valley metro fiscal year 2015 financial results · 10/15/2015 · valley metro fiscal year 2015...

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


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


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


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

http://www.johnmcgrail.com/photography/philadelphia.html


• 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


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.


RPTA’s Members - Use of Corporates


• 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


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


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


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


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 %


Employee $45.74 $52.03 13.8% $56.48 8.6%

Employee + Spouse $137.21 $150.64 9.8% $163.55 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 %


Employee $469.35 $506.38 7.9% $521.06 2.9%

Employee + Spouse $892.91 $966.12 8.2% $991.47 2.6%


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

valley metro fiscal year 2015 financial results · 10/15/2015 · valley metro fiscal year 2015...

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