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r <br />To the City Council and Citizens of the City of Orono <br />May 15, 1998 <br />D ebt A dministration <br />At December 31,1997, the City had six bond issues outstanding. The City ’s legal debt limitation based on <br />state statutes, equals 2% of market value. All City bonded debt at December 31,1997 is special assessment <br />or revenue funded and therefore is excluded from the limit. The City bond rating from Moody’s Investors <br />Service is Aal for all bond issues except the 1991 Public Facilities Revenue Bond which has a bond rating <br />from Moody's Investors Service of Aa. ® <br />C ash Management <br />Cash temporarily idle during the year was invested in demand deposits, money market funds, obligations <br />of federal agencies, the U.S. Treasury, obligations of local governmental units, the State of Minnesota <br />repurchase a^eements. bankers’ acceptances, and commercial paper. The City ’s investment objective as <br />stated in the investment policy is to first ensure the preservation of capital in the overall portfolio second <br />to maximize yield while matching maturity dates with expenditure needs, and third to diversify the <br />mvestment portfolio by financial institution, government agency, or by the corporation in the case of <br />commercial paper to reduce the exposure to risk of loss. At December 31,1997, the City had an investment <br />portfolio including certificates of deposit of $9,378,756, at cost (exclusive of the assets held by deferred <br />compensation trustees) diversified as shown in the following table: <br />Type of Investment <br />Investment Pool - Money Market Funds <br />Certificates of Deposit <br />U.S. Federal Agencies <br />U.S. Treasury Obligations <br />City of Goodview, Minnesota <br />State of Minnesota <br />Commercial Paper <br />Cost Percent <br />$ 204,731 2.18%^ ■ <br />362,331 3.86 <br />4,516,199 48.16 <br />400,250 4.27 <br />50,000 0.53 <br />235,000 2.51 <br />3.610.245 38.49 <br />$ 9,378.756 100.00%- <br />For the year ended December 31, 1997, the City had cash and investment interest earnings of $481,754 at <br />an average yield of 6.07%. <br />Risk Management <br />^e City participates in the liability, property, and workers’ compensation programs sponsored by the <br />league of Minnesota Cities Insurance Trust. In addition, the City appoints an agent of record to assist with <br />the administration, loss prevention, and risk management. <br />-12- <br />J