HomeMy WebLinkAbout2009-1116 Study Session PACKET
CITY OF
ASHLAND
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CITY COUNCIL STUDY SESSION
AGENDA
Monday, November 16, 2009 at 5:30 p.m.
Siskiyou Room, 51 Winburn Way
5:30 p.m. Study Session
1 . Look Ahead Review
2. Discussion regarding what ideas do the Mayor and Council have about the Fiscal
Stability goal [30 Minutes]
3. Discussion regarding would the City Council review and update the current
investment policy [15 minutes]
In compliance with the Americans with Disabilities Act, if you need speciat assistance to participate in this
meeting, ptease contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735-
2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to
ensure accessibility to the meeting (28 CFR 35. 102-35.104 ADA Title I).
COUNCIL !vIEETINGS ARE BROADCAST LIVE ON CHANNEL 9
ViSIT THE CITY OF ASHLAND'S WEB SITT: AT \VWW.ASHLilND.OR.lJS
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CITY OF
ASHLAND
Council Communication
Meeting Date:
Department:
Secondary Dept.:
Approval:
Study Session - Fiscal Stability Discussion
November 16,2009 Primary Staff Contact: Lee Tuneberg
Administrative Services E-Mail: tuneberl@ashland.or.us
None Secondary Contact: None
Martha Benne Estimated Time: 45 Minutes
Question:
What ideas do the Mayor and Council have about the Fiscal Stability goal?
Staff Recommendation:
Staff asks Council to review the included information and provide staff with input on their goal of
Fiscal Stability as they relate to the following questions:
1. How do we want to define fiscal stability?
2. How close or far away from fiscal stability are we?
3. What steps can we take toward this goal?
4. How will we know when we achieve this goal?
5. What does Council want in the way of reporting (information and timing) on progress?
Background:
In 2007 Council set as a goal:
Develop plan to establish fiscal stability, manage costs, prioritize services. and insure key revenue
streams.
In November of 2007 staff prepared a memo that gave an overview to this goal and has worked on the
elements identified as time permits. The memo is attached.
The October 2009 update on this goal is as follows:
Develop a plan to establish fiscal stability. During the FY09 budget process, the Budget
Committee approved a new staff position to assist in realizing this goal. The position has been
filled. Key functions will include creating, updating and managing cost allocation plans and rate
models supporting city enterprise and internal service activities, developing performance measures,
reviewing key revenue streams and prioritizing services. Status is Ongoing.
Per the update, staff has been working on costing services, trending major revenues, allocating internal
charges, evaluating enterprise sales, reviewing policies, identi fying who might be comparable peer
agencies, synthesizing financial reports from peer agencies and gathering industry documentation on
what makes for fiscal stability.
Page I of4
~4.
IF_ ...
CITY OF
ASHLAND
TheCity already uses many things to ensure fiscal stability. Some of it is mandated and some of it is
by choice. Preparing a budget and an annual financial report are mandatory. Preparing the budget to
the level that the City has chosen and doing a comprehensive annual financial report (CAFR) are
efforts of choice. We could do a lot less and still be.rated as compliant.
Just a few of the many elements of these two documents and processes that fall into the "working on
fiscal stability" are Financial Policies, Accounting Methods, ClP, Long-term projections and Revenue-
Expense analysis in the budget and between year comparisons, trending, capacity and statistical data in
the CAFR. Also, the City voluntarily participates in an annual, peer review program of both processes
and uses the feedback to improve future reports.
-,
Other major efforts that contribute to fiscal stability are the master plans done for enterprises and
management studies by departments (whether done internally or through consultants) to support
decision making that contribute to priority identification, managing operations and monitoring
outcomes. Such work is most apparent as departments bring to Council programs and projects needing
review, approval and funding.
Finally, Council has requested and received ad hoc reports on a regular basis that address issues falling
within the scope of fiscal stability. These reports include program or project specific reports, rate
requests and reviews, debt service analysis, financing and funding option recommendations.
Discussion Points:
Staff requests clarity on Council's perspective and the desired steps.
A. Staff offers the following definition for fiscal stability for consideration by Council:
Fiscal stability:
To manage resources, operations and commitments to provide needed and desired services and service
levels for today and the fiaure in a manner that avoids dramatic changes in these services to meet
short term problems or compromising the long term positive financial condition of the City.
Resources include assets such as cash, property, equipment, infrastructure, personnel and institutional
knowledge, ongoing revenue streams, debt or financial capacity, natural resources and the livability of
Ashland.
Operations include the current deparlmental activities and programs that provide direct or indirect
service to the citizens, businesses, institutions and visitors in Ashland on a regular basis by utilizing
staff, materials, outside supporl, capital and systems to meet accepted standards.
Commitments are financial, legislative, mandated, environmental, regulatory, selfimposed restrictions
or whatever agreements the City has entered into or is required to meet.
B. Staff believes the current Financial Management Policies are a good beginning but require a review
and potential updates to elements such as Ending Fund Balance targets. Contingency policy for some
funds. and establishing a formal policy on internal franchise payments.
Page 2 of 4
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CITY OF
ASHLAND
The policies presented in the Appendix of each annual budgct were established many years ago and the
City was quite forward thinking when this was done. Many of these policies are based upon thoughtful
points of fiscal and operational need and should be reviewed to assure effective contribution to, or
promotion of stability.
The budget appendix also includes an Accounting Methods section that supports budgeting, accounting
and financial reporting but it is more proscriptive in nature, helping to assure compliance. Staff will
review this section as part of the internal controls requirement addressed though the audit but
Council's focus here is not as important as in financial policies.
C. Council's ideas about the Fiscal Stability goal, evaluating it, steps for improvement, monitoring
and reporting changes are needed.
Many of the following items require Council direction:
I. Priority in general terms of activities and programs and their likely funding mechanisms.
2. Appropriate minimum ending fund balance for each fund based upon its activity/type of fund.
3. Steps to be taken to restore reserves when below target levels, and conditions related to when
those steps would be taken.
4. Allocation of the permanent tax rate between City and Parks.
5. Guidelines for annually balancing between operating revenues and operating expenditures,
recognizing they should be equal over time, although not always in each year.
6. Acceptable transactions and levels of transactions ,between funds including franchise payments,
operating transfers, inter fund loans, subsidies and internal services.
7. Guidelines for financing capital improvements and use ofrestricted monies like SDCs.
8. Acceptable levels of debt, kinds of debt and uses of debt financing for City programs/projects.
9. Frequency of utility rate studies, SDC studies, miscellaneous fees& charges reviews.
10. Policy on use of unexpected, one-time revenues.
II. Policy to avoid creating long-term programs unless there is not a corresponding long-term
revenue source or other available funding source that can be dedicated to the program.
12. Others?
Summary:
Most of the information presented above is not new, just brought to the forefront by recent economic
conditions and the interest of involved citizens. This can be attested by looking through City of
Ashland documents dating back to the 1800's when building the first water system through financing
and the potential impact was greatly debated. Given time a citizen could find similar debates every
year or 5 to 10 years since. The attachments represent just a few of the discussion Council has had in
the last 5 years.
Staff has considerable information to support most of the discussion points identified above and that
material can be assembled and distributed in coordination of the issues as addressed by Council.
Related City Policies:
City of Ashland Financial Management Policies, Budget Document Appendix
Page 3 of 4
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CITY OF
ASHLAND
Council Potential Motions:
None, this is a study session.
Attachments:
City of Ashland Financial Management Policy
Staff Memo on 2007 Council Goal - November 20,2007
Study Session: Discussion of Long-term Revenue Planning - November 9, 2006
Study Session: Policy Discussion Regarding Fund Balances - March 1,2005
Page 4 of 4
r~'
financial management policies
Scope
The Financial M~nagernent Policies apply to fiscal activities
of the City of Ashl""d.
Objectives
'Tne objectives of Ashland's financial policies are as follows:
~ To enhance the City CouncWs decision-making ability
by providing accurate information on program and oper-
ating costs.
=> To employ revenue policics tl131 prevent undue or
unbalanced reliance on any one source~ distribute the cost
of municipal services fairly, and provide adequate funds
to operate desired programs.
=> To provide and maintain essential public programs.
services. facilities, utilities, infrastructure. and capital
equipment.
=> To protect and enhunce the City's credit rating.
::::> To ensure the legal use of all City funds through efficient =>
systems of financial security and intenta! control.
Investments
All City funds shall be invested 10 provide-in order of im-
port,mce-safety of principal, a sufficient level of liquidily 10
meet cash now needs. and the maximum yield possible. One
hundred percent of all idle cash will be continuously invested.
Accounting
=> The City will mainlain an accounting and financial
reporting system that confonns to Generally Accepted
Accounting Principles (GAAP) and Oregon Local
Budget Law. Tbe City will issue 8 Comprehensive
Annual Financial Report (Audit report) each fiscal year.
The Comprehensive Annual Financial Report shows fund
expenditures and revenues on both a GAAP and budget
basis for comparison purposes.
=> An independent ""nual audit will be perfonned by a
cenified public accounting finn that will issue an official
opinion on the annual financial statements and a
management letter detailing areas that need
improvement.
=> Full disclosure will be provided in financial
statements and bond representat ions.
=> TIle accounting systems will be maintained to monitor
expenditures and revenues on a monthly basis with
thorough analysis and adjustment of the annual budgel as
appropriate,
A-B city of ash/and
=> lne accounting system will provide monthly infomlution
about cash position and investment performance.
:::;. Annually, the City will submit documentation to obtain
the Certilicale of Achievement for Excellence in
financial reporting from the Govcmment Finance
Officers Association (GFOA).
Operating Budgetary Policies
::::> TIle budget committee will be appointed in confonnance
with state statutes. The budget committee's chief purpose
is to review the city administrator's proposed budget and
approve a budget and maximum tax levy for city council
considerati~n. The budget committee may consider and
develop rccommend:Hions on other financial issues as
delegaled by the city council.
:::. The City will finance all current expenditures with
ClIrrent revenues. The City will avoid budgctu1)'
practices that balance current expenditures through the
obligation of future resources.
The City budget will support city council goals and
priorities and the long-r3lige needs oflhe community.
:::> In contrast to the Iinc~item budget that focuses
exclusively on items to be purchased (such as supplies
and equipment), the City will use a program/objectives
format that is designed to:
I) Structure budget choices and infonnation in
tenns of programs and their related work
activities,
2) Provide infonnation on what each program is
committed to accomplish in long-tem goals and
in short-tenn objectives. and
3) Measure the degree of aehievcment of program
objectives (pcrfonnancc measures).
=> 'll1e City will include mulli-year projections in the annual
budget.
=> To maintnin fund integrity, the City will manage each
fund as an independent entity in accordance with
applicable statutes and with generally accepted.
accounting principles.
financial management policies
:::> The City will allocate direct and administrative costs to
each fund based upon the cost of providing these services.
The City will recnlculatc the cost ofadministrntivc scrvicf:s
each year to identify the impact of inflation and other cost
increases.
=> 'nlC City will submit documentation annually to
obtain the A ward for Distinguished Budget Presentation
from the Government Finance Officers Associal ion.
Fund Balance Policy
General Fund
The General Fund accounts for all financial resources not
accounted for in other funds. RC50urcC$ include working
capital carryover. tax~s, licenses and permits.
intergovernmental revenue, fines and forfeitures. charges
for services. miscellaneous rC"CIlUes. and inter-fund
transfers. Expenditures arc for Social Services, Economic
and Cultural Development, Police Department, Municipal
Court Department. Fire and Rescue Department. City Bilnd.
Cemeteries. and the Department of Community
Development. This fund uses the modified accrual method
of accounting.
:) The General Fund will maintain an unrestricted and
undesignated balance of annual revenue of at least
10 percent. This is the minimum needed 10 maintain
the City's credit worthiness and to adequately
provide for economic uncertainties and cash flow
needs.
=> No portion of the General fund balance is restricted
for specific uses.
::::> The General fund was pledged in the issuance of the
1996 Limited Tax Improvement Bonds. Bond and
interest payml'Tlts may be paid from this fund or an
additional L'1.X levy imposed. provided assessment
p3ymenL~ were inadequate,
:::::> The City will budget a contingency appropriation to
provide for unanticipated non.recurring expenditures
or shortfalls in projected revenues. The minimum
contingency \\'ill be maintained at not less thun J
percent of annual revenues.
Special Revenue Funds
Special Revenue Funds account for the proceeds of
specific sources Ihat arc legally restricted to expendilUres
for specified purposes. Special Revenue Funds account for
transactions using the modified accrual method of
accounting.
Communit)' Development Block Grunt fund. This fund
was established in 1994~95. The fund accounts for the
Block Grant and related expenditures.
::) A fund balance policy is not nceded since this fund
works on a reimbursement basis.
=> The City will budget a contingency approprialion to
provide for unanticipated non-recurring expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
percent of annual revenues.
Street nmd~ Revenues arc from the state road tax, grants,
franchise fees, charges for services and miscellaneous
SQurces. Expenditun:s are for the maintenance, repair. and
surfac,ing of streets, as well as the maintenance, repair and
construction ofstoml drains.
=> The Street Fund will maintain an unrestricted and
undesignatcd balance of annual revenue of at least
10 percent. This is the minimum needed to mnintain
the City's credit worthiness and to adequately
provide for economic uncertainties and cash llow
needs.
;. The System Development Charges for Transportation
and Stonn Drains are included in the StreetFund
balance. This portion of the Street Fund balance is
restricted and shnll not be used in detemlining the
minimum fund balance.
=> The City will budget a contingency appropriation to
provide for unanticipated expendilures of a nonrecurring
nature or shortfalls in projected revenues.
The minimum contingenc)' will be maintained at not
less than 3 percent of annual reVenui..-S.
Airport Flllld, Revenues arc from airport leases. and fucl
sales. Expenditures are for airport opemtions.
=- The Airport Fund will maintain nn unrestricted and
undcsignatcd balance of annual revenue of at least
16 percent. This is the minimum needed to maintain
the City's credit worthiness and to adequately
provide for economic uncertainties and cash flow
needs.
::::> No portion orthe Airport fund balance is restricted
for ~peci fie uses.
::;:. Many of the Airport assets have restrictions placed
on them by the Federal Aviation Adm inistration.
None of the current revenues are pledged to outside
lenders. Over the next 20 years. the Airport Fund is
obligated to repay the Equipment Fund for the
installation offucl tanks through un equipment rentnl
fee.
city of ash/and A.9
financial management policies
~ 'nlC City will budget a contingency appropriation to
provide for unanticipated non-recurring expenditures
or shOrlfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
percent of annual revenues.
Capital Projects Funds
Capital improvement funds are established to account for
financial resources that are used for the acquisition or
construction of major capital facilities (other than those
financed by Enterprise f:unds. Inlemal Service Funds,
Special Assessment Funds. and Trust F'lIlds). Capital
projects funds use the modified accrual method of
accounting,
Capita/Improvement... Fllnll. '111i5 fund accounts for
revenues from gdms, unbonded assessment payments. and
other sources. and will account for the construction of
spcciallocal irnprovementst usually stn.>ets, with revenues
from short term borrowing and unhonded asscssmcnt5.
Expenditures "rc for constnlction, property and equipment
acquisition and replacement. improvements and related
purposes. and the repayment of shorHerm debt principal
and interest incurred in financing improvements.
o TIle purpose is to accumulate funds prior to a large
constnlction project; therefore, there is no m'inimum
fund balance.
=> TIle System Development Charges (SDCs) fnr rarks
arc included in the Capital Improvement fund
balance. This portion of the Cnpit"llmprovcmcnts
fund balance is legally restricted and shall not be
used in detennining the minimum fund balance. The
city council has established other restrictions on Ihis
fund. such as atTordl.lble housing and office sp~lce
needs.
=- The City will budget a cOlltingency .appropriation to
provide for unanticipated non-recurring expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
perccnt of annual revenues.
Debt Service Funds
Debt Service Funds account for the accumulation of
resources for, and the payment of. generallong-lcml debt
principal and interest. Expenditures and revenues arc
accounted for using the modified accrual method of
accounting, All bond issues and notes arc separated in the
accounting system.
:::> All orthe monics within the Debt Service fund arc
restricted for Debt service until the specific debt is
repaid in full. ORS prohibits cities from borrowing
this money for any other purpose.
=> The Dcbt Service Fund will maintain an unrestricted
and undesignated balance of annual revenue as
required by the speci fie debt instnlmetlt. This is the
minimum needed to maintain the Cityts credit
worthiness and to adequately provide ror t'Conomic
uncertainties and cash flow nceds.
Enterprise Funds
Enterprise funds account for the following operations: (3)
those that are financed and opernted in n manner similar to
private business entcrprise, where the intent of the govcming
body is that the eoslS (expenses. including depreeiation)
of providing goods and serviees to the general publie
on a continuing basis be fimmccd or recovered primarily
through user charges: or (b) those where the governing
body has decided that periodic determination ofrevcnucs
earned. expenses incurred. and/or net income is appropriated
for capital maintenance. public policy. management
control, accountability. or other purposes,
Enterprise funds use full accrual basis of accounting for
financial statement presentations. However! the enterprise
activities use a modified accrual basis of accounting for
budgetary purposes. 111is assures budgetary compliance
with such expenditures as capital CDl1struction and acquisi-
tion. as well as debt principal transactions,
Watf!r Funt!. 'This fund accounts for water operations.
Revenues are from sales ofwalcr, other charges for
services, and miscellaneous sources, Expenditures arc for
opel1ltions, conservation programs. capital construction,
and retirement of debt.
:::> The Water Fund will maintain an unrestricted and
undesignaled balance of annual revenue of at least
20 percent This is the minimum needed to maintain
the City's credit worthiness and to adequately
provide for economic uncertainties nnd cash flow
needs.
::::::> The Water System Development Charges and
reserved debt service fund balances arc included in
the Water Fund balance. These portions of the
Water Fund balance are restricted and shall not be
used in determining the minimum fund balance.
A-10 city of ash/and
financial management policies
=:> The net revenues of the Water Fund were pledged in
the issuance oflhe 1994 Water Revenue Bonds used
to finance the upgrade 10 the water tre~ltmt;nt plant.
==- '111C City will budget :I contingency appropriation to
pro\'ide for unanticipated non-recurring expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than:;
percent of annual revenues.
Wastewater Fund. This fund accounts for wastcwmcr
treatment and collection. Revcnue..o:; are from charges for
services. Expenditures arc for operalions. capital construction,
and retirement of debt.
.:::) The Wastewater Fund will maintain an unrestricted
and undesignatcd balance of annual revenue of at
least 15 percent, but no less than required by the
Wastewater Treatment Plant loan. This is the
minimum needed to mainlain the City~s credit
wonhiness and to adequately providc for economic
unct:rtainties and cash now needs.
:::> The Wastewater Systcm Development Charges
arc included in the Wastewater Fund balance, 'nlis
portion of the Wastewater Fund balllllce is restricted
and shall not be used in detennining the minimum
fund balance.
=> The net revenues of the Wastewater Fund that
wen: pledged in (he issuance of the 1998 Clcnn
Water St.,te Revolving Fund (CWSRF) Loan used to
finance the upgrade to the tre31ment plant are
included in this fund.
:=;.. The City will budget a contingency appropriation to
provide for unanticipated non~recurring expenditures
or shortfalls in projected revenues. The minimum
contingenc-y will be maintained at not less than 3
pcrcent of annual revenueS.
Elec/ric fund. The Electric Fund accounts for the distribu~
tion of purchased electricity according to standards set
forth by the Federal Energy Regulatory Commission.
Revenues are from sale of electricity and other charges for
services and intergovernmental grants. Expenditures ore for
relnted operutions. Utility operations include whole...ale
power purchases~ operating expenses, energy conservation
incentives, capital outlny. retirement of debt, frnnchise tax.
and relllted purposes.
~ 'Ole Electric Fund will maintain an unrestricted and
undcsign3ted balance of annual revenue of at least
I 12 percent. This is the minimum needed to maintain
the City's credit wonhincs5 and to adequately
provid~ for economic uncertainties and cash now
needs.
=> No portion of the Electric Fund b31nnce is restricted
for speci fic uses.
=> The City will budget a contingency appropriation to
provide for unanticipated non~rccurril1g expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
percent of annual revenues.
Telecommunications Punt/. -l1te Telecommunications
Fund accounts for the revenues and expenditures orthe
Ashland Fiber Network.
=> The Telecommunications Fund will maintain a
minimum balance of20 percent of annual revenue as
was established in FY 2006-07.
Internal Service Funds
Internal service funds account for the financing of goods or
services provided by onc department or agency to other
depnnments or agencies of the governmental unit, or to
other govcmmenw.1 units, on a cost reimbursement basis.
Internal service funds use full accrual accounting methods
lor financial statement presentations. However. the internal
service funds use 11 modified accrual basis of accounting
for budgctnry purposes. This assures budgetary compliance
\\rllh such expenditures as capital construction and acquisition
as well as debt principal transactions.
Cen/rill Sen.jceJ l:'umJ. This fund is divided into Administra~
tion. Computer Services, Finance. City Recorder, and
Public Works Administration/Engineering. and Maintenance.
Expenditures are for personnel. materials and
services and capital outlay for these departments. These
functions arc supported by charges for services by all
direct service departments and divisions.
:::) '111C Central Services Fund will maintain 3n unrestricted
3nd undesignated balance of annual revenue
of at least 3 percent. This is the minimum needed to
maintain the City's ci'cdit worthiness and to adequately
provide for economic'uncertainties and cash flow needs.
:::> No portion of the Ccntrnl Services Fund balance is
restricted for specific purposes.
=> The City will budget a contingency appropriation to
provide for unanticipated non-recurring expenditures
or shortfalls in projected revenues. 'l11c minimum
contingency will be maintained at not less than 3
percent of annual revenues.
city of ashland A-11
financial management policies
Insurance Seo'ices Futld. Revenues inlhis fund ure Jrom
service charges from other departments, investment
income, and insurance retrospective ruting adjustments.
Expenditures arc for insurance premiums, self-insurance
direct claims, and administration,
~ The Insurance Services Fund will maintain an
unn."Stricted and undesignated balanee of$350,000
as rec<lmmended in the June 1993 Risk Financing
Study. This balance will be increased annuatly hy the
Consumer Price Index (CPT) to account for inflation.
This is the minimum needed to maintain the City's
insurlUltC programs and provide for uninsured
c.\:posurcs.
=> No portion of the Insurance Services Fund balance is
legally restricted for specific uses.
=> The City will budget 11 contingency appropriation to
provide fi)r unanticipated non-recurring expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
percent of annual revenues.
Equipmen/ Fund. This fund is used to account for the
maintenance und replacement of the City fleet of vehicles.
Revenues arc from equipment rental c~arges. Expenditures
are for personnel, materials and services, and capital
outlay. TIlis fund is divided into two functions: equipment
maintenance nnd equipment replacement. The purpose of
the equipment replacement function is to accumulate
adequate funds to replace equipment. 111is replacement
schedule is updated annually.
:::;) No minimum fund balance is recommend<.x1.
=> No portion of the Equipment fund balance is legally
restricted for specific uses. The City has a policy of
renting equipment at rates that include the replacement
cost of the specific piece of equipment.
=> The City will budget <I contingency appropriation to
provide for unanticipated non~recurring expenditures
or shortfalls in projected revenues. The minimum
contingency will be maintained at not less than 3
percent of annual revenues.
Trust and Agency Funds
Tmst and agency funds account for assets held by a
governmental unit in a trustee capacity or as an agent for
individuals, private organizations, or governmental units.
and/or other funds. These include (a) expendable trust
fllllds, (b) non-expendable trust funds. (c) pension trust
funds, and (d) agency funds,
C~meterv rruJI Fund. The Cemetery Trust Fund is a
non~ex~ndablc trust fund that uses the accnJsl b~ISis of
ltccouI1ling. RC'Y'enues are from interest income and
perpetual care service charges on cemetery operations.
Expenditures are for the repurch::ISC of plOlS and transfers
of camings to the cemetery fund for operations.
::::::> No minimum fund baltmce policy is recommended.
Discrete Components Unit
Parks
f'ark.\' (",(1 Recrcalicm 1"'um1. (Special Rcvenue Fund)
Revenues are from property taxes. charges for services,
and miscellaneous sources. Expenditures are for parks.
recreational. and golf course opemtions.
Parks CiJpitullmprovemi!1Its P",,,I. (Capitlll Projf.,"Cts
Fund) This fund is used to aCCtlUnt for resources from
grams and inter*fund trnnsfers that are to be expended for
equipment purchases and major park fL"Tlovations.
Revenues
::::) The City will estimate its annual revenues by an
objective, analytical process. Because most revenues
are sensitive to conditions outside the City's
control. estimates will be conserv::ltivc.
;::) TIle City will make every effort to maintain a
diversitied and stable revenue base to protect its
operation from shon~teml fluctuations in anyone
revenue source.
=> With the exception of grants, charges for services,
and earmarked donations. the City will not cannark
revenue for specific purposes in the General Fund.
=> TIlC City will establish charges for enterprise funds
tl13t fully support the total cost of the enterprise.
Ulilil)' rates will be reviewed annually. Rates will be
adjusted as needed to account for major changes in
consumption and cost increases.
::> 'lllC City will charge uscr fees to the direct beneficiaries
of City services to recover some or all of the full
cost of providing that service. All user ft;eS will be
reviewed biannually to insure that direct and
overhead costs are recovered in the percentage
ap,provcd by City Council.
=> To the extent prncticable. new development shall pny
necessnry fees to meet all identified costs associated
with that development
A-12 city of ashland
financial management policies
~ lne City will work aggressively to collect all delinquent
accounts receivable. When necessary,
collection procedures will include termination of
service. submission to collection agencies. foreclosure,
and other available legal remedies.
Expenditures
=- The City \\o'i11 provide employee compensation that is
competitive with comparable public jurisdictions
within the relative recruitment area.
::;::. Estimated wage increases and chnnges in employee
benefits will be included in the proposed budget
under Personal Services.
=> The City is committed to maintaining and improving
the productivity of its sta!Tby providing a proper
working environment. adequate equipment and
supplies. and appropriate training and supervision.
::;. A Social Service apprOpri3.1ion will be included in
the proposed Genel'lll Fund Budget. This appropriation
will increase or decrease relative to the ovcrnll
General Fund revenues.
=> An Economic and Cultural Development appropriation
will be included in the proposed General Fund
Budget. This appropriation will increase or decrease
relative to the overall Transient Occupancy Ta.x
Revenues.
Purchasing
::) The City will purchase materials, supplies. and
equipment through a competitive process that
provides the best product for the lenst cost.
Capital
:=) The City will provide for adequate mainrenance of
equipment and capital assel.:;, TIle City will make
regular contributions to the Equipment Replacement
Fund and the City Future Geoeral Capital Improvements
Accounllo ensure that monics will be
available as needed to replace City vehicles and
fucilities.
=> The City wit! update its five-year Capital Improvements
Program biannually, identil)'ing capital needs
and potential capital flUlding sources. The Capital
Improvements Progrp.m will reflect the priorities of the City
Council and the long~rangenecds of the community.
~ Future operating costs associated with new capital
improvements will be projected and included in the
long-term budget forecast.
=> The City will determine and use the most appropriate
method for financing all new capilal projects.
::::> Special accounts dedicated for capital improvements
will be segregated in the accounting system and
used only for the intended capital purposes.
=> 'lbc Capitallmprovernent Pl;m will encourage a
level capital replacement schedule.
Debts
-::;. 'Joe City will not use long~tcnn borrowing to finance
current operations.
=- Capiml projects, financed through bond proceeds,
will be financed for a period not to exceed the useful
life of the projecl.
=> Whenever possible, enterprise debt will be self
supporting. Regardless. of the type of debt issued,
the City will establish a one-year reserve for 1111
self-supporting debt.
=- 'Ine City will seek to maintain and improve its bond
rating to minimize borrowing costs and to ensure its
ncees.." to credit markets.
=> The City will keep the final maturity of genei'll I
obligation bonds at or below 20 years. with the
exception of water supply and land acquisition that
will be limited to 30 years.
=> The City will maintain good communications with
bond ruting agencies about its fiml.l1cial condition.
=:> The Cily will not issue gcncrnl obligation debt.
which combined with all other oycrlappingjurisdictions,
will exceed the medium affordability index.
Risk Management
=" The City \vill provide an activc risk management
program thut reduces human suffering and protects
City assets through loss prevention, insurance, and
sclf-insurance.
city of ash/and A-13
accounting methods
Accounting Methods
General Fund
This fund accounts for all financial resources except those
BeColmtcd for in another fund. Resources include \'.'orking
capital carryover, taxes, licenses and pennits,
intcrgovcnuucntal revenue, fines and forfeitures. charges
for services, miscellaneous revenues. and inter-fund
transfers. Expenditures arc for Social Services. Economic
and Cultural Development, Police Department, Municipal
Court Division, Communications, Fire nnd Rescue
Department, Community Development, Planning Division,
and the Building Division. This fund uses the modified
accrual method of accounting.
Special Revenue Funds
Special Revenue Funds account for the proceeds of
specific revenue sourc(,"S that are legally restricted to
expenditures for specified purposes. Special revenue funds
account for transactions on the modified accrual method of
accounting.
Community Development Block Grant f,mt/.
This fund was created in 1994-95. The fund
accounts for the Block Grant and relatl~
expenditures.
..,,'trect fillld. Revenues arc from the state road
lax. franchise fees. chllrges for services and
miscellaneous sources. Expenditures arc for the
maintenance. repair. and surfacing of streets., as
well as maintenance And construction of the storm
waler runoff infra..c;tructure.
Airport Fund. Revenues are from airport leases,
E..xpenditures are for maintenance of airport
facilities.
Capital Projects Fund
. Capital improvement funds arc established to account for
financial rc5()urces that are used for the acquisition or
construction of major capital facilities (other than those
financed by enterprise funds. internal service funds. special
assessment funds, and trust tunds). Capital projects funds
. use the modified I.Iccrunl method of accounting.
Caplw//mprOI'efnenl.\' f'ul/d. This fund
accounts for revenues from grunts, non bonded
assessment payments. bond proceeds~ and other
sources, and will account for the construction of
Spccillllocal improvements, usually streets~ with
revenues from short-tenn borrowing and non
bonded assessments. Expenditures are for
construction. property and equipment acquisition,
A.14 city of ash/and
improvements and relnted purposes. and the
repayment of short-tenn debt principal and
interest incurred in financing improvemenls.
Debt Service Fund
The Debt Service Fund accounts for the accumulation of
resources to be used for payment orlhe debt incurred for
the acquisition or constnlction of major capital ttH:ilitics
(other than those financed by proprietary funds. and trust
funds). Expenditures and revenues nre accounted for on
the modified accrual method of accounting.
Bancroft Bonds revenues are from B(lncrolt (Local
Improvement District) bonded assessments. These nre
expended for the retirement of local improvement dislrict
bonded debt principal and interest until such debts have
been ful fi lied.
Cenerdl Bonds revenues arc from property taxes that are
expended for ihe retirement of general obligation debt
principal and interest.
Notes, Contracts, and Liens revenues derived from
operating transfers from other funds arc used 10 repay
long-teml contracts that are not bonded.
Enterprise Funds
Enterprise funds account for the following operations: (I)
those that arc financed and operated in a manner sim ilnr to
private business enterprise. where the intent of the
governing body is thut the costs (expenses, including
depreciation) of providing goods and services to the
general public on a continuing basis be financed or
recovered primarily through user charges; or (2) those
where the governing body has decided that periedic
detennination ofrcvenues camed. expenses incurred. and!
or net income is appropriated for capital maintenance.
public policy, management control, accountability, or other
purposes. Enterprise funds use full 3ccrual basis of
accounting for financial statement presentations, However.
the enterprise activities use a modified accrual basis of
accounting for budgetary purposes. This assures budgetary
compliance with such expenditures as capital construction
and acquisition, as well as debt principal transaclions.
Waler Fund. This fund accounts for water
opt..Tations. Revenues are from sales of water,
other cha.rges for services, as well as property
taxes dedicated to the retirement of general
obligation bonds. Expenditures are for operations,
conservation progrnms, capital construction,
and retirement of debt.
Wm.tewater Fund. This fund 3CColmts for
wastewater treatment and collection. Revenues
are from charges for services. Expenditures arc
for operations, capital conslnJction, and
retirement of debt.
l:.1ectr;c Fuud. This fund accounts for the
distribution of purchased electricity according to
standards set forth by Ihe Fedel1ll Energy
Regulatory Commission. Revenues arc from sale
of electricity and other charges for services and
intergovernmental grants. E.xpenditures are for
related operations. Utility opemtions include
wholesale power purchases, opernting expcnscs~
energy conservation incentives. capital outlay.
retirement of debt. and franchise tax.
Telecommun;cations fund. This fund accounts
for telecommunications operations. Revenues are
from cable TV,lnterne! connections, and higtHipced
data. Expenses are for operations
maintenance, capital construction~ and debt
service.
Internal Service Funds
Internal service funds uccount for the financing of goods or
services provided by one department or agency to other
departments or agencies of the governmental unit, or to
other governmental units, on a cost reimbursement basis.
Intemul service funds use full accrual accounting methods
for financial statement presentations. Ho\\'ever. the
internal service funds use a modified accrual basis of
accounting for budgetary purposes. This assures budgetary
compliance with such expenditures as capital construction
and acquisition as well as debt principal tmnsactions.
Celllrol Services. This fund is divided into the
following Divisions: Elected Officials.
Administration, Administrative Services, Legal,
Customer Services, Accounting. Purchasing,
Public Works Administration. Engineering~
Maintenance, Computer Services, and the City
Recorder. Tbese Divisions fall under the
umbrellas of the Administration. Finance! Public
Works, Bnd the Electric D<..j)3rtments. These
functions are supported by charges for services by
all direct service divisions nnd depanments.
accounting methods
In.wrance Sen'ices Fuml. Revenues in this fund
are from service charges from other departments.
investment income, and insunmce retrospective
rating adjustments. Expenditures are for insur-Jnce
premiums, self-insurance direct claims. and
administration.
Equipment Fimtl. TIlis fund is tlst>d to account
for the replacement ami maintenance oflhe city!s
neet of vehicles. Revenues arc'from equipment
rental charges. Expenditures are for personal services.
materials and services, and capital outla)'.
Trust and Agency Funds
Tmsl and agency funds account for assels held by a
governmental unit in a trustee capacity or as an agent for
individuals! private (Jrgani7.ationsl Qr governmental units,
and/or other funds. These include (a) expendable tmst
funds, (b) non-expendable ImSI funds, (c) pension tmst
funds, and (d) ageney funds.
Cemetery TruM Fuml. The Cemetery Trust Fund
is a non-expendable trust fund that uses the
accrual basis of accounting. Revenues are from
interest income and perpetual care service charges
on cemetery opcrntions. Expenditures are for the
repurchase of plots and transfers of earnings to
the general fund for operations.
Discrete Component Unit
Parks
Porks and Recreation Fund. (Special Revenue
Fund) Revenues are from the parks and
recreation portion of the property tax levy,
charges for services. and miscellaneous sources.
Expenditures are for parks and rt..~reational
purposes n..:; well as department operations.
AJl1Iand Youtll Activities Serio/Levy Fuud.
(Special Revenue Fund) Revenues are from a
three-year Ashland Youth Activities local oplion
property lax levy. Expenditures are for community
and )'outh activities and recreation.
Parks Capita/ Imprl1l'cmel11.... FUlld. (Capirol
Projecls Fund) This fund is used 10 account for
resources from grants and inter-fund transfers
that are to be expended for equipment purchasc'$
and major park renovations.
city of ash/and A-.15
CITY OF
ASHLAND
Memo
DATE:
TO:
FROM:
DEPT:
RE:
November 20, 2007
Martha Bennett
Lee Tuneberg
Administrative Services
Council Goals 2007 - Develop plan to establish fiscal responsibility, manage costs,
prioritize services, and insure key revenue streams.
The City of Ashland has many things in place that support this goal. A specific goal for a concerted
effort to review and update existing standards and processes as well as establishing meaningful new
ones is ideal.
We should note that the City annually goes through an extensive budget process, audit and financial
reporting that not only meet State requirements but earn national awards. The City also has established
and followed for many years a set of financial management policies and accounting methods that are
intended to aid in much of this goal on an ongoing basis. Additionally, many of the studies that rates &
fees, operations and capital improvements are based upon are reviewed on a rolling basis to remain
current and provide needed data for the budget and reporting processes.
However, the City does not have an accepted set of measurements or benchmarks for most services
provided. There probably are many reasons contributing to this absence but the primary one is its level
of (comparative) priority for allocation of sufficient resources. Establishing as many of those that can
feasibly be done should be a part of this goal.
Mv assessment of the goal is that Council would like to:
Establish fiscal responsibility. Whether it is establish, re-establish or better define it, we must work to
agree on what it is, how far we are from it, how we will know when we arrive and what roles each of us
will play to meet the goal as well as the respective roles after it is met. It is likely that considerable time
will be spent reaching consensus among ourselves and with members of the public. '
Insure key revenue streams. The community enjoys its diversity of citizens, opportunities and natural
resources. The City should recognize the diversity of resources used to fund all activities is a strength
that many other municipalities do not have. Prior elected, appointed and hired individuals should be
congratulated on the work they did to achieve this.
ADMINISTRATIVE SERVICES DEPARTMENT
D. L. Tuneberg, Director Tel: 541-488-5300
20 East Main Street Fax: 541-488.5311
Ashland, Oregon 97520 TTY: 800.735-2900
WW'N.ashland.or.us
r:.,
CITY OF
ASHLAND
Memo
Even so, the economy, operations and reliability of revenue streams can, have and will change. Some
revenue streams will change y our own design. External influences will affect others. Identifying major
and minor revenue streams, evaluating susceptibility to change and addressing such changes by
developing action steps is an important part of this goal.
Manage costs. Managing costs is the other side of the ledger sheet to evaluating revenue streams and
remains a significantpart of the internal work done annually as part of the budget process. Balancing
the two will playa basic role in the fourth point of this Council goal.
Today there are too few existing tools to help the City formally evaluate how well we do this. The
City's own business experts can address'individual activities that they control (by activity, division,
department or fund) but comparative analysis across departments and City-wide is needed at higher
levels.
Agreeing on meaningful mea~ures and benchmarks, and processes to keep them current, must be part of
the goal.
Prioritize services. This portion of the goal has nuances that go beyond the accounting and managerial
perspectives included in the other three. Because of this, agreeing on what is the priority of services,
what levels of service are necessary or desired, and how they are funded will require significant amounts
of analysis and discussion. For informed decisions it will require significant progress in the prior three
elements to be effective.
,
Steps & Timing:
The City will have difficulty in doing this on its own. This goal demands an intense focus that requires
more resources, and probably a greater skill set, than the City has had to offer for some time. Even
outsourcing this to a consultant will require staff support for development and ongoing management that
is not available today given the day-to-day workload, scheduled projects (some of which will feed
information into this) and breaks in staffing endured in the last five years, today and into the near future.
Also, there may be insufficient appropriations budgeted in FY 2007-2008 to completely do this even ifit
were feasible.
Be that as it may, progress on this goal is imperative for the decisions that will come to Council and the
Budget Committee in this and the next fiscal year(s). With that in mind I would propose the following
process:
ADMINISTRATIVE SERVICES DEPARTMENT
D.l. Tuneberg, Director Tel: 541488-5300
20 East Main Street Fax: 541-488-5311
Ashland, Oregon 97520 TTY: 800-735-2900
www.ashland.or.us
ri.'
CITY OF
ASHLAND
Memo
I. Identify the internal resources (appropriations and staff) available to support the goal. This will
impact proposed changes in the budget this year and next. January - February 2008
2. Develop a solicitation process (Request For Qualifications and Project Proposals) to perform this
goal and provide additional support not available within the City. March - June 2008
3. Create a time line for gathering input from stakeholders and identifying deliverables. July-
August 2008
4. Perform the work including evaluation of existing, and the development of new, measures,
benchmarks and systems for monitoring. September - November 2008
5. Report on work to date to Council and subsequent revisions to the project. December 2008
6. Implementation, staff training and incorporation into City budget, operational and reporting
processes. January - March 2008
7. Complete integration into the FY 2009-2010 budget process. Apri/- June 2009
Benefits yielded from the goal and supporting project steps will be realized immediately and will
positively impact City decision making and the budget process in this (FY 2007-2008) fiscal year even
though the work on the goal is likely to extend through June 2009. All of the steps and dates presented
are subject to change based upon Council input and what is learned from the proposals received in
calendar year 2008.
ADMINISTRATIVE SERVICES DEPARTMENT
O. L. Tuneberg, Director Tef: 541-488-5300
20 East Main Street Fax: 541-488-5311
Ashland, Oregon 97520 TTY:800-735-2900
VNM.ashland.or.us
~.t. 1
CITY OF
ASHLAND
Council Communication
Study Session - Discussion of Long-term Revenue Planning
Meeting Date: November 9, 2006
Department: Administrative Services
Contributing Departments: NA
Approval: Martha Bennett
Primary Staff Contact: Lee Tuneberg
E-mail: tuneberl@ashland.or.us
Secondary Staff Contact: NA
E-mail:
Estimated Time: 60 minutes
Staff Recommendation:
Staff requests that Council review the information provided and be prepared to identify the areas of
concern and information they would like to receive in subsequent meetings to adequately prepare for
the upcoming budget process.
Statement:
This study session was requested in order to look at the next fiscal year. It is an opportunity for
Council and staff to begin to discuss anticipated trends and the potential impact on City services.
This discussion will help the City prepare for the 2007-2008 budget preparation process and establish
guidelines and goals to aid in developing an operations and financial plan for the next year and
beyond.
Likely areas for discussion are:
1. What disconnects do we see between services provided and related revenue streams?
2. Will the City need to discontinue any services in FY 2007-2008 due to:
. Excessive increased costs
. Diminishing or disrupted revenue streams
. Other needs or services of a higher priority
3. What capital projects are in the near future and how will they be funded?
4. What can be done now to plan for future projects and significant changes in revenue?
5. Besides the AFN debt, what other obligations and commitments are there and how are they
paid.
Items 3 - 5 should be the subject of discussion at the December 4, 2006, study session.
Background:
There are many ways to view the budget, some are:
. By fund
. By service type
. By revenue streams
. By expenditure categories
~~,
For informational purposes, examples of the budget by these different perspectives are attached and
each can be telling in their own way and the subject of lengthy discussion. In part, that is what
happens during the budget process so many things you see in the budget document and staff
presentations are Included here.
To provide focus on this initial discussion and to set the path for future meetings, this report is based
on a few assumptions.
Primary areas of concern are:
1. The General Fund's balance between revenue streams and services (and levels of service)
provided.
2. City-wide debt and its impact or limitation on daily operations or future improvements.
in order to focus on these two in the time allowed in this meeting we will set the following items aside
and only refer to them as needed.
A. Service provided through enterprise funds are ongoing and generally pay for themselves
through charges to customers who use or benefit from the service.
B. Other funds like Street, Insurance Services, Capital improvements, etc. may require a
separate discussion on what is included in their operations and funding mechanisms.
C. Internal services are support functions (sometimes steering functions) necessary for
operations and appropriately paid for by line departments and divisions.
D. Parks Commission will continue to require property taxes to fund at least 75% of their activities
and 100% of the Youth Activity Levy if continued.
E. Miscellaneous services are provided as needed in the community and require a variety of
funding mechanisms to be sustainable.
There probably are many more areas for discussion and they will be addressed as raised but efficient
use of time may require them to be held until a later meeting.
THE GENERAL FUND
All agencies have a general fund even though they may have a different name. A general fund is the
place where any activity that does not fit well into some other category is included. The revenues and
reserves captured in this fund are the least restricted giving the agency necessary flexibility to provide
the general health, safety and welfare services expected by the community. Generally speaking,
many of these activities (services) are such that a fee for service cannot be charged or may not cover
the total cost of providing the service. Ashland's general fund includes Police, Fire, Community
Development, Municipal Court, Cemetery and other activities that meet this description.
In order to balance this fund, the shortfall between the amounts that are charged (if any) for a service
and the cost to provide it is funded through indirect revenues and taxes. A comparison of revenues
and cost follows:
~~,
$14,000,000
$12,000,000
$10,000,000 .-
$8,000,000 .-
$6,000,000 .-
$4,000.000 .-
$2,000,000 .-
$'1
o Other
II Fines
o Charges for Services I
IlSllntergovemmental I
&J Ucenses and Permits
CJ Taxes
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$. I
1III0ll1er
10 Community Development
[Ill Public Works I
General Fund Revenue Comparison
2007 Adopted
$97,536
$133,170
$1,650,211
$467,227
$1.489.379
$8,069,464
$550,892
$137,460
$1,517,574
$810,908
$1,106,317
$8,517,028
$186,000
$157,000
$1,654.456
$863,994
$1,713,541
$9,742,360
General Fund Expense Comparison
2005 Aciual
$258,833
$1,482,363
$240,279
jOFireandRescue $4,230,616 I $4,632,526 I $5,262,372
~Police $4,233,855 I $4,606,337 I $5,325,774
III Administrative Services $909,950 I $1,024,549 I $1,083,599
o Administration $212,845 I $104,838 I $253.780
. $1,000,000 was budgeted in Community Development for land purchase, which is not shown in this tabie.
~~,
Resources and revenues
The General Fund revenue structure is fairly complex so a little explanation is appropriate.
Taxes -
The tax category makes up 67% of the total revenues. Taxes include property taxes,
Eiectric Utility Users tax, Hotel/Motel taxes and franchise fees. Property taxes for the
city are also distributed to the Parks and Recreation Fund, Ashland Youth Activity Fund
(Parks) and other funds for debt service.
GENERAL FUND
Description
2004 Actual
2005 Actual
2006 Actual
2007 Adopted
Taxes
Property Taxes
Current
Prior
Electric Utility User Tax
Franchises
License
Hotel/Motel Tax
Total Taxes
2.071.096 2,180,490 2,595.000 2.887,760
98,938 85,064 80,000 97,800
2,102.550 2,277.178 2,323.390 2.648.800
1,985,361 1.982,757 2,104,177 2,417,800
162,357 153,761 205,220 176,100
1,309,013 1.390.212 1,414.218 1,514,100
7,729,315 8,069,462 8,722,005 9,742,360
Projections show that this level of property tax may not be sufficient to meet operational needs for
ongoing service levels in the near future of the General Fund. Tax rate comparisons can be seen
later in this document.
Charges intended to recognize the use of, and the impact on, right-of-ways are called franchise fees.
The city's enterprise activities and private companies all pay franchise fees with most of the proceeds
going to the General Fund in recognition of general ownership and the value added by the activities
managed there. However, the other fund that is significantly impacted by the utilities having access to
the right-of-way is the Street Fund and a portion of the total franchise fees is allocated there. Below is
a table that shows the franchise fee revenue distribution.
City of Ashland
Franchise Revenue
-Actual FY 2005-06
Actual
Rate 2006 General Fund Street Fund
Cable Television 5% $ 346.319 $ 193,824 $ 152,496
Electric Utility 10% 1,110,989 1.110.989
Natural Gas 5% 258,105 258.105
Sanitary Service 5% 76.596 76,596
Telecommunications 7% 137.264 137.264
Water Utility 7% 276.540 197,528 79,011
Wastewater Utility 7% 181,819 129.871 51,948
$ 2,387,632 $ 2,104,177 $ 283,456
Charges for service-
Charges for services account for 12% and examples of services
charged for are ambulance, building, planning, cemetery and court fees.
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GENERAL FUND
Estimate
Description 2004 Actual 2005 Actual 2006 Actual 2007 Adopted
Charges for Services
Police 172.543 193.128 185.000 187,000
Court 376.620 331,761 400.000 337.150
Fire and Rescue 798.853 963,065 750,000 926.800
Cemetery 45.959 37,969 60.000 52.656
Planning Division Services 80.217 97.577 103.000 125.000
Building Division Services 114,848 25.679 25,000 25.000
Rent 1,124 1.033 1.020 850
Total Charges for Services 1,590,164 1,650.210 1,524,020 1,654,456
Each year the city must evaluate the appropriate level of its fees and charges.
Licenses and permits- Licens<:Js and permit fees for plan review, buiiding and fire inspections
represent 12% of the revenue in the General Fund.
Other revenues- Interest, fines, intergovernmental revenues, transfers and grants
comprise a final other category. In total they represent 3% of the current
budget and that percentage varies greatly depending upon annual
activities. These revenue streams are difficult to predict.
Other Resources- Fund balance carried forward from the prior year is a significant portion
of the ongoing budget and primarily represents unreserved monies to
ensure financial stability of the fund during economic or seasonal
variations.
Requirements and expenditures
Personal services- Personal services costs represent 63% of the total General Fund budget
and 37.7% of the total city-wide operational budget. The increase of
6.7% includes a 4.2% growth in general compensation and benefits,
1.1 % more in health care premiums, 0.8% more for two new positions.
Materials and services- This category represents 31.9% of the total General Fund budget and is
budgeted to increase 9.1 % primarily due to petroleum based products
(like fuel and asphalt) increases and internal charges for shared
services including administration, legal, finance, information technology,
building maintenance equipment and insurances services.
Capital outlay- Capital expenditures are a very small portion of the General Fund.
Quite often, most of the expended amount in this category is
significantly offset by a grant.
Other requirements- Things like transfers to other funds (Cemetery Trust) are budgeted here
and usually are nominal.
Ending Fund Balance- Fund balance to be carried forward represents the estimated amount set
aside for the coming year. The estimated amount cannot be
appropriated in the current year except under emergencies.
-..
...'1
MATCHING RESOURCES AND REQUIREMENTS
As can be seen above, the General Fund is reliant on a variety of taxes to balance. Without those
taxes, services would probably cease or be curtailed. Annually the city develops assumptions meant
to help guide the creation of the next year's budget and to estimate the impact extending five more
years into the future. Some of those assumptions are:
Revenues
. Planning fees will fund approximately 75% of division activities.
. Building permits will fund division activities at 100%.
. Property tax rate will be held to $1.72 City, $2.09 Parks, approximately $3.81 combined.
. Property tax assessed valuation growth will be 3% under Measure 50 and new construction will be
2% fo~ a total assessed vaiuation growth of 5%
Expenses
. Health care premiums will increase 7 - 9%.
. Inflation for general Materials & Services will be 3.0% for 2006-07. (Exceptions for industry trends
where appropriate and fuel at 50%)
When modeling the General Fund financial picture it becomes important to consider the "growth" of
revenues as compared to the rise in costs. If we assume the following:
o Assessed property values will increase 3% and a 2% growth
o All other taxes and revenue streams will grow at 3%
o Staff costs will grow at 7%
o General materials & services will increase at 3%
o Petroleum based materials will rise 10%
o Internal charges will increase 5%
Other costs and expenses remain constant, the projection from FY 2005-06 for the General Fund
would look like this:
Projected Revenues and Expenditures
2006 2Q07 2008 2009
GENERAL FUND Actual Projected Projected Projected
Revenues
Property Taxes 2.436,234 2.558,045 2,685,948 2,820,245
All Other Taxes 6,080,805 6,263.229 6.451,126 6,644.660
All Other Revenue* 4,148,593 4.273,051 4.401,242 4,533,280
Subtot~ 12,665,632 13.094,325 13,538,316 13,998,184
Expenditures
Personal Services 7,873,693 8.424,851 9.014,591 9,645,612
Materials & Services- General 2,688,264 2,768,912 2.851,980 2,937,539
Materials & Services- Fuel 102,310 112,541 123.795 136,174
Materials & Services-Internal Charges 1.453,757 1,526.444 1,602.767 1,682,905
Capital Outlay 300,858 300,858 300,858 300,858
Subtotal 12.418.882 13,133,607 13,893,99{j 14,703,089
Excess (deficiency) of revenues over expenditures 246.750 (39,282) (355,675) (704.905)
.Includes Transfer In from Cemetery Trust
~.l'
,
The trend shows a disconnect between revenues and expenditures mav occur within two years, if the
assumptions are correct. Please note that assumptions are seldom 100% accurate, departments
strive to spend less than the amount budgeted, revenue streams fluctuate due to many variables and
a fund balance is used to smooth out these variations.
This is a potential disconnect. Departments strive to under-spend their budgets without compromising
services. Five years ago most departments were using 90% to 95% of their annual budget. In the
last few years many departments have recorded in the 95% to 97% range because of tighter budgets,
rapidly rising costs and unanticipated program or projects requiring resources. This has increased the
need and use of Contingency each year.
Thus, in the scenario above, if departments spent oniy 97% of the budget in 2008, the resulted would
be a $416,820 offset to the negative $355,675 for a balance of a positive $61,145 (all other things
being equal). The cumulative effect of such savings from 2006 through 2009 would be an increase in
fund balance of $337,663 for all years combined.
This scenario relies upon continued, stable revenue streams. As mentioned above, Council has the
ability to change revenue streams to affect the outcome. The end goal is to maintain an ending fund
balance sufficient in size to minimize the impact of sudden disruptions or annual shifts in resources or
requirements. A short history of fund balances is shown below.
For the Fiscal Year Ended June 30, 2003 2004 2005 2006
Fund Balances Actual Actual Actual Actual
City Component
General Fund $ 1.715,220 $ 1,755.145 $ 2,093.388 $ 2,326,936
Community Development
Block Grant Fund (32.433) 33,018 (8,492) 4.599
Street Fund 2,528.750 315,846 1.186,028 1.484.044
Airport Fund 32.135 218.377 122,942 54.874
Capital Improvements Fund 67,583 396.855 924.554 803.171
Debt Service Fund 282,293 433.278 423.842 459.095
Water Fund 4.662,028 5.002,748 6,458.230 6.179,246
Wastewater Fund 2.356.054 1,541.125 5.664.182 5.301.598
Electric Fund 1,497.827 1,539.766 2.527,430 2,116.269
Telecommunications Fund 388.018 62,635 898,750 518,687
Central Services Fund 947.953 569,013 185.137 439.010
Insurance Services Fund 145.978 934,499 1,036.331 1.060,790
Equipment Fund 1.121.598 1,224,311 1,489.055 1.510.170
Cemetery Trust Fund 679.646 684,476 702,629 719,429
Total City Component 16,392,650 14,711,092 23,704,006 22,9S7,918
Parks Component
Parks and Recreation Fund 1,403,171 1.558.332 1,621,679 1,507,367
Youth Activities Levy Fund 36,403 122,588 103.733 35,374
Parks Capital Improvements Fund 367,733 300,331 207.375 165.326
Total Parks Component 1.807,307 1,981,251 1,932,787 1,708,067
Total Budget $18,199,957 $16,692,343 $25,636,793 $24,665,985
Finally, beyond the ability to curtail spending (minimize or discontinue some services) and increase
some revenues or create others to help with balancing, Ashiand is levying less than the permanent
rate of $4.2865. An estimated $500,000 in additional property tax revenue could be generated
annually. However, although this additional amount provides a "cushion" it is likely that General Fund
operating costs will continue to increase at a faster rate than property tax revenue. Below is a table
four years of history on property taxes.
~.t. 1
City of Ashland
Property Tax Rate and Revenue
Property Tax Rate 2003-04 2004.05 2005-06 2006-07
General Fund 1.47194 1.47190 1.62190 1.70690
Debt Service Fund 0.17500
Parks 2.09247 2.09280 2.09280 2.09280
Total 3.56441 3.56470 3.71470 3.97470
Permanent Rate'Limit 4.28650 4.28650 4.28650 4.28650
Rate not levied 0.72209 0.72180 0.57180 0.31180
Property Tax Revenue
General Fund $ 2,170,033 $ 2,265,556 $ 2,436,234 $ 2,985,560
Current 2,071,095 2,180,492 2,307,930 2,887,760
Prior 98,938 85,064 128.304 97,800
Dollar amount not levied $ 1,064,554 $ 1,110,998 $ 858,893 $ 545,373
Assessed Valuation $ 1,511,835,569 $ 1,593,607,600 $ 1,677,271,999 $ 1,761,135,599
The city is in the enviable position of having room left in available property tax revenue and still
maintaining a reasonable fund balance in the General Fund. At the same time, the cost for providing
services has been increasing, often outside the city's control. As explained in the budget message
over the last several years, the city should continue evaluating the services provided, the quality of
those services and how they are to be funded.
DEBT AND DEBT SERVICE
There is no direct debt service funded by the General Fund. To discuss debt we will segregate the
types of debt, where they are located in the city-wide budget and how the debt service is paid.
Debt service -
The budget includes the payment of all current debt obligations of the city.
These obligations include bonds, loans from the state and banks, notes with
private parties and sometimes internal borrowing.
In general, we separate enterprise related debt from general debt but sometimes they overlap. Years
ago, bonds that were issued for enterprise infrastructure were sometimes backed by the general tax
authority of the city and were often referred to as "double barrel bonds." That meant there were two
separate ways to pay for them. This is not done very often today. The city did choose to back the
refinancing of the Ashland Fiber Network debt with the ability to pay from other general revenues
since the telecommunications system could not demonstrate a sufficient ability to pay the debt service
totally through operating revenue.
-..
lra'1
"
The table below shows General Obligation bonds found in the Debt Service Fund:
DEBT SERVICE
Date Due 2004 Actual 2005 Actual 2006 Amended 2007 Adopted
Debt Service Fund
1997 Flood Restoration Bonds - Principal Payment December 1 $ 65,000 $ 65.000 $ 70,000 $ 75,000
1997 Flood Restoration Bonds. Interest Payment December 1 16,409 15.552 13,871 3,392
1997 Flood Restoration Bonds. Interest Payment June 1 15,253 13,870 12,366 1,760
2000 Flood & Fire Stalion Bonds - Principal Payment June 1 120,000 120,000 1~5.000 130.000
2000 Flood & Fire Station Bonds - Interest Payment December 1 18,061 14.843
2000 Flood & Fire Stalion Bonds - Interest Payment June 1 164,483 158,483 18,061 14,843
2005 Refunding Series - Principal Payment NA NA
2005 Refunding Series - Interest Payment December 1 59,879 56,363
2005 Refunding Series - Interest Payment June 1 56.363 56,363
Telecommunications Fund
2004 Revenue Bonds - Interest Payment* July 15 NA NA 802,021 432,227
January 15 432,227 432.227
Total General Obligation Debt Service $ 381,145 $ 372.905 $ 1,607,849 $ 1,217,016
*These Revenue Bonds are also backed by the Full Faith and Credit of the City of Ashland
General Obligation debt is limited by the state to 3% of the assessed value of property in the city's
boundaries but the city is well under that cap.
CITY OF ASHLAND, OREGON
COMPUTATION OF LEGAL DEBT MARGIN
True cash value
3% of the true cash value
$3.266.109.773
0.03
$97.983,293
NET BONDED DEBT:
Gross bonded debt
Less amounts exempted:
Water
Water Refunding
Total debt applicable to margin
LEGAL DEBT MARGIN
19.780.000
(60.000)
(940.000)
18.780,000
$79,203.293
Most all of Ashland's other outstanding debt is either Revenue bonds or General Obligation debt
backed by the city's ability to tax. Except for the refinancing of the AFN debt, most all other enterprise
debt is revenue based thus accounted for and paid out of the corresponding utility fund.
The AFN debt did not greatly reduce the city's ability to finance other improvements via general
obligation debt but the annual debt service of $1.4 million does require allocating resources to make
the payments. All other debt of the city has identified revenue streams to pay the annual service
amounts whether it is through approved property taxes, rate revenues or other fees designed to
generate sufficient amounts.
Council has discussed this debt on many occasions but a long term solution has not been adopted. In
the current budget the debt service of $865,000 in interest only is scheduled to be paid from a reserve
transfer of $570,000 from the Capital Improvement Fund and $295,000 from property tax levied at
$.175/$1000 within the city's permanent rate. Next year's debt service will be $1.1 million and will
~~,
r
climb to $1.43 million by 2010 as payment of principal increases. Funding solutions for these bonds
are part of another agenda item.
Reserves and surpiuses cannot be relied upon to pay ongoing debt service. The City needs to
identify a permanent solution to finance these debt payments. We can then permanently plan for the
additional revenues or reduced services needed to meet this obligation.
Related City Policies:
Financial Management Policies
Accounting Methods
Council Options:
Accept the information provided, request additional information andlor schedule additional meetings
for discussion.
Potential Motions:
This is a study session so there are no formal decisions to be made.
Attachments:
Revenue and Expense Pie Charts
r...,
CITY OF
ASHLAND
Council Communication
Study Session
Policy Discussion Regarding Fund Balances
Meeting Date:
Department:
Contributing Depart:
March 1, 2005
Finance
Police, Fire, Electric, Public
Warks, Com Dcv
Gino Grimaldi
Primary Staff Contact: Lee Tuneberg, 552-2003
tuneberl(Q;ash land.or. us
Approvai:
Statement:
The City established a fund balance policy for most funds in 1995 and has used the calculated
amounts as targets to aid in assuring the public that adequate funds will be maintained to "carry"
city operations from one year to the next. This report is to update Council on the policy and
performance of staff in managing to those targets.
Background:
The City established target fund balances to help ensure that adequate funds were held in reserve
between years. This is a most critical practice for any agency that relies heavily on property tax
so that ample cash is maintained to carry the agency into November when the majority of
property tax revenues are normally received. The City has a diverse revenue funding system so
that it is not as important to rely on a larger fund balance awaiting November's distribution from
the County. However, the City does have many activities whose operations are dramatically
impacted by weather, consumption or use, tourism and activities controlled by others that make it
equally important to have sufficient fund balances in case of a downturn in predicted revenue
streams.
Each year staff prepares the budget and looks to the fund balance target as revenues and
expenses are balanced. Predictions of fund balances for the current, ensuing and future years are
presented in the long-term section ofthe budget document as well as the policy in narrative
format for each fund in the Appendix.
Please note that the timing of construction and financing activities can dramatically impact the
actual performance as compared to the target. An example is issuing bonds in March to
construct infrastructure for the next 2 to 3 years will artificially inflate the fund balance for a
year or two. Also, target fund balances should be considered as minimums since there are no
inherent problems with exceeding them, even for an extended time, but there may be operational
short falls and possible reductions in bond ratings if the financial viability is jeopardized.
A budgetary tool that assists the City in carry over is Contingency. Most funds have a
Contingency budgeted each year that helps to avoid budget law violations and is primarily there
~~,
for unforeseen changes. The important point with Contingency is that any unused amount
results in a larger fund balance carry forward to the next year. The city has been fairly
successful in NOT using all of its Contingency budgeted however, as staff budgets more closely
to the proposed activities and/or revenues outside our control fall short, more contingency is used
and there is a greater chance that less will flow to the bottom line and carried forward.
Attached are a series of tables that show recent trends in the targeted and actual fund balances
Related City Policies
The established Fund Balance Policy may have direct or indirect impacts on City activities and
other policies given that a fee charged or a service rendered may affect the fund balance and vice
versa however, there are no related policies dependent upon the fund balance policy.
Council Options:
No action is required since this is a staff report. If Council would like a change in the existing
policy and/or targets, staff can bring a recommendation to a regular Council meeting.
Staff Recommendation:
No change recommended at this time.
Potential Motions:
None, this is an update and does not require Council action at this time.
Attachments:
Tables and Charts
2
CITY OF
ASHLAND
Council Communication
Meeting Date:
Department:
Secondary Dep!.:
Approval:
Investment Policy Review/Update
November 16, 2009 Primary Staff Contact:
City Recorder/Treasurer E-Mail:
None Secondary Contact:
Martha Bennett Estimated Time:
Barbara Christensen
christeb@ashland.or.us
None
15 minutes
Question:
Would the City Council review and update the current investment policy?
Staff Recommendation:
Information purposes only.
Background:
The current Investment Policy was adopted by City Council in .1998. Since that time there have been
significant changes within the structure of Investment Banking Divisions and Collateralization
requirements. These changes resulted in references to additional Oregon State Statutes that should be
referenced in a current investment policy. In addition, the proposed investment policy includes the
ability, should the City choose in the future, to contract with an external investment management firm.
It is the policy of the City of Ashland to invest public funds in a manner which will provide the highest
investment return with the maximum security while meeting the daily cash flow demands of the entity
and conforming to all state and local statutes governing the investment of public funds. The three main
objectives of a solid Investment Policy is: Safety, Liquidity and Yield.
The request is for City Council to review and approve an updated Investment Policy in order to meet
current Oregon Revised Statutes pertaining to investment of municipal funds. The proposed updated
Investment Policy has been reviewed and commented upon by the Oregon State Short Term Board.
Related City Policies:
Resolution 1998-16
Council Options:
None requested
Potential Motions:
None requested
Attachments:
Proposed Resolution - Investment Policy
Resolution 1998-16 - Investment Policy
Chart information on Investments and Rate of Return
October 2009 Investment Worksheet
Page I of I
r~'
RESOLUTION 2009-
A RESOLUTION AUTHORIZING THE INVESTMENT POLICY OF THE CITY
OF ASHLAND AND REPEALING RESOLUTION NO. 98-16
Recitals:
ORS Chapter 294.035 prohibits local governments from investing money unless the
governing body of the local government has authorized the investments.
The Mayor and City Council resolve: The investment of City monies in accordance with
the attached policy is authorized.
This Resolution supersedes Resolution No. 98-16 authorizing the investment of City
monies and the purchase of Bancroft Bonds.
THE CITY OF ASHLAND RESOLVES AS FOLLOWS:
SECTION I.
This resolution was duly PASSED and ADOPTED this
2009, and takes effect upon signing by the Mayor.
day of
Barbara Christensen, City Recorder
John Stromberg, Mayor
Reviewed as to form:
Richard Appicello, City Attorney
City of Ashland Investment Policy
Revised November 2009
Page 1 of7
CITY OF ASHLAND, OREGON
INVESTMENT POLICY
I. POLICY STATEMENT
It is the policy of the City of Ashland to invest public funds in a manner which will provide the
highest investment return with the maximum security while meeting the daily cash flow demands
of the entity and conforming to all state and local statutes governing the investment of public
funds.
II. SCOPE
This investment policy applies to activities of the City of Ashland and Ashland Parks &
Recreation in regard to investing the financial assets of all funds except for funds held in trust for
deferred compensation funds for the employees of the City of Ashland. In addition, funds held by
trustees or fiscal agents are excluded from these rules; however, all funds are subject to
regulations established by the State of Oregon. Other than bond proceeds or other unusual
situations, the estimated portfolio size ranges from $15,000,000 to $24,000,000.
These funds are accounted for in the City of Ashland's Comprehensive Annual Financial Report
and include:
General Fund
Special Revenue Funds
Capital Projects Funds
Debt Service Funds
Enterprise Funds
Internal Service Funds
Trust & Agency Funds
Funds of the City will be invested in compliance with the provisions of all applicable Oregon
Revised Statutes. Investments of any tax-exempt borrowing proceeds and any related Debt
Service funds will comply with the arbitrage restrictions in all applicable Internal Revenue Codes.
III. OBJECTIVES AND STRATEGY
The primary objectives, in priority order, of the City of Ashland's investment activities shall be:
I. Legality. This Investment Policy will be in conformance with federal laws, state statutes,
local ordinances, and internal policies and procedures.
2. Liquidity. The City of Ashland's investment portfolio will remain sufficiently liquid to
enable the City of Ashland to meet all operating requirements which might be reasonably
anticipated.
3. Diversification. Diversification of the portfolio will include diversification by maturity and
market sector and will include the use of multiple broker/dealers for diversification and
market coverage.
4. Yield. The City of Ashland's investment portfolio shall be designed with the objective of
attaining a market rate of return throughout budgetary and economic cycles, commensurate
with the City of Ashland's investment risk constraints and the cash flow characteristics of the
portfolio. "Market rate of return" may be defined as the average yield of the current three-
City of Ashland Investment Policy
Revised November 2009
Page 2 of?
month U.S. Treasury bill or any other index that most closely matches the average maturity of
the portfolio.
Effective cash management is recognized as essential to good fiscal management. Cash
management is defined as the process of managing monies in order to ensure maximum cash
availability. The City shall maintain a comprehensive cash management program that includes
collection of accounts receivable, and the management of banking services.
IV. STANDARDS OF CARE
1. Delegation of Authority. Authority to manage the City of Ashland's investment program is
delegated to the City Recorder/Treasurer and Administrative Services Director who are the
designated investment officers of the City and are responsible for investment decisions and
activities, under the review of City Council. The day to day administration of the cash
management pro6'fam is handled by the City Recorder/Treasurer or by, the Administrative
Services Director in the absence of the City Recorder/Treasurer.
Management responsibility for the investment pro6'fam is hereby delegated to the City
Recorder/Treasurer and Administrative Services Director, who shall establish written
procedures for the operation of the investment program consistent with this investment policy
and subject to review and adoption by City Council. Procedures should include reference to:
safekeeping, PSA repurchase agreements, wire transfer agreements, banking service contracts
and collateral/depository agreements. Such .procedures shall include explicit delegation of
authority to persons responsible for investment transactions. No person may engage in an ,
investment transaction except as provided under the terms of this policy and the procedures
established by the City Recorder/Treasurer and Administrative Services Director. The City
Recorder/Treasurer and Administrative Services Director shall be responsible for all
transactions undertaken and shall establish a system of controls to regulate the activities of
subordinate officials.
2. Prudence. The standard of prudence to be used by investment officials shall be the "prudent
person" standard and shall be applied in the context of managing an overall portfolio. These
standards states: "Investments shall be made with judgment and care, under circumstances
then prevailing, which persons of prudence, discretion and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering the
probable safety of their capital as well as the probable income to be derived."
3. Limitation of Personal Liability. The Investment Officer acting in accordance with written
procedures, the investment policy and in accord with the Prudent Person Rule shall not be
held personally liable in the management of the portfolio.
4. Ethics and Conflict of Interest. Officers and employees involved in the investment process
shall refrain from personal business activity that could conflict with proper execution of the
investment program, or which could impair their ability to make impartial investment
decisions. Employees and Investment Officers shall disclose any material financial interests
in financial institutions that conduct business within this jurisdiction, and they shall further
disclose any large personal financiallinvestment positions that could be related to the
performance of the investment portfolio. Employees, officers, and their families shall refrain
from undertaking personal investment transactions with the same individual with whom
business is conducted on behalf of the City, Officers and employees shall, at all times,
comply with the State of Oregon, Government Standards and Practices Commission, code of
ethics set forth in ORS Chapter 244.
City of Ashland Investment Policy
Revised November 2009
Page 3 of7
IV. AUTHORIZED AND SUITABLE INVESTMENTS.
1. Authorized Investments. All investments of the City shall diversified by type, maturity and
issuer. Before any transaction is concluded, to the extent practicable, the Investment Officer
shall solicit and document competitive and offers on comparable securities. When not
practicable, the reasons should be similarly documented. At all times the Investment Officer
will strive for best execution of all transactions. Additionally, if reasonably unanticipated
events cause the portfolio limits to be exceeded, the Investment Officer will take the steps
necessary to correct the situation as soon as practicable. Investments may be sold at a loss
when the Investment Officer deems that such a decision is prudent.
2. Suitable Investments.
a. U.S. Treasuries
b. Agencies and Instrumentalities of the United States.
c. Savings and Demand Accounts (Oregon depositories only)
d. Time Certificates of Deposit (Oregon depositories only)
f. Banker's Acceptances (Oregon issued)
g. Corporate Debt
h. Municipal Debt (States of Oregon, California, Idaho and Washington only)
1. Oregon Local Government Investment Pool (LGIP)
, The specific permitted securities are defined under Oregon Revised Statutes Chapters 294.035,
294.040, 294.046 and 294.810. (See Addendum A) Collateral requirements are bank deposits,
time deposits, certificates of deposit and savings accounts are defined in ORS Chapter 295. (See
Addendum B)
V. INVESTMENT PARAMETERS
I. Diversification. The City will diversify the investment portfolio to avoid Incurring
unreasonable risks, both credit and interest rate risk, inherent in over investing in specific
instruments, individual financial institutions or maturities.
Diversification Constraints on Total Holdings:
ISSUER TYPE
U.S. Treasury Obligations
% of portfolio
Up to 100%
U.S. Government Agency Securities and
Instrumentalities of Government Sponsored Corp.
Up to 75% and 25% per issuer
Bankers' Acceptances (BA's)
Up to 25% and 15% per issuer
Certificates of Deposit (CD)
Up to 35% and 5% of deposits per
institution
Municipal Debt
Up to 35% and 10% per issuer
Corporate Debt (AA, AI, PI)
Up to 25% and 5% per issuer
State of Oregon Investment Pool Securities
ORS Limit 294.810
The investment officers will routinely monitor the contents of the portfolio comparing the
holdings to the markets, relative values of competing instruments, changes in credit quality, and
City of Ashland Investment Policy
Revised November 2009
Page 4 of7
benchmarks. If there are advantageous transactions, the portfolio may be adjusted accordingly,
but not to exceed % as stated.
2. Investment Maturities. The City will not directly invest in securities maturing more than
three (3) years from the date of purchase.
a. The maximum weighted maturity of the total portfolio shall not exceed 1.5 years. This
maximum is established to limit the portfolio to excessive price change exposure.
b. Liquidity funds will be held in the State Pool or in money market instruments maturing
six months and shorter. The liquidity portfolio shall, at a minimum, represent six month
budgeted outflow.
c. Core funds will be the defined as the funds in excess of liquidity requirements. The
investments in this portion of the portfolio will have maturities between I day and 5 years
and will be only invested in high quality and liquid securities.
Total Portfolio Maturity Constraints:
Under 30 days
Under 90 days
Under 270 days
Under I year
Under 18 months
Under 3 years
10% minimum
25% minimum
50% minimum
75% minimum
80% minimum
100% minimum
Exception to 3 year maturity maximum: Reserve or Capital Improvement Project monies may be
invested in securities exceeding three (3) years if the maturities of such investments are made to
coincide as nearly as practicable with the expected use of the funds.
Due to fluctuations in the aggregate surplus funds balance, maximum percentages for a particular
issuer or investment type may be exceeded at a point in time subsequent to the purchase of a
particular issuer or investment type may be exceeded. Securities do not need to be liquidated to
realign the portfolio; however, consideration will be given to this matter when future
reinvestments occur.
VII. SAFEKEEPING, CUSTODY AND AUTHORIZED DEALERS
I. Safekeeping and Custody of Securities. The laws of the state and prudent treasury
management require that all purchased securities be bought on a delivery versus payment
basis and be held in safekeeping by the City, or the City's designated depository.
All safekeeping arrangements shall be desi!,'11ated by the Investment Officer and shall list
each specific security, rate, description, maturity, and cusip number. Each safekeeping
receipt will clearly state that the security is held for the City or pledged to the City. In
addition, repurchase requirements including Master Repurchase Agreements shall be in place
prior to any business being conducted.
2. Authorized Financial Dealers. The Investment Officer shall maintain a list of all
authorized brokers/dealers and financial institutions that are approved for investment
purposes or investment dealings. Any firm is eligible to make an application to the City
of Ashland and upon due consideration and approval will be added to the list. Additions
and deletions to the list will be made at the discretion of the Investment Officer. To be
eligible, a financial institution must meet at least one of the following three criteria:
City of Ashland Investment Policy
Revised November 2009
Page 5 of7
a. Be a primary dealer of the Federal Reserve Bank of New York; or
b. Report voluntarily to the F.R. B. of New York; or
c. Affirm that it has met the securities dealers' capital adequacy requirements
of the F.R. B. of New York continuously for the preceding 12 months.
At the request of the City of Ashland, the firms performing investment services shall provide
their most recent financial statements or Consolidated Report of Conditions for review.
Further, there should be in place, proof as to all the necessary credentials and licenses held by
employees of the brokers/dealers who will have contact with the City of Ashland as specified
by, but not necessarily limited to the Financial Industry Regulatory Authority (FINRA),
Securities and Exchange Commission (SEe), etc.
All dealers with whom the City transacts business will be provided a copy of this Investment
Policy to ensure that they are familiar with the goals and objectives of the investment
program.
If the City hires an investment advisor to provide investment management services, the
advisor is authorized to transact with its direct dealer relationships on behalf of the City. A
list of approved dealers must be submitted to the Investment Officer prior to transacting
business.
3. Competitive Transactions. The Investment Officer will obtain telephone, faxed or emailed
quotes before purchasing or selling an investment. The Investment Officer will select the
quote which best satisfies the investment objectives of the investment portfolio within the
parameters of this policy. The Investment Officer will maintain a written record of each
bidding process including the name and prices offered by each participating financial
institution.
The investment advisor must provide documentation of competitive pricing execution on
each transaction. The advisor will retain documentation and provide upon request.
VIII. CONTROLS
I. Accounting Method. The City shall comply with all required legal provisions and Generally
Acccpted Accounting Principles (GAAP). The accounting principles are those contained in
the pronouncements of authoritative bodies including but not necessarily limited to, the
Governmental Accounting Standards Board (GASB); the American Institute of Certified
Public Accountants (AICP A); and the Financial Accounting Standards Board (F ASB).
Pooling of Funds: Except for cash in certain restricted and special funds, the City will
consolidate balances from all funds to maximize investment earnings. Investment income
will be allocated to the various funds based on their respective participation and in
accordance with generally accepted accounting principles.
2. Internal Controls. The City will maintain a structure of internal controls sufficient to assure
the safekeeping and security of all investments.
The Investment Officer shall develop and maintain written administrative procedures for the
operation of the investment program that are consistent with this investment policy.
City of Ashland Investment Policy
Rcvised Novcmber 2009
Page 6 01'7
Procedures will include reference to safekeeping, wire transfers; banking services contracts,
and other investment related activities.
The Investment Officer shall be responsible for all transactions undertaken.
No officer or designee may engage in an investment transaction except as provided under the
terms of this policy and the procedures established by the Investment Officer and approved
by the Council.
3. External Controls. The City of Ashland may enter into contracts with external investment
management firms on a non-discretionary basis. These services will apply to the investment
of the City's short-term operating funds and capital funds including bond proceeds and bond
reserve funds.
If an investment advisor is hired, the advisor will comply with all requirements of this
Investment Policy. The investment advisor will provide return comparisons of the portfolio
to the benchmark on a monthly basis. Exceptions to the Investment Policy must be disclosed
and agreed upon in writing by both parties. The Investment Officer remains the person
ultimately responsible for the prudent management of the portfolio.
Factors to be considered when hiring an investment advisory firm may include, but are not
limited to:
a. The firm's major business
b. Ownership and organization of the firm
c. The background and experience of key members of the firm, including the portfolio
manager expected to be responsible for the City's account
d. The size of the firm's assets base, and the portion of that base which would be made up
by the City's portfolio if the firm were hired
e. Management Fees
f. Cost Analysis of advisor
g. Performance of the investment advisory firm, net of all fees, versus the Local
Government Investment Pool or other benchmarks over a given period of time
IX. PERFORMANCE EVALUATION AND REPORTING
The investment portfolio shall be designed with the objective of obtaining a rate of return
throughout budgetary and economic cycles, commensurate with the investment risk constraints
and the cash flow needs.
The city's investment strategy is active. Preservation of capital and maintenance of sufficient
liquidity will be considered prior to attainment of market return performance. A market
benchmark will be determined that is appropriate for longer term investments based on the City's
risk and return profile. When comparing the performance of the City's portfolio, all fees and
expenses involved with managing the portfolio shall be included in the computation of the
portfolio's total rate of return. This would include any in-house management of the funds, as well
as outside management.
The Investment Officer shall prepare monthly and quarterly compliance summary reports that
provide'details of the investment portfolio, as well as transaction details for the reporting period.
Details shall be sufficient to document conformity with the provisions of the statutes and this
City uf Ashland Investment Policy
Revised November 2009
Page 7 01'7
investment policy and shall include a listing of individual securities held at the end of the period.
All investments owned will be marked-to-market monthly by the City's third-party custodian.
The performance (total return) of the City's portfolio will be measured against the performance of
the Local Government Investment Pool (LGIP) and the yield of the 91-day U.S. Treasury Bill.
X. INVESTMENT POLICY ADOPTION BY GOVERNING BODY
This investment policy will be formally adopted by the City Council. The policy shall be
reviewed on an annual basis by the Investment Officer and the City Council. Material revisions
to this policy will require a review by the Oregon Short Term Fund Board, pursuant to current
Oregon Revised Statutes.
Investment Policy Revised Nov 2009
Addendum A
Page I of 4
ADDENDUM A
Chapter 294 - County and Municipal Financial Administration
294.035 Investment of surplus funds of political subdivisions; approved investments.
(I) Subject to ORS 294.040 and 294.135 to 294.155, the custodial officer may invest any
sinking fund, bond fund or surplus funds in the custody of the custodial officer in the
bank accounts, classes of securities at current market prices, insurance contracts and other
investments listed in this section, but only after obtaining from the governing body of the
county, municipality, political subdivision or school district a written order that has been
entered in the minutes or journal of the governing body.
(2) This section does not:
(a) Limit the authority of the custodial officer to invest surplus funds in other
investments when the investment is specifically authorized by another statute.
(b) Apply to a sinking fund or a bond fund established in connection with conduit
revenue bonds issued by a county, municipality, political subdivision or school district
for private business entities or nonprofit corporations.
(3) Investments authorized by this section are:
(a) Lawfully issued general obligations of the United States, the agencies and
instrumentalities of the United States or enterprises sponsored by the United States
Government.
(b) Lawfully issued debt obligations of the agencies and instrumentalities of the State
of Oregon and its political subdivisions that have a long-term rating of A or an equivalent
rating or better or are rated on the settlement date in the highest category for short-term
municipal debt by a nationally recognized statistical rating organization.
(c) Lawfully issued debt obligations of the States of California, Idaho and
Washington and political subdivisions of those states if the obligations have a long-term
rating of AA or an equivalent rating or better or are rated on the settlement date in the
highest category for short-term municipal debt by a nationally recognized statistical
rating organization.
(d) Time deposit open accounts, certificates of deposit and savings accounts in
insured institutions as defined in ORS 706.008, in credit unions as defined in ORS
723.006 or in federal credit unions, if the institution or credit union maintains a head
office or a branch in this state.
(e) Share accounts and savings accounts in credit unions in the name of, or for the
benefit of, a member of the credit union pursuant to a plan of deferred compensation.
(I) Fixed or variable life insurance or annuity contracts as defined by ORS 731.170
and guaranteed investment contracts issued by life insurance companies authorized to do
business in this state.
(g) Trusts in which deferred compensation funds from other public employers are
pooled, if:
(A) The purpose is to establish a deferred compensation plan;
(B) The trust is a public instrumentality of such public employers and described in
section (2)(b) of the Investment Company Act of 1940,15 U.S.c. 80a-2(b), as amended,
in effect on September 20, 1985, or the trust is a common trust fund described in ORS
709.170;
Investment Policy Revised Nov 2009
Addendum A
Page 2 of 4
(C) Under the terms of the plan the net income from or gain or loss due to fluctuation
in value of the underlying assets of the trust, or other change in such assets, is reflected in
an equal increase or decrease in the amount distributable to the employee or the
beneficiary thereof and, therefore, does not ultimately result in a net increase or decrease
in the worth of the public employer or the state; and
(D) The fidelity of the trustees and others with access to such assets, other than a trust
company, as defined in ORS 706.008, is insured by a surety bond that is satisfactory to
the public employer, issued by a company authorized to do a surety business in this state
and in an amount that is not less than 10 percent of the value of such assets.
(h) (A) Banker's acceptances, if the banker's acceptances are:
(i) Guaranteed by, and carried on the books of, a qualified financial institution;
(ii) Eligible for discount by the Federal Reserve System; and
(iii) Issued by a qualified financial institution whose short-term letter of credit rating
is rated in the highest category by one or more nationally recognized statistical rating
organizations.
(B) For the purposes of this paragraph, "qualified financial institution" means:
(i) A financial institution that is located and licensed to do banking business in the
State of Oregon; or
(ii) A financial institution that is wholly owned by a financial holding company or a
bank holding company that owns a financial institution that is located and licensed to do
banking business in the State of Oregon.
(C) A custodial officer shall not permit more than 25 percent of the moneys ofa local
government that are available for investment, as determined on the settlement date, to be
. invested in banker's acceptances of any qualified financial institution.
(i) (A) Corporate indebtedness subject to a valid registration statement on file with the
Securities and Exchange Commission or issued under the authority of section 3(a)(2) or
3(a)(3) of the Securities Act of 1933, as amended. Corporate indebtedness described in
this paragraph does not include banker's acceptances. The corporate indebtedness must
be issued by a commercial, industrial or utility business enterprise, or by or on behalf of a
financial institution, including a holding company owning a majority interest in a
qualified financial institution.
(B) Corporate indebtedness must be rated on the settlement date pol or Aa or better
by Moody's Investors Service or A-lor AA or better by Standard & Poor's Corporation
or equivalent rating by any nationally recognized statistical rating organization.
(C) Notwithstanding subparagraph (B) of this paragraph, the corporate indebtedness
must be rated on the settlement date P-2 or A or better by Moody's Investors Service or
A-2 or A or better by Standard & Poor's Corporation or equivalent rating by any
nationally recognized statistical rating organization when the corporate indebtedness is:
(i) Issued by a business enterprise that has its headquarters in Oregon, employs more
than 50 percent of its permanent workforce in Oregon or has more than 50 percent of its
tangible assets in Oregon; or
(ii) Issued by a holding company owning not less than a majority interest in a
qualified financial institution, as defined in paragraph (h) of this subsection, located and
licensed to do banking business in Oregon or by a holding company owning not less than
a majority interest in a business enterprise described in sub-subparagraph (i) of this
subparagraph.
Investment Poliey Revised Nov 2009
Addendum ^
Page3of4
(0) A custodial officer may not permit more than 35 percent of the moneys ofa local
govemment that are available fo.r investment, as determined on the settlement date, to be
invested in corporate indebtedness, and may not permit more than five percent of the
moneys of a local government that are available for investment to be invested in
corporate indebtedness of any single corporate entity and its affiliates or subsidiaries.
(j) Securities of any open-end or closed-end management investment company or
investment trust, if the securities are of the types specified in paragraphs (a) to (c), (h)
and (i) of this subsection and if the investment does not cause the county, municipality,
political subdivision or school district to become a stockholder in a joint company,
corporation or association. A trust company or trust department of a national bank while
acting as indenture trustee may invest funds held by it as indenture trustee in any open-
end or closed~end management investment company or investment trust for which the
trust company or trust department of a national bank or an affiliate of the trust company
or trust department of a national bank acts as investment adviser or custodian or provides
other services. However, the securities of the investment company or investment trust in
which the funds are invested must be of the types specified in paragraphs (a) to (c), (h)
and (i) ofthis subsection and the investment must not cause the county, municipality,
political subdivision or school district whose funds are invested to become a stockholder
in ajoint company, corporation or association. For purposes of this paragraph, companies
are affiliated if they are members of the same affiliated group under section 1504 of the
Internal Revenue Code of 1986 (26 V.S.C. 1504).
(k) Repurchase agreements whereby the custodial officer purchases securities from a
financial institution or securities dealer subject to an agreement by the seller to
repurchase the securities. The repurchase agreement must be in writing and executed in
advance of the initial purchase of the securities that are the subject of the repurchase
agreement. Only securities described in paragraph (a) of this subsection may be used in
conjunction with a repurchase agreement and such securities shall have a maturity of not
longer than three years. The price paid by the custodial officer for such securities may not
exceed amounts or percentages prescribed by written policy of the Oregon Investment
Councilor the Oregon Short Term Fund Board created by ORS 294.885.
(L) Shares of stock of any company, association or corporation, including but not
limited to shares of a mutual fund, but only if the moneys being invested are funds set
aside pursuant to a local government deferred compensation plan and are held in trust for
the exclusive benefit of participants and their beneficiaries. [Amended by 1957 c.53 91;
1957 c.689 91; 1965 c.404 91; 1973 c.157 91; 1973 c.288 91; 1974 c.36 99; 1975 c.359
93; 1977 dOO 91; 1981 c.804 984; 1981 c.880 913; 1983 c.456 92; 1985 c.256 92; 1985
c.440 91; 1985 c.690 92; 1987 c.493 91; 1991 c.459 9379; 1993 c.59 91; 1993 c.452 91;
1993 c.72l 91; 1995 c.79 9102; 1995 c.245 92; 1997 c.249 991; 1997 c.63l 9446; 1999
c.601 91; 2001 c.377 943; 2003 c.405 91; 2005 c.443 99l3,13aJ
. 294.040 Restriction on investments under ORS 294.035. The bonds listed in ORS
294.035 (3)(a) to (c) may be purchased only if there has been no default in payment of
either the principal of or the interest on the obligations of the issuing county, port, school
district or city, for a period of five years next preceding the date of the investment.
[Amended by 1995 c.245 93; 2005 c.443 92lJ
Investment Policy Revised Nov 2009
Addendum A
Page40f4
294.046 List of approved securities for investment under ORS 294.035;
distribution. The State Treasurer shall prepare and keep current a list of agencies and
instrumentalities of the United States with available obligations that any county,
municipality, political subdivision or school district may invest in under ORS 294.035
(3)(a) and 294.040. The list shall be distributed, upon request, to any county,
municipality, political subdivision or school district. [1973 c.157 S3; 1975 c.359 S4; 1995
c.245 94; 2005 c.443 922]
294.810 Local governments authorized to place limited funds in pool. (I) With the
consent of the governing body, a local government official may place in the aggregate up
to $30 million of its funds in the investment pool, or, if the assets of the investment pool
have been transferred pursuant to ORS 294.882, in the state investment fund established
c pursuant to ORS 293.721, for investment and reinvestment by the investment officer as
provided under ORS 293.701 to 293.820 or 294.805 to 294.895, as the case may be. The
$30 million limitation stated in this section shall not apply either to funds of a governing
body which are placed in the investment pool on a pass-through basis or to funds invested
on behalf of another government unit. Local governments must remove pass-through
funds which result in an account balance in the pool in excess of $30 million within 10
business days. County governments must remove such excess funds within 20 business
days. The investment officer shall promptly report each instance of noncompliance with,
or apparent abuse of, the limitations of this section to the Secretary of State and to the
governing body of the local government involved.
(2) The $30 million limitation contained in subsection (I) of this section shall
increase in proportion to the increase occurring after September 9, 1995, in the Consumer
Price Index for All Urban Consumers of the Portland, Oregon, Standard Metropolitan
Statistical Area, as compiled by the United States Department of Labor, Bureau of Labor
Statistics. [1973 c.748 92; 1981 c.880 915; 1987 c.38l 92; 1995 c.245 SIO]
ADDENDUM B
Chapter 295 - Depositories of Public Funds and Securities
295.001
295.002
295.004
295.006
295.008
295.013
295.015
295.018
295.022
295.031
295.034
295.037
295.041
295.046
295.048
295.053
295.056
295.061
295.071
295.073
295.081
295.084
295.087
295.091
295.093
295.101
295.106
295.108
295.195
295.205
Definitions for ORS 295.001 to 295.108
Deposit of public funds; limitation; exception
Conditions for deposit of funds in excess of specified amounts
Bank depository and public official filings with State Treasurer; rules
Conditions for acting as custodian or bank depository
Custodian's receipt; duties of custodian
Maintenance of securities by bank depository
Increase in required collateral of bank depository; notifications; failure to
increase collateral
Collateral not required for deferred compensation funds
Notice to public officials regarding adequacy of collateral
Withdrawal of inadequately collateralized funds
Distribution of collateral after loss in bank depository; assessments
Subrogation rights of State Treasurer
Limitation on depository acceptance of public funds from single public
official; exception
Limitations on aggregate public funds deposits; notice; exceptions
Custodian duties when bank depository ceases holding public funds; securities
Liability of public officials for loss of public funds
Treasurer reports; filing; notification of changes
Investigation by regulatory bodies other than State Treasurer
Report to State Treasurer of certain actions by Director of Department of
Consumer and Business Services
Time deposits
Designation of depository; collection for claims due state
Department of State Lands to invest proceeds from sales of public lands
Preference in selecting depositories for political subdivisions; apportioning
funds; interest
Depositing moneys with treasurer of political subdivision
Public funds not subject to ORS 295.001 to 295.108
State Treasurer charges; expenses
State Treasurer rules; form of report
When deposit in foreign country authorized; effect on collateral
Accounts in financial institutions outside Oregon; conditions; rules
295.001 Definitions for ORS 295.001 to 295.108. As used in ORS 295.001 to 295.108,
unless the context requires otherwise:
(1) "Adequately capitalized" means a bank depository that is classified as adequately
capitalized by its primary federal regulatory authority.
(2) "Bank depository" means an insured institution or trust company that:
(a) Maintains a head office or branch in this state in the capacity of an insured
institution or trust company; and
(b) Complies with ORS 295.008.
(3) "Business day" means any day other than a federal or State of Oregon legal
holiday or a day on which offices of the State of Oregon are otherwise authorized by law
to remain closed.
(4) "Credit union depository" means a credit union as defined in ORS 723.006 or a
federal credit union if:
(a) The shares and deposits of the credit union or federal credit union are insured by
the National Credit Union Share Insurance Fund; and
(b) The credit union or federal credit union maintains a head office or branch in this
state in the capacity of a credit union or federal credit union.
(5) "Custodian bank" or "custodian" means one of the following institutions
designated by the bank depository for its own account:
(a) The Federal Home Loan Bank designated to serve this state, or any branch of that
bank; or
(b) Any insured institution or trust company that:
(A) Is authorized to accept deposits or transact trust business in this state;
(B) Complies with ORS 295.008; and
(C) Has been approved by the State Treasurer to serve as a custodian bank, if the
State Treasurer has approved custodians under ORS 295.008.
(6) "Custodian's receipt" or "receipt" means a document issued by a custodian bank
describing the securities deposited with it by a bank depository to secure public fund
deposits.
(7) "Depository" means a bank depository or a credit union depository.
(8) "Financial institution outside this state" means a financial institution, as defined in
ORS 706.008, that is not an extranational institution, as defined in ORS 706.008, and is
not a bank depository or credit union depository, as defined in this section.
(9) "Insured institution" means an insured institution as defined in ORS 706.008.
(10) "Loss" means the issuance of an order by a regulatory or supervisory authority or
a court of competent jurisdiction:
(a) Restraining a bank depository from making payments of deposit liabilities; or
(b) Appointing a receiver for a public depository.
(II) "Maximum liability" of a bank depository on any given date means a sum equal
to:
(a) For a well capitalized bank depository, 10 percent of the greater of:
(A) All public funds held by the bank depository, as shown on the most recent
treasurer report;
(B) The average of the balances of public funds held by the bank depository, as
shown on the last four immediately preceding treasurer reports; or
(C) An amount otherwise prescribed in ORS 295.001 to 295.108.
(b) For an adequately capitalized bank depository, 25 percent of the greater of:
(A) All public funds held by the bank depository, as shown on the most recent
treasurer report;
(B) The average of the balances of public funds held by the bank depository, as
shown on the last four immediately preceding treasurer reports; or
(C) An amount otherwise prescribed in ORS 295.001 to 295.108.
(c) For an undercapitalized bank depository, 110 percent of the greater of:
(A) All public funds held by the bank depository; or
(B) The average of the balances of public funds held by the bank depository, as
shown on the last four immediately preceding treasurer reports.
(12) "Net worth" of a bank depository means:
(a) The equity capital of the bank depository, as shown on the immediately preceding
report of condition and income, and may include capital notes and debentures that are
subordinate to the interests of depositors; or
(b) An amount of equity capital designated by the State Treasurer.
(13) "Pledge agreement" means a written agreement among an insured institution or
trust company, the State Treasurer and a custodian that pledges the securities deposited
by the insured institution or trust company with the custodian as collateral for deposits of
public funds held by the insured institution or trust company. The agreement must be
approved by the board of directors or loan committee of the insured institution or trust
company and must be continuously maintained as a written record of the insured
institution or trust company.
(14) "Public funds" or "funds" means funds under the control or in the custody of a
public official by virtue of office.
(15) "Public official" means each officer or employee of this state or any agency,
political subdivision or public or municipal corporation thereof, or any housing authority,
who by law is made the custodian of or has control of any public funds.
(16) "Report of condition and income" means the quarterly report submitted to a bank
depository's primary federal regulatory authority.
(17) "Security" or "securities" means:
(a) Obligations of the United States, including those of its agencies and
instrumentalities and of government sponsored enterprises;
(b) Obligations of the International Bank for Reconstruction and Development;
(c) Bonds of any state of the United States:
(A) That are rated in one ofthe four highest grades by a recognized investment
service organization that has been engaged regularly and continuously for a period of not
less than 10 years in rating state and municipal bonds; or
(B) Having once been so rated are ruled to be eligible securities for the purposes of
ORS 295.001 to 295.108, notwithstanding the loss of such rating;
(d) Bonds of any county, city, school district, port district or other public body in the
United States payable from or secured by ad valorem taxes and that meet the rating
requirement or are ruled to be eligible securities as provided in paragraph (c) of this
subsection;
(e) Bonds of any county, city, school district, port district or other public body issued
pursuant to the Constitution or statutes of the State of Oregon or the charter or ordinances
of any county or city within the State of Oregon, if the issuing body has not been in
default with respect to the payment of principal or interest on any of its bonds within the
preceding 10 years or during the period of its existence if that is less than 10 years;
(I) With the permission of the State Treasurer and in accordance with rules adopted
by the State Treasurer, loans made to any county, city, school district, port district or
other public body in the State of Oregon, if the borrower has not been in default with
respect to the payment of principal or interest on any of its loans within the preceding 10
years or during the period of its existence if that is less than 10 years;
(g) With the permission of the State Treasurer and in accordance with rules adopted
by the State Treasurer, bond anticipation notes issued, sold or assumed by an authority
under ORS 441.560;
(h) Bonds, notes, letters of credit or other securities or evidence of indebtedness
constituting the direct and general obligation of a federal home loan bank or Federal
Reserve bank;
(i) Debt obligations of domestic corporations that are rated in one of the three highest
grades by a recognized investment service organization that has been engaged regularly
and continuously for a period of not less than 10 years in rating corporate debt
obligations; and
(j) Collateralized mortgage obligations and real estate mortgage investment conduits
that are rated in one of the two highest grades by a recognized investment service
organization that has been engaged regularly and continuously for a period of not less
than 10 years in rating corporate debt obligations.
(18) "Treasurer report" means a written report signed or authenticated by an officer of
a bank depository setting forth as of the close of business on a specified date:
(a) The total amount of public funds on deposit with the bank depository;
(b) The net worth of the bank depository;
(c) The amount and nature of eligible collateral then on deposit with its custodian to
collateralize the bank depository's public funds deposits; and
(d) The identity of its custodian.
(19) "Treasurer report due date" means a date not less than 10 business days after the
date a bank depository's report of condition and income is due to be submitted to its
federal regulatory authority.
(20) "Trust company" means a trust company as defined in ORS 706.008.
(21) "Undercapitalized" means a bank depository that is classified as undercapitalized
by its primary federal regulatory authority.
(22) "Value" means the current market value of securities.
(23) "Well capitalized" means a bank depository that is classified as well capitalized
by its primary federal regulatory authority. [Formerly 295.005]
Note: The amendments to 295.001 (formerly 295.005) by section l5a, chapter 871,
Oregon Laws 2007, become operative July I, 2008, and apply to all public funds on
deposit on or after July I, 2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, including amendments by section 123, chapter 783, Oregon
Laws 2007, is set forth for the user's convenience.
295.001. As used in ORS 295.001 to 295.125, unless the context requires otherwise:
(I) "Certificate of participation" or "certificate" means a nonnegotiable document
issued by a pool manager to a public official.
(2) "Custodian bank" or "custodian" means the following institutions designated by
the depository bank for its own account:
(a) The Federal Reserve Bank designated to serve this state, or any branch of that
bank;
(b) The Federal Home Loan Bank designated to serve this state, or any branch of that
bank;
(c) Any insured institution or trust company, as those terms are defined in ORS
706.008, that is authorized to accept deposits or transact trust business in this state and
that complies with ORS 295.008; and
(d) The fiscal agency of the State of Oregon, duly appointed and acting as such
agency pursuant to ORS 286A.132.
(3) "Custodian's receipt" or "receipt" means a document issued by a custodian bank
to a pool manager describing the securities deposited with it by a depository bank to
secure public fund deposits.
(4) "Depository bank" or "depository" means an insured institution or trust company,
as those terms are defined in ORS 706.008, a credit union, as defined in ORS 723.006,
the shares and deposits of which are insured by the National Credit Union Share
Insurance Fund, or a federal credit union, if the institution, trust company or credit union:
(a) Maintains a head office or a branch in this state in the capacity of an insured
institution, trust company, credit union or federal credit union; and
(b) In the case of an insured institution or trust company, complies with ORS
295.008.
(5) "Pool manager" means:
(a) The State Treasurer;
(b) Any insured institution or trust company, as those terms are defined in ORS
706.008, a credit union, as defined in ORS 723.006, the shares and deposits of which are
insured by the National Credit Union Share Insurance Fund, or a federal credit union, if
the institution, trust company or credit union:
(A) Is authorized to accept deposits or transact trust business in this state; and
(B) In the case of an insured institution or trust company, complies with ORS
295.008;
(c) The Federal Reserve Bank designated to serve this state, or any branch of that
bank; or
(d) The Federal Home Loan Bank designated to serve this state, or any branch of that
bank.
(6) "Public funds" or "funds" means funds under the control or in the custody of a
public official by virtue of office.
(7) "Security" or "securities" means:
(a) Obligations of the United States, including those of its agencies and
instrumentalities;
(b) Obligations of the International Bank for Reconstruction and Development;
(c) Bonds of any state of the United States:
(A) That are rated in one of the four highest grades by a recognized investment
service organization that has been engaged regularly and continuously for a period of not
less than 10 years in rating state and municipal bonds; or
(B) Having once been so rated are ruled to be eligible securities for the purposes of
ORS 295.001 to 295.125, notwithstanding the loss of such rating;
. (d) Bonds of any county, city, school district, port district or other public body in the
United States payable from ad valorem taxes levied generally on substantially all
property within the issuing body and that meet the rating requirement or are ruled to be
eligible securities as provided in paragraph (c) of this subsection;
(e) Bonds of any county, city, school district, port district or other public body issued
pursuant to the Constitution or statutes of the State of Oregon or the charter or ordinances
of any county or city within the State of Oregon, if the issuing body has not been in
default with respect to the payment of principal or interest on any of its bonds within the
preceding 10 years or during the period of its existence if that is less than 10 years;
(I) Bond anticipation notes issued, sold or assumed by an authority under ORS
441.560;
(g) One-family to four-family housing mortgage loan notes related to property
situated in the State of Oregon, which are owned by a depository bank, no payment on
which is more than 90 days past due, and which are eligible collateral for loans from the
Federal Reserve Bank of San Francisco under section lO(b) of the Federal Reserve Act
and regulations thereunder;
(h) Bonds, notes, letters of credit or other securities or evidence of indebtedness
constituting the direct and general obligation of a federal home loan bank or Federal
Reserve bank;
(i) Debt obligations of domestic corporations that are rated in one of the three highest
grades by a recognized investment service organization that has been engaged regularly
and continuously for a period of not less than 10 years in rating corporate debt
obligations;
(j) Collateralized mortgage obligations and real estate mortgage investment conduits
that are rated in one of the two highest grades by a recognized investment service
organization that has been engaged regularly and continuously for a period of not less
than 10 years in rating corporate debt obligations; and
(k) One-family to four-family housing mortgages that have been secured by means of
a guarantee as to full repayment of principal and interest by an agency of the United
States Government, including the Government National Mortgage Association, the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation.
(8) "Public official" means each officer or employee of this state or any agency,
political subdivision or public or municipal corporation Ihereofwho by law is made the
custodian of or has control of any public funds.
(9) "Value" means the current market value of securities.
295.002 Deposit of public funds; limitation; exception. (I) Any public official may
retain undeposited such reasonable cash working fund as is fixed by the governing body
of the political subdivision or public corporation for which the public official acts. Except
to the extent of such cash working fund, each public official shall deposit public funds in
the custody or control of the public official in one or more depositories currently
qualified pursuant to ORS 295.001 to 295.108. The public official may not have on
deposit in anyone credit union depository an aggregate sum in excess of the deposit
insurance limits established by the National Credit Union Administration. With respect to
bank depositories, unless a bank depository has entered into the agreement described in
ORS 295.008 (2)(b) and has deposited securities pursuant to ORS 295.015 (I), the public
official shall not have on deposit in anyone bank depository and its branches a sum in
excess of:
(a) The amount insured by the Federal Deposit Insurance Corporation; or
(b) For any amount over the amount insured by the Federal Deposit Insurance
Corporation, the amount insured or guaranteed by private deposit insurance or a deposit
guaranty bond issued by an insurance company rated A- or better by a recognized
insurance rating service.
(2) Compliance with ORS 295.001 to 295.108 relieves the public official of personal
liability on account of the loss of the public funds in the custody or control of the public
official. [Formerly 295.025]
Note: The amendments to 295.002 (formerly 295.025) by section 19, chapter 871,
Oregon Laws 2007, become operative July 1,2008, and apply to all public funds on
deposit on or after July 1,2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, is set forth for the user's convenience.
295.002. (I) Any public official may retain undeposited such reasonable cash working
fund as is fixed by the governing body of the political subdivision or public corporation
for which the public official acts. Except to the extent of such cash working fund, each
public official shall deposit public funds in the custody or control of the public official in
one or more depositories currently qualified pursuant to ORS 295.001 to 295.125. The
public official may not have on deposit in anyone depository bank that is a credit union
or federal credit union an aggregate sum in excess of $1 00,000. With respect to other
depository banks, the public official, without procuring certificates of participation issued
by the pool manager of the depository in an amount equal to the excess deposit, shall not
have on deposit in anyone depository bank and its branches a sum in excess of:
(a) The amount insured by the Federal Deposit Insurance Corporation; or
(b) For any amount over the amount insured by the Federal Deposit Insurance
Corporation, the amount insured or guaranteed by private deposit insurance or a deposit
guaranty bond issued by an insurance company rated A- or better by a recognized
insurance rating service.
(2) Whenever a public official holds a certificate of participation issued by a pool
manager in an amount exceeding the amount required by subsection (I) of this section,
upon the written request of the depository bank the public official shall surrender it to the
pool manager or direct the pool manager in writing to cancel it in whole or in a
designated part.
(3) Compliance with ORS 295.001 to 295.125 relieves the public official of personal
liability on account of the loss of the public funds in the custody or control of the public
official.
295.004 Conditions for deposit offunds in excess of specified amoiints. (I) A public
official may deposit public funds in a bank depository in an amount in excess of the
amount allowed in ORS 295.002 without requiring the bank depository to show that it
has entered into the agreement described in ORS 295.008 (2)(b) or deposited securities
pursuant to ORS 295.015 (I) if the funds are initially deposited into a bank depository in
Oregon and the Oregon bank depository participates in a program through which:
(a) The Oregon bank depository arranges for deposit of the funds into one or more
certificates of deposit or time deposits issued by other financial institutions in the United
States;
(b) Each certificate of deposit or time deposit is fully insured by the Federal Deposit
Insurance Corporation;
(c) The Oregon bank depository administers the funds on behalf of the public official;
and
(d) Other financial institutions participating in the program place funds into the
Oregon depository in an amount at least equal to the amount deposited into the Oregon
bank depository by the public official for purposes of the program.
(2) Until the Oregon bank depository places public funds into one or more certificates
of deposit or time deposits as provided in subsection (1) of this section, any public funds
held by the Oregon bank depository pending such placement that are in excess of the
amounts allowed in ORS 295.002 must be collateralized as provided in ORS 295.001 to
295.108 for other public funds deposits.
(3) The provisions ofORS 295.006, 295.013, 295.015, 295.018 and 295.037 do not
apply to public funds deposits deposited into a bank depository in Oregon that the bank
depository arranges for under the provisions of the program described in this section. The
provisions ofORS 294.035 and 295.001 requiring deposit of public funds into
depositories that have offices or branches in Oregon do not apply to certificates of deposit
or time deposits that an Oregon bank depository arranges for under the provisions of the
program described in this section. [Formerly 295.027]
Note: The amendments to 295.004 (formerly 295.027) by section 20, chapter 871,
Oregon Laws 2007, become operative July 1,2008, and apply to all public funds on
deposit on or after July 1,2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, is set forth for the user's convenience.
295.004. (1) A public official may deposit public funds in an amount in excess of the
amount allowed in ORS 295.002 without procuring a certificate of participation if the
funds are initially deposited into a depository in Oregon and the Oregon depository
participates in a program through which:
(a) The Oregon depository arranges for deposit of the funds into one or more
certificates of deposit or time deposits issued by other financial institutions in the United
States;
(b) Each certificate of deposit or time deposit is fully insured by the Federal Deposit
Insurance Corporation;
(c) The Oregon depository administers the funds on behalfofthe public official; and
(d) Other financial institutions participating in the program place funds into the
Oregon depository in an amount at least equal to the amount deposited into the Oregon
depository by the public official for purposes of the program.
(2) The provisions ofORS 294.035 and 295.001 requiring deposit of public funds
into depositories that have offices or branches in Oregon do not apply to certificates of
deposit or time deposits that an Oregon depository arranges for under the provisions of
the program described in this section.
(3) As used in this section, "public funds" and "public official" have the meanings
given those terms in ORS 295.001.
295.005 [1967 cA5l 91; 1973 c.157 94; 1973 c.288 92; 1973 c.378 91; 1973 c.797 9426;
1975 c.5l5 98; 1981 cA40 92; 1983 c.l04 93; 1983 cA56 94; 1985 cA39 91; 1985 c.565
951; 1987 c.524 91; 1989 c.536 91; 1991 c.352 96; 1993 c.74 91; 1993 c.229 923; 1993
c.3l8 912; 1997 c.63l 9447; 1999 c.3ll 91; 1999 cAl2 93; 2003 c.195 917; 2003 cA05
92; 2005 cA43 9932,32a; 2007 c.783 9123; 2007 c.87l 9l5a; renumbered 295.001 in
2007]
295.006 Bank depository and public official filings with State Treasurer; rules. (1)
Each bank depository shall keep on file with the State Treasurer the name and address of
its custodian bank.
(2) Each public official shall keep on file with the State Treasurer the names,
addresses and such other information as the State Treasurer shall prescribe by rule of
each depository in which the public official deposits public funds. [Formerly 295.055]
Note: The amendments to 295.006 (formerly 295.055) by section 22, chapter 871,
Oregon Laws 2007, become operative July 1,2008, and apply to all public funds on
deposit on or after July I, 2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, is set forth for the user's convenience.
295.006. Each depository bank shall keep on file with the State Treasurer the names and
addresses of each of its custodian banks and pool managers.
295.008 Conditions for acting as custodian or bank depository. (1 )(a) An insured
institution or trust company may not be a custodian bank under ORS 295.001 to 295.108,
unless it certifies in writing to the State Treasurer that it will furnish the reports required
under ORS 714.075 to the Director of the Department of Consumer and Business
Services.
(b) The State Treasurer may approve one or more insured institutions or trust
companies to serve as custodians for bank depositories. The State Treasurer shall
promptly notify all bank depositories of the approval of an insured institution or trust
company to serve as a custodian.
(2) An insured institution or trust company may not be a bank depository under ORS
295.001 to 295.108, unless it:
(a) Certifies in writing to the State Treasurer that it will furnish the reports required
under ORS 714.075 to the Director of the Department of Consumer and Business
Services;
(b) Except as provided in subsection (4) of this section, enters into a pledge
agreement; and
(c) Complies with subsection (3) ofthis section.
(3) After July I, 2008, any insured institution or trust company that is not acting as a
bank depository on July 1,2008, and that wishes to become a bank depository shall file
with the State Treasurer an initial written report signed or authenticated by an officer of
the insured institution or trust company setting forth, as of the date the insured institution
or trust company intends to commence acting as a bank depository:
(a) The estimated total amaunt of public funds that will be on deposit with the insured
institutian or trust company;
(b) The estimated net warth of the insured institutian .or trust company;
(c) The amount and nature bfthe callateral that will be depasited with its custadian ta
callateralize the public funds depasits; and
(d) The identity .of its custadian.
(4) An insured institution .or trust campany may be a bank depository under ORS
295.001 to 295.108 without entering into a pledge agreement .or camplying with
subsectian (3) .of this sectian if the insured institutian .or trust campany does nat hald any
funds on depasit for a public .official that exceed the limits specified in ORS 295.002 for
that type of depository. The pravisians ofORS 295.006, 295.013, 295.015, 295.018,
295.037 and 295.061 da nat apply ta an insured institution or, trust company that is a bank
depasit.ory under this subsectian. [2005 c.112 93; 2007 c.87l 916]
Note: The amendments ta 295.008 by section 16, chapter 871, Oregan Laws 2007,
become .operative July 1,2008, and apply to all public funds an depasit on or after July I,
2008. See sectians 36 and 37, chapter 871, Oregan Laws 2007, as amended by sectians
39 and 40, chapter 871, Oregan Laws 2007. The text that is .operative until July I, 2008,
is set forth for the user's canvenience.
295.008. (I)(a) An insured institution or trust company described in ORS 295.001 (2)(c)
may not be a custadian bank under ORS 295.001 ta 295.125, unless it certifies in writing
to the State Treasurer that it will furnish the reports required under ORS 714.075 ta the
Directar .of the Department afCansumer and Business Services.
(b) With the approval of the State Treasurer, a depositary bank may be a custadian
bank with respect to its awn securities.
(2) An insured institutian .or trust campany described in ORS 295.001 (4) may not be
a depository bank under ORS 295.001 ta 295.125, unless it:
(a) Certifies in writing ta the State Treasurer that it will furnish the reports required
under ORS 714.075 to the Director .of the Department .of Consumer and Business
Services; and
(b) Except as provided in subsectian (3) .of this sectian, enters inta a written
agreement with the State Treasurer and a custodian that pledges the securities deposited
by the insured institution .or trust camp any with the custodian as collateral far depasits .of
public funds held by the insured institutian or trust company. The agreement must be
approved by the baard .of directars or laan cammittee .of the insured institutian or trust
company and shall be continuausly maintained as a written record .of the insured
institution .or trust campany.
(3) An insured institution or trust company described in ORS 295.001 (4) may be a
depasitory bank under ORS 295.001 ta 295.125 without entering inta the agreement
described in subsectian (2) .of this section if the insured institutian or trust campany daes
nat hald any funds an deposit for a public .official that exceed the limits specified in ORS
295.002 for that type .of depositary. The pravisians afORS 295.006, 295.013, 295.015,
295.018,295.045,295.065,295.105 and 295.185 da nat apply ta an insured institutian .or
trust campany that is a depasitary bank under this subsectian.
(4) An insured institutian .or trust campany may nat be a poal manager with respect ta
securities that it deposits with its custodians as collateral for the security of public fund
deposits, and an insured institution or trust company may not be a pool manager unless it
certifies in writing to the State Treasurer that it will furnish the reports required under
ORS 714.075 to the Director of the Department of Consumer and Business Services.
Note: Section 33, chapter 871, Oregon Laws 2007, provides:
Sec. 33. On or before July I, 2008, each insured institution and trust company that
wishes to act as a bank depository under ORS 295.005 to 295.165 [renumbered 295.001
to 295.108] from and after July I, 2008, shall file with the State Treasurer an initial
written report signed or authenticated by an officer of the insured institution or trust
company, together with an executed copy of its pledge agreement. The report shall set
forth:
(1) The estimated total amount of public funds that will be on deposit with the insured
institution or trust company as of July 1,2008;
(2) The estimated net worth of the insured institution or trust company on July I,
2008;
(3) The amount and nature of the collateral that will be deposited with its custodian to
collateralize the public funds deposits; and
(4) The identity of its custodian. [2007 c.87l 933]
295.010 [Amended by 1953 c.352 93; 1957 c.l72 91; 1965 c.169 91; repealed by 1967
c.45l 932]
295.011 [2005 c.112 94; 2005 c.443 932c; 2007 c.783 9124; renumbered 295.101 in
2007]
295.013 Custodian's receipt; duties of custodian. (1) Upon receipt of securities from
the bank depository, the custodian bank shall issue to the State Treasurer, with a copy to
the bank depository, a custodian's receipt describing the securities.
(2) Each custodian shall:
(a) Maintain an accurate inventory of the securities of each bank depository described
in the custodian's receipts issued by the custodian to the State Treasurer, and adjust the
inventory to reflect withdrawals and substitutions of securities previously inventoried.
(b) Appraise the value of the securities added to and withdrawn from the inventory of
the bank depository, and appraise the value of the entire inventory of the bank depository
on the last day of each month and at such other times as the State Treasurer directs.
(c) Provide a monthly report to the State Treasurer listing the securities pledged by
each bank depository and setting forth the value of each security and of the entire
inventory of securities pledged by the bank depository.
(d) Notify a bank depository in writing whenever the value of the securities held by
the custodian for the bank depository is less than:
(A) For a bank depository that is subject to increased collateral requirements under
ORS 295.018,110 percent of the greater of:
(i) All public funds held by the bank depository; or
(ii) The average of the balances of public funds held by the bank depository, as shown
on the last four immediately preceding treasurer reports; or
(B) For a bank depository that is not subject to increased collateral requirements
under ORS 295.018, the maximum liability for the bank depository.
(e) Notify the State Treasurer in writing if a bank depository fails to increase the
value of its securities within five business days after receipt of notice under paragraph (d)
of this subsection.
(f) Notify the State Treasurer in writing if a bank depository increases the value of its
securities to an adequate amount after receipt of notice under paragraph (d) of this
subsection.
(g) Notify the State Treasurer whenever a bond in the inventory of a bank depository
no longer meets the rating requirements described in ORS 295.001 (l7)(c) or (d).
[Formerly 295.035]
Note: The amendments to 295.013 (formerly 295.035) by section 21, chapter 871,
Oregon Laws 2007, become operative July 1,2008, and apply to all public funds on
deposit on or after July 1,2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, is set forth for the user's convenience.
295.013. Upon receipt of securities from the depository bank, the custodian bank shall
issue to the pool manager designated by the depository a custodian's receipt describing
the securities.
295.015 Maintenance of securities by bank depository. Except as provided in ORS
295.018:
(I)(a) Each bank depository throughout the period of its possession of public fund
deposits in excess of the amounts insured or guaranteed as described in ORS 295.002
(l)(a) and (b) shall maintain on deposit with its custodian, at its own expense, securities
having a value at least equal to its maximum liability and as otherwise prescribed in ORS
295.001 to 295.108. Such collateral shall be deposited with the bank depository's
custodian and shall be clearly designated as security for the benefit of depositors of
public funds under ORS 295.001 to 295.108.
(b) For purposes of this section, when pledged as collateral for public funds deposits,
loans described in ORS 295.001 (l7)(f) shall be discounted to 75 percent of the unpaid
principal balance owing on the loan from time to time, or to a lower value determined by
the State Treasurer fTom time to time.
(c) When a bond anticipation note is pledged as collateral for public funds deposits, if
there is no readily determinable market value for the note, it shall be discounted to 75
percent of the unpaid principal balance owing on the note from time to time, or to a lower
value determined by the State Treasurer from time to time.
(2) The bank depository may deposit other eligible securities with its custodian and
withdraw from deposit securities theretofore pledged to secure deposits of public funds, if
the remaining securities have a value not less than its maximum liability. The State
Treasurer shall execute such releases and surrender such custodian's receipts as are
appropriate to effect substitutions and withdrawals of matured and excess pledged
securities.
(3) If a bank depository's maximum liability increases because it ceases to be a well
capitalized bank depository or because it ceases to be an adequately capitalized bank
depository; within five business days after the date on which the bank depository's
maximum liability increases, the bank depository shall:
(a) Notify its custodian and the State Treasurer in writing that the bank depository's
maximum liability has increased, setting forth the bank depository's new maximum
liability; and
(b) Tender to its custodian additional securities having sufficient value to increase the
total value of its securities pledged as collateral for public funds deposits to the new
maximum liability of the bank depository.
(4) lfa bank depository's maximum liability decreases because it moves from being
an undercapitalized bank depository to being a well capitalized bank depository or an
adequately capitalized bank depository, or because it moves from being an adequately
capitalized bank depository to a well capitalized bank depository, the bank depository
may:
(a) Notify its custodian and the State Treasurer in writing that the bank depository's
maximum liability has decreased, setting forth the bank depository's new maximum
liability; and
(b) With the written approval of the State Treasurer, withdraw from its custodian any
securities that exceed the bank depository's new maximum liability.
(5) The State Treasurer shall act upon requests for releases and withdrawals of
securities under subsections (2) and (4 )(b) of this section within three business days after
the receipt of each request. [1967 c.45l 92; 1975 c.5l5 93; 2007 c.87l 917]
Note: The amendments to 295.015 by section 17, chapter 871, Oregon Laws 2007,
become operative July 1,2008, and apply to all public funds on deposit on or after July I,
2008. See sections 36 and 37, chapter 871, Oregon Laws 2007, as amended by sections
39 and 40, chapter 871, Oregon Laws 2007. The text that is operative until July I, 2008,
is set forth for the user's convenience.
295.015. Except as provided in ORS 295.018:
(1) Each depository throughout the period of its possession of public fund deposits
shall maintain on deposit with its custodians, at its own expense, securities having a value
not less than 25 percent of the certificates of participation issued by its pool manager.
(2) The depository may deposit other eligible securities with its custodian and
withdraw from deposit securities theretofore pledged to secure deposits of public funds, if
the remaining securities have a value not less than 25 percent of outstanding certificates
of participation of the pool manager. The pool manager shall execute such releases and
surrender such custodian's receipts as are appropriate to effect substitutions and
withdrawals of excess pledged securities.
295.018 Increase in required collateral of bank depository; notifications; failure to
increase collateral. (I) The State Treasurer may require any bank depository during any
period when it has in its possession public fund deposits to maintain on deposit with.its
custodians securities having a value not less than 110 percent of the greater of:
(a) All public funds held by the bank depository; or
(b) The average of the balances of public funds held by the bank depository, as shown
on the last four immediately preceding treasurer reports.
(2) An increase in collateral under subsection (1) of this section shall be ordered upon
the advice of the Director of the Department of Consumer and Business Services. If the
bank depository is a national bank or a federally chartered savings bank or savings and
loan association, in giving advice to the State Treasurer the director may rely exclusively
on information provided to the director by federal regulatory agencies and by the
association on forms prescribed by the director. As a condition of being analyzed and
reviewed by the director, a federal association shall agree and consent to provide the
director with accurate, pertinent and timely information.
(3) Failure of the director to inform the State Treasurer ofthe condition of any bank
depository does not give any public depositor any right or impose any liability on the
director. The State Treasurer shall not be liable to any public depositor or to any bank
depository for increasing or not increasing the collateral requirement as authorized in
subsection (1) of this section.
(4) Any bank depository notified by the State Treasurer of the increased collateral
requirement shall comply with the order within five business days by increasing the
collateral in the same manner as required for the initial deposit of collateral in ORS
295.015 and, within the same five days, shall notify the State Treasurer of its compliance
by supplying copies of the custodian's receipts for, or statement of activity showing, the
increased collateral.
(5)(a) If the State Treasurer does not receive the notice required in subsection (4) of
this section within the required five business days, the State Treasurer shall immediately
notify the director of the failure and shall send notice to all public officials served by that
bank depository of its failure to comply.
(b) If, after giving notice as required by paragraph (a) of this subsection, the State
Treasurer receives notice that the bank depository is in compliance with the increased
collateral requirements, the treasurer shall notify the public officials served by the bank
depository that the bank depository is once again in compliance.
(6) A bank depository that does not comply with subsection (4) of this section shall
accept no further public funds deposits that are not insured by the Federal Deposit
Insurance Corporation.
(7) The names of financial institutions contained in records received or compiled by
the State Treasurer pursuant to the provisions of this section shall be exempt from public
disclosure unless the public interest requires disclosure in the particular instance. [1975
c.5l5 !j2; 1981 c.440 !jl; 1985 c.762 !j182; 1987 c.373 !j!j28a,28b; 1987 c.554 !jl; 1989
c.17l !j4l; 1991 c.327 !jl; 2007 c.87l !j18]
Note: The amendments to 295.018 by section 18, chapter 871, Oregon Laws 2007,
become operative July 1,2008, and apply to all public funds on deposit on or after July I,
2008. See sections 36 and 37, chapter 871, Oregon Laws 2007, as amended by sections
39 and 40, chapter 871, Oregon Laws 2007. The text that is operative until July I, 2008,
is set forth for the user's convenience.
295.018. (1) The State Treasurer may require any depository bank during any period
when it has in its possession public fund deposits to maintain on deposit with its
custodians securities having a value not less than 110 percent of the certificates of
participation issued by its pool manager. The increase in collateral shall be ordered upon
the advice of the Director of the Department of Consumer and Business Services. If the
depository bank is a federally chartered savings and loan association, in giving its advice
to the State Treasurer the director may rely exclusively on information provided to the
director by federal regulatory agencies and by the association on forms prescribed by the
director; as a condition of being analyzed and reviewed by the director, a federal
association shall agree and consent to provide. the director with accurate, pertinent and
timely information.
(2) Failure of the director to inform the State Treasurer of the condition of any
depository does not give any public depositor any right or impose any liability on the
director. The State Treasurer shall not be liable to any public depositor or to any
depository bank for increasing or not increasing the collateral requirement as authorized
in subsection (I) of this section.
(3) Any depository bank notified by the State Treasurer of the increased collateral
requirement shall comply with the order within 10 business days by increasing the
collateral in the same manner as required for the initial deposit of collateral in ORS
295.015. The bank shall notify the State Treasurer and the pool manager of its
compliance by supplying copies of the custodian's receipts for the increased collateral.
(4) If any depository bank notified by the State Treasurer of an increased collateral
requirement fails to notifY the State Treasurer of compliance therewith within 10 business
days, the State Treasurer shall immediately notify the director of the failure and shall
send notice to the pool manager and all public depositors served by that depository bank
of its failure to comply.
(5) A depository bank described in subsection (4) of this section shall accept no
further public deposits.
(6) Financial institutions named in records received or compiled by the State
Treasurer pursuant to the provisions of this section shall be exempt from public
disclosure unless the public interest requires disclosure in the particular instance.
295.020 [Repealed by 1967 c.45l 932]
295.022 Collateral not required for deferred compensation funds. Notwithstanding
any other provision of this chapter, when a bank, mutual savings bank or savings and
loan association receives moneys of the Deferred Compensation Fund established under
ORS 243.411 from the state for deposit or investment, the institution shall not have to
maintain the collateral required under this chapter for those deferred compensation
moneys. [1977 c.72l 915; 1997 c.179 927]
295.025 [1967 c.45l 93; 1973 c.288 93; 1999 c.48 91; 2003 c.405 96; 2007 c.87l 919;
renumbered 295.002 in 2007]
295.027 [2005 c.58 9 I; 2007 c.87l 920; renumbered 295.004 in 2007]
295.030 [Repealed by 1967 c.45l 932]
295.03 I Notice to public officials regarding adequacy of collateral. (1) Within five
business days after the State Treasurer receives notice from a custodian pursuant to ORS
295.013 (2)(e) indicating that a bank depository has failed to pledge adequate collateral
with its custodian, the treasurer shall send written notice of the failure to each public
. official who has public funds on deposit in the bank depository with respect to which the
notice under ORS 295.0\3 (2)(e) was given.
(2) Within five business days after the State Treasurer receives notice from a
custodian pursuant to ORS 295.013 (2)(1) indicating that a bank depository has once
again pledged adequate collateral with its custodian, the treasurer shall send written
notice to each public official who was notified under subsection (I) of this section stating
that the bank depository once again has adequate collateral. [2007 c.87l 92]
Note: ORS 295.031, 295.034, 295.037, 295.041, 295.046, 295.048, 295.053,
295.056, 295.061, 295.071,295.073,295.106 and 295.108 become operative July I,
2008, and apply to all public funds on deposit on or after July 1,2008. See sections 36
and 37, chapter 871, Oregon Laws 2007, as amended by sections 39 and 40, chapter 871,
Oregon Laws 2007. ~
295.034 Withdrawal of inadequately collateralized funds. (I) Within 20 business days
after a public official receives a notice from the State Treasurer pursuant to ORS 295.018
(5)(a) or 295.031 (I), the public official shall withdraw from the bank depository to
which the notice applies all public funds deposits except those deposits that are insured
by the Federal Deposit Insurance Corporation.
(2) If a public official receives a notice from the State Treasurer pursuant to ORS
295.018 (5)(a) or 295.031 (I), beginning 20 business days after the public official
receives the notice, the public official may not deposit into the bank depository to which
the notice applies any public funds deposits if, as a result of such a deposit, the total
public funds of the public official on deposit with the bank depository exceed the deposit
insurance limit of the Federal Deposit Insurance Corporation. The prohibition on deposits
continues until the public official receives notice under ORS 295.018 (5)(b) or 295.031
(2) indicating that the bank depository is in compliance with ORS 295.013 or 295.018, as
applicable.
(3) Except as required by any applicable law or regulation, a bank depository may not
impose any early withdrawal penalty or any forfeiture of interest with respect to a
withdrawal made by a public official pursuant to this section. [2007 c.87l 93]
Note: See note under 295.031.
295.035 [1967 c.45l 94; 2007 c.871 921; renumbered 295.013 in 2007]
295.037 Distribution of collateral after loss in bank depository; assessments. (I) The
deposit of securities by a bank depository with its custodian pursuant to ORS 295.001 to
295.108 constitutes consent by the bank depository to the disposition of the securities in
accordance with this section.
(2) When a loss has occurred in a bank depository, the bank depository shall as soon
as possible make payment to the proper public officials of all funds subject to the loss,
pursuant to the following procedures:
(a) The Director of the Department of Consumer and Business Services or the
receiver shall, within 20 days after the issuance of a restraining order or taking possession
of any bank depository, ascertain the amount of public funds on deposit in the bank
depository as disclosed by its records and the amount of the public funds covered by
deposit insurance and certify the amounts to the State Treasurer and to each public
official who has public funds on deposit in the bank depository.
(b) Each public official who has public funds on deposit in the bank depository shall,
within 10 days after receipt of the certification from the Director of the Department of
Consumer and Business Services or the receiver, furnish to the State Treasurer verified
statements of the public funds that the public official has on deposit in the bank
depository.
(3) Upon receipt of the certification from the Director of the Department of Consumer
and Business Services or the receiver and the verified statements from the public officials
who have public funds on deposit in the bank depository, the State Treasurer shall
ascertain and fix the amount of public funds on deposit in the bank depository, plus
interest to the date the funds are distributed to the public official at the rate the bank
depository agreed to pay on the funds, minus any amount covered by deposit insurance.
(4) After making the calculation described in subsection (3) of this section, the State
Treasurer shall assess the net amount of public funds against all bank depositories, as
follows:
(a) First, against the bank depository that suffered the loss, to the extent of the full
value of its collateral deposited with its custodian pursuant to ORS 295.001 to 295.]08;
and
(b) Second, against the collateral of all other bank depositories, on a proportionate
basis determined as provided in subsection (5) of this section.
(5) For purposes of subsection (4) of this section, the proportionate share of each of
the other bank depositories shall be determined by:
(a) Averaging the amounts of the total public funds deposits reported on the bank
depository's last four treasurer reports;
(b ) Averaging the total amounts of the total public funds deposits reported on the last
four treasurer reports of all of the bank depositories; and
(c) Dividing the result of the calculation performed under paragraph (a) of this
subsection by the result of the calculation performed under paragraph (b) of this
subsection.
(6) Notwithstanding the assessment provisions of subsection (4) of this section, the
State Treasurer shall assess the net amount of public funds deposits of a public official
only against the bank depository that suffered the loss, and not against the collateral of
other bank depositories, if the public official:
(a) Was given appropriate notice about the bank depository by the State Treasurer
under ORS 295.018 (5)(a) or 295.03] (I); and
(b) The public official did not comply with ORS 295.034.
(7) Assessments made by the State Treasurer are payable on the fifth business day
following demand. If any bank depository fails to pay its assessment, the State Treasurer
shall take possession of the securities segregated as collateral by the bank depository and
liquidate the securities for the purpose of paying the assessment.
(8) The State Treasurer shall distribute the net proceeds of the assessments and of any
liquidated collateral, to the extent that they do not exceed the total net amount of public
funds deposits and accrued interest claimed by the public officials, among the public
officials entitled to the proceeds in proportion to the public officials' respective claims.
(9) Ifthe net proceeds of the assessments and of any liquidated collateral are
inadequate, after all other available sources are applied, to meet the total claims of the
public officials entitled to the proceeds, the public officials may make claims against the
closed bank depository as general creditors.
(10) The prohibition on transfers of assets set forth in ORS 711.410 does not apply to
assessments, payments, transfers or sales of securities made pursuant to this section.
[2007 c.871 94]
Note: See note under 295.031.
295.040 [Amended by 1959 c.330 9 I; 1963 c.128 9 I; 1965 c.629 9 I; repealed by 1967
c.45 I 932]
295.041 Subrogation rights of State Treasurer. Upon the distribution of the proceeds
of assessments and liquidated collateral pursuant to ORS 295.037 by the State Treasurer
to any public official, the State Treasurer shall be subrogated to all of the right, title and
interest of the public official against the closed bank depository, and shall share in any
distribution of its assets ratably with other depositors. Any sums received from any
distribution shall be paid to the public officials to the extent of any unpaid net deposit
liability and the balance remaining shall be paid to the bank depositories against which
the assessments were made, pro rata in proportion to the assessments actually paid by
each bank depository. However, the closed bank depository may not share in any
distribution of the balance remaining. If the State Treasurer incurs expenses in enforcing
the treasurer's rights under this section, the expenses may be charged as provided in ORS
295.106. The State Treasurer shall submit a claim for expenses to the bank depository,
and if the charges are thereafter paid to the treasurer, they shall be treated as a liquidation
expense of the closed bank depository. [2007 c.87I 96]
Note: See note under 295.03 I.
295.045 [1967 c.451 95; repealed by 2007 c.87I 935]
Note: 295.045 is repealed July 1,2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007.295.045 is set forth for the user's convenience.
295.045 Designation of pool managers; procedure for changing managers. Each
depository bank shall designate one or more pool managers as provided in ORS 295.001
to 295.125; but it shall designate only one pool manager to function with respect to the
public fund deposits and the security therefor of a single public official. If the depository
elects to change pool managers, the public official shall surrender certificates of
participation issued by the former pool manager in exchange for certi ficates of like
amount issued by the successor pool manager, and the former pool manager shall cause
the custodian to deliver to the successor pool manager custodian's receipts for security no
longer required to support its outstanding certificates of participation. Such transactions
may be arranged by escrows or otherwise, as the parties agree.
295.046 Limitation on depository acceptance of public funds from single public
official; exception. (I) A bank depository may not accept a deposit of public funds if the
deposit would cause the aggregate of public funds deposits made by anyone public
official in the bank depository to exceed at any time the net worth of the bank depository.
If a bank depository's net worth is reduced, the bank depository may allow public funds
on deposit in excess of the reduced net worth to remain if the bank depository deposits
with its custodian eligible securities valued at market value in an amount at least equal to
the amount of the excess public funds deposits. If the additional securities required by
this section are not deposited with the custodian, the bank depository shall permit the
public official to withdraw deposits prior to maturity, including accrued interest, in
accordance with applicable statutes and governmental regulations.
(2) The limitations of subsection (I) of this section do not apply to public funds
deposits held by a bank depository in a certificate of deposit or time deposit under the
program described in ORS 295.004. [2007 c.871 SIO]
Note: See note under 295.031.
295.048 Limitations on aggregate public funds deposits; notice; exceptions. (I)
Notwithstanding ORS 295.046, a bank depository may not permit the aggregate of public
funds deposits on deposit with the bank depository from all public officials to exceed at
any time:
(a) 100 percent of the value of the bank depository's net worth, if the bank depository
is an undercapitalized bank depository;
(b) 150 percent of the value of the bank depository's net worth, if the bank depository
is an adequately capitalized bank depository;
(c) 200 percent of the value of the bank depository's net worth, if the bank depository
is a well capitalized bank depository; or
(d) 30 percent of the total aggregate public funds deposits of all public officials in all
bank depositories as reported in the most recent notice received by the bank depository
from the State Treasurer.
(2) The State Treasurer shall notify each bank depository and its custodian of the total
aggregate public funds deposits of all public officials in all bank depositories, based on
the most recently submitted treasurer reports. The treasurer shall give the notification
required by this subsection by the last day of the month in which bank depositories are
required to submit a treasurer report.
(3) If a bank depository's aggregate of public funds deposits exceeds the amount set
forth in subsection (I) of this section, the bank depository shall, not later than 20 business
days after receipt of notice from the State Treasurer, cease accepting deposits of public
funds.
(4) Notwithstanding subsections (I) and (3) of this section:
(a) A bank depository may accept and hold public funds deposits in excess of the
limits provided in subsection (I) of this section if the State Treasurer, upon good cause
shown, approves the request of the bank depository to hold public funds in excess of the
limits provided in subsection (I) of this section for a period not exceeding 90 days.
(b) The limitations of subsection (I) of this section do not apply to public funds
deposits held by a bank depository in a program described in ORS 295.004.
(c) A well capitalized bank depository or an adequately capitalized bank depository
may accept and hold public funds deposits in excess of the limit provided in subsection
(1)( d) of this section if eligible securities are deposited with the bank depository's
custodian as collateral in an amount at least equal to the amount of the public funds
deposits in excess of the limitation prescribed in subsection (1)( d) of this section. [2007
c.87I 91 I]
Note: See note under 295.031.
295.050 [Repealed by 1967 c.451 932]
295.053 Custodian duties when bank depository ceases holding public funds;
securities. (I) If a bank depository ceases holding public funds deposits, the bank
depository's custodian shall continue to hold the pledged securities of the bank
depository as collateral pursuant to ORS 295.001 to 295.108. Unless the State Treasurer
directs that the bank depository's securities be held for a longer period, the custodian
shall hold the bank depository's pledged securities for a period of:
(a) 30 days, in the case of a bank depository that was well capitalized as ofthe date
the bank depository ceased holding any public funds deposits;
(b) 90 days, in the case ofa bank depository that was adequately capitalized as of the
date the bank depository ceased holding any public funds deposits; or
(c) One year, in the case of a bank depository that was undercapitalized as of the date
the bank depository ceased holding any public funds deposits.
(2) If any of a bank depository's pledged securities mature during the periods
described in subsection (1) of this section, the bank depository shall pledge substitute
securities that shall be held by its custodian until the expiration of the period.
(3) At the end of the applicable holding period, if the bank depository has not, during
that period, had on deposit any public funds deposits, the custodian shall tender the bank
depository's securities to the bank depository.
(4) Notwithstanding the release of a bank depository's securities pursuant to
subsection (3) of this section, the bank depository shall continue to be treated as a bank
depository and shall be subject 'to assessment under ORS 295.037 until one year after the
bank depository ceased holding any public funds deposits. If the bank depository no
longer has pledged collateral that may be used to pay the assessment, the bank depository
shall remain liable for payment of the assessment from its other assets. [2007 c.871 913]
Note: See note under 295.03 I.
295.055 [1967 c.45 I 96; 2007 c.871 922; renumbered 295.006 in 2007]
295.056 Liability of public officials for loss of public funds. When public funds
deposits are made in accordance with ORS 295.001 to 295.108, a public official may not
be held liable for any loss of public funds that results from the failure or default of any
depository without fault or neglect on the public official's part or on the part of the public
official's officers or employees. [2007 c.87l 912]
Note: See note under 295.031.
295.060 [Repealed by 1967 c.45 I 932]
295.061 Treasurer reports; filing; notification of changes. (I) On or before each
treasurer report due date, each bank depository that has in its possession public funds
deposits of one or more public officials that exceed the limits specified in ORS 295.002
shall file its treasurer report with its custodian bank and with the State Treasurer.
(2) Each bank depository that files reports with the State Treasurer under subsection
(I) of this section shall notify the State Treasurer in writing or by electronic means within
10 business days of:
(a) The date on which the bank depository's net worth is reduced by an amount
greater than 10 percent of the amount shown as its net worth on the most recent report
submitted pursuant to subsection (I) of this section; or
(b) The date on which the bank depository ceases to be well capitalized and becomes
adequately capitalized or undercapitalized, or ceases to be adequately capitalized and
becomes undercapitalized.
(3) An undercapitalized bank depository shall report the actual amount of public
funds deposits held by it at least weekly to its custodian bank and to the State Treasurer.
[2007 c.87I 97]
Note: See note under 295.03 I.
295.065 [1967 c.451 97; 1973 c.378 92; 1975 c.5I5 94; repealed by 2007 c.871 935]
Note: 295.065 is repealed July 1,2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007. 295.065 is set forth for the user's convenience.
295.065 Duties of pool manager. Each pool manager shall:
(I) Maintain an accurate inventory of the securities of each depository bank described
in the custodian's receipts transmitted to it from custodian banks, and adjust the inventory
to reflect withdrawals and substitutions of securities previously inventoried.
(2) Appraise the value of the securities added to and withdrawn from the inventory of
the depository bank, and appraise the value of the entire inventory of the depository on
October I of each year and at such other times as it is directed to do so by the State
Treasurer.
(3) Issue certificates of participation to public officials in amounts designated by the
depository bank and, upon the direction of the depository bank and the written consent of
the public official to whom it is issued, reduce, modify or cancel a certificate.
(4) Notify in writing holders of certificates of participation in the collateral of a
depository bank whenever, after 10 days' notice to the depository bank, the value of the
securities continues to be less than 25 percent of outstanding certificates.
(5) Notify the State Treasurer of the occurrence whenever a bond in the inventory of a
depository bank loses its rating requirement provided in ORS 295.001 (7)(c) and (d).
295.070 [Repealed by 1967 c.451 932]
295.071 Investigation by regulatory bodies other than State Treasurer. (I) The State
Treasurer may request that the Director of the Department of Consumer and Business
Services or another state or federal agency with primary regulatory authority over any
financial institution that is a bank depository or that applies to become a bank depository
investigate and report to the State Treasurer concerning the condition of the financial
institution.
(2) The financial institution examined under this section shall pay the expenses of the
investigation and report.
(3) In lieu of an investigation and report, the State Treasurer may rely upon
information made available to the State Treasurer or the Director of the Department of
Consumer and Business Services by the Office of the Comptroller of the Currency, the
Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System or any state bank or thrift regulatory agency.
[2007 c.87I 98]
Note: See note under 295.03 I.
295.073 Report to State Treasurer of certain actions by Director of Department of
Consumer and Business Services. The Director of the Department of Consumer and
Business Services shall advise the State Treasurer of any action the director takes or
directs any bank depository to take that will result in a reduction of greater than 10
percent of the net worth of the bank depository as shown on the most recent treasurer
report submitted pursuant to ORS 295.061. [2007 c.871 99]
Note: See note under 295.031.
295.075 [1965 c.629 93; repealed by 1967 c.451 932]
295.080 [Amended by 1959 c.330 92; 1963 c.520 92; 1967 c.335 933; repealed by 1967
c.451 932]
295.081 Time deposits. (I) Subject to ORS 295.002, 295.015 and 295.018, any
depository may offer in writing to accept from the State Treasurer time deposits without
limitation in amount or in an aggregate amount therein stated and to pay interest on the
time deposits at rates specified in the offer. The offer shall be a continuing offer until it is
modified or withdrawn by notice in writing delivered or mailed by registered or certified
mail to the State Treasurer. While the offer continues in effect, the depository is bound to
accept upon the terms therein speci fied time deposits tendered by the State Treasurer.
(2) Any funds deposited by the State Treasurer on a time basis shall be deposited at
the highest rate of interest available for the amount and term of the deposit.
(3) The State Treasurer shall establish time deposits so as to make the deposited
moneys as productive as possible, and shall exercise the judgment and care which
persons of prudence, discretion and intelligence exercise in the management oftheir own
affairs, considering the probable income and the probable safety of the moneys deposited,
including the distribution of the deposits among depositories so as to minimize the
possibility of loss of moneys. [Formerly 295. 115]
Note: The amendments to 295.081 (formerly 295.115) by section 23, chapter 871,
Oregon Laws 2007, become operative July 1,2008, and apply to all public funds on
deposit on or after July I, 2008. See sections 36 and 37, chapter 871, Oregon Laws 2007,
as amended by sections 39 and 40, chapter 871, Oregon Laws 2007. The text that is
operative until July 1,2008, is set forth for the user's convenience.
295.081. (I) Any depository may offer in writing to accept from the State Treasurer time
deposits without limitation in amount or in an aggregate amount therein stated and to pay
interest on the time deposits at rates specified in the offer. The offer shall be a continuing
offer until it is modified or withdrawn by notice in writing delivered or mailed by
registered or certified mail to the State Treasurer. While the offer continues in effect, the
depository is bound to accept upon the terms therein specified time deposits tendered by
the State Treasurer.
(2) Any funds deposited by the State Treasurer on a time basis shall be deposited at
the highest rate of interest available for the amount and term of the deposit.
(3) The State Treasurer shall establish time deposits so as to make the deposited
moneys as productive as possible, and shall exercise the judgment and care which
persons of prudence, discretion and intelligence exercise in the management of their own
affairs, considering the probable income and the probable safety of the moneys deposited,
including the distribution of the deposits among depositories so as to minimize the
possibility of loss of moneys.
295.084 Designation of depository; collection for claims due state. (I) The State
Treasurer may designate such banks as are necessary within this state as depositories for
the collection of drafts, checks, certificates of deposit and coupons received by the State
Treasurer on account of any claim due the state.
(2) The State Treasurer, on receipt of any draft, check or certificate of deposit, on
account of a claim due the state, may place it in a depository for collection. The
depository shall collect it without delay and shall notify the State Treasurer when
collected. The compensation to be paid by the depository shall be fixed by the State
Treasurer upon the best terms obtainable for the state. [Formerly 295.135]
295.085 [1967 c.451 98; repealed by 2007 c.87! 935]
Note: 295.085 is repealed July I, 2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007. 295.085 (2005 Edition) is set forth for the user's convenience.
295.085 Requiring special certification of collateral value. If, in the opinion of the
State Treasurer, market conditions so indicate, the State Treasurer may require
certification of collateral value in accordance with ORS 295.065 at other times
throughout the year. The decision to request a special certification shall be solely at the
discretion of the State Treasurer.
295.087 Department of State Lands to invest proceeds from sales of public lands.
Nothing in ORS 295.001 to 295.108 deprives the Department of State Lands of the power
to invest or dispose of the funds derived from the sale of public lands as provided by law.
[Formerly 295.145]
295.090 [Amended by 1959 c.330 93; repealed by 1967 c.451 932]
295.091 Preference in selecting depositories for political subdivisions; apportioning
funds; interest. (I) In selecting banks or trust companies to act as depositories, public
officials are not limited to the appointment of banks or trust companies in any particular
locality. However, ifbanks or trust companies are engaged in business at an office or
offices within the corporate limits of the political subdivision or public corporation and
qualify to receive the funds, such depositories shall be given preference. Ifthere is more
than one such local qualifying depository, the depositing public official shall apportion
the funds in the hands of the public official to such depositories in a manner that is
equitable and in the best interests of the political subdivision or public corporation.
(2) The depositories shall be required to pay to the political subdivision or public
corporation upon deposits evidenced by certificates of deposit or deposits that by
agreement may not be withdrawn on less than 30 days' notice, interest at such rate or
rates as shall be agreed upon between the governing body of the political subdivision or
public corporation and the depository.
(3) All interest received on deposits of moneys under this section shall accrue to and
become a part of the fund the moneys of which were deposited.
(4) This section does not apply to the State Treasurer. [Formerly 295.155]
295.093 Depositing moneys with treasurer of political subdivision. Any public official
may deposit moneys coming into the hands of the public official in connection with
official duties with the treasurer of the political subdivision or public corporation
concerned and obtain a receipt therefor. [Formerly 295.165]
295.095 [1967 c.451 99; 1969 c.314 920; 1973 c.378 93; 1983 c.456 97; repealed by
1999 c.311 98]
295.100 [Repealed by 1967 c.45 I 932]
295.101 Public funds not subject to ORS 295.001 to 295.108. (I) The following public
funds are not subject to the provisions ofORS 295.001 to 295.108:
(a) Funds that are deposited for the purpose of paying principal, interest or premium,
ifany, on bonds, as defined in ORS 286A.00I and 287A.00I, and related costs or
securing a borrowing related to an agreement for exchange of interest rates entered into
under ORS 286A. I 10 or 287 A.335.
.
(b) Funds that are invested in authorized investments under provisions oflaw other
than ORS 295.001 to 295.108. Funds invested under ORS 293.701 to 293.820 are
invested in authorized investments for purposes of this subsection from the time the funds
are transferred by the State Treasurer to a third party under the terms of a contract for
investment or administration of the funds that requires such a transfer until the time the
funds are returned to the treasurer or paid to another party under the terms of the contract.
(c) Negotiable certificates of deposit purchased by the State Treasurer under ORS
293.736 or by an investment manager under ORS 293.741.
(2) Notwithstanding subsection (I) of this section, funds deposited by a custodial
officer under ORS 294.035 (3)(d) are subject to the provisions ofORS 295.001 to
295. I 08. [Formerly 295.01 I]
295.105 [1967 c.45I gIO; 1973 c.438 gI; 1975 c.515 g5; 1983 c.296 gIO; 1985 c.762
g183; 1999 c.311 g2; repealed by 2007 c.871 g35]
Note: 295.105 is repealed July I, 2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007.295.105 is set forth for the user's convenience.
295.105 Effect of deposit of securities; procedure in case of default of depository
bank; rules. (I) The deposit of securities by a depository bank with its custodian
pursuant to ORS 295.001 to 295.125 constitutes consent by the depository to the
disposition of the securities in accordance with this section.
(2) When a depository is closed by order ofthe Director of the Department of
Consumer and Business Services or the Comptroller of the Currency, the State Treasurer
shall:
(a) Demand and receive from the pool manager the custodian's receipts; and
(b) Demand and receive from the custodian the securities pledged to secure deposits
of public funds and liquidate in an orderly manner the securities or such thereof as the
State Treasurer may determine advisable at public or private sale and distribute the
proceeds as provided in this section.
(3) Each public official shall advise the State Treasurer of the amount of the public
official's deposits in the defaulted depository bank, and the State Treasurer shall proceed
to determine the total amount of the claims payable out of the collateral of the depository.
The claim of a public official for purposes of this section shall be the lesser of:
(a) The amount of the public official's deposits plus interest to the date the funds are
distributed to the public official at the rate the depository agreed to pay on the funds
reduced by the portion thereof that is insured by the Federal Deposit Insurance
Corporation; or
(b) The amount of the public official's certificates of participation plus interest on the
public official's deposits to the date the funds are distributed to the public official at the
rate the depository agreed to pay on the funds.
(4) The State Treasurer shall distribute the net proceeds of the collateral, to the extent
that they do not exceed the total claims, among the public officials entitled thereto in
proportion to their respective claims. The State Treasurer shall remit to the depository
bank any of its collateral or the proceeds thereof in excess of the amount so distributable
to public officials.
(5) If the net proceeds oftl-ie collateral are inadequate, after all other available sources
are applied, to meet the total claims of the public officials entitled thereto, the public
officials may make claims against the depository bank as general creditors.
(6) The State Treasurer, in accordance with ORS chapter 183, shall adopt rules to
carry out this section.
295.106 State Treasurer charges; expenses. The State Treasurer may charge bank
depositories for the reasonable expenses of the State Treasurer in connection with the
services, duties and activities of the State Treasurer related to ORS 295.001 to 295.108.
The State Treasurer shall deposit all moneys received under this section in the
Miscellaneous Receipts Account established in the General Fund for the State Treasurer.
Moneys received under this section are continuously appropriated to the State Treasurer
for the payment of the reasonable expenses of the State Treasurer in connection with the
services, duties and activities of the State Treasurer related to ORS 295.001 to 295.108. A
bank depository shall pay to the State Treasurer all fees and other amounts charged under
this section or under rules adopted to implement this section. [2007 c.871 95]
Note: See note under 295.03 I.
295.108 State Treasurer rules; form of report. (I) The State Treasurer shall adopt rules
implementing the provisions ofORS 295.001 to 295.108.
(2) The State Treasurer shall design the treasurer report required by ORS 295.061.
The report shall be designed to minimize the regulatory burden of completing and
submitting the report and, to the greatest extent practicable, the form of the report and the
content required in the report shall be consistent with the information required by the
bank depository's report of condition and income. [2007 c.871 914]
Note: See note under 295.03 I.
295.110 [Amended by 1953 c.352 93; repealed by 1967 c.45I 932]
295.115 [1967 c.451 91 I; 1989 c.3I99I; 2007 c.871 923; renumbered 295.08] in 2007]
295.120 [Amended by 1953 c.352 93; repealed by 1967 c.451 932]
295.125 [1967 c.451 9 I 2b; 1981 c. I 89 91; 1989 c.319 92; repealed by 2007 c.87I 935]
Note: 295.125 is repealed July I, 2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007.295.125 (2005 Edition) is set forth for the user's convenience.
295.125 Deposits for terms not exceeding two years; interest; retention of sum by
State Treasurer to pay current obligations. (I)(a) The State Treasurer may deposit
moneys not required to meet current demands for a term not to exceed two years at such
interest rates and upon such conditions as to withdrawals of such moneys as may be
agreed upon between the State Treasurer and any depository bank or banks in the state.
(b) All interest received on deposits of moneys under this subsection shall accrue to
and become a part of the General Fund as required by ORS 293.140.
(2)(a) The State Treasurer may deposit moneys of any of the funds mentioned in ORS
(
293.70] (2), except moneys deposited under subsection (I) of this section, at such interest
rates and upon such conditions as to withdrawals of such moneys as may be agreed upon
between the State Treasurer and any depository bank or banks in the state.
(b) Notwithstanding ORS 293.140, all interest received on deposits of moneys under
this subsection shall accrue to and become a part of the fund the moneys of which were
deposited.
(3) The State Treasurer may retain on hand in the state vault or in a depository, the
sum the treasurer considers necessary as a reserve for the purpose of paying the current
obligations and appropriations of the state.
295.130 [Amended by 1953 c.352 !j3; repealed by 1967 c.451 !j32]
295.135 [1967 c.451 !j13; 1981 c.189 !j2; 1991 c.6 !jl; renumbered 295.084 in 2007]
295.140 [Repealed by 1953 c.352 !j3]
295.145 []967 c.45I !j14; renumbered 295.087 in 2007]
295.150 [Repealed by 1967 c.45I !j32]
295.155 [1967 c.45I !j15; 2005 c.22 !j225; renumbered 295.091 in 2007]
295.160 [Repealed by 1967 c.451 !j32]
295.165 [1967 c.45I !j16; renumbered 295.093 in 2007]
295.170 [Repealed by 1967 c.45] !j32]
295.175 [1967 c.45 I !j30; 1989 c.569 !j5; repealed by 2007 c.87] !j35]
Note: 295.175 is repealed July I, 2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 87], Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007. 295.175 is set forth for the user's convenience.
295.175 Expenses of State Treasurer as pool manager; rules. The expense of the State
Treasurer in acting as a pool manager shall be paid to the State Treasurer by the
depository bank using the services as pool manager. The State Treasurer, under rules and
regulations to be adopted by the State Treasurer pursuant to ORS chapter] 83, shall
deposit funds so received and may require advance deposits to be made by any depository
bank. The moneys credited pursuant to this section are continuously appropriated for the
payment of expenses incurred in the administration of ORS 295.00 I to 295. I 25.
295.180 [Repealed by ] 967 c.45 I !j32]
295.185 [1983 c.456 !j6; repealed by 2007 c.871 !j35]
Note: 295.185 is repealed July I, 2008. See section 35, chapter 871, Oregon Laws
2007, and section 36, chapter 871, Oregon Laws 2007, as amended by section 39, chapter
871, Oregon Laws 2007.295.185 is set forth for the user's convenience.
295.185 Maintenance of certain securities as collateral at rate set by State
Treasurer. Notwithstanding the provisions ofORS 295.001 to 295.125, securities
described in ORS 295.001 (7)(g) shall be maintained as collateral for public deposits at
the value determined by the State Treasurer.
295.190 [Repealed by 1967 c.451 !j32]
295.195 When deposit in foreign country authorized; effect on collateral. (I)
Notwithstanding any other provision of ORS chapter 295, the Department of Higher
Education, with the approval of the State Treasurer, may deposit funds in a financial
institution in a foreign country, if the circumstances under which the funds are to be used
render it impracticable to keep the funds in a domestic financial institution or if the terms
of a grant, gift or contract require that the funds be kept in a foreign country.
(2) Notwithstanding any other provision of this chapter, to the extent estimated to be
necessary to fund operations or activities for one biennium of the State of Oregon in a
foreign country, the State Treasurer may deposit funds in a financial institution in a
foreign country.
(3) When funds are deposited in a financial institution in a foreign country pursuant to
subsection (I) or (2) of this section, the institution shall not be required to maintain
collateral as provided in ORS 295.015. Reasonable and prudent measures to protect the
public funds from loss shall be exercised to the extent permitted under the laws of the
foreign country.
(4) The State Treasurer shall report to the Legislative Assembly biennially on the
amounts of deposits in foreign countries, and the operation and activities funded by such
deposits. The report shall be submitted to the offices of the President of the Senate and
the Speaker of the House of Representatives and shall be referred by each of them to
appropriate standing committees other than committees concerned with budgets of the
State Treasurer or the activity or operation so funded. [1983 c.374 991,2; 1989 c.399 91]
295.200 [Repealed by 1967 c.451 932]
295.205 Accounts in financial institutions outside Oregon; conditions; rules. (I)
Notwithstanding any other law:
(a) The State Treasurer may establish demand deposit accounts in financial
institutions outside this state for the purpose of accepting deposits of funds related to the
state investments in the geographical areas respectively serviced by the institutions.
(b) Moneys paid to or collected by a financial institution or other entity under an
agreement to provide loan servicing for a state agency, political subdivision or public
corporation may be deposited in accounts in financial institutions outside this state for the
purpose of:
(A) Accepting payments ofloan principal and interest;
(B) Accepting and holding escrow funds;
(C) Accepting and holding funds required to be held in reserve with or on behalf of
the state agency, political subdivision or public corporation; or
(D) Collecting and holding any other moneys required by the agreement for loan
servicing to be collected or held by the financial institution or other entity prior to
remittance to the state agency, political subdivision or public corporation or a third party.
(c) Moneys held by a trustee or escrow agent pursuant to a bond indenture, certificate
of participation indenture or escrow agreement with a state agency, political subdivision
or public corporation in this state that are public funds, as defined in ORS 295.001, may
be deposited in accounts in financial institutions outside this state.
(2) The State Treasurer shall establish the demand deposit accounts described in
subsection (I )(a) of this section in accordance with rules adopted pursuant to ORS
183.310 to 183.410 that ensure that reasonable and prudent measures are taken to protect
the state investment funds from loss.
(3) When accounts are established for a state agency, political subdivision or public
corporation under subsection (I)(b) or (c) ofthis section, the state agency, political
subdivision or public corporation in the agreement to provide loan servicing or the bond
indenture, certificate of participation indenture or escrow agreement shall ensure that
reasonable and prudent measures are taken to protect the moneys in the accounts from
loss.
(4) A public official may not have on deposit in any credit union that is a financial
institution outside this state an aggregate sum in excess of the deposit insurance limit
established by the National Credit Union Administration.
(5) As used in this section, the terms "financial institution outside this state" and
"public official" have the meanings given those terms in ORS 295.001. [1993 c.69 91;
1995 c.259 95; 1997 c.17I 915; 2007 c.871 924]
Note: The amendments to 295.205 by section 24, chapter 871, Oregon Laws 2007,
become operative July 1,2008, and apply to all public funds on deposit on or after July I,
2008. See sections 36 and 37, chapter 871, Oregon Laws 2007, as amended by sections
39 and 40, chapter 871, Oregon Laws 2007. The text that is operative until July I, 2008,
is set forth for the user's convenience.
295.205, (I) Notwithstanding any other law:
(a) The State Treasurer may establish demand deposit accounts in financial
institutions outside this state for the purpose of accepting deposits of funds related to the
state investments in the geographical areas respectively serviced by the institutions.
(b) Moneys paid to or collected by a financial institution or other entity under an
agreement to provide loan servicing for a state agency, political subdivision or public
corporation may be deposited in accounts in financial institutions outside this state for the
purpose of:
(A) Accepting payments ofloan principal and interest;
(B) Accepting and holding escrow funds;
(C) Accepting and holding funds required to be held in reserve with or on behalf of
the state agency, political subdivision or public corporation; or
(D) Collecting and holding any other moneys required by the agreement for loan
servicing to be collected or held by the financial institution or other entity prior to
remittance to the state agency, political subdivision or public corporation or a third party.
(c) Moneys held by a trustee or escrow agent pursuant to a bond indenture, certificate
of participation indenture or escrow agreement with a state agency, political subdivision
or public corporation in this state that are public funds, as defined in ORS 295.001, may
be deposited in accounts in financial institutions outside this state.
(2) The State Treasurer shall establish the demand deposit accounts described in
subsection (I)(a) of this section in accordance with rules adopted pursuant to ORS
183.3 I 0 to 183.410 th\lt, to the extent practicable, provide that deposits of state
investment funds are collateralized and managed in the manner otherwise required for
deposits of public funds in the state under ORS 295.001 to 295.125.
(3) When accounts are established for a state agency, political subdivision or public
corporation under subsection (1)(b) or (c) of this section, the state agency, political
subdivision or public corporation in the agreement to provide loan servicing or the bond
indenture, certificate of participation indenture or escrow agreement shall require that:
(a) All moneys deposited in the accounts, to the extent practicable, must be
collateralized at the same level and managed in the same manner otherwise required for
deposits of public funds in this state under ORS 295.001 to 295.125;
(b) Compliance with the collateralization and management requirements of this
subsection be monitored and evidence of compliance that is satisfactory to the state
agency, political subdivision or public corporation be periodically supplied to the state
agency, political subdivision or public corporation; and
(c) Failure by a financial institution or other entity to maintain deposits collateralized
and managed as required by this subsection shall constitute a breach of the applicable
loan servicing agreement, bond indenture, certificate of participation indenture or escrow
agreement.
295.210 [Repealed by 1967 c.451 932]
295.220 [Repealed by 1967 c.451 932]
295.230 [Repealed by 1967 c.45 I 932]
295.240 [Repealed by 1967 c.451 932]
295.410 [Repealed by 1967 c.451 932]
295.420 [Repealed by 1967 c.451 932]
295.430 [Repealed by 1967 c.45 I 932]
295.440 [Amended by 1957 c.171 91; 1965 c.169 92; repealed by 1967 c.451 932]
295.450 [Repealed by 1967 c.451 932]
295.460 [Repealed by 1967 c.451 932]
295.470 [Repealed by 1967 c.45 I 932]
295.480 [Repealed by 1967 c.45 I 932]
295.490 [Amended by 1963 c.502 95; repealed by 1967 c.451 932]
295.500 [Repealed by 1967 c.451 932]
295,510 [Repealed by 1967 c.451 932]
295.520 [Repealed by 1967 c.45 I 932]
295.530 [Repealed by 1967 c.451 932]
295.990 [Repealed by 1967 c.451 932]
295.991 [1967 c.45I 918; repealed by 1971 c.743 9432]
RESOLUTION 98-ik-
A RESOLUTION AUTHORIZING THE INVESTMENT POLICY
OF THE CITY OF ASHLAND AND REPEALING
RESOLUTION NO. 89-26.
Recital: ORS 294.035 prohibits local governments from investing money unlcss the governing
body of thc local government has authorized the investments.
The Mayor and City Council resolve: The investment of City monies in accordance with the
attached policy is authorized.
This resolution supersedes Resolution No. 89-26 authorizing the investment of City monies and
the purchase of Bancroft Bonds.
The foregoing resolution was READ and DUL Y ADOPTED at the regular meeting of the
Ashl City Council on the 4th day of August, 1998.
SIGNED and APPROVED this 5th day of AUgUst~ j A cr-J
/ Carole Wheeldon, Council Chairperson
I
Reviewed as to form:
-~~~
Paul Nolte, Attorney
.
CITY OF ASHLAND
INVESTMENT POLICY
Effective August, 1998
CITY OF ASHLAND
INVESTMENT POLICY
TABLE OF CONTENTS
PAGE
POL I CY......... ............................................................... .....................................1
SCOPE........... ................................................................... .................. ............... I
PRUDENCE.......................................................................................................1
OBJECTlVE........ ........... ....... ................................................................ ............ I
SAFETy............................................. ........................... ......... ............................1
U~D~..................................................................................1
RETURN ON INVESTMENTS................................ ........................................2
DELEGATION OF AUTHORlTY....... ................................................. ..... .... ...2
ETHICS AND CONFUCTS OF lNTEREST...................................................2
AUTHORIZED FINANCIAL DEALERS AND INSTlTUTIONS...................2
AUTHORIZED & SUITABLE INVESTMENTS.............................................3
INVESTMENT POOLS..................................................................... ................3
SAFEKEEPING AND COLLA TERAUZA TION...........................................3
ACCOUNTING METHOD........................... ....................................................3
DIVERSIFiCATION............ ......... ..... ... ..... ..... ..... .............. ................ ......... ......4
MAXIMUM MATURITIES......................................... .....................................4
INTERNAL CONTROL....................................................................................4
PI;'RFORMANCE STANDARDS......... ............................................................4
REPORTING... .... ................... .................................... ............................ ...... ..4- 5
INVESTMENT POLICY ADOPTlON................... ........................................5
DEFINITION S......................... ................................ ..... ...................... ..... ..... ..5-8
Cit) of Ashland Imestmcnl Policy Revised August 1998
,
CITY OF ASHLAND, OREGON
INVESTMENT POLICY (Revised August 1998)
1.0 POLICY. It is the policy of the City of Ashland to invest public funds in a manner which will provide the
highest investment .retum with the maximum security while meeting the daily cash flow demands of the entity and
conforming to all state and local statutes governing the investment of public funds.
2.0 SCOPE. This investment policy applies to activities of the City of Ashland and Ashland Parks & .
Recreation in regard to investing the financial assets of all funds except for funds held in trust for deferred
compensation funds for the Employees of the City of Ashland. In addition, funds held by trustees or fiscal agents
arc excluded from these rules; however, all funds are subject to regulations established by the State of Oregon.
Other than bond proceeds or other unusual situations, the estimated portfolio size ranges from $15,000,00010
S24.000.000.
These funds are accounted for in the City of Ashland's Comprehensive Annual Financial Report and include:
General Fund
Special Revenue Funds
Capital Projects Funds
Debt Service Funds
Enterprise Funds
Internal Service Funds
Trust & Agency Funds
Funds of the City will be invested in compliance with the provisions of, but not necessarily limited to, ORS
294.035 through 294.048: ORS 294.125 through 294.155: ORS 294.810 and other applicable statutes. Investments
of any tax-exempt borrowing proceeds and any related debt service funds will comply with the arbitrage restrictions
in all applicable Internal Revenue Codes.
3.0 PRUDENCE. Investments shall be made with judgement and care, under circumstances then prevailing,
which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for
speculation. but for investment. considering the probable safety of their capital as well as the probable income to be
derived.
3.1 The standard of prudence to be used by investment officials shall be the "prudent person" standard and
shall be' applied in the context of managing an overall portfolio. Investment officers acting in accordance with
wrinen procedures and the investment policy and exercising due diligence shall be relieved of personal
responsibility for an individual security's credit risk or market price changes, provided deviations from expectations
arc reported in a timely fashion and appropriate action is taken to control adverse developments.
4.0 OBJECTIVE. The primary objectives, in priority order. of the City of Ashland's investment activities
shall be:
4.1 SAFETY. Safety of principal is the foremost objective of the investment program. Investments of the
City of Ashland shall be undertaken in a manner that seeks to ensure the preservation of capital and the protection of
principal in the overall portfolio. To attain this objective, diversification is required in order that potential losses on
individual securities do not exceed the income generated from the remainder of the portfolio.
4.2 LIQUIDITY. The City of Ashland's investment portfolio will remain sufficiently liquid to enable the
City of Ashland to meet all operating requirements which might be reasonably anticipated.
City of Ashland Investment Policy August 1998
Page I
4.3 RETURN ON INVESTMENTS. The City of Ashland's investment portfolio shall be designed with the
objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the City of
Ashland's investment risk constraints and the cash flow characteristics of the portfolio. The city may self-finance
the Bancroft Debt in order to reduce the overall debt financing costs.
5.0 DELEGATION OF AUTHORITY. Authority to manage the City of Ashland's investment program are
the City Recorder/Treasurer and Director of Finance who are designated as the investment officers of the city and
are responsible for investment decisions and activities, under the review of Ashland City Council. The day to day
administration of the cash management program is handled by the City Recorderrrreasurer or by. the Director of
Finance and the Accounting Supervisor in the absence of the Treasurer.
Management responsibility for the investment program is hereby delegated to the City RecorderfTreasurer and
Director of Finance, who shall establish written procedures for the operation oCthe investment program consistent
with this investment policy and subject to review and adoption by City Council. Procedures should include
reference to: safekeeping, PSA repurchase agreements, wire transfer agreements, banking service contracts and
collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons
responsible for investment transactions. No person may engage in an investment transaction except as provided
under the tenns of this policy and the procedures established by the City Recorderffreasurer and Finance Director.
The City Recordcrffreasurcr and Finance Director shall be responsible for all transactions undertaken and shall
establish a system of controls lo regulate the activities of subordinate officials.
6.0 ETHICS AND CONFLICTS OF INTEREST. Investment Officers involved in the investment process
shall refrain from personal business activity that could conflict with proper execution of the investment program, or
which could impair their ability to make impartial investment decisions. Investment Officers shall disclose to the
City Council any material financial interests in financial institutions that conduct business within this jurisdiction,
and they shall further disclose any large personal financial/investment positions that could be related to the
perfonnance of the City of Ashland, particularly with regard to the time of purchases and sales.
7.0 AUTHORIZED FINANCtAL DEALERS AND INSTITUTIONS. The investment officers shall
maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be
maintained of approved security broker/dealers selected by credit worthiness who are authorized to provide
investment services in the State of Oregon. Further, there should be in place. proof as to all the necessary
credentials and licenses held by employees of the broker/dealers who will have contact with the City of Ashland as
specified by but not necessarily limited to the National Association of Securities Dealers (NASD), Securities and
Exchange Commission (SEe), etc. Additions or deletions to the list will be made at the discretion of the
investment officers.
Securities broker/dealers not affiliated with a bank shall be required to have an office located in Oregon and be
classified as reporting dealers affiliated with the Federal Reserve as primary dealers. These may include "primary"
dealers or regional dealers that qualify under Securities & Exchange Commission rule 15C3-1 (unifonn net capital
rule). No public deposit shall be made except in a qualified publie depository as established by state laws.
All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must
supply the investment officers with the firms most recent financial statements or Consolidated Report of condition
("call report") for review.
An annual review of the financial condition and registrations of qualified bidders will be conducted by the
investment officers. A current audited financial statement is required to be on file for each financial institution and
broker/dealer in which the city invests.
8.0 AUTHORIZED & SUITABLE INVESTMENTS. The City of Ashland is empowered by statute to
CilY of Ashland In\'eslment Policy AugUSI 1998
Page 2
invest in the following types of securities.
I. U.S. Treasury Obligatioos (Bills, notes and bonds)
2. U.S. Government Agency Securities and Instrumentalities ofGovemment Sponsored
Corporations.
3. Bankers' Acceptances (BA's)
4. Certificates of Deposit (CD)
a. Commercial Banks which have a branch in Oregon
b. Savings & Loan Associations which have a branch in Oregon.
5. State & Local Government Securities
6. Commercial Paper (AI, AA,PI)
7. State of Oregon Investment Pool
8. Repurchase Transactions
In selecting authorized investments consideration will be given to credit ratings on commercial paper, bankers
acceptances, and collateralization of applicable instruments. If repurchase agreements are authorized, a Master
Repurchase Agreement must be signed with the bank or dealer.
Before the investment officers invests funds or sells securities prior to their maturity, competitive offers or bids will
be sought from two institutions. The most favorable offer or bid will be awarded the transaction.
9.0 INVESTMENT POOLS. A thorough investigation of the pool/fund is required prior to investing, and on
a continual basis. There shall be an annual review which will answer the following general questions:
I. A description of eligible investment securities, and a written statement of investment policy and
objectives.
2. A description of interest calculations and how it is distributed, and how gains and losses are
treated.
3. A description of how the securities are safeguarded (including the settlement processes), and how
often are the securities priced and the program audited.
4. A description of who may invest in the program, how often, what size deposit and withdrawal.
5. A schedule for receiving statements and portfolio listings.
6. Are reserves, retained earnings, etc. utilized by the pool/fund?
7. A Fee schedule, and when and how is it assessed.
8. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?
10.0 SAFEKEEPING AND COLLATERALlZATION. Purchased investment securities wiil be delivered by
either Fed book entry. DTC, or physical delivery. and held in third party safekeeping with a designated eustodian.
The trust department of a bank may be designated as custodian for safekeeping securities purchased from that bank.
The purchase and sale of securities will be on a delivery versus payment basis. The custodian shall issue a
safekeeping receipt to the City of Ashland listing the specific instrument, selling broker/dealer, issuer, coupon,
maturity, CUSIP number. purchase or sale price, transacIion date, and other pertinent infonnation. Delivery versus
payment wiil also be required for all repurchase transactions and with the coilateral priced and limited in maturity in
compliance with ORS 294.035 (11). Demand and time deposits shail be collateralized through the State coilateral
pool as required by statute for any excess over the amount insured by an agency of the U.S. government Repurchase
agreement collateral will be limited in maturity to three years and priced according to percentages prescribed by
written policy of the Oregon Investment Council or the Oregon Short-Term Fund Board.
11.0 ACCOUNTING METHOD. The City of Ashland shail compiy with all required legal provisions and
Generally Accepted Accounting Principles (GAAP). The accounting principles are those contained in the
pronouncements of authoritative bodies including, but not necessarily limited to, the American Institute of Certified
Public Accountants (AICPA); the Financial Accounting Standards Board (FASB); and the Government Accounting
City of Ashland [n\'e~tmcnt Policy August 1998
Page 3
Standards Board (GASB).
12.0 DIVERSifICATION. The City will diversify its investments by security type and institution. With the
exception of U.S. Treasury, Government Agency Securities and authorized pools, no more than 50% of the cities
total investment portfolio will be invested in a single security type or with a single financial institution.
Diversification by instrument % of Dortfolio
U.S. Treasury Obligations 100%
U.S. Government Agency Securities and
Instrumentalities of Government Sponsored Corp.
100%
Bankers' Acceptances (BA's)
50%
Certificates of Deposit (CD)
35%
State & Local Government Securities
35%
Repurchase Transactions
25%
Commercial Paper (AA.A I,PI)
10%
State of Oregon InvestmenL Pool Securities
100%
The investment officers will routinely monitor the contents of the portfolio comparing the holdings to the markets,
relative values ofcornpeting instruments, changes in credit quality, and benchmarks. If there are advantageous
transactions, the portfolio may be adjusted accordingly, but not to exceed % as stated.
13.0 MAXIMUM MATURITIES. To the extent possible, the eity wiil attempt to match its investments witb
anticipated cash flow requirements. Unless matched to a specific cash flow, the city will not directly invest in
securities maturing more than 18 months from the date of purchase. All investments with maturities in excess of
one year shall pay interest at least annually.
I. Under 30 days
2. Under 90 days
3. Uoder 270 days
4. Under 1 year
5. Under 18 months
6. Under 3 years
10% minimum
25% minimum
50% minimum
75% minimum
80% minimum
IOO%minimum
14.0 INTERNAL CONTROL. The investment officers shall maintain a system of written internal controls
which shall be reviewed and tested by the independent auditor at least annually or upon any extraordinary event,
i.e., turnover of key personnel, the discovery of any inappropriate activity to assure compliance with policies and
procedures.
15.0 PERfORMANCE STANDARDS. The investment portfolio shail be designed with the objective of
obtaining a mte of return throughout budgetary and economic cycles, commensurate with the investment risk
constraints and the cash flow needs.
The city's investment strategy is active. Given this strategy, the basis used by the inveslment officers to delcnnine
whether market yields arc being achieved shall be the six-month U.S. Treasury Bill and the Oregon Local
Government Investment Pool using the monthly net yield of both portfolio's as the yardstick..
16.0 REPORTING. The investment officers shail provide to City Council quarterly investment reports which
City of Ashland In\'cstmcnl Policy Augnsl 199R
Page 4
provide a clear picture of the status of the current investment portfolio. The report should include data on
investment instruments being held, as well as any narrative necessary for clarification.
In addition.)monthly reports shall be prepared with the following information:
I. A listing of individual securities held at the end of the reporting period by authorized investment
category .
2. Average life and final maturity of all investments listed.
3. Coupon, discount or earnings rate.
4. Par value of each investment.
5. Percentage of the Portfolio represented by each investment category.
17.0 INVESTMENT POLICY ADOPTION. The City of Ashland's investment policy shall be fonnally
adopted by resolution by the City Council. If investments exceeding a maturity of eighteen months are
contemplated, further review and comment by the Oregon Short-Term Fund Board will be sought; and thereafter,
this policy will be re-adopted annually even if there are no changes.
18.0 DEFINITIONS. It is the policy of the City of Ashland to invest public funds in a manner whieh will
provide the highest investment return with the maximum security while meeting the daily cash flow demands of the
entity and confonning to all state and local statutes governing the investment of public funds.
AGENCIES. Federal agency seeurities.
ASKED. The price at which securities are offered.
BANKERS' ACCEPTANCE (BA). A draft or bill or exchange accepted by a bank or trust company. The
accepting institution guarantees payment of the bill, as well as the issuer.
BID. The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer.
BROKER. A broker brings buyers and sellers together for a commission.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. large-
denomination CO's are typically negotiable.
COLLATERAL. . Securities, evidence of deposit ~r other property which a borrower pledges to secure repayment
ofa loan. Also refers to securities pledged by a bank to secure deposits of public monies.
COMMERCIAL PAPER. Short-term unsecured promissory note issued for a specified dollar amount with a
maturity that can be tailored to meet an investor's needs. Notes have maximum maturities of270 days, but the
majority ofCP is issued in the 30-50 day maturity range.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR). The official annual report for the City of
Ashland. It includes five combined statement of each individual fund and account group prepared in conformity
with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance related legal
and contractual provisions, extensive introductory material, and a detailed Statistical Section.
COUPON.
(a)
The annual rate of interest that a bond's issuer promises to pay the bondholder on the
bond's face value.
A certificate attached to a bond evidencing interest due on a payment date.
(b)
DEALER. A dealer, as opposed to a broker. acts as principal in all transactions, buying and selling for his/her own
City or Ashland Investmt:nl Policy August 1998
Pagt': 5
account.
DEBENTURE. A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PA YMENT. There are two methods of delivery of securities: delivery versus payment and
delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the
securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.
DERIVATIVES. (I) Financial instruments whose return profile is linked to, or derived from, the movement of
one or more underlying index or security, and may include index or security, and may include a leveraging factor,
or (2) Financial contracts based upon nominal amounts whose value is derived from an underlying index or security
(interest rates, foreign exchange rate, equities or commodities),
DISCOUNT. The difference between the cost price of a security and its maturity when quoted at lower than face
value. A security selling below original offering price shortly after sale also is considered to be at a discount.
nlSCOUNT SECURITIES. Non-interest bearing money market instruments that are issued at a discount and
redeemed at maturity for full face value, e.g. U.S. Treasury Bills.
I>IVERSIFlCA TION. Dividing investment funds among a variety of securities offering independent returns.
FEDERAL CREDIT AGENCIES. Ageneies of the Federal Government set up to supply credit to various classes
of institutions and individuals. e.g. S&L's, small business finns, students, fanners, fann cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). A federal agency that insures bank deposits,
currently up to $100.000 per deposit.
FEDERAL FUNDS RATE. The rate of interest at which Fed funds are traded. This rate is currently pegged by the
Federal Reserve through open-market operations.
FEDERAL HOME LOAN BANKS (FHLB). Government sponsored wholesale banks (eurrentiy 12 regional
banks) which lend funds and provide correspondent banking services to member commercial banks, thrift
institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related
assets of its members who must purchase stock in their district bank.
FEDERAL NA T10NAL MORTGAGE ASSOCIATION (FNMA). FNMA, like GNMA was chartered under the
Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of
the Department of Housing and Urban Development (HUD). It is the largest single provider ofresidential mortgage
funds in the United States. Fannie Mac, as the corporation is called. is a private stockholder-owned corporation. the
corporation's purchases include a variety of adjustable mortgages and second loans. in addition to fixed-rate
mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that
all security holders will receive timely payment of principal and interest.
FEDERAL OPEN MARKET COMMITTEE (FOMC). Consists of seven members of the Federal Reserve Board
and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a
permanent member. while the other Presidents serve on a rotating basis. The committee periodically meets to set
Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means
of influencing the volume of bank credit and money.
FEDERAL RESERVE SYSTEM. The central bank of the United States created by Congress and consisting ofa
seven member Board of Governors in Washington D.C., 12 regional banks and about 5,700 commercial banks that
City of Ashland Investment Policy August 1991\
Page 6
are members of the system.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae). Securities influencing
the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and
loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S.
Government. Ginnie Mae securities are backed by the FHA, V A or FMHM mortgages. The term "pass throughs" is
often used to describe Ginnie Maes.
LIQUIDITY. ^ liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of
value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and
reasonable size can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP). The aggregate of all funds from political subdivisions
that are placed in the custody of the State Treasurer 'for investment and reinvestment.
MARKET VALUE. The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT. A written contract covering all future transactions between the parties
to repurchase--reverse repurchase agreements that establishes each party's rights in the transactions. A master
agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities
in the event of default by the sell~r-borrower.
MATURITY. The date upon which the principal or stated value of an investment becomes due and payable.
MONEY MARKET. The market in which short-term debt instruments (bills, commercial paper, bankers'
acceptances, etc.) are issued and traded.
OFFER. The price a"iked by a seller of securities. (When you are buying securities. you ask for an offer.) See Asked
and Bid.
OPEN MARKET OPERATIONS. Purchases and sales of government and certain other securities in the open
market by the New York Federal Reserve Bank as directed by the FOMe in order to influence the volume of money
and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and
credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most
flexible monetary policy tool.
PORTFOLIO. Collection of securities held by an investor.
PRIMARY DEALER. A group ofgovemment securities dealers who submit daily reports of market activity and
positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its infonnal
oversight. Primary dealers include Securities and Exchange Commission (SEC)-registered securities broker-dealers.
banks and a few unregulated finns.
PRUDENT PERSON RULE. An investment standard. In Oregon the law requires that a fiduciary, such as a
trustee, may invest money only in a list of securities selected by the custody state--the so-called legal list. In other
states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and
intelligence who is seeking a reasonable income and preservation of capital.
QUALIFIED PUBLIC DEPOSITORIES. A financial institutioo which does not claim exemption from the
payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for
the benefit orthe commission eligible collateral having a value of not less than its maximum liability and which has
City of Ashland Invl:stmenl Policy August 1998
Pagt: 7
been approved by the Public Deposit Protection Commission to hold public deposits.
RATE OF RETURN. The yield obtainable on a security based on its purchase price or its current market price.
This may be the amortized yield to maturity on a bond the current income return.
REPURCHASE AGREEMENT (RP or REPO). A holder of securities sells these securities to an investor with an
agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller"
money for the period of the agreement, and the terms of the agreement are structured to compensate him/her fOf
this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is
lending money, that is. increasing bank reserves.
SAFEKEEPING. A service to customers rendered by banks for a fee whereby securities and valuable of all types
and descriptions are held in the bank's vaults for protection.
SECONDARY MARKET. A market made for the purchase and sale of outstanding issues following the initial
distribution.
SECURITIES & EXCHANGE COMMISSION. Ageney created by Congress to protect investors in securities
transactions by administering securities legislation.
SEC RULE ISC3-1. See Uniform Net Capital Rule.
STRUCTURED NOTES. Notes issued by Government Sponsored Eoterprises (FHLB, FNMA, SLMA, etc.) and
Corporations which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-
based returns) into their debt structure. Their market pcrfonnance is impacted by the fluctuation of interest rates,
the volatility of the imbedded options and shifts in the shape of the yield curve.
TREASURY BILLS. A non-interest bearing discount security issued by the U.S. Treasury to finance the national
debt. Most bills are issued to mature in three months, six months, or one year.
TREASURY BONDS. Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S.
Government and having inilial maturities of more than 10 years.
TREASURY NOTES. Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the
U.S. Government and having initial maturities from two to 10 years.
UNIFORM NET CAPITAL RULE. Securities and Exchange Commission requirement that member finns as well
as nonmember broker-dealers in securities maintain a ratio of indebtedness to liquid capital of 15 to I; also called
net eapital rule and net capital ratio. Indebtedness eovers all money owed to a firm, inciuding margin loans and
commitments to purchase securities, one reason new public issues are spread among members of underwriting
syndicates. Liquid capital includes .cash and assets easily converted into cash.
YIELD. The rate of annual income return on an investment, expressed as a percentage.
(a) INCOME YIELD is obtained by dividing the current dollar income by the current market price
for the sccuri.ty.
(b) NET YIELD or YIELD TO MA TURITY is the CUITCnt income yield minus any premium above
par or plus any discount from par in purchase price, with the adjustment spread ovef the period
from the date ofpurehase to the date of maturity of the bond.
City of Ashland Investment poliey August 19l,lH
Page &
City of Ashland
5-Year Portfolio History
Investment/Rate of Return
Period Ending
June-06
June-O?
June-DB
June-09
Oclober-09
Earnings Rate
4.7434%
4.1600%
3.3500%
1.4975%
1.1316%
Portfolio Balance
$22,492,756.68
$21,170,307.64
$18,158,OS3.24
$17,555,988.67
$16,774,445.71
Investments
30.000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
June-06
June-O?
June-OB
June-09
October-09
Rate of Return
5.00% -
4.00% -
3.00% -
2.00% -
1.00% -
0.00% -.
june-06
June-O?
June-OB
June-09
October -09
City Inveslment Officer
Barbara Christensen
City RecorderlTreasurer
Maturity
Dala
Idenlifier
'ldenUfier
""
Cily01 AshIan::l
In""sImenIPortlolioasoIOclobe<31,2009
B~<
1112109
1112109
1113109
12/15109
5/12/10
5/11110
8123/10
8113/10
8113/10
12/10/10
313111
3/23111
4/28111
Type 01 Inveslmanls
local GlNI Pool
FHlN
CD
FFee
CD
CD
>>.."
CD
CD
CD
FICO
FFCe
FFCe
FFCN
'""
Inleresl
Date
B"'"
'Yields
Purchasa Malurily Dayalefl Interest
Dala Dale 10131Kl9 Rale WELLS BANK BofABANK
10131109 0 0075%
US BANK
KEY BANK
OTHER
Inve.tmenl
LGIP Coat
7,312.222327,312,222,32
Well. 1112109 12/1~B 1112109 , 0073% 993,73B,89 !l93,13BB9
C""'''" '"'" "'" 1112109 , """" 500,00000 500,00000
Wells 5/3109 10128/0B 1113/09 , 3050% \,000,00000 1,000,00000
BofA 12/15109 1211510B 12115,00 " 3010% 500,00000 500,00000
KeyBank 5/12110 .''''' 5112/10 '" 0086% 000 500,00000 500,00000
W~. 11/1111l!l 5/11109 5/11/10 '" """ 500,000,00 5llO,QOOOO
""""" 1123/10 '""" 8123110 '" . 2500% 500,00000 5llO,QOOOO
C...... 8/13/10 81\3109 81\3110 '"' 1611)% 500,00000 500,00000
B.A 8113/10 8113109 ll/13/10 '"' , 000% 500,00000 000 500,000,00
Walls 3110/09 9/16109 12/10/10 '" 0070% 934.96450 934,96450
Walls 313110 9/15/09 313/11 "B 0700% 1,033,50000 1.033.50000
Walls 12123109 eo""" 3123/11 'OB 0640% 1,000,00000 1.000,00000
Wells 1128110 I012B1ll9 4128111 ~ """ 1.000,00000 1,000.00000
6,462.22339 1,000,00000 000 ~.00000 1,~.OOllOO 7.312.22232 9.462,22339
Cross 1001 16.774.44571
1,312,222,32
n""
Bank 01 America.
Wall3Fargo
US Bank
Key Bank
""'"
Divars,fie<ttion by Financial IlIsMulicn
Amounl
1.000,00000
6,462.22339
000
500,00000
1,500,000,00
7,312,22232
16.714.44~ (1
Aclual%
"
".
'"'
"
..
...
100%
Local GlNII"""sl
Diver",ficalicnby Inslrument
~,
Treasury Obligal.<
US Agancy's
BankeraAccapta
CerJifiC<lles
Slatea"dLocalGlNlOb
RepllcaI1SeAgnoama"15
""'''''-
LGIP
In....o1moolMllluribes
Un:ler30daYB
Un:ler90daYB
Un:lor21Odays
Un:larlYll!lr
UndBflBMonlhs
Un:l9r3 YeBIO
""'..
000 '"'
6,462.22339 39%
000 0%
3,000,00000 16%
0%
0%
0%
7.312.222,32 44'10
16,114.4457\ tOO,OO%
Am='
Amount Actual %
1.!l93.73889 12%
1,993,B94~ 12%
1,993,B94~ 12%
1,993,B94,~ 12%
1,993,694~ 12%
3,987,63345 24%
Policy %
""
"'.
"'.
"'.
""
100% NOTE. AggrllQ....te balance limitallcn forpoot $35,645,902.00
Policy %
"""
"'"
""
,,%
",
,,.
'''''
"""
PerG L Variance
000
9.462,223,39
000
3,000.00000
000
000
000
(,312,22232 000
16,774.44511 3.000,000.00
Policy %
"""
"""
"""
110100
110100
111/00
DailyRala
360 Days
'-
""
Inleresl
~270and>91 ~360and>271 ~~Oand>36\ <-IOB08l1d>541 Payment
D.~
Unlil
InleraslPaid
Foolnolas
Ias.<31
7.312,22232
~90 end>31
1523
"0
000
0.00
000
000
'" 993,73BB9 2.02 000 000 0.00 993J38e!l
27.78
84.72 1,00000000 84.72 000 0.00 0" 1,000,00000
41,81
1.19
000 000 000 000 000 000 000
''''
22.36
1389
182 000 182 000 "0 000 000
2010 "0 2010 0.00 0.00 000 000
2333 000 2333 000 "0 000 000
22.78 000 22,78 000 "0 000 000
000 000 000 000 000 000
29742 000 1.993,73889 155.67 000 000 000 1.993.13869 000
3,987.63345
1.1316% Coml>nadrat, 5000% 000. 000. 000% 000% 5000%
00750% Pool
1,056[,% DiHaranca
47249% POr1lolioaxdudingPool
45499%
99,97391 Am.JaI{los.)lGain