1. NCLGIA Summer Conference
7/21/2016
LGC UPDATE
2016 NCLGIA – Summer Conference
July 20, 2016
Becky Dzingeleski

2. Announcements / Reminders LGC-203 and COLL 91 (INV 91)
AGENDA
Announcements / Reminders
LGC-203 and COLL 91 (INV 91)
Deposits and Investment Issues
Custody & Safekeeping
Statistical Reports

3. NCLGIA Summer Conference
Announcement
7/21/2016
New LGC Staff
Debt Section
Jennifer Wimmer – Assistant Manager
Fiscal Section
Accounting and Financial Management Advisors
Ryan Chapman, MBA
Jim Agar
Ann Cutler, CPA - Coach Team
David Erwin, CPA - Coach Team
Retired
Dianne Kelly - Debt Section Senior Financial Analyst

4. Announcement
2016 Sample Financial Statements including sample GASBS 72 implementation have been posted to the DST website
Soon to be completed - Carolina County
City of Dogwood
Board of Education
Charter School
Public Housing Authority

5. LGC-203 – Report of Deposits and Investments
NCLGIA Summer Conference
LGC-203 – Report of Deposits and Investments
7/21/2016
Required for NC Local Governments / Public Authorities G.S and for
*Public Schools G.S. 115C-446
Report form is updated each report cycle –
Updated list of Pooling Banks
New Units added
** Please use updated report form every cycle
Report is due twice a year: July 25 and January 25
* Not required for Charter Schools

6. LGC-203 – Report of Deposits and Investments
NCLGIA Summer Conference
LGC-203 – Report of Deposits and Investments
7/21/2016
Please send your
Completed current LGC 203 report in Excel workbook format - helps with automated processing
Finistar, CDARs ICS or collateral statements
As of the report date
Supplemental Schedule that includes all of the Information we need for our review -
Custodian (s), Specific name of Investment, amount, Purchase date & maturity date, market value at report date, (CP) rating at time of purchase
Excel workbook converted to PDF
Ticker statements
Supplemental Schedule Issues – Some unusual Abbreviations make it difficult to determine the CP or agency

7. ABC Board’s LGC-203 – Report of Deposits and Investments
LGC-203 report forms are reviewed by and accessed at the NC ABC Commission Website

8. COLL-91 (INV 91)– Notification of Public Deposit
June 14, 2016
COLL-91 (INV 91)– Notification of Public Deposit
Required by Administrative Code 20 NCAC
20 NCAC Notification By Depositor
(b) As of June 30 of each year, or when requested by the State Treasurer, the public depositor shall provide the depository Form INV-91 "Notification of Public Deposit ", listing the current account names and numbers of all public deposit accounts, and shall provide a duplicate copy to the State Treasurer. Form INV-91 shall be certified by the public depositor that the statements are correct.

9. COLL 91 (INV-91) – Notification of Public Deposit
NCLGIA Summer Conference
COLL 91 (INV-91) – Notification of Public Deposit
7/21/2016
NEW COLL 91 report and related instructions on DST website. NEW submission process for the June 2016 COLL 91 report cycle.
Prepare, sign and directly to
Department of State Treasurer Banking operations (NEW ) -
Keep a copy for the Unit’s records
Both the LGC-203 and the COLL 91 reports are required to be filed by all public depositors, except Charter Schools
It is prudent for the unit to assist the depository in keeping its records current is the public depositor provides each depository with the COLL-91 “Notification of Public Deposit,” The Depository can do an annual check of the Public Accounts to make sure the accounts are coded properly and protected by collateralization.

10. DEPOSIT AND INVESTMENT ISSUES
NCLGIA Summer Conference
DEPOSIT AND INVESTMENT ISSUES
7/21/2016
Issue - As of LGC-203 report date there is insufficient collateralization (Market Value) or no collateralization for deposit accounts in NON-pooling Banks that are required to collateralize public funds by use of the dedicated method.
“Appropriate forms needed for the Bank to collateralize the deposits had not been filed”
Use of Credit Union’s as a Depository – not specified in the NC Statutes

11. June 14, 2016
INVESTMENT ISSUES -
NC ST HSG FIN AGY HOMEOWNERSHIP – not a municipal corporation, local government agency, or an obligations of the State of NC - G.S (c)(3)
NORTH CAROLINA CAPITAL FACILITIES FINANCE AGENCY - Educational Facilities Revenue and Revenue Refunding Bonds –NCCFFA is conduit issuer that permits an entity (University) to borrow on a tax-exempt basis. Bonds are not an obligation of the State of NC but are an obligation of the University.
UNIVERSITY REVENUE BONDS must be evaluated on a case by case basis. Revenue Bonds are often backed by Dorm fee revenue & normally are not obligations of the State of NC - G.S (c)(3)
Review Investment bond documents carefully to see who is obligated to pay these bonds.

12. NC MED CARE COMMISSION BONDS
June 14, 2016
INVESTMENT ISSUES -
NC MED CARE COMMISSION BONDS
MCC Is an agency of the State of NC, their bonds are not obligations of the State of NC as required under § (c)(3).
CERTIFICATES OF PARTICIPATION (COPs) of NC local governments are not “bonds and notes” as required by the statutes. Not issued by the local government or public authority but by a nonprofit corporation.
Review Investment bond documents carefully to see what organization is obligated to pay these bonds.

13. NCLGIA Summer Conference
INVESTMENT CONCERNS -
7/21/2016
Condition - 100% of Units Investments are held in Government Agency Bonds
All purchased in 2012 and early 2013 and have year maturities
From Units Audit report Risk Note
Unit “does not have a formal investment policy that limits investment maturities as a means on managing its exposure to fair value loses arising from increased interest rates.”
Unit “places no limit on the amount that the District may invest in any one issuer”

14. DEPOSIT AND INVESTMENT ISSUES
Safety – Liquidity – Yield – IN THAT ORDER
If cash is suddenly needed market may be adverse to liquidating these long term securities
Risk of Investing too heavily in a specific maturity
Securities with long-term yields may be tempting but are subject to market fluctuations.
If interest rates rise, the value of the portfolio will decline – possible loss of public funds

15. DEPOSIT AND INVESTMENT ISSUES
NCLGIA Summer Conference
DEPOSIT AND INVESTMENT ISSUES
7/21/2016
Formal Cash Management & Investment Policy
Unit’s investing in products other than the NCCMT should have a formal investment policy approved by governing Board.
The North Carolina Department of State Treasurer Policies Manual Section #30 on Cash & Investments provides guidance regarding Cash & Investments of Local Governments including a Sample Cash Management and Investment Policy – Section 30F
Resolution Adopting Cash Management and Investment Policy – Section 30G
Broker Dealer Questionnaire / Agreement – Section 30H

16. CUSTODY AND SAFEKEEPING
June 14, 2016
Custody has to do with the physical safety of the securities. In “book-entry” system there are no physical documents so investment securities must be held by custodians in Third Party safekeeping or trust accounts in the name of the Unit of Government.
Best Practice: Signed Third Party safekeeping contract directly between the Unit and the custodian.

17. CUSTODY AND SAFEKEEPING
June 14, 2016
Condition: A signed contract / custodial safekeeping agreement that is not clearly identifiable as to be directly between the third party custodian and the Unit.
Best Practice: Signed Third Party safekeeping contract directly between the Unit and the custodian.

18. DEPOSIT AND INVESTMENT ISSUES
NCLGIA Summer Conference
DEPOSIT AND INVESTMENT ISSUES
7/21/2016
Condition: A government’s public funds being held in a temporary custodian deposit account or mutual fund for a period of time until they are wired to the Unit.
Matured funds or earnings are legally required to be wired directly into a statutorily allowable (§ and/or §159-31) account in the name of the Unit – no detours to a Brokerage deposit account, not even temporarily.
Units’ Official Depository
NC Cash Management Trust G.S (c)(8)
NCCMT is an allowable investment account
Not allowable: Federated Government Obligation
First American Treasury Obligation

19. 115 Units Invest in other than the NCCMT
42 Municipalities
at June 30, 2015
42 Counties
Government Securities 15 8
Government Agencies 27 32
Commercial Paper 16 26
“Other”: Bond Proceeds or expanded Investment authority 23
“Other”: Bond Proceeds or expanded Investment authority 21
Repurchase Agreements 1

20. County & Municipal Combined portfolio’s at June 30, 2015

21. Comparison of total combined County & Municipal Deposits & Investments at June 30,

22. Comparison of total County Deposits & Investments at June 30, 2015 – 2014 - 2013

23. Comparison of total Municipal Deposits & Investments at June 30, 2015 - 2014 - 2013

24. Percent Change from 2014 to 2015

25. Percent Change from 2013 to 2014

26. Total County & Municipal Portfolio Mix - June 30, 2015

27. Investment Questions?
Local Government & Public Authority Cash & Investment questions?
Becky Dzingeleski
Paru Patel

28. Stay informed by the LGC
NCLGIA Summer Conference
Stay informed by the LGC
7/21/2016
Add additional or new Local Government staff or officials to the LGC_News listserve
Mayor or Board Chairman
Manager
Finance Officer
Clerk .
Please give Paru or Becky a business card or send an requesting to be registered.

29. Thank You!

30. Thank you!
Together , we can build and maintain a fiscally strong and prosperous North Carolina.