F INANCIAL M ANAGEMENT P OLICY U PDATE AARON BOVOS – CHIEF FINANCIAL OFFICER 1 April 12, 2016

Agenda 2 Investment Policy CCPD Reserve Policy Questions / Discussions

Investment Policy 3

PFIA Authorized Investments Direct Obligations of Governmental Entities Certificates of Deposits Repurchase Agreements/Reverse Repurchase Agreements Securities Lending Programs Banker’s Acceptances Commercial Paper Mutual Funds Guaranteed Investment Contracts Investment Pools 4

State Law Investment Objectives Safety  To Ensure the Preservation of Capital in the Portfolio not Interest Earnings Liquidity  Structured to Meet all Expected Obligations in a Timely Manner Diversification  Portfolio Shall be Diversified by Market Sector and Maturity in Order to Manage Market Risk Yield  Designed to Attain a Reasonable Market Rate of Return throughout Economic Cycles 5 Objectives Mandated by PFIA

Short-Term Portfolios Fully Utilizes Cash Assets to obtain a Competitive Yield Maintain 10% in Liquidity Investments Shall not Exceed Weighted Average Maturity (WAM) of 2.5 Years No Security Shall Exceed a Maximum Stated Maturity of 5 Years Performance Benchmark – the comparable period averages of the yield of the portfolio and the 2 year Treasury Note. 6

Long-Term Portfolios 7 Focused on Appreciation Shall not Exceed Weighted Average Maturity of 7.5 Years No Security Shall Exceed a Maximum Stated Maturity of 10 Years Performance Benchmark – the comparable period yield of the 7 Year Treasury Note

Other Changes to Policy  IPS now explicitly authorizes investment committee and identifies its core members  Ethics disclosures requirements updated to reflect changes to local ordinance  Changed window for commercial paper – increased from 90 days to 180 days  Removed limitations on some investments to take better advantage of State law  Identifies and authorizes investment officers by title  Reporting will now reflect “pure” yield, blended yield including securities lending income and blended yield including earned credit rate associated with maintaining certain key levels in bank accounts 8

Government Treasurers’ Organization of Texas Investment Policy Certification Program  Provide assistance in developing investment policies suitable for public funds that fully comply with the Texas Public Funds Investment Act (PFIA)  Certificate of Distinction is awarded for those policies that meet established criteria. The Certificate is awarded for two years and then may be renewed upon review. 9

Investment Policy Next steps  Informal Report was presented to Council on March 29 th  M&C to Council on April 19 th  RFP Process for Investment Advisor  Development: March 14, 2016 – April 4, 2016  Advertising: April 4, 2016 – May 2, 2016  Selection: May 2, 2016 – May 30, 2016  Negotiations and Council Approval: May 30, 2016 – June 21, 2016  Advisor start date – July 1,

CCPD Reserve Policy Change 11

Current VS Revised Policy Current Policy Current Policy Compliance with the current policy is based on minimum assigned fund balance. Compliance with the current policy is based on minimum assigned fund balance. Revised Policy Revised Policy Compliance with the revised policy will be based on minimum assigned and restricted fund balance to comply with GASB 54 requirements. Compliance with the revised policy will be based on minimum assigned and restricted fund balance to comply with GASB 54 requirements. 12

Discussion/Questions 13