South Coast Air Quality Management District

Investment Oversight Committee

SYNOPSIS: 

The Investment Oversight Committee met Friday, May 17, 2002 and discussed various issues detailed in the Committee report. The quarterly meeting scheduled for August 16, 2002 has been cancelled. The next Investment Oversight Committee meeting is scheduled for Friday, November 15, 2002 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file this report.

Michael Antonovich
Investment Oversight Committee

Attendance: Present were Committee members Michael Antonovich and Paul Sundeen. Absent were Committee members William A. Burke, Gary Burton, David E. Ertel and Norma J. Glover.

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of February 2002, the AQMD’s weighted average yield on total investments of $269,458,385, from all sources, was 3.42%. The allocation by investment type was 78.8% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 11.1% in the State of California Local Agency Investment Fund (LAIF); and 10.1% in Federal Agency securities. This report was reviewed and accepted by the Committee members present. Due to the lack of a quorum, a Committee recommendation was not made.

Due to a light committee agenda, the regularly scheduled meeting for August 16, 2002 has been cancelled. The quarterly report on investments will be forwarded to the Board and Committee members in July. A meeting will be scheduled if any member of the Board or Committee wishes to discuss the investment report or has any other business for Committee consideration.

Investment Committee Discussion Items:

Cash Flow Forecast: Rick Pearce reported on the cash flows for the current year and projected for the next three years. AQMD Investment Policy limits its Special Purpose investments to 75% of the minimum amount of funds available for investment during the Cash Flow Horizon. That limit, which includes all funds (General, MSRC, Clean Fuels), is approximately $ 126.5 million.

Financial Market Update: Terry McGuire (Sperry Capital) briefed the Committee on the current interest rate market. In summary, Mr. McGuire stated that the expectation that the Federal Reserve would raise interest rates in the near term has weakened. The trigger for the eventual tightening remains tied to corporate investment -- both in labor and capital spending. The variables directing the policy outlook are chiefly the unemployment rate, capital investment and core inflation. Employment and capital investment are now controlled by corporate profits, economic growth and excess capacity as the bottoming out hasn’t brought the upturn needed to fuel growth in business spending. Business growth, not inflation, will be the element driving the timing of the raising of interest rates.

Other Business: None

Public Comment: None

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