reconvene regular meeting: 7:00 pm - Irvine Unified School District

with a maximum weighted average maturity of 18 months. The investments in the Pools are marked to
market daily to determine the value of the Pools. To further maintain safety, the Chief Financial Officer of
the County (the “Chief Financial Officer”) is required to adhere to an investment strategy of diversification
in regard to instruments and maturities, as well as maintain internal controls for proper accounting and
reporting, compliance, document safekeeping, collateralization and qualified financial broker-dealers. For
details on the composition of the Educational Pool, see “- Composition of the Educational Pool” below.
The Participants use the Educational Pool to, among other things, invest and manage school
moneys for such accounts. In prior years, the County Treasurer has deposited proceeds from the SCLEA
Pooled Tax and Revenue Anticipation Note Program in the Educational Pool, which pursuant to the
Investment Policy (defined herein) is apportioned between the Extended Fund and the Educational Money
Market Fund. The ratio of apportionment is presently approximately one-half to the Extended Fund and
one-half to the Educational Money Market Fund and may be modified from time to time. While the intent
of the Participants is to invest all or a portion of any amounts on deposit in their Payment Accounts in the
Educational Pool, the Trust Agreement permits the Participants to invest said monies in any of the
Permitted Investments directly through the Trustee. See also Appendix B – “Summary of the Trust
Agreement - Investments” attached hereto.
General Statutory Requirements. Senate Bill 866, enacted by the California Legislature and
generally effective January 1, 1996, added Sections 27130 through 27137 to the California Government
Code requiring the board of supervisors in a county investing surplus funds to establish a treasury
oversight committee. Senate Bill 866 was modified by Senate Bill 864, which became effective on
July 11, 1996. In general, these provisions (i) require the treasury oversight committee to consist of
between three and eleven members nominated by the treasurer, and confirmed by the board of supervisors;
(ii) prohibit committee members from raising money for the treasurer or the board of supervisors (or
candidates for such offices) and restrict employment by members of the committee; (iii) require the annual
preparation of an investment policy to be reviewed and monitored by the treasury oversight committee,
which shall include, among other things, a list of the type of securities in which the county treasury may
invest and the maximum term of such securities, criteria for the selection of securities in which the county
treasury may invest and the maximum term of such securities, criteria for the selection of security brokers
and dealers, the requirement that the county treasurer provide the oversight committee with an investment
report as required by the board of supervisors, the manner of calculating and apportioning administrative
costs relating to the investment, handling and managing of funds, and criteria for considering requests to
withdraw funds from the county treasury; (iv) require performance of an annual audit by the treasury
oversight committee to ensure compliance with established investment policies; and (v) permit the
treasurer to grant withdrawal requests for the purposes of investing or depositing such funds outside of the
treasury pool only upon a finding by the treasurer that the withdrawal will not adversely affect the other
depositors in the pool.
In addition, Senate Bill 866 added Government Code provisions regarding the trust and fiduciary
relationship between the treasurer, those involved in the treasury investment process and the depositors,
investors and participants in the treasury. The legislation adopts the prudent investor standard for
investing, establishes priorities for such public investing (first safety, second liquidity and third return on
the funds invested), placed additional limitations on permitted treasury investments, including restricting
the use of reverse repurchase agreement and certain derivative instruments. Senate Bill 564, effective
January 1, 1996, establishes reporting requirements for the treasury in addition to those currently required.
Specific Compliance by Orange County. On December 19, 1995, the Board of Supervisors of
Orange County (the “Board of Supervisors”) established a Treasury Oversight Committee effective on
January 1, 1996, pursuant to the Government Code requirements. The Chief Financial Officer nominates
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