BOARD MEETING DATE: December 7, 2007
AGENDA NO. 22

REPORT:

Investment Oversight Committee

SYNOPSIS:

The Investment Oversight Committee met Friday, November 16, 2007 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, February 15, 2008 at 12:00 noon in the Executive Conference Room.

RECOMMENDED ACTION:

Receive and file this report.

Michael Antonovich, Chair
Investment Oversight Committee

Attendance: Present were Committee members Michael Antonovich (via teleconference), Gary Burton, Bill Campbell, David E. Ertel and Paul Sundeen.

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of September 2007, the AQMD’s weighted average yield on total investments of $349,723,685, from all sources, was 5.56%. The allocation by investment type was 83.0% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 11.3% in the State of California Local Agency Investment Fund (LAIF); and 5.7% in Negotiable Certificates of Deposit and Commercial Paper. The Committee approved the quarterly report.

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 $207.3 million.

Financial Market Update: Jim Martling provided the Committee with comments on current economic and investment market conditions. In summary, Mr. Martling’s comments stated that investors which often worry about slowing economic growth or inflation are now worried about both. The new concern for many government agencies is the rippling effect troubled mortgages is having on the insurers’ of tax-free municipal debt. Many of those insurers in recent years have also backed debt instruments holding now troubled mortgage securities. Because of that exposure, the insurers are under pressure from rating services to raise capital to cover potential losses on those securities or face rating downgrades, which would impact the ratings of the government bonds they insure.

Calendar Year 2006 Committee Meeting Dates: For CY 2008, quarterly Investment Oversight Committee meeting dates are Friday, February 15, Friday, May 16, and Friday, November 21. The August quarterly meeting has been cancelled in conjunction with the cancellation of all AQMD Board and Committee meetings during the month of August 2008.

Other Business: None

Public Comment: None