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Valley Metro
Fiscal Year 2015
Financial Results
Budget and Finance Subcommittee
October 15, 2015
Public Transportation Fund Revenues
from Maricopa Transportation Excise TaxActual versus Budget
Fiscal Year 2014-2015
Month
FY 2013/2014
Actuals
FY 2014/2015
Budget
FY 2014/2015
Actuals
Cumulative
Budget
Variance YTD
Cumulative %
Variance to
Budget
Comparison to
Prior Year
Cumulative
Comparison to
Prior Year
Cumulative
Percent
Change
July $9,937,200 $10,460,135 $10,137,850 ($322,285) -3.08% $200,651 $200,651 2.02%
August 9,594,205 9,863,474 10,053,027 (132,731) -0.65% 458,823 659,473 3.38%
September 9,680,076 10,142,966 10,093,521 (182,176) -0.60% 413,445 1,072,919 3.67%
October 9,640,229 10,242,675 10,190,528 (234,323) -0.58% 550,299 1,623,218 4.18%
November 9,715,097 10,097,179 10,010,211 (321,291) -0.63% 295,115 1,918,332 3.95%
December 9,945,390 10,325,784 10,447,517 (199,558) -0.33% 502,126 2,420,459 4.14%
January 12,521,255 12,569,497 12,312,867 (456,188) -0.62% (208,389) 2,212,070 3.11%
February 9,463,436 10,149,823 9,987,593 (618,418) -0.74% 524,158 2,736,227 3.40%
March 9,906,083 10,407,403 10,756,386 (269,435) -0.29% 850,303 3,586,531 3.97%
April 10,970,909 11,729,341 11,743,214 (255,562) -0.24% 772,305 4,358,836 4.30%
May 10,117,868 10,725,384 10,668,933 (312,013) -0.27% 551,065 4,909,900 4.40%
June 10,282,512 10,958,339 10,916,034 (354,318) -0.28% 633,522 5,543,422 4.55%
Totals * $121,774,260 $127,672,000 $127,317,682 $5,543,422
PTF Revenue To Date Summary:
Original RTP Estimated Excise Tax Revenues Jan. 2006 to June 2015
Actual Excise Tax Revenues from Jan. 2006 to June 2015
-28.06%
$1,514,344,000
$1,089,475,064
($424,868,936)
Valley Metro RPTA
Operating Results
RPTA Budget vs. Actual Report $ Millions
For the quarter ending June 30, 2015
Year to Date
Operations Expenditures Budget Actual
Variance
(Unfav.)
Fixed Route Bus 81.0 76.9 4.1
Paratransit 28.1 26.8 1.3
Vanpool 0.8 0.7 0.1
Regional Services 11.0 9.9 1.1
Planning 3.8 2.7 1.1
Administration 2.4 2.1 0.3
METRO Rail (Salary, Fringe, OH) 15.8 15.4 0.3
AZ Lottery Fund Disbursements 11.2 10.5 0.7
Total Operations Expenditures 154.1 145.2 8.9
Valley Metro RPTA
Capital Results
RPTA Budget vs. Actual Report $ Millions
For the quarter ending June 30, 2015Year to Date
Capital Expenditures Budget Actual
Variance
(Unfav.)
Bus Purchases
Valley Metro 0.9 0.0 0.9
Lead Agency 0.1 0.0 0.1
Paratransit Vehicles
Lead Agency 0.3 0.1 0.2
Vanpool Vehicles 2.1 0.0 2.1
Other Capital 1.5 1.4 0.1
METRO Rail 108.8 100.0 8.8
Total Capital Expenditures 113.6 101.5 12.1
Valley Metro RPTA
Cash and Investments
FY15 vs. FY14
Current Status of Investments
Account Description Type of Funds
Balance at
6.30.2015
Balance at
6.30.2014 Change
Wells Fargo Checking General Fund $ 17,009,103 $ 2,908,276 $ 14,100,827
Wells Fargo Savings Capital Projects/Operating 137,987,094 99,180,546 38,806,548
Various Bank FDIC Certificates of Deposit Capital Projects 6,707,543 2,979,157 3,728,386
US Bank - 2014 Revenue Bonds Proceeds Capital Projects 4,586 98,671,228 (98,666,642)
US Bank - 2014 Revenue Bonds - Debt Service Reserve Debt service fund 11,090,335 2,453,186 8,637,149
LGIP - Debt Service Reserve - 2009 Bond Issuance Debt service fund 149,898 32,265 117,633
Wells Fargo Cash with Escrow Agent Debt service fund 8,039,534 7,872,787 166,747
Local Government Investment Pool - Other Investments Fiduciary/General Fund 9,373,122 13,196,694 (3,823,572)
Total Cash and Investments $ 190,361,215 $ 227,294,139 $ (36,932,924)
-
Summary of Bond Funds 19,284,353 109,029,466 (89,745,113)
-
All Other Cash Reserves $ 171,076,862 $ 118,264,673 $ 52,812,189
Investment Earnings $ 347,785 $ 285,145 $ 62,640
FY15 FY14 Change
Finance
FY16 Q1 Report
Budget and Finance Subcommittee
October 15, 2015
Valley Metro RPTA
Operating Results – Q1
9
RPTA Budget vs. Actual Report $ Millions
For the quarter ending September 30, 20141st Quarter Year to Date
Operations Expenditures Budget Actual
Variance
(Unfav.) Budget Actual
Variance
(Unfav.)
Fixed Route Bus 20.3 20.0 0.3 20.3 20.0 0.3
Paratransit 6.9 6.5 0.4 6.9 6.5 0.4
Vanpool 0.2 0.2 0.0 0.2 0.2 0.0
Regional Services 2.8 2.3 0.5 2.8 2.3 0.5
Planning 0.9 0.8 0.1 0.9 0.8 0.1
Administration 0.6 0.6 0.0 0.6 0.6 0.0
METRO Rail (Salary, Fringe, OH) 3.9 3.7 0.2 3.9 3.7 0.2
Total Operations Expenditures 35.6 34.1 1.5 35.6 34.1 1.5
Open Position Status
10
Valley Metro Integrated Agency
FY 2016 Adopted Positions - Status Update FY15 - Q4 FY16 - Q1
Jun Open Sep Open
Operations and Maintenance 20 25
Human Resources 5 2
Planning & Accessible Transit 2 0
Safety & Security 1 0
Information Technology 2 4
Communication & Marketing 0 1
Design & Construction 1 1
Finance 2 2
Executive 0 0
Legal 0 2
Total Open Positions 33 37
11% 12%
Total Authorized Positions 296 312
Valley Metro RPTA
Capital Results – Q1
11
RPTA Budget vs. Actual Report $ Millions
For the quarter ending September 30, 20141st Quarter Year to Date
Capital Expenditures Budget Actual
Variance
(Unfav.) Budget Actual
Variance
(Unfav.)
Bus Purchases
Valley Metro 2.6 0.0 2.6 2.6 0.0 2.6
Lead Agency 1.3 0.0 1.3 1.3 0.0 1.3
Paratransit Vehicles
Lead Agency 0.1 0.0 0.1 0.1 0.0 0.1
Vanpool Vehicles 1.1 0.0 1.1 1.1 0.0 1.1
Other Capital 4.3 0.0 4.3 4.3 0.0 4.3
METRO Rail 27.3 32.3 (5.0) 27.3 32.3 (5.0)
Total Capital Expenditures 36.7 32.3 4.4 36.7 32.3 4.4
END OF PRESENTATION
12
SERIES 2014 ADVANCE BOND PROCEEDS
POLICY REVIEW OF OPERATING AND CAPITAL FUND BALANCE RESERVE MINIMUMS
INVESTMENT POLICY UPDATE
Valley Metro Budget and Finance Subcommittee Investment Policy Discussion
October 15, 2015
1820 East Ray Road
Chandler, AZ 85225
855-885-9621
• Recommendation to align Valley Metro’s Investment Policy closer to Arizona Revised Statutes,
including use of credit instruments in Valley Metro’s investment program.
• Use of credit instruments will:
Enhance diversification;
Provide potential yield/return enhancement;
Allow greater access to the high-quality, fixed-income market.
• Adding credit instruments will increase Valley Metro’s exposure to credit risk, but those risks can
be managed through:
PFMAM’s diligent credit review process;
Appropriate sector and issuer limitations outlined in the Investment Policy;
Ongoing credit monitoring.
Executive Summary
17© PFM Asset Management LLC
RPTA Current Policy versus ARS Title 35
18© PFM Asset Management LLC
Sector
Arizona Revised
Statutes
35-323
RPTA
Investment
Policy
U.S. Treasury Permitted Permitted
Federal Agency Permitted Permitted
Certificates Of Deposit Permitted Permitted
Repurchase Agreements Permitted Permitted
Interest Bearing Savings Accounts Permitted Permitted
Arizona State Pools Permitted Permitted
Money Market Funds Permitted Not permitted
Municipal Obligations Permitted Not permitted
Negotiable Certificates of Deposit Permitted Not permitted
Commercial Paper Permitted Not permitted
Corporate Notes Permitted Not permitted
MaturityU.S.
Treasury
Federal
Agency
Credit
Instruments
Annual earnings on
$10 million investment
U.S.
Treasury
Federal
Agency
Corporate
Notes
3-Month 0.00% 0.09% 0.24% $0 $9,000 $24,000
6-Month 0.07% 0.15% 0.44% $7,000 $15,000 $44,000
1-Year 0.23% 0.30% 0.73% $23,000 $30,000 $73,000
2-Year 0.63% 0.74% 1.19% $63,000 $74,000 $119,000
3-Year 0.94% 1.06% 1.62% $94,000 $106,000 $162,000
• In the current environment, credit instruments offer significant value compared to comparable maturity
governmental options.
Corporate Sector Offers Value
19
Rates as of 10/9/15. For illustrative purposes only, returns can not be guaranteed.
© PFM Asset Management LLC
Disclosure: The information presented above is based upon past experience to illustrate particular analysis or decisions in the context of market events
and does not describe all credit recommendations. PFMAM cannot guarantee the future performance of credit analysis of any specific market.
PFMAM’s Forward-Thinking Credit Committee
20
2007
Residential Mortgage
Deterioration
2007 Q2: Assessed collateral
exposure of Asset-Backed
Commercial Paper (ABCP)
and other asset classes
July 2007: Liquidated all
ABCP holdings
2007 Q3/Q4: Ceased
purchase of issuers with
exposure to Bear Stearns,
Lehman Brothers, Merrill
Lynch, and RBS
2008
Lehman Brothers Failure
May 2006: Last Lehman
holding matured
2007 Q3: Placed Lehman on
hold
Sep. 2008: Restricted
purchases to government
securities only
Portfolio management team
focused on liquidity
2011
Japanese Tsunami
March 2011: Credit
Committee placed all
Japanese issuers on hold
As conditions improved,
issuers are re-approved
2011/2012
European Debt Crisis
Monitored developments in
Europe on an ongoing basis
Some issuers are removed
from credit list, others are
placed on hold or restricted
by maturity
No exposure to Greece,
Portugal, Italy, or Ireland
• PFMAM’s Fixed-Income Credit Committee is the cornerstone of our credit review process.
• None of PFMAM’s clients lost any principal or were exposed to headline risk during the credit
crisis that spanned from 2007 through 2012.
© PFM Asset Management LLC
RPTA’s Members - Use of Corporates
21© PFM Asset Management LLC
• PFMAM provides investment management services to many of RPTA’s members.
• The following utilize the corporate sectors in some capacity:
− City of Chandler
− Town of Gilbert
− City of Goodyear
− City of Mesa
− City of Scottsdale
− City of Surprise
On average, RPTA members’ policies allow:
• Maximum sector allocation of at least 40%
• Maximum issuer allocation of 5%
• Minimum credit rating of A-/A-1
RPTA Proposed Policy versus ARS Title 35
22© PFM Asset Management LLC
Sector
Arizona Revised
Statutes
Restrictions
RPTA Investment
Policy
Restrictions
U.S. Treasury
No restrictionsNo restrictions
Federal Agency
Certificates Of Deposit
Repurchase Agreements
Interest Bearing Savings Accounts
Arizona State Pools
Money Market Funds 30% max allocation
RPTA’s Policy places the following restrictions on the below investment types: (i) the total combined
investment in these security types may not exceed 40% of the Valley Metro RPTA Investment Funds
and (ii) no greater than 5% may be invested in any one issuer.
ARS does not include sector or issuer limits on these investment types. Additional credit limits include:
Municipal Obligations No restrictions Rated “A” or better
Negotiable Certificates of Deposit No restrictionsRated A-1 or better or
rated “A” or better
Commercial Paper Rated A-1 or better Rated A-1 or better
Corporate Notes Rated “A” or better Rated “A” or better
End of Presentation
Supplemental Slides
Credit Rating Overview
24© PFM Asset Management LLC
Moody’s Standard & Poor’s Fitch Definitions
Long-term Short-term Long-term Short-term Long-term Short-term
Aaa AAA AAA Prime, Maximum Safety
Aa1
Aa2
Aa3 Prime-1
AA+
AA
AA-
A-1+
AA+
AA
AA-
F-1
High Grade, High Quality
A1
A2
A3
A+
A
A-
A-1
A+
A
A-
F-2 Upper Medium Grade
Baa1
Baa2
Baa3
Prime-2
Prime-3
BBB+
BBB
BBB-
A-2
A-3
BBB+
BBB
BBB-
F-3 Lower Medium Grade
Ba1 BB+ BB+ Non Investment Grade
Ba2
Ba3
BB
BB-B
BB
BB-B Speculative
B1
B2
B3 Not Prime
B+
B
B-
B+
B
B- C
Highly Speculative
Caa1 CCC+ C CCC Substantial Risk
Caa2
Caa3
CCC
CCC-
-
-In Poor Standing
Ca - - Extremely Speculative
C - - Maybe in Default
Default
Recommended Credit Instruments
25© PFM Asset Management LLC
Investment Type Description Credit Ratings Maturities
Commercial PaperUnsecured debt obligations Issued by
corporations for short-term cash needs.
Short-term
(A-1/P-1)1-270 days
Medium-Term
Corporate Notes
Unsecured debt obligations Issued by
corporations for longer-term cash needs.
Long-term
(AAA to A-)
Maximum of 5
years
Negotiable CDsFixed deposit receipts issued by large
banks, not collateralized.
Short- or long-
term, depending
on maturity
Typically in 1.5 to 3
year range
CP NCDsMedium-Term
Corporate Notes0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3m
6m
1y
2y
3y
5y
Yie
ld
Yield Curves as of 9/24/2015
U.S. Treasuries
Credit Instruments
This material is based on information obtained from sources generally believed to be reliable and available to
the public, however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability.
This material is for general information purposes only and is not intended to provide specific advice or a
specific recommendation. All statements as to what will or may happen under certain circumstances are based
on assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be
proven correct as actual events occur, and results may depend on events outside of your or our
control. Changes in assumptions may have a material effect on results. Past performance does not necessarily
reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to
purchase or sell any securities.
Disclaimer
© PFM Asset Management LLC
REVIEW OF HEALTH PLAN COSTS
Health Plan Premiums
Current Year Premiums were 3.4% higher than prior year.
Plan Design changes were made last year to mitigate cost increases
7/1/2013 - 6/30/2014
Total Monthly Total Monthly Increase % Total Monthly Increase %
Premium Premium by tier Premium by tier
Employee $515.09 $558.41 8.4% $577.54 3.4%
Employee + Spouse $1,030.12 $1,116.76 8.4% $1,155.02 3.4%
Employee + Child(ren) $875.62 $949.27 8.4% $981.79 3.4%
Employee + Family $1,493.70 $1,619.33 8.4% $1,674.80 3.4%
Plan Change Value -1.9% n/a
7/1/2014 - 6/30/2015 7/1/2015 - 6/30/2016
Program Design Changes7/1/2013 - 6/30/2014 7/1/2014 - 6/30/2015
Medical Plan Highlights In Network In Network
Calendar Year Deductible $750 Ind/ $1,500 Fam $750 Ind/$1,500 Fam
Physician Office Visit Copay $20 Copay $20 Copay
Specialist Office Visit Copay $40 Copay $40 Copay
Hospitalization Services 10% after ded 10% after ded
Emergency Room Copay $150 Copay $250 Copay
Outpatient Hospital Care 10% after ded 10% after ded
Complex Imaging Services $150 Copay $250 Copay
Out-of-Pocket Maximum$2,500 Ind/
$5,000 Fam
$3,000 Ind/
$6,000 Fam
Additional Plan changes effective 7/1/2014• Outpatient MH from $40 copay to 100% covered• Chiropractic from $20 copay to $40 copay• All Copayments applying to out-of-pocket maximum
Premium Funding Changes
7/1/2013 - 6/30/2014
Employee Monthly Employee Monthly Increase % Employee Monthly Increase %
Premium Premium by tier Premium by tier
Employee $45.74 $52.03 13.8% $56.48 8.6%
Employee + Spouse $137.21 $150.64 9.8% $163.55 8.6%
Employee + Child(ren) $109.77 $121.10 10.3% $131.56 8.6%
Employee + Family $219.54 $239.50 9.1% $260.10 8.6%
7/1/2014 - 6/30/2015 7/1/2015 - 6/30/2016
Historical Employee Premiums
7/1/2013 - 6/30/2014
Employer Monthly Employer Monthly Increase % Employer Monthly Increase %
Premium Premium by tier Premium by tier
Employee $469.35 $506.38 7.9% $521.06 2.9%
Employee + Spouse $892.91 $966.12 8.2% $991.47 2.6%
Employee + Child(ren) $765.85 $828.17 8.1% $850.23 2.7%
Employee + Family $1,274.16 $1,379.83 8.3% $1,414.70 2.5%
Historical Employer Premiums
7/1/2014 - 6/30/2015 7/1/2015 - 6/30/2016
End of Presentation