LGC UPDATE 2016 NCLGIA – Summer Conference - PowerPoint Presentation

Slide1

LGC UPDATE

2016 NCLGIA – Summer Conference

July 20, 2016

Becky DzingeleskiSlide2

AGENDAAnnouncements / Reminders

LGC-203 and COLL 91 (INV 91)Deposits and Investment Issues Custody & Safekeeping Statistical ReportsSlide3

Announcement

New LGC Staff

Debt Section

Jennifer Wimmer – Assistant Manager

Fiscal Section

Accounting and Financial Management Advisors

Ryan Chapman, MBA

Jim Agar

Ann Cutler, CPA - Coach Team

David

Erwin, CPA - Coach Team

Retired

Dianne Kelly - Debt

Section Senior Financial AnalystSlide4

Announcement2016 Sample

Financial Statements including sample GASBS 72 implementation have been posted to the DST

website

Soon to be completed - Carolina County

City of Dogwood

Board of Education

Charter School

Public Housing AuthoritySlide5

LGC-203 – Report of Deposits and Investments

Required for NC Local

Governments / Public Authorities

G.S. 159-33

and for

*

Public

Schools

G.S

.

115C-446

Report form is updated each report cycle –

Updated list of Pooling Banks

New Units added

** Please

use

updated report form

every

cycle

Report is due

twice a year: July 25 and January 25

* Not required for Charter SchoolsSlide6

LGC-203 – Report of Deposits and Investments

Please send yourCompleted current LGC 203 report in Excel workbook format - helps with automated processing

Finistar

, CDARs ICS or collateral statements

As of the report date

Supplemental

Schedule

that includes all of the Information we need for our review -

Custodian (s),

Specific name of Investment, amount, Purchase

date &

maturity date, market value at report date,

(CP) rating

at time of purchase

Excel

workbook converted to PDF

Ticker statementsSlide7

ABC Board’s

LGC-203

report forms are reviewed by and accessed at the

NC ABC Commission Website

LGC-203 – Report of Deposits and InvestmentsSlide8

COLL-91 (INV 91)– Notification of Public Deposit

Required by

Administrative Code

20 NCAC

07.0103

20

NCAC 07.0103 Notification By Depositor

(b)

As of June 30 of each year

, or when requested by the State Treasurer, the public depositor shall provide the depository Form INV-91 "Notification of Public Deposit ", listing the current account names and numbers of all public deposit accounts, and shall provide a duplicate copy to the State Treasurer. Form

INV-91

shall be certified by the public depositor that the statements are correct.Slide9

COLL 91 (INV-91) – Notification of Public Deposit

NEW COLL 91 report and related instructions on DST website.

NEW

submission process for the June 2016 COLL 91 report cycle.

Prepare, sign

and

email

directly to

Department of State Treasurer

Banking operations

(

NEW email)

-

sbu.collateral@nctreasurer.com

Keep

a copy for the Unit’s

records

Both the LGC-203 and the COLL 91 reports are required to be filed by

all

public depositors,

except Charter SchoolsSlide10

DEPOSIT AND INVESTMENT ISSUES

Issue

-

As of LGC-203 report date there is

insufficient

collateralization

(Market Value) or no collateralization for deposit accounts in NON-pooling Banks that are required to collateralize public funds by use of the dedicated method.

“

Appropriate forms needed for the Bank to collateralize the deposits had not been filed

”

Use of Credit Union’s as a Depository – not specified in the NC StatutesSlide11

INVESTMENT ISSUES -

NC ST HSG FIN AGY

HOMEOWNERSHIP

– not a municipal corporation

, local government agency, or

an obligations

of the State of NC - G.S.159-30(c)(3)

NORTH

CAROLINA CAPITAL FACILITIES FINANCE

AGENCY - Educational

Facilities Revenue and Revenue Refunding Bonds

–NCCFFA

is

conduit

issuer that permits an entity

(University) to

borrow on a tax-exempt basis.

Bonds are not an obligation of the State of NC but are an obligation of the University.

UNIVERSITY REVENUE BONDS

must be evaluated

on a case by case

basis. Revenue

Bonds

are often

backed by

Dorm fee revenue & normally are not obligations

of the State of NC

-

G.S.159-30(c)(3) Slide12

INVESTMENT ISSUES -

NC MED CARE COMMISSION BONDS

MCC Is an agency

of the State of

NC,

their

bonds are not obligations of the State of

NC

as required

under §159-30 (c)(3

).

CERTIFICATES OF PARTICIPATION

(COPs)

of NC local governments

are not “bonds and notes” as required by the

statutes

.

Not issued by the local government or public authority but by a nonprofit corporation.Slide13

INVESTMENT CONCERNS - Condition - 100% of Units

Investments are held in Government Agency Bonds All purchased in 2012 and early 2013 and have 10 - 15 year maturitiesFrom Units Audit report Risk NoteUnit “does

not have a formal investment policy that limits investment maturities as a means on managing its exposure to fair value loses arising from increased interest

rates.”

Unit “places

no limit on the amount that the District may invest in any one

issuer”Slide14

DEPOSIT AND INVESTMENT ISSUES

Safety

– Liquidity

– Yield – IN THAT ORDER

If cash is suddenly needed market may be

adverse to liquidating

these long term securities

Risk

of Investing

too heavily in a specific maturitySecurities with long-term yields may be

tempting but

are

subject to market fluctuations

.

I

f

interest rates rise, the value of the portfolio will decline

–

possible loss of public fundsSlide15

DEPOSIT AND INVESTMENT ISSUESFormal Cash

Management & Investment PolicyUnit’s investing in products other than the NCCMT should have a formal investment

policy approved by governing Board.

The

North Carolina Department of State Treasurer Policies Manual

Section #30 on Cash & Investments provides guidance regarding Cash & Investments of Local Governments including a Sample Cash Management and Investment

Policy – Section 30F

Resolution Adopting Cash Management and Investment Policy – Section 30G

Broker Dealer Questionnaire / Agreement – Section 30HSlide16

CUSTODY AND SAFEKEEPING

Custody has to do with the physical safety of the securities. In “book-entry” system there are no physical

documents so i

nvestment securities

must be

held

by custodians in Third Party safekeeping or

trust

accounts in the name of the Unit of Government

.Best Practice

: Signed

Third Party safekeeping contract

directly between the Unit and the custodian.Slide17

CUSTODY AND SAFEKEEPING

Condition:

A signed contract / custodial safekeeping agreement that

is not

clearly identifiable

as to be

directly

between the

third party custodian and

the

Unit

.

Best Practice

: Signed Third Party safekeeping contract

directly

between the Unit and the

custodian

.Slide18

DEPOSIT AND INVESTMENT ISSUES

Condition: A government’s public funds being

held in a temporary custodian deposit account or mutual fund for a period of time until

they are

wired to the Unit.

Matured

funds

or earnings are

legally required to be wired directly into a statutorily allowable (§159-30 and/or §159-31)

account

in the name of the

Unit – no detours to

a Brokerage deposit account,

not even temporarily.

Units’ Official Depository

NC Cash Management

Trust

G.S

. 159-30 (c)(8)

NCCMT is an allowable investment account

Not allowable

:

Federated Government Obligation

First American

Treasury

ObligationSlide19

115 Units Invest in other than the NCCMT

42 Municipalities at June 30, 2015

42 Counties

at June 30, 2015

Government Securities

15

Government Securities

8

Government Agencies

27

Government Agencies

32

Commercial Paper

16

Commercial Paper

26

“Other”:

Bond Proceeds or expanded

Investment authority

23

“Other”: Bond Proceeds or expanded

Investment authority

21

Repurchase Agreements

1Slide20

County & Municipal Combined portfolio’s at June 30, 2015Slide21

Comparison of total combined County & Municipal Deposits & Investmentsat June 30, 2015 - 2014 - 2013Slide22

Comparison of total County Deposits & Investments at June 30, 2015 – 2014 - 2013 Slide23

Comparison of total Municipal Deposits & Investments at June 30, 2015 - 2014 - 2013Slide24

Percent Change from 2014 to 2015Slide25

Percent Change from 2013 to 2014Slide26

Total County & Municipal Portfolio Mix - June 30, 2015Slide27

Investment Questions? Local Government & Public Authority Cash & Investment

questions?Becky Dzingeleski 919-814-4287 Becky.Dzingeleski@nctreasurer.com

Paru

Patel

919-814-4292

Paru.Patel@nctreasurer.comSlide28

Add additional or new Local Government staff or officials to the

LGC_News

listserve

Mayor

or Board Chairman

Manager

Finance

Officer

Clerk

.

Please give Paru or Becky a business card or send an email requesting to be registered.

Stay

informed by the

LGCSlide29

Thank You! Slide30

Thank you!Together , we can build and maintain a fiscally strong and prosperous North Carolina.

www.NCTreasurer.com