Agenda Item # 19
| |
Date: |
September 7, 2004 |
| |
Committee Meeting Date: |
September 16, 2004 |
| |
Board Meeting Date: |
October 7, 2004 |
| |
ACTION
X
DISCUSSION
___
| INFO
___
|
BOARD MEMORANDUM
| TO: |
Administration and Finance Committee |
| | Santa Clara Valley Transportation Authority |
| | Board of Directors |
| | | | THROUGH: | Peter M. Cipolla |
| | General Manager |
| | | | FROM: | Roger Contreras |
| | Chief Financial Officer |
| | |
| SUBJECT: |
Reaffirm the Investment Policy on Unrestricted and Restricted Funds |
RECOMMENDATION:
Reaffirm the Santa Clara Valley Transportation Authority (“VTA”) Investment Policy on Unrestricted and Restricted Funds and the delegation of authority as stated therein.
BACKGROUND:
The management responsibility for the investment program is delegated to the General Manager (or his designee) for purposes of placing investments pursuant to the attached investment policy. The Board of Directors, in accordance with California government code Section 53646(a), is required to reaffirm the investment policy and also reauthorize this delegation of authority on an annual basis at a public meeting.
The objectives of VTA’s investment program are, in order of priority: safety, liquidity, and return on investment (yield).
1) Safety. Safety of principal is the foremost objective of the investment program. VTA’s investments shall be undertaken in a manner that seeks to ensure preservation of capital in the portfolio.
2) Liquidity. VTA’s investment portfolio shall remain sufficiently liquid to enable VTA to meet its cash flow requirements.
3) Return On Investment. VTA’s investment portfolio shall be designed with the objective of attaining a market rate of return on its investments consistent with the constraints imposed by its safety objective and cash flow considerations.
DISCUSSION:
As a result of the dwindling cash reserves, VTA segregated its portfolio into two strategies. The first one was of a short duration (three months) to meet the operating deficits. The second one was of an intermediate duration (three and a half years) to meet the capital projects obligations. Since then, the Unrestricted and Restricted funds portfolio had a total market return (gain) of 1.62% while its Lehman Brothers US Aggregate benchmark had a total market return (gain) of 1.25%. In comparison, the Cash Reserve Portfolio had a total market return (gain) of 1.22% compared to its Institutional Money Market Index benchmark which made 0 .80%.
FISCAL IMPACT:
Interest earnings are included in the adopted budget. However, absent the Investment Policy, investments would not be structured, therefore the safety and liquidity may be jeopardized with consequent loss of principal.
Attachment 1: Investment Policy on Unrestricted and Restricted Funds
Contact the Board Secretary's Office for Attachments.
| Prepared by: | Manny Bagnas |
| | |
Click here to return to the Board Agenda Index
|
Rider's Links 
