Attached is the proposed statement of Investment Policy for 2005 that sets forth the basic policy for investment of public funds.  Issues addressed are basic policy and objectives, types of investments permitted, maturity limitations, qualifications of banks/brokers, payment procedure for securities, safekeeping, portfolio diversification, cash management objective, reporting requirements, internal controls, and compliance with government code.

The recommended changes to the policy are as follows:

This year the monthly liquidity amount decreased from $67 million to $62 million.  This was based on keeping 2/12 (roughly 60 days) of the annual appropriations less purchased power liquid (page 3).  This liquidity will be monitored and discussed quarterly with the Treasurer�s investment advisory committees.

Other changes are the addition of Gavin Lee, from Wachovia Securities to the list of qualified brokers from which the City may purchase investments (page 15), as well as three deletions from this list.  The deletions are Ken Herman, First Tennessee Bank who retired, Kirk Walske, Banc of America Securities who was never involved with our portfolio, and Ron Gross, Vining Sparks who has not been active in servicing our needs. 

These recommendations has been reviewed and approved by the Fiscal & Treasurer�s Review Group (F&TRG) and the Treasurer�s Oversight Review Committee (TORC).  The F&TRG members are Michael Flad, Assistant City Manager, Derek Hanway, Financial Services Director, Richard Corbi, Assistant General Manager Finance & Administration, BWP, Marsha Ramos, Council Liaison to the Treasurer�s Office and Stacey Murphy, Council Liaison to the Treasurer�s Office.  The TORC members are Dave Hackett, Bob Jensen, Carrie McCoy and Dick Baker.

I recommend that the City, Redevelopment Agency, Parking Authority, Youth Endowment Services and Housing Authority adopt motions approving the Investment Policy for 2005.

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