurance companies
• No precedent for the Secretarys approval of the
  use of out-of-state banks
• Please craft these arrangements so they are
  within legal authority

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Cash Investment Issues

• Collateral designation as public accounts
• Verify that all your bank accounts are denoted as
  public accounts supposed function of INV-91
• Dedicated banks -make sure that your INV-94A
  (security agreement) and INV-94B (escrow
  agreement) has been executed
• Make sure collateral is adequate, INV-98 (Report
  of Collateral) monitor with market fluctuations
  and spikes in your balances
• Collateral Public Deposits in NC2001

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Cash Investment Issues

• OPEB Investments for an irrevocable trust are
  limited to G.S. 159-30 or the State Treasurers
  OPEB Fund unless you have expanded investment
  authority
• Without expanded authority, choices are
• State Treasurers OPEB Fund
• Bank or privately arranged trust limited to 159-30

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Cash Investment Issues

• Investment of bond proceeds
• Must follow G.S. 159-30 no exceptions
• Even units with expanded authority dont have the
  option to put debt proceeds in anything other
  than those allowed under 159-30
• Be wary of financial advisors or banks with
  creative proposals call us if something needs
  clarification or investigation

14
Cash Investment Issues

• Investment of bond proceeds Mutual Funds
• NCCMT clearly permitted by Statute
• Other mutual funds would require bond counsels
  approval with the proper criteria - G.S.
  159-30(13)
• Proceeds must be for projects subject to
  arbitrage vendor should provide arbitrage
  tracking
• One of the two highest ratings
• Mixed legal opinions on the use of mutual funds
  other than NCCMT consult legal counsel

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Odds Ends

• Treasurers Conference in August
• August 6th New Bern Convention Center
• August 8th Statesville Civic Center
• Contact SOG for registration
• Registration deadline July 23, 2008
• Topics GASB Update, St. 14 39 Review,
  Recruiting Retaining Employees, Breakouts for
  Smaller and Larger governments this year

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Odds Ends

• Plan to develop database confirmations
• Hard copy datasheets of the facts we have on file
  regarding your unit
• Will act as negative confirmations
• If correct, you do nothing
• If inaccurate, you correct and fax back to us
  we will update our database

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Employers Reporting OPEB St. No. 45

• Phase I implemented already 7/1/2007 -
  6/30/2008
• Phase II implements now 7/1/2008 - 6/30/2009
• Phase III implements next year 7/1/2009 -
  6/30/2010
• GASB 34 Phase listing will be added to the
  website soon
• Component units implement with primary government
• Phase III units are encouraged to have at least
  one actuarial valuation
• Please begin planning making arrangements
• Alternative method worksheet on the website for
  units with less than 100 members

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OPEB Plan Reporting St. No. 43

• Reporting of the Plan only - applicable if an
  irrevocable trust has been set up
• Some NC Phase I governments have created their
  trusts this year as they implemented St. No.45
• Phase I governments run the spectrum of pay-go to
  fully funding depends on many variables
• Some are planning to create trusts in 2009
• Can create trust anytime and once created St. 43
  reporting requirements apply

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OPEB Investments and State Treasurers Trust
Fund

• Administrative procedures finalized
• Memos 1102 and 1103
• New section on website OPEB Resources
• Considered a 115 Trust under the IRS
• Will require
• Board resolution
• Depository agreement between unit trustee
  (which is the State Treasurer)
• STIF Account Form (application to open account)

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OPEB Investments and State Treasurers Trust
Fund

• Participating units will have to open a STIF
  (Short Term Investment Fund) account with the
  State Treasurer
• Forms are on the website
• Funds will move in and out of Trust through the
  STIF account transfer mechanism
• Funds cannot reside in the STIF except as a weigh
  station until month end

21
OPEB Investments and State Treasurers Trust
Fund

• Restrictions (See Memo 1103 for details)
• Two withdrawals a year
• Minimum investment of 100,000
• Subsequent deposits in 25,000 increments
• Investments move into long-term funds ONLY on 1st
  day of month
• May put funds into STIF any time during month
• Must give 5 business days notice for deposits or
  withdrawals

22
OPEB Investments and State Treasurers Trust
Fund

• State Treasurers staff will not be administering
  your plan
• They will determine the allocation between equity
  and debt in the portfolio
• The documents provided by the unit will certify
  that the funds are withdrawn only for OPEB
  benefits
• There will be provisions for emergencies

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State Treasurers LEO Trust Fund

• Bill S580 when passed added the LEO funds to the
  bills language
• Actually two trust funds authorized
• Due to the complexity of preparing for the OPEB
  Phase I governments the LEO Trust Fund will not
  be ready until 2009
• Should work similarly to OPEB

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• Comparative Investment Portfolios
  for Cities and Counties

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County Municipal Portfolio As of June 30,
2007
Percentages show relative diversity in portfolio
30.5
31.0
19.2
12.8
4.8
35.7
17.8
18.3
1.7
15.9
6.9
5.4
26
Combined County Municipal Investments over
Three Years For 6/07, 6/06 6/05
Percentage change for past year
11 dec.
8.2 inc.
12.6 inc.
49.6 inc.
31 inc.
4.6 dec.
Overall
7.2 increase
Fewer cities reporting
27
Comparative County InvestmentsFor 6/07, 6/06 and
6/05
Percentage change for past year
35.6 inc.
25 inc.
21.4 dec.
49.5 inc.
20.3 inc.
13.9 dec.
Overall
15.9 increase
28
Participating CountiesFor 6/07, 6/06 and 6/05
29
Comparative Municipal InvestmentsFor 6/07, 6/06
and 6/05
4.0 dec
Percentage change for past year
20 dec.
4.3 dec.
34.9 inc.
49.9 inc.
1.0 inc.
Overall
0.6 decrease
Fewer cities reporting
30
Participating MunicipalitiesFor 6/07, 6/06 and
6/05