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* Healthcare costs trends utilized actual rated for 2009 and a 9.5% increase for HMO <br />and 10% increase for PPO plans. Future years were reduced to an ultimate rate 5% for both <br />HMO and PPO plans by 2021. <br />* The CPI was assumed to be a constant at 3% per year. <br />* Assets in the plan will be invested in a moderately conservative money market portfolio <br />that will provide current income with capital appreciation as a secondary objective. <br />* 5.5% Investment rate of return (net of administrative expenses). <br />Investment Policies and Procedures <br />The City maintains a cash and investment pool, which includes cash balances and <br />authorized investments of all funds, which the Finance Director invests to enhance interest <br />earnings. The pooled interest earned is allocated to the funds based on average daily cash and <br />investment balance in these funds. The City invests its funds in accordance with the City's <br />Investment Policy (the "Investment Policy "), which is subject to annual review and approval by <br />the City Council. The purpose of the Investment Policy is to establish the investment goals of <br />safety, liquidity, and yield (in that order). The City's Investment Policy complies with the <br />provisions of the California government Code, Sections 53600 through 53659 (the authority <br />governing investments for municipal governments in the State). The Investment Policy limits <br />the City to investments authorized by State law. In addition, the Investment Policy establishes <br />further guidelines. A copy of the Investment Policy is attached as Appendix D. <br />The overall strategy of the Investment Policy is to earn a maximum rate of return, while <br />preserving capital and sufficient liquidity to meet operating cash requirements. This is <br />accomplished by maintaining a portfolio of allowable investment instruments that have <br />acceptable credit quality standards with maturities matching expected cash needs. The City <br />does not actively trade securities in the open market. The City utilizes a "buy and hold" <br />approach, which means that it holds securities until maturity unless they are called prior to their <br />scheduled maturity dates by the issuing entity. <br />The City Council reviews monthly investment reports. According to the report for the <br />month ended , 2011, the City has invested funds as set forth in the table below, <br />which had an average number of days to maturity of _ days based upon the earlier to occur <br />of maturity or redemption. <br />Table A -18 <br />CITY OF SAN LEANDRO <br />Investment Portfolio as of [June 30], 2011 <br />Source: City of San Leandro. <br />A -31 <br />% of <br />Days to <br />Par Value <br />Market Value <br />Cost <br />Portfolio <br />Mat. /Call <br />YTM /C <br />Federal agency securities <br />$21,590,118 <br />$22,184,541 <br />$22.416.191 <br />25.7% <br />481.8 <br />48.00% <br />Money Market <br />31,763 <br />31,763 <br />31.763 <br />0.04 <br />448.95 <br />1.00 <br />U.S. Treasury Notes <br />5,425,000 <br />5,617,663 <br />5,656,602 <br />6.46 <br />521.95 <br />51.00 <br />Local Agency Investment Fund <br />56,164,380 <br />56,164,380 <br />56,164,380 <br />66.86 <br />__ <br />__ <br />(LA IF) <br />Total <br />$83,211,261 <br />$83,998,347 <br />$84.268,936 <br />99.06% <br />Source: City of San Leandro. <br />A -31 <br />