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Investment Oversight Committee

SYNOPSIS: 

The Investment Oversight Committee met Monday, March 13, 2000 in a special meeting to discuss the AQMD’s Investment Policy and annual delegation of authority to its Treasurer. The next Investment Oversight Committee meeting is scheduled for Friday, May 5, 2000 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

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Norma J. Glover
Investment Oversight Committee

Attendance:

Committee Members Present: Norma Glover, Gary Burton, David Ertel, Jerry Rogers 
                                 Absent: Michael Antonovich, William Burke

Staff: Barry Wallerstein, Barbara Baird, Rick Pearce

Others: Terry McGuire, Sperry Capital Inc.; Kurt Yeager, Stradling, Yocca, Carlson & Rauth

Investment Committee Action Items:

Approval of Annual Investment Policy and Delegation of Authority to Los Angeles County Treasurer to Invest AQMD Funds: Rick Pearce, Chief Financial Officer, discussed Chairman Burke’s request to obtain outside opinions of AQMD’s current investment program to determine if changes could be made to enhance interest income. The Executive Officer has identified two firms to carry out this independent review.

Mr. Pearce then presented to the committee the AQMD’s current program that has been in place approximately four years and was based on a prior study of AQMD investment options presented to the Board in 1996. The current program diversifies AQMD’s investments at low cost by investing in the two largest public agency investment funds in the State (the $36 billion State Local Agency Investment Fund and the $10 billion Los Angeles County Investment pool) and by making its own special investments through its Treasurer. This approach has allowed the AQMD to both safeguard its investments and maintain a high degree of liquidity while earning a market rate of return. In addition, Mr. Pearce discussed the current oversight, auditing, accounting, cash management and warrant processing services currently provided by Los Angeles County acting as the AQMD Treasurer.

Mr. Pearce then followed with a discussion regarding AQMD investment performance. Based on a survey of agencies represented by AQMD Board members conducted by Mr. Terry McGuire of Sperry Capital, the average return for those represented agencies for 1999 was 5.39% which compares to the AQMD’s return for 1999 of 5.37%.

In response to an earlier question from the Chairman regarding the Board’s ability to appoint a new Treasurer midterm if the Board chose to, Barbara Baird received legal advice from Mr. Kurt Yeager of Stradling, Yocca, Carlson & Rauth who stated that the Board could appoint a new Treasurer without waiting for the next annual delegation of authority.

The Committee discussed the impacts regarding workload, oversight and additional cost to the AQMD in the event the Treasury function is taken over by the AQMD from the County of Los Angeles. Based on these discussions and their experience with AQMD’s investment program and its performance, the three Committee members who represent outside agencies and who are actively involved in investments, cautioned the AQMD regarding the increased cost and new responsibilities and duties associated with leaving the County.

Other Business: None

Public Comment: None

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