|
Return
|
| |
Regular-General Government # 47.
|
| Board of Supervisors |
Financial Services |
|
|
|
| Subject |
| Receive and file annual report on the de-allocation of securitized Tobacco funds and the status of Ceres, Demeter, and Pomona funds for fiscal year ended June 30, 2017. (No general fund impact) (Newens) |
| Recommended Action |
| Receive and file the Department of Financial Services' annual report on the de-allocation of securitized Tobacco funds and the status of the Ceres, Demeter, and Pomona funds for fiscal year ended June 30, 2017. |
| Strategic Plan Goal(s) |
| Operational Excellence |
| Reason for Recommended Action/Background |
In 2002, Yolo County participated in the Pooled Tobacco Securitization Program administered by the California Statewide Financing Authority (the Authority). In accordance with U. S. Treasury regulations, all investments held in connection with the bonds are restricted by the universal cap, which essentially requires that the value of investments equals at least the value of outstanding bonds. After each semi-annual debt service payment (May and November), the bonds and investment holdings are revalued and any excess of investment value over bond value is de-allocated, that is, released back to the County for unrestricted use. In 2003 the Board of Supervisors approved an investment strategy for tobacco settlement receipts securitized in 2002 and directed the Auditor-Controller (presently Chief Financial Officer) to make an annual report on the status of the endowment fund (Demeter) and annuity fund (Pomona) and recommend necessary adjustments to the investment strategy.
In 2013, upon the Department of Financial Services' recommendation, based on revised long-term projections for the funds, the Board adjusted the investment strategy and the distribution of de-allocated funds (Att. B - Board Reso. 13-93 Deallocated Funds Flow). In brief, the adjusted strategy called for annual transfers of $300,000 of de-allocated monies to the Pomona Fund and make $330,000 available from Pomona for appropriations to fund various programs as determined by the Board. The balance of de-allocated monies is directed toward the continued buildup of the Demeter Fund so that it can generate a perpetual annuity of $400,000 from the year 2023.
De-allocations in the past few years have been below the estimates projected by Public Financial Management (PFM), the County's outside investment advisor, based on certain assumptions on market factors that affect bond values. These assumptions did not bear out due to declining consumption of tobacco products, as a result, de-allocation has been lower than predicted. For the fiscal year ended June 30, 2017, the de-allocated funds totaled $263,137, which after investment fees only resulted in $252,709 available to Pomona. There was not adequate funding to move any funds to the Demeter fund. As a result, Department of Financial Services staff together with PFM, are reviewing models for future availability of resources from de-allocated funds and intend to return to the Board with updated models and new recommendations in the near future.
A financial summary of transactions for the Ceres Fund, Pomona Fund and Demeter Fund for fiscal year end June 30, 2017 is presented in Att. A - Report on Tobacco Funds. |
| Collaborations (including Board advisory groups and external partner agencies) |
| The Department of Financial Services is collaborating with PFM who manages the investment of Ceres and Demeter funds in reviewing the de-allocated funds flow and future projections of available resources for de-allocation. |
| Competitive Bid Process |
Not applicable as this board item is an annual report of information to the Board of Supervisors. |
|
| Fiscal Impact |
|
|
| Source of Funds for this Expenditure |
|
|
|
|
|
|
|