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HomeMy WebLinkAbout02-08-2017 Administration Committe Agenda Orange County Sanitation District Wednesday, February 8, 2017 Regular Meeting of the 5:00 P.M. ADMINISTRATION - Administration Building COMMITTEE Board Room 10844 Ellis Avenue Fountain Valley, CA 714 593-7433 AGENDA CALL TO ORDER: PLEDGE OF ALLEGIANCE: DECLARATION OF QUORUM: (Clerk of the Board) PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by the Chairman and are requested to limit comments to three minutes. REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve Minutes of the November 9, 2016 Administration Committee Meeting. 02/08/2017 Administration Committee Agenda Page 1 of 3 2. GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District purchases made under the General Manager's authority and additions to the pre-approved OEM Sole Source List for the period of October 1, 2016 - December 31, 2016. 3. MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2016 (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file Orange County Sanitation District Mid-Year Report for the period ended December 31, 2016. INFORMATION ITEMS: 4. INVESTMENT PERFORMANCE RESULTS (Lorenzo Tyner) NON-CONSENT: 5. CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2017-18 BUDGET UPDATE (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Approve the FY 2017-18 budget assumptions and direct staff to incorporate these parameters in preparing the FY 2017-18 budget update. 6. COOPERATIVE PROCUREMENT AGREEMENTS WITH U.S. COMMUNITIES GOVERNMENT PURCHASING ALLIANCE AND NATIONAL ASSOCIATION OF STATE PROCUREMENT OFFICIALS VALUEPOINT COOPERATIVE PURCHASING ORGANIZATION (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Authorize the purchasing of information technology products, services, and solutions utilizing the U.S. Communities Government Purchasing Alliance and National Association of State Procurement Officials ValuePoint Cooperative Purchasing Organization (NASPO ValuePoint) for the period of March 1, 2017 through February 29, 2020 for a total amount not to exceed $6,000,000, in accordance with Ordinance No. OCSD-47, Section 2.03(B) Cooperative Purchases. 02/03/2017 Administration Committee Agenda Page 2 of 3 INFORMATION ITEMS: 7. ORANGE COUNTY SANITATION DISTRICT ENVIRONMENTAL SERVICES RESOURCE PROTECTION (Jim Colston) 8. ORANGE COUNTY SANITATION DISTRICT STORM UPDATE (Ed Torres) CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, March 8, 2017 at 5:00 P.M. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at (714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Postina: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item,including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Kelly A.Lore Clerk of the Board (714)593-7433 klore(a),ocsd.com For any questions on the agenda, Committee members may contact staff at: General Manager James Herberg (714)593-7300 iherberofalomd.com Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(olocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itvner4ioasd.com Administrative Services Director of Human Resources Celia Chandler 714 593-7202 cchandler ocsd.com 02/011/2017 Administration Committee Agenda Page 3 of 3 ITEM NO. 1 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, November 9, 2016 at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chairman Curry on November 9, 2016 at 5:00 p.m. in the Administration Building of the Orange County Sanitation District. Chairman Curry led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Keith Curry, Chair Jim Herberg, General Manager Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager Jim Ferryman Celia Chandler, Director of Human Resources Jim Katapodis Jim Colston, Director of Environmental Services Peter Kim Rob Thompson, Director of Engineering Greg Mills Ed Torres, Director of Operations & Joy Neugebauer Maintenance John Nielsen, Board Chair Lorenzo Tyner, Director of Finance & Greg Sebourn, Board Vice-Chair Administrative Services Kelly Lore, Clerk of the Board COMMITTEE MEMBERS ABSENT: Eddie Baker Steven Choi Elvia Harvey Glenn Parker Al Garcia Teresa Smith Rebecca Long Sal Tinajero Mark Manzo Kathy Millea Man Nguyen Steve Speakman John Swindler Mike White OTHERS PRESENT: Brad Hogin, General Counsel PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chairman Curry did not provide a report. 11/09/2016 Adminisaabon Committee Minutes Page 1 of 5 REPORT OF GENERAL MANAGER: General Manager Jim Herberg did not provide a report. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: In response to questions posed in previous meetings, Director of Finance and Administrative Services Lorenzo Tyner stated that at the time of purchase,the investment with Lehman Brothers was appropriate under our investment policy. The new investment policy would not allow the same today. He then presented a slide illustrating the average benchmark of our portfolio vs. probable investment in CD's for the same 15-year period. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED AND DULY CARRIED TO: Approve Minutes of the October 12, 2016 Administration Committee Meeting. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero 2. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of July 1, 2016 - September 30, 2016. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero 3. IBM MAXIMO EMERGENCY AND LEVEL 3 SUPPORT (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Authorize a sole source purchase order agreement with Total Resource Management (TRM) for Maximo Emergency and Level 3 Support for one year commencing January 1, 2017 through December 31, 2017 for a total amount not to exceed $160,000. 11/09/2016 Administration Committee Minutes Page 2 of 5 B. Authorize an option for three annual renewals at $160,000 per year for a total amount of$480,000. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero 4. CONSOLIDATED FINANCIAL REPORT FOR FIRST QUARTER ENDED SEPTEMBER 30, 2016 (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2016. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero NON-CONSENT: 5. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2017A (Lorenzo Tyner) Mr. Tyner introduced Controller Mike White who provided a brief overview of this item. MOVED. SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize the General Manager to issue new fixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, Series 2017A, in an amount sufficient to refund up to $91,620,000 of COP Series 2007A. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero Board Chairman John Nielsen arrived at the meeting at 5:04 p.m. 11/09/2016 Administration Committee Minutes Page 3 of 5 6. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2016 (Lorenzo Tyner) Mr. White presented an informative PowerPoint regarding the CAFR including: financial measurement; the net position over the prior year; changes in net assets in the last five years; decreased cash and investments; and collection, treatment, and disposal costs in comparison to budget. Mr. White then introduced auditor Peter George, MGO, who provided a presentation and distributed a handout regarding: responsibilities of the Auditor; deliverables; communications with the Administration Committee and stated there were no major issues encountered and no material weaknesses or significant deficiencies noted for FY 15/16. MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2016, prepared by staff and audited by Macias Gini & O'Connell LLP (MGO), Certified Public Accountants, along with the following reports prepared by MGO: A. Report to the Board of Directors; and B. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Parker, T. Smith, and Tinajero INFORMATION ITEMS: 7. ORANGE COUNTY SANITATION DISTRICT TREATMENT PLANT OVERVIEW (Ed Torres) Director of Operations and Maintenance Ed Torres introduced Operations Supervisor Eddie Baker who provided an informative PowerPoint presentation on the Sanitation District's treatment plant operations, including an overview of the 2015-16 treatment plant operating expenses, future flows for the Groundwater Replenishment System, and maintenance efforts. 8. ORANGE COUNTY SANITATION DISTRICT SEWER SERVICE CHARGES — REBATES (Lorenzo Tyner) Mr. Tyner provided a brief PowerPoint presentation on the Rebate of paid Sewer Service charges application process. 11/09/2016 Administration Committee Minutes Page 4 of 5 CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Committee Chair Curry congratulated those that had successfully been reelected to their agencies, and said goodbye to those Committee members who would not be returning to OCSD. He stated that it had been an honor to work with the group. ADJOURNMENT: Committee Chair Curry declared the meeting adjourned at 5:49 p.m. to the next regularly scheduled meeting of Wednesday, January 11, 2017 at 5:00 p.m. Submitted by: Kelly A. Lore Clerk of the Board 11/09/2016 Administration Committee Minutes Page 5 of 5 ADMINISTRATION COMMITTEE Meng Dat0 TOBE. Dir. oz/ltioe/I7 oz/zz/Ory AGENDA REPORT ItemNumber Item Number z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District purchases made under the General Manager's authority and additions to the pre-approved OEM Sole Source List for the period of October 1, 2016 - December 31, 2016. BACKGROUND Staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved purchases between $50,000 and $100,000 and additions to the pre-approved OEM Sole Source List. RELEVANT STANDARDS • Quarterly financial reporting • Ensure the public's money is wisely spent PRIOR COMMITTEE/BOARD ACTIONS December 2016 - Authorized the General Manager to ratify additions or deletions to the OEM Sole Source list on the General Manager's quarterly approved purchases agenda report. ADDITIONAL INFORMATION In accordance with Board purchasing policies, Ordinance No. OCSD-47, the General Manager has authority to approve purchases between $50,000 and $100,000. Below is a summary of General Manager approved purchases, in amounts exceeding $50,000, for the first quarter of fiscal year 2016-17: Vendor Name Amount Department Description/Discussion ALMEGA Plant No. 1 Trunklines Air Sample ENVIRONMENTAL $g3150.00 Enineerin Collection &Analysis , g g &TECHNICAL for Project No. P1-105 SVCS Specification No. S-2016-793 Page I of 2 Vendor Name Amount Department Description/Discussion Legal Services for Utility Relocations and LEWIS BRISBOIS other Real Estate Matters BISGAARD & $75,000.00 Engineering 10/13/16 to 10/12/18 SMITH LLP Sole Source Justification # 1637 Reason: Unique Product/Service SANCON Operations & Sewer Pipeline Rehabilitation Services ENGINEERING INC $89,880.00 Maintenance 1/1/17 to 12/31/17 Specification No. S-2016-783BD Spectro Scientific MiniLab 53 SPECTRO Operations& Used for Oil Analysis SCIENTIFIC, INC $76,616.00 Maintenance Approved CORF Budget Sole Source Justification # 1668 Reason: Unique Product/Service ADDITIONS TO PRE-APPROVED OEM SOLE SOURCE LIST • SNAP-ON — Smog Machine Repair Services CEOA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. This item has been budgeted in the FY 16-17 Budget. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: N/A Page 2 of 2 ADMINISTRATION COMMITTEE Meng D310 TOBE. Dir. oz/ltioe/17 oz/zz/Ofv AGENDA REPORT Item Item Number 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2016 GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District Mid-Year Report for the period ended December 31, 2016. BACKGROUND Included in this consolidated report are the following mid-year reports for the period ended December 31, 2016: • Mid-Year Budget Review The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the mid-year financial results of the Orange County Sanitation District (Sanitation District)for the period ended December 31, 2016. • Mid-Year Treasurer's Report This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the U.S. and global economic outlook from the Sanitation District's investment manager, Chandler Asset Management. • Certificates of Participation Mid-Year Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. RELEVANT STANDARDS • Quarterly financial reporting ADDITIONAL INFORMATION The mid-year treasurer's report contained within the Consolidated Financial Reports for the period ended December 31, 2016 is being submitted in accordance with the Sanitation District's investment policy that requires the report be submitted to the governing body following the end of each quarter and includes the following information: Page 1 of 3 • Performance results in comparison with the 3-month treasury bill index for the liquid operating portfolio; and the Merrill Lynch Corp./Govt. 1-5 Year Bond index for the long-term portfolio as identified in the investment policy; and the time- weighted total rate of return for the portfolio for the prior three months, six months, nine months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods: Portfolio Performance Summary Quarter Ended December 31,2016 Liquid Operating Monies(%) Long-Term Ope(M,ling Monies Total Rate Total Rate of of Return Benchmark Return Benchmark 3 Months 0.12 0.09 -0.84 -1.06 6 Months 0.22 0.18 -0.78 712 9 Months 0.31 0.25 -0.07 -0.26 12 Months 0.48 0.33 1.47 1.30 Annualized Since inception 30 Nov 2014 0.34 0.18 1.01 0.98 • A listing of individual securities held at the end of each reporting period (see the detailed listings of each security contained within the report). • Cost and market values of the portfolios: Liquid Over. Long-Term Cost $112.9 M $316.4 M MV $113.0 M $316.6 M • Modified duration of the portfolio compared to Benchmark: Liquid Over. Long-Term B.M. 0.15 2.61 Port. 0.14 2.48 • Dollar change in value of the portfolio for a one-percent (1%) change in interest rates: Liquid Oper.- $153,567 Long-Term- $7,856,757 • None of the portfolios are currently invested in reverse repurchase agreements. • The percent of the Liquid Operating Monies portfolio maturing within 90 days: 79.9% Page 2 of 3 • Average portfolio credit quality: Liquid Oper. —AAA/Aaa Long-Term —AA+/Aa1 • Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities: Liquid Portfolio- no exceptions Long Term Portfolio- Percent of portfolio— 3.4% Maturity Cost Date Moody S&P Fitch AMRESCO Residential Securities 1999-1 $ 100,432.85 6/25/2029 Not Rated AA+ BBB Bank of America Corp Note $4,334,014.00 12/1/2017 Baal BBB+ A Goldman Sachs Group Inc. Note $ 692,806.00 1/18/2018 A3 BBB+ A American Express Credit Note $ 3,377,385.79 3/19/2018 A3 BBB+ A Morgan Stanley Note $ 3,200,848.00 7/28/2021 A3 BBB+ A • All investments are in compliance with this policy and the California Government Code, except for the following Lehman Brothers holdings that the Sanitation District is pursuing collection through the bankruptcy court: Lehman Brothers Note-Defaulted $ 600,000 par value purchased 9/19/2008 Lehman Brothers Note-Defaulted $2,000,000 par value purchased 9/18/2008 • Sufficient funds are available for the Sanitation District to meet its operating expenditure requirements for the next six months. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Mid-Year Consolidated Financial Reports for the period ended December 31, 2016 Page 3 of 3 y ORANGE COUNTY SANITATION DISTRICT r � 7fra • \ / .► or the period ended December 31 , 2016 Table of Contents ExecutiveSummary...................................................................................................1 Budget Review Section 1 —Consolidated Financial Reports..........................................................................1 Section 2—Operating Budget Review Chart of the Cost per Million Gallons by Department—Budget and Actual..............1 Chart of the Net Expenses by Major Category— Budget and Actual........................1 Divisional Contributions to Cost Per Million Gallons ................................................2 Comparison of Expenses by Department.................................................................3 Summary of Collection, Treatment, and Disposal Expenses by Major Category.....4 Summary of District-Wide Revenues .......................................................................5 Summary of Collection, Treatment and Disposal Revenues....................................5 Summary of Collection, Treatment, and Disposal Expenses by Line Item...............6 Summary of Collection, Treatment, and Disposal Expenses by Process.................8 Chartof Staffing Trends...........................................................................................9 Section 3—Capital Improvement Program Budget Review Capital Improvement Program Graphs by Type and Funding Source......................1 Summary of Capital Improvement Construction Requirements - Current Year........2 Summary of Capital Improvement Construction Requirements - Project Life..........6 Section 4—Capital Assets Schedule & Debt Service Budget Review CapitalAssets Schedule ..........................................................................................1 Debt Service Budget Review....................................................................................1 Section 5—Self Insurance Budget Review General Liability and Property Fund Budget Review................................................1 Workers' Compensation Fund Budget Review.........................................................2 Quarterly Treasurers Repo rt........................................................................................1 QuarterlyCOP Repo rt.................................................................................................1 FY 2016-17 Mid-Year Financial Report This Page Intentionally Left Blank Executive Summary Consolidated Financial Reports For the Mid-Year Ended December 31, 2016 Included in this consolidated report are the following quarterly financial reports for the period ended December 31, 2016: Mid-Year Budget Review: The Consolidated Financial Reports Section provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the mid-year ended December 31, 2016. Contained within the Consolidated Financial Reports is the budget-to-actual status of the Collections, Treatment and Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of December 31, 2016. Various detail information can be found in this report. In summary: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 77.3 percent mainly due to the receipt of$112.5 million from the issuance of Revenue Refunding Certificate Anticipation Notes, Series 2016B, during the second quarter of the fiscal year. The 2016B Notes were used to refund the Revenue Refunding Certificate Anticipation Notes, Series 2014B. Excluding debt financing proceeds, total revenues are at 51.2 percent of the budget. Except for IRWD Intra District Sewer Use, IRWD Capital Assessments, Interest Earnings, and Other Revenues, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to approximate budget at year-end. More detailed information on District revenues is provided within Section 1 — Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Consolidated Financial Reports Section of this report, the net operating requirements through the mid-year of $67.6 million is currently tracking at 46.2 percent of the $146.4 million budget. In addition, net operating expenses have decreased $4.3 million or 6.0 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain within budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. The total cost per million gallons is approximately $2,012 based on flows of 182.6 million gallons per day. This is $154.8 per million gallons, or 7.1 percent lower than the budgeted cost per million gallon per day. A further Page 1 FY 2016-17 Mid-Year Review description of these costs and benchmarking with other agencies is contained within Section 1 — Pages 6 through 8. d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2016-17 has been revised to $132.3 million, or 77.2 percent of the board approved cash outlay of$171.3 million. The actual cash outlay spending through the mid-year is $59.0 million, or 31.0 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3. • Quarterly Treasurer's Report This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District's money manager, Chandler Asset Management (Chandler). Chandler notes that the Long-Term Portfolio returned a negative return of 22 basis points over the quarter, but still outperforming the Bank of America Merrill Lynch 1-5 year AAA U.S. Corporate and Government Index return of a negative 106 basis points, while the Liquid Operating Monies Portfolio returned 12 basis over the quarter, outperforming the three-month Treasury Bill index return benchmark of 9 basis points. Chandler further notes that the Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted that economic activity has expanded at a moderate pace and labor market trends have improved, but inflation remains below target. The Fed's revised "dot plot" was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee's GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC's median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of two or three more 25 basis point rate hikes this year. The Fed's longer-run median fed funds target rate was revised up to 3.0% from 2.9%. The market is now pricing in more than a 70% chance of another rate hike in June 2017. Domestic economic data points to ongoing moderate growth this year. The U.S. labor market continues to improve, consumer confidence remains strong, and housing trends remain mostly favorable. The manufacturing sector has also improved. Market participants estimate GDP grew 2.2% in the fourth quarter. In December, the yield shifted upward as the 2-year Treasury yield increased nearly 8 basis points and the 10-year Treasury yield increased about 6 basis points. The move up in rates over the past few months has largely been driven by Page 2 Executive Summary heightened expectations for fiscal stimulus, and a potential increase in inflation, in light of President-elect Trump's victory and the Republican Party congressional sweep in the US. The Consumer Price Index (CPI) was up 1.7% year-over-year in November, versus up 1.6% year-over-year in October. Core CPI (CPI less food and energy) was up 2.1% year-over-year in November, unchanged from October. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in November, unchanged from October. Core PCE (excluding food and energy) was up 1.6% year-over-year in November, after being up 1.8% year-over-year in October. Although Core CPI is trending above 2.0%, the Fed's primary inflation gauge is PCE which remains below the Fed's 2.0% target. Economic Outlook The US Presidential election results were a surprise to markets and materially repriced the domestic interest rate market higher. During the fourth quarter the two year Treasury note yield moved higher by 43 basis points, to 1.19%, while the five year Treasury note moved higher by 78 basis points, to 1.93. The Federal Reserve was also finally able to tighten monetary policy, raising interest rates by 25 basis points on December 14. Post the election results, the outlook for risk assets improved as most market participants lowered the probability of a recession over an intermediate time horizon given the more positive outlook on a tax policy and higher probability of additional domestic fiscal spending. In Chandler's judgement the market got ahead of itself with the strong risk asset performance and aforementioned adjustment in interest rates; the Chandler team will be looking for some consolidation of performance in both the fixed income and equity markets during the first quarter of 2017. Monetary policy is poised to continue to normalize, with rates moving higher, but the Chandler team anticipates the process will continue to be slow. Currently the team is anticipating two rate hikes in 2017, with the timing likely in June and close to year-end. Economic activity in overseas markets remains lackluster, however if the team were to observe an uptick in economic activity in the Eurozone and/or Japan it would lead us to adjust our expectations for a quicker pace of domestic monetary policy normalization. Chandler continues to have the view the terminal fed funds rate will be low, despite the forecasted lowering of the tax rate and potential fiscal stimulus. Specific to domestic fiscal stimulus, the impact to the domestic economy is more likely to be a 2018 event as it takes time to put the necessary plans in place, in our judgement. Overall the team expects interest rates to be modestly higher on a year-over-year basis; the team is more willing to allocate monies to longer maturity assets given the large adjustment to domestic interest rates during the fourth quarter. • Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. Page 3 FY 2016-17 Mid-Year Review This Page Intentionally Left Blank Page 4 Consolidated Financial Reports Mid-Year Financial Report December 31, 2016 Financial Management is pleased to present the FY 2016-17 mid-year financial report. This report provides a comprehensive overview of the financial condition of the Sanitation District and reports on the status of all capital projects in progress. A summary of the sections contained within this report is provided below. Operating Budget Review., This section reports on collection, treatment and disposal net operating requirements. At December 31, 2016, 46.2 percent, or $67.6 million of the FY 2016-17 net operating budget of $146.4 million has been expended. Net operating expenses decreased from the same period last year by $4.3 million, or 6.0 percent, mainly due to a decrease of $1.7 million in Salaries and Benefits, $958,000 in Utilities, $878,000 in Repairs and Maintenance, $727,000 in Operating Materials and Supplies, $212,000 in Administrative Expenses, and $176,000 in Other Operating Supplies, and an increase of$323,000 in indirect costs allocated out to capital projects. These reductions to net operating expenses have been partially offset by increases of $269,000 in Contractual Services, $189,000 in Professional Services, $117,000 in Training and Meetings, and $36,000 in Research and Monitoring. These and other variances that factor into this net increase in expenses are discussed in more detail below. Overall, staff expects the total operating costs to remain at or slightly below budget throughout the remainder of the year. Significant operating results as of December 31, 2016 include the following: • Salaries. Wages and Benefits — Personnel costs of $44.5 million are on target at 49.9 percent of budget through the mid-year of FY 2016-17. Although the budget is based on a 5 percent vacancy factor, staffing is 45 full-time equivalents (FTE's), or 7.2 percent below the total 627 FTE's approved in the FY 2016-17 budget. Salary and benefit costs are $1.7 million or 3.6 percent lower than the $46.2 million incurred in the same period last year, mainly due to the decrease in OCERS retirement of $2.4 million. This decrease is reflective of the decrease in the employee contribution rate as a result of the $175 million pay down on the unfunded actuarial accrued liability over the previous two fiscal years. This decrease is partially offset by an increase of $700,000 in salaries and wages due to the recent completion of bargaining unit agreements that became effective as of July 1, 2017. Net operating personnel costs are expected to be slightly below budget throughout the remainder of the year. • Administrative Expenses — Administrative Expenses totaled $761,000, or 39.9 percent of the $1.9 million budget through December 31. These costs are $212,000 or 21.8 percent lower at December 31 in comparison with the prior year mainly due to a decrease of $194,000 in purchases of small computer items, Section 1 - Page 1 FY 2016-17 Mid-Year Report primarily Microsoft Surface Pro tablets purchased in the prior year. It is anticipated that the administrative costs will approximate or be below budget at year-end. • Printing and Publication Expenses — Printing and Publication Expenses totaled $136,000, or 43.7 percent of the $311,000 budget through December 31. These costs are $14,000 or 11.3 percent higher at December 31 in comparison with the prior year, mainly due to an increase of $28,000 in notices and ads for career recruitment, that were somewhat offset by a decrease of $15,000 in copy center costs as a result of removing mailroom services from the Xerox contract. It is anticipated that the printing and publication costs will be below budget at year-end • Training and Meetings — Training and meetings of $447,000 are below target at 38.6 percent of the $1.2 million budget. This account is lower than the proportionate budget due to the timing and need for training throughout the year. These costs have increased over the same period last year by $117,000 or 35.4 percent, which includes $72,000 for Total Productive Maintenance Certification Program costs not incurred in the prior period. Total training and meeting costs are anticipated to be below budget at year-end. • Operating Materials and Supplies — Operating materials and supplies of $7.6 million is slightly below target at 45.2 percent of budget through December 31. Operating Materials and Supplies have decreased from the prior year by $727,000 or 8.8 percent, primarily due to decreases in Chemical Coagulants of $384,000, Odor Control of $144,000, Tools of $100,000, Gas, Diesel and Oil of $52,000, and Safety Equipment of $29,000. The decreases are mainly brought about by chemical process optimization, a decrease in unit costs, and a decrease of purchases for tools and equipment from the prior year. Based on current processes, operating materials and supplies are anticipated to approximate budget at year-end. • Contractual Services — Contractual services is slightly below target at $11.4 million or 45.2 percent of budget through December 31. Solids Removal costs, budgeted at $17.2 million, comprise the majority of this expense category. With an increase of $19,000, or 0.2 percent higher than the prior year, solids removal costs totaled $8.8 million, or 51.4 percent of budget at December 31. Overall, Contractual Services is higher by $269,000 or 2.4 percent over the same period last year. Security Services increased by $216,000 due to heighted security and the addition of armed patrol services at both plants. In addition, Other Contractual Services increased by $152,000 due to an increase preventive maintenance services for the Civil Assets Management Program (CAMP). These increases were offset by decreases of$62,000 in Oxygen Plant Operation due to prior period increased flows diverted from plant 2 and $54,000 in Janitorial Service dues to renegotiation of contract rates. Total contractual services costs are anticipated to approximate budget at year-end. • Professional Services — Professional services costs totaled $1.5 million or 34.8 percent of the $4.3 million budget through December 31. Most professional Section 1 - Page 2 Consolidated Financial Reports service costs, such as Audit and Accounting, Engineering, Environmental Scientific Consulting, and Other Services, are proportionately low through December 31 due to a variety of factors such as services being in the planning or request for proposal stage, timing of services needed, the need for the service being re-evaluated, or utilization of internal staffing for projects. These costs are $189,000 or 14.4 percent higher at December 31 in comparison with the prior year mainly due to an increase of $171,000 in engineering services and timing of services performed. It is anticipated that the costs for this category will be below budget at year-end. • Research and Monitoring — Research and monitoring costs totaled $346,000, or 43.2 percent of the $860,000 budget through December 31. These costs are $36,000, or 11.6 percent higher at December 31 in comparison with the prior year, mainly due to an increase in environmental monitoring costs. Total Research and Monitoring costs are anticipated to be below budget at year-end. • Repairs and Maintenance — Repair and maintenance costs totaled $6.1 million, or 43.1 percent of the $14.3 million budget through December 31. These costs are $878,000, or 12.5 percent lower at December 31 in comparison with the prior year, mainly due to Plant 2 digester treatment and engine repairs in the prior year. It is anticipated that the costs for this category will approximate budget at year- end. • Utilities — Utilities costs totaled $3.4 million, or 41.0 percent of the $8.2 million budget through December 31. These costs are $958,000 or 22.1 percent lower at December 31 in comparison with the prior year, primarily due to a decrease in electricity charges of $1.0 million as a result of decreased usage related to decreased activities and outfall pumping, that is somewhat offset by an increase in natural gas charges of $65,000. The overall operating philosophy of the Central Generation facilities is to purchase electricity for power production rather than to purchase natural gas as a supplement to the digester gas needed to run the Central Generation facilities. This operating philosophy allows the Central Generation facilities to meet air emission requirements. It is anticipated that the costs will approximate budget at year-end. • Other Operating Supplies — Other operating supplies costs totaled $902,000, or 39.6 percent of the $2.3 million budget through December 31. Property and General Liability Insurance comprise the majority of this expense category. These costs are $308,000 or 124.0 percent higher at December 31 in comparison with the prior year primarily due to an increase in budgeted in-lieu premium charges in order to maintain recommended reserve balances. Regulatory Operating Fees have decreased over the prior year by $498,000, or 78.2 percent due to timing of payments for OCSD's ocean discharge permit fees. It is anticipated that the costs will approximate or be below budget at year-end. • Revenues — Service Fees and Property Taxes — Through December 31, revenues from service fees are at $158.6 million, or 55.4 percent of budget and Property taxes are $41.6 million, or 47.8 percent of budget. These items comprise the Section 1 - Page 3 FY 2016-17 Mid-Year Report majority of the Sanitation District's revenues and are mostly collected by the County through the property tax roll and distributed to the Sanitation District throughout the year based on a set distribution schedule that begins in November of each year. A decrease of $270,000 or 0.2 percent in service fee revenue over the prior period is due in part to timing of customer payments, change in invoicing wholly-exempt agency invoices, and an increase in user fee refunds issued in the current period, offset by an increase in fees of 1.6 percent. An increase of$296,000 or 0.7 percent in property tax revenues over the prior period is due to an increase of approximately 2.0 percent in property tax rates, higher construction activities and property values, offset by a decrease due to timing of redevelopment pass-through collections. These revenues are expected to approximate budget at year-end. • Revenues — Permittee User Fees — Permittee User Fees are at $6.0 million, or 53.3 percent of the $11.3 million budget. The number of permittees Fluctuates from year to year as businesses are established or close their operations. The revenues through the mid-year are $1.7 million or 38.9 percent higher in comparison with the same period last year due to an increase in the number of permittees and an increase in the amount of discharge from the permittees. It is estimated that the permittee user charges will approximate budget at year-end. • Revenues — Inter District Sewer Use — SAWPA and SBSD — Inter District Sewer revenues - SAWPA and SBSD are at $1.6 million, or 47.5 percent of the $3.3 million budget. This revenue is derived from charges to the Santa Ana Watershed Protection Agency (SAWPA) and Sunset Beach Sanitary District (SBSD) for treatment of flows. These revenues are expected to approximate budget at year-end. • Revenues — Intra District Sewer Use — IRWD — Intra District Sewer revenues- IRWD are at $761,000, or 20.4 percent of the $3.7 million budget. This revenue is derived from charges to the Irvine Ranch Water District (IRWD) for treatment of flows. The revenues through the mid-year are lower than the same period last year by $89,000 or 10.5 percent mainly due to a $93,000 increase of property tax owed to IRWD that is somewhat offset the cost reimbursements received from IRWD. These revenues are expected to approximate budget at year-end. • Revenues - Sludge Disposal — IRWD — Sludge Disposal fees - IRWD are at $5.0 million, or 54.9 percent of the $9.1 million budget. The revenue is derived and fluctuated from flows discharged from IRWD to Sanitation District for the handling, treatment and disposal of solids. The revenues through the mid-year are lower than the same period last year by $252,000 or 4.8 percent, mainly due to an anticipated decline in sludge disposals. These revenues are expected to approximate or exceed budget at year-end. • Revenues — Capital Assessments — IRWD — Capital Assessments-IRWD are at $927,000, or 21.1 percent of the $4.4 million budget. The revenues through the mid-year are lower than the same period last year by $317,000 or 25.5 percent Section 1 - Page 4 Consolidated Financial Reports mainly due to a decrease in joint capital costs charged to IRWD. It is estimated that the capital assessments will be below budget at year-end. • Revenues — Capital Facilities Capacity Charges (CFCC) — CFCC are at $5.8 million, or 42.8 percent of the $13.5 million budget. The revenues through the mid-year are lower than the same period last year by $169,000 or 2.9 percent due to decreased construction activity, offset by more supplement capital facilities capacity charges from industrial dischargers than at this time last year. These revenues are expected to approximate the budget at year-end. • Revenues — Interest Earnings — Interest Earnings are at ($1.4 million) or (16.4) percent of the $8.6 million budget. The revenues through the mid-year are lower than the same period last year by $2.8 million or 204.2 percent due to a decline in the current market value of the securities held in the investment portfolios. It is estimated that the interest earnings will be below the budget amount at year- end. • Revenues — Wastehauler — Wastehauler revenues are at $358,000 or 47.7 percent of the $750,000 budget. This revenue is derived from fees charged to wastehaulers allowing them to dump waste into the Sanitation District's system. These revenues are expected to approximate budget at year-end. • Revenues — CNG Sales — CNG Sales revenues are at $227,000 or 56.8 percent of the $400,000 budget. This revenue is derived from public sales at the District's Compressed Natural Gas (CNG) fueling station. The revenues through the mid-year are higher than the same period last year by $6,000 or 2.8 percent. These revenues are expected to approximate budget at year-end. • Revenues - Other — Other revenues are at $227,000 or 28.3 percent of the $800,000 budget. These revenues consist of miscellaneous revenues, such as reimbursements from insurance and employees. The revenues through the mid- year are lower than the same period last year by $508,000 or 69.1 percent mainly due to a settlement received in the prior year from the County of Orange bankruptcy filing in 1994 of $480,000. These revenues are expected to be below budget at year-end. Section 1 - Page 5 FY 2016-17 Mid-Year Report Comparison of Mid-Year Cost per Million Gallon Results with Budget Last Five Years 2,200 2,150 2,167 2,100 I 2117 Z050 I 2,076 2 099 z000 2.oas zou 1,950 1,900 951 aoe 1,850 1,800 1,750 1,700 1,650 1,600 1,550 1,500 12-13 13-14 14-15 15-16 16-17 Mid- Annual Mid- Annual Mid- Annual Mid- Annual Mid- Annual Year Budget Year Budget Year Budget Year Budget Year Budget As demonstrated in the preceding graph for each of the last four fiscal years, the cost per million gallons at the end of the mid-year has been between 2.1 percent lower to 3.5 percent higher than the annual budget. The FY 2016-17 mid-year is 7.1 percent lower when compared with this year's budget. The variance from previous years is primarily due to a decrease in operating expenses, which are 6.0 percent lower than the same period last year, offset by a decrease in flows, which are 1.1 percent lower than the same period last year. Staff believes that overall operating costs will be below budget at year-end. The total cost per million gallons at December 31 is $2,012.18 based on flows of 182.6 million gallons per day. This is $154.8 per million gallons, or 7.1 percent, lower than the budgeted cost per million gallons of $2,167. There is an inverse relationship between the amount of flows and the cost per unit of collection, treatment, and disposal. Consequently, the lower cost per million gallons is due to net expenses being 7.6 percent less than the proportionate budget through December 31, which is partially offset by flows of 182.6 million gallons per day being 1.3 percent lower than the budgeted flow of 185 million gallons per day. More detailed information on operating revenues, costs, and related information is provided within Section 2. Section 1 - Page 6 Consolidated Financial Reports Following are data tables showing the last five years of Single Family Residential User Fees (SFR) and the cost per MG to collect, treat, and dispose of wastewater for OCSD and for similar agencies. The agencies used in the table were determined to be those that most closely resembled OCSD in terms of services provided and treatment levels. The summaries demonstrate that OCSD's SFR and cost per million gallons are each one of the lowest in their respective group. Benchmark Study Five-Year Single Family Rate Rates as of July 2012 2013 2014 2015 2016 Agency SFR SFR SFR SFR SFR Notes San Francisco $667.92 $701.40 $744.83 $ 784.44 $ 842.14 City of San Diego $572.58 $572.58 $572.58 $ 572.58 $ 572.58 Vallejo Sanitation/Flood Control District $495.12 $507.48 $520.20 $ 520.20 $ 520.20 Central Contra Costa Sanitary District $371.00 $405.00 $439.00 $ 471.00 $ 503.00 City of Los Angeles $391.56 $409.20 $435.40 $ 464.04 $ 494.77 Note 1 Sacramento County $288.00 $312.00 $348.00 $ 384.00 $ 420.00 Dublin San Ramon Services District $355.44 $355.44 $372.96 $ 382.38 $ 382.38 Union Sanitary District $319.55 $337.76 $357.02 $ 377.00 $ 380.05 East Bay MUD $305.10 $331.10 $358.14 $ 355.18 $ 372.50 City of Hayward $327.24 $327.24 $337.08 $ 347.16 $ 357.60 Orange County Sanitation District $294.00 $308.00 $316.00 $ 322.00 $ 327.00 City of Fresno $309.00 $309.00 $309.00 $ 309.00 $ 309.00 Irvine Ranch Water District $206.40 $220.80 $246.00 $ 288.60 $ 309.00 Note 2 Om Loma Sanitary District $189.00 $195.00 $200.00 $ 206.00 $ 221.00 Los Angeles County $149.00 $150.00 $151.00 $ 155.00 $ 159.00 Note 3 Notes: (1)- Data is for the typical SFR customer rate and is not the average rate. (2)- Data represents the maximum SFR rate and is not the average rate. (3)- Data for 2013 and 2014 was mvised to remove ad valorem monies that were inadvertently included. Section 1 - Page 7 FY 2016-17 Mid-Year Report Benchmark Study Five-Year Cost per MG FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Agency Sic.Trt. Cost/MG Cost/MG Cost/MG CosttMG Cost/MG Notes Central Contra Costa Sanitary District B 4 $4,203.43 $4,621.84 $5,778.43 $6,280.58 $6,453.65 Vallejo Sanitation/Flood Control District B 3 $5,176.00 $5,435.00 $6,153.00 $5,590.00 $5,396.00 San Francisco B 3 $4,778.96 $5,006.74 $5,400.28 $5,357.97 $5,268.23 Note 1 Union Sanitary District B 3 $3,267.06 $3,805.40 $3,832.47 $3,910.73 $3,957.08 City of San Diego B 2 $3,242.30 $3,340.35 $3,156.43 $3,591.69 $3,171.51 Dublin San Ramon Services District B 3 $2,009.57 $2,159.49 $2,506.60 $2,522.00 $2,895.95 East Bay MUD T 4 $2,320.02 $2,359.40 $2,559.18 $2,727.97 $2,598.53 Sacramento County T 3 $3,312.50 $2,143.16 $2,375.47 $2,494.40 $2,571.14 Note 2 City of Los Angeles B 4 $1,935.00 $2,062.00 $2,163.00 $2,269.00 $2,452.00 Orange County Sanitation District B 3 $1,871.47 $1,906.01 $1,935.05 $2,070.97 $2,110.43 City of Fresno B 3 $1,383.60 $1,411.89 $1,552.39 $1,628.91 $1,678.28 Los Angeles County B 4 $1,156.00 $1,008.00 $1,223.72 $1,239.40 $1,371.06 Note 3 Legend for SeNoe Prmided and Treatment Level: B-Agency operates both collection and treabnentfacilites T-Agency provides treatment sernces but not collection 2-Advanced prim aryor primary with some secondary treatment 3-Secondary treatment 4-Advanced secondary or secondary with some tertiary treatment Notes: (1)-Beginning in Fiscal Year 2012-13,dataset represents wastewater flows from finalimd publicly available audited documents. (2)-Miles of sewers number changed in 2012 to include parallel force main pipes per the 2011 State of the District Report. (3)-Does not include source control or overhead costs. Section 1 - Page 8 Consolidated Financial Reports Capital Outlay Review: $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 12/31/16 Actual Projected 2016-17 2016-17 Capital Outlay Capital Outlay Capital Outlay Cashilow Budget $59,018,230 $132,251,000 $171,277,393 As depicted by the preceding chart, Capital Outlays totaled $59.0 million or 34.5 percent of the capital outlay cash flow budget for FY 2016-17 as of December 31, 2016. Costs are proportionately low through the mid-year as some projects are still in the design phase or have experienced various delays. Examples as of December 31 are the Sludge Dewatering and Odor Control for Plants 1 and 2, which has a combined FY16-17 cash flow budget of$41.9 million but actual costs of only $14.3 million and the Rehabilitation of Western Regional Sewers, which has a budget of $16.0 million but actual costs of only $2.0 million. Overall, the capital outlay costs of the capital improvement program are expected to approximate $132.3 million, or 77.2 percent of the capital outlay cash flow budget at year-end. More detailed information on the capital improvement program is provided within Section 3. Capital Assets Schedule and Debt Service Budget Review: Section 4 is the Capital Assets Schedule and Debt Service Section. This section shows the cost value of the Sanitation District's capital facilities at December 31, 2016, as well as the debt service costs resulting from the need to provide funding for the construction of capital facilities. The majority of principal payments on debt issues are due in August during the first quarter, and in February during the third quarter of each fiscal year. Excluding payments on refunding debt from the Revenue Refunding Certificate Anticipation Notes, Series 20148, as of December 31, 2016, 55.2 percent of the principal payments have been made through the end of the mid-year. Total principal payments are expected to Section 1 - Page 9 FY 2016-17 Mid-Year Report approximate budget at year-end. Interest costs are expensed ratably throughout the fiscal year. Interest expense is anticipated to approximate budget at year-end. Self-Insurance Budget Reviews: Section 5 is the Self-Insurance Section. Through December 31, the Self-Insurance Fund revenues totaled $1.2 million or 49.8 percent of the budget, while expenses were $1.7 million or 66.7 percent of the budget. Separate fund accounting is used for recording the revenue and expenses incurred in managing these liability claims. The revenues to these funds represent charges to operating divisions. Expenses to these funds include actual claims paid, claims administration, and excess loss policies. Section 1 - Page 10 Operating Budget Review Cost per Million Gallons by Department Budget and Actual December 31, 2016 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $ 00 $600 $500 to0 00 $200 $100 $0 mow y c � •fin � b `a' > E = 2m w'� � E✓� �y w OE 6 w �eutlget �Aclual Collection, Treatment, & Disposal Expenses by Major Category Budget and Actual (in thousands) December 31, 2016 $70,000 M'000 $00,000 $55,000 W'000 U5,000 $40,000 $35,000 $ '000 $25,Ooo $20,000 $15,000 AIM $10,000 $5,000ANN $o E n @ oa 2 �8utlgef �Actuel Section 2-Page 1 2016-17 Mid-Year Report Divisional Contributions to Cost Per Million Gallons For the Six Months Ended December 31,2016 2016-1T 12131/14 12131/15 Annual 12131/16 Actual Actual Budget Actual Flow in Million Gallons 35,166.23 33,974.26 67,525.00 33,601.96 Flow in Million Gallons per Day 191.12 184.64 185.00 182.62 Executive Management Department Geneml Management Administration $ 25.60 $ 31.50 $ 43.31 $ 36.87 Board Services 7.32 6.67 9.38 8.07 Public Affairs 7.93 13.11 15.11 15.05 Subtotal 40.85 51.28 67.80 59.99 Human Resources Department Human Resources 54.65 56.17 58.04 54.33 Risk Management/Safety I Security 48.23 43.67 70.33 60.60 Subtotal 102.88 99.84 128.37 114.93 Administrative Services Department Administrative Services 9.87 9.43 8.75 1.65 Financial Management 45.60 46.69 50.51 42.54 Contracts,Purchasing,&Materials Mgmt. 62.59 61.57 61.74 63.24 Information Technology 150.60 151.32 154.39 143.82 Subtotal 268.66 275.01 275.39 257.26 Facilities Support Services Department Facilities Support Administration 9A9 14.91 - - Facilities Support 8.21 - - - Equipment Rebuild 24.89 - -East Services 30.11 32.14 - - Collections Engineering 44.33 42.60 - - NPDES Source Inspection 33.08 34.61 - - Odor and Corrosion Control 104.94 105.34 - - Collection Facilities O&M 60.76 56.94 Subtotal 316.21 286.54 Environmental Services Department Environmental Services Administration - - 12.41 12.16 Resource Protection - - 88.10 81.92 Laboratory&Ocean Monitoring 153.76 146.20 Subtotal 254.27 240.28 Engineering Department Engineering Administration 10.43 7.75 5.91 6.72 Planning 44.49 50.91 48.61 49.05 Project Management Offme 52.03 37.39 39.89 39.75 Civil and Mechanical Engineering 129.56 140.56 124.51 127.49 Electrical&Control System Engineering - - 68.29 61.45 Environmental Compliance 109.09 105.11 Subtotal 345.60 341.72 287.21 284.46 Operations&Maintenance Department Operations&Maintenance Administration 10.66 13.23 10.15 7.29 Collections Facilities 0&M - - 190.21 166.05 Fleet Services - - 31.27 28.10 Plant No. l Operations 378.10 489.49 429.22 414.15 Plant No.2 Operations 308.15 309.99 309.80 302.10 Building,Grounds&Mechanical Maintenance 205.58 - - - Instrumentation&Electrical Maintenance 215.79 - - - PlanlNo. lMaintenance - 226.80 299.69 256.09 Plant No.2 Maintenance - 171.72 168.14 163.51 Environmental Laborotory a Ocean Monitoring 111.48 120.34 Subtotal 1,235.76 1,331.57 1,438.48 1,337.29 Total Operating Expenses 2,309.96 2,385.96 2,451.52 2,294.21 Cost Allocation (2UA3) (269AS) (284.52) (282.03) Net Operating Requirements $ 2,O75.83 $ 2,1 66.51 $ 2,167.00 $ 2,012.18 Section 2-Page 2 Operating Budget Review Comparison of Expenses by Department For the Six Months Ended December 31,2016 2016.17 12131/14 ID31/15 Year to Date Budge% Department and Division Actual Actual Budget 12/31116 Realized Executive Management Department General Management Administration $ 900,333 $ 1,070,092 $ 2,924,220 $ 1,238,T75 42.36% Board Services 257,548 228,641 633,540 271,180 42.80% Public Affairs 278,804 445,273 1,020,100 505,756 49.58% Subtotal 1,436,685 1,742,006 4,577,860 2,015,711 44.03% Human Resources Department Human Resources 1,921,945 1.908,246 3.918,890 1,825,529 46,58% Risk Management l Safety/Security 1,691 1,483,739 4,749,050 2,036,378 42.8l Subtotal 3,618.032 3.391,985 8.667,940 3,861.907 44,55% Administrative Services Department Administrative Services 347,258 320,249 590,830 257,262 43.5,t% Financial Management 1,603,533 1,586,133 3,410,810 1,429,448 41.91% Contracts,Purchasing,&Materials Mgmt. 2,200,926 2,091,743 4,169,220 2,125,049 50.97% Information Technology 5,296.062 5.344,753 10.425,510 4,832.573 46,35% Subtotal 9,447,779 9,342,878 18,596,370 8,644,332 46.48% Facilities Support Services Department Facilities Support Administration 347,941 506,529 - - 0.00% Facilities Support 288,601 - - - 0.00% Equipment Rebuild 875,449 - - - 0,00% Fleet Services 1,068,813 1.091,964 - - 0.00% Collections Engineering 1,558,758 1,447,182 - - 0.00% NPDES Source Inspection 1,163,166 1,176,019 - - 0.00% Odor and Corrosion Control 3,690,482 3,578,950 - - 0.00% Collection Facilities 0&M 2,136,631 1,934,347 0.00% Subtotal 11,119,841 9,734,991 0.00% Environmental Services Department Environmental Services Administration - - 838,250 408,709 48.76% Resource Protection - - 5,948,920 2,752,519 46.27% labomtory&Ocean Monitoring 10,382,450 4,912,625 47.32% Subtotal 17.169,620 8,073,853 47.02% Engineering Department Engineering Administration 366,932 263,193 399,390 225,956 56.58% Planning 1,564,599 1,729,470 3,282,440 1,648,112 50.21% Protect Management Office 1,829,753 1,270,433 2,693,360 1,335,715 49.59% Civil and Mechanical Engineering 4,556,182 4,775,392 8,407,280 4,284,039 50,96% Electrical&Control System Engineering - - 4.610,980 2,064,785 4478% Environmental Compliance 3,836,238 3,571,061 0.00% Subtotal 12,153,704 111609,549 19,393,450 9,558,607 49.29% Operations&Maintenance Department Operations&Maintenance Administration 374,959 449,368 685,600 244,910 35.72% Collections Facilities 0&M - - 12,844,162 5,579,495 43.44% Fleet Services - - 2,111,320 944,263 44,72% Plant No.1 Operations 13,296,458 16.630,063 28,982,656 13,916,367 48.02% Plant No.2 Operations 10,836,567 10,531,806 20,918,950 10,151,167 48.53% Building,Grounds&Mechanical Maintenance 7,229,649 - - - 0.00% Instrumentation&Electrical Maintenance 7,588,641 - - - 0,00% Plant No.1 Maintenance - 7.705,229 20.236,812 8,605.039 42.52% Plant No.2 Maintenance - 5,833,922 11,353,810 5,494,260 48.39% Environmental Laboratory&Ocean Monitoring 4,131,065 4,089,195 0.00% Subtotal 43,457,339 45,239,583 97,133,310 44,935.501 46.26% Total Operating Expenses 81,233,380 81,060,992 165,538,550 77,089.911 46.57% Cost Allocation (8,234,303) (9,153,971) (19,182,030) (9,476,871) 49.40% Net Operating Requirements $ 72,999,077 $ 71,907,021 $ 146,356,520 $ 67,613,040 46.20% Section 2-Page 3 2016-17 Mid-Year Report Summary of Collection, Treatment, &Disposal Expenses by Major Category For the Six Months Ended December 31, 2016 Expense Expense Increase Increase Percent Budget Through Through (Decrease) (Decrease) Budget Remaining Description 2016-17 12/31/16 12/31/15 $ % Realized Budget Salary&Wages $ 66,833,000 33,174,805 32,474,470 $ 700,335 2.16% 49.64% $33.658,195 Employee Benefits 22,456,800 11,355,931 13,709,333 (2,353,402) -17.17% 50.57% 11,100,869 Administrative Expenses 1,909,150 760,690 972,801 (212,111) -21.80% 39.84% 1,148,460 Printing&Publication 310,690 135,662 121,931 13,731 11.26% 43.66% 175,028 Training&Meetings 1,158,070 446,676 329,883 116,793 35.40% 38.57% 711,394 Operating Materials&Supplies 16,698,250 7,554,763 8,281,648 (726,885) -8.78% 45.24% 9,143,487 Contractual Services 25,138,420 11,354,517 11,085,727 268,790 2.42% 45.17% 13.783,903 Professional Services 4,320,830 1,503,976 1,315,067 188,909 14.36% 34.81% 2,816,854 Research&Monitoring 800,000 345,735 309,764 35,971 11.61% 43.22% 454,265 Repairs&Maintenance 14,265,930 6,145,263 7,023,304 (878,041) -12.50% 43.08% 8,120,667 Utilities 8,242,240 3,378.952 4,337,178 (958,226) -22.09% 41.00% 4,863,288 Other Materials,Supplies, and Services 3,405,170 932,941 1,099,886 (166,945) -15.18% 27.40% 2,472,229 Net Cast Allocation (19,182,030) (9,476,871) (9,153,971) (322,900) 3.53% 49.40% (9,705,159) Net Operating Requirements 146,356,620 67,613,040 71,907,021 (4,293,981) .5.97% 46.20% 78,743,480 Gallonage Flow(MG) 67,52&00 33,601.96 33,974.26 (372.30) -1.10% Gallonage Flow(MGD) 185.00 182.62 184.64 (2.02) -1.09% Gallonage Flow($'a/MG) $2,167000 $2,012.18 $2,116.51 ($104.33) -4.93% Section 2-Page 4 Operating Budget Review Summary of Revenues For the Six Months Ended December 31, 2016 Revenue Percent Revenue Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 12/31/16 Realised Budget 12131/15 $ % Service Fees $286,554,000 $158,606,025 55.35% $127,947,975 $158,875,947 $ (269,922) 0.17% Permit Fees 11,272,000 6,004,948 53.27% 5,267,052 4,322,983 1,681,965 38.91% Inter District Sewer Use-SAWPA&SBSD 3.283.000 1,560,261 47.53% 1,722739 1.633.381 (73,120) 4.48% Intra District Sewer Use-IRWD 3,737,690 761,413 20.37% 2,976,277 850,469 (89,056) -10.47% Sludge Disposal-IRWD 9,090.000 4,993,946 54.94% 4,096,054 5.246.103 (252,157) 4.81% Capital Assessments-IRWD 4,402,000 926,696 21.05% 3,475,304 1,243,274 (316,578) -25.46% Capital Facilities Capacity Charges 13,500.000 5,776,293 4279% 7,723,707 5,945,771 (169,478) .2.85% Debt Proceeds - 112,494,420 N/A (112,494,420) - 112,494,420 100.00% Property To. 87,017.000 41,601,683 47.81% 45,415,317 41,305.268 296,415 0.72% Interest Earnings 8,606,000 (1,409,703) -16.38% 10,015,703 1,352,547 (2,762,250) -204.23% Wastemuler 750.000 357,741 47.70% 392,259 337.513 20,228 5.99% CNG Sales 400,000 227,216 56.80% 172,784 221,094 6,122 2.77% Rents&Leases 255.000 124,284 48.74% 130,716 129,940 (5,656) 4.35% Other 800,000 226,733 28.34% 573,267 734,790 (508,057) -69.14% Power Sales 20.000 23,600 118.00% (3,600) 7,822 15,778 201.71% Other Sales 35,000 19,123 54.64% 15,877 30,717 (11,594) -37.74% Total Revenues $429,721,690 $332,294,679 77.33% $ 97,427,011 $222,237,619 $110,057,060 49.52% Section 2-Page 5 2016-17 Mid-Year Report Summary of Collection,Treatment, &Disposal Expenses by Line Item For the Six Months Ended December 31,2016 Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 IV31118 Expensed Budget lV31115 $ % Salaries.Wanes&Benefits Salaries&Wages $ 66,833,000 $ 33,174,805 49.64% $ 33,658,195 $ 32,474,470 $ 100,335 2.16% Employee Benefits Retirement 10,950,600 5,]4],044 52.48% 5,203,556 8,099,396 (2,352,352) Group Insurances 9,725,700 4,640,020 47.71% 5,085,680 4,605,766 34,254 0.74% Tuition&Codification Relmb 175,600 49,982 28.46% 125,618 60,625 (10,643) -17.56% Edu.degrees,Cad.&Lic. 314.600 199,660 63.46% 114.940 157.128 42,532 2].0]% Uniform Rental 53,200 55,295 103.94% (2,095) 26,643 28,652 101.54% Workers Compensation 1,196,300 598,160 50.00% 598,150 739,349 (141,199) -19.10% Unemployment insurance 2,900 12,334 425.31% (9,434) 1,459 10,875 745.37% EMT Supplemental Benefits 37,900 53,446 141.02% 115.546) 18,967 34,479 181.78% Total Benefits 22,456,800 11,355,931 5057% 11,100,869 13,709,333 (2,353,402) Salaries,Wages&Benefits 89,289,800 44,530,736 49.87% 44,75%064 46,183,803 (1,653,067) -3.56% Matt,Supply.&Services Administrative Expenses Memberehips 586,050 335,649 57.27% 250,401 343,816 (8,167) -2.38% Office Exp-Supplies 61.370 30,114 49.07% 31.256 25.970 4,144 15.96% Postage 41,040 19,870 48.42% 21,170 14,418 5,452 37.81% Books&Publications 50,970 21,306 41.80% 29,662 15,459 5,849 37.84% Fortes 1,300 - 0.00% 1,300 231 (231) -100.01 Small Computer Items 908,000 311,023 34.25% 596.9]] 504,933 (193,910) -38.40% Minor Furniture&Fixtures 260,420 42,726 16.41% 211,694 61,914 (25,248) Subtotal 1,909,150 760,690 39.84% 1,148,460 972,801 (212,111) -21.80% Printing&Publication Repro-In-House 243,690 95,150 39.05% 148,540 11D407 (15,257) -13.82% Printing-Outside 22,250 6,912 31.07% 15,338 6,314 598 9.47% Notions&Ads 44,700 33,600 75.17% 11,100 5,210 28,390 544.91% Photo Processing 50 0.00% 50 NIA Subtotal 310,690 135,662 43,66% 175,028 121,931 13,731 11.26% Training&Meetings Meetings 188.310 49,741 26.41% 138.569 71,634 (21,893) -30.56% Training 969,160 396,935 40.93% 572,825 258,249 138,686 53.70% Subtotal 1,158,070 446,616 38.57% 711,394 329,883 116,793 35.40% Operating Mat'Is&Supplies Chemical Coagulants 5,126,550 2,617,231 51.05% 2,509,319 3,001,217 (383,986) -12.79% Odor Control 8,151,300 3,603,443 44.17% 4,553,857 3,147,900 (144,457) -3.85% Disinfection 170,500 101,701 59.65% 68,799 100.885 816 0.81% Chemicals-Misc&Cogan 472.000 153,559 32.53% 318.441 144.253 9,306 6.45% Gasoline,Diesel&Oil 632,790 253,014 39.98% 379,176 304,595 (51,581) -16.93% Tools 691,950 135,343 19.56% 556,607 235,123 (99,780) 42.44% Safety equlpmentnools 581,560 299,478 50.97% 288,082 328,389 (28,911) -am% Soly,Points&Jon.Supplies 82.390 38,507 46.74% 43.883 43.353 (4,846) -11.18% Lab Chemicals&Supplies 601,360 270,598 45.00% 330,762 289,837 (19,239) -6.64% Other Operating Supplies 171,850 80,858 47.05% 90,992 84,203 (3,345) -3.97% Property Tax Fees 4,000 1,031 25.78% 2,969 1,893 (862) 45.54% Subtotal 16,698,250 ],554]63 45.24% 9,143,487 8,281,648 (726,885) Contractual Services Solids Removal 17,206,000 8,844,955 51.41% 8,381,045 8,826,087 18,868 0.21% Other Waste Disposal 886,400 393,159 44.35% 493,241 388.010 5,149 1.33% Gmundskeeping 129,720 69,332 53.45% 60,388 69,306 26 0.0`1 Janitorial 345,700 181,110 52.39% 164,590 235,632 (54,522) -23.14% Outside Lab Services 275,000 62,718 22.81% 212,282 91.956 (29,238) -31.81 Oxygen Plant Oper 406.000 146,240 36.02% 259.760 208.302 (62,062) -29.79% County Service Fee 671,700 24,468 3.64% 641,232 21,229 3,239 15.26% Temporary Ser4ces 814,400 223,713 27.47% 590,687 203,824 19,889 9.76% Security Services 1,33D000 416,489 31.31% 913,511 200,691 215,798 107.53% Other 3,073s00 992,333 32.29% 2,081,167 840,690 151,643 18.04% Subtotal 25,138,420 11,354,517 45,17% 13,]83,903 11,085,]2] 268,790 2.42% (Continued) Section 2-Page 6 Operating Budget Review Summary of Expenses by Line Item For the Six Months Ended December 31,2016 Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 IV31/16 Expenses! Budget IV31/15 $ % Con6nuad: Professional Services Legal 1,363,500 606,591 44.49% 756,909 644,443 (37,852) -5.87% Audit&Amounting 270,700 71,077 26.26% 199,623 85,607 (14.530) -16.97% Engineering 743.000 262,085 35.27% 480,915 91,060 171.025 187.82% Enviro Scientific Consulting 125,000 23,481 18.70% 101,519 37,683 (14,202) -37.69% So ,xime PMm Consulting 370,000 198,661 63.69% 171,339 115,713 82,948 71.68% Advocacy Efforts 176,000 78,870 ".at% 97,130 112,456 (33,586) -29.87% Industrial Hygiene Services 50.000 43,802 87.60% 6,198 41,635 2.167 5.20% Labor Negotiation Services 80,000 32,200 40.25% 47,800 - 32,200 N/A Other 1,142,630 187,209 16.38% 955,421 186,470 739 0.40% Subtotal 4,320,830 1,503.976 34.81% 2,816,854 1,315,067 188,909 14.36% Research&Monitoring Environmental Monitoring 305,000 145,203 47.61% 159,797 97,857 47,346 48.38% AU Quality Monitoring 95,000 532 0.56% 94,468 11,907 (11,375) -95.53% Research 400,000 200,000 50.00% 200,000 200,000 0.00% Subtotal 800,000 345,735 43.22% 454,265 309,764 35,971 11.61% Repairs&Maintenance Materials&Services 11,453,670 4,962,286 43.32% ( 1,386 5756,023 (793737) -13.79% Svc.Mtc.Agreements 2,812,260 1,182,977 42.06% 1,629,283 1,267,281 (84,304) -6.65% Subtotal 14,265,930 6,145,263 43.08% 8,120,667 7,023,W4 (878,041) -12.50% Utilities Telephone 400,000 170,340 42.59% 229,660 151,285 19,055 12.60% Diesel For Generators 18,240 4,056 22.24% 14,184 5,711 (1,656) -28.98% Natural Gas 519,000 307,085 59.17% 211,915 242,158 64.927 26.81% Power 616541000 2,591.513 38.95% 4,062,487 3,623,124 (1,031.611) -28.47% Water 651,000 305,958 47.00% 345,042 314,900 (8,942) -2.84% Subtotal 8,242,240 3,378,952 41.00% 4,863,288 4,337,178 (958,226) -22.09% Other Operating Supplies Outside Equip Rental 139,600 35,052 25.68% 103,748 5,919 29,933 505.71% Insurance Premiums 32,000 31,049 97.03% 951 31,386 (337) -1.07% Prop&Gen Liab Insurance 1,111,100 555,552 50.00% 555,548 247,998 307,554 124.01% Freight 70.030 35,151 50.19% 3 ,879 39,738 (4,587) -11.54% Misc.Operating Expense 207,310 105,433 50.86% 101,877 115,106 (9,673) -8.40% Regulatory Operating Fees 715,900 139,093 19.43% 676,807 637,582 (498,489) -78.18% Subtotal 2,275,940 902,130 39.64% 1,373.810 1,077,729 (175,599) -16.29% General Mgr Contingency &Reappropriations 1,015,700 0.00% 1,015,700 N/A Other Non-Oper Expense Others 113,530 W,811 27.14% 82,719 22,157 81654 39.06% Subtotal 113,530 30,811 27.14% 82,719 22,157 8,654 39.06% Total Materials, Supplies&Services 76,248,750 32,559,175 42.70% 43,609,575 34,877,189 (2,318,014) -6.65% Total Expenditures 165,538,550 77,089,911 46.67% 8g448,639 81,060,992 (3,971,081) 4.90% Cost Allocation (19,182,030) (9,476,871) 49.40% (9,705,159) (9,153,971) (322,900) 3.53% Net Operating Requirements $ 146,356,520 $ 67,613.040 46.20% $ 78743.480 $ 71,907,021 $ a 3,981) -5.97% Section 2-Page 7 2016-17 Mid-Year Report Summary of Collection,Treatment,8 Disposal Expenses by Process For the Six Months Ended December 31,2016 Increase Increase Actual Actual (Decrease) (Decrease) 12/31/16 12/31115 $ % Process: Preliminary Treatment $ 3,790,935 $ 4,356,349 $ (565,414) -12.98% Primary Treatment 5,018,856 6,049,026 (1,030,170) -17.03% Secondary Treatment 3,792,044 3,896,615 (104,571) -2.68% Cryogenic Plant(Plant 2) 289,718 389,023 (99,305) -25.53% Ef0uent Disposal 313,093 609,674 (296,581) -48.65% Solids Handling 22,753,395 23,627,692 (874,297) -3.70% Cogeneration 6,975,711 9,009,038 (2,033,327) -22.57% Utilities 1,413,404 1,451,895 (38,492) -2.65% Electrical Distribution 707,948 1,065,714 (357,765) -33.57% Miscellaneous Buildings 4,395,607 4,240,680 154,927 3.65% External Location 27,628 38,192 (10,564) -27.66% Nerlssa Vessel 113,056 102,352 10,703 10.46% North County Yard 2,079 37,504 (35,425) -94.46% Laboratory 7,241,498 6,262,185 979,313 15.64% Collections 10,778,070 10,771,083 6,988 0.06% Net Operating Requirements $ 67,613,040 $ 71,907,021 $ (4,293,980) -5.97% Section 2-Page 8 Operating Budget Review Staffing Trends Full Time Equivalents December 31, 2016 700 650 626 624 624 624 627 600 38 36 qq 52 550 500 450 6/30113 6/30114 6/30/15 6130116 12131/16 8Actua1 8Va.a t At December 31, 2016,the total head count was 594 employees,ore full time equivalency of 582. Section 2-Page 9 2016-17 Mid-Year Report This Page Intentionally Left Blank Section 2- Page 10 CIP Budget Review Capital Improvement Program By Type and Funding Source For the Six Months Ended December 31, 2016 @Collectlons Facllldes: 36,7% 1•Headwwks: 5.1% @Primary Treaoment 2.7% oseoondary Treatment 0.1% @Solids Handling&Dlgestlon: 33.1% 130cean Outtall SYstems: 7.5% outllin systems: 1.6% @Process Related Special Projects: 0,9% @Informatlon Management Systems: 2.3% @Strategic&Master Planning: 2.3% @Water Management Projects: 0.4% @Reseamin 01% oSupporl Fealties: 4.9% @Others: 0.0% @Prior Year Treatment Pmlects: 0 3% @Capital Equipment Purchases 2.01, Total Capital Improvement Outlays -$59,018,230 Replaceme ilRehabilitation: 45% Improved Treatment: 15% ❑Additional Capacity: 36% ■Support: 4% Total Capital Improvement Outlays -$59,018,230 Section 3- Page 1 FY 2016-17 Mid-Year Report Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016 2016-17 2016.17 2016.17 Cashflow Actual at Projected Budget 1 213112 01 6 Outlay Collection System Improvement Proiects Collections Facilities Santa Ana Trunk Sewer Rehab. $ 74,119 $ 17,305 $ 41,900 Raitt and Bristol Street Sewer Rehab& Extension 204,379 - 196,600 Santa Ana River Interceptor(SARI) Realignment 562,271 35,622 73,300 SARI Rock Stabilizers Removal 312,927 9,023 242,500 Newhope-Placentia Trunk Grade Separation Replacements 934,520 7,192 37,300 Newhope-Placentia Trunk Replacement 7,181,679 9,126,938 16,384,800 Newhope-Placentia Trunk Replacement, Segment B 13,762,266 2,172,924 2,173,000 Lakeview Grade Separation Project 154,706 - 80,200 Tustin Rose OCTA Grade Separation Project 71,317 132,287 132,300 Seal Beach Pumping Station Upgrade and Rehabilitation 5,964,626 660,411 3,042,400 Rehabilitation of Western Regional Sewers 16,018,059 2,009,451 7,137,300 Doig Drive Building Improvements - - 173,600 Newport Force Main Rehabilitation 5,903,015 1,309,508 1,333,900 Bay Bridge Pumping Station Replacement - 91,168 91,200 District 6 Trunk Sewer Relief 4,623,818 209,852 979,800 Southwest Costa Mesa Trunk 876,199 199,083 199,100 Gisler-Redhill System Improvements, Reach "B" 11,951,892 5,401,542 11,209,200 Gisler Red-Hill Interceptor Rehabilitation 102,511 - 46,700 Master Facilities Engineering Projects-Collections 1,429,603 92,390 1,194,400 Master Planning Studies-Collections 2,748,262 66,589 66,600 Bay Bridge Pump Station and Force Mains Rehab Study 361,019 51,612 61,200 Additional Charges to CIP Closed at 6/30/16 19,447 19,500 Subtotal -Collections Facilities 73,237,188 21,612,344 44,916,800 Revenue Area 14 Newport Force Main Rehabilitation (2.18%) 131,554 29,183 29,800 Subtotal -Revenue Area 14 131,554 29,183 29,800 Total Collection System Improvement Projects 73,368,742 21,641,527 44,946,600 (Confined) Section 3-Page 2 CIP Budget Review Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016 2016-17 2016-17 2016.17 Cashflow Actual at Projected Budget 1 213112 01 6 Outlay Treatment&Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 6,705,388 1,773,439 5,855,000 Truck Line Odor Control Improvements P1 3,244,621 1,158,329 1,317,100 Headworks Modifications at P2 for GWRS Final Expansion 62,608 168,100 Subtotal -Headworks 9,950,009 2,994,376 7,340,200 Primary Treatment Primary Clarifier&Trickling Filter Odor Control at P1 95,767 - 58,700 Plant No. 1 Primary Treatment Upgrades 293,871 156,059 175,400 Primary Clarifiers Repl & Impr at Plant No. 1 - 351,542 404,700 A-Side Primary Clarifiers Repl.at P2 1,684,096 1,083,650 3,650,300 Subtotal -Primary Treatment 2,073,734 1,591,251 4,289,100 Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 - - 24,600 Activated Sludge Aeration Basin Deck Repair at P2 295,085 67,944 82,500 Oxygen Plant Demolition at Plant No. 2 428,585 16,659 36,700 Subtotal -Secondary Treatment 723,670 84,603 143,800 Solids Handling& Digestion Digester Rehabilitation at Plant 1 4,754,023 4,769,978 5,978,300 Sludge Dewatedng and Odor Control at Plant 1 18,460,389 6,122,425 12,043,300 Solids Thickening and Processing Upgrades 4,208,003 503,474 621,000 Sludge Dewatering and Odor Control at Plant 2 23,463,706 8,159,404 19,863,800 Subtotal -Solids Handling &Digestion 50,886,121 19,555,281 38,506,400 Ocean Outfall Systems Final Ef0uent Sampler and Building Area Upgrades 5,602,416 2,976,864 4,862,900 Ocean Outfall System Rehabilitation 4,648,804 1,394,818 4,136,400 Interplant Ef0uent Pipeline Rehabiliation 66,348 66,400 Subtotal -Ocean Outfall Systems 10,251,220 4,438,030 9,065,700 Utility Systems Cengen Cooling Water System Replacement - 6,114 9,700 Cengen Emissions Control Project 692,372 236,832 253,600 Digester Gas Facilities Rehabilitation 332,017 16,009 84,700 Natural Gas Pipelines Rapt at Plant No. 1 and 2 33,573 12,981 85,400 Plant Water System Rehabilitation at Plant No. 1 11,645 410 500 Plant Water System Rehabilitation at Plant No. 2 1,884 4,084 4,100 Consolidated Demolition&Utility Improvements at P2 1,081,187 645,733 1,088,000 Plant Air System Master Plan 45,061 (42) (100) Subtotal -Utility Systems 2,197,739 922,121 1,525,900 (Confined) Section 3-Page 3 FY 2016-17 Mid-Year Report Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016 2016-17 2016-17 2016-17 CashBow Actual at Projected Budget 1 213112 01 6 Outlay Process Related Special Projects Safety Improvements at Plants Nos. 1 and 2 704,960 353,735 2,624,300 Odor Control Master Plan 585,791 166,595 626,000 Subtotal -Process Related Special Projects 1,290,751 520,330 3,250,300 Information Management Systems Programmable Control Panel Upgrade 74,645 21,348 62,200 Project Management Information System - - 137,500 Power Monitoring &Control Systems at P2 2,590,934 473,174 1,977,300 Master Information Technology Capital Program 502,307 423,587 437,800 Geographic Information System 616,445 379,135 409,200 EAM Software and Process Implementation 471,467 34,893 94,900 PD82D Software Replacement 98,061 6,250 36,300 Process Control System Upgrades Study 1,348,089 5,234 222,600 Subtotal -Information Management Systems 5,701,948 1,343,621 3,377,800 Strategic& Master Planning Master Planning Studies 3,363,060 1,356,202 5,872,100 Subtotal -Strategic&Master Planning 3,363,060 1,356,202 5,872,100 Water Management Projects Ef0uent Reuse Study 1,104,241 239,243 239,300 Subtotal -Water Management Projects 1,104,241 239,243 239,300 Research Research Program 1,149,080 20,489 77,000 Fuel Cell Demo 16,644 12,925 13,000 SCCWRP Nutrient Cycling Sampling 42,659 - 7,000 AquaCritox Evaluation/Design 255,469 54,680 131,900 Subtotal -Research 1,463,852 88,094 228,900 Support Facilities Master Facilities Engineering Projects- Plant 12,735,831 2,212,582 5,070,700 Master Small Capital Replacement/Rehabilitation 1,711,019 28,337 491,800 Title 24 Access Compliance&Building Rehab Project 3,816,143 553,493 2,128,100 Headquarters Complex, Site& Security&Entrance Realign. 5,951,410 95,456 1,909,700 Site and Security Improvements at Plant No.2 12,797 4,300 Subtotal -Support Facilities 24,227,200 2,889,868 9,604,600 (Confined) Section 3-Page 4 CIP Budget Review Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016 2016-17 2016-17 2016.17 Cashflow Actual at Projected Budget 12/31/2016 Outlay Others Capital Improvement Program Mgmt. Services 24,326 12 100 Subtotal -Others 24,326 12 100 Additional Charges to CIP Completed at 6130116 177,492 177,500 Total Treatment and Disposal Projects 113,257,871 36,200,524 83,621,700 Capital Equipment Purchases 3,682,780 1,176,179 3,682,800 Total Collection, Treatment and Disposal Projects and Capital Equipment Purchases 190,309,393 59,018,230 132,251,100 Less: CIP Savings and Deferrals (19,032,000) Net Collection,Treatment and Disposal Projects and Capital Equipment Purchases $171,277,393 $ 59,018,230 $132,251,100 Section 3- Page 5 FY 2016-17 Mid-Year Report Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2016 Current Total Approved June 30,2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2017 Budget Collection System Improvement Projects Collections Facilities Santa Ana Trunk Sewer Rehab. 6,974,000 6,686,800 41,900 6,728,700 245,300 Raiff and Bristol Street Sewer Rehab&Extension 13,622,000 259,075 196,600 455,675 13,166,325 Santa Ana River Interceptor(SARI)Realignment 11,404,000 5,592,473 73,300 5,665,773 5,738,227 SARI Rock Stabilizers Removal 4,046,000 265,733 242,500 508,233 3,537,767 Taft Branch Sewer Relief 1,928,000 12,083 - 12,083 1,915,917 Newhope-Placentia Trunk Grade Separation Replacements 5,739,000 4,045,695 37,300 4,082,995 1,656,005 Newhope-Placentia Trunk Replacement 34,708,000 9,737,373 16,384,800 26,122,173 8,585,827 Newhope-Placentia Trunk Replacement,Segment 65,367,000 26,909 2,173,000 2,199,909 63,167,091 Yoffie Linda Pumping Station Abandonment 7,053,000 - - - 7,053,000 Lakeview Grade Separation Project 330,000 68,892 80,200 149,092 180,908 Tustin Rose OCTA Grade Separation Project 586,000 283,638 132,300 415,938 170,062 Beach TrunkMnoB Interceptor Sewer Relief 118,678,000 - - - 118,678,000 Seal Beach Pumping Station Upgrade and Rehabilitation 60,840,000 2,073,689 3,042,400 5,116,089 55,723,911 Rehabilitation of Western Regional Sewers 217,069,000 2,518,370 7,137,300 9,655,670 207,413,330 Doig Drive Building Improvements 2,436,000 - 173,600 173,600 2,262,400 Newport Force Main Rehabilitation 62,604,800 56,646,974 1,333,900 57,980,874 4,623,926 Crystal Cove Pumping Station Rehabilitation 10,882,000 - - - 10,882,000 Bay Badge Pumping Station Replacement 54,000,000 - 91,200 91,200 53,908,800 Newport Beach Pump Stations Odor Control Improvements 4,066,000 - - - 4,066,000 District 6 Trunk Sewer Relief 7,965,000 1,421,400 979,800 2,401,200 5,563,800 Southwest Costa Mesa Trunk 29,650,000 1,747,830 199,100 1,946,930 27,703,070 Gisler-Redhill System Improvements,Reach"B" 25,213,000 6,299,980 11,209,200 17,509,180 7,703,820 Browning Subtrunk Sewer Relief 16,952,000 - - - 16,952,000 MacArthur Pumping Station Rehabilitation 8,762,000 - - - 8,762,000 Main Street Pump Station Rehabilitation 39,219,000 - - - 39,219,000 Gisler Red-Hill Interceptor Rehabilitation 5,486,000 - 46,700 46,700 5,439,300 Edinger/Bolsa Crui Trunk Improvements 5,159,000 - - - 5,159,000 Edinger Pumping Station Rehabilitation 8,880,000 - - - 8,880,000 Slater Avenue Pump Station Rehabilitation 9,729,000 - - - 9,729,000 Master Facilities Engineering Projects-Collections 12,192,000 1,199,298 1,194,400 2,393,698 9,798,302 Master Planning Studies-Collections 10,636,304 402,264 66,600 468,864 10,167,440 Bay Bridge Pump Station and Force Mains Rehab Study 725,000 341,878 61,200 403,078 321,922 Additional Charges to CIP Closed at 6130116 19,500 19,500 (19,500) Subtotal-Collections Facilities 862,91 99,630,3M 44,916,800 144,547,154 718,353,950 Revenue Area 14: Newport Force Main Rehabilitation(2.18%) 1,395,200 1,262,425 29,800 1,292,225 102,975 Subtotal-Revenue Area 14 1,395,200 1,262,425 29,800 1,292,225 102,975 Total Collection System Improvement Projects 864,296,304 100,892,779 44,946,600 145,839,379 718,456,925 (Continued) Section 3-Page 6 CIP Budget Review Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2016 Current Total Approved June 30,2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2017 Budget Treatment&Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 274,841,000 2,433,404 5,855,000 8,288,404 266,552,596 Truck Line Odor Control Improvements P1 9,299,000 7,359,325 1,317,100 8,676,425 622,575 Headworks Modifications at P2 for GWRS Final Expansion 50,000,000 168,100 168,100 49,831,900 Subtotal-Headworks 334,140,000 9,792,729 7,340,200 17,132,929 317,007,071 Primary Treatment Primary Clarifier&Trickling Filter Odor Control at Pi 94,228,000 - 58,700 58,700 94,169,300 Plant No.1 Primary Treatment Upgrades 9,146,000 8,118,861 175,400 8,294,261 851,739 Primary Clarifiers Repl&Impr at Plant No.1 158,332,000 - 404,700 404,700 157,927,300 A-Side Primary Clarifiers Repl.at P2 428,264.000 978,734 3,650,300 4,629,034 423,634,966 Subtotal-Primary Treatment 689,970,000 9,097,595 4,289,100 13,386,695 676,583,305 Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 3,300,000 - 24,600 24,600 3,275,400 Activated Sludge Aeration Basin Deck Repair at P2 2,331,000 55,798 82,500 138,298 2,192,702 Oxygen Plant Demolition at Plant No.2 3,444,000 2,816.671 36,700 2,853,371 590,629 Subtotal-Secondary Treatment 9,075,000 2,872.469 143,800 3,016,269 6,058,731 Solids Handling&Digestion Digester Rehabilitation at Plant 1 67,150,000 57,765,401 5,978,300 63,743,701 3,406,299 Sludge Dewatering and Odor Control at Plant l 188,328,000 152,105,764 12,043,300 164,149,064 24,178,936 Solids Thickening and Processing Upgrades 51,150,000 46,778,286 621,000 47,399,286 3,750,714 Plant No.2 Digester Facilities Rehabilitation 49,220,000 152,343 - 152,343 49,067,657 Sludge Dewatering and Odor Control at Plant 2 90,477,000 25,961,621 19,863,800 45,825,421 44,651,579 Subtotal-Solids Handling&Digestion 446,325,000 282,763,415 38,506,400 321,269,815 125,055,185 Ocean Ouffall Systems Final Effluent Sampler and Building Area Upgrades 16,411,000 11,079,895 4,862,900 15,942,795 468,205 Ocean Curtail System Rehabilitation 91,000,000 3,043,856 4,136,400 7,180,256 83,819,744 Interplant Effluent Pipeline Rehabiliation 25,200,000 66,400 66,400 25,133,600 Subtotal-Ocean Outfall Systems 132,611,000 14,123,751 9,065,700 23,189,451 109,421,549 Utility Systems Cengen Cooling Water System Replacement 11,477,000 11,374,655 9,700 11,384,355 92,645 Cengen Emissions Control Project 23,820,000 21,945,471 253,600 22,199,071 1,620,929 UPS System Upgrades 8,087,000 - - - 8,087,000 Digester Gas Facilities Rehabilitation 87,897,000 9,458 84,700 94,158 87,802,842 Natural Gas Pipelines Repl at Plant No.1 and 2 1,310,000 2,282 85,400 87,682 1,222,318 Electrical Power Distribution System Improvements 34,608,000 - - - 34,608,000 Plant Water System Rehabilitation at Plant No.1 6,157,000 6,113,517 500 6,114,017 42,983 (Confined) Section 3-Page 7 FY 2016-17 Mid-Year Report Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016 Current Total Approved June 30,2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2017 Budget Utility Systems(continued) Central Generation Rehab at Plant No. 1 73,151,000 - - - 73,151,000 Plant Water System Rehabilita0on at Plant No.2 3,704,000 3,737,750 4,100 3,741,850 (37,850) Consolidated Demolition&Utility Improvements at P2 38,460,000 3,205,873 1,088,000 4,293,873 34,166,127 Central Generation Rehab at Plant No.2 95,906,000 - - - 95,906,000 Plant Air System Master Plan 225,000 187,096 (100) 186,996 38,004 Subtotal-Utility Systems 384,802,000 46,576,102 1,525,900 48,102,002 336,699,998 Process Related Special Projects Safety Improvements at Plants Nos.l and 2 9,702,000 202,858 2,624,300 2,827,158 6,874,842 Odor Control Master Plan 1,950,000 1,233,922 626,000 1,859,922 90,078 Subtotal-Process Related Special Projects 11,652,000 1,436.780 3,250,300 4,687,080 6,964,920 Information Management Systems Process Control Systems Upgrades 102,399,000 - - - 102,399,000 Programmable Control Panel Upgrade 2,283,000 1,785,807 62,200 1,848,007 434,993 Project Management Information System 4,000,000 - 137,500 137,500 3,862,500 Power Monitoring&Control Systems at P2 34,123,000 604,790 1,977,300 2,582,090 31,540,910 Master Information Technology Capital Program 10,000,000 - 437,800 437,800 9,562,200 Geographic Information System 4,568,000 1,947,390 409,200 2,356,590 2,211,410 EAM Software and Process Implementation 7,500,000 4,700,097 94,900 4,794,997 2,705,003 PDS2D Software Replacement 525,000 342,351 36,300 378,651 146,349 Process Control System Upgrades Study 3,554,000 222,600 222,600 3,331,400 Subtotal-Information Management Systems 168,952,000 9,380,435 3,377,800 12,758,235 156,193,765 Strategic It Master Planning Master Planning Studies 13,015,696 1,190,605 5,872,100 7,062,705 5,952,991 Climate Change Impact Study 590,000 590,000 Subtotal-Strategic&Master Planning 13,605,696 1,190,605 5,872,100 7,062,705 6,542,991 Water Management Projects Effluent Reuse Study 3,250,000 2,529,365 239,300 2,768,665 481,335 Subtotal-Water Management Projects 3,250,000 2,529.365 239,300 2,768,665 481,335 Research Research Program 8,500,000 - 77,000 77,000 8,423,000 Fuel Cell Demo 135,000 118,192 13,000 131,192 3,808 SCCWRP Nutrient Cycling Sampling 95,000 71,250 7,000 78,250 16,750 AquaCrilox Evaluation/Design 588,000 402,510 131,900 534,410 53,590 Subtotal-Research 9,318,000 591,952 228,900 820,852 8,497,148 (Continued) Section 3-Page 8 CIP Budget Review Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016 Current Total Approved June 30,2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2017 Budget Support Facilities Master Facilities Engineering Projects-Plant 43,325,000 7,856,037 5,070,700 12,926,737 30,398,263 Master Small Capital ReplacementlRehabilitation 15,622,000 2,065,761 491,800 2,557,561 13,064,439 Title 24 Access Compliance&Building Rehab Project 17,509,000 12,967,931 2,128,100 15,096,031 2,412,969 Headquarters Complex,Site&Security&Entrance Realign. 179,067,000 169,006 1,909,700 2,078,706 176,988,294 Site and Security Improvements at Plant No.2 252,000 227,660 4,300 231,960 20,040 Subtotal-Support Facilities 255,775,000 23,286,395 9,604,600 32,890.995 222,884,005 Others Banning Gale Relocation&Grading at Plant No.2 2,812,000 227,660 - 227,660 2,584,340 Capital Improvement Program Mgml.Services 300,000 9,591 100 9,691 290,309 Subtotal-Others 3,112,000 237,251 100 237,351 2,874,649 Additional Charges to CIP Completed at 6130116 177,500 171,500 (177,500) Total Treatment and Disposal Projects 2,462,587,696 403,878,844 83,621,700 487,500,544 1,975,087,152 Capital Equipment Purchases 16,000,000 7,083,097 3,682,800 10,765,897 5,234,103 Total Collection,Treatment and Disposal Projects and Capital Equipment Purchases $3,342,884,000 $511,854,720 $132,251,100 $644,105,820 $2,698,778,180 Section 3-Page 9 FY 2016-17 Mid-Year Report This Page Intentionally Left Blank Section 3- Page 10 Capital Assets Schedule & Debt Service Budget Review Capital Assets Schedule For the Six Months Ended December 31,2016 Capital Facilities Budget Review Balance Year-to-Date Balance 07/01/16 Additions 12/31/16 CONSTRUCTION IN PROGRESS: Treatment Plant $ 405,065,130 $ 37,376,703 $ 442,441,833 Collection System 94,310,929 21,641,527 115,952,456 Subtotal 499,376,059 59,018,230 558,394,289 PROPERTY,PLANT&EQUIPMENT(at cost): Land and Property Rights 15,959,559 - 15,959,559 Collection Lines and Pump Stations 781,138,758 - 781,138,758 Treatment Facilities 2,278,136,004 - 2,278,136,004 Effluent disposal facilities 97,014,820 - 97,014,820 Solids disposal facilities 3,463,236 - 3,463,236 General and administrative facilities 229,446,444 - 229,446,444 Excess purchase price over book value on acquired assets 19,979,000 19,979,000 Subtotal 3,425,137,821 3,425,137,821 Total Property, Plant&Equipment&CIP $ 3,924.513,880 $ 59,018,230 $ 3,983.532,110 Debt Service Budget Review 2016-17 Year-to-Dale Remaining Budget Payments %of Budget Budget Principal Payments by Debt Issue: 2007A COP 265,000 - 0.00% 265,000 2007B COP 7,110,000 - 0.00% 7,110,000 2008B COP 8,815,000 8,815,000 100.00% - 2009A COP 4,250,000 - 0.00% 4,250,000 2010A BABs - - 0.00% - 2010C BABs - - 0.00% - 2011ACOP 15,135,000 15,135,000 100.00% - 2012A COP - - 0.00% - 2012B COP - - 0.00% - 2014A COP - - 0.00% - 20148 CANs 7,827,411 120,850,000 1543.93% (113,022,589) 2015A COP - - 0.00% - 2016A COP - - 0.00% - 2016B COP 0.00 Subtotal Principal Payments 43,402,411 144,800,000 333.62% (101,397,589) Interest Expense by Debt Issue: 2007A COP 4,108,278 2,054,139 50.00% 2,054,139 2007E COP 355,500 177,750 50.00% 177,750 2008B COP 132,225 22,025 16.66% 110,200 2009A COP 585,250 292,625 50.00% 292,625 2010A BABs 2,897,639 2,107,769 72.74% 789,870 2010C BABs 6,523,780 4,745,475 72.74% 1,778,305 2011A COP 4,774,725 2,261,250 47.36% 2,513,475 2012A COP 3,735,900 1,867,950 50.00% 1,867,950 2012B COP 3,187,400 1,593,700 50.00% 1,593,700 2014A COP 4,254,500 2,127,250 50.00% 2,127,250 2014B CANS 496,694 1,624,711 327.11% (1,128,017) 2015A COP 6,375,500 3,187,750 50.00% 3,187,750 2016A COP 5,833,798 3,493,448 59.88% 2,340,350 2016E COP 617,967 N/A (617,967) Subtotal Interest Expense 43,261,189 26,173,809 60.50% 12,177,247 Total Debt Service $ 86,663,600 $ 170,973,809 197.28% $ (89,220,342) Section 4- Page 1 2016-17 Mid-Year Report This Page Intentionally Left Blank Section 4 - Page 2 Self Insurance Budget Review General Liability and Property Fund Budget Review For the Six Months Ended December 31,2016 Percent Actual of Budget Remaining Actual 2016-17 Through Through 2016-17 Through Increase Budget 12/31/16 12/31/16 Budget 12/31/15 (Decrease) Revenues: In-Lieu Premiums $ 1,111,100 $ 555,552 50.00% $ 555,548 $ 247,998 $ 307,554 Service Department Allocations 18,700 9,348 49.99% 9,352 2,748 6,600 Total Revenues 1,129,800 564,900 50.00% 564,900 265,080 299,820 Expenses: Benefits/Claims 40,000 667,161 1667.90% (627,161) 13,549 653,612 Legal Services 130,000 72,136 55.49% 57,864 28,905 43,231 Professional Services 25,976 N/A (25,976) 25,976 Subtotal 170,000 765,273 450.16% (595,273) 42,454 722,819 Policy Premium Expense 1,220,000 585,721 48.01% 634,279 580,262 5,459 Total Expenses 1,390,000 1,350,994 97.19% 39,006 622,716 728,278 Excess Revenue(Expense) (260,200) (786,094) $ 525,894 (357,636) (428,458) Beginning Reserves 55,260,200 55,252,299 56,125,515 (873,216) Ending Reserves $55, 000,000 $ 54, 666,205 $ 55, 667,879 $(1,301,674) Section 5-Page 1 FY 2016-17 Mid-Year Report Workers'Compensation Fund Budget Review For the Six Months Ended December 31, 2016 Percent Actual of Budget Remaining Actual 2016-17 Through Through 2016-17 Through Increase Budget 12/31/16 12/31/16 Budget 12/31/15 (Decrease) Revenues: In-Lieu Premiums $ 1,196,300 $ 598,150 50.00% $ 598,150 $ 739,350 $ (141,200) Miscellaneous Other Revenue 10,000 - 0.00% 10,000 - - Total Revenues 1,206,300 596,150 49.59% 608,150 739,350 (141,200) Expenses: Benefits/Claims 660,000 137,622 20.85% 522,378 433,699 (296,077) Legal Services 170,000 23,875 14.04% 146,125 124,201 (100,326) Professional Services 60,000 36,232 60.39% 23,768 35,847 385 Subtotal 890,000 197,729 22.22% 692,271 593,747 (396,018) Policy Premium Expense 200,000 104,413 52.21% 95,587 97,169 7,244 Total Expenses 1,090,000 302,142 27.72% 787,858 690,916 (388,774) Excess Revenue(Expense) 116,300 296,008 $ (179,708) 48,434 247,574 Beginning Reserves 1,883,700 1,913,178 1,523,264 389,914 Ending Reserves $ 2,000,000 _L 2.209,186 $ 1.571,698 $ 637,488 Section 5-Page 2 'e? Op January 31, 2017 STAFF REPORT Mid-Year Treasurer's Report For the Period Ended December 31, 2016 SUMMARY Section 15.0 of the District's Investment Policy includes quarterly reporting requirements for the District's two investment portfolios. These two funds, the "Liquid Operating Monies," and the "Long-Term Operating Monies" are managed by Chandler Asset Management, the District's external money manager. The ongoing monitoring of the District's investment program by staff and Callan Associates, the District's independent investment advisor, indicates that the District's investments are in compliance with the District's adopted Investment Policy and the California Government Code, and that overall performance has tracked with benchmark indices. In addition, sufficient liquidity and anticipated revenues are available for the District to meet budgeted expenditures for the next six months. The District's portfolios do not include any reverse repurchase agreements or derivative securities. ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Review, prepared by Chandler Asset Management, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, is attached for reference. Also attached are Long-Term and Liquid Operating Monies Summary of Performance Data and Portfolio Statistics charts that depict the performance results, estimated yield and duration, credit quality, and sector diversification of the District's portfolios, as of December 31, 2016. The Liquid Operating Monies portfolio, with an average maturity of 51 days, consists entirely of high quality fixed income investments consistent with the District's investment policy. Portfolio Performance Summary The following table presents a performance summary of the District's portfolios as compared to their benchmarks for the period ended December 31, 2016. ODSD ♦ P.0.Box8127 ♦ Foun in Velley,C 927284127 ♦ (714)%2-2411 Mid-Year Treasurer's Report For the Period Ended December 31, 2016 Page 2 of 3 Portfolio Performance Summary As of December 31,2016 Liquid Operating Monies(h) Long-Term Operating Monies(%) Total Rate of Total Rate of Return Benchmark(" Return Benchmadc"' 3 Months 0.12 0.09 -0.84 -1.06 6 Months 0.22 0.18 -0.78 -1.12 9 Months 0.31 0.25 -0.07 -0.26 12 Months 0.48 0.33 1.47 1.30 Annualized Since inception 30 Nov 2014 0.34 0.18 1.01 0.98 Market Value 113.0M $316.61A Average Quality 'AAA'fAae' 'AA-'TAa1' Current Yield(%) 0.8 1.7 Estimated Yield to Maturity(%) 0.6 1.5 Quarterly Deposits withdrawals $55.0M aTTMT Estimated Annual Income O.BM .OM (1) Benchmarks: • Liquid Operating Portfolio: 3-Month Treasury Bill Index • Long-Tenn Operating Portfolio: Merrill Lynch Corp/Govt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Liquid Long-Term Quarter Operating Operating Ending Monies($M) Monies($M) 31 Mar.16 63.8 319.E 30 Jun.16 139.4 332.7 30 Sep.16 58.0 325.9 30 Dec.16 113.0 316.E District's Investment Account Balances as of December 31, 2016 Book Balances Estimated Investment Accounts December 31,2016 Yield(%) State of Calif.LAIF $62,400,000 0.72 Union Bank Checking Account 132,512 0.00 Union Bank Overnight Sweep Account 87,000 0.01 Union Bank W/C Checking 89,873 0.00 Chandler-Short-term Portfolio 112,898,829 0.55 Chandler-Long-term Portfolio 315,497,191 1.51 Petty Cash 3,000 N/A BNY Mellon OCIP Reserve 3.614.750 0.87 TOTAL �g47 9156 1.19 Debt Service Reserves w/Trustees A 22 nfiF 544 2.58 Mid-Year Treasurer's Report For the Period Ended December 31, 2016 Page 3 of 3 District's Cost of Funds on Debt Issues as of December 31, 2016 Annual Cost of Fwds Outstanding Interest Issoe Description COP Balance Rate(%) 2007A Fixed $91,885,000 4.50 2007B Fixed 7,110,000 4.71 2009A Fixed 13,405,000 4.72 2010A Fixed 80,000,000 3.68 2010C Fixed 157,000,000 4.11 2011A Fixed 96,330,000 2.61 2012A Fixed 100,645,000 3.54 2012B Fixed 66,395,000 1.50 2014A Fixed 85,090,000 2.34 2015A Fixed 127,510,000 3.30 2016A Fixed 145,880,000 3.02 2016D Fixed 109.875 000 0.87 TOTAL $LORLI25.000 Weighted Avg.Cost of Foods 3.06 ATTACHMENTS 1. Chandler Quarterly Report 2. Summary of Performance Data and Portfolio Statistics — Liquid Operating Monies 3. Summary of Performance Data and Portfolio Statistics— L-T Operating Monies 4. Investment Transactions and Balances in LAIF 5. Asset Summary by Asset Type — Liquid Operating Portfolio 6. Asset Summary by Asset Type— Long Term Portfolio 7. Asset Summary by Asset Type — Owner Controlled Insurance Program Escrow Account 8. Investment Listing (Yield Analysis Report) 9. Asset Detail — Consolidated 10. Custody Transaction History—Consolidated 11. Callan Quarterly Review 12. Chandler Quarterly Review 13. Rating Agency Comparisons C/" CHANDLER ASSET MANAGEMENT December 31, 2016 Mr. Mike White, CPA Controller Orange County Sanitation District 10844 Ellis Avenue Fountain Valley CA 92708-7018 Dear Mike, Bond Market Recap The Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted that economic activity has expanded at a moderate pace and labor market trends have improved, but inflation remains below target. The Fed's revised "dot plot" was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee's GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC's median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of two or three more 25 basis point rate hikes this year. The Fed's longer-run median fed funds target rate was revised up to 3.0% from 2.9%. Fed Chair Yellen downplayed the forecast changes during her post-meeting press conference, and continued to emphasize that future increases in the fed funds rate are expected to be gradual. She added that it is too early to anticipate how potential changes in fiscal policy will impact the economy and the Fed's outlook. The market is now pricing in more than a 70% chance of another rate hike in June 2017. Domestic economic data points to ongoing moderate growth this year. The U.S. labor market continues to improve, consumer confidence remains strong, and housing trends remain mostly favorable. The manufacturing sector has also improved. Market participants estimate GDP grew 2.2% in the fourth quarter. In December, the yield shifted upward as the 2-year Treasury yield increased nearly 8 basis points and the 10-year Treasury yield increased about 6 basis points. The move up in rates over the past few months has largely been driven by heightened expectations for fiscal stimulus, and a potential increase in inflation, in light of President-elect Trump's victory and the Republican Party congressional sweep in the US. C/" CHANDLER ASSET MANAGEMENT Consumer Prices The Consumer Price Index (CPI) was up 1.7% year-over-year in November, versus up 1.6% year-over-year in October. Core CPI (CPI less food and energy)was up 2.1% year-over-year in November, unchanged from October. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in November, unchanged from October. Core PCE (excluding food and energy) was up 1.6% year-over-year in November, after being up 1.8% year-over-year in October. Although Core CPI is trending above 2.0%, the Fed's primary inflation gauge is PCE which remains below the Fed's 2.0%target. Retail Sales On a year-over-year basis, total retail sales were up 3.8% in November compared with a 4.2% increase in October. On a month-over-month basis, retail sales were up just 0.1% in November, below expectations of 0.4%. Excluding autos and gas, retail sales rose 0.2% in the month. Labor Market Nonfarm payrolls were lower than expected in December, up 156,000 versus the consensus forecast of 175,000. However, October and November payrolls were revised up by a total of 19,000. On a trailing 3-month and 6-month basis, payrolls increased by an average of 165,000 and 188,500 per month, respectively. The unemployment rate inched back up to 4.7% from 4.6%, but the participation rate also increased to 62.7% from 62.6%. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, declined to 9.2% in December from 9.3% in November. Wages were up a solid 0.4% in December, versus expectations for a 0.3% increase. On a year-over-year basis, wages were up 2.9% in December(the highest year-over- year increase since June 2009), vs. 2.5% in November. Housing Starts Total housing starts fell 18.7% in November, following a gain of 27.4% in October. Single-family starts fell 4.1% in November while multi-family starts plunged 45.1%. Housing starts tend to be volatile on a month-to-month basis. 2 C/" CHANDLER ASSET MANAGEMENT TREASURYYIELDS 1213112016 9/30/2016 CHANGE 3 Month 0.50 0.28 0.22 2 Year 1.19 0.76 0.43 3 Year 1.45 0.88 0.57 5 Year 1.93 1.15 0.78 7 Year 2.25 1.42 0.83 10 Year 2.45 1.60 0.85 30 Year 3.07 2.32 0.75 Economic Data Points to Continued Slow Growth ECONOMIC INDICATOR Current Release Prior Release One Year Ago Trade Balance (45.2)$Bin NOV 16 (42A)$Bin OCT 16 (41.1)$Bin NOV IS GDP 3S%SEP 16 1.4%JUN 16 2.0%SEP 1S Unemployment Rate 4.7%DEC 16 4.6%NOV 16 5.0%DEC 15 Prime Rate 3.75%DEC 16 3.50%NOV 16 3.50%DEC 15 CRB Index 192.51 DEC 16 189.31 NOV 16 176.14 DEC 15 Oil(West Texas Intl $53.72 DEC 16 $49.44 NOV 16 $37.04 DEC 15 Consumer Price Index(y/o/y) 1.7%NOV 16 1.6%OCT 16 0.5%NOV 15 Producer Price Index(y/o/y) 03%NOV 16 0.6%OCT 16 (33%)NOV 1S Dollar/Euro I Z DEC 16 1.06 NOV 16 1.09 DEC IS Source.Bloomberg 3 C/" CHANDLER ASSET MANAGEMENT Performance Attribution Long-Term Portfolio The long-term portfolio produced a negative absolute return but a positive relative return of 0.22% during the quarter. The quarterly return for the portfolio was (0.84%) versus (1.06%) for the Bank of America Merrill Lynch 1-5 Year AAA-A US Corporate and Government Index. The primary driver of the positive performance differentiation of the portfolio versus the benchmark was the lower than benchmark interest rate exposure of the portfolio. As market interest rates moved higher late in the quarter the Chandler team moved to tighten the duration differential versus the benchmark; the team anticipates further lengthening the maturity profile of the portfolio during the first quarter of 2017. The Chandler team added exposure to the portfolio in the Treasury, Supranational, and Commercial Paper sectors of the market during the quarter. The Agency market has become very expensive in our judgement and the team is finding better value in the Supranational and by default the Treasury sector. Although the regulatory change specific to prime money market funds has taken place, the team is still finding the Commercial Paper market to be somewhat dislocated and thus we continue to allocate to the sector in the front end of the curve. The duration of the portfolio increased to 2.48 compared to 2.38 at the end of September; in Chandler's judgement the market is currently pricing in a reasonable expectation for a tightening of monetary policy in 2017 thus the overall interest rate sensitivity of the portfolio is likely to increase to be closer to the benchmark in the upcoming quarter. Liquid Portfolio The liquidity portfolio modestly outperformed the benchmark during the quarter, generating a return of 0.12% compared to 0.09% for the Bank of America Three Month Treasury Bill Index. The portfolio experienced large cash flows, both positive and negative, and the Chandler team worked to position the portfolio for upcoming liquidity needs in January 2017 and beyond. Many securities were purchased across the Treasury, Agency, Supranational, Yankee CD, and Commercial Paper sectors to offset upcoming liquidity needs first and secondarily to attempt to enhance the overall yield of the portfolio with attractively valued longer maturity securities. 4 C/" CHANDLER ASSET MANAGEMENT Economic Outlook The US Presidential election results were a surprise to markets and materially repriced the domestic interest rate market higher. During the fourth quarter the two year Treasury note yield moved higher by 43 basis points, to 1.19%, while the five year Treasury note moved higher by 78 basis points, to 1.93. The Federal Reserve was also finally able to tighten monetary policy, raising interest rates by 25 basis points on December 14. Post the election results, the outlook for risk assets improved as most market participants lowered the probability of a recession over an intermediate time horizon given the more positive outlook on a tax policy and higher probability of additional domestic fiscal spending. In Chandler's judgement the market got ahead of itself with the strong risk asset performance and aforementioned adjustment in interest rates; the Chandler team will be looking for some consolidation of performance in both the fixed income and equity markets during the first quarter of 2017. Monetary policy is poised to continue to normalize, with rates moving higher, but the Chandler team anticipates the process will continue to be slow. Currently the team is anticipating two rate hikes in 2017, with the timing likely in June and close to year-end. Economic activity in overseas markets remains lackluster, however if the team were to observe an uptick in economic activity in the Eurozone and/or Japan it would lead us to adjust our expectations for a quicker pace of domestic monetary policy normalization. Chandler continues to have the view the terminal fed funds rate will be low, despite the forecasted lowering of the tax rate and potential fiscal stimulus. Specific to domestic fiscal stimulus, the impact to the domestic economy is more likely to be a 2018 event as it takes time to put the necessary plans in place, in our judgement. Overall the team expects interest rates to be modestly higher on a year-over- year basis; the team is more willing to allocate monies to longer maturity assets given the large adjustment to domestic interest rates during the fourth quarter. Strategy Strategy highlights for the Long-Term Portfolio in coming months: • Continue to optimize the overall term structure positioning of the portfolio by closing some of the large deviations relative to the benchmark. The market is pricing in a realistic probability of monetary policy tightening in 2017 and thus the duration shortfall relative to the benchmark will lessen. • Opportunistically increase the Corporate and Supranational exposure of the portfolio to enhance the total return opportunity of the strategy. o The focus of the Corporate allocation will continue to be both sector diversification and relative valuation. o The Agency sector is expensive (i.e. tight spreads) thus we are allocating more monies to the more attractively valued Supranational sector. • Utilize out of benchmark allocations to the Asset Backed and Commercial Paper sectors of the market to enhance the overall credit quality and return potential of the portfolio. 5 OIL CHANDLER ASSET MANAGEMENT Strategy highlights for the Liquidity Portfolio in coming months: • Continue to ladder the Agency discount note and Treasury exposure to correspond to upcoming liquidity needs. • Periodically add to the Corporate exposure of the portfolio between maturities of six months to one year, where the additional spread to the Treasury curve is compelling. • Maintain a dedicated exposure to the Treasury sector on an ongoing basis to ensure ample liquidity in the portfolio at all times. 6 C/" CHANDLER ASSET MANAGEMENT Compliance Issues CA Orange County Sanitation District Long Term Dedember31,2016 COMPLIANCE WITH INVESTMENT POLICY Asasts managed by ChandlarAsset Management ere in full compliance Wtll Stele lervend wm ma invesfrnentpolicy CNegor3• 8lerMIRW Comment Treasurylssues 5 was,maximum matunty Complies' Supmrlational "AA'orbetterbyt of3 NRSROs; 30%maximum; 5%maxtssuer, 5 years maturity Complies Includesonly Ann,Spin,and FC amCGG U.S.Agencies 20%max issuer, 5 years maximun matrnly Complies U.S.Corporate(UTNs) "A"orbetterlong term rating by l of3 NRSR0a; 3090 maximim;5%max issuer, 5 years Complies max maturity Municipal Secinties "A"or Ngfler by l of 3 NRSROS;10%maximum 5%max issuer, 5 years maximum matlnty Complies Asset Backed/CMOs/Mortgage- 'AA"or better by l of3 NRSROs; 'A'or Ngharissuer again by l of 3 NRSROS: 20% Complies' backed maximum'. 5%max issuer(excluding MBS/ det ammod,'S years max maturty Negotiable CDs "A"orbetter on its longterm debt byt of 3 NRSROs; "At/P1"or highest shod tens ratings Complies by 1 of 3 NRSROs, 30%maximum,5%max issuer, 5 years max maturity CDVTDS 5%max issuer, 5Wars max maturity Complies Barikefs Acceptances A-1,or equrvakrt Ng hest soon ten rating by l of 3 NRSROS, 40%maximum, 5%max Complies issuer,180 daya max maturly Commercial Paper A-1,orequhlalent by 103 NRSROS; "A'orbeterby l of3 NRSROs,iflorig term debt Complies issued' 25%maximum' 5%max issuer, 270 days max maturity Morley M ark¢t Fund! Hlg1estmtlrg1by2013NRSR05', 2046maximor:105fimaxisser Complies Repuchase Agvemenls 1029lcdlalerelimtion Complies Rexelse Repumhase Agaemenls 5%maximum 90 days max maturity Complies IAF NO wed by investors 0 Wieser Complies Avg Duration Not to exceed 60 mdNs - (80%to 120%Oge bewhmatte) Complies Maximum Maturity, 5 Wars maximum maturity Complies' 'Re[Unrdlo hE nexty-tx,(24)wuni1tl am manarti1¢s gatatan S yam scluang one(1)slay twe Pcmi:a SPbeCm(17)MOS ard OR(1)txeUri' All sCWdi6 v¢2lmema ram tre peas msa9er tie tonpia a tlm¢oramnase. 7 C/" CHANDLER ASSET MANAGEMENT CA Orange County Sanitation District Liquid December31,2018 COMPLIANCEe Assets managed by Chandler Asset Management are in run compliance WM State lawand win the investrnentgolicy Category Standard Comment Treasury bales l year maximum maturity; Minimum allocation of 10% Complies Stpmnatiarel "AP or better by l of 3 NRSROs; 30%maximum; 5%max issuer, Iyear maturity, Complies Includes only: ADS,IBRD and IFC perCGC U.S.Agencies 20%maxissuer; l year maximum maturity Complies• U.S.Corporate(Mi "A"or be0er long term rating by l of3 NRSROs;30%maximum;5%max Issuer,, 1 Complies yearmasmatunly Asset Backed/CMOs 'AP or better by of 3 NRSRO%W or higher issuer rating by l of 3 NRSRO% Complies 20%maximum 5%max issuer, 1 War max maturity Negotiable CDs "A"or better on its long term debt by l of 3 NRSROs; "A1rP1"or higheslshort term Complies ratings by l of 3 NRSROs; 30%maximum;5%maxissuer;l year maxmaturty CDSITDS 5%max issuer,l year max maturity Complies Bankers Acceptances A-1,orequivaknl short term rating by l of3 NRSROS;40%maximum;5%max Complies taster 180 days max maturity Commercial Paper A-1,orequivaknt by l of3 NRSROS;"A-or beter by l of3 NRSROs,ifleng teml Complies debt issued; 25%maximum 5%max issuer 270 days max metui Money Market Fund Higheslmtiigby2of3NRSROs; 20%maximum10%maxiwmr Complies Repurchase Agreements 102%callatemlimtion Complies Reverse Repurchase Agreements 5%maximum,90 days max maturity Complies LAIF Not used by imesbneM adi Complies prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Nottoexceed180days; Maxdurationoi year Complies Maximum Maturity 1 year maximum maturity Complies Matt Ieauarcoopies on a cercditlaled bands 8 C/" CHANDLER ASSET MANAGEMENT OROCSD Lehman Exposure December31,2016 COMPLIANCE WITH INVESTMENT POLICY Assets managed by ChandlerAsset Management are in Poll compliance with State lawand elth the investmentpolicy Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supmretional "AA"or better by l of 3 Ni 30%maximum; 5%max 5years Complies maduntf, Includes only IADB,IBRD,and PC perCGC U.S.Agencies 20%max issuer, 5 years maxmun maturity Complies U.S.Corporate(MTNs) "A"or better long term rating by l of3 NRSR0s30%mapmun;5% Complies" max issuer 5 were max maturity Municipal Secuities "A"or higher by 1 of 3 NRSROS;10%maximum; 5%max issuer 5 Complies years maximum maturity Asset Backed/CMOs/Mortgage- "AA"or better by of 3 NRSROs; "A"or higher issuer rating by l of3 Complies backed NRSROs; 20%maximum; 5%max issuer(exdudiig MBS/gout agency);5 years max maturity Negotiable CDs "A"or better on its long tern debt by l of 3 NRSROs; "At/P1"or Complies highest short term ratings by 1 of 3 Ni 30%maximum;5%max issuer' S were max matud CDs/TDS 5%max issuer, 5 years max maturity Complies Banker's Acceptances A-1,orequivalent highestshort term rating by l of3 NRSROS; 40% Complies maximum; 5%max issuer,180 days max maturity Commercial Paper A-1,or equivalent by l of 3 NRSROS; "A"or better by l of 3 NRSROs, Complies if long tens debt issued; 25%maximum; 5%maxissuer; 270days maxmatuity Money Market Fund Highest rating by2 of3 NRSROs; 20%maximum;10%maxissuer Complies Repurchase A reements 102%collatemliration Complies Reverse Repurchase Agreements 5%maximum,90 days max maturity Complies LAIF Nol ttsedb invesMerdadviser Com lies A Duration No tto excead 60 months - 80%to 120%ofthe benchmark Complies Maximum Maturity 5 years maximum maturty Complies Account holds$2 million face arcs,(cusip 525ESM6)and$600.000 face value(cusip 525ESC1127)ordefaulted Lehman B.Holding.that wee pumhessol by the their manager. Compiled at time of purchase. 9 C/" CHANDLER ASSET MANAGEMENT Defaulted Bonds G11I ggspienmmevesure Holdings Report Aneeun]X =4 A-f lMMG sHOPNTa mama ,-.1-10, 60 641 nol 4 642 64 042 am a9 303°5 om1 842Ba 1e11 om 0222161) NN am xmA NRINR az'zziiil NReY us mmomn nsssvrer 1o,Wttd sdd,dddud pla2080% NRINR Ow 36) NI 1111111w t, 1m 09/IM9N o— I 00 mm SOW% 1�385)]i0 Xd% OD] 0A1B.mp0) NNXR pR04 XmAmY NRINR 3 p,]npw.06) 1.tl0.0]A10 ppO61O3.071 1]]Ji4m 10 OIL CHANDLER ASSET MANAGEMENT Ratings Orange County Sanitation District Long Tenn December 31,2016 vs. September 30,2016 seem eoox es ms wox mws 0. u A NR � vnme ■ wona AM M A �A NR 1L31Ne 166% 00% 102% 34% 4.0% wws 153% e0.2% 100% 34% 51% Ss—"Peg, Orange County Sanitation District Liquid December31,2016 vs. September30,2016 lmas JM A NR ma% mw mw � 1 Illt 15 Y]tlle AM AA A <A NR mine 101% 2&2% 3.1% 0,0% 0.0% mis St.e% 32.4% 14,0% 0,0% 0.0% Seuro..1 ss q tt C/" CHANDLER ASSET MANAGEMENT OCSD Investment Program Quarter End Portfolio Value $600,000,000 •Liquid Opembrg Monies $500,000,000 •Long-Tom Opending Monies $400,000,000 $300,000,000 $200,000,000 $100,000.000 . �3 HISTORICAL YIELD CURVE 4.00% �oac�o�s —rvov mie 3.07% 3.00% oec zms ________________________------------------------------- ____ 2.4o7 00S assess 2.25% 2.00% ----------- 1.93% _ _______________________________________________________ 1.45% 1.19% 1.00% 0.61% 0.50% 0.00% % 0 ?h 0 o h h 12 C/" Orange County Sanitation District Liquid Portfolio Summary Account#10282 As of 12/31/2016 PORTFOLIO CHARACTERISTICS ACCOUNTSUMMARY •• Average Duration 0.14 * Beg.Values End Values Issuer %Portfolio as of 11/30/16 as of 12131/16 Government of United States 34.8% Average Coupon 0.76% Market Value 32,974,552 112,916,619 Federal Home Loan Bank 22.1 % Average Purchase YTM 0.52% Accrued Interest 46,188 126,058 Federal Home Loan Mortgage Corp 17.7% Averse Market YTM 0.55% Total Market Value 33,020,740 113,042,677 9 Federal National Mortgage Assoc 6.6% Average S&P/Moody Rating AAA/Aaa Income Earned 14,916 23,707 Dreyfus Treasury Money Market F 5.0% Average Final Maturity 0.14 yrs COntIWD 80.000,000 Paccar Financial 1.8% Average Life 0.04 ym Par 32,965,202 112,903,509 PepsiCo Inc 1.3% Book Value 32,977,791 112,921,628 Toronto Dominion Holdings 1.0% I Cost Value 33,003,378 112.941,193 90.3% • - • • MATURITY DISTRIBUTION us AAA Corporate u5 (70.7%) (5.8%) Treasury Commercial Paper (52%) Negotiable 40%, CD money H 0%) Market 20.1% Fund p% FI (50%) A Supranational � Agency (1.8%I % (•6A%) o-ss ss-s sn t vs 1ss z.zs as-a a. AA Maturity fy.) (N.2%) WIMMMMM97m, Rate of Return 41111111111111116,6� Current Latest Year Annualized Since As of 12/31/2016 Month 3 Months To Date 1 Yr 3 Yrs 5 Yrs 10 Yrs 11/30/2014 11/3012014 Orange County Sanitation District Liquid 0.04% 0.12% 0.48% 0.48% N/A N/A N/A 0.34% 0.72% BAML 3-Month US Treasury Bill Index 0.04% 0.09% 0.33% 0.33% N/A N/A N/A 0.18% 0.38% Chandler Asset Management-CONFIDENTIAL Page 1 Exernean Time:111=1710:21:15PM C/" Orange County Sanitation District Long Term Portfolio Summary Account#10268 As of 12/31/2016 PORTFOLIO CHARACTERISTICS ACCOUNTSUMMARY •• aaaa� IF Beg.Values End Values Issuer %Portfolio Average Duration 2.48 as of 11/30/16 as of 12131/16 Government of United States 30.1 % Average Coupon 1.65% Market Value 281,266,378 315,341,911 Federal National Mortgage Assoc 9.3% Average Purchase YTM 1.57% Accrued Interest 1,169,842 1,250,939 Federal Home Loan Bank 8.0% Averse Market YTM 1.51 % Total Market Value 282,436,221 316,592,849 9 Federal Home Loan Mortgage Corp 7.8 Average S&P/Moody Rating AA+/Aal Income Earned 357,592 371,284 Inter-American Dev Bank 2.7% Average Final Maturity 2.87 yrs COntIWD 33.913,216 John Deere ASS 2.4% Average Life 2.56 yrs Par 280,302,410 315,136,824 International Finance Corp 2.3% Book Value 280,875,824 315,079,227 Toyota Motor Corp 2.0% I Cost Value 282.154,240 316.376,297 64 6 Y • - • • MATURITY DISTRIBUTION Mortgage US 30% AA Pass Treasury :5e°m j (65.0%) USs( (30.1%) 25% Corporate (22.4%) 20% 19.8% Commercial Negotiable Pa 1 CD 18.8% (3.8% 3%) 15.4% 15% Municipal Bootle 95% (1.5%) Supranatlonal 10% (B4%) MonMarket (6-6%) 5.1% 4 J 5% 3.1% NR CMO (0.9%) (4.6%) Agency ABS (237%) 0-25 35-.5 5-1 i-i ]-a 0-1 a-s N AM A (71%) Maturity(Ym) (16.6%) (10.2%) Total Rate of Return Current Latest Year Annualized Since As of 12/31/2016 Month 3 Months To Date 1 Yr 3 Yrs 5 Yrs 10 Yrs 11/30/2014 11/3012014 Orange County Sanitation District Long Tenn 0.06% -0.84% 1.47% 1.47% N/A N/A N/A 1.01 % 2.11 % BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index 0.04% -1.06% 1.30% 1.30% N/A N/A N/A 0.98% 2.06% BAML US 15 Yr US Corp/Govl Rated AAA-BBB Index 0.07% -1.02% 1.61 % 1.61 % N/A N/A N/A 1.10% 2.30% Chandler Asset Management-CONFIDENTIAL Page 1 ExacaSgn Time:1112/201 7 1 0:21:03AM Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund December 31, 2016 Par Value Book Value Market Value Rate Yield Balance December 1,2016 $33,131,963 $33,131,963 $33,131,963 0.72 0.72 Deposits: 12/1/2016 31,869,000.00 31,869,000.00 31,869,000.00 0.72 0.72 12/21/2016 9,100,000.00 9,100,000.00 9,100,000.00 0.72 0.72 Total Deposits 40,969,000.00 40,969,000.00 40,969,000.00 0.72 0.72 Quarterly Interest Distribution 0.72 0.72 Withdrawals: 12/1/2016 (962.54) (962.54) (962.54) 0.72 0.72 1217/2016 (1,800,000) (1,800,000) (1,800,000) 0.72 0.72 12/8/2016 (2,100,000) (2,100,000) (2,100,000) 0.72 0.72 12/15/2016 (5,200,000) (5,200,000) (5,200,000) 0.72 0.72 12/29/2016 (2,600,000) (2,600,000) (2,600,000) 0.72 0.72 Total Withdrawals (11,700,963) (11,700,963) (11,700,963) 0.72 0.72 Balance December 31,2016 $62,400,000 $62,400,000 $62,400,000 0.72 0.72 Report ID: GL8251 Asset Summary Base Cwnener: Dan i BNY MELLON by Asset Type with Sectors Alternate Bass h.. Rats; Exc6eage Rats; OCS LNQ OF CHANDLER-OCSF07511102 12 31 2016 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Per Base Base Total Base CASH&CASH EQUWALENTS U.B.DOLLAR CERTIFICATES OF DEPOSIT-U.S. 1,150,000.000 1,149,964.14 1,149,964.14 1.02E 0.00 COMMERCIAL PAPER-DISCOUNT 5,900,000.000 5,889,136.07 5,889,136.07 5.21% 0.00 FEDERAL HOME LOAN BANK- I YR OR LESS 25,040,000.000 25,020,269.55 25,020,269.55 22.13% 0.00 FEDERAL HOME LOAN MORTGAGES- 1 YR OR LESS 19,000,000.000 18,991,553.07 18,991,553.07 16,80% 0.00 FNMA ISSUES- t YR OR LESS 4,920,000.000 4,916,716.08 4,916,716.08 4.35% 0.00 SHORT TERM INVESTMENT FUNDS(US REGULATED) 5,643,509.210 5,643,509.21 5,643,509.21 4.99% 0.00 U.S.TREASURY BILLS- 1 YR OR LESS 20,250,000.000 20,218,586.16 20,218,586.16 19.89% 0.00 INTEREST 145,871.27 145,871.27 0.13% 0.00 U.S.DOLLAR 81,903,509.210 81,973,605.53 81,975,605.55 M.52% 0.00 CASH&CASH EQUIVALENTS 81,903,509.210 91,975,605.55 81,975,605.55 T2.52% 0.00 FMD INCOME SECURITIES U.S.DOLLAR BANKING&FINANCE 2,000,000.000 2,009,020.00 2,003,000.00 1.77% -6,020.00 FOOD BEVERAGE&TOBACCO 1,500,000.000 1,501,765.00 1,499,415.00 1,33% -2,350.00 HEALTHCARE 1,000,000.000 1,027,930.00 1,008,130.00 0.89% -19,800.00 SUPRANATIONAL ISSUES 2,000,000.000 2,002,630.00 1,999,920.00 1.97% -2,710.00 TECHNOLOGY 1,000,000.000 1,002,590.00 1,000,700.00 0.89% -1,890.00 US AGENCIES 3,500,000.000 3,553,745.00 3,551,240.00 3.14% -2,505.00 US GOVERNMENTS 19,000,000.000 19,011,118.35 19,006,820.00 16.81% -4,298.35 UTILITY-TELEPHONE 1,000,000mo 1,002,660.00 999,870.00 0.88% -2,790.00 U.S. DOLLAR 31,000,000.000 31,111,458.35 31,069,095.00 27.48% -42,363.35 FIXED INCOME SECURITIES 31,000,000.000 31,111,459.35 31,069,095.00 27.48% -42,363.35 TOTAL ASSETS-EASE: 112,903,509.210 113,087,063.90 113,044,700.55 300.00% -42,363.35 111712017 6:07.-59PM EST 1 Workbench Asset Summary Report ID: GL8251 Base Currenry: Can BNY MELLON by Asset Type with Sectors Alteesa[e Base Currency: Exchange Rate: OCS WING CHANDLER-OCSFOT522202 12 31 2016 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Per Base Base Total Base CASH&CASH EQUIVALENTS U.B.DOLLAR CASH EQUIVALENTS 60,641.490 93,294.59 25,621.03 0.01% -67,673.56 CERTIFICATES OF DEPOSIT-U.S. 4,075,000.000 4,075,000.00 4,075,000.00 1.29% 0.00 COMMERCIAL PAPER-DISCOUNT 12,170,000.000 12,100,166.14 12,100,166.14 3.82% 0.00 SHORT TERM INVESTMENT FUNDS(US REGULATED) 6,114,842.740 6,114,842.74 6,114,842.74 1,93% 0.00 CASH -0.04 -0.04 0.00% 0.00 PENDING TRADES 25.62 25.62 0.00% 0.00 INTEREST 1,290,037.30 1,290,037.30 0.41% 0.00 U.S.DOLLAR 22,420,484.230 23,673,366.35 23,605,6%t.79 7.45% -67,673.56 CASH&CASH EQUIVALENTS 22,420,484.230 23,673,366.35 23,605,692.79 7.45% -67,673.56 FIXED INCOME SECURITIES U.S.DOLLAR ASS-CAR LOANS 10,623,891.420 10,620,933.42 10,614,459.59 3.350% -6,473.83 ASS-CREDIT CARDS 4,140,000.000 4,139,643.13 4,136,232.60 1.31% -3,410.53 ASS-EQUIPMENT 7,647,986.480 7,648,477.52 7,638,061.72 2,41% -10,415.80 ASS-HOME EQUITY 133,743.290 100,432.85 125,488.65 0.04% 25,055.80 ABS-SMALL BUSINESS ADMINISTRATION 90,644.450 70,644.45 74,581.47 0.02% 3,937.02 ABS-STUDENT LOANS 36,113.900 35,967.38 36,160.49 0.01% 193.11 BANKING&FINANCE 39,370,000.000 40,247,000.06 37,813,952.80 11.94% -2,433,047.26 CAPITAL GOODS 5,000,000.000 5,014,950.00 5,016,250.00 1.58% 1,300.00 FHLMC MULTICLASS 1,926,474.610 2,107,812.33 2,121,119.04 0.570% 13,306.71 FHLMC POOLS 2,413.320 2,354.51 2,488.59 0.00% 134.08 FNMA POOLS 1,606,933.990 1,679,371.53 1,729,866.21 0,55% 52,494.68 FNMA REMIC 359,682.440 358,545.34 362,950.07 0.11% 4,404.93 GNMA MULTI FAMILY POOLS 236,362.330 236,437.84 245,188.57 0.08% 8,750.73 GNMA REMIC 32,010.820 32,010.82 32,172.47 0.01% 161.65 HEALTHCARE 4,000,000.000 4,009,675.00 4,024,840.00 1.27% 15,165.00 OIL&GAS 9,500,000.000 9,476,387.40 9,482,745.00 2.99% 6,357.60 SUPRANATIONAL ISSUES 21,000,000.000 21,063,425.00 20,851,045.00 6.58% -212,380.00 TAXABLE MUNICIPALS 4,240,000.000 4,307,633.89 4,604,028.00 1,45% 296,394.11 TECHNOLOGY 14,045,000.000 14,095,700.55 13,953,405.95 4.40% -142,294.60 111712017 6:09:28PM EST 1 Workbench Asset Summary Report ID: GL8251 Base Cmnenry: USD BNY MELLON by Asset Type with Sectors Alteesa[e Base Currency: Exchange Rate: OCS LONG CHANDLER-OCSF07S22202 12 31 2016 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Per Base Base Total Base U.S.TIPS 10,589,200.000 10,469,915.89 10,400,865.28 3.289% -69,050.61 US AGENCIES 95,365,000.000 75,153,091.40 74,934,561.90 23.65% -218,529.50 US GOVERNMENTS 85,050,000.000 84,371,116,56 84,593,390.00 26.90% 222,260.44 WHOLE LOAN-CMO-COLLATERALIZED MTG OBMG 387,664.001 387,656.73 387,695.01 0.12% 38.28 U.S.DOLLAR 295,361,121.051 295,627,183.60 293,191,535.41 92.55% -2,445,648.19 FIXED INCOME SECURITIES 295,361,121.061 295,627,183.60 293,181,635.41 92.55% -2,445,648.19 TOTAL ASSETS-BABE: 317,791,605.281 319,300,549.95 316,787,228.20 300.00% -2,513,321.75 111712017 6:09:2SPM EST 2 Workbench Asset Summary Report ID: GL8251 Base Cuuenry: USD BNY MELLON by Asset Type with Sectors Alteesa[e Base Currency: Exchange Rate: ESCROW ACCOUNT-OCSFOT555502 12 31 2016 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Par Base Base Total Base FIXED INCOME SECURITIES U.S.DOLLAR US GOVERNMENTS 3,594,000.000 3,603,596.33 3,594,000.00 100.00% -9,596.33 TOTAL ASSETS-BASE: 3,594,000.000 3,603,596.33 3,594,000.00 100.00% -9,596.33 111712017 6:10:07PM EST 1 Workbench Yield Analysis Report ID: RAM234 Base Currency: TINY MELLON OCSF07511102 12/31/2016 Liquid Oper-Pimco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(EOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration CASH &.TEMPORARY Sum o(Acmuut Receivables - 0.00 SUMRECV 145,871 AGENCY 3,000,000.00 FEDERAL NATL MTG ASSN DISC 0.39 Aaa 99.97 2,998,110 3.71 0.07 313589BA0 MAT01/25/2016 2,998,110 2.65 15,000,000.00 FEDERAL HOME LN BK CONS DISC 0.38 Asa 99.98 14,991,760 18.54 0.07 313385BC9 MAT 01/27/2017 14,991,760 13.26 2,040,000.00 FEDERAL HOME LN BK CONS DISC 0.38 Asa 99.98 2,038,221 2.52 0.05 313385AV8 MAT 01/20/2017 2,038,221 1.80 2,000,000.00 FEDERAL HOME LN MTG CORP DISC 0.38 Ass 99.98 1,999,164 2.47 0.05 313397AV3 MAT 01/20/2017 1,999,164 1.77 17,000,000.00 FEDERAL HOME LN MTG CORP DISC 0.44 Aaa 99.96 16,992,389 21.01 0.09 313397BG5 01/31/2017 16,992,389 15.03 1,920,000.00 FEDERAL NATL MTG ASSN DISC 0.50 Ana 99.94 1,918,606 2.37 0.12 313589RX0 MAT 02/15/2017 1,918,606 1.70 6,000,000.00 FEDERAL HOME LN BK CONS DISC N 0.50 Asa 99.90 5,991,734 7.41 0.23 313385DL7 MAT 03/24/2017 5,991,734 5.30 CERTIFICATES OF DEPOSIT 1,150,000.00 TORONTO-DOMINIONNYINSTLC/D L08 1.15 Aal 100.02 1,149,964 1.42 0.34 89113E7K6 1.150%05/03/2017 DD 05/05/16 1,149,964 1.02 COMMERCIAL PAPER 111712017 6:13:02PM EST 1 Source:The Back fNew York Mellon Communion Yield Analysis Report ID: RAM234 Base Currency: Ban TINY MELLON OCSF07511102 12/31/2016 Liquid Oper-Pim<o Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(EOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration 2,000,000.00 PACCAR FINL CORP DISC 0,65 P-1 99.95 1,998,639 2.47 0.08 69372ANT5 01/27/2017 1,998,639 1.79 900,000.00 AMERICAN HONDA FN DISC 0.93 PI 99.96 899,398 1.11 0.09 02665JNR7 01/25/2017 899,398 0.80 1,000,000.00 TOYOTA MTR CR CP DISC 1.11 P-1 99.93 998,129 1.23 0.09 89233GNP7 01/23/2017 998,129 0.88 1,000,000.00 BANK TOEYO-MITSUB DISC 2.04 P-1 99.82 996,281 1.23 0.18 06538BQ63 03/06/2017 996,281 0.88 OTHER 5,643,509.21 DREYFUS TREAS&AGY CSH CSH MG - Aaa 5,643,509 6.98 0.08 996085247 VAR RT 12/31/2049 DO 04/09/97 5,643,509 4A9 TREASURIES AND AGENCIES O 1,000,000.00 FEDERAL HOME LN BK CONS DISC 0.38 Aaa 99.97 999,110 1.24 0.06 313385BA3 MAT01/25/2017 999,110 0.88 1,000,000.00 TOYOTA MTR CR CP DISC 1.00 P-I 99.69 996,689 1.23 0.31 89233GRL2 04/20/2017 996,689 0.88 TREASURY 5,250,000.00 U S TREASURY BILL 0.37 Aso 99.97 5,246,587 6.49 0.07 912796KE8 0.000%O 1/26/2017 DD 07/28/16 5,246,587 4.64 15,000,000.00 U S TREASURY BILL 0.53 Ass 99.85 14,972,000 18.52 0.30 912796KT5 0.000%04/20/2017 DD 10/20/16 14,972,000 13.24 TOTAL:CASH as TEMPORARY 0.50 0.03 80,830,290 100.00 0.14 S0,9Y6,161 FIXED INCOME 111712017 6:13:02PM EST 2 Source:The Bank fNew York McOa Corporadon Yield Analysis Report ID: RAM234 Base Currency: Ban TINY MELLON OCSF07511102 12/31/2016 Liquid Oper-Pim<o Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration AGENCIES is OTHER GOVT OBL 1,000,000.00 FEDERAL HOME LN BK CONS DISC 0.39 Asa 99.97 999,444 3.11 0.08 313385BF2 MAT 01/30/2017 999,444 0.88 1,000,000.00 FEDERAL HOME LN MTG CORP 0.51 0.50 Asa 100.00 1,000,320 3.11 0.08 3137EADUO 0.500%01/29/2017 DD 0 1/16/15 999,990 0.88 2,500,000.00 FEDERAL NATL MTG ASSN 0.80 5.29 Aaa 102.05 2,553,425 9.93 0.45 31398ADM1 5.395%06/12/2017 DD 06/08/09 2,551,250 2.26 BARBS&FDiMCE 1,000,000.00 JPMORGAN CHASE&CO L21 1.3$ A3 100.02 1,000,470 3.11 0.12 46623E6'6 1.350%02/15/2017 DO 02/18/14 1,000,170 0.88 1,000,000.00 WELLS FARGO&CO 1.30 2.09 A2 100.28 1,008,550 3.12 0.35 94974BFD7 2.100%05/08/2017 DO 05/07/12 1,002,830 0.89 INDUSTRIALS 1,000,000.00 APPLE INC 0.85 1.05 Ael 100.09 1,002,590 3.11 0.35 037833AM2 1.050%05/05/2017 DD 05/06/14 1,000,700 0.89 1,000,000.00 CISCO SYSTEMS INC 1.17 1.10 Al 99.99 1,002,660 3.11 0.10 19295RAT9 1.100%03/03/2017 DD 03/03/14 999,870 0.88 1,500,000.00 PEPSICO INC 122 0.95 Al 99.96 1,501,765 4.66 0.14 713448CM 0.950%02/22/2017 DD 02/28/14 1,499,415 1.33 1,000,000.00 ELI LILLY&CO 129 5.16 A2 100.81 1,027,930 3.13 0.21 532459BB3 5.200%03/15/2017 DD 03/14/07 1,008,130 0.89 SUPRANATIONALS 1,000,000.00 INTER-AMERICAN DEVELOPMENT BAN 1.00 1.12 Asa 100.03 1,001,540 3.11 0.21 4581XOBV9 L125%03/15/2017 DD 0 1/11/12 1,000,260 OAS 111712017 6:13:02PM EST 3 Sourc Ma Houk fNeu,Pork Mellon Corporad.n Yield Analysis Report ID: RAM234 Base Currency: Ban TINY MELLON OCSF07511102 12/31/2016 Liquid Oper-Pim<o Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration 1,000,000.00 INTERNATIONAL FINANCE CORD 1A1 1.00 A. 99.99 1,001,090 3.11 0.32 45950SBS8 1.000%04/24/2017 DD 04/24/12 999,660 0,88 TREASURIES 16,000,000.00 USTREASURY NOTE 0.41 0.89 Aaa 100.04 16,008,179 49.93 0.09 912828SC5 O.875%01/31/2017 DO 0 1/31/12 16,006,400 14.16 3,000,000.00 U S TREASURY NOTE 0.43 0.95 Asa 100.01 3,002,940 9.32 0.04 912828A91 0.750%01/15/2017 DO 0 1/15/14 3,000,420 2.65 TOTAL:FD.'@D MCOME 0.64 1.38 32,110,903 100.00 0.15 32,068,539 TOTAL:Liquid Oper-Pimco 0.54 0.54 112,941,193 100.00 0.14 113,014,701 111712017 6:13:02PM EST 4 Source:The BaNc. fNew York M,Oa Corpomdon Yield Analysis Report ID: RAM234 Base Currency: BNY MELLON OCSF07522202 12/31/2016 Long Term Oper-Plmeo Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(EOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration CASH &.TEMPORARY Sum o(Acmuut Receivables - 0.00 SUMRECV 1,290,063 CERTIFICATES OF DEPOM 4,075,000.00 TORONTO DOMINION BANKC/D 0.92 1,19 - 100.05 4,075,000 18.23 0.20 89113WHFG 1.190%03/13/2017DD08/23/16 4,075,000 1.29 COMMERCUV PAPER 6,300,000.00 TOYOTA MTR CR CP DISC 1.23 P-1 99.27 6,251,999 27.97 0.59 89233GV29 08/02/2017 6,251,999 1.99 5,870,000.00 BANK TOKYO-MITSUB DISC 2.04 P-1 99.82 5,848,167 26.17 0.18 06538BQ63 03/06/2017 5,848,167 1.85 OTHER 60,641.49 SLH PROXY LONG EXPOSURE - - 93,295 0.11 - 99WAEU30 SLHOPNTA4 25,621 0.01 6,114,842.74 DREYFUS TREAS&AGY CSH CSH MG - Ana 6,114,843 29.36 0.08 996085247 VAR RT 12/31/2049 DD 04/09/97 6,114,843 1A3 Us CASH 1.00 USD(UNITED STATES DOLLAR) - - 0 0.00 - NA9123459 GL PAYABLES RECEIVABLES 0 0.00 1.00 US CASH - - 0 0.00 - 999999USD GL PURE CASH 0 0.00 US CASH FUNDS 0.00 BNY MELLON CASH RESERVE 0.76 0.96 - 100.00 0 0.00 0.08 996087094 0.010%12/31/2049 DD 06/26/97 0 0.00 111712017 6:13:02PM EST 5 Source:Ma BaNc. fNew York Mellen Communion Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Opar Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration TOTAL:CASH&TEMPORARY 1.44 0.49 22,383,303 100.00 0.27 23,605,693 FIXED INCOME AGENCIES S OTHER GOVT OHL 5,000,000.00 FEDERAL HOME LN MTG CORD 0.92 0.95 Ann 100.02 4,994,250 1.90 0.54 3139EADV8 0950%07/14/2017 DD 05/29/15 5,000,850 L58 5,000,000.00 FEDERAL HOME LN MTG CORD G.95 0.95 A. 99.80 4,967,500 1.69 1.02 3139EADN6 0950%01/12/2018 DD 11/21/12 4,989,800 1.58 5,000,000.00 FEDERAL HOME LN MTG CORP 0.99 0.88 As, 99.89 4,994,I00 1.90 1.18 3139EADP1 0.895%03/07/2018 DD 01/17/13 4,993,500 1.58 7,500,000.00 FEDERAL HOME LN BK CONS BE, 1.07 1.37 Aae 100.36 7,544,850 2.56 1.18 313398A43 1.395%03/09/2018 DD 02/13/12 7,526,850 2.38 5,000,000.00 FEDERAL NATL MTG ASSN 1.23 1.13 Asa 99.99 4,963,950 1.69 1.93 3135GOG72 1.125%12/14/2018 DD 11/03/15 4,989,700 1.58 7,500,000.00 FEDERAL HOME LN BE CONS BE, 1.36 1.50 Aeo 100.30 7,589,190 2.55 2.14 3133982M2 1.500%03/08/2019 DD 02/06/12 7,522,650 2.39 7,500,000.00 FEDERAL HOME LN MTG CORP 1.49 1.26 Asa 99.42 7,399,650 2.53 2.90 3139EADM8 1.250%10/02/2019 DD 10/02/12 7,456,125 2.35 5,000,000.00 FEDERAL NATL MTG ASSN L64 1.51 Aae 99.53 4,955,650 1.69 3.39 3135GOD75 1.500%06/22/2020 DD 04/27/15 4,976,700 1.59 5,000,000.00 FEDERAL HOME LN BK CONS BE, 1.93 1.75 Aaa 100.08 5,008,950 1.70 3.35 313383HU8 1.950%06/12/2020 DD 06/03/13 5,003,950 1.58 111712017 6:13:02PM EST 6 Sou¢e:The HaNc. fNew York Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Opar Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration 7,500,000.00 FEDERAL NATL MTG ASSN 1.83 1.52 A. 98.75 7,370,726 2.52 3.81 3135GOF73 1.500%11/30/2020 DD 10/19/15 7,405,950 2.34 5,365,000.00 FEDERAL HOME LN BK CONS BD 1.85 1.40 Aae 98.11 5,343,325 1.79 4.01 3130A7CV5 1.375%02/18/2021 DD 02/18/16 5,263,387 1.66 10,000,000.00 FEDERAL NATL MTG ASSN 1.86 1.40 Aaa 98.05 10,040,950 3.33 4.03 3135GOJ20 1.375%02/26/2021 DD 02/05/16 9,805,100 3.10 RANKS&PMANCE 600,000.00 BANK OF AMERICA NA 1.04 1.30 Al 100.09 600,000 0.20 0.11 06050TLX8 VAR RT 05/08/2017 DD 05/08/14 600,552 0.19 500,000.00 WELLS FARGO BANK NA 1.19 1.22 Aa2 100.02 500,000 0.17 0.21 94988J2L0 VAR RT 06/15/2017 DD 06/12/14 500,090 OA6 2,900,000.00 AMERICAN EXPRESS CO 1.78 6.59 A3 106.27 3,377,386 1.05 1.16 025816AYS T000%03/19/2018 DD 03/19/08 3,081,801 0A7 3,000,000.00 HSBC USA INC 1.79 1.63 A2 99.83 3,003,290 1.02 1.02 40428HPH9 1.625%01/16/2018 DD 12/20/12 2,994,750 PAS 3,800,000.00 BANK OF AMERICA CORD 1.80 5.55 Baal 103.59 4,334,014 1.34 0.90 060505DP6 5.750%12/O1/2017 DD 12/04/07 3,936,230 1.24 5,000,000.00 JOHN DEERE CAPITAL CORP 1.89 2.28 A2 101.08 5,046,984 1.72 2.61 24422ESS9 2.300%09/16/2019 DD 09/15/14 5,054,200 1.60 600,000.00 GOLDMAN SACHS GROUP INC/THE 1.91 5.71 A3 104.17 692,806 0.21 1.00 38141GFG4 5.950%O1/18/2018 DD 0 1/18/08 625,044 0.20 3,200,000.00 BEAR STEARNS COS LLC/THE 1.94 4.47 A3 104.00 3,523,520 1.13 1.43 073902CD8 4.650%07/02/2018 DD 06/25/03 3,327,840 1.05 111712017 6:13:02PM EST 7 Soume:TAe B¢Nc. fNew Pork Mellon Corporation Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Oper-Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration 2,120,000.00 BANK OF NEW YORK MELLON CORP/T L98 2.28 Al 100.82 2,142,175 0.93 2.60 06406HCW9 2.300%09/11/2019 DD 09/11/14 2,137,469 0,69 5,000,000.00 GENERAL ELECTRIC CO 2.09 2.19 Al 100.33 5,014,950 1.00 2.89 36962G7MO 2.200%01/09/2020 DD 01/09/15 5,016,250 1.58 2,000,000.00 JPMORGAN CHASE&CO 2.33 2.26 A3 99.97 1,994,880 0.68 2.93 46625HKA7 2.250%01/23/2020 DD 01/23/15 1,995,300 0.63 5,000,000.00 WELLS FARGO&CO 2.43 2.59 A2 100.58 5,001,650 1.91 3.39 94994BGM6 2.600%07/22/2020 DD 07/22/15 5,028,900 1.59 1,250,000.00 HSBC USA INC 2.61 2.37 A2 99.22 1,222,788 0.42 3.04 40428HPR7 2.350%03/05/2020 DD 03/05/15 1,240,225 0.39 2,800,000.00 MORGAN STANLEY 2.96 4.96 A3 110.81 3,200,848 1.05 4.03 61749WAL3 5.500%07/28/2021 DD 00/28/11 3,102,792 0.98 600,000.00 ESC LEHMAN BRTH HLD ESCROW - - 5.80 352,614 0.01 - 525ESCIBT 0.000%11/24/2013 DD 01/22/08 34,800 0.01 2,000,000.00 LEHMAN BRTH HLD ESC - - 5.75 1,207,405 0.04 - 525ESCOY6 0.000%12/30/2016 DD 10/24/05 115,000 0.04 CARDS 4,140,000.00 CHASE ISSUANCE TRUST A9 A9 1.19 1.06 - 99.91 4,139,643 1.40 0.42 161571HHO 1.060%09/16/2019 DD 09/13/16 4,136,233 1.31 1,810,000.00 HONDA AUTO RECEIVABLES 20 2 A3 1.50 1.39 Aee 99.85 1,809,965 0.61 1.46 43814QAC2 1.390%04/15/2020 DD 05/31/16 1,807,195 0.57 CARS 272,358.99 HONDA AUTO RECEIVABLES 20 1 A3 1.00 0.69 Asa 99.99 271,529 0.09 0.08 43813JAC9 0.690%11/21/2017 DO 02/27/14 272,285 0.09 111712017 6:13:02PM EST 8 Sou¢e:The Bank fNew Pork Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Oper-Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration 459,078.17 TOYOTA AUTO RECENABLES 2 A A3 1.09 0.69 A. 99.96 458,128 0.16 0.08 89231MAC9 0.670%12/15/2017 DO 03/19/14 458,876 0.14 2,020,144.82 HONDA AUTO RECEIVABLES 20 1 A2 1.10 1.01 - 99.97 2,019,943 0.69 0.38 43814NAB1 1.010%06/18/2018 DO 02/25/16 2,019,478 0.6 556,481.45 TOYOTA AUTO RECEIVABLES C A2A 1.16 0.92 Aaa 99.98 556,437 0.19 0.03 89231TAB6 0.920%02/15/2018 DO 08/26/15 556,342 0.18 537,546.51 HONDA AUTO RECEIVABLES 20 2 A3 1.16 0,79 Aaa 99.92 539,169 0.18 0.22 43814GAC4 0.970%03/19/2018 DO 05/21/14 537,095 0.19 2,883,281.48 TOYOTA AUTO RECEIVABLES 2 A A3 120 1.12 Aaa 99.95 2,882,846 0.98 0.56 89236WAC2 1.120%02/15/2019 DO 03/04/15 2,881,753 0.91 2,085,000.00 NISSAN AUTO RECEIVABLES C MA 1.31 1.07 Asa 99.83 2,084,918 0.71 0.52 65478WABI 1.000%05/15/2019 DO 08/10/16 2,081,435 0.66 EQUIPMENT LOANS 2,247,986.48 JOHN DEERE OWNER TRUST 20 B A3 1.10 1.09 Ann 99.99 2,249,040 0.96 0.22 499897AD6 1.090%11/15/2018 DO 09/03/14 2,247,829 O.71 2,980,000.00 JOHN DEERE OWNER TRUST 20 B A2 1.38 1.09 Ann 99.89 2,979,818 1.01 0.39 49988NAB4 1.090%02/15/2019 DO 09/27/16 2,976,573 0A4 2,420,000.00 JOHN DEERE OWNER TRUST 20 A A3 1.63 1.36 Aaa 99.94 2,419,619 0.82 0.99 49988MAC4 1.360%04/15/2020 DO 03/02/16 2,413,660 0.76 FANNIE MAE REMIC 21,155.32 FNMA GTD REMIC P/T 07-114 A6 0.00 0.96 Asa 99.89 20,124 0.01 - 31396A3Q5 VAR RT 10/27/2037 DO 11/30/07 21,132 0.01 338,527.12 FNMA GTD REMIC P/T 11-3 FA 1.20 1.19 Ass 100.99 338,421 0.12 -1.44 31397QRE0 VAR RT 02/25/2041 DO 01/25/11 341,818 0.11 111712017 6:13:02PM EST 9 Sou¢e:The Bank fNew Pork Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Oper-Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration FHLMC 2,413.32 FHLMC POOL#T8-6064 1,75 2.97 Aaa 103.12 2,355 0,00 0.99 31348SWZ3 VAR RT 01/01/2028 DO 12/01/97 2,489 0.00 FNMA 169,347.90 FNMA POOL#0823358 2.03 3.08 Aaa 105.34 168,025 0.06 1.05 31406XWT5 VAR RT 02/01/2035 DD 04/01/05 178,383 0.06 359,837.41 FNMA POOL#0466397 2.05 3.25 Aaa 104.63 352,050 0.13 3.50 31381PDA3 3.400%11/01/2020 DO 11/01/10 376,505 0.12 25,421.17 FNMA POOL#0257179 2A0 4.18 Aaa 107.56 26,885 0.01 3.36 31371N Cl 4.500%04/01/2028 DO 03/01/08 27,342 0.01 18,959.93 FNMA POOL#0AL0869 2A2 4.18 Aaa 107.56 20,052 0.01 3.20 3138EG6F6 L500%06/01/2029DD09/01/11 20,392 0.01 29,376.20 FNMA POOL#0MA0022 2.43 4.18 Aaa 107.56 31,068 0.01 3.27 314=AY3 4.500%04/01/2029DD03/01/09 31,596 0.01 5,192.31 FNMA POOL#0948618 2.55 4.57 Aaa 109.53 5,582 0.00 2.97 31403GXF4 5.000%10/01/2033 DO 10/01/03 5,687 0.00 30,985.35 FNMA POOL#0826080 2.62 4.59 Aaa 109.05 33,309 0.01 2.76 31407B= 5.000%07/01/2035 DO 06/01/05 33,989 0.01 171,499.53 FNMA POOL#0945580 2.91 4.58 Aaa 109.24 184,338 0.06 2.92 31403WZ3 5.000%06/01/2036DD05/01/06 187,322 0.06 336,428.02 FNMA POOL#0888336 2.95 4.58 Aaa 109.11 361,660 0.12 3.01 31410F4V4 5.000%07/01/2036DD04/01/07 367,060 0.12 172,280.91 FNMA POOL#0357969 2.95 4.59 Aaa 109.03 185,202 0.06 2.84 31376KT22 5.000%09/01/2035DD09/01/05 187,834 0.06 111712017 6:13:02PM EST 10 Sou¢ Ma BaNc. fNew Pork Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Opar Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration 287,627.26 FNMA POOLK0815991 2.80 4.58 Aaa 109.15 309,199 0.11 3.05 31406PQY8 5.000%03/01/2035DD03/01/05 313,957 0,10 FREDDIE MAC MULTICLASS 900,000.00 FHLMC MULTICLASS MTG K006 A2 2.11 4.02 NR 105.86 951,047 0.32 2.76 31398VJ98 4.251%01/25/2020 DO 04/01/10 952,695 0.30 43,729.55 FHLMC MULTICLASS MTG E3 A 2.59 2.99 Aaa 100.81 43,775 0.02 0.76 3133TCE95 VAR RT 08/15/2032 DO 12/01/97 44,085 0.01 982,745.06 FHLMC MULUCLASS MTG 58 2A 3.56 5.68 Aaa 114.41 1,112,990 0.38 3.08 31394JY35 6.500%09/25/2043 DO 09/01/03 1,124,339 0.35 GNMA 87,212.64 GNMA 11 POOL#0080965 0.99 2.11 Aaa 104.35 89,158 0.03 0.89 36225DCB8 VAR RT 07/20/2034DD07/01/04 91,004 0.03 25,504.74 GNMA 11 POOL#0080023 129 2.13 Aaa 103.31 25,927 0.01 1.34 36225CA 9 VAR RT 12/20/2026 DO 12/01/96 26,350 0.01 10,571.74 GNMA II POOL#0080395 1.33 2.12 Aaa 103.55 10,476 0.00 0.54 36225CNM4 VARRT 04/20/2039DD04/01/00 10,949 0.00 83,358.44 GNMA 11 POOL 4080408X 1.36 2.13 Aaa 103.47 82,512 0.03 0.69 36225CN28 VARRT 05/20/2030DD05/01/00 86,252 0.03 29,714.77 GNMA II POOL s080088M 1.36 2.13 Aaa 103.10 30,365 0.01 0.88 36225CC20 VAR RT 06/20/2027 DO 06/01/97 30,636 0.01 GNMA RBMIC 32,010.82 GNMA GM REMIC P/T 00-9 FH 0.90 1.03 Aaa 100.51 32,011 0.01 0.00 3839H4NX9 VAR RT 02/16/2030 32,172 0.01 BOMB EQUITT 111712017 6:13:02PM EST 11 Sou¢ Ma HaNc. fNew York Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Oper-Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market AQj Yield Rating Value Duration 133,743.29 AMRESCO RESIDENTIAL SECURI 1 A L82 1.00 - 93.83 100,433 0.04 0.00 03215PFN4 VAR RT 06/25/2029 DO 10/20/99 125,489 0.04 INDUSTRIALS 2,000,000.00 INTEL CORP 1.19 1.35 Al 100.15 2,008,280 0.68 0.95 458140AL4 1.350%12/15/2017 DD 12/11/12 2,003,000 0.63 2,000,000.00 CHEVRON CORP 1.35 1.11 Aa2 99.79 1,988,600 0.68 0.92 166164AA8 1.104%12/05/2017 DD 12/05/12 1,995,480 0.63 2,000,000.00 OCCIDENTAL PETROLEUM CORP 1.42 1.50 A3 100.09 1,986,340 0.68 1.11 694599CD5 1.500%02/15/2018 DD 06/22/12 2,001,820 0.63 4,000,000.00 ELI LILLY&CO 1.66 1.94 A2 100.62 4,009,675 1.39 2.15 532459BF4 1A50%03/15/2019 DD 02/25/14 4,024,840 L27 4,000,000.00 AMERICAN HONDA FINANCE CORP 1.89 2.23 Al 100.99 4,046,640 1.39 2.53 02665WAH4 2.250%08/15/2019 DO 09/09/14 4,038,960 L28 3,000,000.00 EX ON MOBIL CORP 2.16 2.22 Ann 100.23 3,016,097 1.02 3.99 30231GAV4 2.222%03/01/2021 DO 03/03/16 3,006,870 0A5 3,045,000.00 MICROSOFT CORP 2.24 1.60 Aaa 96.99 3,041,385 1.00 4.42 594918BP8 1.550%08/08/2021 DO 08/08/16 2,953,376 0.93 5,000,000.00 QUALCOMM INC 225 2.25 Al 100.01 4,995,195 1.90 3.26 749525AD5 2.250%05/20/2020 DO 05/20/15 5,000,350 1.58 4,000,000.00 APPLE INC 2.27 2.25 Aal 99.92 4,050,840 1.36 3.94 037833BS8 2.250%02/23/2021 DO 02/23/16 3,996,680 1.26 2,500,000.00 CHEVRON CORP 2.31 2.12 Aa2 99.14 2,485,350 0.84 4.18 166964BG4 2.100%05/16/2021 DO 05/16/16 2,478,575 0.98 OTHER CMO OOVT AGENCIES 111712017 6:13:02PM EST 12 Sou¢ Ma BaNc. fNew York Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Oper-Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration 387,664.00 NCUA GUARANTEED NOTES TR R2 IA L59 1.66 Aaa 100.01 387,657 0.13 0.02 62888UAA8 VARRT 11/06/2017 DD 11/17/10 387,695 0,12 70,644.45 SBA GTD PARTN CTFS 2001-20C 1 1.98 6.01 Aaa 105.57 90,644 0.03 1.25 83162CWO 6.340%03/01/2021 74,581 0.02 STUDENT 36,113.90 SLM STUDENT LOAN TRUST 200 9 A 2.26 2.38 Baa3 100.13 35,967 0.01 0.08 78445JAA5 VARRT 04/25/2023 DO 08/28/08 36,160 0.01 SUPRANATIONALS 5,000,000.00 INTERNATIONAL FINANCE CORP L11 1.00 Asa 99.97 5,020,700 1.70 0.32 45950KB58 1.000%04/24/2017 DO 04/24/12 4,998,300 1.58 5,000,000.00 INTER-AMERICAN DEVELOPMENT DAN 1.12 1.00 Aaa 99.93 5,019,550 1.70 0.53 4581XOCG1 L000%07/14/2017 DO 04/30/14 4,996,700 1.58 5,000,000.00 INTERNATIONAL DANE FOR RECONST 128 1.00 Aaa 99.59 4,991,170 1.69 1.44 459058EJ8 1.000%06/15/2018 DO 04/30/15 4,979,650 1.57 3,500,000.00 INTER-AMERICAN DEVELOPMENT BAN 2.03 1.89 Aaa 99.39 3,590,405 1.18 4.04 4581X0055 1.875%03/15/2021 DO 01/14/16 3,478,720 1.10 2,500,000.00 INTERNATIONAL FINANCE CORP 2.09 1.17 Aaa 95.91 2,441,600 0.81 4.42 45950KC81 1.125%07/20/2021 DO 07/20/16 2,397,675 0.76 TIPS 0.00 US TREAS-CPI INFLAT 1.98 1.07 Aaa 104.91 0 0.00 2.46 912828PP9 1.125%01/15/2021 DD 01/15/11 0 0.00 10,587,200.00 US TREAS-CPI INFLAT 2.34 0.13 Aaa 98.24 10,469,916 3.53 4.90 912828W O 0.125%07/15/2024 DD 07/15/14 10,400,865 3.28 TREASURIES 111712017 6:13:02PM EST 13 Sou¢e:The Bank fNew York Mellon Corporation Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Opar Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration 3,750,000.00 U S TREASURY NOTE 0.53 0.89 A. 100.11 3,750,306 1.28 0.33 912828SSO 0.875%04/30/2017 DD 04/30/12 3,754,275 1,19 5,000,000.00 U S TREASURY NOTE 0.87 0.87 Aaa 100.00 4,974,392 1.90 0.87 91282SG20 0.875%11/15/2017 DD 11/15/14 5,000,200 1.58 3,500,000.00 U S TREASURY NOTE 0.95 0.95 Aae 99.97 3,496,457 1.19 1.16 912828UR9 0.950%02/28/2018 DD 02/28/13 3,491,810 1.10 11,000,000.00 U S TREASURY NOTE 1.24 1.49 Aaa 100.54 11,042,439 3.76 2.04 91282SB33 1.500%01/31/2019 DD 01/31/14 11,059,730 3.49 5,000,000.00 USTREASURY NOTE 129 1.49 Aaa 100.51 5,016,423 1.71 2.20 912828SNI 1.500%03/31/2019 DD 03/31/12 5,025,600 1.59 2,000,000.00 U S TREASURY NOTE 1.32 1.61 Aso 100.95 1,996,861 0.68 2.43 91282SW85 1.625%06/30/2019 DD 06/30/14 2,014,920 0.64 5,000,000.00 USTREASURY NOTE 1.35 1.61 Aae I00.70 5,012,389 1.71 2.52 912828W W6 1.625%07/31/2019 DD 09/31/14 5,034,950 1.59 5,800,000.00 USTREASURY NOTE L38 1.73 Aae 100.98 5,873,187 1.99 2.68 912828F39 1.750%09/30/2019 DD 09/30/14 5,857,072 1.85 7,500,000.00 U S TREASURY NOTE L43 1.50 Aae 100.21 7,449,635 2.55 2.85 912828G61 1.500%11/30/2019 DD 11/30/14 7,515,525 2.37 5,000,000.00 U S TREASURY NOTE 1.59 1.50 Aaa 99.70 4,966,423 1.69 3.33 912828XE5 1.500%05/31/2020 DD 05/31/15 4,984,750 1.57 5,500,000.00 U S TREASURY NOTE 1.91 1.39 Aaa 98.77 5,424,667 1.85 3.93 912828L99 1.375%10/31/2020 DD 10/31/15 5,432,515 1.71 6,000,000.00 U S TREASURY NOTE 1.98 1.40 Aaa 98.40 5,895,840 2.01 3.96 912828N89 1.375%01/31/2021 DD 01/31/16 5,904,120 1.86 111712017 6:13:02PM EST 14 Sou¢e:The BaNc. fNew York Mellon Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 12/31/2016 Long Term.Opar Plmco Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(EOP) t Qua ity Price Market Value %Market Adj Vield Rating Value Duration 7,000,000.00 U S TREASURY NOTE L91 1.17 A. 96.46 6,757,914 2.29 4.62 912828T34 1.125%09/30/2021 DO 09/30/16 6,751,990 2,13 6,OOQ000.00 U S TREASURY NOTE 1.91 1.29 Aaa 96.97 5,813,692 1.98 4.69 912828T67 1.250%10/31/2021 DO 10/31/16 5,818,140 1.84 7,000,000.00 U S TREASURY NOTE 1.91 1.96 Aaa 99.25 6,900,492 2.36 4.93 912828U65 1.750%11/30/2021 DO 11/30/16 6,947,780 2.19 U8 TAXABLE MUM BONDS 2,440,000.00 PORT AUTH OF NEW YORK&NEW JE 1.89 4.84 Aa3 109.66 2,501,634 0.91 2.93 73358WAG9 5.309%12/01/2019 DO 07/01/09 2,675,582 0.84 1,400,000.00 NEW YORK CITY NY TRANSITIONAL 2.35 3,83 Ael 106.30 1,400,000 0.51 3.55 64971M5E8 4.095%11/01/2020 DO 11/03/10 1,488,186 0A7 400,000.00 UNW OF CALIFORMA CA ROTS MED 2.59 4,57 Aa3 110.09 400,000 0.15 3.96 913366WS 5.035%05/15/2021 DO 11/18/10 440,260 OA4 TOTAL:FIXED INCOME 1.62 1.69 295,627,184 IWOO 2.52 293,181,535 TOTAL:Long Term Oper.Pimco 1.61 1.65 319,010,497 100.00 2.37 316,787,228 111712017 6:13:02PM EST 15 Source:The BaNc. fNew York Megan Corpomdon Yield Analysis Report ID: NAM234 Base currency: BNY MELLON OCSF07555502 12/31/2016 O.C.S.Escrow Account Units Held YTM/ Curren Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) t Quality Price Market Value %Market Adj Yield Rating Value Duration CASH &.TEMPORARY Sum o(Acmunt Receivables - 0.00 SUMRECV 0 TOTAL:CASH 3:TEMPORARY 0.00 0.00 300.00 0 FIXED INCOME TREASURIES 3,594,000.00 U S TREASURY NOTE - Ane 3,603,596 100.00 - 912828SK7 0.375h03/15/2015DD03/15/12 3,594,000 100.00 TOTAL:FIXED INCOME 0.00 0.00 3,603,596 100.00 3,594,000 TOTAL:O.C.S.Escrow Account 0.00 0.00 3,603,596 100.00 3,594,000 111712017 6:13:02PM EST 16 Source:Ma BaNc. fNew York Mellon Communion Asset Detail BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 As Of Date 12/31/2016 Mellon Base Base Market Percent of Local Unrealized Net Unrealized Security ID Security Description ShareslPar price Base Cost Value Total Gaint-oss Gain/Loss Base Grand Total _ 434,279,114.491 435,991,210.18 433.425,928.75 100.00 -2,565,281.43 CASH&CASH EQUIVALENTS 104,323,993.4/0 105,648,971.90 105,581,298.34 24.36 -67,673.56 U.S.DOLLAR _ 10g323,993.440 105,648,971.90 105,581,298.34 24.36 -67,673.56 CASH ANN 1.0000 -004 -0. 000 000 0.00 _ 99VVAEU30 SLH PROXY LONG E%POSURESLHOPNTA4 60,6414% 04225 .3.2.59 25,62103 001 -6],6]355 E],6]34 89113E9K6 TORONTO-DOMINION NY INSTL C/D1d50%05N320tT DO 05N$It6 1,150,OM.WO 999969 1,149964.14 1,149,961.14 09 000 0.00 89113WHF6 TORONTO DOMINION BANK CID1190%03I1 W2017 DD 01 4,075,00O.WO 1000000 4075000.W 4,075,00100 0.94 0.00 0.00 02611 AMERICAN HONDA FIN DISC01I2&2017 900,000.000 999331 899,397]5 899,397,75 021 0.00 0.00 06538BC63 BANK TOKY"ITSUB DISWMW2017 6,870,000.000 996281 6,844A47.45 O644A4TAS 1.58 0.00 000 69372ANT5 PACCAR FINL CORP DIS001I2TI20P 2,000SW.WO 999319 1,99063&88 1.998.83988 046 0.00 0.00 89233GNP7 TOYOTA MTR CR CP DISC01I23f2017 IOOOSW.WO 998129 Basin. SETUP. 023 ON 0.00 89233GRL2 TOYOTA MTR CR CP DIBC04R020P 1,000,000 NO 996fi89 991" 99$8 " 023 000 0.00 892MGV29 TOYOTA MTR CR UP DISC06N2201 7 6300,000.003 992381 6251S.25 6,251,93925 1. ON Too RECEIVABLE FOR INVESTMENTS SOLD OWN IJON 2562 2562 ON JOS 0.00 313385AV8 FEDERAL HOME LN BK CONS DISCMAT 0112012017 2,040,000.000 999128 2,038,220.95 2,038,220.95 0.47 0.00 000 313385BA3 FEDERAL HOME LN BK CONS DISCMAT 0112512017 1,000,OW.WO 99.9110 999,110.W assil .00 023 0.00 000 313385BC9 FEDERAL HOME LN BK CONS DISCMAT 0112712017 15000,CW.WO 99 N51 14991.76O.W 14,991.760.00 3.0 0.00 Coo 313M5BF2 FEDERAL HOME LN BK CONS DISCMAT 0113012017 IOOOXOONO 99.M44 999,44444 N%,PF.44 023 0.00 000 313385DL7 FEDERAL HOME LN BK CONS DISC KRAT 03124Y2017 6,000,000.000 998822 5,991)34.16 5991.73T16 1.38 ON OOS 313397AV3 FEDERAL HOME LN MTG CORP DISCMAT 0 WW17 2,000OW.NO 999502 1,91 19931W.44 04fi 0.00 000 313397BG5 FEDERAL HOME LN MTG CORP DISCOWN2017 17JOOSOONO 999552 16 992,386 63 16992,388.63 392 OW TOO 313589BM FEDERAL NATL MTGASSN DISCMAT 0112512016 3,000,OW.WO 99.93]0 2,998,11000 2,995,110.00 069 0.00 000 313589BX0 FEDERAL NATL MTG ASSN DISCMAT 0211 W2017 1,920,00O.WO 999274 1,918,6W.08 1,918,606.08 A" 0.00 000 INTEREST RECENABLE _ O.WO 10000 1435,908.57 1A35.908.57 0.33 0.00 0.00 99WB5247 DREYFUS TREAS&AGY CBH CBH MI RT 12OV2049 DO OM09l97 11,758.351.950 1000000 11758,351.95 11,755351.95 2.71 0.00 0,00 912796KE8 U S TREASURY BILLO.WO%01,262017 DD 07C&16 5250,000.000 99.9350 5,246,586.58 5,246.536.58 121 0.00 0.00 912796KT5 US TREASURY BILLO.WO%04202017 DO 1MV16 15,000,000.WO 998133 14 971,999 58 14,971.999.58 345 000 0.00 FIXED INCOME SECURITIES 329,955,121.051 330,342,238.28 327,84d,630.41 75.64 -2,497,807.87 U.S.DOLLAR 329,955,121.051 330,342,238.28 327,044,630.41 75.64 -2,497,607.87 43813JAC9 HONDAAUTO RECEIVABLES 201 A30.870%1112112017 DD 02J21114 272,359.W0 99.9730 271,529.15 272,295.45 ON 756.30 756.30 43814GAC4 HONDAAUTO RECEIVABLES SO 2 A30.77M 011912018 DD XW21114 537.546.510 999160 537.1MM 53T� 0.12 -7359 43.59 43814NAB1 HONDAAUTO RECEIVABLES 201 A21010%0&1&20180D OY25118 2020.144.820 99.9670 2019.943.01 2019.4T8- 047 464.84 4"84 430140AC2 HONDA AUTO RECEIVABLES 202 A31.39M W11512020 DO 05131116 1,810,000 AS 998450 1,809.981.&9 1,807.194.W 042 $77039 -2.77039 65498WAB1 NISSAN AUTO RECEIVABLES C A2A1 J70%0511612019 ON 0&1 SO 6 2,085,OW.WO 998290 2,084,917 55 2081,434.65 048 -348320 -3,48320 89231MAC9 TOYOTA AUTO RECEIVABLES 2 A A31670%IWINS1]DD O&1&14 469,076170 999560 450,12713 458,07618 011 740d6 T4045 89231TAB6 TOYOTA AUTO RECEIVABLES C A2A0920%0211612018 OD OBl21115 566,481.450 99.9750 556,436]0 556342.33 0,13 -94.37 -U37 89236WAC2 TOYOTA AUTO RECEIVABLES 2 A A31A20%02H 5201Y ODD 0=015 2,883,281.480 999470 2,882,845.53 2,881,753.34 ON -1,09219 -1,09219 161571HHO CHASE ISSUANCE TRUST AT A71060%09116Y2019 DO WlWl6 4,140,000.000 99,9090 4,139,643.13 4,136.23260 095 3410.53 -3,410.53 477877AD6 JOHN DEERE OWNERTRUST 20 B A31.070%111152018 DO WN3O4 2,247,986.480 999930 2,249,040.21 2,247.829.12 0.52 -1,211.09 -1,21109 47788MAC4 JOHN DEERE OWNER TRUST 20 A A31.360%W11512020 DO 03MV16 2420,000.WO 997380 2419,6190 2113.65960 0.56 .5,959 TO -5,95949 477BBNAM JOHN DEERE OWNER TRUST 20 B A21.09M 021512019 DO 07WI16 2,980,000.WO 998850 2,979,81822 2,976.573W 069 -3,24522 -3.24522 331 AMRESCO RESIDENTIAL SECURI t AVAR RT JAWWO29 DO 1020ry9 133,743. 938280 10I AN 125.486.65 0W 2505510 2505580 83162CW0 SBA GTO PARTN CTFS 2001-20C 16340%WN1@021 70,13"AS0 105,5730 706M.45 74,54S107 002 393702 3,937.02 78445JMS SLIM STUDENT LOAN TRUST 2009 AVAR RT Od12512023 D008128OM 1 36,113.900 100,1290 35,967.36 36,160.49 0.011 IOXII 193.11 RI 1Lpe TimeadmPTue Jm 17201T 0334:40 PM Page 1 of 4 Asset Detail BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 As Of Date 12/31/2016 Mellon Base Base Market Percent of Local Unrealized Net Unrealized Security ID Security Description I'llareslPar price Base Cost Value Total GainlLoss Gain/Loss Base 025316AY5 AMERICAN EXPRESS C07,000%0XISAX10 DO 03I19N8 _ 2900,003 WO 1062690 33]],38579 308190100 071 -29558479 -295584]9 02665WAH4 AMERICAN HONDA FINANCE CORP2260%OBI192019 DO WN9/14 4,000,000WO 1W 9740 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n-Nmp:Tue Jm 17 201]03 M 40 PM Page 2 of Asset Detail BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 As Of Date 12/31/2016 Mellon Base Base Market Percent of Local Unrealized Net Unrealized Security 10 Security Description ShareslPar price Base Cost Value Total GainlLoss Gain/Loss Base 1fi61fNAPH CHEVRON CORP1104%12N512017 DO 12105112 200000000D 99]]40 1880,fiLb.00 1995,48000 046 Kor DO 588000 166764BG4 CHEVRON CORP2.103%CUIM021 Do Osl W16 2,500,000.000 99.1430 2,405,350.00 2,08,575.00 057 -6,]]500 -6,775.00 30231GAV4 EXXON MOBIL CORP3222%ON0112021 DO 03/03/16 3,000,000.000 100.2290 3,016,097.40 3,006,87000 069 -9,22740 -9.22740 6I4599CD5 OCCIDENTAL PETROLEUM CORPI.500%021152018 DO O&22/12 2.900,000.000 100.0910 1,986,30.00 2,001.820.00 046 15,480.00 15,480 O 4581XOBV9 INTER-AMERICAN DEVELOPMENT BAN1.125%0311512017 DO 01/11/12 1,000.000.000 100.0260 1,001.540.00 1.000.26000 023 128000 -1,280.00 4581%OCG1 INTER-AMERICAN DEVELOPMENT BAN1.000%0711412017 DO SIDI 5,000.000 GOO 99.9340 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7,5W.BW.00 1./4 -18,00000 -18.00000 313383HU8 FEDERAL HOME LN BK CONS BDI750%MlMO20 DO OKOI 5,000.0003 1DO 3I90 5008950 SO 510039A.00 111 -5,000.00 -5,000.00 3135GO075 FEDERAL NAR MTG ASSN1503%06222020 DO 04127115 5,000,000.WO 995310 491 SO 4,976,703.00 111 2105000 21105000 3135G3FI3 FEDERAL NATL MTG ASSN1.500%I IMIDO020 Do 10119116 7,5000W.W0 987460 I,370,726 Or I,405,9500D 171 35,224.00 35,ZM 00 31MGOG72 FEDERAL NATL MTG ASBN1.125%121142018 DO 1 IM3116 5,000,000.000 997940 4,963,860.00 4,889j0DOO 1,15 26,70.00 25,75000 31MGDJ20 FEDERAL NATL MTG ASSN1.375%0226R021 DO 0210&16 10,900,OW.WO 98.0510 10,040,950.W 9,805.100.00 2.26 -235,850.00 -235850.00 3137EADMO FEDERAL HOME LN MTG CORP1.25D%1ODI DO 1CM2112 T.500.CW.WO 994150 T,399.6W.W TA50.12500 172 E 47B00 58.4T5.00 313IEAON6 FEDERAL HOME LN INTO CORFO.T50%OIIIM018 DO 1121112 5,900,000.00 997960 4,96T,500.0 4,989.WO 00 115 22,300,001 22.300.00 3137EADPI FEDERAL HOME LN MTG CORK 875%03IOT2018 Do 01117113 5.000.000.WO 99.8700 4,974.100.W 4.993.500.00 115 19,400,001 19.4OOXD 313IEADUD FEDERAL HOME LN MTG CORMS00%01272017 DO 0111&15 1,000,CW.IRS 999990 1,000,320SO 99993D.So 023 -33000 -33000 3137EADW FEDERAL HOME LN MTG CORPO.I50%07I14201 T Do 06OW16 6,00SOM000 1000170 d,PSI SO S,OW,OW.W 111 660000 Q600.00 31398ADM1 FEDERAL NATL MTG ASSN53I5%OVU2017 Do OW08107 2,500,000.000 102.0500 2,553,425.W 2,551,250.00 059 -2,9500 -2,17600 912UM91 U S TREASURY NOTED750%01/1512017 DO 0111&14 3,900,900.010 100.0140 3,002,939.74 3,000,420.00 069 -2,519.74 -2,51974 9128281333 U S TREASURY HOTEL 500%01/31/2019 DO 0121/14 11,000,000.01O 100.M30 11,042,43919 11,059.73000 2,55 17,290.81 17,290.81 912828F39 U S TREASURY NOTEI750%0&3D2D19 DO 09/30/14 5,800.00.00 100.9840 5,873.188.87 5,857.072.00 135 -16,114.87 -16,11487 912UBG20 U S TREASURY NOTEO.675%1111512017 OD 1111 SID 5,000,000.WO 1DO 0040 4,974,39175 5,000.20000 115 25,80825 25.808.25 912B28G61 U S TREASURY NOLL1 0%1113012019 DO 11130114 TE00,00).WO 1002070 7M9,6MSO 7515.525,00 173 65,89050 65.890.50 912828L99 U S TREASURY NOLL 3I5%10/3112020 DO 10131/15 55000W.SOO 987730 5,424,66687 5,432,515 DO 125 I,.aA3 7,81813 912B281,189 U S TREASURY NOTED.375%01/3112021 DO 01/31/16 6p000W.W0 984020 6,886840.41 SS04,120W 1IN 8,27959 8,278.59 812828SC5 U S TREASURY NOTED 876%01/31/2017 DO 01/31/12 16,000,000.000 100.MOO 16,008,178.61 16,006,40000 369 -1,II861 -1.II8.61 912828SK7 U S TREASURY NOTED 376%OWIW2016 DO O3VI&I2 3,584,000.010 1000000 3,603,596.33 3,594,00000 083 -9,58633 -959633 912828SNI U S TREASURY NOTE1.500%OW3112019 DO 0321/12 5,000,000.000 100.5120 5,016,4230 5.025W000 1,16 9,177,00 9,177.00 91MBSSO U S TREASURY NOTED.875%MMM1T DO M/3N12 3]50,000.00 100.1140 3)50.30553 3,754.275.00 OW 391 3,9694T 91282MO U S TREASURY NOTE1.125%09/3N2021 DO 03/3N16 7,000,000.WO 964570 6757,91408 6.751.990.00 1.55 5,92408 -5924.08 R.-MGLW13 RepA n-aNmR na Jm 17201T 0334/0 PM Page 3 of Asset Detail BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 As Of Date 12/31/2016 Mellon Base Base Market Percent of Local Unrealiwd Net Unrealmeol Security 10 Security Description ShareslPar price Base Cost Value Total GainlLoss Gain/Loss Be.. 912URT67 USTRIASURV NOTE1 250%IW31=21 DD 10/31/16 6,000,000.W0 969fi90 5,013,fi9196 5,818,14000 1m 4,.s 02 4,440.02 912028U65 U S TREASURY NOTEI.760%11/30/2021 DD I IW16 7,000,000.000 99.2540 6,900,492.20 6,947,78000 160 47,20700 47,28].80 9128MUR9 U S TREASURY NOTEO.)50%GV2812018 DD OMN13 3,500,000.000 99.7660 3496,457.04 3,491,810.00 081 464L04 4,61].04 912828WSS U S TREASURY NOTE1.625%=3012019 DID 0SAYN14 2,000,000.000 1007460 1,996,861.44 2,014.92000 046 18,05856 18,058.56 912828W U S TREASURY NOTE1625%W/3laOI9 DID WPo1/14 5,000,00.00 1006990 5,012,3W.70 5,034,950.00 1,18 22,561.30 22.561.31 912820XE5 USTRFASURV NOTE1.500%OS/31/20200D W31/15 5,000.00O.WO 996950 4,988.42300 4.904.]5000 115 18,3900 10,32].00 92]SRAT9 CISCO SYST 1051NC1100%OMW2017 DD 0MV14 1,000,CN.WO 999070 1,0020W.00 use 87000 023 Q]9000 -2,79000 fi2000VAA0 NCUA GUARANTEED NOTES TR R2 tAVAR FIT 11N6/2p1]DD 11I1]I10 387,664.001 ID00000 387,1356.73 307,69501F 009 W20 W20 RpMItl GLWI3 Upod n—m mp:Tue Jm 17201T 0334:40 PM Page 4 of j� Transaction Report BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 -IN Elective Contract Trade Data ease Investment ease Investment ease security ID DescriPtiou Data settle Data snare./Par Amount Amount Gam/Loss settle ea.e Amount GRANDTOTAL -240,505.30 114,143.538.53 .10,609.57 -240,530.92 CORPORATE ACTIONS 11000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 1,000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 U.S.DOLLAR 1,000,000.00 -1,008,120.00 -9,120.00 1,000,000.00 ONG6XCA5 BANK OF NEW VORKMELLOH CORPT 2.4W%OlfVFAS7 Do H QS111 1II1 ltl 12IM015 -1.WOOW.WO LOEOW000 -1008,120.00 0,1A.. 1WO,0O0 00 MATURITIES 2,995,484.99 -2,995,484.99 0.00 2,995,484.99 GASH 8 LASH EQUIVALENTS 2,995,484.99 -2,995,484.99 0.00 2,995,484.89 U.S.DOLLAR 2,995,484.99 -2,995,484.99 0.00 2,995,484.99 21RTAMK. OOOPENIT CENT DISC 12lMD16 12I1-118 -1,010OXON 995,]63.33 10,111.11 IN NI.753.33 740NIHMRS PRAXAIR INC DISC 12I30Y HOSGOe018 1ASSQDI8 2000ON 000 1889]31 fib -1968.]31.86 ON 1.as St1fib PRINCIPAL PAYMENTS 1,460,703.32 -1,43,174.09 -2,489.57 1,460,677.70 FIXED INCOME SECURITIES 1,460,703.32 -1,463,174.09 -2,489.57 1,460,677.70 U.S.DOLLAR 1,00,703.32 -1.03,174.09 -3,489.57 1,460,111 313486WZ3 FHLMC POOLp]&NHVARRT OHOlOS28D011L19] 11/ 2m. lKi.IB -16N0 1880 ON ON 1880 31%BSW S FXLMC POOLpBmGVARRTOPOOOKK8D012,DUEN 12tl. 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HONDA AUTO RECENABLES 202 AS 07ID%OWNRONS DO OW1114 1118IN1B 1H1812M8 Al RJOL810 9LBW 81 .1.]8005 84.N 81.04461 4P78]]ADS JOHN DEERE OWNERTRUST20 BA31.070%llIl MD180DOPNSII4 IA15MHO 12I1SODIO 215,162.680 215,16388 -215.28J.56 -1WH 21516368 62888UMS NCUA GWRANTEED NOTES To R2 IA VAR RT I INNNT]DO 11I1Sn0 112016 IWAAR, Ica..1. 10'.a 020 10.684S, 89231MAC9 TOVOTA AUTO RECEIVABLES 2 A A308TO%12/150017 DO=19114 111.1a 191BOO18 1941.As. 194,WO 33 -NoS1794 40239 _ 1PHNO 33 8B238WAC2 TOVOTAMTO RECEIVABLES 2AA31.40%=I M019 DOIXJW/i6 lVlaccR 12I1S2m8 Q44 a.SO0 244,92980 -244892]] 37N _ .,.ISO 89231TABfi TOYOTA AUTO RECEIVABLES 0 MA 0I OW1 scat B ODMI 5 LAl AccOP lViNms 167782000 18].]8]00 -167.768.51 13.49 167 782 OD PURCHASES -M,186,005.29 2A2,186,005.28 0.o0 -s2,186,005.28 CASH&CASH EQUIVALENTS -192,686,268.80 192,686,268.80 0.00 -192,686,268.80 RPoa1m TX8355 Poor Ti BoamPT o Jan 17 A17033836 PM PRgei of j� Transaction Report BNY MELLON OCSD-CONSOLIDATED-OCSG00010000 Effective Contract Trade Data Base Investment ease Investment ease security ID Description Data Settle Data SNareal Par Amount Amount Bain/Loss same Ba.e Amount U.S.DOLLAR -192,686,268.80 192,686,268.80 0.00 -192,686,268.80 885JNRT AMERICAN HONDAFN DISC OIQEC017 1LZVM18 192.mA 900,ON0O 899 75 998D8]091 BNY MELLON CASH RESERVE O.DIRR 1SSH2N9 DO OSC 9] 12/SI2018 4152018 S,EOD.OW.000 $BOONON SBW,W0.0. ON -5.RN 00000 88fi0052G] DREYFUS TREAS B AGY CSH CSH MG VAR RT 1MICOAM DO WOlven 1VRNUT 1&1IID18 171 M.1. -173.S2fi G8 IMAX4B ON -173,52648 886005247 DREYFUS TREAS B ANY CSH CSH MG VAR RT 1MIA048 DO WIMe] I.NI6 12ANAHS Y,HN0 83f 05 8H.05 OW BJ105 a524T DREYFUS TRSA3 a SAY CSH CSH MG VAR RT InlM48 DO 01 12 016 lVAN16 N1250 RY 21 65325 NOON.] DREYFUS TlnP &AGY CBH CSH MG VAR RT 1L31R049 DO OANP] 1N5I2018 19 16 11'.ran A1,M000 11,W000 OW .11 mON 998085M7 DREYFUS TREAS A AGY CSH CSH MG VAR RT I AsR249 DO WAAR ILM2018_ 12NMNH6 5.0000ORN -5,800,can 00 S6W.N000 ON -"AN No 00 88fi08524] DREYFUS MEMO&AGY CSH CSH MG VAR RT 1MMMA8 DO GANNET 1ANSOOS 1N1N18 11,014.100 -11.D14.18 11.014.18 O.Po -11,014.18 896085247 DREYFUS TRFAB B AGY CSH CSH MGVAR RT 1MICHHA DO INDOOR INYMM16 1V12=16 411.ON 43.]5000 43.75000 0. 13]SON N6.5247 DREYFUS MEAN 4 AGY CSH CSH NO VAR RT 1voloO48 DO WrO] 12/162018 12/152016 W,N240 .2 NY2 6 882,Po228 9Po08524] DREYFUS TREAS 8 SAY CSH CSH MG VAR RT 1WIMO DO NUBW I11ENN lll. 18 1139 940 J13994 1194 0 39or 8-0,13994 99808524] DREYFUS MEAS B ANY CSH CSH MG VAR RT 12 ONNN DO INI 1119YA18 1Li9Y1018 34C.S.LOS) 4A0.S3303 310.93303 ON S0 M03 Y.N1247 DREYFUS TREAS B AGY CSH CSH MG VAR RT 12131 Y1Aa DO WDOO] lWl91l6 121102016 108 aRN -10.AS Be ... . A ON -10,8630, NN85247 DREYFUS THIEVE&AGY CBH CBH MG VAR RT 12HSMO8 DO Oscum 12/21R4R2016 1=12016 3,02570 3M717 3,W7,17 OW -3047.17 5247 DREYFUSMR &AGYCSHCSHMGVARRTI2lf 049DD0 W9] 1221Y2016 1.1.016 28A17,144.2ID 26,527,144.23 28,52],144.23 .26,52714423 N6085247 DREYFUS MEAN A AGY CSH CSH MG VAR RT IASIM49 D004D92] 12R 16 12Yt21aN BOW00L ran -Nara,W000 Po,OLO,W0.00 OW _SOON 000 A, 99808524] DREYFUS TREIS B AGY CSH CSH MG VAR RT lZKMA49 DO MD9N] 1.16 12R]Y1018 SO,B70630 9EOVD63 W,8]0.83 ON A0,8]063 8W08524] DREYFUSIREASBAGYCSHCSHMGVARRT129V10480DOWOO] UZAAM16 12RBY101B LB7fi.620 J.B]88R 4.BISO2 ON J,171162 313240B57 DREYFUS]RFABBAGYCSHCSHMGVARRT12131R1048D00W819R IASNAR, lVNINIS 2000 ..0 3,000.W000 20W.W000 O W0 W Q00o O0 385BC9 FEDERAL HOME UN BK CONS DISC MAT 010712017 1b231ID18 I.M0,16 12C400M.NO .11,990,40000 11,99f UNN 000 .1 TRATI 4.1 Or 313385B12 FEDERAL HOME UN BR CONS DISC MAT OIMRM17 H.U.10 12I21I2018 1,W00Ld.ON A99.W 44 9fA,.44 OW .9994.04 313385OL7 FEDERAL MOM E UN W CONS DISC N MOT 0324Y109 1223R016 lacu101B B.W00W.000 3.%1.Y31.1B 5,991.7.1fi ON 1.991p34.16 J13]WBGB FEDERAL HOME UN MTG CORP DISC OVlMM17 12RB,R016 12QW2016 12NOOMPO0 -11.W4.W3]3 11,884.S7S IM ON -0L04.673.33 313lmWS FEDERAL HOME UN MTG CORP DISC OIDIYIOO 12274416 1=712016 40NAMN0 d.eBR.]1530 4,eB].71530 0W 4.9d;]1530 313397AV3 FEDERAL HOME UN MTG CORP DISC MAT 0112N2DI7 1919M116 111.16 ".CO.NO 4999,184.40 1.993,164.44 0RM -1999184.44 313MROXI) FEDERAL NATL MTG ASSN DISC MAT WIM017 1223Y[1118 iL2312018 I,B20.OW.WO -L918.W8.08 1,918.W8.08 ON -L9I8,Sao SHI.NT5 PACCAR FINL COW DISC OlODYN17' 12R3R018 12R]Y101B 2WDON 000 -1.988.W60B 1886G3. o. 1.98B,fiJ308 CONJIAN's PRAXOR INC DISC 12SNABDI6 12I2YN16 1=1CO16 Z.O.S.PoO - W9]3166 1,8119.731 SO 0W ,A89]Jt 66 9IlE7K6 TORDNTOpOMINION NY INSTIL CID 1150%05N1 DD OSTON t9 in 12,N12016 1p50,04n.w0 .1,_149,964.14 1,149,Po4.14 89233GRL2 MYCTA MM OR CP DISC W201M17 1.10 I2/23YNI8 1,W0,ON.No 39ARm44 99669944 0W .R.A.4, 892..A TOYOTA MTR OR OF DISCOSNOSNT 1.16 l.OrMB SNONOODO E,251.99925 6.251.99925 ON ",SO," 9127NKES U STREASURY BILL DOW%01OHNS17 DO DCSOIS 1ANOMS 121L'N18 1,25DOOONO -1.249.349.22 1,2N8.Me22 ON I..N,34022 81279NT5 U S TREASURY BILL DN0%W201M17 DO TOCNO INCT016 1ZT3YN16 ISROO 0.ON -14,871.Ps 58 14,871,AN 58 _ 0Po 14,9R1,AN11 FIXED INCOME SECURITIES 49,09,736.48 49,699,736.48 0.00 -49,499,736.48 U.S.DOLLAR J9,499,736A8 49,499,738A8 0.00 -49,499,736.48 31380AOM1 FEDERAL NATL MTG ASSN 6.375%W112QO17 OD08NOW 1-AM 16 12RBY101B 2.SOONO.PoO IMMANN 2553p25N ON -2.55342300 2828SC5 V S TREASURY MODE 0875%OOMI Capp DD 01131/12 12/222016 1ERL2016 t0.WO NON. -in.A.11163 TOON11163 _ OW 9128285C5 USTRE URYNO]E08]5%01/31YeD1]OD01131/12 1L2LM10 1&23Yf018 B4O0D,OM.WO E,W3,88896 B4OD3,Po898 ON 912828T3N N B TREASURY NOSE 1.125%f9MYN210D O91SO16 1221YN10 12R21MI8 10000Ld.000 -3838,B8040 3858.80840 00, _3838,8a,. 912B2Ban U S TREASURY NOTE 1.25D%10OHOM10D 1M,1/16 lAI4Y[010 12114Y101B B.WDOW.PoO 3.819.B91 BB 5,813.691.88 ON 1.813,19195 812828N88 U STREASURY NOSE 12]B%0151QO21 DO 01131/16 12/20R01B 12RBI2016 4.SOO ANON d,404,21429 4AM,214.29 ON All'214IS 912020SN1 US TREASURY MOM 150OYa,.1.119 DO OW31/12 12lLBIN11 12402016 S,WO,NO No 5016.42300 5,016.42300 OW _5,0164230D m2828%CS U S TREASURY MOM 1500%ORCUCO20 DO LR31/15 1 2212016 12/2.nA sLoCc U➢OO 1968,42SN 498642300 OW .496642300 912828V85 U S TREASURY NOTE 1.750%1 lMCO2 I DD I11Son B 1L28Y[01I lNGSIB ],WOAW.WO A,900.49220 6.900A9220 ON AMN02M RECEIPTS AND DISBURSEMENT TRANSACTIONS 113,900,00NDO 13,624.00 0.00 113,900,OOD.00 CASH/SECURITIES RECEIVED FROM PLAN ADMINISTRATOR 113,900,000.00 0.00 0.00 113,900,OOD.OD Report III TX0355 Repll Thavamp:To Jan 17 N17 03MIN PM PARIS2 of j� Transaction Report BNY MELLON OCSO-CONSOLIDATED-OCSG00010000 Effec9ve Contract Trade Date Base Investment Base Investment Base secant,ID Description Date SeHle Dace Shermal Par Amount Amount Gain/Loss settle Ba.e Amount U.B.DOLLAR 113,900,000.00 0.00 0.00 113,900,000.00 Has" . REED FROM P.ADMIN 1.1al8 000 OW S,W000000 NA9123d59 REED FROM PLAN ADMIN 12I 1a 000E 80000,0000E Ora ON BOW000000 NA8123fi5B REED FROM PIPN ADMIN 1.1.1. 0.00E 28.300,00E OD a00 O.W 28,300,000 O0 MISCELLANEOUS INCOME 0.00 13,620.0E 0.00 0.00 U.S.DOLLAR DDD 131824.00 0.00 D.00 R2828WV0 ILB INFLA9ON ADJUSTMENTS USTREASCPI INFLAT IN1I2018 1L12018 sVaoo 000 N3 Yo O.W 000 &1282BWV0 ILB INFLATION ADJUSTMENTS US TREPSCPI NFWT 1AV2016 12R1N18 124500E 0AS 1.2A600 ON OOO m2a2mrpo ILB INFLATION ADJUSTMENTS US TREMSCPI INFIAT 12JA2016 121.1a 416000 000 416A0 0W 000 91282. ILB INFLA90N ADJUSTMENTS US naE PI INFIAT 19 .is 1.18 41000E 1.0 I1800 OW I TO 01282. ILB INFLATION ADJUSTMENTS US TREA PI NFLAT DN.OI8 1.18 a.ON 000 SRYO OW 00E 91282. ILB INFLATION ADJUSTMENTS US TREASLPI INFIAT 1..is 12Ib2016 416N. 0OR 01B00 ON 00O 81282BWV0 ILB INFLATION ADJUSTMENTS US TREASCPI INFWT 1ASOU6 12RI20IS 134500E 000 1'24800 ON 00, 912B2601A ILB INFLATION ADJUSTMENTS US TREAS-CPI INFIAT TA1.16 lViVA16 _ 41600E LOT tl600 ON I RE 9128280011E ILB INFLATION ADJUSTMENTS US TREAR-Cm INFLAT T11.1a 12I13Y2016 41000E 1 On 4180E OW 0 Or 01262. ILB INFLATION ADJUSTMENTS US TREA PI INFIAT I11.1a l..m8 41500E 000 0150E OW 000 91282BWV0 ILB INFLATION ADJUSTMENTS US TREASCPI INFLAT 111.la 1Vl WD16 416000 00A 4160E O.W 00O 912B2BWV0 ILB INFLATION ADJUSTMENTS US TREASCPI INFIAT 191Nalu 12I1&'tm6 1952.Po0 000 1=to 0.W 000 912828WU0 ILB INFLATION ADJUSTMENTS US TREASCPI INFIAT 9¢016 12I1WAUS 41600E 1.0 4160E 0ON 1.0 91282. ILB INFLATION AOJUBThIENTB US TREAe4PI INFIAT 19MIM16 1.01S 41000E van 4150E OW 01282. ILB INFLATION ADJUSThIENTS US TREASCPI INFLAT 12J21YA18 TNI.018 41500E EN 4150E AN 000 81282BWLV ILB INFLA➢ON ADJUSTMENTS US TREASCPI INFLAT 19Y 1S 12Y1a.WS 41 fi.00a 211 4150E O.W 00E 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-Cm INFIgT 122,I 12U112016 124800E 000 1.2450E 0. .1 e¢828WW ILB INFLATION ADJUSTMENTS US TREASCPI INFIAT .in 421.olS _ 832.00E Sol 5120E OW 0 912828. ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT IL.1a 12I28I2nS 416000 000 4150E OW IN 01282. ILB INFLATION ADJUSTMENTS US TREAS-CPI INFIAT 1229IMi8 1ffi812018 U.N. 000 5200E O.W 000 8128A. ILBINFLATIONAOJUSTMENTSUSTREASCPI NFLAT I12130RPI8 125EUD1�032.000 Don atRao OW 0OF SALES 122,589,311.67 -12E2,589,311.62 0.00 122,589,311.67 CASH 6 CASH EQUIVALENTS 122,589,311.67 -122,589,311.67 0.0E 122,589,311.67 U.S.DOLLAR 122,569d11.57 IU.N9,311.67 0.00 122,539,311.67 asucom04 BNY MELLON CASH RESERVE OEIO%IMIconr DO ONVOR i.DS 12Id20n d,W00W.000 SWO,W000 1NNNO 00 OW 50000000E 93fi085M] DREYFUS TREAS 6 AGV CSH CSH MG VAR RT 1291204E DO OI eac T.A.U. 12I61018 -1,24SNe9 20 1.249.34S22 -1 M9.348.22 O.W T.It34922 586085247 DREYFUS TREAS 6 AGV CSH CSH MG VAR RT 1MIM49 DO Wp&OT 1ADAslu 12I14I201B d7N4 YW,NO S]84,UrIN -ST..W300 0.ON 24 5.]S4,fiB800 Neass ] DREYFUS TREAS ANY CSH CSH NO VAR RT DO313DN DD MOUNT .is 12RW2016 -1,158,3]671. MS3,3]6i1 -;158 0.3]Ii.]1 W y155n6]1 N61.1241 DREYFUS TREAS&AGY CSH CSH MG VAR RT 12J31OoM DO A,Wum T2 ,Ocla 12J21Y2018 .93944C.440 995414A4 A93,M4M OW A. 61 NMI DREYFUSTREP58AGVCSHCSHMGVARRTIMIM40DD04p9I0] 1.1a 1%[2IRi8 US.III lsm3 ,W4.81 1S032EM81 O.W 15.03280181 BBfi085247 DREYFUS TREAS 6 AGV CSH CSH MG VAR RT 1SOLAW DOW AND 12R3YA18 12Y13Y101B -IS.0. 00 BSSN,53S2D SO.14.83aN ON SS.tUNNO SE SOW8524] DREYFUS TREAS 6 AGV CSH CSH MG VAR RT 12KTONAN DO W RSA 1y7.lu 1=NSU6 d,6Bp113W 4.W],]15.30 4SF7 71530 OW 4.119],]1530 00524] DREYFUS TREA$8 AGV CSH ESH MG VAR RT IYOD000H DO WINE EYUvFrlE 1MV2016 1455f 070510 14554.0]0.51 -14554.OR55 0W 4554,0]O 55 958C0524] DREYFUS TRFP58 AGY ASH ESH MG VAR RT 1L31OW9 DO MUSNOT 12J29IM18 1.018 -15388,SM.840 1SYS.S.1 -o.uM,.N OW 1a neea2584 Rar-M TXN55 RANI Timndm,To Jan 17201]0330:36 PM Page 3 of Callan December 11,2011 Orange County Sanitation District Investment Measurement service Quarterly Review The holder, aided waa prepared by Callan Associates Inc. ("CAI"I using Information from sources that include the following: fund thusands); fund dietodian(s);Investment managaidel CAI computer service;CAI investment manager and fund sponsor database;third party data vendors;and other outside sources as directed by the client CAI assumes no responsibility for the accuracy or completeness of the information provided,or methodologies employed,by any information providers external to CAI.Reasonable care has been taken to assure the accuracy of the CAI database and computer software.Callan does not provide advice reversing, nor shall Callan be responsible for,the purchase,sale, hedge or holding of individual securities, including,without limitation cuticles of the client(i.e. company stock)or derivatives in the clients accounts.In preparing the following report CAI has not reviewed the risks of individual cunt,holdings or the conformity of individual seventy holdings with the client's Investment policies and guidelines,nor has it assumed any responsibility to do a.Advice pertaining to Me medic of individual securities and derivatives sal be discussed with a Mind party securities expert.Copyright 2017 by Callan Associates mr. Table of Contents December 31, 2016 Capital Markel Review 1 Active Management Overview Market Overview 8 Domestic Fixed Income 9 Asset Allocation Investment Manager Asset Allocation 11 Investment Manager Returns 12 Asset Class Risk and Return 16 Manager Analysis Chandler-Long Term Operating Fund 18 Chandler-Liquid Operating Money 22 Callan Research/Education 24 Definitions 27 Disclosures 32 Callan Orange County Sanitation District Executive Summary for Period Ending December 31, 2016 Asset Allocation December 31, 2016 Market Value Welaht Net New Inv. Domestic Fired Income Long Ter,OlxmOng Fund' 316.787,228 7670% (7.f00.000) Liquid 0 Tmal Flntl $429,031,929 100.0% $47,900.000 Performance Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term operating Fund^ (0.80%) 1.58% 1.47% 1.13% 2.08% Chandler (0.80%) 1.58% - - - Blmbg GmUCmd 1-5 Year lux (1.05%) 1.56% 1.32% 1.29% 1.95% ML 1-5 GovtlCorp (1.02%) 1.62% 1.39% 1.39% 2.03% Liquid Operating Monlese 0.12% 0.47% 0.26% 0.21% 0.22% Chandler 0.12% 0.47% - - - iti nth Tanni Bill 0.08% 0.27% .11 Total Fund (0.70%) 1.15% 1.22% 0.97% 1.74% Target' (0.80%) 1.35% 1.14% 1.13% 1.64% Current Quarter Target=80.0%ML 1-5 GovVi and 20.0%3mo T-Bills. ^Assets were transferred in kind to Chandler on 121112014.Previous performance reflects PIMCO. Recent Developments — During the quarter, $47.9 million was deposited into the total portfolio. $7.1 million was taken from the Long Term Operating Fund and $55 million was added to the Liquid Operating Monies. Organizational Issues N/A Manager Performance The yield curve steepened throughout October, then took an overnight jolt upwards following announcement of the presidential election results. Positive economic data and expectations of a Federal Open Market Committee (FOMC) rate hike drove yields upwards the remainder of the quarter. On December 14", the FOMC raised the target fed funds rate to 0.50-0.75%. They cited "solid" job numbers, "moderate" household spending, and steady economic expansion as supporting their decision. Following this announcement, Treasuries sold off. Rates softened from their peaks the last few days of December. Callan Orange county nitdm Dhtnd January 26,2017 During the quarter, the 5-year Treasury rose 79 bps to 1.93% and the 10-year increased 85 bps to 2.45%. The Bloomberg Barclays Aggregate Index gave up 3.0%, bringing its calendar year return to 2.7%. Government securities trailed the broader market for the three months (Barclays Government Index: -3.7%). Credit securities kept pace with broader market, also falling 3.0% (Barclays Credit Index). High yield continued its trend and led the other fixed income sectors throughout the quarter, returning 1.9%. For the calendar year, the sector produced an impressive 17.3% gain (MIL High Yield CP Index). Inflation protected securities fell 2.4% but led the broader market for the trailing 12 months, up 4.7% (Barclays U.S. TIPS Index). — The Long Term Operating Fund fell 0.80% in the quarter, beating the ML 1-5 Govt/Corp Index (-1.02%) and ranking in the 92"" percentile versus peers. The portfolio was short duration (2.48 versus 2.76 years), which helped relative performance as interest rates rose across the curve throughout the quarter. The Long Term Operating Fund had less than 30% invested in credit and less than the permitted 20% invested in the combination of asset- backed securities, commercial mortgage backed securities, and CMOs as of December 31, 2016 (see page 21). The Liquid Operating Portfolio returned 0.08% (after fees) in the quarter, which tied the return of the 3-month Treasury (+0.08%). The Portfolio returned 0.32% (after fees) for the calendar year and ranked 22ntl percentile versus peers. Cordially, Gordon M. Weightman, CFA Vice President 2 Capital Market Review CA LLAN Callan INSTITUTE L * CMR Preview Fourth Quarter 2016 This "Preview" contains excerpts from the upcoming Capital Broad Market Quarterly Returns Market Review(CMR) newsletter, which will be published in several weeks. U.S.Equiy(Rusaell 3000)— 4.21% -1.26%E Non-U.S.Equiry(MSCI ACWI ex USA) -2.98% _ U.S.Fixed(Bloomberg Barclays Aggregate) Markets Trumped -10.26%— Noe-U.S.Fixed(Bloomberg Barclaya Global as US) U.S. EQUITY I Lauren Mathias,CFA Caen(gooay T-Bills) 10.09% Source'.Bloomberg Barclays,Merrill Lynch MSCI.Russell investment Group The S&P 500 Index notched a +3.82% return for the fourth quarter after reaching an all-time high(2,239)just days before Treacherous Treasuries the end of 2016. Even more impressive was the return from small-capitalization companies(Russell 2000 Index:+8.83%), U.S. FIXED INCOME I Rufash Lama as was the divergence between value and growth across the size spectrum(Russell 1000 Value Index:+6.68%vs.Russell The U.S.bond market experienced a tumultuous fourth quarter, 1000 Growth Index: +1.01%; Russell 2000 Value Index: triggered by the unexpected election results and strong eco- +14.07%vs. Russell 2000 Growth Index +3.57%). nomic data,among otherfactors.The Bloomberg Barclays U.S. : Aggregate Bond Index dropped 2.98%,while the Bloomberg Continued on pg.2 Barclays High Yield Index rose 1.75%. But the year ended on an upbeat note,with the Aggregate up 2.65%and the High A Depressing Dollar Yield Index delivering equity-like returns at 17.13%. NON-U.S. EQUITY I Irina Sushch The yield curve rose following the presidential election and a During the final quarter of 2016,foreign developed and emerg- n upward revision for third quarter GDP to 3.5%, the highest ing markets Floundered in U.S.dollar terms despite hearty local Continued on pg.4 returns. Donald Trump's election drove U.S. stocks to record highs, as investors reacted positively to his business-friendly Big League Yields stances on taxes,trade, and regulations. The U.S. dollar hit a NON-U.S. FIXED INCOME I Kyle Fekele multi-year high versus the euro and the yen and appreciated roughly 7%compared to a basket of currencies. The U.S. dollar skyrocketed against a trade-weighted basket of currencies on the back of the November U.S. election and That broad-based dollar strength detracted from overseas higher U.S. interest rates. Investment strategies with foreign returns for U.S. investors.The MSCI ACWI ex USA Index was currency exposure faced strong headwinds as the Bloomberg down 1.25%for the quarter(but up 4.93%in local currency).As Barclays Global Aggregate ex-US fell 10.26% (-1.86%on a in the previous quarter,the defensive-oriented sectors dragged hedged basis). Continued on pg.3 Continued on pg.5 Knowledge.Experience.Integrity. U.S. Equity: Markets Trumped Rolling One-year Relative Returns (vs.Russell 1000) Continued from pg. 1 e Russell1000 Gmnvh a Russell 1000 Value a Russell 1000 30%____ The market in the fourth quarter was trumped by politics as the incoming Trump administration promised to lower personal and 20% - - - - - - - - - - - - - - - corporate income taxes, decrease business and environmen- tal regulation, and increase infrastructure spending. Investors 10% appeared to approve; November saw the highest monthly 0% return of the quarter (+3.70%). Other tailwinds furthered the frenzy,including upwardly revised third quarter GDP(to 3.5%), -10%--- - - - - - - - - - - - - - - - - - - - - - - - subdued initial jobless claims, unemployment at the lowest -zo%_______ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . level in nine years (4.6%), average wage growth of 2.9% in December, and a surging U.S. dollar; home and automobile -30% ...r„„..l,,,r„..„r„....r„.,,,i,,,r„...,r„.„.r„r„..„r„..... prices hit all-time highs,as did consumer confidence.In light of 97 96 99 00 01 02 03 04 05 05 07 08 09 10 11 12 13 14 15 16 the progress,the Fed Funds rate was increased in December spume:R,ssall Investment Groan to a range of 0.50%-0.75%. There are still pockets of uncer- tainty, however; across the pond the European Central Bank across market capitalizations, with the widest (1,050 bps) in continued quantitative easing and back at home a Trump gov- small cap (Russell 2000 Value minus Russell 2000 Growth)— emment could mean higher debt and subsequently inflation. the most since the technology bubble burst in 2001. Sentiment is nonetheless revved up,at least for now. Sector performance reflected the style shift;the best-perform- U.S. equity was the preferred market globally; small cap par- ing sectors in the S&P 500 during the quarter were valueork ticularly benefited from Trump-fueled enthusiasm. Micro and anted, including Financials (+21.10%), Energy (+7,28%), and small capitalization companies outpaced mid and large cap Materials (+4.70%). Within Financials, banks did especially stocks (Russell Microcap Index: +10.05%, Russell 2000 well, benefiting from both an increase in interest rates and Index:+8.83%, Russell Midcap Index: +3.21%, and Russell talk of deregulation. The Organization of Petroleum Exporting 1000 Index: +3.83%). Value regained its lead over growth in Countries(OPEC)agreed on oil production cuts in the quarter, all capitalizations; the dispersion in style returns was broad boosting energy stocks.In general companies with lower lever- age and higher operating margins and return on equity were preferred. The growth-oriented, momentum areas of the mar- Quarterly Performance of Select Sectors ket declined, including Health Care (4.00%) and Consumer Staples (-2.02%). The new Real Estate sector, representing *Russel moo 0Russell nor 2.9% of the S&P 500, finished the quarter down 4.41% as these investments tend to move in the opposite direction of i interest rates, i i U.S.equity valuations were elevated;the S&P 500 Index Forward P/E was 16.9x at the end of the year versus the 25-year average of 15.9x. In this environment active managers were challenged; 7,.76% i outflows from this group have totaled over$1 trillion since 2005, vmsaaan Rmaacer Consumer Realm care However, a future with more volatility, lower returns, and higher Samosa Durables soon,. interest rates would favor active management. source:Russell Imeslment Group 2 1 Callan Non-U.S. Equity: A Depressing Dollar Rolling One-Year Relative Returns Continued from pg. 1 (vs.MSCI Word ex USA,USD hedged) e MSCI Peafic a MSCI Europe a MSCI Wadd ex USA down returns (Consumer Staples: -10.09%, Health Care: 40% -8.08%, REITs: -7.90%, Utilities: -7.19%). The interest rate- Sow sensitive sectors helped limit the damage (Energy: +8,32%, z0% Financials:+6.84%). 10%__ 0% In dollar-denominated results, emerging markets (MSCI -10%--- - - - - - --------- --- Emerging Markets Index: -4.16%) trailed their developed -z0% peers(MSCI World ex USA Index:-0.36%,MSCI EAFE Index: -30% -0.71%).The MSCI ACWI ex USA Value Index(+3.29%)fared -00%"' " "' "' "' "' "' "' "'r" "'i"'I"'i"'I"'I"'I"'I"'i"'I"'i 8]98 88 08 O1 82 83 80 85 OB W OB 89 10 11 1P 13 16 15 18 much better than the MSCI ACWI ex USA Growth Index seams:Msa (-5.72%).Small Cap stocks joined growth and emerging market stocks at the bottom of the barrel (MSCI ACWI ex USA Small brought up the rear.Across the sure zone,economically sensi- Cap Index: -3.52%). Despite multiple headwinds, the MSCI live Financial (+11.45%)and Energy(+11.16%)stocks posted ACWI ex USA Index ended the year up 4.50%. healthy returns,while defensively-oriented REIT(-9.96%)and Utility(-9.40%)stocks faltered. The European Central Bank announced that it would extend its bond purchase program, although it plans to lower invest- In Southeast Asia and the Pacific, Japan's stimulus measures mans from E80 billion to E60 billion per month.The unemploy- boosted returns for local investors(+14.99%).But the dollar hit ment rate in the sure zone declined to 9.8%, the lowest since 14-year high versus the yen,hammering returns for U.S.inves- July 2009. Consumer prices ticked up 0.6%year-over-year in tors (-0.16%). New Zealand had a rough quarter (-10.88%), November,and GDP was on track to increase at a 0.4%-0.5% although it closed out the year up 18.37%. Australia was the pace from 0.3% in the third quarter, based on early indica- only country in the region to end the quarter in the black, up bons ahead of the release of the official figures in early 2017. 0.69%(and+11.45%for the year),buoyed by rebounding com- Against this backdrop,the MSCI Europe Index rose 5.44%in modify prices and higher interest rates.The MSCI Pacific Index the fourth quarter and 7.23%during the year for local investors; slumped 1.03%for the quarter,but rose for the year(+4.18%). however,in U.S.dollar terms,the Index was essentially gat for the quarter and year(-0.40%for both periods). Italy(+10.75%) Despite the MSCI Emerging Markets Index's decline during the led the pack during the quarter, while Belgium (-11.80%) quarter, it jumped a robust 11.19% during 2016, buttressed by strengthening commodity prices as well as reform efforts and accommodafive monetary policies in several countries.Russia, Regional Quarterly Performance (U.S.Dollar) up 18.56%in thequarterand 54.82%forthe year,and Brazil,up 4.16% MSCI Japan 2.05% in the quarter and 66.24%for the year, benefited richly 4.36% MSCI word ex USA from rising prices for oil and industrial commodities. China fell -0.40% MSCI Europe during the quarter(-7.07%) but ended the year essentially gat -1.35% _MSCINCWI ex USA (+0.90%). Most emerging Asian markets gained ground during -z.]zx -Mscl Peaoa ex Japan the year(MSCI EM Asia:+6.14%),despite a rough fourth quar. ter(-6.06%),driven by economic reform and technology stocks. 4.16% -MSCI Emergin8 Meikele Mexico dropped 7.88%for the quarter and 9.16%for the year, .7.07% MSCI China hurt by peso weakness and Trump's election. Spu¢e',MSCI Knowledge.Experience.Integrity. 1 3 U.S. Fixed Income: Treacherous Treasuries underperformed duration-matched Treasuries by39 bps.Asset- Continued from pg. 1 backed securities (ABS)were off 0.70%for the quarter but up 2.03% for the year. Commercial mortgage-backed securities quarterly increase in two years.Yields rose across the maturity (CMBS)experienced a similar divergence,falling 3.03% in the spectrum. The benchmark 10-year Treasury note showed the quarter but rising 3.32%over the year. biggest change,ending the quarter at 2.45%(an increase of 85 bps). Yields on the 5-year and 30-year finished at 1.93% and In 2016,U.S.corporations set a milestone with new high yield 3.07%,respectively. and investment-grade issuances that totaled$1.5 trillion.The municipal bond market also set a record with new offerings Markets entered 2016 expecting four rate hikes, but the Fed totaling$445 billion. increased the Federal Funds rate only once, by 25 bps to a range of 0.50%-0.75%in December.As a result of rising yields, returns across the broad fixed income sector were negative Historical 10-Year Ylelds for the quarter. Tax-exempt municipal bonds and Treasuries dropped 3.62%and 3.84%,respectively.On a duretion-adjusted •U.s.10-Year TmasuryYeld 11110-Year TIPS Yield 613makevenlnflabon Rate basis, Treasuries underperformed credit securities by 156 bps. 6% Long Treasuries were hit particularly hard,falling 11.67%. 5% 4% _ _ _ _ _ _ _ _ _ _ ________ _ _ _ _ _ _ _ _ _ . Spreads tightened during the quarter. Investment-grade corpo- rate spreads over comparable Treasuries tightened 42 bps and s% - - - - - - - - - - - - ----- - - - - - - - - - ended the yearat123bps—a stark contmsttothe firsthalf of the 2% _ _ _ _ _ _ _ _ _ _ __ __ year, in which spreads had widened up to 214 bps in February. 1% - - - Corporates declined 2.8%for the quarter,but generated a strong 0% return(+6.11%)for the year. On a duration-adjusted basis,long credit outperformed intermediate credit by 330 bps. Despite a -1% 1 0 7 07 I . 1 09 9 ' 1 10. 1 11. 1 �12 1 13. 1 .14' 1 15. 1 16' 1 OB slow start, high yield corporates made a powerful comeback to spume:elppmberg end the year on a strong note;they delivered 407 bps of excess returns for the quarter. Mortgage-backed securities (MBS), plagued by rate volatility and elevated prepayment concerns, U.S.Treasury Yleld curves fell 1.97%for the quarter(but were up 1.67%for the year)and a December 31.2016 •September 30,2016 •Demmber a1.21H5 4% Fixed Income Index Quarterly Returns 3% _ _ _ _ _ _ _ ___ -2.99% - Bloombenl Bvd,.Aggregate 131.mbee Barclays Treasury -1.96% - Bloomberg B.rc ays Agenaes 4.03% - Bloomberg BvSa,CMBS 4.70% . Bloomberg Bamlars AB6 1% - ---- - - - - - - - - - - ----------- .1.9T% - Bloomberg B.rc ays MBs -2.97% - Bloomberg Bamleye credit 0% Bloomberg BaMaye Corp.High Yeld - 1.75% 0 1 1 1 1 1 1 5 10 15 20 25 30 -2.41% - Bloomberg Bard.,U.S.TIPS Marubty(Yeam) Source'.Bloomberg Barclays Source:Bloomberg 4 1 Callan Non-U.S. Fixed Income: Big League Yields Emerging Spreads Over Developed (By Region) Continued from pg. 1 e EmergingPmenms a Emerging EMEAempe,pesism bi a EmeryingAsia 8% Continuing 2016's anti-establishment geopolitical theme, Italians voted against reforms proposed by the govern- 6% ment, leading to Italian President Matteo Renzi's resigna- tion. In December, European Central Bank President Mario 4% _____. Draghi announced the extension of its stimulus program out to December 2017; however, the bond buying will be dialed 2% back to€60 billion per month,down from€80 billion.The ECB stressed that it is not "tapering" the stimulus program (i.e., D% . . . . . . . . 12 13 14 16 16 reducing purchases to zero) and it stands ready to ramp up source:slppmbem purchases again should it see fit.The quantitative easing pro- gram reached approximately E1.7 trillion in 2016,and should top E2.2 trillion by the end of 2017. 10-Year Global Government Bond Yields Yields on the 10-year German bund increased to 0.21%,224 bps a U.S.Treasun Is Gemniny a U.K. a Canada a Japan below that of the 10-year Treasury. The U.S./German 10-year 6% debt spread reached the widest We been since 1990.The sure s% declined 6.14%against the dollar. 3%_____ The Bank of England (BOE) took a wait-and-see approach 2%________ ahead of the uncertainty surrounding the Brexit process.The 1%__________ BOE elected to hold the benchmark rate at 0.25%and main- tain the same rate of bond purchasing, saying the sterling's o% recent appreciation against the Sure may curtail inflation.The -1%" " " ' " " 1' " " " or oe ae I 1n I 1 1 12 13 144' "1s" 19, U.K. 10-year yield jumped 49 bps to 1.24% and the sterling declined 4.9% against the dollar. Changes to Japan's mon- change In 16-Year Yields from 3016to 4016 etary policy were also put on hold as the unemployment rate u.s.Treasury es bps reached a healthy level and a weakened yen stood poised to Germany - 33 bps boost potential earnings growth. The Bank of Japan upheld U.K. - 49 bps its pledge to keep the yield of 10-year Japanese debt near Canada 73 bps 0%; its yield settled at 0.05%.Set off by the U.S. presidential Japan 14 bps election,the yen dropped 13%' Spur<e.eioombarg Emerging market debt weakened and underperformed devel- oped markets. The local currency-denominated JP Morgan indices. However,emerging market sovereign debt proved to GBI-EM Global Diversified Index fell 6,09%. The USD- be one ofthe strongest asset classes in 2016,gaining roughly denominated JPM EM Global Diversified Index fell 4.02%. 10%in both JP Morgan indices,benefiting from the tailwind of Turkey and Mexico were among the worst performers in both increased Commodity prices. Knowledge.Experience.Integrity. 1 5 Active Management Overview Market Overview Active Management vs Index Returns Market Overview The charts below illustrate the range of returns across managers in Callan's Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes.An appropriate index is also shown for each asset class for comparison purposes.As an example, the Orsl bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the Large Cap Equity manager database. Range of Separate Account Manager Returns by Asset Class One Quarter Ended December 31,2016 20% 5% 0% 0)� E 6% (as) 0% 8])r (5%) (to%) B]1 (Is%) Lame Cep Small Cap Non-US Domestic Non-US Real EquNy Equity Equity Fixed Income Fixed Income Estate s xs no No Russell 2000 MSCI WE Blmbg Aggr Bd Citi Non-05 GoA NCREIF Index 10ih Percentile 8.55 1489 1.23 241 (4.36) 3.28 250 PercenLle e5] 12.12 0.00 2.55 (124) 267 Median 3.79 890 ((1807)7 273 (((992))) L8] got,Percentile I,.351 0 2] (5.39) 2.98 (422) (0.05) Index • 3.82 8,83 (071) (2,98) noaq 1.]] Range of Separate Account Manager Returns by Asset Class One Year Ended December 31,2016 35% so% 25% c 20% 42) 15% f0% (35) am, (53) 5% 0% (86)� I601 (5%) (10%) Barge Cap Small Cap Non-Us Domestic NomUS Real E fty Equity Equity Fixed Income Fixed Income Estate se vs seem Russell 200D MSCI EAFE Blmbg Aggr Bd Cln Non US G.A NGREIF Index 10MPercantila 16.83 30.34 6.19 443 7.90 13.37 25th Percentile 14.48 2535 3.43 3.79 4.49 10.76 Median 10.17 19.33 1.47 3.13 2.28 B.M 75th Percentile 4.70 1103 0.44 2,80 0.52 5.52 90th Percentile 1.60 5]0 3.]] 2.59 (0.88) (0.02) '� Index • 11.96 21.31 1.00 2.65 1.80 8.01 Callan omtge County Sanitation District e Domestic Fixed Income Active Management Overview The 10-year U.S.Treasury yield rose 85 bps and returned-6.8%for the quarter in the sharpest quarterly selloff in more than two decades.TIPS outperformed nominal Treasuries, bolstered by rising expectations for inflation.The Bloomberg Barclays TIPS Index returned-2.4%for the quarter and the 10-year inflation breakeven rate widened to 1.95%as of December 30th. The Bloomberg Barclays U.S. Aggregate retumed -3.0% for the quarter with the corporate sector performing the best, in spite of robust issuance. While long maturity corporates lost 5%, they performed well in relative terms, outperforming like-duration Treasuries by 436 bps. Mortgages underperformed Treasuries as durations extended with the increase in interest rates. Extended maturity returned -7.60% for the quarter, but was up by 7.28%for the year. High Yield managers underpeformed the Bloomberg High Yield Index for the year. Separate Account Style Group Median Returns for Quarter Ended December 31,2016 Blmbg Aggregate: (2.98%) 6% Blmbg High Yisid: 1.75% Blmbg Long Gov/Creel (7.84%) 4% 2.13 0% E (0.33) (2%) __________-- ------------ IY (191) (2.]3) (2.33) (4%1 ______________________ (6%) ______________________ (e%) 1760) (to%) Defensive Interment Core Core Plus Extended Bank HI9h Ylekl Bond Maturity Loans Separate Account Style Group Median Returns for One Year Ended December 31,2016 Blmbg Aggregate: 2.65% 20% Blmbg High Yield: 17.13% Blmbg Long GovlCre¢ 6,67% 15% __________________________________16]6____ so C 0% N ].28 L31 2,33 1.56 0% Defensive Interment Care Core Plus Extended Bank High YleH Callan Band Maturity Loan. Cellar l Orercg County Sanitation Ohara g Asset Allocation Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund's investment managers as of December 31, 2016,with the distribution as of September 30,2016.The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers December 31,2016 September 30,2016 Market Value Weight Net New Inv. Inv.Return Market Value Weight Domestic Fixed Income Long Term Operating Fund' 316,787,228 73.70% (7.100.000) (2,316,151) 326.203.379 8,Ia1% liquid ODeratina Monies' 113.W.701 26.30% 55,000,000 55,409 57,989,291 15.09% Total Fund s429,831,909 100.0% $47,900,000 8(2,260,742) 5384,192,071 100.0% 'Chandler replaced PIMCO during the 4th quarter of 2014.Assets were transferred In+lnd as of 12I0112014. Callan OmM,e County sanitation Distoct „ Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods ended December 31, 2016. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended December 31,2016 Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^ (0.80%) 1.58% 1.47% 1.13% 2.08% Chandler (0.80%) 1.58% - - Blmbg Govl/Cred 1-5 Year Idx (1.05%) 1.56% 1.32% 1.29% 1.95% ML 1-5 GovUCorp (1.02%) 1.62% 1.39% 1.39% 2.03% Liquid Operating Monies^ 0.12% 0.47% 0.26% 0.21% 0.22% Chandler 0.12% 0.47% - - - Citigroup 3-Month Treasury Bill 0.08% 0,27% 0.11% 0.09% 0,09% Total Fund (0.70%) 1.15% 1.22% 0.97% 1.74% Target* (0,80%) 1,35% 1.14% 1,13% 1,64% Current Quarter Target=80.0%MIL 1-5 Govt/Corp and 20.0%3mo T-Bills. Callan were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan Onan,County Sandarinn Distnd 12 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods ended December 31, 2016. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended December 31,2016 Last Last Last 10 15 21.1/4 Years Years Years Domestic Fixed Income Long Term Operating Fund^ 3.25% 3.53% 4.47% Blmbg Govt/Cred 1-5 Year Idz 3.05% 3.29% 4.28% ML 1-5 GovUCorp 3.08% 3.29% 4.31% Liquid Operating Monies^ 0.97% 1,50% 2.69% Citigroup 3-Month Treasury Bill 0.73% 1.26% 2.37% Total Fund 2.81% 3.18% 4.20% Target` 2.61% 2.89% 3.92% Current Quarter Target=80.0%ML 1-5 Govt/Corp and 20.0%3mo T-Bills. Callan were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan Onar,County Sandarinn Distnd 19 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 2016 2015 2014 2013 2012 Domestic Fixed Income Long Term Operating Fund^ 1.58% 0.85% 1.98% (1.77%) 3.06% Chandler 1.58% 0.85% - - - Blmbg Govl/Cred 1-5 Year Idx 1.56% 0.97% 1.42% 0.28% 2.24% ML 1-5 Govt/Com 1.62% 1.05% 1.51% 0.32% 2.47% Liquid Operating Monies^ 0.47% 0.22% 0.09% 0.13% 0.17% Chandler 0.47% 0.22% - - Citiarouo 3-Month Treasury Bill 0.27% 0.03% 0.03% 0.05% 0.07% Total Fund 1.15% 0.80% 1.73% (1.49%) 2.70% Target* 1.35% 0.85% 1.21% 0.26% 1.99% *Current Quarter Target=80.0%MIL 1-5 Govt/Corp and 20.0%3mo T-Bills. Callan were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan Crerxre County Santlerinn DisNtl 14 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 2011 2010 2009 2008 2007 Domestic Fixed Income Long Term Operating Fund^ 4.59% 4.42% 5.52% 5.37% 7.21% Blmbg Govt/Cred 1-5 Year Idx 3.14% 4.08% 4.62% 5,12% 7,27% ML1-5 Govt/Corp 3.10% 4.17% 4.88% 4.65% 7.27% Liquid Operating Monies- 0,24% 0.25% 0.58% 2,40% 5,25% Ciligroup 3-Month Treasury Bill 0.08% 0.13% 0.16% 1.80% 4.74% Total Fund 3.70% 3.68% 4.65% 4.61% 6.84% Target` 2.49% 3.36% 3.93% 4.08% 6.76% Current Quarter Target=80.0%MIL 1-5 Govt/Corp and 20.0%3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan 0mr,,e County SantlerinnDist c ,s Asset Class Risk and Return The charts below show the seven year annualized risk and return for each asset class component of the Total Fund.The first graph contrasts these values with those of the appropriate index for each asset class.The second chart contrasts them with the risk and return of the median portfolio in each of the appropriate CAI comparative databases. In each case, the crosshairs on the chart represent the return and risk of the Total Fund. Seven Year Annualized Risk vs Return Asset Classes vs Benchmark Indices 2.5% 2.0% 77 1.5% N K 1 0% 0.5% 0.0% 0.0% 0.2% 0.4% 0.6% 0.8% 10% 1.2% 1.4% 1.6% 1.8% Standard Deviation Seven Year Annualized Risk vs Return Asset Classes vs Asset Class Median 2.0% 1.8% 1.6% 14% 1.2% 1.0% v 0.8% o6% 0.4% 0.2% 0.0% 0.0% 0.2% 0.4% 06% 0.8% 1.6% 1.2% 14% 1.6% 1.8% /'�,, 1,, Standard Deviation Callan Omrr County Sandation Oistnd 16 Manager Analysis Chandler-Long Term Operating Fund Period Ended December 31, 2016 Investment Philosophy Chandler Asset Management's Short Term Bond strategy is driven by quantitative models and focuses on active duration management,sector selection and term structure.The strategy seeks to achieve consistent above-benchmark returns with low volatility relative to the style's performance benchmark. The firm has a unique focus on high quality fixed income management, and places risk control as a higher objective than return. Assets were transferred in kind to Chandler on 12/l/2014.Previous performance reflects PIMCO. Quarterly Summary and Highlights Quarterly Asset Growth • Long Term Operating Fund's portfolio posted a (0.80)% Beginning Market Value $326,203,379 return for the quarter placing it in the 92 percentile of the CAI Net New Investment $-7,100,000 Defensive Fixed Income group for the quarter and in the 47 Investment Gains/(Losses) $-2,316,151 percentile for the last year. • Long Term Operating Fund's portfolio outperformed the ML Ending Market Value $316,787,228 1-5 Govt/Corp by 0.22%for the quarter and underperformed the ML 1-5 Govt/Corp for the year by 0,03%. Performance vs CAI Defensive Fixed Income(Gross) 6% 5% 4% ( 28)"Bf2 ) 3% 11 11 11 ( )27)®A(2 1% 05)®Bl4 3l®N(5 3l®B(4�3) 85 391®Ai3 ) a% � ( (1%) 94)• •A(9 (20) LaatW Laat Chandler Laal3 Yrs Last 5Ym Lost 7Yrs Laat10Yra Loat20.51(ra Yr Inception 10M POrcen111e 10.15) 258 1.93 il8 220 2.73 351 455 250,Percentile 025 2.12 1.52 140 1.69 2.19 3.15 434 Median 0.33 1.54 1,23 1.19 1.29 1.Tr 2.74 4.03 751h Percentile 0.44 1.12 1,01 0.99 1.00 1.37 241 3.87 eOM POrcentlle 058) 102 0.86 0,87 0,81 1.21 2.20 370 Long Term Operating Fund *A (0.80) 1.58 1,21 1.47 1.13 2.08 3.25 4.47 Blmbg Govgrmd 1-5 Year lux IN (1.05) 1.56 1,27 1.32 1.29 1.95 3.05 4.28 AL 1-5 GoWCorp ♦ (1.02) 152 1,33 1.39 1.39 2.03 3.08 4.31 CAI Defensive Fixed Income(Gross) Relative Return vs ML 1-5 Govt/Corp Annualized Seven Year Risk vs Return 2.0% 3.5% 30% __ __ __ ____ E 2.5% E , + no 2.0% 0.0% on __ __ __ ____ 1.5% (1.0%) __ __ __ _ __ ____ 1.0% (1.5%) 0.5% 2010 2011 2012 2013 2014 2015 2016 00 0.5 1.0 1.5 2.0 0 Long Term Operating Fun tl Standard Deviation L.A,�11,�M 3 L Orange County sanitation cornet 18 Long Term Operating Fund Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a dsk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropriate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager's ranking relative to their style using various dsk-adjusted return measures and returns for rising/declining periods. Assets were transferred in kind to Chandler on 12M/2014. Previous performance reflects PIMCO. Performance vs CAI Defensive Fixed Income(Gross) 20% 1s% ( 5y ( ( 1 1 ) O�IB 11]�B(1N ®Bl �9 Bl OISA1 7 (10%) 2015 2015 2014 2013 2012 2011 2010 2009 2008 2007 101M1 Percentile 2.58 1.1s 1.50 1.20 446 2.]2 4.]1 13]4 6.63 ].03 25th Pemenule 2.12 1.03 1.2] 0.80 2.60 2.28 4.02 860 5.64 6.83 Metllan 1.54 0.90 1.11 065 1.01 18] Me 591 3.00 645 75th PemetHe L12 0.76 08] 041 146 165 2]2 253 0.1]) 5.66 Dorn Percentile 1.02 0.64 0.70 031 0.92 1.44 2.41 1.82 34]) 3.75 Long Term Opemung Fund *A 1,58 0.85 198 (117) 3.06 4.59 442 552 5.37 7.21 elm GoWCretl -5 Year irk eB 1.56 0.97 1.42 028 2.24 3.14 4.08 4.62 5.12 ].2] ML1-5 GOWCOT ♦ 1.62 1.05 1.51 032 2.47 3.10 4.17 4.88 4,65 ].2] Cumulative and Quarterly Relative Return vs MIL 1-5 GoWCorp 6% 4% 2% of 0% N (6%) (6%) 200] 2000 2009 2010 2011 2012 2013 M14 2015 2016 10 Long Tema Operating Fund M Blmbg GOWCred 1-5 Year Idx CAI Defensive Fixed Inc Risk Adjusted Return Measures vs ML 1-5 Govt/Corp Returns for Domestic Fixed-Income Rankings Against CAI Defensive Fixed Income(Gross) Rising/Declining Periods Seven Years Ended December 31,2016 Seven Years Ended December 31,2016 3.D 2.5 ® ( 1 to •A(99 (29) B�3 0 2) 1(0.D A95 lO p�5 201612 B(]3 10 gg 20 Alpha arpe Excess 201812 R Ratio Rafi.ie iMM1 Percentile 2.73 10M Percentile 1.19 2.1a 0.]1 251M1 Percentile 2.19 251h Percentile 0.82 188 0.19 Median 1.A Medan 0.43 1]1 (039) 75tb Pecentile 1.37 ]SN Percentile 0.23 148 (091) 9MM1 Percentile 1.21 9016 Percentile a 02 1.28 1.12 Long Term Long Term Operating Fund eA 2.08 Operating Fund •A (0.17) 1.07 006 Blm WWCretl Blmbg GOWCretl SYaer ldx ■B 1.95 1-5 Year Idx ■B (0.07) 1.27 (o90) MIL 1-5 GovVCom ♦ 2.03 Callan Orange County sanitation District 19 Long Term Operating Fund Bond Characteristics Analysis Summary Portfolio Characteristics This graph compares the managers portfolio characteristics with the range of characteristics for the portfolios which make up the manager's style group. This analysis illustrates whether the manager's Current holdings are Consistent with other managers employing the same style. Fixed Income Portfolio Characteristics Rankings Against CAI Defensive Fixed Income as of December 31,2016 35 3.0 2. (4)J(B) �(22) 20 (35) 1 5 (5 )�(65) •(30) 1.0 0.5 0.0 (0.5) A-90 Stand. Coupon CA Duration "to Yield Rate convexly 101n Pementile 2.36 2.89 2.40 2.68 0.13 250n PercenNe 2.02 2.29 2.02 231 006 Median 1.85 2.00 1.76 1.96 0.04 75tb Percentile i75 1.87 1.51 180 002 901n Pementile 1.59 1.66 1.33 1.32 (0.01) Long Term Operating Fund • 2.48 2.56 1.57 1.65 - elmbgGov/Cr 1-5 Yr ♦ 2.76 2.88 1.73 2.22 009 Sector Allocation and Quality Ratings The first graph compares the managers sector allocation with the average allocation across all the members of the manager's style.The second graph compares the manager's weighted average quality rating with the range of quality ratings for the style. Sector Allocation Quality Ratings December 31,2016 vs CAI Defensive Fixed Income rsy Us Tr, zs.r AAA RMBS Cora(Inpl 144A) aher (16)♦ AA •(° ) ASS .on Ai Tax-Exempt US Muni A CMOs A- Weighted Average Quality Rating CMBS loth Percentile AAA 25m 25U Percentile AA Gov Related! Median AA Percentile AA- 90M 9oUPercentile A o% 10% 20% 30% 60% 50% 60% ]o% 80% Long Term Operating Fund 0CAI Defensive Fixed Inwme Long Term Cavern,Fund 0 AA Callan Gw/Cr 1-5 Yr Blmbg Gov/Cr 1-5 Yr ♦ M. Callan orange County Sandation District 20 Long Term Operating Fund Portfolio Characteristics Summary As of December 31, 2016 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sectors. The second chart Compares the duration distribution.The last chart compares the distribution across quality ratings. Sector Allocation US Troy US Trsy 30% 59% CMBS ABS % ]% Ceoh 2% RMBS 24% Other 12% 4 --v Related Tax-Exempt US Muni 13% 2% CMOs Corp lino 144A) Corp(axl 144A) 1% 28% 22% Long Term Operating Fund Blmbg GoWCredit 1.5 Year Weighted Average: Duration Duration Distribution ■ Long Term Operating Fund: 2.46 70% ■ Blmbg GoWC%dit 1-5 Year: 2.76 0 60% ---_______56.6_ ------ ------ -- ---- __ 0 so% _________ ______ ______ __ __ d 40% -- 41.1 33.6 c i 1g% ____ __ __ 0% 0.3 3.4 <1 1-3 35 5-0 7-10 NO Years Duration WelgNted Average: oua111y Quality Distribution Long Term Operating Fund M 100% ■ Blmbg GoWCmdit l-5 Year: AAr p80% ______ ___ ___ __ ___ ___ ___ __ ___ ___ 68.4 65.0 R 60% JL 3.44.8___ ___ __ ___ ___ ______ 40%or20% 10��i.8 —127 0% APA PA A BBB Be B CCC CC C 0 NIR Quality Rating Callan Orange County Sanitation Dsond 21 Chandler-Liquid Operating Money Period Ended December 31, 2016 Investment Philosophy Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Quarterly Summary and Highlights Quarterly Asset Growth • Liquid Operating Money Net's portfolio posted a 0,08% Beginning Market Value $57.989,291 return for the quarter placing it in the 25 percentile of the CAI Net New Investment $55,000,000 Money Market Funds group for the quarter and in the 22 percentile for the last year. Investment Gains/(Losses) $55,409 • Liquid Operating Money Net's portfolio outperformed the Ending Market Value $113,044,701 Citigroup 3-Month Treasury Bill by 0.00%for the quarter and outperformed the Citigroup 3-Month Treasury Bill for the year by 0.05%. Performance vs CAI Money Market Funds(Net) 2. �(15 2.0% B) 0% 1.5% 1.0% 49)®(26 0.5% 6) Iz (20 0.0% 26) Its 26) za) (z4 z01 2s l]I zt Last Otr Last Chandler Last 3 Yrs Last 5Yrs Last 7Ym LastlOYrs Last20.5Yrs Yr Incewlon I Percentile 0.07 071 0.34 0,24 0,18 0.15 096 262 25M Percentile 0.08 028 0.15 0.11 0.0] 005 0.82 2.44 Msdian 0.04 o.to 0.06 0.0a 0.03 0.02 0.72 2.29 75M Peroentlle 000 001 0.01 0,01 0,01 001 063 2.17 90T Perwntile 000 000 0.00 0,00 0,00 OW 055 201 Liquid Operating Money Net • 008 032 0.19 0,11 0.06 OW 082 204 Ciligmup 3-Month Treasury Bill ♦ 0.08 0.27 0.15 0.11 oN 0.09 0.73 2.37 Relative Returns vs CAI Money Market Funds(Net) Citigroup 3-Month Treasury Bill Annualized Seven Year Risk vs Return 0.10% 20% 008% __ E f y 0.02% __ > 'v m 0.00% tt 0.5% a 0.0% (0.06%) (0.5%) 2010 2011 2012 2013 2014 2015 2016 (02) 0.0 02 04 06 08 1.0 1.2 1.4 Liquid Operating Money Net Standard Deviation Callan Oran,e County Sanitation DoUkt Liquid Operating Money Net Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a risk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropriate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager's ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12M/2014. Previous performance reflects PIMCO. Performance vs CAI Money Market Funds(Net) 6% 5% 48®16 4% 3% 2% 61®3] 0% 22 14 (1%) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 10lh Percentile 0.71 011 00] Us 0.18 008 OA5 052 2.]] 5.20 25th Penxxale 0.28 0.03 002 0c2 0.03 002 005 028 2.46 4.99 Median 0.10 0.01 0.01 0.01 0.01 0.01 0.01 0.12 2.03 4.71 75th Pecendle 0.01 0.00 0.01 0.00 0.01 0.00 0.01 0.03 146 4.34 Ruth Pertende 0.00 cW 000 0.00 0.00 000 000 001 1.08 3.89 Liquid Operating Money Net 81 0.32 0.07 (0.06) (002) 0.02 0.09 0.10 0.43 2.25 5.09 Citigrcup 3-Month Treasury6111 ♦ 0.27 0.03 0.03 005 0.07 ON 0.13 0.16 1.80 4.74 Cumulative and Quarterly Relative Return vs Citigroup 3-Month Treasury Bill 'u o.s% w - 0.0%- d o%) 2007 2006 2009 2010 2011 2012 2013 2014 2015 2016 10 Liquid Operating Money Net 0CAI Money Market Funda Risk Adjusted Return Measures vs Citigroup 3-Month Treasury BIII Rankings Against CAI Money Market Funds(Net) Seven Years Ended December 31,2016 2 0 (t) �(19) •120) 2) (3) (4) Alpha SM1 rpe Excess Return Rat. Ratio 10h Percentile 0.08 043 IA3 25th Percentile (0.03) 11.41) 1.1] Median (0.05) (4.59) 1.98 75th Percentile low) 13t T1) 2 22 901h Percentile (007) /'� Liquid Operating Money Net • (ON). ) (0.69) (0.51) Collar l Oreille County Sendation District 21 Callan Research/Education CALLAN Callan INSTITUTE 4th Quarter 2016 Education Research and Educational Programs The Callan Institute provides research that updates clients on the latest industry trends while helping them learn through carefully struc- tured educational programs.Visit www.callan.convresearch to see all of our publications,or for more information contact Anna West at 415.974.5060/institute@wllan.com. New Research from Callan's Experts 2017 Defined Contribution Trends Survey I Callan's 10th ESG and Investors: What, Why, and Who I In this video, Annual DC Trends Survey highlights plan sponsors' key Mark Wood, CFA, of Callan's Global Manager Research themes from 2016 and expectations for 2017. group explains ESG investing principles and how asset man- ESG Factors: U.S. Investor Usage Crystalizes I This agers can implement them. charticle looks at environmental, social, and Momentum: The Trend Is Your Friend I Callan's director governance (ESG) factors from the perspectives of Hedge Fund Research, Jim McKee, explores the advan- of U.S. asset owners and global investment tages of momentum-based investing strategies, which profit managers, revealing the growing incorporation of from market trends in whichever direction. He discusses the ESG factors in investment decision making. rationale behind them, how they are defined and harnessed Fixedfor different diversification needs, and whether they are ap- Octob r 2016 AMional orkshonomic LightnessR alternd I ativean's propriale for fund sponsors. October 2016 Regional Workshop addressed alternative fixed income strategies to deal with the shifting market and Periodicals economic environment investors face, as the extended pe- Private Markets Trends, Fall 2016 1 Gary Robertson, man- nod of low yields in the wake of the Global Financial Crisis ager of Callan's Private Equity Research group, discusses appears to be ending. the steady performance of private markets in 2016,with year- ESG Interest and Implementation Survey I Callan's fourth to-date figures tracking very close to 2015's levels. annual survey on the status of ESG factor integration in the DC Observer,3rd Quarter 2016 1 This quarter's cover story U.S. institutional market reflects responses from 84 funds is"Merging DC Plans: Making the Transition Smooth" representing approximately$843 billion in assets. Hedge Fund Monitor, 3rd Quarter 2016 1 This quarter's 2016 Cost Doting Business Survey In this survey, cover story is"Musketeers or Mercenaries...,"on the growing Callan compares es the costs of administering and operating appeal of the multi-strategy hedge fund category. funds and trusts across all types of tax-exempt and tax- Capital Market Review, 3rd Quarter 2016 1 A quarterly - qualified organizations in the macroeconomic newsletter providing thoughtful insights U.S. We identify practices and on the economy and recent performance in equity, fixed in- trends to help institutional in- come,alternatives, international,real estate,and other capi- vestors manage expenses. tal markets. The Center for Investment Training Events Educational Sessions Miss out on a Callan conference or workshop? Event summa- The Center for Investment Training, better known as the "Callan des and speakers presentations are available on our websile: College;provides a foundation of knowledge for industry profes- https:/tw ..callan.com/education/Cil/ sionals who are involved in the investment decision-making pro. Mark your calendars for our National Conference, January 23— cess.It was founded in 1994 to provide clients and non-clients alike 25,2017,at the Palace Hotel in San Francisco. with basic-to intermediate-level instruction.Our next sessions are: Introduction to Investments For more information about events, please contact Barb San Francisco,April 18-19,2017 Gerraty:415.274.3093/gerraty@callan.com San Francisco,July 25-26,, 2017 Chicago, October 24-25,2017 This program familiarizes fund sponsor trustees, staff, and asset management advisors with basic investment theory,terminology, and practices. It lasts one-and-a-half days and is designed for in- dividuals who have less than two years of experience with asset. management oversight and/or support responsibilities.Tuition for the Introductory "Callan College" session is $2,350 per person. Tuition includes instruction, all materials, breakfast and lunch on each day,and dinner on the first evening with the instructors. Customized Sessions The 'Callan College" is equipped to customize a curriculum to meet the training and educational needs of a specific organization. These tailored sessions range from basic to advanced and can take place anywhere—even at your office. Learn more at https://www.callan.com/education/college/or contact Kathleen Cu nnie:415.274.3029/can nie@callan.com Education: By the Numbers 500 Attendees(on average)of the 50+ Unique pieces of research the Institutes annual National Conference Institute generates each year 3 500 Total attendees of the'Callan 1980 Year the Callan Institute College since 1994 was founded "We think the best way to learn something is to teach it. Entrusting client education to our consultants and specialists ensures that they have a total command of their subject matter. This is one reason why education and research have been cornerstones of our firm for more than 40 years." Ron Peyton,Chairman and CEO Callan 9 @CallanAssoc ID Callan Associates Definitions Risk/Reward Statistics The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill). Alpha measures a portfolio's return in excess of the market return adjusted for disk. It is a measure of the manager's contribution to performance with reference to security selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk which was taken for that level of market exposure. Beta measures the sensitivity of rates of portfolio returns to movements in the market index. A portfolio's beta measures the expected change in return per 1% change in the return on the market. If a beta of a portfolio is 1.5,a 1 percent increase in the return on the market will result,on average, in a 1.5 percent increase in the return on the portfolio. The converse would also be true. Downside Risk stems from the desire to differentiate between "good risk" (upside volatility) and "bad risk" (downside volatility). Whereas standard deviation punishes both upside and downside volatility, downside risk measures only the standard deviation of returns below the target. Returns above the target are assigned a deviation of zero. Both the frequency and magnitude of underperformance affect the amount of downside risk. Excess Return Ratio is a measure of risk adjusted relative return. This ratio captures the amount of active management performance (value added relative to an index) per unit of active management risk (tracking error against the index.) It is calculated by dividing the managers annualized cumulative excess return relative to the index by the standard deviation of the individual quarterly excess returns. The Excess Return Ratio can be interpreted as the manager's active riskireward tradeoff for diverging from the index when the index is mandated to be the"nskless"market position. Information Ratio measures the manager's market risk-adjusted excess return per unit of residual risk relative to a benchmark. It is computed by dividing alpha by the residual risk over a given time period. Assuming all other factors being equal, managers with lower residual risk achieve higher values in the information ratio. Managers with higher information ratios will add value relative to the benchmark more reliably and consistently. R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of.75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio's returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio's return and the market. Relative Standard Deviation is a simple measure of a managers risk(volatility)relative to a benchmark. It is calculated by dividing the manager's standard deviation of returns by the benchmark's standard deviation of returns. A relative standard deviation of 1.20,for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark. Residual Portfolio Risk is the unsystematic risk of a fund,the portion of the total risk unique to the fund(manager)itself and not related to the overall market. This reflects the"bets"which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors. maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio. Callan 26 Risk/Reward Statistics Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-free" return (usually 3 Month Treasury Bill)from the portfolio return and dividing the resulting"excess return" by the portfolio's risk level (standard deviation).The result is a measure of return gained per unit of risk taken. Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1)the statistical significance of the denominator,and (2) its reliance on the persistence of skewness in return distributions. Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns,the higher the standard deviation of returns,and the higher the portfolio risk. If returns are normally distributed (ie. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean. Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market(non-diversifiable or systematic)risk and residual(diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual disk of the portfolio. Tracking Error is a statistical measure of a portfolio's risk relative to an index. It reflects the standard deviation of a portfolio's individual quarterly or monthly returns from the index's returns. Typically,the lower the Tracking Error, the more "Index-like"the portfolio. Traynor Ratio represents the portfolio's average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed. Note:Alpha,Total Risk,and Residual Risk are annualized. Callan 29 Fixed Income Portfolio Characteristics All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector- Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio's weights with those of the index to identity any significant sector bets. Average Coupon-The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody's Rating for Total Portfolio- A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody's Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality-lowest credit risk)to C (lowest investment quality- highest credit risk). Average Option Adjusted(Effective)Convexity-Convexity is a measure of the portfolio's exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally,securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security's duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted(Effective)Duration- Duration is one measure of the portfolio's exposure to interest rate risk. Generally, the higher a portfolio's duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price-The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity- This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Years to Stated Maturity- The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns,or prepayments. Current Yield-The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. Callan 30 Fixed Income Portfolio Characteristics Duration Dispersion- Duration dispersion is the market-value weighted standard deviation of the portfolio's individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ('barbellness"), and the smaller the dispersion, the more concentrated the holdings' durations around the overall portfolio's ('bulletness"). The purpose of this statistic is to gauge the 'bulletness' or 'barbellness'of a portfolio relative to its total duration and to that of its benchmark index. Effective Yield-The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns,expected mortgage principal prepayments,and the exercise of any"in-the-money"imbedded put or call options. Weighted Average Life-The weighted average fife of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. Callan 31 Disclosures Callan ll Quarterly List as of December 31, 2016 List of Callan's Investment Manager Clients Confidential—For Callan Client Use Only Callan takes its fiduciary and disclosure responsibilities to clients very seriously.We recognize that there are numerous potential conflicts of interest encountered in the investment consulting industry and that it is our responsibility to manage those conflicts effectively and in the best interest of our clients. At Callan,we employ a robust process to Identify,manage,mocker and disclose potential conflicts on an on-going basis. The list below,is an important component of our conflicts management and disclosure process. It idenfifies those investment managers that gay Callan fees for educational,consulting,software,database or reporrng products and services. We update the list quarterly because we believe that our fund sponsor clients should know the investment managers that do business with Callan,particularly those investment manager clients that the fund sponsor clients may be using or considering using.Please refer to Callan's ADV Pad 2A for a more detailed description of the services and products that Callan makes available to investment manager clients through our Institutional Consulting Group,Independent Adviser Group and Fund Sponsor Consulting Group. Due to the complex corporate and organizational ownership structures of many investment management firms,parent and affiliate firm relationships are not indicated on our list. Fund sponsor clients may request a copy of the mast currently available list at any time.Fund sponsor clients may also request specific information regarding the fees paid W Callan by particular fund manager clients. Per company policy,Information requests regarding fees are handled exclusively by Callan's Compliance Department. Manager Name Manager Name 1607 Capital Partners,LLC Carl Investors,LLC Aberdeen Asset Management PLC Capital Group Acadian Asset Management LLC CastleArk Management,LLC AEGON USA Investment Management Causeway Capital Management Affiliated Managers Group,Inc. Churning Capital Management,LLC AllianceBernstem Chartwell Investment Partners Allianz Global Investors ClearBridge Investments,LLC Allianz Ufa Insurance Company of North America Cohen&Steers Capital Management,Inc. American Century Investment Management Columbia Management Investment Advisers,LLC Actual Smith Breeden LLC Columbia Threadneedle Investments Analytic Investors Columbus Circle Investors Angelo,Gordon&Co. Corbin Capital Partners,L.P. Apollo Global Management Correction Capital Management AOR Capital Management Cramer Rosenthal McGlynn,LLC Ares Management LLC Credit Suisse Asset Management Adel Investments,LLC Crestline Investors,Inc. Aristotle Capital Management,LLC D.E.Shaw Investment Management,L.L.C. Artisan Holdings Delaware Investments Atlanta Capital Management Co.,LLC DePrince,Race&Zollo,Inc. Avian Investors Americas Deutsche Asset Management AM Investment Managers Diamond Hill Capital Management,Inc. Babson Capital Management Duff&Phelps Investment Mgmt.Co. Baillie Gifford Overseas Limited Eagle Asset Management,Inc. Baird Advisers EARNEST Partners,LLC Bank of America Eaton Vance Management Baring Asset Management Epoch Investment Partners,Inc. Barings LLC Fayez Sol&Company Baron Capital Management Inc. Federated Investors Barrow,Hanley,Mewhlnney&Strauss,LLC Fidelity Institutional Asset Management BlackRock Fism Capital Global Asset Management HMO Global Asset Management First Eagle Investment Management LLC BNP Paribas Investment Partners First Hawaiian Bank Wealth Management Division BNY Mellon Asset Management First Quadrant L.P. Boston Partners Fisher Investments Brandes Investment Partners,L.P. Fort Washington Investment Advisors,Inc. Brandywine Global Investment Management.LLC Franklin Templeton Institutional Brivar Brothers Harman&Company Fred Alger Management,Inc. Callan I Knowledge.Experience.Integrity. Page 1 of 2 Manager Name Manager Name Fuller&Thaler Asset Management,Inc. Opus Capital Management Inc. GAM(USA)Inc. Pacific Investment Management Company GE Asset Management Parametric Portfolio Associates GMO Peregrine Capital Management,Inc. Goldman Sachs Asset Management PGIM Guggenheim Investments PGIM Fixed Income GW&K Investment Management Richer Asset Management Ltd. Harbor Capital Group Trust PineBddge Investments Hartford Funds Pinnacle Asset Management L.P. Harrold Investment Management Co. Pioneer Investments Henderson Global Investors PNC Capital Advisors,LLC Holland Capital Management Principal Global Investors Hotchkis&Wiley Capital Management,LLC Private Advisors,LLC HSBC Global Asset Management Putnam Investments,LLC Income Research a Management Inc. OMA(Quantitative Management Associates) Insight Investment Management Limited RBC Global Asset Management Institutional Capital LLC Regions Financial Corporation INTECH Investment Management,LLC RidgeWorh Captal Management,Inc. Invesco Rockefeller&Co.,Inc. Investec Asset Management Rothschild Asset Management,Inc. Ivy Investments Russell Investments Janus Capital Mattagami LLC Santander Global Facilities Jennison Associates LLC Schroder Investment Management North America Inc. Jensen Investment Management Seoul Investments J.P.Morgan Asset Management SEI Investments KeyCom Smith,Graham&Co.Investment Advisors,- Lazard Asset Management Smith Group Asset Management Legal&General Investment Management America Standard Life Investments Limited Lincoln National Corporation Standish LMCG Investments,LLC State Street Global Advisors Logan Capital Management Stone Harbor Investment Partners,L.P. Logan Circle Partners,L.P. Systematic Financial Management- Longview Partners T.Rowe Price Associates,Inc. Loomis,Bayles&Company,L.P. Tapir,Carl&Habacht Lord Abbet&Company The Boston Company Asset Management,LLC Los Angeles Capital Management The Davis Companies LSV Asset Management The Hartford MacKay Shields LLC The London Comparry, - Man Investments Inc. The TOW Group,Inc. Manning&Napier Advisors,LLC Thompson,Siegel&Walmsley LLC Manulife Asset Management Timberland Investment Resources,LLC Martin Coma Inc. Tri-Star Trust Bank Mellon Capital Management UBS Asset Management MFS Investment Management Van Eck Global MidFirst Bank Versus Capital Group Mondrian Investment Partners Limited Victory Capital Management Inc. Montag&Caldwell,LLC Vontobel Asset Management,Inc. Morgan Stanley Investment Management Vol Financial Mountain Lake Investment Management LLC Voya Investment Management(No ING) MUFG Union Bank,N.A. Waddell&Reed Asset Management Group Neuberger Berman WCM Investment Management Newton Investment Management pike Newton Capital Management) WEDGE Capital Management Nicholas Investment Partners Wellington Management Company,LLP Nikko Asset Management Co.,Ltd, Wells Capital Management Norther Trust Asset Management Western Asset Management Company Novell Investments,Inc. William Blair&Company OFI Global Asset Management Windham Capital Management,LLC Old Mutual Asset Management Callan I Knowledge.Experience.Integrity. Page 2 of 2 December 31,2016 Investment Report Orange County Sanitation District Period Ending December 31, 2016 Diego, 0 All Table of Contents SECTION 1 Economic Update SECTION 2 Account Profile SECTION 3 Consolidated Information SECTION 4 Portfolio Holdings SECTION 1 Economic Update o. 0111 Economic Update ■ The Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted that economic activity has expanded at a moderate pace and labor market trends have improved, but inflation remains below target. The Fed's revised"dot plot" was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee's GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC's median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of three more 25 basis point rate hikes next year.The Fed's longer-run median fed funds target rate was revised up to 3.0% from 2.9%. Fed Chair Yellen downplayed the forecast changes during her press conference, and continued to emphasize that future increases in the fed funds rate are expected to be gradual. She added that it is too early to anticipate how potential changes in fiscal policy will impact the economy and the Fed's outlook. ■ Domestic economic data remains indicative of slow growth. The U.S. labor market continues to improve, consumer confidence remains strong, and housing trends remain mostly favorable. The manufacturing sector has also improved. Third quarter 2016 GDP grew 3.5%, following growth of 1.4% in the second quarter and 0.8% in the first quarter. Market participants estimate GDP grew 2.2%in the fourth quarter. ■ In December, the yield shifted upward as the 2-year Treasury yield increased nearly 8 basis points and the 10-year Treasury yield increased about 6 basis points. The move up in rates over the past two months has largely been driven by heightened expectations for fiscal stimulus, and a potential increase in inflation, in light of President-elect Tramp's victory and the Republican Party congressional sweep in the US. Global factors (including steeper yield curves in Japan and Germany, and an expectation for ongoing stimulus from the European Central Bank) also continue to influence US Treasury yields. s CiIII Employment Nonfarm Payroll (000's) Unemployment Rate 350 15.0% 14.0% .1-1 Rab(U6) 300 13.0% �Unempbyment Rate(W) 250 12.0% 11.0% 200 u 10.0% c s 150 9.0% UV 8.0% i f 7.0% 50 6.0% 5.0% 0 4.0% 'r'a; 44, ,gam e 44 �o, , �>v >S >S �>S �>S >6 >6 �>6 >6 G>v �>S >S �>S >S 4>a >S >S %>S >S Sturm:USOep drt nfof Labw Sw :USCepaNnent MLaG r Nonfarm payrolls were lower than expected in December, up 156,000 versus the consensus forecast of 175,000. However, October and November payrolls were revised up by a total of 19,000. On a trailing 3-month and 6-month basis, payrolls increased by an average of 165,000 and 188,500 per month, respectively. The unemployment rate inched back up to 4.7%from 4.6%, but the participation rate also increased to 62.7% from 62.6%. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, declined to 9.2% in December from 9.3% in November. Wages were up a solid 0.4% in December, versus expectations for a 0.3%increase. On a year-over-year basis, wages were up 2.9% in December(the highest year-over-year increase since June 2009), vs.2.5% in November. llll� GRI Inflation Consumer Price Index (CPI) Personal Consumption Expenditures 5.0% (PCE) CPI YOY%CM1enge 3.0% 2.5% �Cwe CPI YOY%LM1ange 1 25% PCE Poce Celalor YOY%Cl,enge PCE Cone Oeftt r YOY%CM1enge ym 2.0% 2.0% c O1 s 1.5% Zee- 1.5% U 1.0% 1.0% 0.5% } 0.5% 0.0% 0.0% 05% S -a5% +1 A �'a �Oa; A 41.1 7V ,�s 7S 7S 7s 76 �a 7Y IS IS 1S >s 's >s 1s >s source:US DepaN nt ollabw source:US Deparbnent of LaO r The Consumer Price Index(CPI)was up 2.1%year-over-year in December, versus up 1.7%year-over-year in November, largely driven by an increase in energy prices. Core CPI(CPI less food and energy) was up 2.2%year-over-year in December, versus up 2.1%year- over-year in November. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in November, unchanged from October. Core PCE (excluding food and energy) was up 1.6%year-over-year in November, after being up 1.8% year-over-year in October. Although Core CPI is trending above 2.0%, the Fed's primary inflation gauge is PCE which remains below the Fed's 2.0% target. IIII© CIR I Consumer Retail Sales YOY % Change Consumer Confidence 4.5% 120 4.0% as 115 3.5% 110 m 3.0% 05 c u 2.5% u 700 2.0% u 95 O v 1.5% 90 1.0% 85 0.5% 80 0.0% Q Q 75 4 S S S S 6 6 @ 6 4 S S S S S S B B 6 6 6 )B source:Us CePert I of cor . souce:F a'W Reserve On a year-over-year basis, total retail sales were up 4.1% in December compared with a 3.9% increase in November. On a month-over month basis, retail sales were up 0.6% in December, driven largely by vehicle sales. Excluding autos and gas, retail sales were flat in the month. Meanwhile, consumer confidence increased to 113.7 in December versus 109.4 in November. s GRI Economic Activity Leading Economic Indicators (LEI) Chicago Fed National Activity Index 0.8% 0.40 (CFNAI) 0.6% 0.30 0.20 w 0.4% ° 0.10 w 0.2% < 0.00 a- n -0.10 0.0% -a20 -Q2% a30 0.40 -0.50 T T Nok @5, ydh '94.A Nok � 2h 1�9. 'I'ok 95, y°h S ryOk @'i �h � ryOk �4 �S �S �S �S �S �S l@ �Ok�6 �4 �S �S �S �S �S �S �S 7S Source:the COM Mre Bo M Source Fe eml Reserve Bank&Chicago The Index of Leading Economic Indicators (LEI) was flat in November, below expectations, pointing to flat economic growth ahead. Meanwhile, the Chicago Fed National Activity Index (CFNAI) improved in November on a 3-month moving average basis to-0.14 from - 0.20 in October. Still,the CFNAI suggests that the pace of economic growth is below-trend. s CIRI Housing Housing Starts S&P/CaseShiller20 City Composite Home 1600 _ Price Index •Multi Family HO"N Sfarls 1400 �singleF 11-u.u6ng sere 6.5% `0 1200 6.0% g1000 5.5% 0 F 800 ti 5.0% T u 600 m O c 400 4,01, U C 200 3.5% f 064 4l �S ✓44�5 "47S O�;7S 41k70 Se.({1s IDNG7e 41 14 11 11117 3. CIIII 11 "1 11 '11/)6. CIIII Souse:US Census Bureau Soumm S&P Total housing rose 11.3% in December, following a decline of 16.5% in November. The overall increase was driven by multi-family starts which rose 57.3% in December. Meanwhile, single-family starts fell 4.0%. Housing starts tend to be volatile on a month-to-month basis. According to the Case-Shiller 20-City home price index, home prices were up 5.1% year-over-year in October, compared to 5.0%in September. C1111 Manufacturing Institute of Supply Management Purchasing Capacity Utilization Manager Index 80.0% so pantling 58 ]8.0% 56 78.0% 54 X 0% sz P so 6.0% 48 75.0% c.M..pwe 46 74.0% O�7v Ma 76 ✓4�76 19470 0�76 76 6 7s 76 7y 7S ✓4�76 76 O�7s 41 .1, 76 76 76 %76 Sou Ansfdufe Supply Management Seurt :Fe ml Reserve The Institute for Supply Management(ISM) manufacturing index increased to 54.7 in December from 53.2 in November, suggesting that manufacturing activity continues to improve. Notably, a reading above 50.0 suggests the manufacturing sector is expanding. Meanwhile, capacity utilization, which is production divided by capacity, increased to 75.5% in December from 74.9% in November. The capacity utilization rate remains below the long-run average of 50.0% (1972-2015), suggesting there is still excess capacity in the industrial sector. �jjjj Gross Domestic Product (GDP) Gross Domestic Product(GDP) 6.0% Personal consumption Expenditures 1.5% 1.1% 2.9% 2.0% 5.0% Gross Private Domestic Investment -0.4% -0.6% -1.3% 0.5% 4.0% 3.0% Net Exports and Imparts -0.5% 0.0% 0.2% 0.9% .0% .0% Federal Government Expenditures 0.3% -0.1% am0.2% 0.0% 11 State and Local(Consumption and Gross .t.0% r_GOP 000%OM1a,ge Investment) -0.1% 04% -0.3% D.D% -GDP YOY%change Total 0.9% 0.8% 1.4% 3.5% », ya, % yu, % "I. % 40 1) )) 1 2 "0 0 76 Source: US Dapart of of Commerce Soule: USOeevtnantof Conx . Third quarter real GDP was revised up to an annualized rate of 3.5% from the second estimate of 3.2%. The upward revision was driven by nonresidential investment, PCE, and state and local spending. This compares to 1.4% growth in the second quarter. Overall, Personal Consumption Expenditures continued to be the biggest contributor of economic growth in the third quarter, although it was down from the second quarter. Markel participants estimate GDP grew 2.2%in the fourth quarter. iii� GIII Bond Yields US Treasury Note Yields US Treasury Yield Curve 3.0% 3.5% 2-Year Dec-i6 — 'Year 3.0% —6eD-16 2.5% iureer Dec-15 2.5% X X 2.0% Y 1.5% 1.0% 0.5% 0.5% 0.0% 0.0% O0q'v 441,'S �x'S 's O.'s ''s `L� ° s�o 2% S% 70 `� source:B mbe source:Bloomberg Over the past three months, the yield curve steepened with the 2-year Treasury yield up nearly 43 basis points and the 10-year Treasury yield up 85 basis points. On a year-over-year basis the 2-year Treasury yield increased 14 basis points and 10-year Treasury yield increased about 18 basis points. Over the past year, financial market volatility has been elevated due to weak global economic growth,volatile commodity prices, political uncertainty, and divergent global central bank monetary policy. IIIIIIIII� . S= Account Profile 011 Objectives Investment Objectives The investment objectives of the Orange County Sanitation District are first, to provide safety of principal to ensure the preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the safety and liquidity objectives. Chandler Asset Management Performance Objective Liquid Operating Monies—will be compared to the 3-month T-Bill rate and operate with a maximum maturity of one year. Long-Term Operating Monies—will be compared to the Bank of America Merrill Lynch 1-5 Year Corporate Government Rated AAA—A Index. Strategy In order to achieve these objectives, the portfolio invests in high quality fixed income securities consistent with the investment policy and California Government Code. Cjjjj Compliance C/" Orange County Sanitation District Long Term December 31,2016 COMPLIANCE • Assets managed by ChandlerAsset Management are in full compliance with State lawand with the investmentpolicy Category Comment Treasury Issues 5 years maximum maturity Complies' Supranational "AA"or better by of NRSROs; 30%maximum; 5%max issuer; 5years maturity, Complies Includes only. ADB,IBRD,and IFC per CGC U.S.Agencies 20%maxissuer; 5yeammaximummatunty Complies U.S.Corporate(MTNs) "A"or better long term rating by 1 of 3 NRSROs; 30%maximum;5%max issuer; 5 years Complies max maturity Municipal Securities "A"or higher by of 3 NRSROS;10%maximum; 5%maxissuer; 5 years maximum maturity Complies Asset Backed/CMOs/Mortgage- "AA"or better by l of 3 NRSROs; "A"or higher issuer rating by l of 3 NRSROs; 20% Complies' backed maximum; 5%max issuer(excluding MBS/ ovtagency);5 ars max maturity Negotiable CDs "A"or better on its long term debt by l of 3 NRSROs: "Al/P1"or highest short term ratings Complies by 1 of 3 NRSROs; 30%maximum;5%max issuer, 5 years max maturity CDs/TDS 5%maxissuer; 5yearsmaxmatunty Complies Bankers Acceptances A-1,or equivalent highest short term rating by 1 of 3 NRSROS; 40%maximum; 5%max Complies issuer;180 days max maturity Commercial Paper A-1,orequivalent by 1 of 3 NRSROS; "A"or better by 1 of 3 NRSROs,if long tens debt Complies issued 25%maximum, 5%max issuer, 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20%maximum; 10%max issuer Complies Repurchase Agreements 102%collateralization Complies Reverse Repurchase Agreements 5%maximum,90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80°%to 120%of the benchmark) Complies Maximum Maturity 5 years maximum maturity Complies' 'The portfolio has twenty-four(24)securities with maturities greater than 5 years Including one(I)ABS,Bwr(5)CMOs,se enteen(f 7)MBS and one(1)treasury. All secudtles were inhented from the pmmwa manager and complied at time of purchase. S,`I Account Profile Portfolio Characteristics Orange County Sanitation District Long Term 12/31/2016 09/30/2016 Benchmark' Portfolio Portfolio Average Maturity(yrs) 2.73 2.87 2.80 Modified Duration 2.61 2.48 2.38 Average Purchase Yield n/a 1.57 % 1.48 Average Market Yield 1.57 % 1.51 % 1.05 % Average Quality— AAA AA+/Aar AA+/Aa1 Total Market Value 316,592,849 325,949,886 'BAML 1-5 Yr US CorporaWGovt Rated AAA-A Index Benchmark is a blended rating of S&P,Moody's,and Fitch.POMolio is S&P and Mcody's respectively. Multiple securities were purchased across the Treasury, Supranational, and Commercial Paper sectors of the market to keep the portfolio structure in-line with Chandler objectives. The purchased securities ranged in maturity from March 2017 to November 2021. Ten securities were sold and two matured to help fund the new additions to the portfolio and to account for the two large withdrawals early in the quarter. �-J" Sector Distribution Orange County Sanitation District Long Term December 31, 2016 September 30, 2016 Carmen ial US Commercial us paper corporate paper Cwpaate 3.8% 22.3% 3.8% Me% Municipal Municipal ncy Bonds Mortgage Bonds Mortgage 1.5% Pass 1.5% Pass Th. Th u Morey 0]% Money 0.7% Markel Market Fund Fund FI Us FI US 1.9% Treasury 0.8% Treasury 30.1% / 25s% CMO CMO 0.9% 1.0% Negotiable Negotable CD CD ABS 13% Ass 1.3% 7A% 9.0% a Supranaeonal Supranagonal 29a%% 6.6% 29.3%e cy5.7% The sector allocation was relatively stable. The valuation in the Agency sector continues to compress thus the Chandler team reduced our exposure to the sector to 23.7% of the portfolio, offset by the increase in the Treasury allocation to 30.1% of the portfolio. Issuers C/" Orange County sanitation District Long Term Issuer Report Accounl810268 Aa of 1N3lQ0l6 Govemmem of United States US Treasury 30.09% Federal National Mortgage Association Ageney 8.60% Federal Home Loan Bank Ageney 8.03% Federal Home Loan Mortgage Corp Agency 7.11% Imer-Ameican Dcv Bank Supmiutional 2.69% John Deere ADS ADS 2AI% Intemationel Finance Cory Supranational 234% Toyola Motor Cory Commecial Paper 1.98% Dmyfu.,Treasury Money Make Fond Money Marlon Fund FI 1.94% Bark of Tokyo�Mit UFJ Commercial Paper 1.95% wells Fargo Corp US Corporate 1.76% JP Morgan Chase&Co US Corporate 1.71% Dun,&Company US Corpora Ibl% General Clonle Co US Coryomro 1.60% Gn.lnumm Inc US Corporate 139% Intl Bank Boon and Development Suprenational 1.57% [fond.ADS ADS IA7% Bank of America Corp US Corporate 1.44% ChevronTexaco Corp US Corpomte IA2% HSBC USA Corp US Corporate 135% JP Morgan ADS ADS 131% Toronto Dominion Holdings Negmiahle CD 1.29% Honda Motor Corporation US Corporate 1.29% Eli Lilly&Co US Coryonm 1.29% Apple Inc US Corporate 1.27% Toyota ADS ADS 113% Morgan Stanley US Corporate 1.00% American Express Credit US Corporate 0.99% Exxon Mobil Corp US Corporate 0.96% Microsoft US Corinna. 0.%% Pon Authority of New Yok and New Jersey Municipal Bonds 0.94% Bank of New York US Corporate 0.69% FMenl Home Loan Mortgage Corp CMO 0.68% KI Issuers Continued C/" Orange County Sanitation District Long Term Issuer Report Accounta10268 AsoflW316016 Nissan ABS A13S 0.66% Occidental Petroleum Corporation US Corporate 0.64% Intel Carp US Corporate 0.63% Federal National Mongage Association Mongage Pa. I'hr. 0.55% New York City Transitional Finance Authority Municipal Bonds 0.47% Goldman Sachs Inc. US Corporate 020% University ofCalifamia Municipal Bonds 0.14% NCUA Guaranteed Notes CMO 0.12% Federal National Mortgage Association CMO 0.11% GNMA Mortgage Pass Thru 0.08% AMRESCO Residental Securities Corp Mongage Pass Thru 0.04% Small Business Administration ABS 0.02% SLM Carp ABS 0.01% GNMA CMO 0.01% Federal Nome Loan Mortgage Corp Mortgage Pass Thru 0.00% Total 100.00% Quality Distribution Orange County Sanitation District Long Term December 31, 2016 vs. September 30, 2016 100.0% 60.0% 60.0% — 40.0% 20.0% 0.0% AAA AA A <A NR 12/31/16 9/30/16 AAA AA A <A NR 12/31/16 16.6% 65.0% 10.2% 3.4% 4.8% 9/30116 15.3% 66.2% 10.0% 3.4% 5.1 % Source:S&P Ratings " Duration Distribution Orange County Sanitation District Long Term Portfolio Compared to the Benchmark as of December 31, 2016 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 0-0.25 0.25-0.50 0.50-1 1-2 2-3 3-4 4-5 5- PonfalM = BYMkINrk' 0-0.25 0.25-0.50 0.50-1 1 -2 2-3 3-4 4-5 5+ Portfolio 6.2% 4.1 % 13.3% 14.8% 24.6% 23.0% 10.6% 3.4% Benchmark' 0.2% 0.0% 3.7% 30.8% 28.4% 22.2% 14.6% 0.0% `SAW 1-5 Vr U3 Corp..WG.v Rated AAA-A Index The duration of the portfolio increased, currently 2.48 versus 2.38 at the end of the prior quarter. In Chandler's judgement the market is currently pricing in a reasonable expectation for a tightening of monetary policy in 2017 thus the overall interest rate sensitivity of the portfolio is likely to increase to be closer to the benchmark in the coming quarter. Investment Performance Orange County Sanitation District Long Term Period Ending December 31, 2016 Total Rate of Return Annualized Since Inception November 30,2014 1.60% 1.40% 1.20% 1M% 080% 0.80% a.40% 9.29% 0.o9% 12 months 2years 3years 5years 10 years Since inception Orange County Sanitation District Lang Term = BAML 1-5 Yr US Corponsle/Govl Rated AAA-A Index Annualized 3 months 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Long Term -0.84% 1.47% 1.16% N/A N/A N/A 1.01 % BAML 1-5 Yr US Corporate/Gout Rated AAA-A Index -1.06% 1.30% 1.19% N/A N/A N/A 0.98% Total rate of return A measure of a portfolio's performance over time. It is the internal rate of return which equates the beginning value of the portfolio with the ending value;it includes interest earnings,realized and unrealized gains and losses in the portfolio. Cjjjj Compliance CA Orange County Sanitation District Liquid December 31,2016 COMPLIANCE • Assets managed by Chandler-Asset Management are in full compliance Wth State lawand wth the investment policy Category Treasury Issues l year maximum maturity; Minimum allocation of 10% Complies Suprenational "AA"or better by of 3 NRSROs; 30%maximum; 5%max issuer, 1 year maturity, Complies Includes only, IADB,BIRD,and IFC per CGC U.S.Agencies 20%max issuer; l year maximum maturity Complies' U.S.Corporate(MTNs) "A"or better long term rating by 1 of 3 NRSROs;30%maximum;5%max issuer; 1 Complies year max maturity Asset Backed/CMOs "AA"or better by 1 of 3 NRSROs; "A"or higher issuer rating by 1 of 3 NRSROs; Complies 20%maximum; 5%max issuer 1 year max maturity Negotiable CDs "A"or befteron its long term debt by l of 3 NRSROs; "Al/P1"or highest shorttenn Complies ratings by 1 of 3 NRSROs; 30%maximum;5%max issuer; 1 year max maturity CDs/TDS 5%max issuer, l year max maturity Complies Bankers Acceptances A-1,or equivalent short tam rating by l of 3 NRSROS;40%maximum;5%max Complies issuer; 180 days max matudty Commercial Paper A-1,or equivalent by 1 of 3 NRSROS;"A"or better by 1 of 3 NRSROs,if long term Complies debt issued; 25%maximum;5%max issuer;270 days max matudty Money Market Fund Highest rating by 2 of 3 NRSROs; 20%maximum; 10%max issuer Complies Repurchase Agreements 102%collateralization Complies Reverse Repurchase Agreements 5%maximum,90 days max maturity Complies LAIF Not used by investment adviser Complies Prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Not to exceed 180 days; Max duration of 1/2 year Complies Maximum Maturity l year maximum maturity Complies Max Issuer complies on a consolidated basis 11% Account Profile Portfolio Characteristics Orange County Sanitation District Liquid 12/31/2016 09/30/2016 Benchmark' Portfolio Portfolio Average Maturity(yrs) 0.15 0.14 0.11 Modified Duration 0.15 0.14 0.10 Average Purchase Yield n/a 0.52 % 0.45 Average Market Yield 0.43 % 0.55 % 0.51 % Average Quality— AAA AAA/Aaa AA+/Aaa Total Market Value 113,042,677 57,988,854 'BAML 3-Month US Treasury BIII Index Benchmark is a blended rating of S&P,Moody's,and Fitch.PoMolio is S&P and Mwdy's respectively. Many securities were purchased across the Treasury, Agency, Supranational,Yankee CD, and Commercial Paper sectors of the market to account for the large cash Flows both out and into the portfolio during the reporting period. The purchased securities ranged in maturity from November 2016 to June 2017. One security was sold and fourteen matured to fund both the fund ou0lows and the new securities in the portfolio. C& Sector Distribution Orange County Sanitation District Liquid December 31, 2016 September 30, 2016 Money Commercial Money Markel Paper Market Fund �5.2 qo Fund FI FI 5.0% 9.1% us Corporate 5.8% Commercial Agency Paper Sts% 5 7% us Treasury 34.8% I Agency us 4fi44'0 211% le Negotiable 20.0 n CD 1.0% us Supranational Treasury 18% 104% The sector allocation changed materially with the large cash flows in and out of the portfolio. Issuers C/" Orange County Sanitation District Liquid Issuer Report Account#10282 As of 12/31/2016 Gowinmene of United States US Treasury 34.76% Federal Home Loan Bank Agency 22.14% Federal Home Loan Mortgage Corp Agency 17.69% Federal National Mortgage Association Agency 6.61% Dreyfus Treasury Money Market Fund Money Market Fund FI 4.99% Pincer Financial Commercial Paper 1.77% PepsiCo Inc US Corpomie 1.33% Toronto Dominion Holdings Negotiable CD 1.03% Eli Lilly&Co US Corporate 0.91% Wells Fargo Corp US Corporate 0.89% JP Morgan Chose&Co US Corporate 0.89% Inter-American Dav Bank Supranatim al 0.99% Cisco Systems US Corporate 0.89% Apple Inc US Corporate 0.89% International Finance Corp Summational 0.89% Toyota Motor Corp Commercial Paper 0.99% Bank ofTokyo-Mit UFJ Commercial Paper 0.98% Toyota Motor Credit Corp Commercial Paper 0.88% Honda Motor Corporation Commercial Paper 0.80% Total 100.00% Quality Distribution Orange County Sanitation District Liquid December 31, 2016 vs. September 30, 2016 100.0% 60.0% 60.0% 40.0% 20.0% 0.0% AAA AA A <A NR 12/31/16 9/30/16 AAA AA A <A NR 12/31/16 70.7% 26.2% 3.1 % 0.0% 0.0% 9/30116 52.9% 32.4% 14.8% 0.0% 0.0% Source:S&P Ratings GKI Duration Distribution Orange County Sanitation District Liquid Portfolio Compared to the Benchmark as of December 31, 2016 120.D% 100.0% KID% 60.0% 40.D% 20.0% D.0% 0-0.25 0.25-Ds) 0.50-1 1-1.5 1.5-2 2-2.5 2.5-3 3+ m Pomblin eknchnkrk' 0-0.25 0.25-0.50 0.50-1 1 -1.5 1.5-2 2-2.5 2.5-3 3+ Portfolio 79.9% 20.1 % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Benchmark' 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 'BAML 3-Month US Treasury Bill Index The duration of the portfolio extended to 0.14 versus 0.10 at the end of the prior quarter. The maturity structure of the portfolio remains short to account for the large upcoming liquidity needs in January 2017. Investment Performance Orange County Sanitation District Liquid Period Ending December 31, 2016 Total Rate of Return Annualized Since Inception November 30,2014 0.50% a.4o% 0.30% 0.20% 0.10% 0.00% 12 manNa 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Liquid BAML 3Month US Treasury Bill Index Annualized 3 months 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation Distinct Liquid 0.12% 0.48% 0.36% N/A N/A N/A 0.34% BAML 3-Month US Treasury Bill Index 0.09% 0.33% 0.19% N/A N/A N/A 0.18% Total rate of return:A measure of a portfolio's performance over time. It is the internal rate of return,which equates the beginning value of the portfolio with the ending value;it includes interest earnings,realized and unrealized gains and losses in the portfolio. Compliance CALOCSD Lehman Exposure December 31,2016 COMPLIANCE • Assets managed by ChandierAsset Management are in full compliance Win State lawand dth me investmentpolicy Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supmnational "AA"or better by of NRSROs; 30%maximum; 5%max 5years Complies matunt,r, Includes only, [ADS (BIRD,and FC per CGC U.S.Agencies 20%max issuer; 5 years maximum marturity Complies U.S.Corporate(MTNs) "A"or better long term rstng by 1 of 3 NRSROs; 30%maximum;5% Complies' max issuer; 5 years max maturity Municipal Securities "A"or higher by l of 3 NRSROS;10%maximum; 5%maxissuer, 5 Complies years maximun matud Asset Backed/CMOs/Mortgage- "AA"or better by 1 of 3 NRSROs; "A"or higher issuer rating by 1 of 3 Complies backed NRSROs; 20%maximum; 5%max issuer(excluding MBS/govt agency);5 years max maturity Negotiable CDs "A"or better on its long term debt by of 3 NRSROs,; "A1/P1"or Complies highest short term ratings by 1 of 3 NRSROs; 30%maximum;5%max issuer 5 years max matunty CDs/TDS 5%max issuer 5 years max maturity Complies Banker's Acceptances A-1,or equivalent highest short term rating by l of 3 NRSROS; 40% Complies maximum, 5%max issuer. 180 days max maturity Commercial Paper A-1,or equivalent by 1 of 3 NRSROS; "A"or better by 1 of 3 NRSROs, Complies if long term debt issued; 25%maximum; 5%max issuer, 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20%maximum; l0%max issuer Complies Repurchase A reements 102%collatemlization Complies Reverse Repurchase Agreements 5%maximum,90 days max maturity Complies LAIF Not used by investment adviser Complies A Duration Not to exceed 60 months - 80%to 120%of the benchmark Complies Maximum Maturity 5 years maximum marturity Complies Account hods$2 million face wlue(cusip 525ESCOy6)and$600,000 race value(cusip 525ESCiB7)of defaulted Lehman Bras Holdings that were purchased by the preens manager. Complied at time of pumhase. S,`I Account Profile Portfolio Characteristics OCSD Lehman Exposure 12/31/2016 09/30/2016 Portfolio Portfolio Average Maturity(yrs) 21.44 22.68 Modified Duration 0.00 0.00 Average Purchase Yield 0.00 % 0.00 Average Market Yield 0.00 % 0.00 % Average Quality— NR/NR NR/NR Total Market Value 183,871 230,371 Portfolio is S&P and Mows respectively. SECTION 3 i Consolidated Information S,`I Account Profile Portfolio Characteristics Orange County Sanitation District Consolidated 12/31/2016 09/30/2016 Portfolio Portfolio Average Maturity(yrs) 2.16 2.41 Modified Duration 1.86 2.04 Average Purchase Yield 1.29 % 1.32 Average Market Yield 1.26 % 0.97 % Average Quality— AA+/Aai AA+/Aa1 Total Market Value 429,819,397 384,169,111 Portfolio is S&P and Mows respectively. C�" Sector Distribution Orange County Sanitation District Consolidated December 31, 2016 September 30, 2016 ConmenJal u5 Commercial us Paper Corporate Paper_ Capoode 421% 1&0% IS% 21.7% Muiicl"I Mortgage Municipal Mortgage Pass Bonds Bonds Pass Th. Tbm Money Money Markel u5 Market us Fund ,Treasury Fund Treasury FI 131.3% 23.3% 2.]F1 8% CMO '� Negotiable CMO / Nag°4able CD / CD ASS Common ABS Corraricn Stock Sbd 5.2% 0.0% 7"5% Agency Supranauonal Agency Supranasonal 29.]% 5.3% 33.1% 0.9% SECTION 4 Portfolio Holdings ��" Orange County Sanitation District Long Term Holdings Report Account 010268 As of 12/31/16 Purchase Da:o Cost Vat Mid Price Market Value %of Pod. MoodyIS&P Maturity CUSIP Security Description Par Value/Units Book Yie d Book Va Mkt YTM Accrued Ind. Gain/Loss Fitch Duration ABS 43813JAC9 Honda Auto Receivables 2014-1 A3 272,358.99 01/22/2015 271,529.15 99.97 272,285.73 0.09% Aaa/NR 0.89 0.67%Due 11/21/2017 0.90% 272,358.99 lAs% 50.69 (73.26) AAA 0.05 89231 MAC9 Toyota Auto Receivables Owner 2014-A 459,078.18 0112112015 458,127.74 Was 458,877.56 0.14% Aaa I AAA 0.96 0.67%Due 1211512017 0.90% 459,057.12 1.33% 136.70 (179.56) NR 0.08 89231TAB6 Toyota Auto Receivables Owner,2015-C 556,481.45 0811812015 556,436.70 99.97 556,ml.22 0.18% Aaa/AAA 1.13 0.92%Due 2/1512018 0.93% 556,461.15 1.13% 227.54 (119.93) NR 0.12 43814GAC4 Honda Auto Receivables 2014-2 A3 537,546.59 04/OB/2015 537,168.64 99.92 537,095.05 0.17% Asia I AAA 1.21 0.77%Due 311912018 0.83% 07,478.99 1.14% 149.47 (383.94) NR 0.23 43814NAB1 Honda Auto Receivables 2016-1 A2 2,020,144.82 02/1612016 2,019,943.01 99.97 2,019,474.13 0.64% NR/AAA 1.46 1.01%Due 6/18/2018 1.02% 2.020,017.37 1.11% 936.79 (543.24) AAA 0.34 4778TIAD6 John Deere Owner Trust 2014E A3 2,247,986.48 02/04/2015 2,249,040.21 99.99 2,247,833.62 0.71 % Asa INR 1.87 1.07%Due 11115/2018 1.05% 2,248,318.25 1.09% 1,069.04 (484.63) AAA 0.37 89236WAC2 Toyota Auto Receivables Owner 2015-A 2,883,281.48 0212412015 2,882,845.53 99.95 2,881,744.69 0.91 % Aaa IAAA 2.13 1.12%Due 2115/2019 1.13% 2,883,115.83 1.22% 1,435.23 (1,371.14) NR 0.54 47788NAM John Deere Owner Tmst2016-B A2 2,980,000.00 0711912016 2.979,818.22 99.89 2,976,573.00 0.94% Ann/NR 2.13 1.09%Due 2/1512019 1.10% 2,979,849.00 1.26% 1,443.64 (3,276.00) AAA 0.70 654TBWA13I Nissan Auto Receivables Owner 2016-C 2,085,000.00 08/02/2016 2,084,917.85 NAG 2,081,436.74 0.66% Aaa/NR 2.37 A2A 1.08% 2,084,929.59 1.30% 991.53 (3,492.85) AAA 0.76 1.07%Due 5n 512019 161571HHO Chase CHAT Pool#2016-A] 4,140,000.00 09I101312016 4,139,643.13 99.91 4,136,2M.74 1.31 % Ase I AAA 2]1 1.06%Due 911612019 1.08% 4,139,760.09 1.20% 1,950.40 (3,513.35) AAA 0.68 47788MAC4 John Deere Owner Trust 2016-A A3 2,420,000.00 0212312016 2,419,619.09 99.74 2,413,659.60 0.76% Aaa/NR 3.29 1.36%Due 4/1512020 1.37% 2,419,696.28 1.55% 1,462.76 (6,0W.68) AAA 1.41 438140AC2 Honda Auto Receivables 2016-2 A3 1,810,000.00 OW2412016 1,809,964.89 ".85 1,807,194.50 0.57% Aaa/NR 3.29 1.39%Due 4/15/2020 1.40% 1.809,970.22 1.49% 1,118.18 (2,775.72) AAA 1.57 83162CLJO Small Business Administration 2001-20C 70,644.46 031N12001 70,64tA6 104.55 73,859.49 0.02% Aaa/AA+ 4.17 6.34%Due 311/2021 6.34% 70,64 A(5 4A7% 1,492.95 3,215.03 AAA 2.04 18445JAA5 SLMA 2008-9A 36,113.93 0812212008 35,967.41 100.13 36,160.63 0.01 % Baa3l AA+ 6.32 2.386%Due 412512023 2.48% 36,100S2 2.47% 162.74 59.71 AAA 3.43 22,515,666.03 22,498,872.70 7.11 % Ann 1 AAA 2.32 Total ABS 22,518,636.38 1.14% 22,517,748,26 1 2]% 12,427.66 (18,975.56) AAA 0.92 AGENCY 3137EADVB FHLMC Note 5,000,000.00 0612512015 4.994250.00 100.02 5,000,825.00 1.59% Aaa/AA+ 0.53 0.75%Due 7/14/2017 0.81 % 4,998,510.68 0.72% 17,395.83 2,314,32 AAA 0.53 3137EADN6 FHLMC Note 6,000,000.00 01/23/2015 4,967,500.00 99.80 4,989,810.00 1.58% Aaa/AA+ 1.03 0.75%Due 111212018 0.97% 4,988,706.10 0.95% 17,604.17 1,103.90 AAA 1.02 3137EADPI FHLMC Note 5,000,000.00 0111312015 4,974,100.00 99.87 4,993,515.00 1.58% Aaa/AA+ 1.18 0.875%Due 31712018 1.04% 4,990,298.78 0.99% 13854.17 3,216.22 AAA 1.17 313378A43 FHLB NO. 7,500,000.00 0211112015 7,544,850.00 100.36 7,526,827,50 2.39% Aaa/AA+ 1.19 1.375%Due M/2018 1.18% 7,517,283.85 1.07% 32,083.33 9,543.65 AAA 1.17 Chandler Aau[Management-CONFIDENTIAL 35 C�" Orange County Sanitation District Long Term Holdings Report Account#70268 As of 12/31/16 Purchase Da:o Cost Va:u: Mut Price Market Value %of Pod. MoodyIS&P Maturity CUSIP Security Description Par Value/Units Book Yie d Book Va Mkt Y-tM Accrued Int. Gain/Loss Fitch Duration AGENCY 111111 3135GOG72 FNMA Note 5,000,000.00 12/18/2015 4,963,950.00 99.79 4,989,685.00 1.58% Ann/AA+ 1.96 1.125%Due 12/14/2018 1.37% 4,976,430.12 L23% 2,656.25 13,254.88 AAA 1.92 31337821,12 FHLB Note 7,500,000.00 Various 7,589,190.00 100.30 7,522,612.50 2.39% Aaa/AA+ 2.18 1.5%Due 3/8/2019 1.14% 7,556,899+90 1.36% 35,312.50 (34,287.40) AAA 2.13 3137EADM8 FHLMC Note 7,500,000.00 Various 7.399,650.00 99.42 9,456,132.50 2.36% Aaa/AA+ 2.75 1.25%Due 10/2/2019 1.61 % 7,42],5]6A1 1.47% 23,177.08 28,556.09 AAA 2.69 313383HU8 FHLB Note 5,000,000.00 08/13/2015 5,008,950.00 100.08 5,003,930.00 1.58% Aaa/AA+ 3.45 1.75%Due 611212020 1.71 % 5,006,382.71 1.73% 4,618.06 (2,452.71) NR 3.33 3135GOD75 FNMA Note 5,0001 11/1612015 4,955,650+00 99.53 4,976,690.00 1.57% Anii 3.48 1.5%Due 6=020 1.70% 4,966,506.37 1.64% 1,875.00 10,183.63 AAA 3.37 3135GOR3 FNMA Note 7,600,000.00 Various 7,370,726.00 98.75 7,405,912.50 2.34% Aaa/AA+ 3.92 1.5%Due I1130/2020 1.87% 7,397,970.25 1.83% 9,687.50 7,942.25 AAA 3.78 3130A7CV5 FHLB Note 5,365,000.00 02/17/2016 5,343,325.40 98.11 5,263,392.26 1.67% Aaa/AA+ 4.14 1.375%Due V1812021 1.46% 5,347,097.99 1.85% 2125345 (83,705.73) AAA 3.97 3135GOJ20 FNMA Note 10,000,000.00 Various 10,040,950.00 90.05 9,805,050.00 3.11 % Aae/AA+ 4.16 1.375%Due 2/2612021 1.28% 10,01 lA6% 47743.06 (232,019.54) AAA 3.99 75,153,091.40 74,91 23.74% Aaa/AA+ 2.61 Total Agency 75,365,000.00 1.35% 75,210,732.70 1.43% 233,260.40 (276,350.44) AAA 2.53 C61O 61 NCUA Guaranteed Note CMO 2010-R2 387,664.00 11/10/2010 387,662.25 100.01 387,694.63 0.12% Asia/AA+ 0.85 1.142%Due 11/6/2017 0.00% 387,662.25 1.08% 264.43 32.38 NR 0.01 31398VJ98 FHLMC FHMS K006 A2 900,000.00 11/23/2010 951,046.88 105.05 952,693.20 0.W Is Aisi 3.07 4.251%Due 112512020 3.54% 917,081.78 2.09% 3,188.25 35,611+42 AAA 2.73 3837H4NX9 GNMA PooI#2000-9 32,010.76 01124/2000 32,01016 100.25 32,089.51 0.01 % Aae/AA+ 13.14 1.239%Due 211612030 1.25% 32,01076 1.09% 30.59 76.75 AAA 0.03 3133TCE95 FHLMC FSPC E3A 43,729.65 03/11/1998 43,775.30 100.25 43,838.87 0.01Is Aaa/AA+ 15.63 3.052%Due 811512032 3.02% 43,750+38 1.65% 111.22 88.49 AAA 1.95 31396X3O5 FNMA FNR 2007-114 A6 21,155.32 01/1012008 20,124.00 99.89 21,132.51 0.01 % Aaa/AA- 20,84 0.961 is Due 10/27/2037 1.32% 20,434A0 1.10% 2.26 698.11 AAA 0.29 31397QREO FNMA FNR 20113 FA 338,527.14 12/20/2010 338,421.36 100.08 338,80413 0.11 % Asia/AA+ 24.17 1.441%Due 2I25I2041 1.44% 338,442.21 Loy% 81.31 362.52 AAA 0.06 313WY35 FHLMC FSPC TS82A 982,745.07 M10912011 1,112,958.77 116.27 1,142,598.38 0.36% Aaa/AA+ 26.75 6.5%Due 9=043 5,40% 1,090,562+59 2.95% 1,064.64 52,035.79 AAA 4.52 2,885,999.32 2,918,851.83 0.92% Aaa I AA+ 14.91 Total CMO 2,705,831.84 3.47% 2,829,944,37 R 20% 4,742.70 88,907,46 AAA 2.70 COMMERCIAL PAPER 06538BO63 Bank of Tokyo Mitsubishi NY Discount 5,870,000.00 10/26/2016 5,848,166.89 99.82 5,859,251.39 1.85% P-1 I A-1 0.18 CP 1,05% 5,859,251,39 1 OS% 0,00 0,00 NR 0.18 1.03%Dua 3/612017 Chandler Asset Management-CONFIDENTIAL 36 ��" Orange County Sanitation District Long Term Holdings Report Account#10268 As of 12/31/16 Purchase Da:o Cost Va:u: Nut Price Market Value %of Pod. MoodyIS&P Maturity CUSIP Security Description Par Value/Units Book Yie d Book Va Mid Y7M Accrued Int. Gain/Loss Fitch Duration COMMERCIAL PAPER 89233GV29 Toyota Motor Credit Discount CP 6,300,000.00 12/22/2016 6,251,999.25 99.27 6,25Q151.75 1.98% P-1/A-1+ 0.59 1.23%Due 6/2/2017 1.26% 6,254,15175 1.26% 0.00 0.00 NR 0,58 12,100,166.14 12,113,403.14 3.83% P-1/A-I 0.39 Total Commercial Paper 12,170,000.00 1.16% 12,113,403.14 1.16% 0.00 0.00 NR 0.39 MONEY MARKET FUND FI 261908107 Dreyfus Trsy/Agcy Cash Management 6,131,092.70 Various 6,131,092,70 1.00 6,131,092.70 1.94% Ass I AAA 000 521 0.39% 6,131,092+70 0.39% 0.00 0.00 AAA 000 6,131,092.70 6,131,092.70 1.94% Aaa I AAA 0.00 Total Money Market Fund Fl 6,131,092.70 0.39% 6,131,092.70 0.39% 0.00 0.00 AAA 0.00 MORTGAGE PASS THRU 31381PDA3 FNMA FN 466397 359,837.39 12/01/2010 352,050.30 104.63 376,503.26 0.12% Ass/AA+ 384 34%Due 1111/2020 3.80% 356,824+14 2.10% 237.89 19,679.12 AAA 3,47 36225CAZ9 GNMA Pool#G280023 25,504.80 08/08/1997 25,92T.22 103.31 26,349.88 0.01 % Ass/AA+ 9.98 1.625%Due 12/20Y2026 1.52% 25,648.38 1.89% 34.54 701.50 AAA 4.53 36225CC20 GNMA Pool#G280088 29,714.84 08/11/1997 30,364.86 103.10 30,635.88 0.01 % Aaa/AA+ 10.47 2.32%Due 612012027 2.10% 29,942S5 1S2% 57.45 692.93 AAA 4.79 3134BSM3 FHLMC FH 786064 2,439.33 0211812000 2,379+93 103.12 2,515.41 0.00% Aaa/AA+ 11.01 2,957%Do.1/112028 3,15% 2,415.87 2.49% 6.01 99.54 AAA 4.92 31371NUC7 FNMA FN 257179 25,421.21 1210512011 26,885.42 107.55 27,34176 0.01 % Aaa/AA+ 11.26 4.5%Due 4/1/2028 3.72% 26,431.28 2.07% 95.33 910AB AAA 3.48 3141TYAY3 FNMA Pool#FN MA0022 29,376.19 12/05/2011 31,068A9 107.55 31,595.53 0.01 % Ass/AA+ 12.26 4.5%Due 4/1/2029 3.76% 30,573.71 2.37% 110.16 1,021.82 AAA 3.62 3138EG6F6 FNMA FN AL0869 18,959.96 121OW2011 20,052.02 107.55 20,392.37 0.01 % Aaa/AA+ 12.42 4.5%Due 611/2029 377% 19735.92 1.89% 16.59 656A5 AAA 2.92 03215PFN4 AMRESCO Residential Securities 1999-1 133,743.29 05/20/2011 100,432.85 91.TT 122,134.88 0.04% NR IAA+ 12.49 A 5.25% 110,763.27 271% 44.24 11,971.61 BBB 8.49 1.701%Due 6/25/2029 36225CNM4 GNMA PooI#G280395 10,571.73 0311512000 10,475.90 103.55 10,947.30 0.00% Aaa/AA+ 13.31 2.32%Due 4/20/2030 2.38% 10,529.12 1.89% 20.44 418.18 AAA 6.31 36225CN28 GNMA Pool#G280408 83,369.45 03/1B 000 82,511.86 103.47 86,251.66 0.03% Aaa/AA+ 13.39 2.32%Due 512012030 2.39% 82,980.72 1.89% 161.16 3,270.94 AAA 5.30 31403GXF4 FNMA P.I#FN 748678 5,192.30 M11012013 5,581.72 109.53 5,687.01 0.00% Ass/AA+ 16.76 5%Due 10/1/2033 4.16% 5,514.94 2.52% 21.63 172.07 AAA 3.84 36225DCBB GNMA Pool#G2 SONS 87,212.64 07/19/2004 87,168.14 104.35 91,003.60 0.03% Aaa/AA+ 17.56 2.125%Due 712012OU 2.13% 87,180.66 178% 154.44 3,822.94 AAA 4.82 Chandler Asset Management-CONFIDENTIAL 37 OROrange County Sanitation District Long Term Holdings Report Account As of 12/31/16 DescriptionPurchase Da:o Cost Va:u: Mkt Price Market Value %of Pod. Mandl Maturity CUSIP Security MORTGAGE PASS THRU 31406XWT5 FNMA Pool#FN 823358 169,347.88 01/11/2006 168,024.86 105.34 178,382.76 0.06% Ann/AA- 18.10 2.581%Due 2I1I2035 2.64% 168,523.49 2.19% 384.24 9,859.27 AAA 4.59 31406P0Y8 FNMA P.I#FN 815971 287,627.20 0611012013 309,199.34 109.15 313,957.54 0.10% Aaa/AA+ 18.18 5%Due 311/2035 4.21 % 305,741+91 2.70% 1,198.45 8,215.63 AAA 4.09 31407BXH7 FNMA PwI#FN 826080 30,985.37 0611012013 33,309.26 109.05 33,788.80 0.011 Aee/AA+ 1851 5%Due 711/2035 4.22% 32,942.47 2.70% 129.11 846.33 AAA 4.10 31376KTU FNMA FIN 357969 172,280.96 O6/10/2013 185,202.03 109.03 187,834.83 0.06% Aaa/AA+ 18.68 5%Due 911/2035 4.22% 183,178.27 2.71% 167.50 4,656.56 AAA 4.11 31403DJM FNMA Pool#745580 171,477.52 0 II O12013 184,338.34 109.24 187=39 0.06% Aaa/AA+ 19.43 5%Due 611/2036 4.26% 182,390.06 2-73% 714.49 4,932.33 AAA 6.16 31410F4V4 FNMA P.I#FN 888336 336,428.03 W/10I2013 361,660.15 109.10 367,059.13 0.12% Aaa/AA+ 19.51 5%Due 7l1/2036 4.25% 357,851Al 272% 1,401.78 9,207.72 AAA 4.12 2,016,622.39 2,100,303.99 0.66% Aaa I AA+ 14.96 Total Mortgage Pass Thru 1,979,479.17 3.82% 2,019,168.57 2."IN 4,935.45 01,135.42 AAA 4.37 MUNICIPAL BONDS 73358WAG9 Pon Authority of NY&NJ TE-REV 2,440,000,00 Various 2,507,633,89 108.94 2,658,136.00 0.84% Aa3/AA- 2.92 5,309%Due lW/2019 4,97% 2,458,920+27 2,13% 10,794.97 199,215,73 AA- 2.71 64971M5E8 New York NY TE-REV 1,400,000.00 1012712010 1,400,000.00 105.57 1,478,008.00 0.47% Ant/AAA 3.84 4.075%Due 11/1/2020 4.08% 1.400,000.00 2.56% 9,508.33 78,008.00 AAA 3.53 913366EJ5 Univ of California Rgis Med TE-REV 400,000.00 11I09/2010 400,000.00 111.91 447,620.00 0.14% Aa3/AA- 4.37 5.035%Due 511512021 5.04% 400,000.00 2.17% 2,573.44 47,620.00 NR 3.94 4,307,633.89 4,583,764.00 1.461 Aa21 AA 3.36 Total Municipal Bonds 4,240,000.00 4.68% 4,258,920.27 2.27% 22,876.74 324,843.73 AA 3.09 NEGOTIABLE CD 89113WHF6 Toronto Dominion NY Yankee CD 4,075,000.00 O8I22I2016 4,075,000.00 100.00 4,075,000.00 1.29% P-11A-1+ 0.20 1.19%Due 311312017 1.19% 4,015,000.00 1A9% 17,645.88 0.00 F-1+ 0.20 4,075,000.00 4,075,000.00 1.29% P-1/A-1+ 0.20 Total Negotiable CD 4,075,000.00 1.19% 4,075,000.00 1.19% 17,645.88 0.00 F-1+ 0.20 SUPRANATIONAL as as 45950KBS8 International Finance Corp Note 5,000,000,00 03/16/2015 5,020,700,00 99.97 4,998,310.00 1.58% Aaa I AAA 0.31 1%Due 4124/2017 0,80% 5,003,041,74 111 % 9,305.56 (4,73174) NR 0.31 4581XOCGI Inter-American Dev Bank Note 5,000,000.00 W12212015 5,019,550.00 99.93 4,996,690.00 1.59% Aaa/AAA 0.53 11 Do.7/14/2017 0.81 % 5,005,063.48 1.12% 23,194.dd (8,353.48) AAA 0.53 4590MEJB Intl.Bank Recon&Development Note 6,000,000.00 Various 4,991,170.00 99.59 4,979,670.00 1.57% Asia IAAA 1.46 1%Due 6115I2018 1.07% 4,995,189.19 128% 2,222.22 (15,519.19) AAA 1.44 4581XOCS5 Inter-American Dev Bank Note 3,500,000.00 0112512016 3,590,405.00 99.39 3,478,723.50 1.10% Aaa 1 AAA 4.21 1.875%Do.311512021 1.30% 3.581,914.51 2.03% 19,322.92 (103,191.01) AAA 4.00 Chandler Asset Managemem-CONFIDENTIAL 38 ��" Orange County Sanitation District Long Term Holdings Report Account#10268 As of 12/31/16 Purchase Da:o Cost Va:u: Idut Price Market Value %of Pod. MoodyIS&P Maturity CUSIP Security Description Par Value/Units Book Yie d Book Va Mut YIrlyl Accrued Int. Gain/Loss Fitch Duration SUPRANATIONAL i 45950KCJ7 International Finance Corp Note 2,500,000.00 11/09/2016 2,441,600.00 95.91 2,397,685.00 076% Asa I AAA 4.55 1.125%Due 7/2012021 1.64% 2,443,372.80 107% 12,578.13 (45,687.80) NR 4,38 21,063,425.00 20,851,078.50 6.61 % Ass I AAA 1.78 Total Supranational 21,000,000.00 1.05% 21,028,561.72 1.42% 66,623.27 (177,483,22) AAA 1.72 US CORPORATE 06050TLX8 Bank of America Note 600,000.00 05I01I2014 "111,60Q000.00 11.1 600,554.40 0.19% Al/A+ 0.35 1.302%Due 51812017 1.30% 600,000.00 1.04% 1,150.39 554.40 NR 0.10 94988J21.0 Walls Fargo Bank Callable Note Curly 500,000.00 NIOW2014 W0,000.00 100.02 500,091.50 0.16% Aa2/AA- 0.45 6/15/2016 1.25% 500,000.00 1.16% 278.48 91.50 AA 0.21 1.253%Due 611512017 060505DP6 Bank of America Corp Note 3,800,000.00 01/15/2014 4,334,014.00 103.58 3,936,226.20 1.25% Baal/BBB+ 0.92 5.75%Due 121112017 1.95% 3,926,496.93 1.79% 18,200.33 9,729.27 A 0.90 166764AAB Chevron Corp Callable Note Cunt 2,000,000.00 121M12014 1,988,600.00 Rs. 1,995,480.00 0.63% Aa2/AA- 0.93 11&17 1.30% 1.996,471.43 1.39% 1,594.67 (991.43) NR 0.84 f.104%Due 121512017 458140AL4 Intel Corp Note 2,000,00D00 01262015 2,008,280.00 100.15 2,003,006.00 0.0% Al/A+ 0.96 1.35%Due 12115/2017 1.20% 2,002,741+62 1.19% 1,200.00 264.38 A+ 0.95 40428HPH9 HSBC USA Inc Note 3,000,000.00 Various 3.003,290.00 99.83 2,994,753.00 0.95% A2I A 1.04 1.625%Due 111612018 1.59% 3,001,147.01 1.79% 22,34375 (6,394.01) AA- 1.02 38141GFG4 Goldman Sachs Group Inc Note 600,000.00 Various 692,806.00 104.17 625,045.20 0.20% A3/BBB+ 1.05 5.95%Due 111812018 2.73% 618,759.21 1.90% 16,164.17 6,285.99 A 1.00 674599CD5 Occidental Petroleum Callable Note Cont 2,000,000.00 011MIN15 1,986,340.00 100.09 2,001,818.00 0.64% MIA 1.13 1/15/18 1.73% 1.995,056.84 1.41% 11,333.33 6761.16 A 1.02 1.5%Do.V1512018 025816AY5 American Express Coach Note 2,900,000.00 Various 3,377,385.79 106.27 3,081,806.80 0.99% A3/BBB+ 1.21 7%Due 311912018 4.20% 2,981,450.67 137% 57,516.67 100,356.13 A 1.16 073902CD8 Bear Stearns Note 3,200,000.00 0111WH14 3,523,520+00 104.00 3,327,840A0 1.07% A31NR 1.50 4.65%Duo 7/2/2018 2.25% 3.309,036.01 1.94% 73,988.67 18,803.99 A+ 1.42 532457BF4 Eli Lilly B CO Note 4,000,000.00 Various 4.009,675.00 100.62 4,024,852.00 1.28% A2/AA- 2.20 1.95%Due 311512019 1.89% 4,004,992.27 1.66% 22,966.67 19,869.73 A 2.14 02665WAH4 American Honda Finance Note 4,000,000.00 Various 4,046,640.00 100.97 4,038,948.00 1.29% Al/A+ 2.62 2.25%Due 8/1512019 1.93% 4,032,059+57 1.87% 34,000.00 6,888.43 NR 2.52 06406HCWT Bank of New York Callable Note Cont 2,120,000.00 0211012016 2,142,175.20 100.82 2,137,468.80 0.68% At/A 270 w l/2019 1.99% 2.136,596.53 1.97% 14,898.89 872.27 AA- 2.51 2.3%Due 9/11/2019 24422ESS9 John Dears Capital Corp Note 5,000,000.00 Various 5,046,984.00 101.08 5,054,215A0 1.61 % A2/A 2.71 2.3%Due 9/16/2019 2,07% 5,029,008.77 1.89% 33,541.67 25,206.23 A 2.60 Chandler Aase1 Management-CONFIDENTIAL 39 ��" Orange County Sanitation District Long Term Holdings Report Account As of 12/31/16 Purchase Da:o Cost Va:u: Mid Price Market Value %of Pod. Ml Maturity CUSIP Security Description Par Value/Units Book Yie d Book Va Mkt Y7M Accrued Int. Gain/Loss Fitch Duration US CORPORATE 36962G7MO General Electric Capital Corp Callable 5,000,000.00 Various 5,014,950.00 100.33 5,016,270.00 1.60% Al/AA- 3.02 Note 1X 1M/2019 2.13% 5,009,278.91 2.08% 52,555.5E 6,991.09 AA- 2.81 2.2%Due 1/92020 46625HKA7 JP Morgan Chase Callable Note Cant 2,000,000.00 0210612015 1.994,880.00 99.76 1,995,292.00 0.64% A3/A- 3.06 1212312019 2.30% 1.996,835.06 2.33% 19,750.00 (1,563.06) A+ 2.91 2.25%Due 1/23/2020 4042811PR7 HSBC USA Inc Note 1,250,000.00 02/052016 1,222,787.50 99.22 1,240,225.00 0.39% A2/A 3.18 2.35%Due 3I52020 2.92% 1228,761+42 2.61% 9,465.28 11,463+58 AA- 3.02 747525AD5 Oualcomm Inc Note 5,000,000.00 OW1912015 4,995,195AO 100.01 5,000,365.00 1.58% Al/A+ 3.39 2.25%Due 512012020 2.27% 4,996,748.67 2.25% 12,812.51 3,616.33 NR 3.24 94974BGM6 Wells Fargo Corp Note 5,000,000.00 07/16/2015 5,001,660.00 100.58 5,028,900.00 1.61 % A2/A 3.56 2.6%Due 7/22/2020 2.59% 5,001,172.25 2A3% 57,416.67 27,727.75 AA- 3.34 037833BS8 Apple Inc Callable Note Cant 1/23/2021 4,000,000.00 OW2312016 4,050,840.00 99.92 3,996,672.00 1.27% Aa1/AA+ 4.15 2.25%Due 2/23/2021 1.98% 4,046,272.30 2.27% 32,000.00 (47,600.30) NR 3.91 30231 GAV4 Exxon Mobil Corp Callable Note Cant 3,000,000.00 Various 3,016,097AO 101 3,006,873.01 0.96% Aaa/AA+ 4.17 212021 2.10% 3,014,070.18 2.16% 22,220.00 (7,197.17) NR 3.93 2.222%Due 311/2021 166764BG4 Chavron Corp Callable Note Cant 2,500,000.00 OW20IN16 2,485,350.00 99.14 2,478,565,00 0.78% Aa2/AA- 4.38 Vl MD21 2.23% 2.487,131.87 2.31% 6,562.50 (8,566.87) NR 4.14 2.1%Due V16/2021 6174MAL3 Morgan Stanley Note 2,800,000.00 O6/O6/2014 3,200,848.00 110.91 3,102,783.60 1.00% AS I BBB+ 4.58 5.5%Due 7/28/2021 3.24% 3,056,918.32 2.95% 65,45900 45,865.28 A 3.99 594918BP8 MicrosoO Callable Note Cant 71821 3,045,000.00 Various 3,041,385.15 96.99 2,953,382.04 0.94% Aaa IAAA 4.61 1.55%Due 81812021 1.57% 3.041,674.18 2.24% 18,747,89 (88,292.14) AA+ 4.38 71,283,693A4 70,141,432.55 22.35% Al/A+ 2.70 Total US Corporate 69,315,000.00 2.17% 70,010,680.02 2.02% 606,164.09 130,752.53 A+ 2.54 US TREASURY 912828SSO US Treasury Note 3,750,000,00 12/22/2015 3,750,305,53 100,11 3,]54,286,25 IA9% Ann IAA+ 0.33 0.875%Due 413012017 0.87% 3,750,073.60 0.53% 5,619.82 4,212.65 AAA 0.33 91282BG20 US Treasury Note 5,000,000.00 Various 4,974,39134 100.00 5,000,195.00 1.58Is Ass/AA+ 0.87 0.875%Due 11/1 5201 7 1.05% 4,992,349A9 0.87% 5,680.25 7,845.21 AAA 0.87 912828UR9 US Treasury Note 3,500,000.00 D4122IN16 3,496,457.04 99.T 3,491796.00 1.11Is Aaa/AA- 1.16 0.75%Due 2/28/2018 0.81 % 3,497,976A5 0.95% 8,919.20 (5,980.45) AAA 1.15 91282BB33 US Treasury Note 11,000,000.00 Various 11,042,439.19 100.54 11,059,730.00 3.52% Aaa/AA+ 2.08 1.5%Due 1/31/2019 1.37% 11,028,474.47 L24% 69,048.91 31,255.53 AAA 2.03 912828SN1 US Treasury Note 5,000,000.00 1212812016 5,016,423.00 100.51 5,025,585.00 1.59% Aaa/AA+ 2.25 1.5%Due&312019 1.35% 5,016,363.06 1.27% 19,162.09 9,221.94 AAA 2.20 912828WS5 US Treasury Note 2,000,000.00 Various 1,996,861.46 100.75 2,014,922.W 0.64% Aaa/AA+ 2.50 1.625%Due W3012019 1.66% 1,998,414.67 1.32% 8978 16,507.33 AAA 2.44 Chandler Aseer Menegeranl-CONFIDENTIAL 40 CAROrangeCounty Sanitation District Long Term Holdings Report Account#10268 As of 12/31/16 Purchase Da:o Cost Va:u: Mut Price Market Value %of Pod. MoodyIS&P Maturity CUSP Security Description Par Value/Units Book Yie d Book Va Mkt Y7M Accrued Int. Gain/Loss Fitch Duration US TREASURY 912828WW6 US Treasury Note 5,000,000.00 Various 5,012,388.70 100.70 5,03Q960.00 1.60% Ann/AA+ 2.58 1.625%Due 7/3112019 1.57% 5,006,435.94 1.35% 3Q001.36 28,524.06 AAA 2,51 912828F39 US Treasury Note 5,800,000.00 1012712014 5,873,186.87 100.98 5,857,095.20 1.86% Aaa/AA+ 275 1.75%Due 9/3012019 1.48% 5,840,786+01 1.38% 25,932.69 16,309+19 AAA 267 912828G61 US Treasury Note 7,500,000.00 12I19I2014 1,449,634.50 100.21 7,515,525.00 2.38% Aaa/AA+ 2.92 1.5%Due 11/3012019 1."% 7,470,322.32 1.43% 9,8911.11 46,202.68 AAA 2.84 912828XE5 US Treasury Note 5,000,000.00 12/21/2016 4,966,423.00 99.70 4,984,765.00 1.58% Aaa/AA+ 3.42 1.5%Due Y31/2020 1.70% 4,966,690.33 1.59% 6,593.41 18,074.67 AAA 3.31 912828L99 US Treasury Note 5,500,000.00 Various 5,424,666+87 98.TT 5,432,531.00 1.72% Me/AA+ 3.84 1.375%Due 10/31Y2020 1.67% 5.441,236.30 1]1% 12,952.35 (8,699.30) AAA 3.70 91282BN89 US Treasury Note 6,000,000.00 Various 5,895,840.41 98.40 5,904,138.00 1.88% Aaa/AA+ 4.09 1.375%Due 1/3112021 1.81 % 5,897,400.20 138% 34,524.45 6,737.80 AAA 3.93 912828TU US Treasury Note 7,000,000.00 Various 6,757,914.08 9a,t6 6,751,990.00 2.14% Aaa/AA+ 4.75 1.125%Do.9/3012021 1.88% 6,760,891+95 1.91% 20,120.19 (8,901.95) AAA 4.58 912828T67 US Treasury Note 6,000,000.00 1211312016 5.813,691.98 W.97 5,818,128.00 1.84% Aaa/AA+ 4.84 1.25%Due 10/31/2021 1.92% 5,816,573.88 1.91% 12,845.30 2,554.12 AAA 4.66 91282BU65 US Treasury Note 7,000,000.00 1212812016 6,900,492.20 99.25 6,94T,773.00 2.20% Ass/AA+ 4.92 1.75%Due 11/30/2021 2.06% 6,900,658.32 1.91% 10,769.23 47,114.68 AAA 4.68 912828WUD US Treasury Inflation Index Note 10,586,784.00 Various 10472,789.71 98.24 10,400,403.65 3.29% Aaa/AA- 7.54 0.125%Due 7115/2024 0.23% 10,500,528,22 0.36% 6,113.311 (100,124.57) AAA 7.49 94,843,906.26 94,993,829.10 30.09% Asa I AA+ 3.52 Total US Treasury 95,636,784.00 1A1% 94,883,975.51 1.33% 282,262.44 109,853.59 AAA SAS 316,376,296.57 315,341,910.71 100.00% Aal IAA+ 2.87 TOTAL PORTFOLIO 315,136,824.09 1,57% 315,079,227+26 1.51% 1,250,938.63 262,683+51 AAA 2.48 TOTAL MARKET VALUE PLUS ACCRUED 316,592,649.40 Chandler Asee1 Management-CONFIDENTIAL 41 J Orange County Sanitation District Liquid Holdings Report ( '" Account#10282 As of 12/31/16 Purchase Da:o Cost Va:u Nut Price Market Value %of Pod. MoodyIS&P Maturity CUSP Security Description Par Value/Units Book Yie d Book Va u: Nut YTM Accrued Int. Gain/Loss Fitch Duration AGENCY 313385AV8 FHLB Discount Note 2,040,000.00 10/21/2016 2,038,220.95 99.98 2,039,628.55 1.80% P-1IA-1+ 0.05 0.34%Due 1/20/2017 0.35% 2,039,628.55 0.35% 0.00 0.00 F-1+ 0.05 313397AV3 FHLMC Discount Note 2,000,000.00 1211912016 1,999,164.44 Was 1,999,503.89 1. /% P-1IA-1+ 0.05 0.47%Due 1120/2017 0.48% 1,999,503+89 0.48% 0.00 0.00 F-1+ 0.05 313385BA3 FHLB Discount Note 1,000,000.00 1012712016 999,110.00 99.98 999,762.67 0.88% P-1 l A-1+ 0.07 0.366%Due 1/2512017 0.36% 999,762.67 0.36% 0.00 0.00 F-1+ 0.07 313589MO FNMA Discount Note 3,000,000.00 11/30/2016 2,998,110.00 99.97 2,999,190.00 2.65% P-1IA-1+ 0.0] 0.41%Due 1/2512017 0.41 % 2,999,190.00 0.41% 0.00 0.00 F-1+ 0.07 3137EADUO FHLMC Note 1,000,000.00 1012412016 1,000,320+00 100.00 999,988.00 0.89% Asa/AA+ 0.07 0.5%Due 1=2017 0.37% 1.000,088.51 0.52% 2,138.89 (100.51) AAA 0.07 313385BC9 FHLB Discount Note 16,000,000.00 Various 14,991,760.00 99.97 14,995,060.00 13.26% P-1/A-1+ 0.07 0.456%Due 112712017 0.46% 14,995,060.00 OAS% 0.00 0.00 F-1+ 0.07 313385BF2 FHLB Discount Note 1,000,000.00 1212112016 999,444.44 Was 999,597.22 0.88% P-1IA-1+ 0.08 0.5%Due 1/30/2017 0.51 % 999,597.22 0.51% 0.00 0.00 F-1+ 0.08 313397BG5 FHLMC Discount Note 17,000,000.00 Various 16,992,388.63 99.96 16,993,341.69 15.03% P-1/A-1+ 0.08 0.47%Due 113112017 0.48% 16,993,341.69 0.48% 0.00 0.00 F-1+ 0.08 313589BXO FNMA Discount Note 1,920,000.00 12/23/2016 1,918,606.08 99.94 1,918,838.40 1.70% P-11A-1+ 0.13 0.48%Due 211512017 0,49% 1,918,838+40 0.49% 0.00 0.00 F-1+ 0.13 313385DV FHLB Discount Note 6,000,000.00 12/23/2016 5,991,134.16 Was 5,992,551.66 5.30% P-1IA-1+ 0.23 0.55%Due 3/24/2017 0,55% 5,992,551.66 0.55% 0.00 0.00 F-1+ 0.23 3139BADMI FNMA Note 2,500,000.00 12/27/2016 2,553,425.00 102.05 2,551,242.50 2.26% Ann IAA+ 0.46 5.375%Due 611212017 0.67% 2,552,137.65 071% 7,092.01 (895.15) AAA 0.45 52,482,283.70 52,488,704.58 46.44 is Aaa I AAA 0.11 Total Agency 52,460,000.00 CAB% 52,489,700.24 0.49% 9,230.90 (995.66) AAA 0.11 COMMERCIAL PAPER 89233GNP7 Toyota Motor Credit Discount CP 1,000,000.00 10/21/2016 998,129.44 99.95 999,W.78 0.88% P4l A-1+ 0.06 0.74%Due 112312017 0.75% 999,547.78 0.75% 0.00 0.00 NR 0.06 02665JNR7 American Honda Corp Discount CP 900,000.00 1212312016 899,397.75 99.95 899,562.00 0.80% P-1/A-1 0.07 0.73%Due 1/25/2019 0.74% 899,562.00 0.74% 0.00 0.00 F-1 0.07 69372ANT5 Paccar Financial Discount CP 2,000,000.00 12/23/2016 1,998,638.88 99.95 1,998,988.88 1.T1% P-1/A-1 0.07 0.7%Due 1/27/2017 0.71 % 1,998,988.88 0J1% 0.00 0.00 NR 0.07 06538BQ63 Bank of Tokyo Mitsubishi NY Discount 1,000,000.00 1012612016 996,280.56 99.82 998,168.89 0.88% P-1 IA-1 0.18 CP 1.05% 998,168.89 1.05% 0.00 0.00 NR 0.18 1.03%Due 316/2017 89233GRL2 Toyota Motor Credit Discount CP 1,000,000.00 12/23/2016 996,689.44 99.69 996,941.94 0.88% P-11A-1+ 0.30 1.01%Due 412012017 1.03% 996,941.94 1.03% 0.00 0.00 NR 0.30 5,889,136.07 5,893,209A9 5.21 % P-1/A-1 0.13 Total Commercial Paper 5,900,000.00 0.83% 5,893,209.49 0.83% 0.00 0.00 F-1 0.13 Chandler Asset Manegemenl-CONFIDENTIAL 42 OROrange County Sanitation District Liquid Holdings Report Account l)10282 As of 12/31/16 DescriptionPurchase Da:o Cost Va:u Not Price Market Value %of Pod. MoodyIS&P Maturity CUSP Security MONEY MARKET FUND Fl 261908107 Dreyfus Trsy/Agcy Cash Management 5,643,509.21 Various 5,643,509.21 1.00 5,643,509.21 4.99% Aaa I AAA 0.00 521 0.39% 5,643,509.21 039% 0.00 0,00 AAA 0.00 5,643,509.21 5,643,509.21 4.99% Aaa I AAA 0.00 Total Money Market Fund Fl 5,643,509.21 0.39% 5,643,509.21 0.39% 0.00 0.00 AAA 0.00 NEGOTIABLE CD - 89113E7K6 Toronto Dominion Yankee CD 1,150,000.00 12/20/2016 1,149,964.14 im.00 1,149,967.35 1.03% P-l/A-1+ 0,34 1.15%Due 513/2017 1.15% 1,149,967.35 1.15% 8,853.40 0.00 NR 0,34 1,149,964.14 1,149,967.35 1.03% P-1/A-1+ 0.34 Total Negotiable CD 1,150,000.00 1.15% 1,10,967.35 1.15% 8,853.40 0.00 NR 0.34 SUPRANATIONAL es es 4581XOBV9 Inter AmericanDev Bank Note 1,000,000.00 10/24/2016 1,001,540,00 1W.08 1,000,797.30 0.89% Asia I AAA 0.20 1.125%Due 311512017 0.73% 1,000,797.30 1.00% 3,312.50 0.00 AAA 0.21 45950KBSB International Finance Corp Note 11000,000.00 10/26/2016 1.01 99.97 999,662.00 0.89% Aaa/AAA 0.31 1%Due 4/24/2017 0.78% 1,000,691.97 1.11% 1,861.11 (1,029.97) NR 0.31 2,002,630.00 2,000,459.30 1.T1% Aaa I AAA 0.26 Total Supranational 2,000,000.00 0.75% 2,001,489.27 1.05% 5,173.61 (1,029.97) AAA 0.26 US CORPORATE 46623EJY6 JP Morgan Chase Note 1,000,000.00 0212612016 1.000,470.00 100.02 1,000,170.00 0.89% A3/A- 0.13 1.35%Due 211512017 1.30% 1,000,060A3 1.20% 5,100.00 109.67 A+ 0.12 713448CLO Pepsim Inc.Note 1,500,000.00 Various 1,501,765.00 99.96 1,499,416.50 1.33 Is Al/A 0.15 0.95%Due 212212017 0.75% 1,500,411.77 1.22% 5,106.25 (995.27) A 0.14 17275RAT9 Cisco Systems Note 1,000,000.00 0610812016 1,002,660.00 99.99 999,865.00 0.89% At/AA- 0.17 1.1%Due NMO17 0.73% 1.000,616.96 1.17% 3,605.59 (751.96) NR 0.17 532457BB3 Eli Lilly B Co Note 1,000,000.00 07/21/2016 1,027,930.00 100.81 1,008,125.00 0.91 % A2/AA- 0.20 5.2%Due 3/15/2017 0.79% 1,008,788.32 1.22% 15,311.11 (663.32) A 0.21 037833AM2 Apple Inc Note 1,000,000.00 O6/OBI2016 1.002,590+00 100.07 1,000,702.00 0.89% Aid/AA+ 0.34 1.05%Due 5/5/2017 0.76% 11000,985A5 0A4% 1,604.17 (283.15) NR 0.35 94974BFD7 Wells Fargo Corp Note 1,000,000.00 06/02/2016 1,008,550.00 100.28 1,002,833.00 0.89% A21 A 0.35 2.1%Due 5/8/2017 1.16% 1,003,241.34 1.29% 3,091.67 (408.34) AA- 0.36 6,543,965.00 6,511,111.50 5.T9% At/A+ 0.22 Total US Corporate 6,500,000.00 0.90% 6,514,103.97 1.16% 33,818.76 (2,992.47) A+ 0.22 Chandler Asset Manegeare,a-CONFIDENTIAL 43 ��" Orange County Sanitation District Liquid Holdings Report Account 010282 As of 12/31/16 Purchase Da:o Cost Va:u Mint Price Market Value %of Pod. MoodyIS&P Maturity CUSP Security Description Par Value/Units Book Yie d Book Va u: Mid YTM Accrued Int. Gain/Loss Fitch Duration US TREASURY 91282BA91 US Treasury Note 3,000,000.00 10/20/2016 3,002,939.74 100.01 3,000,411.00 2.66% Ann/AA+ 0.04 0.75%Due 1/15/2017 0.33% 3,000,478.56 0.41 % 10,394.02 (87.56) NR 0.04 912796KE8 US Treasury Bill 5,250,000.00 Various 5,246,586.58 Was 5,248,743.49 4.64% P-1IA-1+ 0.07 0.344%Due 112612017 0.35% 5,248,743+49 0.35% 0.00 0.00 F-1+ 0.07 912828SC5 US Treasury Note 16,000,000.00 Vedous 16,008,178,61 100.04 16,006,368.00 14.21 % Aae/AA+ 0.08 0.875%Due 113112017 0.39% 16,006,291.24 0.40% 68,686.96 76.76 AAA 0.08 912796KT5 US Treasury Bill 15,000,000.00 12/23/2016 14,971,999,58 99.83 14,974,135.21 13.25% P-1IA-1+ 0.30 0.57%Due 412012017 0.58% 14,974,135.21 0.58% 0.00 0.00 F-1+ 0.30 39,229,704.51 39,229,657.70 34.76% Aaa I AAA 0.16 Total US Treasury 39,250,000.00 OAS% 39,229,648.50 0.46% 68,980.98 9.20 AAA 0.16 112,941,192.63 112,916,619.13 100.00% Ann I AAA 0.14 TOTAL PORTFOLIO 112,903,509.21 0.52% 112,921,628.03 0.55% 126,057.65 (5,008.90) AAA 0.14 TOTAL I81MRI0ET VALUE PLUS ACCRUED 113,042,676.78 Chandler Asset Management-CONFIDENTIAL 44 CAROCSDLehman Exposure Holdings Report Account#70284 As of 12/31/16 Purchase D :a Cost V :u: Mid Price Market Value %of Pon Ma.d,IS&P Maturity CUSIP Security Description Par Value/Units Book YI:d Book Va Mkt Y­TM Accrued Int. Gain/Loss Fitch Duration COMMON STOCK SLHOPNTA4 Lehman Brothers,Inc Open Position 60,641.49 11/21/2014 57,842.64 0.42 25,621.03 13.93% NR/NR 0.00 Lang Exposure 0.00% 57,842.64 0.00% 0.00 (32,221.61) NR 0.00 Due 12/31/2016 57,842.64 25,621.03 13.93% NR/NR 0.00 Total Common Stock 60,641.49 NIA 57,842.64 0.00% 0.00 (32,221.61) NR 0.00 US CORPORATE as 525ESC167 Lehman Brothers Note-Defaulted 600,000,00 09/19/2008 352,614,36 6.38 38,250,00 20.80% NRINR OOT Due 112412017 0.00% 352,614.36 000% 0.00 (314,364.36) NR 000 525ESCOV6 Lehman Brothers Note-Defaulted 2,000,000.00 09/18/2008 1,139.57T70 6.00 120,000.00 65.26% NR/NR 3283 Due 10/2212049 0.00% 1,139,577.70 0.00% 0.00 (1,019,577.70) NR 0.00 1,492,192.06 158,250.00 86.07% NR/NR 24.91 Total US Corporate 2,600,000.00 NIA 1,492,192.06 0.00% 0.00 (1,333,942.06) NR 0.00 1,550,034.70 183,871.03 100.00% NRINR 21.44 TOTAL PORTFOLIO 2,660,641.49 NIA 1,550,034.70 0.00% 0.00 (1,366,163.67) NR 0.00 TOTAL MARKET VALUE PLUS ACCRUED 183,871.03 Chandler Ae cManagement-CONFIDENTIAL 45 Rating Agency Comparisons A summary of investment grade ratings are listed below. More complete descriptions of Moody's and Standard & Poor's ratings are included in the following pages. Quality/Grade Mood 's Standard & Poor's Fitch Best Quality Aaa AAA AAA High Quality Aal AA+ AA+ Aa2 AA AA Aa3 AA- AA- Upper Medium Grade Al A+ A+ A2 A A A3 A- A- Medium Grade Baal BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB1 Moodv's - Investment Grade "Aaa" - Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. "A" - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Mae" - Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Bonds in the As, A, and Bee are also assigned "1", "2", or "S' based on the strength of the issue within each category. Accordingly, "At" would be the strongest group of A securities and "AY would be the weakest A securities. Be, B, Caa, Ca, and C - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Be" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa", "Ca" and "C" bonds may be in default. Standard and Poor's-Investment Grade AAA- Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal Is extremely strong. AA - Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A - Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Standard and Poor's - Speculative Grade Retina Debt rated "BB", "B", "CCC", "CC" and "C" is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. "BB" indicates the least degree of speculation and "C" the highest. While such debt will likely have some quality and protective characteristics these are outweighed by major uncertainties or major exposures to adverse conditions. BB - Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB" rating. B - Debt rated "B" has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or"BB" rating. CCC - Debt rated "CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The "CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "B" or"B" rating. CC - The rating "CC' typically is applied to debt subordinated to senior debt that is assigned an actual or implied "CCC' debt rating. C-The rating"C'typically is applied to debt subordinated to senior debt which is assigned an actual or implied "CCC" debt rating. The "C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. Cl -The rating "Cl" is reserved for income bonds on which no interest is being paid. D - Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. Plus (+) or Minus (-) - The ratings from "AA" to "CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. NR-Indicates no rating has been requested,that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy. 'e? Op January 31, 2017 STAFF REPORT Certificates of Participation (COP) Mid-Year Report for the Period Ended December 31, 2016 Summary The District began issuing Certificates of Participation (COPS) in 1990. These COPS were a part of our long-term financing plan that included both variable interest rate and traditional fixed rate borrowing. Following are the current outstanding debt issues of the District: In May 2007, the District issued $95.18 million of fixed rate COPs, Series 2007A refunding a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 4.5 percent. In December 2007, the District issued $300 million of fixed rate COPS, Series 2007E at a true interest cost of 4.71 percent for the issue. In May 2009, the District issued $200 million of fixed rate CON, Series 2009A at a true interest cost of 4.72 percent for the issue. In May 2010, the District issued $80 million of fixed rate BABs, Series 2010A at a true interest cost of 3.68 percent for the issue. In December 2010, the District issued $157 million of fixed rate BABs, Series 2010C at a true interest cost of 4.11 percent for the issue. In October 2011, the District issued $147.595 million of fixed rate COPS, Series 2011A refunding a portion of the Series 2000 variable rate debt and a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 2.61 percent. In March 2012, the District issued $100.645 million of fixed rate COPs, Series 2012A refunding the Series 2003 fixed rate debt. The true interest cost for the issue is 3.54 percent. ODSD ♦ P.0.Box8127 ♦ Foun in Velley,O 9272M127 ♦ (714)%2-2411 COP Mid-Year Report For the Period Ended December 31, 2016 Page 2 of 2 In August 2012, the District issued $66.395 million of fixed rate COPs, Series 2012B refunding the Series 2000 variable rate debt. The true interest cost for the issue is 1.50 percent. With the issuance of Series 201213, there remains no variable interest rate COPs at the District. In August 2014, the District issued $85.09 million of fixed rate COPS, Series 2014A, refunding a portion of Series 2007B debt. The true interest cost for the issue is 2.34 percent. In February 2015, the District issued $127.51 million of fixed rate COPS, Series 2015A, refunding $152.99 million of the Series 2007E debt. The true interest cost for the issue is 3.30 percent. In March 2016, the District issued $145.88 million of fixed rate CANs, Series 2016A, refunding $162.78 million of the Series 2009A fixed rate debt. The true interest cost for the issue is 3.02 percent. In November 2016, the District issued $109.875 million of fixed rate CANS, Series 201613, refunding the Series 2014B CANs. The true interest cost for the issue is 0.87 percent. Additional Information The graph entitled, "OCSD COP Rate History Report,' shows the various fixed interest rates of the District's thirteen debt issues. Attachments 1. Graph - OCSD COP Rate History Report Prepared by Finance,1/17/2017,4:10 PM OCSD COP RATE HISTORY REPORT DECEMBER 2016 6.00 5.00 4.00 d w 3.00 2.00 1.00 0.00 m m m m e m e e m e m m m m e m m e m e m m m DATE 3 A e a a A a 3 3 n 3 3 e s �sen-2007FFixO —8 fts2007a Fixed �sedes200ee Fa �Seno2o0an Hxed —aedes2moNFixed +senes2010c Fixed �sedessOtw Fixed �sene 2012n Fixed — 8enn2012e Fixed �sedes2014n Fam �seno2014a Hxed �sedes2015n Fixed �Sens 2016n Fixed � Sedes 201ea axed H1depAasdMMCommonWonthly and Quarterly Treasurers Report\COP Rate History Report F 16-17 ORANGE COUNTY SANITATION DISTRICT FINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.ocsd.com 12/31/16 ADMINISTRATION COMMITTEE Meeting Dare To ad.ofDir. oz 0e/v — AGENDA REPORT Item Number Item Number a — Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: INVESTMENT PERFORMANCE RESULTS GENERAL MANAGER'S RECOMMENDATION Information Only. SUMMARY Chandler Asset Management began serving as the Orange County Sanitation District's (Sanitation District) Investment Manager in November 2014. The Portfolio Manager and Senior Vice President, William Dennehy, CFA, will be providing an informational presentation on the performance of the Sanitation District's short term and long term investment portfolios over the past year. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: N/A Page 1 of 1 ADMINISTRATION COMMITTEE Meng Date TOBE. Dir. oz/etio8117 ozfzz/Ory AGENDA REPORT ItemNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2017-18 BUDGET UPDATE GENERAL MANAGER'S RECOMMENDATION Approve the FY 2017-18 budget assumptions and direct staff to incorporate these parameters in preparing the FY 2017-18 budget update. BACKGROUND For the budget update process, the Administration Committee establishes the Budget Assumptions and approves the Budget Calendar. Staff will make a brief presentation at the Committee meeting. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Currently, there are no proposed changes to the Orange County Sanitation District Fiscal Policy. The Fiscal Policy is published in the FY 2016-17 and 2017-18 Budget document (Section 3, Pages 1-8),and is available on the Orange County Sanitation District's website. FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Preliminary Budget Assumptions Highlights (Pages 2-5) • Budget Update Calendar (Pages 6-9) Page 1 &9 FY 2017-18 Preliminary Budget Assumptions Economic Assumptions • Inflation for Orange County in FY 2017-18 is projected to be 1.6 percent based on the 2017 projected percentage change in consumer price index obtained from the December 2016 Economic and Business Review report prepared by Chapman University. This is 0.4 percent lower than the 2.0 percent inflation factor that was used for the FY 2017-18 budget. Revenue Assumptions • Based upon the revised Sewer Service Fee Rate Schedule approved by the Board in May 2015, the single-family residence (SFR) rate will increase by 1.2 percent to $331 in FY 2017-18. • Note that each $1 increase in the SFR rate generates approximately$900,000 per year. • The capital facilities capacity charge (CFCC)fee captures only those infrastructure costs that relate to additional capacity. The CFCC fee will increase for FY 2017-18 by the increase in the Engineering-News Record construction cost index. Other infrastructure costs such as improved treatment, rehabilitation, refurbishment, and replacement,will be supported through userfees. • Given the Facilities Master Plan adopted in December 2009, a rate study was completed in January 2013 to ensure that the CFCC fee methodology remains equitable and to confirm that an appropriate share of system costs would be recovered from new development. • Revenues will be budgeted to reflect little growth in Equivalent Dwelling Unit (EDU) connections that have remained flat over the past five years. • Changes in permit user rates for flow, Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS) are based upon the change in the SFR and will increase by 1.2 percent for FY 2017-18. • Annexation fees capture both the net current assets and the equivalent property tax allocations totaling $4,235 per acre. • Annexable property in the District's service area sphere is minimal; consequently, no FY 2017-18 income from annexation fees is anticipated. • Property tax revenues are preliminarily estimated to increase by approximately five percent from FY 2016-17 to $91,368,000. A two percent annual increase in Assessed Value is authorized by the state constitution and is included in the increases noted above. The additional increase in assessed value is from authorized increases to market value when property is sold at a higher value. • Earnings on the investment of the District's operating cash and reserves will be budgeted at 1.0 percent of the average cash and investment balance projected for the fiscal year. • No additional debt issuance is scheduled for FY 2017-18. 2 FY 2017-18 Preliminary Budget Assumptions Operating Assumptions • Operating expenses are expected to approximate the adopted FY 2017-18 budget of $152.4 million. • Average daily flows are projected at 185 mgd for FY 2017-18. This projection reflects an expected increase in economic activity. The FY 2017-18 flow projection of 185 mgd reflects an increase of 1.6 mgd from the actual for the first 5 months of the current year and is 2 mgd higher than the final actual flow for FY 2015-16. Employee/Staffing Assumptions • Staffing will remain essentially flat (less than 1%). The total FY 2017-18 authorized staffing level is 627.00 FTEs, excluding Management Discretion positions. • Vacant positions as of 12/31/2016 are budgeted at 50 percent of step 1 for the remainder of FY 2016-17 and at 100 percent of step 2 for FY 2017-18. • New positions will be projected at 100 percent of step 1 for FY 2017-18. • A 5.0 percent vacancy factor on authorized positions has been budgeted for FY 2017-18. The actual vacancy factor for 2015-16 was 8.5 percent. This vacancy factor accounts for time spent for recruitment and turnover. • The Memorandums of Understanding (MOUs) for the OCEA, the Loral 501, and the Supervisor and Professional (SPMT) groups expire on June 30, 2019. Salary adjustments will be included in the budget for COLA based upon the current MOUs. • OCERS rates for FY 2017-18 will decrease as a result of paying off the UAAL. Retirement costs for employees enrolled in OCERS Plans G and H are estimated at a rate of 15.83 percent of the employee's base salary for FY 2017-18, down from 16.59 percent in FY 2016-17. The rates for Plans G and H include the District's pickup of 3.5 percent of employees' required contributions. Employees enrolled in OCERS Plan B are estimated at a rate of 10.30 percent of the employee's base salary for FY 2017-18, down from 10.99 percent in FY 2016-17. All employees hired on or after January 1, 2013 are enrolled in OCERS Plan U and are estimated at a rate of 9.25 percent for FY 2017-18, down from 9.69 percent in FY 2016-17. Interns are not enrolled in OCERS so their retirement benefits are calculated at 6.2 percent (FICA rate). • Other employee benefits and insurances will be budgeted to increase in FY 2017-18 by moderate but yet to be determined amounts. Materials, Supplies, & Services Assumptions • The proposed operating budget will continue to reflect an emphasis on safety, security, and maintenance of plant assets and infrastructure. • An amount equal to half of one percent of the Operating materials and services budget will be a contingency for prior year re-appropriations. Since the current year's budget lapses on June 30, a contingency is needed in the succeeding budget year for goods or services ordered at the end of one budget year but not delivered until the following year. 3 FY 2017-18 Preliminary Budget Assumptions • An amount equal to 0.85 percent of the Operating materials and services budget will be the General Manager's contingency budget. These funds will be allocated to appropriate line items during the year after requests and justifications for unanticipated needs are approved by the General Manager. • Resource needs for strategic initiatives will be included in the budget. Capital Improvement Program Assumptions • The FY 2017-18 cash flow budget, based on the most current Validated Capital Improvement Program (CIP), is the target. • The baseline CIP cash flow for FY 2017-18 is$138 million. • Continual evaluation of the CIP by the Asset Management Team may result in deferral or reduction of some projects and a resultant increase in O&M repair costs for materials and services, if the net cash flow impact is a decrease. • The FY 2017-18 CIP budget will only increase for critical projects which were not previously identified in the Strategic Plan Update. • For the first five months of FY 2016-17, $45.5 million of the $171.3 million CIP budget, approximately 26.6 percent, was expended. Debt Financing • The District will issue new debt in the form of Certificates of Participation (COP) as needed to fund the CIP and to maintain reserves. • No additional debt issuance is scheduled for FY 2017-18. • Debt will only be used for CIP and capital expenses, not for operating expenses. • Capital financing plans no longer include future borrowings over the next ten years as the approved user fee schedule is considered sufficient. • Borrowing is proposed only for facilities which do not add capacity and that are funded by all users for replacement, rehabilitation, and improved treatment. Reserve Assumptions The existing reserve policy is summarized as follows: ► A cash flow reserve will be established to fund operations, maintenance and certificates of participation expenses for the first half of the fiscal year, prior to receipt of the first installment of the property tax allocation and sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve will be established as the sum of an amount equal to six months operations and maintenance expenses and the total of the annual debt(COP) service payments due in August each year. ► An operating contingency reserve will be established to provide for non-recurring expenditures that were not anticipated when the annual budget and sewer service fees 4 FY 2017-18 Preliminary Budget Assumptions were considered and adopted. The level of this reserve will be established at an amount equal to ten percent of the annual operating budget. ► A capital improvement reserve will be maintained to fund annual increments of the capital improvement program. The long-term target is for one half of the capital improvement program to be funded from borrowing and for one half to be funded from current revenues and reserves. With this program in mind, the target level of this reserve has been established at one-half of the average annual capital improvement program over the next ten years. ► Catastrophic loss, or self-insurance, reserves will be maintained for property damage including fire, flood and earthquake, for general liability and for workers' compensation. These reserves are intended to work with purchased insurance policies, FEMA disaster reimbursements and State disaster reimbursements. The potential infrastructure loss from a major earthquake, of which the District currently has limited outside insurance coverage of$25 million, has been estimated to be as high as $1.3 billion. The level of this reserve has been set at$57 million should such a catastrophic event occur. This reserve amount will assist the District with any short-term funding needs until Federal and State assistance becomes available. ► Accumulated capital funds will be set aside for certain specific, short-term capital improvements as the need and availability arise. ► A capital replacement/renewal reserve policy has been established to provide thirty percent of the funding to replace or refurbish the current collection,treatment and disposal facilities at the end of their useful economic lives. Based on the FY 2011-12 Asset Management Plan, the current replacement value of these facilities is estimated to be $3.14 billion for the collection facilities and $3.12 billion for the treatment and disposal facilities. The initial reserve level has been established at $50 million, which will be augmented by interest earnings and a small portion of the annual sewer user fee, in order to meet projected needs through the year 2030. ► Provisions of the various certificates of participation (COP) issues require debt service reserves to be under the control of the Trustee for that issue. These reserve funds are not available for the general needs of the District and must be maintained at specified levels. The current level of required COP service reserves is projected to be $186.4 million. ► Accumulated funds exceeding the levels specified by District policy will be maintained in a rate stabilization fund. These funds will be applied to future years' needs in order to maintain rates or to moderate annual Fluctuations. There is no established target for this reserve. 5 FY 2017-18 Budget Calendar Tasks Responsibility EvenUDue Date PHASE I-BUDGET PREPARATION Preliminary Budget Assumptions Identified Financial Planning 12/22/16 Capital Improvement Program (CIP)— Future Project Engineering Planning 1/6/17 Attributes Reviewed and Updated Preliminary Budget Assumptions & Draft Budget Financial Management 1/12/17 Calendar Presented to Executive Management Team (EMT) and Managers Team (MT) Preparation for Budget Kickoff/Training Session: Financial Planning 1/20/17 • Salary and benefits downloaded to Excel worksheets • Develop line item worksheets with mid-year actual expense • Prepare/update budget instruction manual CIP— Engineering Validation Inputs Complete Engineering Project 1/20/17 Managers CIP— New Project Numbers Assigned Engineering Project 1/27/17 Management Office (PMO) Budget Kickoff/Training Session: Financial Planning 1/30/17 • Distribute budget instruction manual update • Conduct budget training session • Review submission deadlines Budget Assumptions Presented to Administration Financial Management 218/17 Committee Mid-Year Financial Report to Administration Committee Financial Management 2/8/17 Operating Divisional Budgets: New Position and Divisional Budget 2/10/17 Change to Existing Position Decision Packages Due to Coordinators Human Resources (Richard Spencer, Ext. 7164)with copies to John Ralston Operating Budget: Promotional Items Request Forms Divisional Budget 2/10/17 and Conference Request Forms Due to Dr. Robert Coordinators Ghirelli (Division 110) Capital Equipment Budget: Vehicle Capital Equipment Divisional Budget 2/10/17 Decision Packages Due to Fleet Services (Jim Tintle, Coordinators Ext. 7214) 6 FY 2017-18 Budget Calendar Tasks Responsibility Event/Due Date Capital Equipment Budget: Computer Capital Divisional Budget 2/10/17 Equipment Decision Packages Due to Information Coordinators Technology(John Swindler, Ext. 7260) Mid-Year Financial Report to Board Financial Management 2122117 Division Budget Packages Due to Financial Planning: Divisional Budget 2/24/17 • Projection of 2016-17 actual operating costs Coordinators • Proposed operating costs for 2017-18 • Operating Budget Expense Detail • Meetings, Memberships and Training Requests • Capital Equipment Decision Packages (other than computer and vehicle decision packages which were due on 2/10/17) • New program decision packages (Financial Planning will collate and bind these items—along with salary information-into the Preliminary Division Budget Document for use during the budget review process.) CIP— Non-engineering CIP project validation forms Non-engineering 2/27/17 completed & approved Project Managers CIP— Preliminary capital equipment request estimates Financial Planning 3/1/17 delivered to PMO Complete the Compilation of the Preliminary Division Financial Planning 3/1/17 Budget Update Packages CIP— Unified Preliminary CIP Budgets& Equipment Engineering PMO 3/7/17 Request Reports and Analysis Created CIP—Validated CIP budgets delivered to IT/Finance Engineering PMO 3/10/17 Department Budget Narrative - Updates of the Department Budget 3/23/17 FY 2016-17 & 2017-18 Budget Executive Summary Coordinator Due to Financial Planning PHASE 11 -BUDGET REVIEW Divisional Budgets- Distribution of Preliminary Line Financial Planning 3/2/17 Item Requested Budgets to Department Heads and Managers along with Analysis/Questions for Review 7 FY 2017-18 Budget Calendar Operating Budget— Information on New Positions, Human Resources 3/6/17 Position Upgrades & Reclassifications Submitted to the General Manager Tasks Responsibility Event/Due Date Operating Budget— Division Budget Review Meetings Financial Planning & 3/6/17—3/9/17 with Finance and Division Representatives Division Representatives CIP— Review/Adjust Preliminary CIP Budget Engineering 3/8/17 Management CIP— Preliminary Engineering/Finance Budget Review Engineering/Financial 3/13/17 Workshop Management CIP— Final Adjustments/Confirm 20 Year Cash Flow Engineering/Financial 3/14/17 Schedules/Final capital equipment requests delivered Management to PMO Operating Budget-Completion of Preliminary Financial Planning 3/14/17 Divisional Budgets and Compilation into Departmental Budgets Operating Budget— Recommendations to General Financial Planning 3/15/17 Manager Final Operating Budget—General Manager Review of Financial Planning, 3/16/17—3/22/17 Budget Recommendations General Manager, & Department Heads Capital Equipment Budget— Requests Reviewed & Financial Planning, 3/16/17—3/22/17 Approved General Manager, & Department Heads CIP—Approve Proposed CIP Budget EMT 3/23/17 Operating Budget— Report of General Manager's General Manager 3/27/17 Decisions on New Positions, Position Upgrades & Reclassifications Submitted to the Financial Planning CIP Budget Update- Operations Committee Review Engineering 4/5/17 PHASE III -BUDGET PRESENTATION Operating Budget— Presentation of Preliminary Budget Financial Management 4/3/17 Update by Division/Department to EMT Operating Budget Update—Overview to Administration Financial Management 4112117 Committee 8 FY 2017-18 Budget Calendar CIP- Final CIP Budget Document Preparation and Financial Planning 4/13/17 Incorporation into Final Budget Document CIP— Review draft of Final Budget Document pages Financial Planning 4/17/17 with Engineering Planning & PMO Tasks Responsibility Event/Due Date Initial - Proposed Budget finalized Financial Planning 4/24/17 General Manager's Budget Message Completed General Manager/ 5/12/17 Financial Management Approval of General Manager's Budget Message General Manager 5/17/17 Final - Proposed Budget to Printer Financial Planning 5/24/17 PHASE IV-BUDGET DELIBERATIONS Final Draft- Proposed 2017-18 Budget Update Financial Management Ops—6I7/17 Presented to Committees Admin—6/14/17 Public Hearing & Board Adoption Board of Directors 6128117 PHASE V-DISTRIBUTION OF BUDGET Final line item budget and equipment budgets posted Financial Planning 7/10/17 in H:\ntglobal 9 ADMINISTRATION COMMITTEE Meng Dat0 TOBE. Dir. oz/ltioe/17 oz/zz/Ory AGENDA REPORT Item Item Number 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: COOPERATIVE PROCUREMENT AGREEMENTS WITH U.S. COMMUNITIES GOVERNMENT PURCHASING ALLIANCE AND NATIONAL ASSOCIATION OF STATE PROCUREMENT OFFICIALS VALUEPOINT COOPERATIVE PURCHASING ORGANIZATION GENERAL MANAGER'S RECOMMENDATION Authorize the purchasing of information technology products, services, and solutions utilizing the U.S. Communities Government Purchasing Alliance and National Association of State Procurement Officials ValuePoint Cooperative Purchasing Organization (NASPO ValuePoint) for the period March 1, 2017 through February 29, 2020 for a total amount not to exceed $6,000,000, in accordance with Ordinance No. OCSD-47, Section 2.03(B) Cooperative Purchases. BACKGROUND The Orange County Sanitation District (Sanitation District) desires to select U.S. Communities Government Purchasing Alliance and NASPO ValuePoint as providers of technology products, services, and solutions needed to complete an entire technology solution based on competitive contract pricing, breadth of product offerings, availability, and the ease of using online ordering systems. Large capital items will be procured through the bidding process and all purchases continue to follow the existing approval and procurement processes in accordance with Purchasing Ordinance No. OCSD-47. These cooperatives provide deep discounts not normally available through the Sanitation District's bid process. To properly maintain and provide solutions to the Sanitation District's facilities, the Information Technology (IT) division has a need to purchase technology products, services, and solutions. Such item requirements have been forecasted based upon projected obsolete equipment, historical product failure rates, and new items to address general capacity, redundancy, or security. Since technology changes frequently, it is not appropriate to stock these items in the Sanitation District's warehouses. IT currently uses vendors providing technology items and recurring maintenance support and services using U.S. Communities Government Purchasing Alliance and NASPO ValuePoint. Purchases include: • Networking and telephony equipment • Servers and desktop computers Page 1 of 4 • Data storage and backup appliances • Software licenses and maintenance agreements • Consulting services • Disaster recovery and cyber security solutions • Printers, scanners, and monitors • Computer peripherals • Uninterruptible power supply components Example U.S. Communities Government Purchasing Alliance contracts include: • Insight Public Sector Contract: Technology Products, Services and Solutions - Contract Number: 4400006644, Lead Agency: County of Fairfax, Virginia • Graybar Telecommunications Contract: Telecommunication Supplies - Contract Number: MA-IS-1540125, Lead Agency: County of Los Angeles, California • OLT Solutions Contract: Oracle Products, Services and Solutions - Contract Number: 13120, Lead Agency: Maricopa County, AZ • DLT Solutions Contract: Amazon Web Services- Contract Number: 4400006643, Lead Agency: County of Fairfax, Virginia Example NASPO ValuePoint contracts include: • Hewlett Packard Enterprise: Computer Equipment, Peripherals & Related Services - Master Agreement No. MNNVP-134, Lead State: Minnesota • HP, Inc.: Computer Equipment, Peripherals & Related Services - Master Agreement No. MNNVP-133, Lead State: Minnesota • Cisco Systems, Inc.: Computer Equipment, Peripherals & Related Services - Master Agreement No. MNWNC-105, Lead State: Minnesota • Nimble Storage, Inc.: Computer Equipment: Storage including Related Peripherals & Services — Master Agreement No. MNWNC-122, Lead State: Minnesota RELEVANT STANDARDS • Efficiency efforts reduce the cost to provide the current service level or standard • Ensure public's money is wisely spent • Maintain and Support Enterprise Asset and Financial Management Systems • Maintain a proactive asset management program PROBLEM The procurement process for information technology items and services for the Sanitation District involves many efforts and associated costs. IT and Purchasing work diligently in finding ways to streamline the procurement process while minimizing cost concomitant of the procurement of technology items. Page 2 of 4 PROPOSED SOLUTION The Sanitation District's purchasing power is limited, therefore, utilizing other large agencies' cooperative agreement(s) who have completed a vetted procurement process is a viable and economical solution. TIMING CONCERNS Maintenance and deploymentof new systems and solutions is an imperative for continued support of plant operations and maintenance initiatives without delay. RAMIFICATIONS OF NOT TAKING ACTION Risk of being unable to maintain/deploy or delay IT projects supporting plant operations and maintenance. Increased cost related to the procurement of technology items. PRIOR COMMITTEE/BOARD ACTION/S: April 2016 - Board approval authorizing purchases of information technology products, services, and solutions using the County of Fairfax, Virginia contract number#440000664 through April 30, 2019 (Item No. 16). October 2015 - Board approval of Cooperative procurement with Admin Minnesota Materials Management Division (WSCA/NASPO-HP). November 2014 - Board approval of Cooperative procurement (WSCA/NASPO-Cisco). ADDITIONAL INFORMATION The State of California Procurement Division (PD) is the central purchasing authority for all State departments and local government agencies. With a massive marketplace and billions of dollars in purchasing power, they are able to offer a lower procurement cost to California's State, county, city, special district, education, and other government entities through their Leveraged Procurement Agreements (LPAs). LPAs allow entities/agencies to buy directly from suppliers through existing contracts and agreements. LPAs offered by the State to California governmental agencies include the U.S. Communities Government Purchasing Alliance and NASPO ValuePoint for technology products, equipment and technology services, and solutions. Upon utilization of each contract under these LPAs, OCSD staff verifies competitiveness of pricing based upon volume purchasing through these cooperatives. U.S. Communities Government Purchasing Alliance is a government purchasing cooperative that reduces the cost of goods and services by aggregating the purchasing power of public agencies nationwide. U.S. Communities has over 55,000 participating agencies, from both the public and nonprofit sectors. The U.S. Communities Advisory Board is made up of key government purchasing officials from across the United States. Page 3 of 4 The Advisory Board provides leadership and overall direction for the U.S. Communities Government Purchasing Alliance. The National Association of State Procurement Officials (NASPO) ValuePoint Cooperative Purchasing Organization (formerly WSCA-NASPO) provides the highest standard of excellence in public cooperative contracting. The organization leverages the leadership and expertise of all states with the purchasing power of their public entities, NASPO ValuePoint delivers best value, reliable, competitively sourced contracts. Since 1993 NASPO ValuePoint has been the cooperative purchasing arm of NASPO (the National Association of State Procurement Officials) encouraging, fostering, and guiding the nation's most significant public contract cooperative. NASPO ValuePoint is a unified, nationally focused cooperative aggregating the demand of all 50 states, the District of Columbia, and the organized US territories, their political subdivisions, and other eligible entities spurring best value, innovation, and competition in the marketplace. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance No. OCSD-47, Section 2.03(B) Cooperative Purchases. This item has been budgeted in the established annual Joint Operating and Capital Improvement Program budgets. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: N/A Page 4 of 4 ADMINISTRATION COMMITTEE neebng Date To ad.of Dir. Dz/oe/17 AGENDA REPORT Item Number Item Number Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: James Colston, Director of Environmental Services SUBJECT: ORANGE COUNTY SANITATION DISTRICT ENVIRONMENTAL SERVICES RESOURCE PROTECTION GENERAL MANAGER'S RECOMMENDATION Information Only. BACKGROUND Each month, staff provides an informational presentation on topics of interest to the Board of Directors. This month's topic: Orange County Sanitation District Environmental Services Resource Protection: Protecting Water, Biosolids, and Gas for Reuse. RELEVANT STANDARDS • Comply with the Clean Water Act • Safe beneficial reuse of Biosolids • Meet volume and water quality needs to support GW RS System ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: N/A Page 1 of 1 ADMINISTRATION COMMITTEE Meeting Date To ad.of Dir. Dyoe/v AGENDA REPORT Item Number Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: ORANGE COUNTY SANITATION DISTRICT RECENT STORM UPDATE GENERAL MANAGER'S RECOMMENDATION Information Only. BACKGROUND An update on the recent storms, advanced preparations, and information on high flow activity will be presented. RELEVANT STANDARDS • Meet or exceed sanitary sewer overflow regulations • Meet volume and water quality needs to support GW RS System ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 1 of 1 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARB California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CIP Capital Improvement Program CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA U.S. Environmental Protection Agency FOG Fats, Oils, and Grease gpd Gallons per day GWR System Groundwater Replenishment System (also called GWRS) ICS Incident Command System IERP Integrated Emergency Control Plan LOS Level of Service MGD Million gallons per day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O&M Operations and Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District COBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant Services Agreement POTW Publicly Owned Treatment Works ppm Parts per million PSA Professional Services Agreement RFP Request For Proposal Glossary of Terms and Abbreviations RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board SAWPA Santa Ana Watershed Project Authority SCADA Supervisory Control and Data Acquisition system SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SRF State Revolving Fund SSMP Sanitary Sewer Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation WERF Water Environment Research Foundation WIFIA Water Infrastructure Financing and Innovation Act Activated-sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater. Benthos—The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or near the seabed, also known as the benthic zone. Biochemical Oxygen Demand (BOD) —The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Blogas — A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel. Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria —A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coil are the most common bacteria in wastewater. Glossary of Terms and Abbreviations Collections system — In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP) — A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (D/T) — the dilution at which the majority of the people detect the odor becomes the D/T for that air sample. Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect"). Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service(LOS)—Goals to support environmental and public expectations for performance. NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility. Publicly-owned Treatment Works(POTW)— Municipal wastewater treatment plant. Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge— Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater. Glossary of Terms and Abbreviations Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed —A land area from which water drains to a particular water body. OCSD's service area is in the Santa Ana River Watershed.