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CHUCK ENGELKEN, CHAIR JAY MARTIN Councilmember, District 2 Alternate Member 1 DARYL LEONARD DOTTIE KAMINSKI Councilmember, District 3 Alternate Member 2 TOMMY MOSER Councilmember, District 4 CITY OF LA PORTE FISCAL AFFAIRS COMMITTEE MEETING AGENDA Notice is hereby given of a meeting of the City of La Porte Fiscal Affairs Committee to be held on April 28, 2014, in the City Hall Council Chambers, 604 W. Fairmont Parkway, La Porte, Texas, beginning at 5:00 PM regarding the items of business according to the agenda listed below: 1. Call to order 2. Consider approval of minutes of the March 10, 2014, meeting of the Fiscal Affairs Committee - P. Fogarty 3. Receive and review Second Quarter (FY 2014) Investment Report - M. Dolby 4. Receive and review month of December(FY2013), January (FY2014) and February (FY2014) Purchasing Card Expenditures - M. Dolby 5. Set date for next meeting — M. Dolby 6. Administrative Reports — C. Alexander 7. Committee Comments regarding matters appearing on agenda — Committee members Engelken, Leonard, Moser, and Martin 8. Adjourn In compliance with the Americans with Disabilities Act, the City of La Porte will provide for reasonable accommodations for persons attending public meetings. To better serve attendees, requests should be received 24 hours prior to the meetings. Please contact Patrice Fogarty, City Secretary, at 281.470.5019. CERTIFICATION I certify that a copy of the April 28, 2014, agenda of items to be considered by the Fiscal Affairs Committee was placed on the City Hall Bulletin Board on April 22, 2014 . Patrice Fogarty, City Secretary CHUCK ENGELKEN, CHAIR JAY MARTIN Councilmember District 2 Councilmember District 5 Committee Member Alternate Member 1 DARYL LEONARD DOTTIE KAMINSKI Councilmember District 3 Councilmember At Large B Committee Member Alternate Member 2 TOMMY MOSER Councilmember District 4 Committee Member MINUTES OF MEETING OF FISCAL AFFAIRS COMMITTEE MARCH 10, 2014 The Fiscal Affairs Committee met on March 10, 2014, at 5:00 p.m., in the La Porte City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas, to consider the following items of business: 1. Call to Order Chairman Chuck Engelken called the meeting to order at 5:00 p.m. Present were: Committee Member Tommy Moser, Alternate Member 1 Jay Martin, and Alternate Member 2 Dottie Kaminski. Absent: Committee Member Daryl Leonard. Also present were City Secretary Patrice Fogarty, City Manager Corby Alexander, Finance Director Michael Dolby, Controller Phyllis Rinehart and Treasurer Shelley Wolny. 2. Consider approval of Minutes of the January 27, 2014, meeting of the Fiscal Affairs Committee – P. Fogarty Committee member Moser moved to approve the minutes of the January 27, 2014, meeting. Alternate Member 1 Martin seconded. MOTION PASSED. Ayes: Chairman Engelken, Committee Member Moser and Alternate Member 1 Martin Nays: None Absent: Committee Member Leonard 3. Receive presentation of the 2013 Comprehensive Annual Financial (CAFR) Report – M. Dolby Finance Director Michael Dolby introduced Tom Pederson from Whitley Penn, and he presented the 2013 Comprehensive Annual Financial (CAFR) Report. Mr. Pederson reported the Financial Statements were issued an Unmodified Opinion, and it is the highest level of assurance an auditor can place on Financial Statements. Alternate Member 1 Martin questioned the 250 days of Working Capital. Finance Director Michael Dolby responded the City has to subtract 120 days of Working Capital and $2.6 million dollars in the budgeted draw down Fund Balance. Alternate Member 1 Martin asked how many years has Whitley Penn conducted the City audit. Mr. Pederson responded three years. Page 1 of 2 March 10, 2014, Fiscal Affairs Committee Minutes Committee Member Moser questioned the total Portfolio amount. Finance Director Michael Dolby and Tom Pederson advised a $51.6 million total. Alternate Member 1 Martin questioned if there was an anticipated increase in property values. Mr. Dolby advised the City usually budgets about a three percent increase based on historical trends. Committee Member Moser questioned the Portfolio comparison to last year. Mr. Dolby advised he will send the information at a later date. 4. Receive and review audit contract renewal – M Dolby Finance Director Michael Dolby presented the audit contract renewal and advised staff would like to continue with Whitley Penn for an additional year. Chairman Engelken commented he is fine with extending the contract for an additional year. All other members were in agreement as well. Mr. Dolby advised he will bring the contract to the full City Council for consideration. 5. Receive and review Franchise Fee Audit Contract – M. Dolby Finance Director Michael Dolby presented the Franchise Fee Audit Contract. Mr. Dolby advised staff received four proposals, and MuniServices was the best candidate to provide the Franchise Fee Audit services. The Committee Members were in favor of MuniServices providing the service. 6. Set date for next meeting – M. Dolby The Committee set April 28, 2014, at 5:00 p.m., as the date and time for the next meeting. 7. Administrative Reports – C. Alexander There were no Administrative Reports. 8. Committee Comments – Matters appearing on agenda; Recognition of community members, city employees, and upcoming events; Inquiry of staff regarding specific factual information or existing policy. There were no Committee Comments. 10. Adjourn There being no further business, the meeting was adjourned at 5:21 p.m. Respectfully submitted, ________________________________ Patrice Fogarty, City Secretary Passed and approved on the _____ day of ___________, 2014. ________________________________ Chairman Chuck Engelken Page 2 of 2 March 10, 2014, Fiscal Affairs Committee Minutes CITY OF LA PORTE Interoffice Memorandum TO: Chuck Engelken, Councilmember Tommy Moser, Councilmember Daryl Leonard, Councilmember Jay Martin, Councilmember Corby Alexander, City Manager Traci Leach, Assistant City Manager FROM: Michael Dolby, Director of Finance Shelley Wolny, Treasurer DATE: April 16, 2014 SUBJECT: Quarterly Investment Report For the second quarter of the 2014 fiscal year, the City’s investment portfolio yield averaged 0.17%, which is above the average yield of our benchmark at 0.08% (see graph below). The City’s investment portfolio exceeded the benchmark by an average of 9 basis points for the year, which equates to approximately $24,115 in additional earnings for the year. Our benchmark is the 6-month T-Bill rate. The total interest earned for the 2014 fiscal year for all funds is $67,967 which is approximately 62% of the $109,572 budgeted for the year. City vs. Benchmark 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% ` 0.00% Portfolio Yield Benchmark At March 31st, the City’s portfolio totaled $68,712,515 and consisted of 35% in Texpool, 26% in Agency Notes and 39% in Logic. The majority of funds are in the pools due to the large influx of cash from industrial contracts and property taxes; however, as investment opportunities arise, staff will continue to focus on laddering and diversifying the portfolio through the purchase of agencies. 1 At the end of the second quarter, the City’s portfolio consisted of 74% of the portfolio maturing overnight, 5% of the City’s portfolio matures in 1-12 months, 5% maturing in 12-24 months and 16% maturing beyond two years. Currently, the 3-month T-Bill is at 0.05%; 2-year, at 0.40%; 5-year, at 1.64%; and, the 20-year is at 3.63% (see yield curve below). A year ago, the 20-year treasury was yielding slightly below 3.35%. While rates have seen some movement on the long end, there is not much yield to be gained on shorter term investments. Yield Curve 4.00% 3.00% 2.00% 1.00% 0.00% Treasury Bills 3 months ago current The most current overnight rate was set on December 16, 2008 at 0.00% to 0.25%. Economic growth has picked up over the last 3 months. Rates should begin to increase later in 2014; however, short term rate increases will most likely be moderate. The U.S. yield curve will begin to steepen over the next two years. The target funds rate will most likely remain unchanged through 2014. We will continue to focus on laddering the portfolio to maintain a constant cash flow and a liquid position. 2 2 Year T-Note 8.00% 6.00% 4.00% 2.00% 0.00% In summary, we will continue to invest the City’s funds in conservative investments, as authorized by the Public Funds Investment Act, always keeping in mind Safety first, and then Liquidity and lastly Yield. 3 Portfolio Composition and Value as of March 31, 2014 100.00% 80.00% Par Book Market Days to Value Value Value Maturity 60.00% Investment Pools 50,712,515 50,712,515 50,712,515 55 40.00% Agencies 18,000,000 18,000,000 17,976,297 679 Total 68,712,515 68,712,515 68,688,812 218 20.00% 0.00% Investment Pools Agencies Mar-14 Mar-13 Investment Maturity Schedule as of March 31, 2014 Book 1-12 months Value Percent Overnight Overnight 50,712,515 73.80% 1-2 years 1-12 months 3,500,000 5.09% 1-2 years 3,500,000 5.09% 2-3 years 11,000,000 16.01% Total 68,712,515 100.00% 2-3 years Portfolio Performance for the month of March 31, 2014 Weighted 0.20% Portfolio Benchmark Average Yield Yield* Maturity 0.15% Pooled Funds 0.18% 0.08% 7.32 months Bond Funds 0.03% 0.05% 42 days 0.10% Total 0.10% 0.07% 7.36 months 0.05% 0.00% *The pooled funds benchmark is based on the average monthly yield of a 6-month Treasury. Pooled Funds Bond Funds Total The bond funds benchmark yield is based on the average monthly yield of a 3-month Treasury.