Day-to-Day Management Day-to-Day Management of Public Funds and of Public Funds and Investment ReportsInvestment Reports

California Debt and Investment California Debt and Investment Advisory CommissionAdvisory Commission

Brice Bins, Assistant Treasurer, Contra Costa CountyBrice Bins, Assistant Treasurer, Contra Costa CountyKatano Kasaine, Treasury Manager, City of OaklandKatano Kasaine, Treasury Manager, City of Oakland

Maria Maria ÖÖberg, Principal Investment Officer, City of San Joseberg, Principal Investment Officer, City of San Jose

January 13, 2011January 13, 2011

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Introduction Introduction Daily Routine for Cash ManagementDaily Routine for Cash Management

Pre-Investment ActivitiesPre-Investment Activities

Investment of Daily FundsInvestment of Daily Funds

Reconciliation of Daily ActivitiesReconciliation of Daily Activities

Ongoing ActivitiesOngoing Activities

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Pre-Investment Pre-Investment ActivitiesActivities Download Prior Day Bank ActivityDownload Prior Day Bank Activity

Update Cash Flow ModelUpdate Cash Flow Model

Download Intra-Day Bank ActivityDownload Intra-Day Bank Activity

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Bank ActivityBank Activity Prior Day Activity – ReportsPrior Day Activity – Reports

– Collected BalancesCollected Balances– Funds AvailableFunds Available

Update Daily Cash Flow Model Update Daily Cash Flow Model – Debits & CreditsDebits & Credits

Update Cash Flow ProjectionsUpdate Cash Flow Projections

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Daily Cash FlowDaily Cash Flow Identify Current RevenuesIdentify Current Revenues

– Deposits from Agencies and DistrictsDeposits from Agencies and Districts– Remittances from the StateRemittances from the State– Investment MaturitiesInvestment Maturities– OtherOther

Identify Current ExpendituresIdentify Current Expenditures– Accounts Payable, Wire TransfersAccounts Payable, Wire Transfers– Investment PurchasesInvestment Purchases– OtherOther

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Daily Cash FlowDaily Cash Flow

Determine Amount of “Idle” CashDetermine Amount of “Idle” Cash – Revenues Minus ExpendituresRevenues Minus Expenditures

Investment of “Idle” CashInvestment of “Idle” Cash– Short-Term, Medium-Term, Long-TermShort-Term, Medium-Term, Long-Term

Reconciliation of Daily Cash FlowReconciliation of Daily Cash Flow

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Investment Of FundsInvestment Of Funds Focus on Investment ObjectivesFocus on Investment Objectives

– SafetySafety

– LiquidityLiquidity

– Return on Investment (Yield)Return on Investment (Yield)

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Bloomberg - YCRVBloomberg - YCRV

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What To Invest Funds In What To Invest Funds In ??

California Government Code California Government Code

City or County Investment City or County Investment PolicyPolicy

Investment Objectives Investment Objectives Market AccessMarket Access

1010

Market ReviewMarket Review What’s the market like today?What’s the market like today?

Major economic announcements?Major economic announcements?

Other resources?Other resources?

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Bloomberg - BTMMBloomberg - BTMM

1212

Bloomberg - DOCPBloomberg - DOCP

1313

Bloomberg - NIM2Bloomberg - NIM2

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Compliance ReviewCompliance Review Proportion of Security Types and Proportion of Security Types and

IssuersIssuers– Govt. Code, Investment PolicyGovt. Code, Investment Policy

Credit QualityCredit Quality– Ratings, Analysis, ReviewRatings, Analysis, Review

Approved List of Issuers and BrokersApproved List of Issuers and Brokers

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Investment DecisionInvestment Decision Permitted InvestmentsPermitted Investments

– California Govt. CodeCalifornia Govt. Code– Your Agency’s Investment PolicyYour Agency’s Investment Policy

Suitable Maturity/CategorySuitable Maturity/Category Obtain Bids/Offers from Broker/DealersObtain Bids/Offers from Broker/Dealers Decide and Execute TradeDecide and Execute Trade Maintain Lines of Communication with Maintain Lines of Communication with

Custody Bank for Settlement Custody Bank for Settlement ConfirmationConfirmation

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Short-Term Short-Term InvestmentsInvestments(One Day Liquidity)(One Day Liquidity)

Demand / Checking AccountDemand / Checking Account Bank “Sweep Account”Bank “Sweep Account” Money Market AccountMoney Market Account L.A.I.F. – State of CaliforniaL.A.I.F. – State of California Repurchase AgreementRepurchase Agreement Commercial PaperCommercial Paper

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Medium-Term Medium-Term InvestmentsInvestments(One Month or Longer)(One Month or Longer) U.S. Treasury BillsU.S. Treasury Bills Federal Agency Discount NotesFederal Agency Discount Notes Time Deposits (TCD) – Time Deposits (TCD) –

CollateralizedCollateralized Commercial PaperCommercial Paper Corporate NotesCorporate Notes

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Portfolio Structure Portfolio Structure AlternativesAlternatives Divide your portfolio into:Divide your portfolio into:

– Short-term Maturities or Core PortfolioShort-term Maturities or Core Portfolio– Longer-term Maturities or Reserve PortfolioLonger-term Maturities or Reserve Portfolio

Advantages:Advantages:– Clearly Define Funds Available for LiquidityClearly Define Funds Available for Liquidity– Can Optimize Returns on Both Sub-PortfoliosCan Optimize Returns on Both Sub-Portfolios– Each can be Managed to a Unique Each can be Managed to a Unique

BenchmarkBenchmark

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Post-Investment Post-Investment ActivitiesActivities Settle with Custodian Bank - DVPSettle with Custodian Bank - DVP Record Trade in Finance System Record Trade in Finance System Reconcile to Trade ConfirmationsReconcile to Trade Confirmations Update Cash Flow Model Update Cash Flow Model

2020

Ongoing ActivitiesOngoing Activities Investment ReportingInvestment Reporting Credit ReviewsCredit Reviews Cash Flow UpdatesCash Flow Updates Broker ReviewsBroker Reviews AuditsAudits Portfolio Rating/ReviewPortfolio Rating/Review

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Summary Summary Daily Routine for Cash ManagementDaily Routine for Cash Management

Pre-Investment ActivitiesPre-Investment Activities

Investment of Daily FundsInvestment of Daily Funds

Reconciliation of Daily ActivitiesReconciliation of Daily Activities

Ongoing ActivitiesOngoing Activities

Questions?Questions?

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Where to Get More Where to Get More InformationInformation

– Investment Workshops:Investment Workshops: CDIAC, GFOA, GIOA, AFPCDIAC, GFOA, GIOA, AFP

– Financial Markets: Financial Markets: Bloomberg, Telerate, CNN, etc.Bloomberg, Telerate, CNN, etc.

– Programs, such as:Programs, such as: Master in Business Administration (MBA)Master in Business Administration (MBA) Certified Treasury Professional (CTP)Certified Treasury Professional (CTP) Chartered Financial Analyst (CFA)Chartered Financial Analyst (CFA)