Modesto City Council
April 5, 2022

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%
2011 2012 2013 2014 2015 2016 2017 2018
Book Yield Performance Benchmark*
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Exhibit 2.9: Comparison of Unclaimed Property Tourism Fund Total Rate of Return vs the Treasury’s Benchmark (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s Annual Returns; Lipper for Investment Management.

Note: The total return benchmark used by the Treasury in this comparison is the benchmark in effect at the time, as reflected in Exhibit 2.3. The Treasury changed its benchmark in 2017 and 2018. The returns reported by the Treasury do not include assets held in the T-Pool prior to 2018.

The compound growth rate of the Unclaimed Property Tourism Fund during the Review Period was 3.24 percent, which was less than the 3.44 percent compound growth rate of its benchmark over the same period.

Second, the Treasury’s 2018 total return benchmarks did not always align with portfolio asset allocations. According to the Investment Policy Statements and Treasury personnel, the total return benchmarks established by the Treasury are used to measure its performance with respect to achieving its mission— maintaining rates of return consistently at or above performance benchmarks—and to monitor the balance of the asset allocation as compared with the benchmarks’ allocations within each portfolio. It appears that historic portfolio allocations were generally aligned with the allocations of the Treasury’s selected benchmarks.

However, by the end of 2018, changes to portfolio allocations and benchmark indices resulted in benchmarks that, while consistent with the asset allocation ranges required in the Investment Policy Statements, did not represent the actual make-up of the Treasury’s portfolios. For example, as of December 31, 2018:
 The T-Pool held fewer Treasury/Agency securities and more corporate bonds and notes compared to its established benchmark. Specifically, the Treasury allocated 19 percent of its portfolio to Treasury/Agency securities, while its benchmark allocated 68 percent to this asset class; alternatively, the Treasury allocated 45 percent of its T-Pool portfolio to corporate bonds and notes, while its benchmark allocated 23 percent.
-5.0%
-3.0%
-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%
2011 2012 2013 2014 2015 2016 2017 2018
Total Rate of Return Total Return Benchmark*
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 The Public School Permanent Fund portfolio asset type allocations were generally consistent with its benchmark and Investment Policy asset allocation ranges, with two exceptions. Specifically, the Treasury invested somewhat more assets in corporate bonds and notes and less in asset backed securities, mortgage backed securities, and collateralized mortgage obligations—35 and 8 percent of its portfolio, respectively—than its benchmark, which allocated 24 and 31 percent, respectively, to these asset classes.  The Unclaimed Property Tourism Fund invested more in corporate bonds and notes and less in mortgage backed securities and collateralized mortgage obligations when compared to its established benchmark. Specifically, the Treasury allocated 46 percent of its portfolio to corporate bonds and notes, while its benchmark allocated 24 percent to this asset class; alternatively, the Treasury allocated 8 percent of its portfolio to asset backed securities and collateralized mortgage obligations, while its benchmark allocated 31 percent.

Because the actual asset allocations differed from those of its portfolios, the Treasury had been comparing its portfolio to benchmarks with unlike asset allocations. For each portfolio, the Treasury tended to invest in some assets that generally increase each portfolio’s risk profile over that of its benchmarks, such as asset class and credit rating, as described in the next finding. This approach could contribute to higher, but also more variable, returns.

In July 2019, the Treasury adopted a new benchmark for the T-Pool that it believes is consistent with the policy constraints described in the Investment Policy Statements for asset allocation purposes. Because this benchmark did not go into effect during the scope of this audit, it was not subject to this review.

Third, underlying documentation supporting older total return benchmark information was not available for review. In the past, the Treasury used custom composite benchmarks consisting of several indices for each of the three portfolios in Calendar Years 2011 through 2016, and for the Public School Permanent Fund into 2017. Combined, the composites were intended to provide benchmarks with characteristics that closely represented the Treasury’s Investment Policy asset allocation ranges and investment practices with respect to asset mix, maturity, and risk.

We attempted to replicate the composite benchmarks reported by the Treasury using published data for each of the indices included in the benchmark, but we were not able to replicate all of the historical returns reported for the benchmarks. As a result, we could not verify the benchmark returns reported by the Treasury.

Maintaining documentation of the benchmarks for Calendar Years 2017 (for T-Pool and Unclaimed Property) and 2018 (for all three funds) was not necessary since the Treasury used published, rather than custom composite, benchmarks. #35..
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Why did the finding occur and why does it matter?
Overall, we found that three factors contributed to this finding.

First, the Treasury places priority on maximizing yield and cash flow, not on total returns, leading it to measure its performance primarily in relationship to its yield benchmarks. Investment yield measures the percentage value that a portfolio generates during a given period, regardless of whether the values of the portfolios holdings increase or decrease over time as a result of market conditions.

Because the value of an investment may increase or decrease over time, measuring investment yield as a primary metric is most useful to the extent that the investment is held to maturity and to the extent that the State will not need to liquidate investments prior to maturity.

While, in the past, the Treasury had generally held investments to maturity, in recent years the Treasury has not done so, opting to sell investments prior to maturity in an effort to optimize yield and maximize net realized capital gains. For instance, according to the State Auditor’s 2011 performance audit of the Colorado State Treasury’s investment practices, Treasury management adhered to a buy-andhold strategy in which it held investments to maturity. However, according to Treasury management, it no longer adheres to such a strategy, but actively manages investment portfolios to maximize cash flows and avoid booking realized net losses. Transaction data maintained by the Treasury shows that between 2017 and 2018 alone, the Treasury executed approximately 1,200 trades, nearly 300 of which consisted of transactions in which it sold holdings.

Despite this shift in practice, the Treasury has maintained its emphasis on yield as a primary performance indicator. Investment yield is limited for assessing the risk and return characteristics of the portfolio—which becomes increasingly important to the extent investments are sold before they reach maturity—because yield does not capture the fluctuations in the market value of the assets and thus, the value of a portfolio. For instance, as illustrated in Exhibit 2.8, the Unclaimed Property Tourism Fund portfolio significantly outperformed its yield benchmark in 2013, with a book yield of over 3 percent compared to the benchmark yield of just over 1 percent. However, total returns were negative on the year, declining approximately 5 percent, because significant increases in U.S. Treasury interest rates in 2013 negatively impacted the market value of the portfolio’s existing holdings. The increase in sales trading activity observed in the Treasury’s portfolios suggests that reporting total return in addition to yield would be important in evaluating the performance of the portfolios.

By not reporting total rates of return along with comparisons to established benchmarks on a quarterly basis, the Treasury is not making available information relevant to the portfolios’ actual total return performance and the true liquidation #35..
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value of its portfolios. Reporting only the portfolios’ book yield suggests the Treasury has consistently outperformed benchmarks when, in fact, it has demonstrated mixed results when compared to established benchmarks. Reporting total return trends in comparison to benchmarks also reflects the broader impact of the Treasury’s decisions regarding asset mix, maturity, and credit quality—as described further in the next finding—on each of its portfolios.

Second, as of December 31, 2018, the Treasury had not identified a benchmark that was closely aligned with the characteristics of its portfolios. When the Treasury decided to move away from the composite benchmark it had utilized since it adopted the 2010 Investment Policy Statement, the Treasury elected to utilize a well-recognized and widely used benchmark. In 2016, this benchmark was more closely aligned with the Treasury’s investment practices at the time. However, as the Treasury implemented the 2017 and 2018 Investment Policy Statements, and as its asset mix continued to shift to more corporate bonds and notes and less Treasury/Agency securities, the extent to which this benchmark represented the make-up of the T-Pool diminished. As mentioned previously, in July 2019, the Treasury adopted a new composite benchmark that it believes is more closely aligned to its portfolio allocations.

Ensuring that total return benchmarks have a composition similar to portfolio holdings is necessary to ensure the reliability and relevance of benchmarks used and the value of the benchmarks to management and stakeholders. This includes ensuring (a) the Treasury has a sound basis for evaluating investment performance to inform decisions about investing going forward, and (b) stakeholders, the public, and policymakers have a sound basis upon which to evaluate the Treasury’s investment performance.

Third, while the Treasury relied on its custodian to calculate total return benchmarks based on publicly available indices, the benchmarks could not be verified when the indices were no longer publicly available. During the period the Treasury had historically used a custom composite benchmark, it relied fully on its custodian to calculate and report the benchmark return for the Treasury’s use. It is the Treasury’s belief that a custodian bank, an independent third party, should be relied upon to calculate the benchmark returns, and that it sought reasonable assurances as to the accuracy and reliability of the benchmark calculations by requiring its custodian to complete independent audits of its systems of internal controls.

When the Treasury first established its custom composite benchmark, the three separate indices were publicly available via Bloomberg and, assuming the custodian’s methodology was known, could have been used to replicate the custodian’s calculations. During the audit period, however, the indices were purchased by a third party and were only available through a separate subscription. #35..
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This lack of some historical benchmark data has impeded third-party evaluation of the Treasury’s performance with respect to past established benchmarks.

As mentioned previously, the Treasury established a new custom composite benchmark in July 2019; according to the Treasury, the indices upon which its new benchmark is based is publicly available. Moving forward, maintaining a record of the publicly available indices, and the custodian’s approach for calculating the total return benchmark results, is critical to ensuring reported results can be verified and replicated. The availability and transparency of key performance and benchmark data is important to ensuring stakeholder confidence in the reported performance of the portfolios.

Recommendation No. 1:

The Colorado Department of the Treasury (Treasury) should enhance its measurement and reporting of portfolio performance by:
a. Including in its quarterly reporting for each portfolio the total returns versus established benchmarks in addition to book yield versus benchmarks. b. Ensuring total return benchmarks are consistent with the policy constraints described in the Investment Policy Statements and management practices. c. Ensuring adequate documentation is maintained by Treasury and/or its custodian for all benchmarks used to allow results to be verified and replicated.

Treasury Response:
a. Agree. Implementation date: December 31, 2019
We are now in the process, based on the auditor's recommendation, of determining the best way to present information related to total return, but we want to do it in a way that is clear, and does not confuse those about Treasury's mandate, which is managing for safety, liquidity, and yield. We will continue to present book yield information, in line with our unchanged statutory mandate, once we add in the presentation of total return. We currently use total return as one of several methods to evaluate portfolio holdings and while we did not publish total return numbers in the past, that information has always been available for those interested.
b. Agree. Implementation date: December 31, 2019
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Treasury believes that the benchmarks it used in the past adequately represented the policy constraints of its Investment Policy Statements. However, as the audit notes, Treasury’s investment management style has evolved over the past eight years, with a greater emphasis on active management than in the past. After a lengthy discussion that began under the prior administration, in July of 2019 (while the audit was ongoing), Treasury adopted a new customized benchmark for the T-Pool, the Bloomberg Barclays US Aggregate Total Return Index (50% weight) and the Bloomberg Barclays US Treasury Bill 1-3 Months Total Return Index (50% weight), that we believe is consistent with the policy constraints described in the Investment Policy Statements for asset allocation purposes.

The benchmark for the Public School Permanent Fund is set by its investment board as directed by a separate Investment Policy Statement, and is no longer set by Treasury as it was during the majority of the audit period. At this point in time, the benchmark for the Unclaimed Property Tourism Trust Fund is not set to be adjusted. Treasury, as it implements Recommendation 1.a., will determine the best way to present its total return benchmarks to clearly identify significant variances, if any, in holdings between the indices and the Treasury’s portfolios.
c. Agree. Implementation date: December 31, 2019
Treasury has consistently relied on its custodian to maintain benchmark records and the calculations associated with those benchmarks. In doing so, Treasury believed that having a separate party calculate the benchmark removed any possible concerns that the benchmark numbers could be suspect. Because of this, Treasury has always relied on the custodian to maintain the records related to calculating the benchmark.

The prior composite benchmark that Treasury used was composed of three separate indices. These indices had been publically available on Bloomberg, but were purchased by a vendor who made the underlying calculations for those indices proprietary, and thus only available through a purchased subscription. This was one of many reasons why Treasury determined that a new customized benchmark would be necessary.

Treasury’s new customized benchmark, referenced in response to comment b above is publicly available, and thus should resolve any #35..
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issues related to verification or replication. Additionally, for audit purposes, Treasury will maintain underlying data from the benchmark indices it uses for replication purposes.

Compliance with Investment Policies
Diversification in investment portfolios is an important factor in managing risk.

Because of this, statute requires the Treasury to formulate investment policies regarding liquidity, maturity, and diversification appropriate to each fund or pool of funds in the State Treasurer's custody available for investment. Diversification requirements generally set upper and lower bounds within which a portfolio’s asset mix, at any given time, must fall. The Treasury’s Investment Policy Statements set such limitations with respect to asset type, maturity, and credit rating.

To ensure compliance with its Investment Policy Statements and the Treasury’s diversification requirements, the Treasury requires a daily evaluation of all holdings in each portfolio, including asset mix, asset maturity, and credit quality.

What audit work was performed and what was the purpose? We evaluated the Treasury’s compliance with its investment policies by reviewing its investments, monthly portfolio holdings data, and quarterly investment reports; assessing the appropriateness of the asset mix of each of the Treasury’s portfolios; and ascertaining what each portfolio’s asset mix indicates in terms of risk, maturity, return, and other portfolio characteristics. These analyses were performed using the monthly holdings data, which show security-level detail for each State portfolio as of the end of each month between Calendar Years 2011 and 2018. These analyses were performed for the following State portfolios: the T-Pool, the T-Pool Cash subportfolio, the T-Pool Bond sub-portfolio, the Public School Permanent Fund, and the Unclaimed Property Tourism Fund.

The purpose of the audit work was to determine whether the Treasury’s investment practices, including asset mix, complied with state law, Investment Policy Statements, prudent industry practice, and other applicable criteria.

How were the results of the audit work measured?
Our examination of the Treasury’s portfolios included evaluating the assets of each portfolio broken down by asset type, maturity, and credit rating. We measured the Treasury’s compliance against the following requirements in its Investment Policy Statements.
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Asset Mix. The Investment Policy Statements require each portfolio to maintain sufficient diversity with respect to the different types of assets held. Exhibits 2.10 through 2.12 illustrate the diversification requirements and show that there were changes in the requirements for the T-Pool (Exhibit 2.10), Unclaimed Property Tourism Fund (Exhibit 2.11), and Public School Permanent Fund (Exhibit 2.12) between Calendar Years 2011 and 2018. Note that the Investment Policy Statements for both the Public School Permanent Fund and the Unclaimed Property Tourism Fund allow assets to be invested in the T-Pool, as indicated by the highlighted rows in Exhibits 2.11 and 2.12.

Exhibit 2.10: Summary of T-Pool Investment Policy Statements (Effective Calendar Years 2010, 2017, and 2018)*
T-Pool Bonds
2010 2017 2018
Treasury/Agency/Government
Guaranteed/Supranational 10% to 100% 10% to 100%; Target 50% 0% to 100%;Target 50% Agency 0% to 90% 10% to 100%; Target 50%** 10% to 100%; Target 50%** Agency Collateralized Mortgage
Obligations (CMO) 0% to 15% 0% to 30%; Target 0% 0% to 30%; Target 0% Misc. Government Guaranteed 0% to 50% 10% to 100%; Target 50%** 10% to 100%; Target 50%** Certificates of Deposit 0% to 5% 0% to 5%; Target 0% Not addressed in policy Asset-Backed 0% to 25% 0% to 30%; Target 15% 0% to 30%; Target 15% Repurchase Agreements 0% to 50% Not addressed in policy Not addressed in policy Corporate Notes/Bankers
Acceptances (BA) and Bank
Notes/Commercial Paper/Yankee
0% to 65% 0% to 80%; Target 40% 0% to 80%; Target 40%
Money Market Funds 0% to 35% Not addressed in policy Not addressed in policy Yankees, foreign corporations Not included in policy 0% to 10%; Target 0%** 0% to 80%; Target 40% Taxable Municipals Not included in policy 0% to 10%; Target 0% 0% to 10%; Target 0% T-Pool Cash
2010 2017 2018
Treasury 10% to 100% 10% to 100%; Target 50%** 10% to 100%; Target 50%** Agency 0% to 90% 10% to 100%; Target 50%** 10% to 100%; Target 50%** Agency/CMO 0% to 15% Not addressed in policy Not addressed in policy Misc. Government Guaranteed 0% to 50% 10% to 100%; Target 50** 0% to 100%; Target 50%** Certificates of Deposit 0% to 5% 0% to 5%; Target 0% 0% to 5%; Target 0% Asset-Backed 0% to 25% Not addressed in policy Not addressed in policy Repurchase Agreements 0% to 50% Not addressed in policy Not addressed in policy Corporate Notes/BA and Bank
Notes/Commercial Paper/Yankees 0% to 65% 0% to 40% 0% to 70%; Target 20% Money Market Funds 0% to 35% 0% to 70% Target 10% 0% to 70%; Target 10% Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements.

Note: * Effective Dates of December 30, 2010, May 25, 2017, and September 28, 2018 are shown to highlight how the policy changed over time. Some asset classes were combined in the table due to groupings presented in the Investment Policy Statements, and figures may apply to one or all of the stated asset classes in each line. ** Treasury/Agency/Government Guaranteed are combined in the state policy limits for 2017 and 2018. Yankees were reported as a separate asset class in 2017 for the T-Pool Bond sub-portfolio. #35..
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Exhibit 2.11: Summary of Unclaimed Property Tourism Fund Portfolio Investment Policy Statements (Effective Calendar Years 2010, 2017, and 2018)* Unclaimed Property Tourism Fund
2010 2017 2018
Treasury/Agency 20% to 100% 20% to 100%; Target 20%** 20% to 100%; Target 20%** Misc. Government Guaranteed 0% to 50% 20% to 100%; Target 20%** 20% to 100%; Target 20%** Mortgage 0% to 50% 0% to 50%; Target 10% 0% to 50%; Target 10% Domestic Corporate 0% to 50% 0% to 50%; Target 50% 0% to 60%; Target 50% Asset-Backed 0% to 30% 0% to 30%; Target 15% 0% to 30%; Target 15% Repurchase Agreements 0% to 50% Not addressed in policy Not addressed in policy T-Pool 0% to 30% 0% to 30%; Target 5% 0% to 30%; Target 5% BAs and Bank Notes 0% to 20% Not addressed in policy Not addressed in policy Yankees, issued by foreign
corporations Not included in policy 0% to 10%; Target 0% 0% to 10%; Target 0% Taxable Municipals Not included in policy 0% to 10%; Target 0% 0% to 10%; Target 0% Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements.

Note: * Effective Dates of December 30, 2010, May 25, 2017, and September 28, 2018 are shown to highlight how the current policy varies from that in place at the beginning of the period we reviewed. ** Treasury/Agency/Government/ Guaranteed are combined for Investment Policy Statement limits for 2017 and 2018.

Exhibit 2.12: Summary of Public School Permanent Fund Portfolio Investment Policy Statements (Effective Calendar Years 2010, 2017, and 2018)* Public School Permanent Fund
2010 2017 2018
Treasury/Agency 20% to 100%
(max 75% in agency)
20% to 100%
(max 75% in agency) 0% to 100%; Target 40%**
Misc. Government Guaranteed 0% to 50% 0% to 50% 0% to 100%; Target 40%** Mortgage 0% to 50% 0% to 50% 0% to 50%; Target 30%**
Domestic Corporate 0% to 20% 0% to 20% 0% to 50%; Target 30% Asset-Backed 0% to 30% 0% to 30% 0% to 50%; Target 30%** Municipal 0% to 15% 0% to 15% 0% to 10%; Target 0%
Repurchase Agreements 0% to 50% 0% to 50% Not included in policy T-Pool/Cash 0% to 20% 0% to 20% 0% to 30%
BAs and Bank Notes 0% to 20% 0% to 20% Not included in policy Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements.

Note: * Effective Dates of December 30, 2010 and November 13, 2017 are shown to highlight how the current policy varies from that in place at the beginning of the period we reviewed. ** Treasury/Agency/Government Guaranteed are combined for the 2018 Investment Policy Statement limits.

Mortgaged backed securities and asset backed securities are combined for the 2018 Investment Policy Statement limits.

Asset Maturity. The Investment Policy Statements limit the length of time until a security reaches maturity, for example, by setting a percentage of assets in a portfolio that may be in securities that mature 3 to 5 years in the future, 5 to 7 years in the future, and so forth. Maturity is measured in one of two key ways. First, the stated final maturity is the length of time from the beginning of the period in which the security was held until the maturity date of the security. For certain investments, however, it is reasonable to expect that the investment will reach maturity—after which it will no longer yield returns—prior to the final stated maturity.

Collateralized Mortgage Obligations or Asset Backed Securities, for instance, may #35..
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have a final stated maturity of 30 years, but an investor may reasonably expect that the underlying obligations, such as a mortgage, may be fully paid well before the 30-year maturity. In such cases, the asset will be assigned an “expected maturity”— for instance, of 10 years. This is the second method of measuring the maturity of an asset. Longer maturity timespans generally result in a longer time period before invested principal is repaid. Setting maturity limits helps to facilitate liquidity.

Exhibit 2.13: Summary of Maturity Requirements by Portfolio (Effective Dates 2010, 2017, 2018)*
2010 2017 2018
T-Pool Cash Less than 1 year Less than 1 year Less than 1 year T-Pool Bonds
Maximum not to exceed 5
years;
CMOs: Average life not to
exceed 5 years**
ABS: Expected maturity
not to exceed 5 years
Maximum not to exceed
5 years;
CMOs: Average life not
to exceed 5 years**
ABS: Expected maturity
not to exceed 5 years
Maximum not to exceed 5
years;
CMOs: Average life not to
exceed 5 years**
ABS: Expected maturity
not to exceed 5 years
Public School
Permanent Fund
Average life is between 4-
6 years**
Average life is between
4-6 years**
Maximum not to exceed
30 years
Unclaimed
Property Tourism
Fund
Average life is between 5-
10 years**
Maximum not to exceed
30 years
Maximum not to exceed
30 years
Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements.

Note: * Effective Dates of December 30, 2010, May 25, 2017, and September 28, 2018 are shown to highlight how the current policy varies from that in place at the beginning of the period we reviewed.
** “Average Life” refers to the entire portfolio, not individual investments.

Credit Quality. According to the Investment Policy Statements, eligible securities must have two minimum acceptable debt ratings. One primary rating must be from Moody's or Standard & Poor's; a secondary rating may be from Fitch or another nationally recognized rating agency. For each portfolio and each asset class, investments must be rated at least investment grade by a nationally recognized rating organization, which is generally reflected as a “Baa3” or “BBB-” rating or higher, depending on the agency. According to a legal opinion the Treasury obtained from the Colorado Attorney General’s office in July 2000, while bonds rated below investment grade may not be purchased, bonds whose ratings are downgraded subsequent to their purchase may be retained at the Treasurer’s discretion.

What did the audit work find and why does this matter?
Investment holdings generally complied with Investment Policy Statements related to asset mix. Changes in asset mix for the T-Pool, Unclaimed Property Tourism Fund, and Public School Permanent Fund portfolios are shown in Exhibits

2.14 through 2.16.
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Exhibit 2.14: T-Pool Portfolio Market Value by Asset Type (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Exhibit 2.15: Public School Permanent Fund Portfolio by Market Value by Asset Type (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
Treasury/Agency Supranational
Collateralized Mortgage Obligations Asset-Backed Securities Corporate Bonds and Notes Commercial Paper
Money Market
0%
20%
40%
60%
80%
100%
2011 2012 2013 2014 2015 2016 2017 2018
Treasury/Agency Agency Collateralized Mortgage Obligations Collateralized Mortgage Obligations Asset-Backed Securities Corporate Bonds and Notes Municipal Bonds
Treasury Pool
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Exhibit 2.16: Unclaimed Property Tourism Fund Portfolio Market Value by Asset Type (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Some investment holdings were outside the asset mix bounds in the Investment Policy Statements. We found instances of asset allocations that were not consistent with the Investment Policy Statements for all three portfolios, as discussed below.

We reviewed the Treasury’s Quarterly Performance Reports to identify each instance in which asset allocations fell outside the bounds set forth in the Investment Policy Statements, and we independently calculated the asset allocations using monthly holdings data from the Treasury’s investment custodian.

While our calculations resulted in some variances from what the Treasury reported in its Quarterly Performance Reports, both revealed similar instances in which certain asset allocations did not comply with the Investment Policy Statements. As shown in Exhibit 2.17, the Treasury allocated assets within the T-Pool in a manner consistent with the Investment Policy Statements, but allocations of the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios to Treasury/Agency assets and to corporate bonds and notes were often not compliant, as were allocations from these portfolios to the T-Pool.

In addition to this analysis, we also examined the total exposure of the Public School Permanent Fund and the Unclaimed Property Tourism Fund to each of the asset types for which the Investment Policy Statements placed restrictions; this was of particular importance because both portfolios allow for the allocation of funds to the T-Pool, which also allows for the allocation of its assets to other asset types.

When accounting for the total exposure of the Public School Permanent Fund and the Unclaimed Property Tourism Fund to each asset type, allocations to Treasury/Agency assets were more in line with the Investment Policy Statement 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
Treasury/Agency Collaterized Mortgage Obligations
Asset-Backed Securities Corporate Bonds and Notes
Treasury Pool
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requirements, while allocations to corporate bonds and notes were further out of compliance.

Exhibit 2.17: Number of Quarters Asset Allocations Fell Outside the Bounds Set Forth in the Investment Policy Statements (Calendar Years 2011 through 2018) Asset Class
T-Pool Portfolio Public School Permanent Portfolio Unclaimed Property Portfolio Quarterly
Performance
Reports
AuditorCalculated
Quarterly
Performance
Reports
AuditorCalculatedTotal
Exposure
Quarterly
Performance
Reports
AuditorCalculatedTotal
Exposure
Treasury/Agency 1 - 8 12 - 14 13 2
Supranational - - - - - - - -
Collateralized
Mortgage
Obligations
- - - - - - - -
Asset Backed
Securities - - - - - - - -
Corporate Bonds
and Notes - - 15 25 28 2 3 9
Commercial
Paper - - - - - - - -
Municipal Bonds - - - - - - - -
Certificates of
Deposit - - - - - - - -
Money Market - - - - - - - -
Mutual Equity
Funds - - - - - - - -
T-Pool N/A N/A 12 11 N/A 5 4 N/A
Source: Auditor Analysis of the Colorado Department of the Treasury’s Quarterly Performance Reports, monthly holdings data, and Investment Policy Statements.

Public School Permanent Fund. Investment Policy Statements for the Public School Permanent Fund limited asset allocations of domestic corporate securities to a maximum of 20 percent between Calendar Years 2011 through 2017, but investment records from the Treasury’s custodian showed allocations that exceeded this threshold, from just over 20 percent to 35 percent of the portfolio’s assets, for 28 quarters between 2011 and 2017. This is illustrated in Exhibit 2.18. #35..
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Exhibit 2.18: Public School Permanent Fund Asset Allocation—Corporate Securities, including T-Pool Allocations (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: Figure includes underlying T-Pool holdings.

The Investment Policy Statements (which allow assets in the Public School Permanent Fund to be allocated to the T-Pool) limited such allocations to a maximum of 20 percent until 2017, but investment records from the Treasury’s custodian showed allocations that exceeded this threshold in 11 of 28 quarters between Calendar Years 2011 and 2017, ranging from 20 percent to 25 percent.

This is illustrated in Exhibit 2.19.

Exhibit 2.19: Public School Permanent Fund Asset Allocation—T-Pool (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: In 2018, the Investment Policy Statement no longer specified specific asset class restrictions for the T-Pool, and instead included the asset class “cash.” Unclaimed Property Tourism Fund. The Investment Policy Statements for the Unclaimed Property Tourism Fund limited asset allocations of corporate bonds and

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%
2011 2012 2013 2014 2015 2016 2017 2018
Corporate Bonds/Notes in Portfolio Maximum per Policy Statement

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%
2011 2012 2013 2014 2015 2016 2017 2018
Treasury Pool in Portfolio Maximum per Policy Statement #35..
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notes to a maximum of 50 percent between Calendar Years 2011 and 2017, and increased this maximum to 60 percent in 2018; however, as illustrated in Exhibit

2.20, investment records from the Treasury’s custodian showed allocations between 50 and 61 percent in 9 of the 32 quarters between Calendar Years 2011 and 2018.

Exhibit 2.20: Unclaimed Property Tourism Fund Asset Allocation— Corporate Bonds and Notes, Including T-Pool Allocations (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: Figure includes underlying T-Pool holdings.

The Investment Policy Statements also required a minimum of 20 percent of this portfolio’s assets be invested in Treasury/Agency securities, but investment records from the Treasury’s custodian showed allocations to these securities were below 20 percent in two quarters during 2016. This is illustrated in Exhibit 2.21.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%
2011 2012 2013 2014 2015 2016 2017 2018
Corporate Bonds/Notes in Portfolio Maximum per Policy Statement #35..
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Exhibit 2.21: Unclaimed Property Tourism Fund Asset Allocation— Treasury/Agency Assets, Including T-Pool Allocations (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: Figure includes underlying T-Pool holdings.

Overall, the asset mix trends we observed for each of the Treasury’s portfolios, particularly the increasing investments in corporate bonds and notes that exceed the limits outlined in the Investment Policy Statement, were consistent with the Treasury investing in riskier assets and possibly reaching for yield in a market environment with low interest rates. This trend itself is not surprising given the current market conditions. However, the instances in which actual asset mixes were not in line with parameters in the Investment Policy Statements indicate that the Treasury may be taking on more investment risk than intended. Further, without policies on how allocations to the T-Pool from the Public School Permanent Fund and Unclaimed Property Tourism Fund should be evaluated relative to the asset mix limits (e.g., a policy to include the asset mix of funds that have been allocated to the T-Pool from the Public School Permanent Fund and the Unclaimed Property Tourism Fund when assessing compliance), the Treasury, as well as the public and policy makers, may receive inconsistent and unclear information about how assets are actually allocated.

Investment holdings generally complied with Investment Policy Statements related to asset maturity for the Unclaimed Property Tourism Fund and Public School Permanent Fund portfolios. The maturities of the assets in these portfolios are shown in Exhibits 2.22 and 2.23.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%
2011 2012 2013 2014 2015 2016 2017 2018
Treasury/Agency in Portfolio Minimum per Policy Statement #35..
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Exhibit 2.22: Unclaimed Property Tourism Fund Market Value as a Percent of the Portfolio by Years to Maturity (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Exhibit 2.23: Public School Permanent Fund Market Value as a Percent of the Portfolio by Years to Maturity (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Some investment holdings were outside the maturity limits in the Investment Policy Statements. We found instances of holdings in the T-Pool Bond and T-Pool Cash sub-portfolios that were not consistent with the Investment Policy Statements.

First, although the Investment Policy Statements specified that only securities with a maximum maturity of five years were allowed to be held by the T-Pool Bond sub0% 10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
0-1 Years 1-3 Years 3-5 Years 5-10 Years 10+ Years Treasury Pool 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
0-1 Years 1-3 Years 3-5 Years 5-10 Years 10+ Years Treasury Pool #35..
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SJOBERGEVASHENK P a g e | 37
portfolio, there were holdings with longer maturities. According to the Treasury, some of these differences in maturities were due to measurements based on the trade date and settlement date basis. As shown in Exhibit 2.24, securities with maturity of 5 to 10 years represented 1.8 to 13.6 percent of the T-Pool Bond portfolio’s market value over the 8 years of review and securities with maturity of greater than 10 years represented 0.1 percent to 1.0 percent of the portfolio’s market value from Q1 2011 through Q4 2012, but were not represented in the portfolio thereafter.

Exhibit 2.24: Treasury Pool Bond Market Value as a Percent of the Portfolio by Years to Maturity (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Second, for the T-Pool Cash sub-portfolio, the Investment Policy Statements permit only securities with a maximum maturity of one year, but the Treasury held some securities with a maturity of greater than one year in Q1 2015, Q2 2015, and Q4 2018. This is shown in Exhibit 2.25.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
0-1 Years 1-3 Years 3-5 Years 5-10 Years 10+ Years
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Exhibit 2.25: Treasury Pool Cash Market Value by Months to Maturity (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

The instances we found of the Treasury holding some investments with maturities that exceed the thresholds outlined in the Investment Policy Statements are indicative of the Treasury’s move toward investments that carry higher risk and associated yield. However, these instances also indicate the Treasury may be taking on more investment risk than intended by incurring increased interest rate risk— the risk that over a long-enough period of time interest rates in the market will increase above those generated by the Treasury’s existing securities, causing the value of those securities to diminish and reducing the Treasury’s ability to generate higher yields on its investments. Further, without policies on how to account for differences in maturity dates (i.e., stated final maturity v. expected or average maturity) when assessing compliance with policies, the Treasury, as well as the public and policy makers, may receive inconsistent and unclear information about actual asset maturity.

Investment holdings generally complied with Investment Policy Statements related to credit quality. According to the quarterly reports published by the Treasury, the credit quality distribution of the Treasury Pool, the Public School Permanent Fund, and the Unclaimed Property Tourism Fund portfolios remained fairly consistent between Calendar Years 2011 and 2018. A notable change occurred in August 2011, when S&P downgraded the credit rating of the United States government from “AAA” to “AA+,” after which the portfolio’s allocation to “AAA” securities decreased. The credit ratings for each portfolio are shown in Exhibits 2.26 through 2.28.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
0-1 Months 1-3 Months 3-6 Months 6-9 Months 9-12 Months 12+ Months #35..
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SJOBERGEVASHENK P a g e | 39
Exhibit 2.26: T-Pool Combined Quarterly Ratings (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s published Quarterly Performance Reports.

Exhibit 2.27: Public School Permanent Fund Quarterly Ratings (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s published Quarterly Performance Reports.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
A1/P1 AAA AA A BBB BB B Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
A1/P1 AAA AA A BBB BB B Other
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Exhibit 2.28: Unclaimed Property Tourism Fund Quarterly Ratings (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s published Quarterly Performance Reports.

Overall, trends for each portfolio show a shift in credit rating distribution, with the Treasury decreasing its “AAA” and “AA” holdings and increasing holdings in securities rated at “A” and “BBB,” particularly between 2017 and 2018. Consistent with other characteristics of the Treasury’s portfolios—asset mix and maturity— this demonstrates that the Treasury’s portfolios have been taking on increased risk and reaching for yield in a market environment with low interest rates.

The Treasury lacked documentation of some credit rating information prior to December 2017. We were unable to verify the credit rating information in some of the Treasury’s quarterly reports because the Treasury did not record or retain credit rating information for purchase transactions between January 2011 and November 2017. Credit ratings assigned by Moody’s were available in the monthly portfolio holdings data starting in December 2017. The lack of historical investment information, including credit ratings at the time of purchase or historical credit monitoring records, reduces the transparency of the Treasury’s actions related to credit ratings by impeding the ability of an independent party to validate the credit quality of the Treasury’s investments.

While the Treasury currently relies on its custodian and Bloomberg for providing all credit quality data to monitor its holdings on a daily and monthly basis, it did not always retain credit rating records for its investments prior to 2017. Since 2017, the Treasury has been receiving standard Portfolio Holdings Characteristic reports that show Moody’s, S&P, and Fitch credit ratings for each holding, and a “Composite Quality Rating” that converts different agencies’ ratings into an S&Pequivalent rating. These reports allow the Treasury to easily monitor and report on 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018
A1/P1 AAA AA A BBB BB B Other
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SJOBERGEVASHENK P a g e | 41
credit quality and, to date, have been retained to document historical credit rating information. The Treasury has stated that it will continue to maintain these records to support its internal reporting of credit quality and to demonstrate compliance with its Investment Policy Statements.

Why did the finding occur?
Investment Holdings Outside Asset Mix Bounds. Our analysis revealed three factors that contributed to the instances in which asset allocations fell outside the bounds established in the Investment Policy Statements.

First, the Treasury characterized investments differently than its investment custodians. When staff initiate purchases of securities, staff complete a Trade Order Form that requires the documentation of various security characteristics, one of which is the security type; the signature of the Chief Investment Officer; and, for the purposes of internal control, the signature of a second Treasury official not involved in trade decisions. When completing this form, staff do not always know how its investment custodian (JP Morgan Chase and Wells Fargo maintained the Treasury’s investment system of record at differing periods between Calendar Years 2011 and 2018) will categorize the investment. We analyzed the asset allocations as defined by the custodian, as the system of record, and found that some of our calculations showing the portfolio’s holdings as outside of the asset mix bounds differed from figures in the Treasury’s quarterly investment reports.

Exhibit 2.29 illustrates examples of the variations between the asset allocations reported by Treasury and the allocations we calculated based on the definitions of the custodians. The darker colored cells show where the asset allocation was outside the bounds of the Policy according to our calculations.

Exhibit 2.29: Comparison of Treasury Reported Asset Mix to Calculated Asset Mix (Calendar years 2016 through 2018)
Q4
Unclaimed Property Tourism Fund
Corporate Treasury/Agency
Policy Reported Calculated Policy Reported Calculated
2016 0 – 50% 46.3% 49.0% 20 – 100% 17.7% 14.9%
2017 0 – 50% 49.1% 51.9% 20 – 100% 14.8% 28.0%
2018 0 – 60% 44.1% 46.0% 20 – 100% 24.4% 35.3%
Q4
Public School Permanent Fund
Corporate Treasury/Agency
Policy Reported Calculated Policy Reported Calculated
2016 0 – 20% 20.3% 23.9% 20 – 100% 19.1% 15.8%
2017 0 – 20% 19.6% 22.6% 20 – 100% 39.0% 49.2%
2018 0 – 50% 31.3% 35.3% 0 – 100% 37.0% 46.1%
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: Calculated percentages do not include underlying T-Pool holdings. #35..
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While we were able to assess some of the differing classifications made by the Treasury, we were unable to validate all of the internal classifications of securities purchased by the Treasury. Those we did review, occurring in 2018, generally appeared to be reasonable. For instance, while Wells Fargo classified a certain security as a corporate bond or note, Treasury staff classified the same as a supranational security. It is, therefore, possible that a single security could be classified differently by different institutions. In the interest of accountability and transparency, it is a matter of best practice to rely on an independent, third-party assessment of an asset’s classification rather than on one’s own classification when determining compliance with investment policies.

With respect to the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios, we identified a limited number of cases where this difference in classification accounted for much of the variance between the Treasury’s asset allocations and the boundaries set forth in the Investment Policy Statements. However, the lack of historical data regarding all of the Treasury’s internal classifications, at the point of purchase, prevented an analysis of its classification practices during the full audit period.

Second, the Investment Policy Statements for the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios each allow uninvested cash allocations to the T-Pool. Both of these Funds have some assets in the T-Pool.

However, as the T-Pool also holds investments in multiple asset classes, such as corporate bonds and notes, these asset allocations are not accounted or calculated into the asset mixes when the Treasury determines and reports the composition of the two portfolios. The Investment Policy Statements do not require that such allocations be accounted for in calculated asset mixes to ensure compliance with policies. As a result, the actual asset mixes may be different than reported or than permitted in the Investment Policy Statements. Exhibit 2.30 shows an example of how including the T-Pool’s asset allocations in the calculation of the actual asset mixes for the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios result in differences from what was reported. #35..
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Exhibit 2.30: Comparison of Treasury Reported Asset Mix to Calculated Asset Mix, including T-Pool Allocations (Calendar years 2016 through 2018) Q4 Unclaimed Property Tourism Fund
Corporate Treasury/Agency
Policy Reported Calculated Policy Reported Calculated
2016 0 – 50% 46.3% 52.4% 20 – 100% 17.7% 19.6%
2017 0 – 50% 49.1% 57.1% 20 – 100% 14.8% 31.1%
2018 0 – 60% 44.1% 50.7% 20 – 100% 24.4% 37.3%
Q4
Public School Permanent Fund
Corporate Treasury/Agency
Policy Reported Calculated Policy Reported Calculated
2016 0 – 20% 20.3% 30.0% 20 – 100% 19.1% 24.2%
2017 0 – 20% 19.6% 30.6% 20 – 100% 39.0% 54.1%
2018 0 – 50% 31.3% 40.0% 0 – 100% 37.0% 48.3%
Source: Auditor analysis of the Colorado Department of the Treasury’s monthly portfolio holdings reports and published Quarterly Performance Reports.

Note: Calculated percentages include underlying T-Pool holdings.

Third, the Treasury has not implemented a policy requiring investment officers, who have responsibility for day-to-day investment decisions, to obtain approval from the State Treasurer for deviations from Investment Policy Statement provisions. In response to a recommendation in the State Auditor’s 2011 Performance Review of Treasury Investments, the Treasury agreed to begin requiring investment officers to obtain written approval from the State Treasurer for departures from the Investment Policy Statements lasting more than three months. Such a process serves as a control to help ensure that investment activities comply with statutes and achieve Investment Program objectives. We did not find evidence of such a practice being carried out for the instances we found of deviations from the Investment Policy Statements.

Investment Holdings With Maturities Exceeding the Investment Policy Statements. The Investment Policy Statements contain conflicting language when stipulating maturity requirements. For instance, the 2010 Investment Policy Statement states that the maximum maturity for any security held within the T-Pool Bond sub-portfolio must be less than five years, with the exception of collateralized mortgage obligations and asset backed securities, which allow maturities with expected maturities or an average life not to exceed five years. However, our analysis revealed that over the eight-year period, the Treasury purchased 34 securities, with an aggregate purchase value of nearly $380 million that exceeded the five-year maturity limit, in every case by less than 30 days.

Further, similar to deviations found in portfolio asset allocations as compared to Investment Policy Statement requirements, the Treasury has not implemented a formal procedure requiring investment officers to obtain the pre-approval from the State Treasurer for deviations from Investment Policy Statement provisions, including those related to duration and maturity.
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SJOBERGEVASHENK P a g e | 44
Recommendation No. 2:

The Colorado Department of the Treasury (Treasury) should enhance its controls over investment activities by:
a. Specifying in the Investment Policy Statements how compliance with key restrictions related to asset allocations, maturity, and credit quality will be measured. This should include portfolio allocations to the T-Pool, such as those from the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios. In doing so, the Treasury should, to the extent possible, verify security characteristics with third-party data (such as its custodian’s characteristics of its asset classes, and average life or expected maturity). b. Develop a formal procedure requiring investment officers to obtain the preapproval from the State Treasurer for deviations from Investment Policy Statement provisions when such deviations last, or are expected to last, more than three months, and document this review and approval process in order to memorialize the decision and rationale to deviate from the established Investment Policy Statement.

Treasury Response:
a. Agree. Implementation date: December 31, 2019
Treasury’s current Investment Statement Policy adopted in July 2019, details how compliance with those policies is to be measured, including references to all of the portfolios it manages.

Treasury will continue to work with its custodian to ensure that proper classification of securities occurs. On rare occasions, the custodian maintains a different appellation of the same security, though this does not change or alter the underlying characteristics of that security. That said, Treasury will increase its efforts through stronger communication and review to ensure a proper classification occurs each time a security is purchased.
b. Agree. Implementation date: December 31, 2019
Treasury is in the process of adopting a formal procedure that will require the State Treasurer to pre-approve deviation from Investment Policy for the limited occasions when such a deviation is determined to be necessary. Such deviations will be memorialized as the findings above recommend.
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Via e-mail
October 15, 2021
Request for Proposal
Public Sector Consulting Firm
The City of Modesto is soliciting proposals from qualified Public Sector Consulting Firms to retain a firm for the following services:

City Auditor Services
Plan, organize, direct, and review the activities and operations of the City Auditor Office, including:
o Coordinate Department activities with those of other departments and outside agencies and organizations; provide staff assistance to the Mayor and City Council; prepare and present staff reports and other necessary correspondence.
o Conduct financial, operational, and performance audits to determine compliance with laws and the appropriate utilization of resources including public funds, personnel, property, equipment, and space to ensure efficiency of operations
o Review system of internal controls confirming the adequacy and effectiveness of the controls and that work complies with applicable professional standards.
o Identify causes of inefficiencies or uneconomical practices including inadequacies in management information systems, internal and administrative procedures, organizational structure, use of resources, allocation of personnel, purchasing polices, and equipment.
o Consult with operating departments to recommend appropriate improvements to procedures, review progress on implementing the recommended improvements, and ensure action is taken.
o Conduct research, analysis, and special studies on complex and sensitive administrative and policy issues; prepare reports with recommendations for appropriate action.
o Provide timely information and report progress and results of audits to City Council.

The Consulting Firm should specialize in providing services to public sector organizations in a wide range of organizational issues. #35..
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If you are interested in this opportunity, your proposal must be submitted by 5:00 pm, PST November 5, 2021. Proposals will be accepted electronically or by mail. The City of Modesto assumes no responsibility for delay in the delivery of the proposal. All costs associated with the preparation of the proposal shall be borne by the proposer.

Please see the City’s Professional Services Insurance Requirements in the attached document. A sample form is found at
https://www.modestogov.com/DocumentCenter/View/4541/Insurance-RequirementSamples?bidId Business licensing information is found at https://www.modestogov.com/235/BusinessLicensing Please direct your proposal to:

Kelly Rice-Ortiz
Executive Assistant
City of Modesto
P. O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
[email protected]
The proposal shall include the following information:
▪ Qualifications of the firm
▪ Professional fees and estimated out-of-pocket expenses ▪ Principal staff contacts
▪ Background on your firm
▪ Sample of similar projects
▪ List of clients--preferably including comparable placements ▪ Additional services (Optional)
Proposals submitted will be reviewed by an evaluation committee. The committee will select the proposal which best fulfills the City’s requirements as determined by the evaluation committee. Overall responsiveness to the Request for Proposals is an important factor in the evaluation process.

Should you have any questions, please feel free to contact me at (209) 577-5400 or email at [email protected].

I hope this recruitment opportunity will be of interest to you and look forward to your response.

Sincerely,
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Christina Alger
Director of Human Resources
cc: Kelly Rice-Ortiz, Executive Assistant
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

April 5, 2022
Date: March 29, 2022
TO: Mayor & City Council
FROM: Christina Alger, Director of Human Resources and
Jose M. Sanchez, City Attorney
SUBJECT: Employment Agreement for City Clerk
CONTACT: Christina Alger, Director of Human Resources
[email protected], 209-571-5126
DESCRIPTION:

Consider appointing Diane Nayares-Perez as City Clerk, approving a City Clerk Employment Agreement with Diane Nayares-Perez for service as City Clerk and setting terms of employment, salary and benefits. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

This item supports the 2020-2025 Strategic Plan’s Service and Delivery Goals & Strategies - Building a High-Performing Organization by Attracting and Retaining High Performance Employees.

BACKGROUND:

On August 30, 2021, Council authorized the Human Resources Department to issue a Request for Quotes for recruitment services to fill the position of City Clerk which became vacant October 5, 2021 due to retirement. The request was sent to the recruitment firms through which the City currently has contracts. The City received quotes from three of the five firms under contract and chose Avery and Associates based on availability and proposed timeline for completion.

Five candidates were brought forward to interview with a subcommittee of the Council. The top two candidates were moved to the final interview process with the full Council for consideration.

DISCUSSION, FISCAL IMPACT AND BASIC CONTRACT TERMS:

Diane Nayares-Perez comes to the City with many years of City Clerk’s Office experience. She began as a legal secretary for a local law firm and the Department of Justice before becoming a Deputy Clerk of the Board for Stanislaus County. She joined the City of Modesto as the Assistant City Clerk for seven years before becoming the City Clerk for the City of Ceres. She cumulatively brings over 30 years of experience to our City Clerk’s Office. She holds her Certified Municipal Clerk certification and is currently working toward her Master Municipal Clerk certification. Her background and familiarity with the City make her an exceptional choice. #36..
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City Council, April 5, 2022
Employment Agreement for City Clerk

The attached recommended employment agreement is effective April 26. The key provisions of the agreement include:
 Base salary of $139,000;
 Certification Incentive Pay of five (5%) percent;
 One hundred twenty-eight (128) hours of vacation per year; annually adjusted  Car allowance of $500 per month;
 Executive leave accrual and credit;
 Medical, vision and dental benefits equal to those provided to other City management employees;
 Retiree Health Savings as provided to other City management employees;  PERS retirement benefits;
 410a and 457 retirement plans; and
 Payment for professional memberships and conferences;  Appointment for an indefinite term, consistent with the language in Section 900 of the Modesto Charter.

Staff recommends approval of the attached resolution and employment agreement which reflects the direction that Council provided to its labor negotiators and appointing Diane Nayares-Perez as City Clerk.

COMMITTEE RECOMMENDATION:

This item was not presented to a committee; however, it reflects direction given to labor negotiators in closed session and reviewed by a subcommittee of Council.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution appointing Diane Nayares-Perez as City Clerk, approving a City Clerk Employment Agreement with Diane Nayares-Perez for service as City Clerk, setting terms of employment, salary and benefits, and authorizing the Mayor to execute the agreement.

Approved by:

Christina Alger, Director of Human Resources
Jose M. Sanchez, City Attorney
Attachments:

1. Resolution

2. Employment Agreement for Diane Nayares-Perez
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022--?

RESOLUTION APPOINTING DIANE NAYARES-PEREZ AS CITY CLERK,

APPROVING A CITY CLERK EMPLOYMENT AGREEMENT WITH DIANE

NAYARES-PEREZ FOR SERVICE AS CITY CLERK, SETTING TERMS OF

EMPLOYMENT, SALARY AND BENEFITS, AND AUTHORIZING THE

MAYOR TO EXECUTE THE AGREEMENT
WHEREAS, on August 30, 2021, Council authorized the Human Resources Department to issue a Request for Quotes for recruitment services to fill the position of City Clerk which became vacant October 5, 2021 due to retirement; and WHEREAS, the request was sent to the recruitment firms through which the City currently has contracts; and
WHEREAS, the City received quotes from three of the five firms under contract and chose Avery and Associates based on availability and proposed timeline for completion; and
WHEREAS, Ms. Diane Nayares-Perez applied for the position, was screened by Avery & Associates Consulting and interviewed by the City Council; and WHEREAS, following the selection process, Council reported out of closed session that it had given instructions to negotiate an employment agreement for City Clerk services.

NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Modesto that it hereby appoints Diane Nayares-Perez as City Clerk, approves a City Clerk Employment Agreement with Diane Nayares-Perez for service as City Clerk, and sets terms of employment, salary and benefits as shown in the attached Employment Agreement.
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BE IT FURTHER RESOLVED, that the Mayor is hereby authorized to execute the Agreement.

The foregoing resolution was introduced at regular meeting of the Council of the City of Modesto held on the 5th day of April 2022 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _________________________________
DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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1 EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”), made and entered into this _____ day of April, 2022, by and between the CITY OF MODESTO, State of California, a municipal corporation (“CITY”), and Diane Nayares-Perez (“EMPLOYEE”), both of whom understand as follows:

RECITALS:

WHEREAS, Section 900 of the CITY’s Charter provides that the City Clerk of Modesto, California (“City Clerk”), shall be appointed by and serve at the pleasure of the City Council of the City of Modesto (“COUNCIL”), and
WHEREAS, CITY desires to employ the services of EMPLOYEE as City Clerk of the City of Modesto as provided by said City Charter, and
WHEREAS, COUNCIL desires to employ EMPLOYEE as City Clerk and to provide certain benefits, establish certain conditions of employment and set working conditions of EMPLOYEE, and
WHEREAS, EMPLOYEE desires to serve as City Clerk, and
WHEREAS, it is the desire of the parties hereto to provide the terms and conditions by which CITY shall receive and retain the services of EMPLOYEE and to provide for her to remain in such employment, to act as a deterrent against malfeasance or dishonesty for personal gain on her part; and to provide for terminating her services at such time as she may be unable to fully discharge her duties or when COUNCIL may otherwise desire to terminate her employment.
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2 SECTION 1. Duties
CITY hereby agrees to employ said Diane Nayares-Perez as City Clerk of said CITY to perform the functions and duties specified in Section 901 of the Modesto City Charter and to perform other legally permissible and proper duties and functions as COUNCIL shall from time to time assign. Nothing in this Agreement shall supersede the requirements of the Modesto City Charter.

SECTION 2. Term
a. Effective April 26, 2022, EMPLOYEE shall fulfill the powers, functions, and duties of City Clerk and shall serve in this capacity until such time as this Agreement is terminated pursuant to Section 3, below.
b. Nothing in this Agreement shall prevent, limit, or otherwise interfere with the right of COUNCIL to terminate the services of EMPLOYEE at any time subject only to the provisions set forth in Section 3, below.
c. Nothing in this Agreement shall prevent, limit, or otherwise interfere with the right of EMPLOYEE to resign at any time from her position as City Clerk, subject only to the provisions as set forth in Section 3, below. d. EMPLOYEE agrees to remain in exclusive employ of CITY and neither to accept other employment nor become employed by any other employer until this Agreement is terminated. Recognizing that certain outside consulting or teaching opportunities provide indirect benefits to Employer and the community, Employee may elect, with the prior written approval of the Mayor, and written notification to the full Council, to accept limited teaching, consulting or other business opportunities with the #36..
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3 understanding that such arrangements shall not constitute interference with nor a conflict of interest with his responsibilities under this Agreement.

SECTION 3. Termination and Severance
a. EMPLOYEE is an at-will employee who shall serve at the pleasure of the COUNCIL. EMPLOYEE may terminate this Agreement, with or without cause, by giving the CITY sixty (60) days written notice in advance of termination unless the Parties agree otherwise. During the notice period, all the rights and obligations of the Parties under this Agreement shall remain in full force and effect. EMPLOYEE will not receive any severance pay if EMPLOYEE’s resignation is solely voluntary on EMPLOYEE’s part.
b. The COUNCIL may terminate this Agreement upon an affirmative vote of four (4) members of the COUNCIL, with or without cause. COUNCIL shall give EMPLOYEE a minimum of thirty (30) days written notice prior to terminating EMPLOYEE as City Clerk, provided, however, that if EMPLOYEE is terminated for cause as defined in this Agreement, the thirty (30) day written notice requirement shall not apply and EMPLOYEE may be terminated effective immediately upon written notice. c. If the COUNCIL discharges EMPLOYEE without cause during the term of this Agreement, and EMPLOYEE is willing and able to perform her duties under this Agreement, then EMPLOYEE shall be entitled to a severance payment equal to three (3) months of EMPLOYEE’s then current annual base salary. This provision will not apply in the event the COUNCIL discharges EMPLOYEE for cause, in which case EMPLOYEE will not be entitled to any severance payment or continuation of benefits.

The determination of whether there is good cause for termination shall be in the sole #36..
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4 discretion of the COUNCIL. Severance pay under this Agreement shall be conditioned upon EMPLOYEE signing a waiver and release agreement forever releasing and waiving any and all claims in a form acceptable to the CITY. EMPLOYEE shall not receive any severance is such a release agreement is executed by the parties. d. Nothing in this provision alters the at-will employment status of EMPLOYEE. Rather, the term “cause” simply relates to the issue of potential severance.

For purposes of this Agreement, “cause” shall mean:
(1) Willful and repeated failure to perform the duties of City Clerk; (2) Violation of any policies or procedures;
(3) Insubordination;
(4) Failure to maintain satisfactory working relationships with other employees or the public;
(5) Conviction of an employment-related illegal act;
(6) Conviction of a felony; or
(7) Malfeasance materially related to the job.
e. Pursuant to Government Code section 53243.2, any cash settlement related to the termination of this Agreement received by EMPLOYEE from the CITY shall be fully reimbursed to the CITY if EMPLOYEE is convicted of a crime involving abuse of her office or position as defined in California Government Code section 53243.4.
f. Abuse of Office: Government Code sections 53243, 53243.1, 53243.2, and 53243.3 are incorporated by this reference as if fully set forth herein. #36..
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5 g. EMPLOYEE shall not receive any severance if she resigns, is terminated for cause, or if a waiver and release agreement is not executed by EMPLOYEE and CITY.
h. Notwithstanding the provisions of this Section and in accordance with Article IX, Section 900 of the City Charter, COUNCIL shall not terminate this Agreement during or within ninety (90) days next succeeding the election of a Member of the COUNCIL.

SECTION 4. Salary
a. Effective the 26th day of April, 2022, CITY agrees to pay EMPLOYEE for her services rendered pursuant to this Agreement an annual salary of One Hundred Thirty-Nine Thousand Dollars ($139,000.00), payable in installments at the same time as other employees of CITY are paid.
b. Consideration shall be given on an annual basis to increase compensation following an annual performance evaluation as set forth in Section 11 of this Agreement.

SECTION 5. Certification Incentive Pay
City agrees to provide a professional certification incentive pay for the Certified Municipal Clerk certification at a rate of five percent (5%) calculated on the base salary rate.

SECTION 6. Health, Long Term Disability, and Life Insurance Benefits a. CITY agrees to provide health, dental, and vision insurance for EMPLOYEE and dependents equal to that which is provided to all other unrepresented Management and Confidential employees of CITY. CITY’s contribution toward the #36..
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6 premiums for said health, dental, and vision coverage shall not be less than that which CITY contributes to other Executive employees of the CITY. b. CITY agrees to provide long term disability coverage for EMPLOYEE at CITY’s expense.
c. CITY shall pay the amount of premium due for a term life insurance policy consistent with that provided to other unrepresented Management and Confidential employees of CITY. EMPLOYEE shall name the beneficiary of the life insurance policy.

SECTION 7. Retirement
a. CITY shall continue enrollment of EMPLOYEE in the California Public Employees’ Retirement System (“CalPERS”). EMPLOYEE shall pay one hundred percent (100%) of the total “Employee’s share,” and CITY shall pay one hundred percent (100%) of the “Employer’s share.”
b. CITY shall provide a qualified 401(a) defined contribution plan for EMPLOYEE in the form of a money purchase plan to which CITY shall contribute five percent (5%) of EMPLOYEE’s base salary. EMPLOYEE shall match the CITY’s contribution.
c. CITY shall provide a Section 457 deferred compensation plan for EMPLOYEE’s voluntary participation. In addition to the base salary paid by CITY to EMPLOYEE, CITY agrees to pay an amount equal to one and one-half percent (1.5%) of EMPLOYEE’s base salary, or greater, into the designated plan on the EMPLOYEE’s behalf, in equal proportionate amounts each pay period. EMPLOYEE shall match CITY’s contribution. Amount increases to two and one-half percent (2.5%) at nine (9) #36..
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7 years of service. EMPLOYEE’s prior years of service will be counted toward the nine (9) years.
d. Any or all of the CITY and EMPLOYEE contribution amounts designated in this Section are subject to change in the event that COUNCIL authorizes such change for all Charter Officers of the CITY.

SECTION 8. Other Supplemental Benefits
a. Vacation Leave. Upon the effective date of this Agreement, EMPLOYEE shall be credited with twenty (20) hours of vacation leave and commence accruing vacation at the rate of one hundred twenty-eight (128) hours during year one (1). In each subsequent year, EMPLOYEE’s vacation accrual rate shall increase on her employment anniversary date of April 26th, consistent with the standard vacation accrual progression for Management and Confidential employees. This vacation accrual is in addition to the standard eighty (80) hours of Management Leave afforded annually to Executives and Charter Officers. EMPLOYEE shall be credited with a pro-rata share of Management Leave hours for calendar year 2022 hours upon the effective date of this Agreement. b. Retiree Health Savings. Retiree Health Savings monthly contributions will be effective upon the hire date.
c. Automobile. EMPLOYEE’s functions and duties require that she shall have the use of an automobile during her employment with the CITY. CITY shall pay EMPLOYEE the monthly sum of five hundred dollars ($500) for the expense of owning, operating, maintaining, and insuring her personal automobile. c. Other Benefits. All actions taken by COUNCIL relating to fringe benefits for unrepresented Management and Confidential employees shall be considered actions #36..
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8 granting the same benefits to EMPLOYEE. As used herein, fringe benefits include but are not limited to vacation, sick leave, holidays, retirement (CalPERS) benefits and payments, health insurance, dental insurance, vision insurance, and life insurance.

SECTION 9. Professional Development
In its discretion, COUNCIL shall budget for and pay travel and subsistence expenses of EMPLOYEE for professional and official travel, meetings, courses, institutes, and seminars adequate to continue her professional development and to adequately pursue necessary official and other functions on behalf of the CITY, including but not limited to the annual conference of the League of California Cities and the annual League of California Cities City Clerk’s Department Conference.

SECTION 10. Indemnification
CITY shall defend, hold harmless, and indemnify EMPLOYEE against any tort, professional liability claim or demand, or any other legal action, whether groundless or otherwise, arising out of any alleged act or omission occurring in the course and scope of performance of EMPLOYEE’s functions and duties. CITY may compromise and settle any claim or suit and shall pay the amounts of all settlements or judgments rendered against EMPLOYEE and/or CITY thereon. Any CITY funds provided for the legal criminal defense of EMPLOYEE shall be fully reimbursed in accordance with California Government Code section 53243.1 if EMPLOYEE is convicted of a crime involving abuse of her office or position as defined in California Government Code section 53243.4.
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9 SECTION 11. Performance Evaluation
a. COUNCIL shall review and evaluate EMPLOYEE’s performance at least once a year.
b. Annually, the COUNCIL may define such goals and performance objectives as COUNCIL determines necessary for the proper operation of CITY and the attainment of the COUNCIL’s policy objectives and may further establish a relative priority among those various goals and objectives, said goals and objectives to be reduced to writing. Said goals and objectives shall generally be attainable within the time limitations as specified in the annual operations and capital budgets and appropriations provided.
c. In effecting the provisions of this Section, the COUNCIL and EMPLOYEE mutually agree to abide by the provisions of applicable law. d. EMPLOYEE will timely cause to be placed on the COUNCIL agenda each year a “closed session” for purposes of her performance evaluation.

SECTION 12. Additional Term of Employment
COUNCIL, in consulting with EMPLOYEE, shall fix any such other terms and conditions of employment as it may determine from time to time relating to the performance of EMPLOYEE, provided that such terms and conditions are reduced to writing and included in an amendment to this Agreement.

SECTION 13. Notices
Notices pursuant to this Agreement shall be given by deposit in the custody of the United States Postal Service, postage prepaid, addressed as follows, or as such address may be changed from time to time upon notice to the other:
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10 CITY: EMPLOYEE:

Mayor Diane Nayares-Perez
City of Modesto
P. O. Box 642
1010 10th Street, Suite 6200
Modesto CA 95353
Alternatively, notices required pursuant to this Agreement may be personally served in the same manner as is applicable to civil judicial practice. Notice shall be deemed given as of the date of personal service or as of the date of deposit of such written notice in the course of transmission in the United States Postal Service.

SECTION 14. General Provisions
a. The text herein shall constitute the entire agreement between the Parties. b. This Agreement shall be binding upon and inure to the benefit of the heirs at law and executors of EMPLOYEE.
c. This Agreement shall become effective commencing the 26th day of April, 2022.
d. If any provision, or any portion thereof, contained in this Agreement is held unconstitutional, invalid, or unenforceable, the remainder of this Agreement, or portion thereof, shall be deemed severable, shall not be affected, and shall remain in full force and effect.

IN WITNESS WHEREOF the CITY has caused this Agreement to be signed and executed in its behalf by its Mayor under the authority of Resolution No. _________, and EMPLOYEE has signed and executed this Agreement, both in duplicate, the day and year first above written, and EMPLOYEE has caused this Agreement to be duly executed. #36..
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11 CITY OF MODESTO
A MUNICIPAL CORPORATION:

By _________________________________
Sue Zwahlen, Mayor
EMPLOYEE:

By _________________________________
Diane Nayares-Perez
(SEAL)
APPROVED AS TO FORM:

By__________________________________
JOSE M. SANCHEZ, City Attorney
5081844.1
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OFFICE OF THE CITY CLERK

NOTICE OF SPECIAL MEETING
Please take notice that a special Closed Session meeting of the Council of the City of Modesto has been called pursuant to Section 2-1.02 of the Modesto Municipal Code to be convened on
TUESDAY, APRIL 5, 2022 at 4:00 PM
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.

Any and all of the following agenda items are subject to action being taken by the Modesto City Council.

The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:

CLOSED SESSION
CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Two Cases (Pursuant to Section 54956.9(d)(1) of the Government Code) Name of Case: City of Modesto, et al. v. The Dow Chemical Company, et al. (PCE)
Court of Appeals of the State of California
Appeal Case No: A134419
Cherry v. City of Modesto
Case No. 1:18-CV-01268
CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCEA Negotiator: Christina Alger
Employee Organization: Modesto City Employees Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCMA Negotiator: Christina Alger
Employee Organization: Modesto Confidential & Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPOA Negotiator: Christina Alger
Employee Organization: Modesto Police Officers’ Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPNSA Negotiator: Christina Alger
Employee Organization: Modesto Police Non-Sworn Association #37..
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CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) –MPMA Negotiator: Christina Alger
Employee Organization: Modesto Police Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCFFA Negotiator: Christina Alger
Employee Organization: Modesto City Firefighters Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – Unrepresented Negotiator: Christina Alger
Employee Organization: Unrepresented Management and Confidential Employees April 1, 2022 BY ORDER OF THE CHAIR
/S
Dana Sanchez, Interim City Clerk
Posted pursuant to Government Code Section 54956 on the bulletin board at Tenth Street Place on at by
date time signature
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TO: THE CLERK OF THE CITY OF MODESTO
RE: CLOSED SESSION
Pursuant to Section 2-1.02 of the Modesto Municipal Code, you are hereby authorized and empowered to call a special Closed Session meeting of the Council of the City of Modesto to be convened on
TUESDAY, APRIL 5, 2022 at 4:00 PM
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.

Any and all of the following agenda items are subject to action being taken by the Modesto City Council.

The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:

CLOSED SESSION
CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Two Cases (Pursuant to Section 54956.9(d)(1) of the Government Code) Name of Case: City of Modesto, et al. v. The Dow Chemical Company, et al. (PCE)
Court of Appeals of the State of California
Appeal Case No: A134419
Cherry v. City of Modesto
Case No. 1:18-CV-01268
CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCEA Negotiator: Christina Alger
Employee Organization: Modesto City Employees Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCMA Negotiator: Christina Alger
Employee Organization: Modesto Confidential & Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPOA Negotiator: Christina Alger
Employee Organization: Modesto Police Officers’ Association #37..
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CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPNSA Negotiator: Christina Alger
Employee Organization: Modesto Police Non-Sworn Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) –MPMA Negotiator: Christina Alger
Employee Organization: Modesto Police Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCFFA Negotiator: Christina Alger
Employee Organization: Modesto City Firefighters Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – Unrepresented Negotiator: Christina Alger
Employee Organization: Unrepresented Management and Confidential Employees April 1, 2022 BY ORDER OF THE CHAIR
/S
__________________________
SUE ZWAHLEN, Mayor
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