Presented by Indiana Treasurer of State’s Office

1. Presented by Indiana Treasurer of State’s Office

2. Welcome Presented by :,Indiana State Treasurer Richard Mourdock

3. Investment Policies & Banking Services for Local Governments Entities Presented by :,Jim HoldenChief Deputy & General CounselKim LoganDeputy Treasurer, Indiana Treasurer of State’s Office

4. Goals for Investing of Public Funds • Safety, Liquidity, & Yield • Diversification of Investments

5. Bank Products • DDA Checking Accounts • Negotiable order of withdrawal (NOW) accounts • Passbook savings accounts • Certificates of Deposit (CDs) • Money market accounts • Any interest-bearing account that is authorized and • offered by a financial institution in the course of its • respective business

6. PDIF Insured Accounts • Make sure your deposit accounts are PDIF insured • Are they public funds? IC 5-13-4-20 • Fees & funds in the possession of a “public officer” by • the virtue of that office • Is the financial institution an approved depository? • www.in.gov/tos/files/ALLDEP.pdf • PDIF covers losses above FDIC limits

7. Maximizing FDIC Insurance • FDIC coverage of $250,000 per depositor (Until 12-31-13) • New program FDIC’s Transaction Account Guarantee • program (TAGP) • Unlimited FDIC coverage • Interest rate limited to 0.50% • Your bank must be a participant in the program • Slated to expire 06-3-10

8. Transaction Accounts • Special Rules for Political Subdivisions • Must establish transaction accounts in • depositories with branches within political • boundaries • Exception for political subdivisions that cross county • lines or those without a depository within its • boundaries (or only one) • Doesn’t apply to county hospitals

9. Certificates of Deposit Required Procedures • Every investing officer must obtain quotes on the specific • rate of interest for the term of the certificate of deposit • The quote may be taken by phone • The quote must be recorded in a memorandum and • retained as a public record • The deposit shall be placed with the depository quoting • the highest rate of interest • If two depositories offer the same quote, the investing • officer has the discretion • Can invest in CDs from any depository on state’s approved • list if county commissioners of political subdivision fiscal • body passes resolution authorizing it (renewed every 2 years)

10. Money Market Mutual Funds • Money market mutual fund requirements • Must be rated AAA, or its equivalent, by Standard & • Poor’s or Aaa, or it equivalent by Moody’s • Purchases, sells, or holds direct obligations of the United • States Treasury or other obligations issues by a federal • agency, a federal instrumentality or a federal government • sponsored enterprise • Must be purchased through an institution on the state’s • approved depository list • Must have a final stated maturity of one day • The mutual fund’s investments can’t exceed 50% of funds held, • except a county treasurer may exceed limit if 10 days prior to • property tax due date and property tax settlement distribution • date

11. Eligible Securities • Securities backed by the full faith and credit of the United • States Treasury or fully guaranteed by any of the following: • The United States Treasury (Notes, t-bills, and bonds) • Federal agency (Government National Mortgage Agency) • Federal Instrumentality • Federal government sponsored enterprise (Federal Home • Loan Bank) • Discount notes issued by a federal agency, a federal instrumentality, or a government sponsored enterprise

12. Securities – Critical Criteria • Use of a broker-dealer that is SEC licensed • Use of a custodial bank that is on the state’s approved • depository list or has combined capital and surplus of at • least $10 million • Securities may have a maximum maturity of 2 years • Securities lending • Securities may be lent for extra income as long as its • collateralized by cash or securities issued, insured, or • guaranteed by the federal government or a federal • agency

13. Repurchase Agreements • An agreement involving the purchase and guaranteed • resale of securities • Can be a one time commitment or an ongoing • commitment • Must have a final stated maturity of one day (overnight) • Must be fully collateralized • Must be made through a depository on the state’s • approved depository list

14. Local Boards of Finance Members • County – Board of Commissioners & County Treasurer • Marion County – County Treasurer, County • Auditor, County Assessor, City Controller, • Mayor, President of the School Board • City – Executive and fiscal body • Town – Fiscal Body • Other – Fiscal body of each political subdivision • * Note: cities, towns, and county hospitals exempt • (IC 5-13-4-19) • * School Corporations may determine if a Board of Finance • meeting is need on an annual basis (IC 5-13-7-5)

15. Local Boards of Finance Responsibilities • Each local board of finance SHALL meet annually after • the first Monday and on or before the last day of January • and do the following: • From the board’s membership elect a president & • secretary • Receive and review the report required by IC 5-13-7-7 • Review the overall investment policy • The report must contain a summary of all investments • made during the previous calendar year • Consult your county attorney or counsel regarding this requirement

16. Banking Services • Check costs, check processing, deposit processing, • Automated Clearing House (ACH), and wire transfers • Are usually not customized for all customers, majority • of financial institutions offer them. This allows room to • negotiate costs with your financial institution, not • always but sometimes.

17. Banking Services • Lockbox is the collecting, processing, and • reporting of payments provided by a financial • institution to a client. • Some custom reports available • Not a of lot margin for negotiating costs if • customizations are done • Direct Deposit is an electronic payment system to a payee’s bank account (Great for payroll.)

18. Banking Services • Remote Capture/Image Transmission is the process • of scanning and transmitting electronic images of • paper checks to financial institutions • A report is created by batch with amounts, payee • names, serial numbers, and etc. exhibited • Paper checks can be retained and then destroyed after 15 days • Funds are directly deposited to your operating account • Daily deposit deadline extended • Quicker access to funds for investment purposes • Earlier notification of returned items • Online access to check images and deposits

19. Banking Services • Online Banking allows you instant access to your • account • To do wire transfers and moving of funds • Can assist with setting a daily cash position for • investing purposes • Can assist with reducing paper checks if funds are • moved on line

20. Banking Services • Positive Pay allows a customer to provide copies of • outstanding checks to a financial institution, which then • compares payee names, amounts, endorsers, and check • numbers to paper checks presented for payment. If • a discrepancy is found between the information provided • to the bank and the paper checks being cashed, the • customer can deny the payment of the check • Reduces fraud • Financial institutions can stop the images of • questionable checks so no check needs to be returned, • which reduces costs

21. Banking Services • Imaging Services is offered by most financial institutions • or they have a relationship with a vendor that will allow a • customer to view items on line or by CD • Reduces storage, paper usage, research time, and cuts • overall costs • Recommended for documents of all kinds

22. Banking Services • Sweep Account allows excess funds in a checking • account to be placed in an overnight repurchase • agreement or a NOW account, which earns a rate of • of interest on the funds. • Financial institutions do automatically overnight • and return funds back to your checking account • the next day.

23. Banking Services • Charge Card Payments can be accepted by county • organizations, schools, or town by joining the State of • Indiana’s charge card contract with Metevante, Inc. • Contact: Lottie Hooyer • Contract Manager • Indiana Department of Administration • Indiana Government Center South • 402 W. Washington St., RM W468 • Phone Number 317.234.0067 • lohooyer@ido.in.gov

24. Banking Services • E-Check is another electronic payment process that can • be done through a web application or the sliding of a • debit card at the time of purchase by a customer.

25. Additional ways to cut costs • Courier Fees incurred for the deliver or pick-up of paper • checks or financial reports handled by your financial • institution or third party can be negotiated. Also, look at • consolidating pick-up/drop-off points as a way to • reduce costs • Multiple elected officials working together to leverage • costs associated with using the same financial • institutions or vendors • (Example County Treasurer & County Auditor)

26. Questions /Comments Jim Holden Chief Deputy Treasurer & General Counsel Indiana Treasurer of State’s Office 200 W. Washington St., 242 Indianapolis, IN 46204 317-232-6388 jrholden@tos.in.gov www.in.gov/tos/ Kim Logan Deputy Treasurer Indiana Treasurer of State’s Office 302 W. Washington St., IGC-S E016 Indianapolis, IN 46204 317-233-0921 Klogan@tos.in.gov www.in.gov/tos/

27. Indiana Bond Bank Option for Local Governments Presented by :,Dan HugeExecutive Director, Indiana Bond Bank

28. The primary mission of the Indiana Bond Bank is to assist local government or qualified entities with the process of issuing debt. Our Mission

29. Organizational Structure

30. Structure • Created by the Indiana General Assembly in 1984 • Self-supporting quasi-governmental entity • A seven member board governs the Bond Bank • The State Treasurer statutorily serves as Chairman of the Board • The director of the Indiana Finance Authority statutorily serves as a board member • The Governor appoints five board members

31. Programs • Hoosier Equipment Lease Purchase Program (HELP) • Advance Funding Program • Pool Program • New Programs

32. Debt Issuance • Indiana Bond Bank has issued $18.2billion in bonds/notes since its inception • $2.57 billion outstanding • Financing Conduit • The Bond Bank purchases bonds and notes from communities and in turn sells its own obligations to the open market • The pooling process allows communities to realize savings that are achieved by sharing of fixed costs and economies of scale

33. Activity

34. HELP Program • Lease essential equipment • Competitive interest rates • Fixed to treasury yields • Contact the Bond Bank for interest rates • Repayment flexibility • Annually • Semi-annually • Quarterly • Monthly • Option to escrow

35. Overview • Since 1991 • Assisted over 200 communities • Over $180 million in equipment • Four program underwriters • Title to asset passes to entity upon completion of lease term

36. Fire Trucks Police Cars Ambulances Tandem Trucks Computers Phone Systems Safety/Security Equipment 911 Emergency Equipment/Systems Garbage Trucks Snow Plows Sewer Vacs Radio Equipment Voting Machines Buses Portable Classrooms Book Mobiles And much more… Equipment Leased

37. Fiscal Year Analysis Fiscal Year = July 1–June 30

38. ‘09 Advanced Funding Program • 1.79% one-year interest rate was among the lowest published in Indiana • Highest Standard & Poor’s short-term credit ratings • Program size and participants increased • Flexible draw and pre-payment options • Provide $357 million to over 122 governmental entities throughout Indiana

39. ’09 Midyear Program • 1.25% interest rate • 79 participants • $161 million notes • Closed on June 25, 2009

40. Historic Pricing Trends (1 year Maturities) Advanced Funding Program

41. Applications: Cash Flow Statements: Participant Resolution/ Ordinance Adopted: Interim Funds Distributed: Closing/Funds Distributed: Midyear Program Due Date 10/09/2009 10/30/2009 11/23 – 12/4/2009 1/05/2010 1/28/2010 June 2010 ‘10 Advanced Funding Participant Deadlines

42. Pool Program Overview • Long Term Debt Program • Typical Uses • Construction of Essential Use Facilities • Acquisition/Improvement/Expansion: • Utility systems • Building projects • Assisted over 200 communities • Issued pooled debt of over $440 million

43. Types of Long-term Debt Financing • Revenue Bonds • Debt Service Coverage of at least 125% • General Obligation Debt • Property Taxes used for repayment • Building Corporations – Lease revenues

44. Pool Program Advantages • Indiana Bond Bank Rating “AA” • Utilize Bond Bank experience in issuing debt • Reduced cost of issuance • Flexible Terms: 7 to 30 years • Projects over $150,000

45. Municipal Market Data GO Yields as of 10-14-09

46. Economic Benefits for Using the Pool Program • Qualified Entities (QE) gain access to capital markets • Economic savings by issuing bonds using IBB’s higher credit rating • Estimated annual savings for each QE range from $5,000 - $10,000 on million dollar bond issues • Savings based upon QE underlying credit rating and other factors

47. Fuel Hedge Program • Use as a budgeting tool to guard against rising fuel prices • Allows smaller entities to pool their fuel budgets to create an effective hedge size (42,000 gallons) • Share program costs for cost efficiency • Experience of IBB Staff/Professionals from 2009 Fuel Hedge Program • 2009 – Participants were 2nd class cities • 2010 – Expanded to Schools and County Government

48. Other Programs • Common School Fund • Qualified School Construction Bonds (QSCB’s) • Economic Recovery Zone Bonds

49. Questions /Comments Dan Huge Executive Director Indiana Bond Bank 10 W Market St., Ste 2980 Indianapolis, IN 46204 317-233-0888 dhuge@indondbank.com www.in.gov/tos/bond/

50. TrustINdiana - Alternative Investment Option for Local Government Presented by :,Kelly MitchellDirector , TrustINdiana