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2002-2003. Tax and Revenue Anticipation Notes. Rating Agenc

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Title: 2002-2003. Tax and Revenue Anticipation Notes. Rating Agenc


1
County of San Diego
2002-2003Tax and Revenue Anticipation
Notes Rating Agency Presentation
May 15, 2002
2
Table of Contents
  • Introductions
  • Objectives
  • Strategic Plan Update
  • Financial Results and Budget
  • Challenges and Potential Responses
  • Investment Pool
  • Economic Overview and Fundamentals
  • TRANs Financing Schedule
  • Future Financings
  • Conclusion
  • Appendix A - Cashflows

3
Introductions
  • County of San Diego
  • William J. Kelly, Chief Financial Officer, County
    of San Diego
  • Kenneth J. Mory, Assistant Chief Financial
    Officer, County of San Diego
  • Lisa Keller-Chiodo, Capital Finance Manager,
    County of San Diego
  • Neil Rossi, Chief Deputy Treasurer, County of San
    Diego
  • Mark Friedrich, Investment Officer, County of San
    Diego
  • Stan Riggin, Director, Accounting Fiscal
    Control
  • Jack Morien, Manager, General Accounting Division
  • Marilyn Flores, Associate Accountant, General
    Accounting Division
  • Janel Pehau, Director, Office of Financial
    Planning
  • John McTighe, Finance Director, Health Human
    Services Agency
  • Ron Geller, Finance Director, Community Services
  • Jill Serrano, Finance Director, Public Safety
  • Ray Fernandez, Finance Director, Land Use
    Environment
  • Rick Poggemeyer, Finance Director, Finance
    General Government
  • Banc of America Securities LLC
  • David Johnson, Managing Director
  • Alex Ocampo, Senior Associate

4
Objectives
  • Demonstrate organized, structured and disciplined
    focus on prevention, continuous improvement,
    strategic planning and performance monitoring, as
    the best run County government in California
  • Demonstrate ability to handle unknowns stemming
    from States budget shortfalls
  • Demonstrate positive financial results achieved
    by the County resulting from our Strategic Plan
    and budgetary discipline
  • Demonstrate continued positive economic forces in
    local economy
  • Attain MIG1/SP-1 short-term ratings for TRANs
  • Defer long-term rating upgrade consideration but
    reiterate how different the County of San Diego
    is from other California counties

5
Strategic Plan Update
  • Strategic Plan provides long-term direction for
    the
  • County and is built around four strategic
    intents
  • Provide for the safety and well-being of those
  • San Diego communities, families, individuals, and
  • other organization we serve
  • Preserve and enhance the environment in San Diego
  • County
  • Ensure the Countys fiscal stability through
    periods of
  • economic fluctuations and changing priorities and
    service demands
  • Promote a culture that values our employees,
    partners and customers and institutionalizes
  • continuous improvement and innovation
  • Strategic plan is reflected in the program
    objectives of the Countys Operational Plan (a
    two-year budget plan)
  • Progress in 2001
  • Maintaining Countys strong fiscal position to
    manage future challenges is a primary goal

6
Financial Highlights
  • In fiscal 2000-2001 the County maintained a
    structurally balanced budget, using one-time
    resources for one-time costs and ongoing revenues
    for ongoing expenses
  • Future fiscal stability is enhanced by historic
    five-year labor agreements reached with most
    employee unions
  • County has been able to absorb dramatically
    higher utility costs caused by the States energy
    crisis without cutting services
  • County sold its Tobacco Settlement Revenue stream
    for 467 million and funded an endowment for the
    cost of certain health programs
  • Reduction in welfare cases in San Diego County
    has far exceeded other California counties (over
    a five-year period beginning in 1995, County case
    load dropped 58 while rest of state dropped 41)
  • Overall budgetary revenues were on target in
    2000-2001
  • After adjustments for GASB 33, County operations
    resulted in available fund balances of 351
    million as of June 30, 2001
  • Reduction of Long-Term Debt San Pasqual and
    Interim Justice Refunding
  • Seeking other opportunities to refinance debt
    with variable rate to reduce costs and provide
    opportunity for further debt extinguishments

7
GASB 33
  • County receives funding from the State and
    federal government that is substantially
    restricted
  • Prior to GASB 33 implementation, grants and other
    restricted funding sources were maintained in
    trust as agency funds until used to reimburse the
    General Fund or other funds (revenues recognized
    until expenditures occurred)
  • Under GASB 33, most grants and other government
    funding sources are recognized as revenue when
    received
  • New accounting standard procedure affects cash
    and fund balance of the General Fund since it now
    includes equity that was previously classified in
    agency funds (thereby increasing General Fund
    balances)

8
Proven Financial Performance (General Fund)
Actual
Ending Cash balance (millions)
Expenditures (thousands)
Fund Balance (thousands)
Revenue (thousands)
9
Projected FY 2001-2002 Financial Results
(1) Balances for the year ended June 30, 2001
were significantly affected by the implementation
of GASB 33, which requires equity that was
previously classified in certain agency funds to
be consolidated with the General Fund. In fiscal
year 2000-2001 the effect of GASB 33 was an
additional 26.6 million in the unreserved and
152.2 million in the reserved fund balances.
10
FY 2002-2003 Proposed Operating Plan
2.64 Billion General Fund Operating Plan FY
2002-2003(in Millions)
Revenues
Appropriations
11
County of San Diego FY 2002-2003Proposed
Operating Plan General Fund
12
FY 2002-2003 Reserves and Resources
source 02-03 Operational Plan, as of July 1,
2002
13
Challenges and Potential Responses
  • Risk of local discretionary revenue shifts
  • Operating Plan assumes full local discretionary
    revenue
  • Assessment of impact of the May Revise
  • Risk of State Responsibility Shifts
  • EPSDT
  • Assessment of impact of the May Revise
  • Factors affecting San Diego economic prosperity
  • High cost and uncertain supply of energy
  • Rising housing costs and
  • State budget
  • Regional economy
  • San Diegos employment growth has slowed,
    although it is still growing
  • Local sales tax transactions continue to do well
  • Real estate market continues to be strong due to
    high demand and favorable low financing costs
  • Budget impact
  • General Purpose Revenues are expected to be
    between 6.5 and 7 vs. fiscal year 99-00 and
    00-01 where growth was 9.2 and 10.8
    respectively

14
San Diego County Investment Pool Strength and
Stability
  • Highly Liquid
  • Vast majority of funds are mandatory
  • Low weighted average maturity
  • 32 of securities mature within 180 days
  • Portfolio focus is Safety, Liquidity, Return
  • High Credit Quality
  • High credit quality (100 of securities are rated
    AAA or A1/P1/F1)
  • Weighted average yield of 3.20
  • Professionally managed
  • Varied Pool Participants
  • Strong cash flow model

15
San Diego County Investment Pool Asset
Allocationas of March 31, 2002
16
San Diego County Investment Pool Credit
Qualityas of March 31, 2002
17
San Diego County Investment Pool Participantsas
of March 31, 2002
18
San Diego County Investment Pool Statisticsas of
March 31, 2002
19
Economic Overview
  • San Diego County region exhibited stronger
    economic performance than other California
    counties in 2001
  • Property tax valuation increased 9.6 for 2001-02
    from the prior year
  • Gross Regional Product (GRP) climbed to 120.5
    billion in 2001, a record for total economic
    production in the region
  • County employment and population have continued
    to rise and unemployment remains below State
    average

20
Economic Overview Strong Tax Base Growth
Assessed Valuation of Property FY 1994-1995
through 2001-2002
Billions
Source County of San Diego Auditor and
Controller. Note Net Assessed Valuation for
Tax Purposes figures include local secured,
unsecured, state unitary and redevelopment
valuation.
  • 9.6 growth for 2001-02
  • Expectation of 8.5 for 2002-03

21
Economic Overview Diverse Economy and Tax Base
  • SDGE and SCE remain current on all tax payments

Ten Largest TaxpayersFiscal Year 2001-02
22
Economic Overview Diverse Employment Base
  • The County possesses a diverse economic base
    consisting of manufacturing (electronics,
    technology, ship building), defense-related
    industries, and a large tourist industry
    bolstered by the favorable climate of the region.

23
Economic Overview High Employment Levels
Labor Force - Unemployment Annual Averages
1997-2001
Source State Data - California Employment
Development Department National Data - U.S.
Department of Labor, Bureau of Labor
Statistics. Data not seasonally adjusted. (1)
Data for December 2001
  • Unemployment levels have been consistently lower
    than State and National levels.

24
2002 TRANs Schedule
25
Future Debt Issuance Plans
  • Teeter Commercial Paper Program
  • Annual Teeter plan funding
  • Pension Obligation Bonds
  • To fund a portion of the unfunded liability
    resulting from settlements related to the Ventura
    case and enhancements to retirement benefits
  • Unfunded accrued liability of approximately 1
    billion
  • Issuance in summer 2002
  • Edgemoor Skilled Nursing Facility
  • 65 million Certificates of Participation
  • Eligible for SB 1128 (Medicaid) funding
  • Fall 2002

26
Conclusion
  • County continues to exercise fiscal prudence and
    build reserves
  • Consistent with its strategic plan and financial
    objectives, the County has maintained a
    structurally balanced budget
  • County continues to maintain strong cash position
  • County is well positioned to manage future
    challenges, including potential impact of State
    budgetary actions
  • 263.2 million of July 1, 2002 reserves
  • No public hospital system
  • Diversified economy
  • Relatively less reliant on property tax revenues
  • Investment Pool is highly liquid and has highest
    possible ratings
  • Request highest rating for TRANs

27
APPENDIX A
28
Cashflows
29
Cashflows
30
Cashflows
TOTAL AMOUNT AVAILABLE FOR SHORT-TERM INTERFUND
BORROWING -- AS OF 05/06/2002     Solid
Waste Environmental Trust 91.2 million
Inactive Waste Site Management Fund 2.2
million Transnet Improvement Trust 20.7
million Community Services Agency Trust
25.3 million Workers Compensation 32.0
million Public Liability Insurance
Trust 19.5 million Park Land Dedication
Funds 6.9 million Airport Enterprise
Fund 3.8 million Recorders
Micrographic/Modernization Trusts 7.7
million DOT Transportation Fund 3.9
million Transit Enterprise Fund 3.0
million Penalty Assessments (Court
Constr.) 4.6 million Liquid Waste
Enterprise Fund 1.9 million Total
Available 222.7 million
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