The balance of unrestricted funds as of March 31, 2013 was $12,269,398 which includes a $2.5M cash reserve. Restricted funds include the Preservation and Improvement Fund (“PIF”) and the Capital Reserve Fund. As of March 31, 2013, PIF had a balance of $10,677,410 plus $585,000 collected in March that was transferred into the PIF account the first part of April 2013. The Capital Reserve Fund had a balance of $1,000,041 as of March month end.
It is important to recognize that this is the time of year when we collect the highest percentage of assessments, and therefore, we accumulate considerable cash during this time of year which will be used to pay for the operating and capital expenses throughout the remainder of the year. Therefore, the money you see accumulating in our operating accounts at this time is only temporary.
The corporation has operated within its budget for the 2013 fiscal year.
Investment Report 1st Quarter 2013:
On February 12, 2013 the Investment Commission interviewed five investment brokers/firms, including the current investment firm, UBS, where RCSC funds had been maintained for the past few years. Upon completion of the interview and review process, the Investment Commission chose local Sun City broker, JR Rotchford of JR Rotchford & Associates, and selected the investment firm, Franklin Templeton Investments, to receive the funds currently held at UBS.
At the end of the first quarter, the Franklin Templeton Investments unrestricted money market account had an ending balance of $10,213,785.44. This account has earned a total of $193.62 in interest year-to-date.
The restricted Franklin Templeton Investments money market account for the Preservation and Improvement Fund had an ending balance of $10,677,410.41, with a total of $237.92 interest earned year-to-date.
The restricted Franklin Templeton Investments money market account for the Capital Reserve Fund had a balance of $1,000,041.44, with a total of $10.80 interest earned year-to-date.
On March 28, 2013 the Investment Commission met with RCSC’s broker, JR Rotchford, regarding a proposal for investing RCSC’s $2.5M unrestricted cash reserves and $1M restricted capital reserve with Franklin Templeton Investments, as both of these funds can be invested without concern for withdrawal for a period of 18 months or longer, which is required to avoid penalties. RCSC’s Investment Policy (Board Policy 33) is
stringent in its requirements with the priority of investment objectives to be placed in this order: 1) safety, 2) liquidity, and 3) yield. The Investment Commission unanimously approved the investment proposal and investments were made accordingly as follows:
On April 1, 2013 the $2.5M unrestricted cash reserve was invested as follows:
$700k into Franklin Adjustable U.S. Government Securities Fund Class A
$550k into Franklin Limited Maturity U.S. Government Securities Fund Class A
$550k into Franklin Low Duration Total Return Fund Class A
$700k into Franklin U.S. Government Securities Series Class A
On April 1, 2013 the $1M restricted capital reserve was invested as follows:
$280k into Franklin Adjustable U.S. Government Securities Fund Class A
$220k into Franklin Limited Maturity U.S. Government Securities Fund Class A
$220k into Franklin Low Duration Total Return Fund Class A
$280k into Franklin U.S. Government Securities Series Class A
The Investment Commission requested options available for shorter term investment requirements (less than 18 months) that would meet the Investment Policy criteria with safety and liquidity and still allow for a better yield than a money market account. The Commission will meet with RCSC’s broker in the near future to discuss the options.
Restrictions for FDIC Standard Maximum Deposit Insurance Amount has been changed back to $250k per depositor per insured financial institution, which makes money management in banks much more restrictive than it has been in recent time. The Investment Commission will consider such options as Repurchase Agreements which sweeps funds nightly from bank accounts to assure no accounts are in excess of the $250k insured limit and invests the overages in low yielding, high security Federal funds that have immediate liquidity.
