Board of Trustees

MEETING NOTICE Village of Scarsdale A Work Session of the Scarsdale Village Board of Trustees is scheduled for 6:00 PM on Tuesday, May 17, 2022. The meeting will be held in Rutherford Hall located on the 2nd Floor in Village Hall. Members of the public wishing to participate in the meeting can do so via online link at https://zoom.us/j/93183703358, or call into the meeting using 1- 929-436-2866 and entering the Meeting ID 931 8370 3358.* Agenda 1. Village Investment Strategy CS: 05-13-22 E-MAIL: Journal News (Lohud) Scarsdale 10583 Scarsdale Hamlet Hub Scarsdale Inquirer The Daily Scarsdale cc: Lobby Bulletin Board *For a brief Zoom tutorial or to troubleshoot a problem, see here: https://support.zoom.us/hc/en- us/articles/205566129-Raise-Hand-In-Webinar. For other user questions, please visit the Zoom Help Center: https://support.zoom.us/hc/en-us. Village of Scarsdale Memorandum Treasurer’s Office To: Rob Cole, Village Manager From: Ann Scaglione, Village Treasurer Date: May 11, 2022 Re: NYLAF Recommendation I request approval to add New York Liquid Asset Fund (NYLAF) to the list of designated official depositories with the Village. This request has arisen from the need to maximize interest earnings on Village funds, particularly against the backdrop of rising interest rates, as discussed with the Village Board during public budget meetings. NYLAF is a premier cooperative investment program and offers the suite of services necessary to prudently manage Village funds within our regulatory framework and associated investment plan alternatives. I’ll being with some brief background describing our current banking environment. Current Banking Environment Currently the Village is authorized to hold funds with the following banks: JP Morgan Chase (Chase), HSBC, Signature Bank, and New York Cooperative Liquid Assets Securities System (NYCLASS), which is a short-term, highly liquid investment fund, designed specifically for the public sector. NYCLASS has been the primary investment option for the Village. It should also be noted that we are not presently banking with HSBC, as our deposits earned no interest there and needed services were available from the other authorized institutions. In considering whether to hold funds on deposit in a bank or invest them to maximize interest earnings potential, one must consider the suite of services the Village receives in exchange for meeting minimum deposit thresholds. Next, I will summarize the service benefits and deposit thresholds necessary to maintain them. This information helps to inform discussion of cash flow and funds available to invest through NYCLASS and/or NYLAF for interest earnings maximization. Banks and Summary of Services Provided Chase:  Benefit: Village operations are executed in many transactions. Chase provides the Village with secure bank transactions, for both receivables and payables. We are using technology to safeguard the Village’s funds and working to improving processes to execute transactions in a productive and cost effect manner.  Value: high level of security with banking products  Current Interest rate: .03%  Minimum Deposit Threshold to Maintain Benefit: we have historically paid bank fees to Chase. We have focused on reducing bank fees; and compensating deposit balances offset fees charged. For detail on bank fees, see exhibit 2.  Current Balance: $18,780,951. Signature Bank:  Benefit: At no cost to the Village, Signature Bank picks up and counts parking meter coin on a weekly basis, as well as provides a Smart Safe, eliminating the need of depositing cash at a bank.  Value: operationally efficient  Current Interest rate: .50%  Minimum Deposit Threshold to Maintain Benefit: $1,500,000  Current Balance: $8,809,864 NYClass:  Benefit: NYCLASS is a short-term, highly liquid investment fund, designed specifically for the public sector.  Value: fund designed and managed to provide highest interest for liquid funds  Current Interest rate: .4958% Daily Yield  No Minimum Deposit Threshold to Maintain Benefit  Current Balance: $46,923,890 Please note, bank balances listed above are totals of funds from all Village and Town Funds NYLAF:  Benefit: NYLAF offers competitive yields for both Liquid and Fixed Term investments and provides services Cash Flow Optimization services  Value: NYLAF will work with us to customize an investment plan to assist the Village in achieving our investment goals  Current Interest rate: .618% Daily Yield  Minimum investment threshold: $500,000  Current balance: $0 Interest Income The chart below is a view of total interest earnings for the current fiscal year as compared to the prior fiscal year. Please note, interest income presented is total of Village and Town revenue. Total Interest Earning 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - June July Aug Sept Oct Nov Dec Jan Feb Mar April 2020/2021 2021/2022 Cash Flow To support our investment goals, I have prepared a cash flow projection of the General and Town funds for the upcoming fiscal year were prepared. This cash flow, shared in summary with NYLAF during our initial meeting, would be the starting point for our work. NYLAF would assist in analyzing cash needs and creating a balanced plan for investing. A copy of this cash projection is attached, Exhibit 1. Investment Goals Investment of Village funds has been a focus of the Board. With the implementation of the Strategic and Financial Pillar structure, conversations have been focused on improving efficiencies and maximizing results. As part of this goal, we worked to update our Investment Policy, adopted in December 2021, and we were asked to revise projections and develop an investment plan as part of our 2022/2023 budget process. A detailed cash flow review of the General and Town funds was completed and cash flow projections for the upcoming fiscal year were prepared. An investment plan was developed, then revised, and continues to be evaluated, with a goal of implementation by the start of our 2022/2023 fiscal year. To work toward an actionable investment plan, I contacted municipal peers to gain insights into current practices and discussed with each of our current financial institutions. This work led to interviews with NYCLASS and NYLAF to gain insights into their offerings and competitive strengths and weaknesses. Based on my research and the interview outcomes, I recommend that we recommend to the Village Board that NYLAF be added to our list of authorized depositories for three principal reasons: 1. NYLAF could compliment the Village Staff and Strategic and Financial Pillar in providing products and services to achieve our investment goals 2. NYLAF is experienced in dealing with municipal entities, understanding our guidelines and restrictions 3. NYLAF provides Competitive yields for both Liquid and Fixed Term investments Next, I offer some additional background about NYLAF. In addition, their presentation to staff and the Strategic and Financial Planning Pillar is attached for your review. NYLAF NYLAF was established in 1988 and specializes in school and local government investments. NYLAF manages a short-term, highly liquid investment fund similar to NYClass, and in addition offers a compliment of services targeted for municipal entities. Services include customizable investment support and programs, all in compliance with General Municipal Laws. Staff had detailed conversations with NYLAF representatives and current participants, which include the Scarsdale School District and the City of White Plains. Two senior level NYLAF representatives presented to the Strategic and Financial pillar on May 10th; a copy of their presentation is attached, and the committee was impressed with their background and offerings. NYLAF would provide a dedicated account representative to the Village, located in their Fishkill, NY office, with the support of their entire team. NYLAF would assist the Village in documenting an investment plan, executing the plan, and reporting to the Treasurer with regular statements of activity and to the Village Manager and Board on an agreed upon schedule. Similar to NYClass, there are no out of pocket fees in transactions with NYLAF. Interest rates are net of fees, with range between 10 and 15 basis points. Should the Village commit to an investment program with a minimum balance of $30M, fees would be set at 10 basis points. We believe that NYLAF would provide the services and expertise to assist the Village in refining cash flow projections and investing to an optimum result. Action 1. I request a resolution to be included on the May 24, 2022 Village Board agenda to authorize NYLAF as an official depository. 2. Investment Plan to be reviewed and updated accordingly.  Exhibit 1 Village of Scarsdale Monthly Cash Flow Projections Village - General Fund Only June July August September October November December January February March April May Cash Projection 20,938,000 18,881,000 44,646,000 46,110,000 42,779,000 40,207,000 36,316,000 36,632,000 34,414,000 32,699,000 30,306,000 19,062,000 Town Fund June July August September October November December January February March April May Cash Projection 11,813,000 12,679,000 12,979,000 17,135,000 57,860,000 17,510,000 19,063,000 26,333,000 35,550,000 3,132,000 4,633,000 35,085,000 Exhibit 2 - Chase Bank Fees: Village operations are executed in many transactions. Chase provides the Village with secure bank transactions, for both receivables ad payables. We are using technology to safeguard the Village’s funds and working to improving processes to execute transactions in a productive and cost effect. Over the last year, we have reduced bank fees and improved processes by implementing remote data capture at each workstation of the Treasurer’s office and encouraged electronic transactions over paper, for both receivables and payables. A detailed account analysis is provided by Chase each month, totaling the fee for bank services, and applied to the Village’s offsetting credit for balances held, the difference is a direct expense to the Village. The following is a summary of bank fees by month over the last Bank Fees 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - June July Aug Sept Oct Nov Dec Jan Feb Mar 2020/2021 2021/2022 It should be noted that as the Village aims to improve interest earnings, funds will be moved out of Chase, lowering compensating balance offset and resulting in increased bank fee expense. Village of Scarsdale Tuesday May 10th, 2022 Michael Marino Rajesh Chainani AVP, Relationship Manager SVP, Director PMA Financial Network, LLC PMA Financial Network, LLC 300 Westage Business Center Drive, Suite 405 2101 Oregon Pike, Suite 200 Fishkill NY 12524 Lancaster, PA 17601 845-305-4044 717-519-5922 mmarino@pmanetwork.com rchainani@pmanetwork.com Contents  NYLAF Overview  Team FINRA and SEC Registrations  References  Products and Services  Cash Flow Optimization (CFO) Overview  Sample Current Interest Rates (as of 5/6/22)  Fed Expectations for 2022/23  CFO Analysis Samples (Fixed Compared to Liquid  NYLAF Expenses  Sample Portfolios (Information and Education Purposes Only)  Operating  Reserves  Additional Information 2 NYLAF Overview  In 1998, NYLAF (The Fund) was created specifically to assist Local Governments (Schools and Municipal Entities) in the State of New York to help manage their investment needs.  It is similar to a “cooperative purchasing program”, which is defined as a type of cooperative arrangement, often among governmental entities such as schools and municipalities, to agree to aggregate demand to get lower prices from selected suppliers for health insurance, energy, etc.  NYLAF provides Local Governments multiple investment programs, in accordance with Article 5-G of the New York General Municipal Law, as amended, and Article 3-A of the General Municipal Law (Chapter 623 of the Laws of 1998).  NYLAF’s continued focus is to provide an unrivalled experience of investment and client service excellence on a daily basis to every Participant of the Fund. 3 FINRA and SEC Registrations Definitions Choosing an Investment Professional From FINRA Website (https://www.finra.org/investors/learn-to-invest/choosing-investment- professional) A qualified investment professional can help you make sound investment decisions. Investment professionals include registered financial professionals, also known as registered representatives or stockbrokers, investment advisers and financial planners. The person or team of professionals you work with will depend on the type of financial help you seek. When you choose an investment professional, it always pays to Ask and Check. Registered Financial Professionals Buy and sell securities for their customers, including individual investors. They are regulated by FINRA and the SEC. Learn more. Investment Advisers Provide advice about securities tailored to the needs of their clients. They are regulated by the SEC or state securities regulators. Learn more. 4 NYLAF Team is fully registered with FINRA and SEC Team Member FINRA Registered Professional Investment Advisor FINRA Registered Principal Rajesh Chainani    Mike Marino    Chase Byler    Ken Shuler   Mike Stramara   Brittany Dalziel   Aaron Fricke   Brandon Engle   Registered Financial Professionals Buy and sell securities for their customers, including individual investors. They are regulated by FINRA and the SEC. Investment Advisers Provide advice about securities tailored to the needs of their clients. They are regulated by the SEC or state securities regulators. https://www.finra.org/investors/learn-to-invest/choosing-investment-professional 5 NYLAF References (Regionally) Entity County Budget (Millions) Contact Phone Number Arsdley UFSD Westchester County $ 68.10 Cheri Rosenblatt 1-914-295-5556 City of White Plains Westchester County $ 203.40 Nino Pennachio 1-914-422-1397 Insurance Coop Westchester County $ 64.50 Awaiting Approval Irvington UFSD Westchester County $ 60.90 Carol Stein 1-914-691-9780 Mamaroneck UFSD Westchester County $ 137.60 Adrienne De Mita 1-914-220-3046 Municipality Westchester County $ 22.69 Awaiting Approval Scarsdale UFSD Westchester County $ 154.30 Jeff Martin 1-914-721-2423 School District Westchester County $ 90.75 Awaiting Approval School District Westchester County $ 73.15 Awaiting Approval School District Westchester County $ 49.57 Awaiting Approval White Plains CSD Westchester County $ 222.02 Lindsay Rose 1-914-422-2007 Putnam County Putnam $ 167.70 Michael Lewis 1-845-808-1075 County Neighboring County $ 704.56 Awaiting Approval County Neighboring County $ 830.00 Awaiting Approval Dutchess County Dutchess $ 532.60 John Forte 1-845-486-2033 6 Products & Services All NYLAF Investments fully comply with the New York General Municipal Law. NYMAX  100% Liquid Investment Pool for Local Governments in New York.  Offers Banking Services (Checking and Payroll) to Participants  100% invested in General Municipal Law compliant investments.'AAAm’ rating by S&P Global Ratings NYLAF FDIC Insured Reciprocal Deposit Program  Collateralized Deposits  Access multi-million-dollar FDIC protection through a single relationship. New York Choice Full Flex and Fixed Term  Weekly Liquidity for Full Flex Opportunities, Flexible Maturity Dates for Fixed Term  Approved Collateral consists of 102% of Principal Deposit (FHLB Irrevocable Letter of Credit or US Treasuries and Agencies) U.S. Treasury Securities  Securities are held in the Participant’s name by a third-party Custodian Bank  Flexible Maturity Dates Cash Flow Optimization  Construction and Maintenance of an investment portfolio matched to precise cashflow dates and needs. Bond Proceeds Management  Customized Account Structuring  Arbitrage Rebate Monitoring by 3rd Party at No Cost 7 Cash Flow Optimization (CFO) Program All NYLAF Investments fully comply with the New York General Municipal Law. Benefits  Maximize invested cash  Match expenditure obligations  Extend maturities to increase yield The Power of a Good Plan The result of the analysis and collaborative planning process is a daily cash flow plan and investment schedule. The investment schedule matches investments with the critical need dates to meet payroll, accounts payable, bond payments and other anticipated expenses 8 Cash Flow Optimization (CFO) Program All NYLAF Investments fully comply with the New York General Municipal Law. Let us make your life easier with the power of a strong plan. 9 Cash Flow Optimization (CFO) Program All NYLAF Investments fully comply with the New York General Municipal Law. NYMAX Daily Rate as of 5.6.22: 0.304% Daily Liquidity. Rated AAAm by S&P Global Ratings US Treasury Rates Normalized Yield Curve (3 months to 12 months) The above prices, yields, and maturities have been obtained from sources believed to be reliable, but are not necessarily complete and cannot be guaranteed. Price, yields, and availability of specific issues are subject to change 10 CFO analysis- Fed Expectations as of 5.6.22 Source: Bloomberg 11 CFO analysis- Fixed compared to Liquid Breakeven Fixed Investment Principal Net Rate Settlement Maturity Term Interest Earnings $ 1,000,000.00 1.25% 05/05/22 11/03/22 182 $ 6,232.88 Liquid Investment Principal Avg Liquid Rate Settlement Maturity Term Interest Earnings $ 1,000,000.00 0.75% 05/05/22 06/16/22 42 $ 863.01 $ 1,000,863.01 1.25% 06/16/22 07/28/22 42 $ 1,439.60 $ 1,002,302.61 1.75% 07/28/22 09/22/22 56 $ 2,691.11 $ 1,004,993.73 2.00% 09/22/22 11/03/22 42 $ 2,312.86 Total 182 $ 7,306.59 Liquid rates will need to increase immediately (which is not typical based on historic performance of liquid rates) with the anticipated Fed moves to the “lower band” of the Fed Funds rate to outperform the six-month fixed investment available as of 5/6/22. Please see the next page for historical performance of similar Cooperative Investment Programs in the State of New York for an historical example of the lag effect of liquid rates. 12 CFO analysis- Lag effect of Liquid Rates example 5/4/22-0.50% Increase Fed Funds Rate 3/16/22- 0.25% Increase Fed Funds Rate Avg yields from 3/16/22 to 5/5/22 (Liquid Rates) NYCLASS: 0.235% NYMAX: 0.161% Source: https://www.newyorkclass.org/rate/ Bloomberg 13 NYLAF Fees Commitment to Village of Scarsdale All NYLAF Investments fully comply with the New York General Municipal Law. Services included:  Cash Flow analysis  Structure of strategy (Cocreation with Village)  Execution of securities  Safekeeping (custodian service) at no additional charge  On-going analysis and reporting Fees for services (US Treasury Securities): NYLAF’s professional fees for services range from 10 basis points to a maximum of 15 basis points on treasury securities purchased. NYLAF is a not-for-profit organization in which after all expenses, a net yield is delivered to the Participant. Economies to scale enables NYLAF to provide additional value to each Participant. Additionally, NYLAF is willing to commit to a fixed expense of 10 basis point with a commitment of an average balance of $30 Million or more. 14 Sample Portfolio #1 – Operating Portfolio 15 Sample Portfolio #2 – Reserve Portfolio 16 NYLAF Additional Information The following information is related to the NYMAX Portfolio only. NYLAF Board of Directors on 4/29/2022 approved an updated expense schedule for the NYMAX Portfolio (which are currently in effect):  Administrator: 0.04% from 0.11%  Investment Consultant: 0.05% from 0.075%  Marketing: 0.04% from 0.08% Updated Information Statements and Municipal Cooperative Agreements will be distributed to Participants after the July Board of Directors meeting (7/29/22). The AAAm rating is based on Standard & Poor’s analysis of the fund’s credit quality, market price exposure, and management. The rating signifies excellent safety of invested principal and a superior capacity to maintain a $1.00 per share net asset value. However, it should be understood that the rating is neither a “market” rating nor a recommendation to buy, hold or sell securities. 17 Disclaimer Securities, public finance services and institutional brokerage services are offered through PMA Securities, LLC. PMA Securities, LLC is a broker-dealer and municipal advisor registered with the SEC and MSRB, and is a member of FINRA and SIPC. PMA Asset Management, LLC, an SEC registered investment adviser, provides investment advisory services to local government investment pools. All other products and services are provided by PMA Financial Network, LLC. PMA Financial Network, LLC, PMA Securities, LLC and PMA Asset Management, LLC (collectively “PMA”) are under common ownership. Securities and public finance services offered through PMA Securities, LLC are available in CA, CO, FL, IL, IN, IA, MI, MN, MO, NE, NY, OH, OK, PA, SD, TX and WI. This document is not an offer of services available in any state other than those listed above, has been prepared for informational and educational purposes and does not constitute a solicitation to purchase or sell securities, which may be done only after client suitability is reviewed and determined. All investments mentioned herein may have varying levels of risk, and may not be suitable for every investor. PMA and its employees do not offer tax or legal advice. Individuals and organizations should consult with their own tax and/or legal advisors before making any tax or legal related investment decisions. Additional information is available upon request. For more information visit www.pmanetwork.com ©2021 PMA Financial Network, LLC 18