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Home My WebLink AboutItem 13 PPP 02-05-2020 Operations Committee - Reserves and Investments OCSD Reserves MIAy & Investments RENI .�-�.� Wally Ritchie, Controller u �= _ Operations Committee = ` POWFebruary 5, 2020 Mg 1 Seven Reserve Criteria 1) Next Year's Dry Period (Cash Flow Reserve) - 50% of the Operating Budget 2) Operating Contingencies - 10% of Operating Budget 3) Next Year's Dry Period Debt Service - 100% of August COP Debt Service 4) Capital Improvement Reserve - 50% of average CIP balance to 2030 5) Debt Service Reserve - 10% of the Outstanding COPs 6) Operating & Capital Share of Catastrophe Funds 7) Replacement and Refurbishment - 2% Per Year NonmDiscretionary Criteria � ` 1 ai Ems- 1 ) Next Year's Dry Period (Cash Flow Reserve) - 50% of the Operating Budget 3) Next Year's Dry Period Debt Service - 100% of August COP Debt Service 5) Debt Service Reserve - 10% of the Outstanding COPs ate-- Discretionary Reserve � � 41 Criteria j Operating Contingencies - 10% of Operating Budget 4) Capital Improvement Reserve - 50% of average CIP balance to 2030 6) Operating & Capital Share of Catastrophe Funds 7) Replacement and Refurbishment - 2% Per Year Poo, OCSD Investments •Investment Objectives Provide safety of principal Second • Provide sufficient liquidity Third • Earn a commensurate rate of return consistent with the constraints imposed by the objectives listed above MA Chandler Asset `c! M t an.aqemen • Specializing in Investment Management for Public Agencies • Independent & Employee-Owned • Fixed income specialist since 1988 • Founded by public investment professionals • Headquartered in San Diego, CA • Stable Team of Investment Professionals • Team of investment professionals average over 21 years portfolio management experience • Disciplined, repeatable investment philosophy and process • Proprietary investment analysis � -� Chandler Asset r j ■Management Custom Investment Programs • Investment solutions based on your risk profile and return goals • Strategies for operating, short, and long-term reserves • Direct contact with investment management team Corporation <1% Non Profit 1% Assets Under Management $19.5 Billion Public Healthcare 80% 17% Sub-advised 2% :v • • j & pd Ikk VZ11-I , _ Iate 4 c� • The US Consumer will remain the engine of domestic economic growth in 2020. Employment • The low unemployment 14.0 w 400 (U3) and 12.0 — 350 300 underemployment (U6) 100 250 rates should continue to g° 200 6.0 150 support consumer 100 4.0 ill Iill I I 50 spending. 2.0 i 0 N m m m � v v Ln Ln Ln w w w n n n w w w m m m 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N 0`0 N 0`0 N 0000 N 0`0 N 0`0 N 0`0 N 0`0 N • Non-Farm Payrolls have � CDCD 'ACDC � CDCD " CDCD " CDC � CDCD " CDC �remained robust, with a NFP U3 U6 current 3 month moving average at 184k. 1'z mjWpd 1 • conom ate The savings rate is elevated , providing further support to the view the US consumer Personal Savings Rate asa% of Disposable Personal Income will remain a tailwind for the 12.0 11.0 US economic outlook. 10.0 9.0 • The coronavirus is a 8.0 7.0 0 6.0 T Y I),d:� concern for global growth 5.0 'IV 4.0 the Chandler team is 2.0 u1 r� M M O cV m �t Ln t�o r, M o r4 m zT Ln �D r� oo monitoring closely. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N M Ln � n W Q`t O `-I N `-I N fY Ln �O r- rl O O O O CD CD CD CD CD �--I rl i--I O CD CDO O O O O • The US election cycle is Savings Rate Benchmark likely to impact sentiment in the 2H of 2020. OCSD has Two Major Portfolios Long -Term and Short Term dh" The Orange County Sanitation District's Investment Policy is consistent with California Government Code. Long-Term • Approximately $580 million Compares to the ICE BAML 1 -5 Year Corporate Government Rated AAA — A Index Short-Term • Approximately $ 176 million Compares to the 3-month T-Bill rate Operates with a maximum maturity of one year amm Long =Term ; 2L Asset Allocation -3 Quality Distribution As of December 31,2019 Orange County Sanitation District Long Term December 31,2019 vs.September 30,2019 80.0% Category Percent 7 O% US Treasury 35% 60.0% 50.0% Agency 23% 40.0% 0.0% US Corporate 21 % 20.0% Asset Backed Sec 8% 10.0% r -AAA AA A <p NR Other 7% 0 12/31/2019 AA A ■9/30/2019 Supranational 6% 12/31/2019 75.4% 6.1% 17.2% 0.0% 1.3% Total 10 0% 09/30/2019 73.3% 6.9% 18.2% 0.0% 1.6% Soarer:Mootlrs Ratings Long =Term Portfolio L L-C Performance Average Market Yield December 31 , 2019 2 . 74% Benchmark 2 .67% September 30 , 2019 2 .82 % ShortmTerm Portfolio Asset - -� Allocation Quality Distribution Orange County Sanitation District Liquid As of December 31,707 q December 31,2019 vs.September 30,2019 Category Percent 100.0% US Treasury 78% 90.0% 80.0% US Corporate 7% 70.0% 60.0% Agency 6% 50.0% 40.0% Commercial Paper 3% 30.0% 20.0% Money Market 3% Mo% MM 0.0% AAA AA A <A NR Negotiable CDs 2% 0 12/31/2019 ■9/30/2019 Supranational 1 % 12/31/2019 92.3% 1.1% 6.6% 0.0% 0.0% O O O/0 09/30/2019 83.0% 0.7% 16.3% 0.0% 0.01 Total Source:Moodys Ratings Short=Term Portfolio .41 WLI Performance Average Market Yield December 31 , 2019 1 .68% Benchmark 1 . 50% September 30 , 2019 2 . 01 % PV Q ' uest 'ions .