California Debt and Investment Advisory Commission

Introduction

The California Debt and Investment Advisory Commission (CDIAC) provides information, education and technical assistance on debt issuance and public fund investments to local public agencies and other public finance professionals. The Commission was created in 1981 with the passage of Chapter 1088, Statutes of 1981 (AB 1192, Costa). This legislation established the California Debt Advisory Commission as the State's clearinghouse for public debt issuance information and required it to assist state and local agencies with the monitoring, issuance, and management of public debt. The Commission's name was changed to the California Debt and Investment Advisory Commission with the passage of Chapter 833, Statutes of 1996 (AB 1197 Takasugi) and its mission was expanded to cover public investments. The Commission is specifically required to:

• Serve as the state's clearing house for debt issuance information.
• Publish a monthly newsletter.
• Maintain contact with participants in the municipal debt industry to improve the market for public debt.
• Provide technical assistance to state and local governments to reduce issuance costs and protect the issuers' credit.
• Undertake or commission studies on methods to reduce issuance costs and improve credit ratings.
• Recommend legislative changes to improve the sale and payment of debt.
• Assist state financing authorities and commissions in carrying out their responsibilities.
• Collect specific financing information on debt issued through Mello-Roos Community Facilities Districts after January 1, 1993 or as a member of a Marks-Roos Bond Pool beginning January 1, 1996; and collect reports of draw on reserves or defaults from Mello-Roos Community Facilities Districts and Marks-Roos from public financing agencies required to report within 10 days of each occurrence.
• In conjunction with statewide associations representing local agency financial managers and elected officials, develop a continuing education program aimed at state and local officials who have direct or supervisory responsibility for the investment of public funds.
• Receive notice of public hearings and copies of resolutions adopted by a Joint Powers Authority for certain bonds authorized pursuant to Marks-Roos Local Bond Pooling Act of 1985.

The Commission Members

The Commission consists of nine members, including the State Treasurer, the Governor or the Director of Finance, the State Controller, two local government finance officials, two Assembly Members, and two Senators. The State Treasurer serves as the Chairperson and appoints the two local government officials. The Speaker of the Assembly appoints the Assembly representatives and the Senate Rules Committee appoints the Senate representatives. Appointed members serve four-year terms, or at the pleasure of their appointing power. The Commission directs the activities of the staff.

The Technical Advisory Committee

To assist the Commission in its decision-making responsibility, a Technical Advisory Committee (TAC) was established in 1983. Comprised of individuals involved in municipal debt issuance process and/or the investment of public funds, including bond counsel, financial advisors, underwriters, trustees, credit analysts, insurance providers, investors, investment advisors, and local issuers and investors, the TAC serves two primary functions:

1. To assist CDIAC in its deliberations by providing a forum for discussion of issues, problems, and opportunities related to public agency debt transactions and the investment of public funds; and
2. To ensure a proper technical review of public finance and investment products developed by CDIAC or its contractors. Currently, the TAC is divided into two groups. One group focuses on debt issuance issues while the second group focuses on public investment issues.

Since its inception, the TAC has continually provided Commission staff with valuable advice on a wide variety of issues, ranging from the contents of CDIAC's reporting forms to emerging issues in public finance. TAC members serve without compensation, and also serve as faculty for the Commission's education seminars.

The Commission's Programs

In order to carry out its mission of assisting state and local agencies on matters related to debt issuance and management, the investment of public funds, and economic development financing tools, the Commission engages in a wide range of activities and functions. These activities can be classified into three general program areas: data collection, policy research, and technical assistance.

Data Collection

In compliance with its statutory requirements, CDIAC maintains a debt issuance database. The debt issuance repository is considered the most comprehensive and accessible database of California debt issuance in existence. Depending on the needs of state and local governments and market conditions, the volume of data processing may range from 2,500 to 4,000 individual debt issuance reports received each year. Data from these reports are the basis for debt statistics and analysis released by the Commission.

As the state's clearinghouse for public debt issuance information, the Commission has compiled data on all public debt issued in California since January 1, 1982. All issuers of state and local government debt are required to submit issue-related information to the Commission 30 days prior to the proposed sale date. In addition, no later than 45 days from the actual sale date, issuers are required to submit a report of final sale to the commission. The information reported to CDIAC includes the sale date, the name of the issuer, the type of sale, the principal amount, the type of debt instrument, the source(s) of repayment, the purpose of the financing, the rating of the issue, and the members of the financing team.

CDIAC has instituted for use by all bond counsels and issuers or their representatives reporting forms to report debt issuance pursuant to California Government Code Section 8855(g). CDIAC periodically updates its reporting forms (Report of Proposed Debt Issuance and Report of Final Sale).

The results of the report submissions are published in a monthly calendar of debt issuance in the DEBT LINE monthly newsletter and included in annual reports on debt issuance.

Policy Research

The Commission's mandated duties include some that are intended to improve the market for, and indeed the marketability of, public debt issued in California. Such functions include efforts to maintain contact with participants in the municipal debt industry, to undertake or commission studies of various aspects of the market in order to provide guidance to state and local debt issuers, and to recommend legislative changes in matters affecting public debt issuers. To fulfill these functions, CDIAC's Policy Research Unit draws on information from CDIAC's debt issuance database, public and private experts throughout the municipal industry, public and private finance groups, periodicals and journals, and other existing resources. Research staff remains knowledgeable of developments and events in the municipal and other financial markets, and work in conjunction with the Executive Director and with input and advice from Commission members and the TAC to determine what areas of interest to conduct research and analysis. Research staff prepares their findings and recommendations in the form of Issue Briefs, technical reports and articles for the DEBT LINE monthly newsletter.

Since 1996, the Commission also has been charged with providing education and assistance to local government officials on public investments. This mandate has lead to the publication of several reports, issue briefs, and a California Public Fund Investment Primer.

CDIAC researches issues that are of current interest and have practical relevance to public finance practitioners. These projects are typically designed to (1) keep issuers/investors apprised of emerging trends in public finance, (2) develop ways of reducing issuance costs, (3) provide financing options for local issuers, (4) raise the issuers'/investors' sophistication level with regard to debt issuance and public investments, respectively, and (5) preserve the integrity and viability of the public finance market by alerting policy makers to potential problem areas.

Technical Assistance

CDIAC places a high priority on making its data and expertise available to public agencies in useful forms. Accessibility is the crux of its technical assistance program. CDIAC's formal technical assistance program has two components. The first component is its seminar program. Since 1984, CDIAC has organized educational seminars focusing on public finance matters and the debt issuance process. Offered throughout the year at various locations in the State, CDIAC seminars are designed to: (1) introduce public officials who are new to the field of public finance to the debt issuance and investment process; (2) strengthen the expertise of public officials who are familiar with the municipal debt issuance process and the investment of public funds; and, (3) inform public officials about current topics that may affect public finance, public debt issuance and the investment of public funds.

In addition to the educational seminars, CDIAC has acted as co-sponsor of public finance-related conferences, symposia and seminars conducted by private companies and statewide associations. Such co-sponsorships allow CDIAC to contribute its expertise to the event, increase contacts with experts from public and private sectors, and keep abreast of current matters affecting public finance and the debt issuance process.

The third component of CDIAC's technical assistance program is responding to inquiries concerning California debt issuance. The Commission receives daily contacts from representatives of public and private entities and the media for data on debt issuance and information on the nature and application of specific debt instruments. CDIAC staff responds to over 2,000 such requests for information or assistance each year.