Loading...
HomeMy WebLinkAboutAgenda Packet - Finance & Human Resources Committee - 03/14/2023FINANCE & HUMAN RESOURCES COMMITTEE MARCH 14, 2023 East Valley Water District was formed in 1954 and provides water and wastewater services to 103,000 residents within the cities of San Bernardino and Highland, and portions of San Bernardino County. EVWD operates under the direction of a 5­member elected Board. COMMITTEE MEMBERS David E. Smith Governing Board Member Ronald L. Coats Governing Board Member Finance & Human Resources Committee Meeting March 14, 2023 ­ 3:30 PM 31111 Greenspot Road, Highland, CA 92346 www.eastvalley.org PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Review Resolution 2023.06 and Investment Policy 7.6 2.Water and Wastewater Pathway and Educational Partnership Update DISCUSSION AND POSSIBLE ACTION ITEMS 3.Set the day and time for holding recurring meetings REPORTS 4.Finance Activities 5.Human Resources Activities ADJOURN FINANCE & HUMAN RESOURCES COMMITTEEMARCH 14, 2023East Valley Water District was formed in 1954 and provides water and wastewater services to103,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5­member elected Board.COMMITTEE MEMBERS David E. Smith Governing Board Member Ronald L. Coats Governing Board Member Finance & Human Resources Committee Meeting March 14, 2023 ­ 3:30 PM 31111 Greenspot Road, Highland, CA 92346 www.eastvalley.org PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Review Resolution 2023.06 and Investment Policy 7.6 2.Water and Wastewater Pathway and Educational Partnership Update DISCUSSION AND POSSIBLE ACTION ITEMS 3.Set the day and time for holding recurring meetings REPORTS 4.Finance Activities 5.Human Resources Activities ADJOURN FINANCE & HUMAN RESOURCES COMMITTEEMARCH 14, 2023East Valley Water District was formed in 1954 and provides water and wastewater services to103,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5­member elected Board.COMMITTEE MEMBERSDavid E. SmithGoverning Board Member Ronald L. CoatsGoverning Board MemberFinance & Human Resources Committee MeetingMarch 14, 2023 ­ 3:30 PM31111 Greenspot Road, Highland, CA 92346www.eastvalley.orgPLEASE NOTE:Materials related to an item on this agenda submitted to the Board after distribution of theagenda packet are available for public inspection in the District’s office located at 31111Greenspot Rd., Highland, during normal business hours. Also, such documents are availableon the District’s website at eastvalley.org and are subject to staff’s ability to post thedocuments before the meeting.Pursuant to Government Code Section 54954.2(a), any request for a disability­relatedmodification or accommodation, including auxiliary aids or services, that is sought in orderto participate in the above agendized public meeting should be directed to the District Clerkat (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Review Resolution 2023.06 and Investment Policy 7.6 2.Water and Wastewater Pathway and Educational Partnership Update DISCUSSION AND POSSIBLE ACTION ITEMS 3.Set the day and time for holding recurring meetings REPORTS 4.Finance Activities 5.Human Resources Activities ADJOURN Agenda Item #1 March 14, 20231 Meeting Date: March 14, 2023 Agenda Item #1 Informational Item 7 1 7 Regular Meeting TO: Committee Members FROM: Chief Financial Officer SUBJECT: Review Resolution 2023.06 and Investment Policy 7.6 RECOMMENDATION That the Finance and Human Resources Committee recommend to the Board of Directors to adopt Resolution 2023.06 - Investment Policy. BACKGROUND / ANALYSIS California Government Code section 53646(a) requires that the CFO/Treasurer of a local agency annually render to the legislative body a Statement of Investment Policy for consideration at a public meeting. Accordingly, a proposed Statement of Investment Policy for fiscal year 2023-24 is attached. The proposed policy is very close to the version that was approved by the Board on April 27, 2022 – there have been just minor modifications including: 1) a change to the acronym referring to the District’s annual financial report (ACFR) to comply with industry standards, and 2) clean-up of the Glossary of Terms to remove terms that are not referenced anywhere in the policy. Staff recommends adoption of Resolution 2023.06 and updated Policy 7.6 including the changes referenced above and redlined in the attached policy. AGENCY GOALS AND OBJECTIVES II - Maintain a Commitment To Sustainability, Transparency, and Accountability A. Practice Transparent and Accountable Fiscal Management FISCAL IMPACT There is no fiscal impact associated with this agenda item. Respectfully submitted: ________________ Brian Tompkins Chief Financial Officer Agenda Item #1 March 14, 20232 Meeting Date: March 14, 2023 Agenda Item #1 Informational Item 7 1 7 ATTACHMENTS 1. Resolution 2023.06 2. Exhibit A - Statement of Investment Policy 7.6 East Valley Water District Resolution 2023.06 Page 1 of 2 RESOLUTION NO. 2023.06 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY WATER DISTRICT ESTABLISHING AN INVESTMENT POLICY FOR PUBLIC FUNDS WHEREAS, the Board of Directors of the East Valley Water District (the “District”) desires to maintain a formal policy regarding the investment of public funds pursuant to the requirements of Government Code Sections 5921 and 53600 et seq.; and WHEREAS, the Board of Directors of the District has employed qualified staff to invest those funds in accordance with the law and the terms of the District’s investment policy , as well as in a manner that advances the District’s investment objectives of safety, liquidity and yield; and NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the District that the East Valley Water District Investment Policy attached hereto as Exhibit “A” and incorporated in full herein by this reference is hereby adopted as the formal investment policy of the District; and BE IF FURTHER RESOLVED that the General Manager/CEO and the Treasurer/Chief Financial Officer of the District are hereby authorized and directed to invest the District’s funds in a manner consistent with the terms hereof and in accordance with any further directions of the District’s Board of Directors; and BE IT FURTHER RESOLVED that this Resolution supersedes Resolution No. 2022.05 adopted by the Board of Directors of the District on April 27, 2022. This Resolution shall take effect on July 1, 2023. ADOPTED this 26th day of April 2023. ROLL CALL: Ayes: Noes: Absent: Abstain: Phillip R. Goodrich, Board President East Valley Water District Resolution 2023.06 Page 2 of 2 ATTEST: Michael Moore, Secretary, Board of Directors April 26, 2023 I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution 2023.06 adopted by the Board of Directors of East Valley Water District at its Regular Meeting held April 26, 2023. Michael Moore, Secretary, Board of Directors EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 1 of 15 Purpose The purpose of this policy is to establish guidelines for the prudent investment of East Valley Water District (District) funds in conformance with California Government Code requirements. Funds will be managed to provide for daily cash flow requirements and to meet the objectives of this policy. Policy It is the policy of the District to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating needs, achieving a reasonable rate of return, and conforming to all state and local statutes governing the investment of public funds. Scope This policy applies to the investment of all operating funds; it does not apply to investments held in trust for the District retirement plan, or post-employment health benefits, as these investments are subject to policies established by the plan trustees. Indenture agreements specify how bond proceeds will be invested, but generally they will be invested in securities permitted by this policy. Invested funds are accounted for, and are identified in, the District’s Comprehensive Annual Comprehensive Financial Report. Objectives As specified in CGC §53600.5, when investing and managing public funds, the primary objectives, in priority order, of the District’s investment activities shall be: 1.Safety: Safety of principal is the foremost objective of the investment program. Investments of the East Valley Water District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio by mitigating certain risks. Some of those risks are: A.Interest Rate Risk – the District will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by: Exhibit A EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 2 of 15 • Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operation and avoiding the need to sell securities on the open market prior to maturity. • Investing operating funds primarily in short-term securities, money market mutual funds, or investment pools. B. Credit Risk – the risk that an issuer or other counterparty to an investment will not fulfill its obligations, will be reduced by: • Limiting investments to higher rated securities as further described in this policy. • Diversifying the investment portfolio so that potential losses on individual securities will be reduced. 2. Liquidity: The investment portfolio will remain sufficiently liquid to enable the East Valley Water District to meet all operating requirements that might be reasonably anticipated. 3. Return on Investments: The investment portfolio shall be designed with the objective of attaining the best yield or returns on investments, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives. Prudence The standard of prudence to be used by District officials involved in the investment program shall be the “prudent investor” standard and shall be applied in the context of managing the overall portfolio. The meaning of the standard of prudent investor is explained in CGC Section 53600.3, which states that “when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 3 of 15 character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.” The CFO/Treasurer and delegated investment officers, acting in accordance with written procedures and this Policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Delegation of Authority The authority of the District’s Board of Directors to invest District funds is derived from California Government Code (CGC) section 53601. Section 53607 of the CGC grants the Board the authority to delegate that authority to the District’s Chief Financial Officer (CFO)/Treasurer. The authority to invest District funds is hereby delegated to the CFO/Treasurer. The CFO/Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials in the absence of the Treasurer. All transactions will be reviewed by the Treasurer on a regular basis to ensure compliance with this Policy. No Person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the Treasurer. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the District’s General Manager/CEO any material financial interest in financial institutions that conduct business within the District, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the District. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 4 of 15 All bond issue participants, including but not limited to, underwriters, bond counsel, financial advisors, brokers, and dealers will disclose any fee sharing arrangements or fee splitting to the CFO/Treasurer prior to the execution of any transaction. Authorized Broker-Dealers The CFO/Treasurer will maintain a list of approved financial institutions authorized to provide investment services to the District. These may include primary dealers authorized to buy and sell government securities in direct dealings with the Federal Reserve Bank of New York, or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). The list of approved financial institutions will be reviewed by the CFO/Treasurer on an annual basis. All Broker Dealers who desire to conduct investment transactions with the District must supply the CFO/Treasurer with the following: • Audited Financial Statements • Proof of Financial Industry Regulatory Authority (FINRA) certification • Proof of State of California registration • Completed broker/dealer questionnaire (except Certificate of Deposit counterparties) • Certification of having read the District’s investment policy and depository contracts Authorized and Suitable Investments The East Valley Water District as empowered by California Government Code (CGC) §53600, et. Seq., establishes the following as authorized investments: A. Local Agency Investment Fund (LAIF). The District may invest in the Local Agency Investment Fund established by the State Treasurer for the benefit of local agencies (CGC §16429.1). The fund must have 24-hour liquidity. There is no limitation on the percentage of the District portfolio that may be invested with LAIF, however, LAIF does impose a maximum deposit of $75 million. B. United States Treasury Securities. United States Treasury notes, bonds, or bills for which the full faith and credit of the United States is pledged for the payment of principal and interest (CGC §53601(b)). There is no limitation as to the percentage of EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 5 of 15 the District’s portfolio that may be invested in these securities, however, maximum investment maturities are limited to five years from the date of purchase. C. Federal Agency Obligations. The District is permitted to invest in federal agency or United States government sponsored enterprise obligations, participations, mortgage backed securities or other instruments, including those issued by or fully guaranteed as to principal and interest by Federal agencies or United States government sponsored enterprises (CGC §53601(f)). Maximum maturity is limited to five years from the date of purchase. There is no limitation as to the percentage of the District’s portfolio that may be invested in agencies. D. Bank Depository Accounts. The District may invest in insured or collateralized certificates of deposit, savings accounts, market rate accounts, or other bank deposits issued by a state or national bank, savings and loan associations, or state or federal credit unions located in California (CGC §53630 et. Seq.). A written depository contract is required with all institutions that hold District deposits requiring that deposits be collateralized in accordance with the CGC. Under provisions of the Code, California banks and savings and loan associations are required to secure the District’s deposits by pledging government securities with a value of 110% principal and accrued interest. State law also allows financial institutions to secure the District deposits by pledging first trust deed mortgage notes having a value of 150% of the District’s total deposits. The Treasurer may waive collateral requirement for the portion of any deposit insured pursuant to federal law. Securities placed in a collateral pool must provide coverage for at least 110% of all deposits that are placed in the institution. Acceptable pooled collateral is governed by CGC §53651. Real estate mortgages are not considered acceptable collateral by the District, even though they are permitted in CGC §53651(m). All financial institutions holding District deposits are required to provide the District with a regular statement of pooled collateral. This report will state that they are meeting the 110% collateral rule, a listing of all collateral with location and market value, plus an accountability of the total amount of deposits secured by the pool. Deposits are allowable in any institution that insures its deposits with the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), and a maximum deposit of up to the federal insurance limits may be deposited in any one institution without collateral. No bank shall receive District EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 6 of 15 deposits in excess of the federal insurance limits that has a long-term debt rating by Moody’s investors Service, Standard & Poor’s, or Fitch Ratings of less that ‘A’. The maximum maturity is restricted to three years. In accordance with CGC §53638, no deposit shall exceed the shareholder’s equity of any depository bank, nor shall a deposit exceed the total net worth of any institution. No deposits shall be made at a state or federal credit union if a member of the Board of Directors or the General Manager/CEO or CFO/Treasurer of the District serves on the Board of Directors or a committee of the credit union. E. Municipal Securities. Registered treasury notes or bonds issued by the State of California or any of the other 49 states, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any states (CGC §53601 (c)(d)). Bonds, notes, or other evidence of debt issued by a local agency within the State of California, including issues by East Valley Water District if allowed under the bond indenture. This includes bonds payable solely out of revenue form a revenue- producing property owned, controlled, or operated by the local agency, or by an authority of the local agency (CGC §53601 (a)(e)). Securities must have a debt rating of at least ‘AA’ by a Nationally Recognized Statistical Rating Organization (NRSRO). Maximum maturity is limited to five years from the date of purchase, and holdings of this type of security are limited to a maximum of 20% of the District’s investment portfolio. F. Commercial Paper. Commercial paper of ‘prime’ quality of the highest ranking of the highest letter and number rating as provided for by a NRSRO and must be issued only by general corporations that are organized and operating within the United States and have total assets in excess of $500 million. The general corporation must have an ‘A’ rating or better on debt other than commercial paper, if any, assigned by an NRSRO (CGC §53601(h)). Purchases shall not exceed 5% of the outstanding paper of the issuing corporation, and maximum maturity is restricted to 270 days. This type of investment shall not exceed 15% of the District’s investment portfolio. G. Placement Service Deposits. The District may invest in Certificates of Deposit EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 7 of 15 placed with a private sector entity that assists in the placement of deposits with eligible financial institutions located in the United States (CGC §53601.8). The full amount of the principal and the interest that may be accrued during the maximum term of each deposit shall at all times be insured by federal deposit insurance. Placement Service Deposits, in combination with bank certificates of deposit shall not exceed 25% of the value of the District’s investments at any time. The maximum investment maturity will be restricted to three years. H. Medium Term Notes. The District may invest in corporate and depository institution debt securities issued by corporations organized and operating within the United States, or by depository institutions licensed by the United States or any state and operating within the United States (CGC §53601(k)). Securities eligible for investment under this section shall be rated ‘AA’ or better by an NRSRO. The maximum maturity is restricted to five years, and investment in this category of security shall not exceed 30% of the District’s investible funds, and not more than 5% from a single issuer. I. Money Market Funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission (CGC §53601(l)(2)). The Company shall either 1) have attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs or 2) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years of experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). A maximum of 15% of the District’s investible funds can be invested in Money Market Mutual funds. J. Local Government Investment Pools. Shares of beneficial interest in an investment pool created by a joint powers authority organized pursuant to CGC §6509.7 and that invest in securities and obligations authorized in the California Government Code (CGC §53601(p)). Investment is limited to pools that seek to maintain a stable Net Asset Value (NAV) and must be rated at least ‘AA’ or better by a NRSRO. A maximum of 25% of the District’s portfolio may be invested in Local Government Investment Pools. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 8 of 15 K. Prohibited Investments. Under the provision of CGC §53601.6 and §53631.5, the District shall not invest any funds covered by this Investment Policy in inverse floaters, range notes, interest-only strips derived from mortgage pools or any investment that may result in a zero-interest accrual if held to maturity. Notwithstanding the prohibition above, the District may invest in securities issued by, or backed by, the United States government that could result in zero or negative-interest accrual if held to maturity, in the event of, and for the duration of, a period of negative market interest rates (CA SB 998). Review of Investment Portfolio The securities held by East Valley Water District must be in compliance with the above section ‘Authorized and Suitable Investments’ at the time of purchase. If a security falls out of compliance with this section subsequent to the date of purchase, the CFO/Treasurer shall report this change to the District’s Board of Directors with the following monthly Investment Transaction report. Discussion in the monthly report will include the reasons for the change, prognosis for recovery, and a recommended course of action. Investment Pools / Mutual Funds When the District’s investment portfolio includes Investment Pools and Mutual Funds, as permitted in the section ‘Authorized and Suitable Investments’, the CFO/Treasurer shall as a matter of due diligence, monitor the assets held by the pools/funds. At least quarterly, the CFO/Treasurer will conduct an investigation to determine the following: 1. A description of eligible investment securities, and a written statement of investment policy and objectives. 2. A description of interest calculation and how it is distributed, and how gains and losses are treated. 3. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. 4. A description of who may invest in the program, how often, what size deposit and withdrawal are allowed. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 9 of 15 5. A schedule for receiving statements and portfolio listings. 6. Are reserves, retained earnings, etc. utilized by the pool/fund? 7. A fee schedule, and when and how it is assessed. 8. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? Safekeeping and Custody Agreements To protect against potential losses caused by collapse of individual securities dealers, all securities owned by the East Valley Water District shall be kept in safekeeping by a third- party bank trust department, acting as agent for the District under the terms of a custody agreement executed by the bank and the District. All securities will be received and delivered using standard delivery versus payment (DVP) procedures with the District’s custodial bank, and evidenced by safekeeping receipts. Diversification and Maximum Maturities The District will diversify its investment by security type and institution. With the exception of the US Government, its agencies and instrumentalities, and the Local Agency Investment Fund, no more than 5% of the District’s total investment portfolio will be invested in a single security type with a single financial institution. To the extent possible, East Valley Water District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities maturing more than 5 years from the date of purchase. Reserve funds may be invested in securities exceeding 5 years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds. Internal Controls The CFO/Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft, or misuse. The internal control structures shall be designed to provide reasonable assurance that these objectives are met. Internal controls shall be in writing and shall address the following: separation of transaction authority from accounting and record keeping, EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 10 of 15 safekeeping of assets and written confirmation of telephone transactions for investments and wire transfers. The external auditors will annually review the investments and general activities associated with the investment program. This review will provide internal control by assuring compliance with the Investment Policy and District policies and procedures. Performance Standards The investment portfolio will be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints, and the cash flow needs. The District’s investment strategy is passive. The performance of the District’s investment portfolio will be evaluated and compared to an appropriate benchmark in order to assess the success of the investment portfolio relative to the District’s Safety, Liquidity, and Return on Investments’ objectives. Investment Reporting In accordance with California Government Code §53607, the CFO/Treasurer will submit a monthly report to the Board of Directors showing all investment transactions occurring in the previous month. Further, in accordance with California Government Code §53646, the CFO/Treasurer will also prepare a quarterly Investment Report and render the report to the Board of Directors no later than 30 days after the close of each calendar quarter. The report shall provide the type of investment, issuers, the date of maturity, par values and market values of each investment, transactions occurring during the reporting period, and identification of funds managed by third party managers. The report will also include 1) certification that all investment transactions have been made in compliance with the District’s Investment Policy, and 2) a statement that the District has the ability to meet all of its expenditure requirements during the next six months. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 11 of 15 Policy Adoption Adoption. This policy shall be reviewed annually with the Board of Directors and adopted by Board Resolution. Amendments. Any changes to the policy, or persons charged with maintaining internal controls over investments, must be approved by the Board. Glossary of Terms (Note: All words of a technical nature should be included. Following is an example of common treasury terminology.) Agencies: Federal agency securities and/or Government-sponsored enterprises. Benchmark: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. Broker: A broker brings buyers and sellers together for a commission. Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a Certificate. Large-denomination CDs are typically negotiable. Collateral: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. Comprehensive Annual Comprehensive Financial Report (CAFRACFR): The official annual report of the (East Valley Water District). It includes four combined financial statements prepared in conformity with Generally Accepted Accounting Principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with finance- related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. Coupon: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date. Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 12 of 15 Delivery versus Payment (DVP): There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. Derivatives: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities, or commodities). Discount: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. Diversification: A Dividing investment funds among a variety of securities offering independent returns. Duration: A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. Federal Credit Agencies: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals (e.g., S & L’s, small business firms, students, farmers, farm cooperatives, and exporters). Federal Deposit Insurance Corporation (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per entity. Federal Funds Rate: The rate of interest at which Federal funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. Federal Home Loan Banks (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions, and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 13 of 15 Federal Reserve System: The central bank of the United States created by Congress and consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks, and about 5,700 commercial banks that are members of the system. Liquidity: A liquidity asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. Local Government Investment Pool (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. Market Value: The price at which a security is trading and could presumably be purchased or sold. Maturity: The date upon which the principal or stated value of an investment becomes due and payable. Money Market: The marker in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. Offer: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. Portfolio: Collection of securities held by an investor. Primary Dealer: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC)-registered securities broker-dealers, banks, and a few unregulated firms. “Prudent Investor” Standard: A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” Rate of Return: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 14 of 15 Safekeeping: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution. Securities & and Exchange Commission: Agency created by Congress to protect investors in securities transactions by administering securities legislation. Sec Rule 15(C)3-1: See Uniform Net Capital Rule. Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. Yield: The rate of annual income return on an investment, expressed as a percentage. (a) Income Yield is obtained by dividing the current dollar income by the current market price for the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2022 Policy No: 7.6 Page 15 of 15 Revised 4/27/16 Revised 4/12/17 Revised 4/25/18 Revised 4/24/19 Revised 5/13/20 Revised 3/24/21 Agenda Item #2 March 14, 20231 Meeting Date: March 14, 2023 Agenda Item #2 Informational Item 8 9 9 Regular Meeting TO: Committee Members FROM: Director of Administrative Services SUBJECT: Water and Wastewater Pathway and Educational Partnership Update RECOMMENDATION This report is provided to the Finance and Human Resources Committee for informational purposes only. BACKGROUND / ANALYSIS The East Valley Water District (District) vision is based on providing leadership and world-class public service to our community. As a leader in the water and wastewater industry, the District strives to find the best talent to enter the workforce. Partnering with our local schools can provide a much-needed source of talent to the water/wastewater industry. The District launched a partnership with the San Bernardino City Unified School District (SBUSD) in February 2020 with the commencement of the first Water and Resource Management Pathway (Pathway) class at Indian Springs High School. The class was intended to include in-person interactions with District staff throughout the school year. The COVID Pandemic required remote learning and the students were never able to attend a District tour or experience the in-class speaking engagements. The District and the SBCUSD realized that we had to adapt to these challenges and came up with ways to keep the Pathway and other educational partnerships going throughout the Pandemic. During the Pandemic, the Pathway was altered to a virtual format. These approaches were successful, and several students completed the required courses at San Bernardino Valley College. In March 2021, the District partnered with the Harbor Freight Fellows Program to sponsor paid internships. The District had three virtual internship graduates from this semester’s participants and later hired one of the former interns for a full-time Field Service Worker position. The District Internship Program was adopted by the District Board of Directors in August 2021. Internships continued virtually until March 2022. With the return of in-person schooling, the SBCUSD and District have been discussing improvement to the Pathway program to educate students on the various careers in the Agenda Item #2 March 14, 20232 Meeting Date: March 14, 2023 Agenda Item #2 Informational Item 8 9 9 water/wastewater industry. The program would benefit the District with a potential talented and local workforce. The soon to be completed Sterling Natural Resource Center provides a strategic location to demonstrate a variety of careers in the water/wastewater industry. The facility was built with an education center to provide both a classroom and hands-on learning opportunity for students and interns. A review of Pathway and Internship Programs were completed with SBCUSD to determine improvements to the Pathway Program. A revised Pathway Program partners with local schools with related Pathways and Academies programs. These Pathways and Academies will allow for four-year experiences for students from their freshmen to senior years as listed below for our Pathway integration with Arroyo Valley High School: Freshman Year – 9th Grade: • 1st exposure to water industry careers • Monthly speaking engagements o District staff members from a variety of departments will engage students in the classroom and give an overview of their department’s responsibilities, their specific job at the District, and the background on their career journey. There will be 8 monthly speakers throughout the school year. o 9th Grade students are learning about technical calculations and math applicable to construction and utilities at this time, so District staff will tie in their presentations to this subject matter. Sophomore Year – 10th Grade: • District On-Site Field Trip o Field trips to the Sterling Natural Resource Center will be scheduled after Winter Break where students will receive a well-rounded overview of careers in the water industry with specific focus on STEM-related careers. Brief presentations will be given by various departments and the students will attend an equipment demonstration given by the Operations Team. o 10th grade students are learning about career exploration and specific technical skills. Some of the technical skills they are currently learning include GIS Mapping and utilizing the Sketchup 3D modeling program. District staff will tie in how the District utilizes GIS, modeling programs, and more when speaking to the students. Junior Year – 11th Grade: • Hands-on, work-based learning Agenda Item #2 March 14, 20233 Meeting Date: March 14, 2023 Agenda Item #2 Informational Item 8 9 9 o District staff members will conduct hands-on learning with students through water utility labs in the classroom and onsite at District locations in small groups. o 11th grade focuses heavily on an introduction to trades, including construction, utilities, reading and working with blueprints, and more. The District will create labs for students tying in these focus areas and will include water maintenance, water treatment, water quality, and more. Senior Year – 12th Grade: • Career Readiness o District staff members will work with students on their career readiness skills. o There is a heavy employment focus for 12th grade students along with some trades-focused learning. District staff will work with students on job applications, resume preparation, dressing for success, and mock interviews. Staff will also share on-the-job do’s and don'ts with the students to help them prepare for success in their youth-jobs and future careers. • Certification Readiness o District staff will work with students, in groups or individually, who have shown a strong interest in pursuing a career in the water/wastewater industry. This will include providing guidance on Water Technology courses at local community colleges and sharing information on how to obtain state water and wastewater certifications. Students that complete the Pathway program will be eligible for a paid summer internship at the District. Students interested in an internship will complete an internship application and go through an interview process. The selected interns will primarily be located at the Sterling Natural Resource Center and rotate through a variety of career opportunities. Upon completion of the internship, the interns will celebrate with a refreshment reception and will receive a Certificate of Internship Completion that can be included in future job application packets. They will also receive priority interviews for future District job openings, if they meet the recruitment requirements, and will know that they have lifelong mentors at the District. In addition to the Pathway Program, staff has committed to continuing current educational partnerships such as the Claremont McKenna College Data Science Program, attendance at school career days and job fairs, job shadowing opportunities, and will place a strong focus on outreach and recruiting at additional local schools to spread the word about water industry careers and help provide students with career readiness skills. Agenda Item #2 March 14, 20234 Meeting Date: March 14, 2023 Agenda Item #2 Informational Item 8 9 9 AGENCY GOALS AND OBJECTIVES I - Implement Effective Solutions Through Visionary Leadership C. Strengthen Regional, State and National Partnerships III - Deliver Public Service With Purpose While Embracing Continuous Growth D. Embrace an Environment of Active Learning and Knowledge Sharing Through State-of-the-Art Data Management FISCAL IMPACT This item is funded in the current fiscal year budget. Respectfully submitted: ________________ Kerrie Bryan Director of Administrative Services ATTACHMENTS Presentation Kerrie Bryan, Director of Administrative Services WATER AND WASTEWATER PATHWAY UPDATE 2023 March 14, 2023 •Partnered with San Bernardino City Unified School District •Water and Resource Management Pathway at Indian Springs High School •Dual Enrollment Courses Available Through San Bernardino Valley College’s Water Technology Program 2 LAUNCHING THE PROGRAM Established February 2020 3 ADAPTING THE PATHWAY PROGRAM TO THE PANDEMIC Staff Hosted Virtual Mentoring With Students District Created Instructional Videos Virtual Pathway Program Continued Virtual Learning Began March 2020 4 PATHWAY INTERNSHIP PROGRAM TIMELINE Virtual Internships Began* March 2021 District Adopted In-House Internship Program August 2021 Internships Conducted Via Virtual Instruction, Videos, and Hand’s-On Home Learning Fall 2021 1st In-Person Internship Spring Break March 2022 *Sponsored by the Harbor Freight Fellowship Initiative PATHWAY REVIEW 5 6 PATHWAY PROGRAM: WHAT’S WORKING •District Staff Instruction •Career Exploration •On-Site Tours for Students •Hands-On Projects •Paid Internships 7 •Insufficient Resources/Participation for Stand-Alone Pathway •Juggling College Courses with Full Schedule •Mandatory high school classes •Extracurricular activities •Part-time jobs •Not Enough Available Time in Schedules to Complete Internship Hours PATHWAY PROGRAM: WHAT NEEDS RESTRUCTURING REVISED PATHWAY AND INTERNSHIP PROGRAM 8 9 •Expand on Current Related Pathways and Academies •CORE Academy –Arroyo Valley High School •Construction Trades Pathway –San Gorgonio High School •4-Year experiences for students from freshman to senior year •Outreach and Recruit at Other Local Schools/Community Organizations •Field trips •Job shadowing •In-class speakers •Career exploration POWER OF PARTNERSHIPS 10 SUMMER INTERNSHIP PROGRAM •Open to Pathway Participants and Other Local High School Students •Up to 50 Hours of Paid Internship •Number of Interns Per Summer Based on Annual Budget Allocation •Career Readiness and Hands-On Work Experiences •Internship conducted from SNRC facilities •Variety of departments and operational areas •Internship Application and Interview AVHS Field Trip January 2023 •Celebrate Achievement •During the celebration, participants receive a Certificate of Internship Completion •Work Experience Provided at the SNRC Facility will Offer Future Career Opportunities •Participants will Receive Priority Interviews for District Job Openings •Participants will Have Lifelong Mentors in East Valley Water District Staff 11 SUMMER INTERNSHIP COMPLETION DISCUSSION