Last week the San Diego Union-Tribune provided side-by-side commentaries on the California Institute for Regenerative Medicine (CIRM). CIRM is working toward putting a $5.5 billion bond on the ballot next year to continue its taxpayer-supported funding.
Read the supportive narrative here: https://www.sandiegouniontribune.com/opinion/story/2019-09-25/commentary-why-californias-landmark-stem-cell-agency-deserves-more-funding
Read my opposition here:
Thank you, Mr. Jester, for enthusiastically supporting my arguments. His comments are in the first piece.
Spyglass Hill Picnic
Mr. Merhfar sent a letter to the Daily Pilot and debriefed its readership on the recent annual Spyglass Hill Picnic in the second piece. My wife and I had a great time and enjoyed interacting with many of the area’s residents.
School Group 8, #659 – #752
It is down to the 30th percentile. This means 70 percent of California’s school districts are in better financial shape than the districts in this group.
Orange County has four school districts in the eighth group of 94:
#700 Capistrano Unified, down 36
#706 Irvine Unified, up 38
#710 Westminster, down 30
#744 Newport-Mesa Unified, down 14
For Group 7 and links to the first 6 groups, go to MOORLACH UPDATE — California’s and Group 7’s Fiscal Health — September 30, 2019.
25th Anniversary Look Back
Every fall, The Bond Buyer holds a California conference. In its October 3rd, 1994 edition, it shared a panel discussion in “California Democrat for Treasurer Says Taxes Are the Answer to the State’s Gap,” by Brad Altman (see MOORLACH UPDATE — Start to Finish — June 30, 2017).
Chris Ailman was quoted. He is now the Chief Investment Officer of CalSTRS, so we get to interact on occasion when I’m in Sacramento. He made a great observation on marking to market (see MOORLACH UPDATE — Reducing Debt Transparency? — September 25, 2019).
Here is the second half of this interesting piece, where Orange County gave a bold and worrisome account:
Investing public funds was the topic of a panel discussion held Thursday, and Orange County assistant treasurer Matt Raabe used the forum to explain how the county investment pool achieves above-average interest rate returns.
Raabe said the county uses a leveraging strategy to allow it to achieve high returns on its $8 billion fixed-income investment portfolio, which Raabe is responsible for managing on a daily basis.
Raabe did not specify the pool’s current interest rate return, which historically has averaged 8% — much better than the 4% to 5% achieved by the investment pool administered by the California treasurer’s office.
But Raabe indicated the county’s return has dropped, noting that “a significant impact” on the pool occurred earlier this year when federal funds rates were increased. “I wish we had been right about where interest rates are going, because I would be breathing a lot easier these days,” he said.
“Over the years, we’ve developed a reputation for being aggressive investors,” Raabe said. He said the aggressive reputation is accurate: “We like to take our base portfolio and leverage it.”
The leveraging strategy is based on an analysis of the cash flow needs of the 180 taxing districts that invest in the pool, Raabe said. Orange County asks the taxing districts, which include special districts, school districts, and cities, to provide cash flow projections.
“We tell them our current balance, and we ask them to define for us how much money they plan to leave with us for several years,” Raabe said. The separate cash flows are combined, and the county derives “one cash flow for our investment purposes,” he added.
This single cash flow “allows us to stretch out further on the maturity range” investment expectations “than we could otherwise do,” Raabe said. “We can extend further along the yield curve.”
Raabe said the pool contains “a large number” of long-term dollars pledged by the county’s airport, sanitation district, and other enterprise funds that give him “flexibility I might not otherwise have.”
Unexpected cash flow demands are covered by maintaining $1 billion “in overnight money” that can be tapped immediately “in case we’re wrong on some of our investment guesses, and our investors need their money sooner than they thought they did,” Raabe said. The liquidity “brings our overall yield down, but it is important to have, particularly in this environment” of rising interest rates.
Orange County has not crossed the line between being “aggressive and an overly risky investor,” Raabe said. For example, “we don’t trade our portfolios” like some public agencies. “We buy fixed-income government securities, and we intend to hold them until maturity.”
Another panelist, Christopher J. Ailman, chief investment officer and manager for Sacramento County’s $1.8 billion short-term fixed-income portfolio, said investment pools would be managed differently if they had to meet SEC requirements for daily valuation of their worth.
Municipal pools are run on an historical-cost basis required of mutual funds, which must maintain a $1 net asset value daily, Ailman said. “We’d look horrible” if the pools were required to meet the mutual fund standard, he said, adding that “we would manage the portfolios differently” if that were the case.
A year later, I would be speaking on a panel about Orange County at the next annual Bond Buyer California Conference. They wanted me so badly, they provided a limo from and back to the airport. It was an amazing experience.
For the last LOOK BACK, go to MOORLACH UPDATE — Reducing Debt Transparency? — September 25, 2019.
Readers React: CIRM has too little to show for so much investment
Maybe more/different/better data will change my mind
Re “Stem cell funding debate” (Sept. 26): Based solely on the arguments posed in the op-ed section, the winner, hands down in my opinion, is John Moorlach, who reasoned that very little in the way of results speaks for itself.
The California Institute for Regenerative Medicine (CIRM) had a lot of money and 15 years to prove that billions afforded it “might/could” yield a decent scientific return. A few anecdotal successes don’t do it for me — not at this level. What the pro-CIRM group did not reason, that may have highly influenced me, is that “these things take a lot more time than we were given (with strong supporting data here).”
And what Moorlach did say, that influenced me to a large extent, is “91% of the CIRM funding went to institutions with representatives on the CIRM board.” That just smells.
Today, I would have to vote no to more funding. Sorry, but sometimes you just have to say no, cut the cord and move on. There are too many other pressing needs in our state. Maybe more/different/better data will change my mind.
Spyglass picnic strengthens community
The Spyglass Hill community of Corona del Mar held its seventh annual meet and greet family picnic recently at Spyglass Hill Park. A good number of residents with their kids and grandchildren attended along with our elected officials, including Sen. John Moorlach (R-Costa Mesa), Mayor Diane Dixon, City Council members Will O’Neill, Brad Avery and Kevin Muldoon, City Manager Grace Leung and Newport Beach Police Area 4 Cmdr. Keith Krallman.
The fact that every year people can connect directly with each other and with their representatives at the city and state levels in a relaxed, open and family-oriented environment brings back the sense of community, belonging and oneness that has been gradually eroding at best and missing at worst from many communities across U.S.
Various activities for kids were planned and played with joy and excitement, including face paining, a watermelon contest and tug of war. Our caring and effective councilman for District 7, O’Neill, made a brief speech and awarded Therese Loutherback, chairwoman of the Spyglass Hill Picnic Committee, with an honorary title, “The Mayor of Spyglass Hill,” and gave her a specially designed sash.
Thanks to O’Neill and also our several vendor supporters. Just like in the previous years, complimentary burgers, drinks and ice cream were provided for the residents. Spyglass Hill community residents left with another joyful and memorable annual family picnic.
|Rank||School District||Population||Per Cap||2017||Chg|
|659||Lucia Mar Unified||78,750||($1,180)||612||-47|
|663||Morgan Hill Unified||65,169||($1,183)||382||-281|
|664||Rim of the World Unified||30,615||($1,187)||568||-96|
|670||Sierra Sands Unified||37,513||($1,203)||169||-501|
|672||Woodland Joint Unified||66,978||($1,207)||526||-146|
|675||Val Verde Unified||89,981||($1,220)||778||103|
|677||Desert Sands Unified||196,219||($1,222)||647||-30|
|678||Aromas/San Juan Unified||9,531||($1,226)||919||241|
|680||Mountain View Elementary||59,024||($1,230)||685||5|
|682||New Haven Unified||81,692||($1,232)||789||107|
|683||Greenfield Union Elementary||18,436||($1,237)||766||83|
|686||Shandon Joint Unified||1,944||($1,245)||814||128|
|688||Twin Rivers Unified||195,713||($1,248)||705||17|
|690||Jamul-Dulzura Union Elementary||9,388||($1,249)||881||191|
|693||Santa Paula Unified||33,169||($1,253)||524||-169|
|695||Galt Joint Union Elementary||30,963||($1,257)||724||29|
|696||West Park Elementary||1,933||($1,257)||480||-216|
|697||Los Molinos Unified||3,550||($1,258)||771||74|
|699||Guadalupe Union Elementary||7,563||($1,261)||787||88|
|701||Richland Union Elementary||20,301||($1,269)||741||40|
|707||Klamath-Trinity Joint Unified||6,382||($1,286)||791||84|
|708||Elk Grove Unified||337,557||($1,288)||800||92|
|712||Anderson Valley Unified||2,975||($1,310)||736||24|
|720||San Jacinto Unified||50,917||($1,324)||759||39|
|721||Manhattan Beach Unified||36,366||($1,326)||774||53|
|725||Vallejo City Unified||128,235||($1,347)||751||26|
|726||River Delta Joint Unified||16,424||($1,349)||784||58|
|729||Los Altos Elementary||44,223||($1,357)||533||-196|
|732||Brentwood Union Elementary||59,685||($1,367)||584||-148|
|733||San Francisco Unified||884,363||($1,371)||604||-129|
|734||Eastside Union Elementary||25,073||($1,373)||394||-340|
|738||Castro Valley Unified||54,327||($1,388)||806||68|
|739||Hickman Community Charter||1,330||($1,395)||376||-363|
|741||Menlo Park City Elementary||27,915||($1,404)||845||104|
|743||El Monte City||85,245||($1,410)||621||-122|
|745||Portola Valley Elementary||6,958||($1,411)||667||-78|
|746||Hacienda la Puente Unified||120,681||($1,414)||834||88|
|750||Del Norte County Unified||27,470||($1,429)||837||87|
|752||San Carlos Elementary||28,373||($1,429)||704||-48|
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