October 13, 2017 NOTICE

Transcription

1 October 13, 2017 NOTICE The Board of Directors of the Kaweah Delta Health Care District will meet in an open Finance, Property, Services, and Acquisition Committee meeting at 8:00AM on Thursday October 19, 2017 in the Kaweah Delta Medical Center Acequia Wing - Executive Office Conference Room {400 W. Mineral King, Visalia}. The Board of Directors of the Kaweah Delta Health Care District will meet in a closed Finance, Property, Services & Acquisition Committee meeting immediately following the 8:00AM open meeting on Thursday October 19, 2017 in the Kaweah Delta Medical Center Acequia Wing - Executive Office Conference Room {400 W. Mineral King, Visalia} pursuant to Government Code Section and Health and Safety Code The disclosable public records related to agendas are available for public inspection at Kaweah Delta Medical Center Acequia Wing, Executive Offices (Administration Department) {1st floor}, 400 West Mineral King Avenue, Visalia, CA and on the Kaweah Delta Health Care District web page KAWEAH DELTA HEALTH CARE DISTRICT Lynn Havard Mirviss, Secretary/Treasurer Cindy Moccio Board Clerk, Executive Assistant to CEO DISTRIBUTION: Governing Board Legal Counsel Executive Team Chief of Staff West Mineral King Avenue Visalia, CA (559)

2 KAWEAH DELTA HEALTH CARE DISTRICT BOARD OF DIRECTORS FINANCE, PROPERTY, SERVICES & ACQUISITION COMMITTEE Thursday October 19, 2017 Kaweah Delta Medical Center / 400 West Mineral King Executive Office Conference Room (1 st floor Acequia Wing) ATTENDING: Directors: Lynn Havard Mirviss (chair) & John Hipskind, MD; Gary, Herbst, Chief Executive Officer; Thomas Rayner, SVP & Chief Operating Officer; Malinda Tupper, Interim Chief Financial Officer; Jennifer Stockton, Director of Finance; Julieta Moncada, Facilities Planning Director, Cindy Moccio, Recording OPEN MEETING 8:00AM Call to order Lynn Havard Mirviss Public / Medical Staff participation Members of the public wishing to address the Committee concerning items not on the agenda and within the subject matter jurisdiction of the Committee may step forward and are requested to identify themselves at this time. Members of the public or the medical staff may comment on agenda items after the item has been discussed by the Committee but before a Committee recommendation is decided. In either case, each speaker will be allowed five minutes. 1. Financials Review of the August and September 2017 financials - Malinda Tupper, Interim Chief Financial Officer and Jennifer Stockton, Director of Finance 2. Investment Report Semi-annual review of the Kaweah Delta Health Care District investment report Malinda Tupper, Interim Chief Financial Officer and Jennifer Stockton, Director of Finance 3. Proposed Refinancing of the Siemen s Lease and a portion of the 2012 Revenue Bonds Review of the proposed refinancing of the Siemen s lease and a portion of the 2012 Revenue Bonds Malinda Tupper, Interim Chief Financial Officer and Jennifer Stockton, Director of Finance B Revenue Bond Status Report Status report and next steps for projects Julieta Moncada, Facilities Planning Director 5. Approval of Closed Property, Services, and Acquisition Agenda: Closed Agenda Executive Office Conference Room 1 st floor Acequia Wing immediately following the 11:00AM open meeting 5.1. Conference with Real Property Negotiator {Government Code }: Property: 308 S. Johnson Street, APN and304 S. Johnson Street, APN Negotiating party: Kaweah Delta Health Care District: Dena Cochran and Roger A. Johnson price and terms - Gary Herbst, Chief Executive Officer Herb Hawkins Zone I Lynn Havard Mirviss Zone II John Hipskind, MD Zone III Carl Anderson Zone IV Nevin House Zone V Board Member Secretary/Treasurer Board Member President Board Member

3 5.2. Report involving trade secrets {Health and Safety Code 32106} Discussion will concern a proposed new services/programs estimated date of disclosure is 03/01/18 Gary Herbst, Chief Executive Officer Adjourn open meeting Lynn Havard Mirviss CLOSED MEETING Immediately following the 8:00AM open meeting Call to order Lynn Havard Mirviss 1. Conference with Real Property Negotiator {Government Code }: Property: 308 S. Johnson Street, APN and304 S. Johnson Street, APN Negotiating party: Kaweah Delta Health Care District: Dena Cochran and Roger A. Johnson price and terms - Gary Herbst, Chief Executive Officer 2. Report involving trade secrets {Health and Safety Code 32106} Discussion will concern a proposed new services/programs estimated date of disclosure is 03/01/18 Gary Herbst, Chief Executive Officer Adjourn open meeting Lynn Havard Mirviss In compliance with the Americans with Disabilities Act, if you need special assistance to participate at this meeting, please contact the Board Clerk (559) Notification 48 hours prior to the meeting will enable the District to make reasonable arrangements to ensure accessibility to the Kaweah Delta Health Care District Board of Directors meeting. Thursday, October 19, 2017 Finance, Property, Services & Acquisition Committee Page 2 of 2 Herb Hawkins Zone I Lynn Havard Mirviss Zone II John Hipskind, MD Zone III Carl Anderson Zone IV Nevin House Zone V Board Member Secretary/Treasurer Board Member President Board Member

4 Kaweah Delta Health Care District CONSOLIDATED INCOME STATEMENT SUMMARY Fiscal Year 2018 Income Statement Average Equiv Net Mgmt Other Mgmt Daily OP Patient Services Operating Contract Employee Depreciation Interest Services Census Census Revenue Revenue Revenue Payroll Labor Benefits Expense Expense Expense July ,156 $ 48,230,073 $ 2,211,182 $ 4,670,590 $ 22,049,818 $ 575,620 $ 4,914,452 $ 1,997,288 $ 405,981 $ 2,142,677 August ,720 $ 48,238,183 $ 2,569,270 $ 5,057,986 $ 21,311,920 $ 579,900 $ 5,657,463 $ 1,973,972 $ 405,516 $ 2,558,509 September October November December January February March April May June 2018 Year-to-date ,876 96,468,256 4,780,452 9,728,576 43,361,738 1,155,521 10,571,915 3,971, ,497 4,701,186 Budget , ,411,293 4,967,304 10,851,359 44,649, ,137 12,110,384 5,399, ,449 4,875,578 Variance (15) 105 $ (3,943,037) $ (186,852) $ (1,122,783) $ (1,287,434) $ 581,384 $ (1,538,468) $ (1,428,005) $ (168,952) $ (174,392) Current month ,720 $ 48,238,183 $ 2,569,270 $ 5,057,986 $ 21,311,920 $ 579,900 $ 5,657,463 $ 1,973,972 $ 405,516 $ 2,558,509 Budget ,385 50,205,647 2,483,652 5,425,679 22,324, ,068 6,055,192 2,699, ,225 2,437,789 Variance (18) 335 $ (1,967,464) $ 85,618 $ (367,694) $ (1,012,666) $ 292,832 $ (397,729) $ (725,660) $ (84,708) $ 120,720

5 Kaweah Delta Health Care District CONSOLIDATED INCOME STATEMENT SUMMARY Fiscal Year 2018 Income Statement Chargeable Nonchargeable Other Total Pharmacy Supplies Supplies Operating Operating Operating Investment Net Income w/o Net GOB Expense Expense Expense Expense Expense Income Income** GOB, PF & IC Revenue Net Income July 2017 August $ 2,312,503 $ 2,033,632 $ 4,013,490 $ 11,961,191 $ 52,406,654 $ 2,705,191 $ 406,281 $ 3,111,472 $ 85,796 $ 3,197,268 $ 2,250,857 $ 2,483,328 $ 4,170,744 $ 12,804,515 $ 54,196,725 $ 1,668,713 $ 372,435 $ 2,041,148 $ 89,831 $ 2,130,979 September October November December January February March April May June 2018 Year-to-date Budget Variance 4,563,360 4,516,960 8,184,234 24,765, ,603,379 4,373, ,716 5,152, ,627 5,328,247 5,200,356 4,109,156 7,450,532 27,812, ,161,381 3,068, ,510 3,813, ,989 3,992,073 $ (636,996) $ 407,804 $ 733,702 $ (3,046,644) $ (6,558,002) $ 1,305,329 $ 34,206 $ 1,339,535 $ (3,361) $ 1,336,174 Current month Budget Variance $ 2,250,857 $ 2,483,328 $ 4,170,744 $ 12,804,515 $ 54,196,725 $ 1,668,713 $ 372,435 $ 2,041,148 $ 89,831 $ 2,130,979 2,600,178 2,054,578 3,725,266 13,906,175 56,580,690 1,534, ,255 1,906,542 89,494 1,996,037 $ (349,321) $ 428,750 $ 445,478 $ (1,101,660) $ (2,383,965) $ 134,425 $ 180 $ 134,605 $ 337 $ 134,942

6 Kaweah Delta Health Care District CONSOLIDATED INCOME STATEMENT SUMMARY Fiscal Year 2018 Payroll Net Patient Net Patient & Contract Net Revenue Revenue Labor as a Operating Income Gross Deductions Per Cost Per Per Cost Per % of Net pat I/P Margin w/o GOB Patient from DFR & Adjusted Adjusted Adjusted Adjusted and Other Op I/P Revenue % % Revenue Revenue Bad Debt % Discharge Discharge Patient Day Patient Day Revenue Revenue % July 2017 August 4.9% 5.6% $ 167,760,145 $ 119,530, % $ 9,510 $ 10,334 $ 1,918 $ 2, % $ 86,669, % 3.0% 3.6% $ 174,792,902 $ 126,554, % $ 8,512 $ 9,564 $ 1,891 $ 2, % $ 87,628, % September October November December January February March April May June 2018 Year-to-date Budget Variance 3.9% 4.6% 342,553, ,084, % 8,984 9,927 1,904 2, % $ 174,298, % 2.6% 3.3% 340,257, ,845, % 9,842 11,091 1,950 2, % 176,536, % $ 2,296,028 $ 6,239, % $ (858) $ (1,164) $ (46) $ (94) 1.3% $ (2,238,040) -1.0% Current month Budget Variance 3.0% 3.6% $ 174,792,902 $ 126,554, % $ 8,512 $ 9,564 $ 1,891 $ 2, % $ 87,628, % 2.6% 2.8% 170,128, ,922, % 9,842 11,091 1,950 2, % 88,268, % $ 4,664,392 $ 6,631, % $ (1,330) $ (1,528) $ (59) $ (74) 0.8% $ (639,967) -1.8%

7 Kaweah Delta Health Care District CONSOLIDATED INCOME STATEMENT SUMMARY Fiscal Year 2018 Average FTEs per O/P Daily Adjusted O/P Revenue I/P Occupied Acute Days in Days in Days Cash Total Revenue % Revenue Bed ALOS A/R (Net) A/R (Gross) on Hand Surplus Cash July 2017 August $ 81,090, % $ 6, $ 267,353,335 $ 87,164, % $ 6, $ 256,733,495 September October November December January February March April May June 2018 Year-to-date $ 168,255, % $ 6, Budget 163,720, % 6,610 Variance $ 4,534, % $ 151 Current month $ 87,164, % Budget 81,860, % Variance $ 5,304, %

8 Supplemental Information for the Income Statement For the fiscal year ending June 30, 2018 July August Total Increases to Net Revenue: Intergovernmental Transfers Medi-Cal FFS $ 608,333 $ 608,333 $ 1,216,667 Medi-Cal Managed Care 383, , ,667 Medi-Cal Quality Assurance Funds 1,116,667 1,116,667 2,233,333 Medi-Cal DSH Funds 547, ,500 1,095,000 Medi-Cal Outpatient Supplemental Funds 108,990 62, ,272 Medi-Cal SNF Supplemental Funds Incentive Payment for Medi-Cal Program Total Increases 2,764,823 2,718,115 5,482,939 Decreases to Net Revenue: Value Based Purchasing Adjustment (9,564) (10,891) (20,455) Medicare Readmission Adjustment Medicare DSH cuts effective 10/1/ ,364 23,972 66,336 Changes in RAC Allowance (76,359) 21,088 (55,271) Total Decreases (43,560) 34,169 (9,390)

9 Supplemental Information for the Income Statement For the fiscal year ending June 30, 2018 July August Total Net impact on net revenue $ 2,721,264 $ 2,752,285 $ 5,473,548 RAC Receivable Balance Beginning Receivable Balance $ 12,819,841 $ 4,511,781 Additional RAC Denials (8,308,060) (6,873) 4,511,781 4,504,908 Beginning Allowance 4,126,937 4,050,578 Increases/Decreases to allowance (76,359) 21,088 4,050,578 4,071,666 Ending Receivable Balance (net of allowance) $ 461,203 $ 433,242 Acute Inpatient Payor Mix Medicare 36.6% 39.8% 39.4% Medicare Managed Care 8.8% 7.2% 7.9% Medi-Cal FFS 8.8% 9.2% 8.7% Medi-Cal Managed Care 29.9% 27.3% 27.9% Charity 0.0% 0.3% 0.2% Indemnity 1.4% 2.5% 2.0% Managed 13.5% 13.3% 13.3% Other 0.9% 0.3% 0.5% 100% 100% 100.0% Surgical Cases Inpatient Outpatient Cardiac

10 Supplemental Information for the Income Statement For the fiscal year ending June 30, 2018 July August Total Robotic ,701 Cardiac Cath Volumes Inpatient ,129 Outpatient ,197 1,002 1,324 2,326 ED Visits 7,531 7,536 15,067 Urgent Care and Sequoia Prompt Care Visits 6,797 7,528 14,325 Rural Health Clinic Visits 11,346 9,825 21,171 OB Deliveries Percentage of Gross Revenue Inpatient 53.2% 51.7% Outpatient 46.8% 48.3%

11 KAWEAH DELTA HEALTH CARE DISTRICT STATEMENT OF REVENUE AND EXPENSES FISCAL YEAR 2018 August Year To Date FY18 FY17 $ Change % Change FY18 FY17 $ Change % Change OPERATING REVENUE: Net patient service revenue $ 48,238,183 $ 45,380,939 $ 2,857, % $ 96,468,256 $ 90,139,892 $ 6,328, % Other operating revenue 7,627,255 5,880,100 1,747, % 14,509,028 12,900,494 1,608, % Total operating revenue 55,865,438 51,261,038 4,604, % 110,977, ,040,386 7,936, % OPERATING EXPENSES: Salaries and wages 21,311,920 21,096, , % 43,361,738 42,412, , % Employee benefits 5,657,463 6,752,475 (1,095,012) -16.2% 10,571,915 11,519,531 (947,615) -8.2% Total employment expenses 26,969,383 27,849,036 (879,653) -3.2% 53,933,654 53,931,560 2, % Medical and other supplies 8,904,929 7,921, , % 17,264,554 15,958,271 1,306, % Medical and other fees 6,468,011 6,368,778 99, % 12,403,976 12,308,321 95, % Purchased services 3,068,395 2,222, , % 5,799,210 4,946, , % Repairs and maintenance 1,831,262 1,879,526 (48,264) -2.6% 3,835,268 4,092,233 (256,965) -6.3% Utilities 513, ,831 10, % 1,038,207 1,006,616 31, % Rents and leases 487, ,335 59, % 938, ,818 82, % Depreciation and amortization 1,973,972 1,878,556 95, % 3,971,261 3,777, , % Interest Expense 405, ,908 (51,391) -11.2% 811, ,338 (96,840) -10.7% Other Expenses 1,016,214 1,082,717 (66,503) -6.1% 1,905,852 2,275,370 (369,518) -16.2% Management Services Expenses 2,558,509 2,264, , % 4,701,186 4,125, , % Total operating expenses 54,196,725 52,854,482 1,342, % 106,603, ,185,239 2,418, % OPERATING MARGIN 1,668,713 (1,593,443) 3,262, % 4,373,904 (1,144,853) 5,518, % NONOPERATING REVENUE: Incentive Compensation Provider Fee Revenue - Investment Income 372, ,722 (53,287) -12.5% 778, ,609 51, % Net GOB Revenue 89,831 84,747 5, % 175, ,794 9, % Total nonoperating revenue 462, ,469 (48,203) -9.4% 954, ,403 60, % EXCESS MARGIN $ 2,130,979 $ (1,082,974) $ 3,213, % $ 5,328,247 $ (251,449) $ 5,579, %

12 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% (1.0%) (2.0%) (3.0%) Kaweah Delta Health Care District Kaweah Delta Health Care District 9.0% EXCESS MARGIN FY 2018 FY 2017 Budget Benchmark FY 2018 YTD Avg 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% (1.0%) (2.0%) (3.0%) (4.0%) OPERATING MARGIN FY 2018 FY 2017 Budget Benchmark FY 2018 YTD Avg AVERAGE DAILY CENSUS FY 2018 FY 2017 Budget FY 2018 YTD Avg

13 $2,500 Kaweah Delta Health Care District NET PATIENT REVENUE PER ADJ PATIENT DAY $2,400 $2,300 $2,200 $2,100 $2,000 $1,900 $1,800 $1,700 FY 2018 FY 2017 Budget FY 2018 YTD Avg $2,600 COST PER ADJUSTED PATIENT DAY $2,500 $2,400 $2,300 $2,200 $2,100 $2,000 $1,900 $1,800 $1,700 FY 2018 FY 2017 Budget FY 2018 YTD Avg FTEs PER ADJUSTED OCCUPIED BED FY 2018 FY 2017 Budget FY 2018 YTD Avg

14 1.60 Kaweah Delta Health Care District CASE-MIX INDEX WITHOUT NORMAL NEWBORNS FY 2018 FY 2017 FY 2018 YTD Avg NET DAYS IN ACCOUNTS RECEIVABLE FY 2018 FY 2017 Benchmark FY 2018 YTD Avg DAYS CASH ON HAND Kaweah Delta Health Care District FY 2018 FY 2017 Benchmark FY 2018 YTD Avg

15 60.0% 55.0% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2,500,000 2,450,000 2,400,000 2,350,000 2,300,000 2,250,000 2,200,000 2,150,000 2,100,000 2,050,000 2,000,000 1,950,000 1,900,000 1,850,000 1,800,000 1,750,000 1,700,000 1,650,000 1,600,000 Kaweah Delta Health Care District GROSS ACCOUNTS RECEIVABLE AGING Current Sep 31-Dec 31-Mar 30-Jun AVERAGE DAILY COLLECTIONS FY 2018 FY 2017 FY 2018 YTD Avg CASH TO NET REVENUE REALIZATION % % % % % % 95.00% 90.00% 85.00% 80.00% 75.00% FY 2018 FY 2017 FY 2018 YTD Avg

16 22.00% 21.00% 20.00% 19.00% 18.00% 17.00% 16.00% 15.00% 14.00% 13.00% Kaweah Delta Health Care District SUPPLIES COST AS A PERCENTAGE OF OPERATING REVENUE FY 2018 FY 2017 Budget FY 2018 YTD Avg SALARIES & CONTRACT LABOR AS A % OF TOTAL OPERATING REVENUE 65.00% 60.00% 55.00% 50.00% 45.00% 40.00% 35.00% FY 2018 FY 2017 Budget FY 2018 YTD Avg

17 KAWEAH DELTA HEALTH CARE DISTRICT RATIO ANALYSIS REPORT AUGUST 31, 2017 LIQUIDITY RATIOS June 30, Current Prior Moody's Month Month Unaudited Median Benchmark Value Value Value Aa A Baa Current Ratio (x) Accounts Receivable (days) Cash On Hand (days) Cushion Ratio (x) Average Payment Period (days) CAPITAL STRUCTURE RATIOS Cash-to-Debt 107.0% 111.3% 109.6% 225.6% 160.6% 112.1% Debt-To-Capitalization 35.3% 35.4% 35.6% 27.6% 33.9% 43.5% Debt-to-Cash Flow (x) Debt Service Coverage Maximum Annual Debt Service Coverage (x) Age Of Plant (years) PROFITABILITY RATIOS Operating Margin 3.9% 4.9% 2.3% 4.0% 3.2% 1.1% Excess Margin 4.6% 5.6% 2.6% 7.5% 6.1% 3.4% Operating Cash Flow Margin 8.3% 9.3% 6.7% 9.7% 10.0% 7.8% Return on Assets 3.6% 4.4% 2.1% 5.4% 4.6% 2.8% *For Moody's Reporting Purposes, bad debt is reflected as an operating expense

18 KAWEAH DELTA HEALTH CARE DISTRICT BALANCE SHEET AUGUST 31, 2017 ASSETS AND DEFERRED OUTFLOWS CURRENT ASSETS Current Period June 30, 2017 (Unaudited) Cash and cash equivalents $ 10,235,883 $ 3,992,275 Accounts receivable: Patient accounts, less allowance for doubtful accounts 98,956,464 92,049,996 Other receivables 19,376,769 20,986, ,333, ,036,101 Medicare and Medi-Cal settlements 32,130,733 25,947,397 Inventories 7,870,219 8,168,590 Prepaid expenses 9,177,038 8,375,461 Current portion of assets whose use is limited 12,569,872 12,147, ,316, ,667,510 ASSETS WHOSE USE IS LIMITED, less current portion Board designated cash and assets 257,675, ,913,339 Revenue bond assets held in trust 79,585,247 81,830,759 Assets in self-insurance trust fund 5,647,060 5,642, ,908, ,386,673 CAPITAL ASSETS Land 15,758,181 15,758,181 Buildings and improvements 322,424, ,412,653 Equipment 193,657, ,438,466 Construction in progress 51,965,528 47,257, ,805, ,866,737 Less accumulated depreciation 290,038, ,440, ,767, ,425,974 Property under capital leases, less accumulated amortization 7,142,984 7,485, ,910, ,911,158 OTHER ASSETS Property not used in operations 3,413,370 3,420,518 Health-related investments 3,263,017 3,342,533 Other 6,909,836 7,002,445 13,586,223 13,765,496 DEFERRED OUTFLOWS 12,664,521 12,719,424 $ 860,385,922 $ 855,450,261

19 KAWEAH DELTA HEALTH CARE DISTRICT BALANCE SHEET AUGUST 31, 2017 LIABILITIES AND NET ASSETS Current Period June 30, 2017 (Unaudited) CURRENT LIABILITIES Accounts payable and accrued expenses $ 26,304,514 $ 31,349,099 Accrued payroll and related liabilities 44,879,535 39,858,647 Long-term debt, current portion 8,291,021 8,180,021 79,475,070 79,387,767 LONG-TERM DEBT, less current portion Bonds payable 258,516, ,960,479 Capital leases 16,432,220 16,870, ,949, ,831,088 NET PENSION LIABILITY 51,852,454 51,749,371 OTHER LONG-TERM LIABILITIES 26,389,230 25,235,748 NET ASSETS Unrestricted 295,873, ,811,158 Invested in capital assets, net of related debt 100,434,971 99,956,382 Restricted 31,411,581 30,478, ,720, ,246,287 $ 860,385,922 $ 855,450,261

20 KAWEAH DELTA HEALTH CARE DISTRICT SUMMARY OF FUNDS August 31, 2017 Maturity Investment G/L Board designated funds Date Yield Type Account Amount Total LAIF 1.08 Various 48,058,860 Cal Trust 1.45 Cal Trust 20,792,024 Wells Cap 0.02 Money market 98,003 PFM 0.02 Money market 1,154,024 PFM 15-Mar ABS Ally Auto 320,000 PFM 15-Dec ABS Ally Auto 360,000 PFM 5-May MTN-C American Express 450,000 PFM 15-Dec ABS American Express 330,000 PFM 15-Aug MTN-C American Honda Mtn 1,305,000 PFM 20-Jul MTN-C American Honda Mtn 420,000 PFM 7-Feb CD Bank of CD 1,200,000 PFM 5-Apr CD Bank of Nova 2,000,000 PFM 15-Apr MTN-C Bank of NY 900,000 PFM 10-May MTN-C BB T Corp 450,000 PFM 1-Oct MTN-C Burlington North 425,000 PFM 30-Nov CD Canadian C D 1,800,000 PFM 15-Nov ABS Carmax Auto 384,264 PFM 20-Sep MTN-C Cisco Systems Inc 800,000 PFM 25-Apr MTN-C Citigroup 1,000,000 PFM 15-Jan MTN-C Comcast Corp 450,000 PFM 15-Mar Municipal Connecticut ST 500,000 PFM 5-Aug U.S. Govt Agency FHLB 2,250,000 PFM 15-Nov U.S. Govt Agency FHLB 1,440,000 PFM 14-Jul U.S. Govt Agency FHLB 1,775,000 PFM 25-Jul ABS FHLMC 163,638 PFM 15-Sep ABS FHLMC 4,390 PFM 25-Feb ABS FNMA 167,813 PFM 25-Apr ABS FNMA 291,993 PFM 25-Jan ABS FNMA 344,671 PFM 2-Aug U.S. Govt Agency FNMA 1,000,000 PFM 28-Aug U.S. Govt Agency FNMA 1,650,000 PFM 25-Sep ABS FNMA 757,285 PFM 26-Nov U.S. Govt Agency FNMA 750,000 PFM 6-May U.S. Govt Agency FNMA 3,650,000 PFM 15-Nov ABS Ford Credit Auto 238,631 PFM 15-Feb ABS Ford Credit Auto 421,320 PFM 15-Jun ABS Ford Credit Auto 355,000 PFM 8-Jan MTN-C General Electric Cap 500,000 PFM 13-Dec MTN-C Goldman Sachs 900,000 PFM 5-Jun MTN-C Home Depot Inc 425,000 PFM 15-Aug ABS Honda Auto 900,000 PFM 15-Sep ABS Hyundai Auto 175,000 PFM 15-Apr ABS Hyundai Auto 465,000 PFM 16-Aug ABS Hyundai Auto 430,000 PFM 17-May MTN-C IBM 875,000 PFM 15-Jun ABS John Deere 195,000 PFM 22-Jun MTN-C John Deere 200,000 PFM 15-Oct ABS John Deere 340,000 PFM 23-Jun MTN-C JP Morgan 1,000,000 PFM 12-Feb MTN-C Microsoft Corp 450,000 PFM 21-Apr MTN-C Morgan Stanley 450,000 PFM 15-Oct ABS Nissan Auto 283,301 PFM 16-Mar ABS Nissan Auto 509,881 PFM 30-Nov CD Nordea Bank 1,800,000 PFM 15-Sep MTN-C Oracle Corp 900,000 PFM 6-Oct MTN-C Pepsico Inc 1,320,000 PFM 8-Mar MTN-C PNC Funding Corp 494,000 PFM 9-Mar CD Royal Bank CD 1,800,000 PFM 2-Aug CD Skandin Ens CD 2,000,000 PFM 19-May MTN-C State Street Corp 245,000 PFM 3-May CD Sumito MTSU 1,625,000 PFM 10-Jan CD Svenska NY CD 1,800,000 PFM 12-Mar MTN-C Texas Instruments 180,000 PFM 15-May ABS Toyota Auto Recvs 471,353 PFM 16-Feb ABS Toyota Auto Recvs 225,000 PFM 15-Nov ABS Toyota Auto Recvs 250,000 PFM 12-Mar MTN-C Toyota Motor 550,000 PFM 16-May MTN-C United Parcel 450,000 PFM 15-May Municipal Univ of CA 1,180,000 PFM 24-May MTN-C US Bancorp 900,000 PFM 3-Aug CD Westpac Bking CD 1,570,000 PFM 4-Sep MTN-C Intl BK 1,250,000 PFM 29-Feb U.S. Govt Agency US Treasury Bill 2,325,000 PFM 31-Mar U.S. Govt Agency US Treasury Bill 998,000 PFM 31-Jul U.S. Govt Agency US Treasury Bill 1,375,000 PFM 31-Aug U.S. Govt Agency US Treasury Bill 3,500,000 PFM 31-Oct U.S. Govt Agency US Treasury Bill 2,875,000 PFM 15-Nov U.S. Govt Agency US Treasury Bill 2,655,000 PFM 30-Nov U.S. Govt Agency US Treasury Bill 1,950,000 PFM 31-Dec U.S. Govt Agency US Treasury Bill 1,525,000 PFM 31-May U.S. Govt Agency US Treasury Bill 1,750,000 PFM 31-Aug U.S. Govt Agency US Treasury Bill 2,250,000 PFM 31-Aug U.S. Govt Agency US Treasury Bill 5,750,000 PFM 31-Oct U.S. Govt Agency US Treasury Bill 290,000 PFM 31-Dec U.S. Govt Agency US Treasury Bill 3,600,000 PFM 28-Feb U.S. Govt Agency US Treasury Bill 500,000 PFM 31-Oct U.S. Govt Agency US Treasury Bill 2,000,000 PFM 4-Mar MTN-C Walt Disney Co 375,000 PFM 30-Jan MTN-C Wells Fargo Company 850,000 PFM 22-Jul MTN-C Wells Fargo Company 1,150,000 Torrey Pines Bank 5-Mar CD Torrey Pines Bank 3,002,269 Wells Cap 22-Feb MTN-C American Honda Mtn 500,000 Wells Cap 23-Feb MTN-C Apple, Inc 615,000 Wells Cap 15-Sep MTN-C Automatic Data 800,000 Wells Cap 19-Apr MTN-C Bank of America 435,000 Wells Cap 7-Feb MTN-C Bank of NY 1,000,000 Wells Cap 29-Jun MTN-C BB T Corp 1,280,000 Wells Cap 25-Nov ABS BMW Vehicle Owner 980,000 Wells Cap 30-Oct MTN-C Boeing Co 1,000,000 Wells Cap 1-Apr Municipal California ST High 1,250,000 Wells Cap 25-Jul MTN-C Charles Schwab 340,000 Wells Cap 15-Apr ABS Chase Issuance 1,100,000 Wells Cap 1-Mar MTN-C Cisco Systems Inc 435,000 Wells Cap 19-Nov ABS Citibank Credit 1,100,000 Wells Cap 26-Sep MTN-C Citigroup 250,000 Wells Cap 7-Dec MTN-C Citigroup 500,000 Wells Cap 25-May MTN-C Coca Cola Co 500,000 Wells Cap 18-May MTN-C Costco Wholesale 1,000,000 Wells Cap 27-Apr MTN-C Credit Suisse 500,000 Wells Cap 1-May MTN-C E I DU PONT DE 500,000 Wells Cap 14-Dec U.S. Govt Agency FFCB 700,000 Wells Cap 12-Jun U.S. Govt Agency FFCB 750,000 Wells Cap 8-May U.S. Govt Agency FFCB 1,050,000 Wells Cap 8-Mar U.S. Govt Agency FHLB 495,000 Wells Cap 8-Mar U.S. Govt Agency FHLB 800,000

21 KAWEAH DELTA HEALTH CARE DISTRICT SUMMARY OF FUNDS August 31, 2017 Wells Cap 18-Feb U.S. Govt Agency FHLB 980,000 Wells Cap 14-Jun MTN-C Fifth Third Bank 800,000 Wells Cap 20-Jul U.S. Govt Agency FNMA 300,000 Wells Cap 27-Nov U.S. Govt Agency FNMA 500,000 Wells Cap 6-May U.S. Govt Agency FNMA 700,000 Wells Cap 17-Aug U.S. Govt Agency FNMA 1,400,000 Wells Cap 17-Aug U.S. Govt Agency FNMA 1,500,000 Wells Cap 5-Apr U.S. Govt Agency FNMA 920,000 Wells Cap 11-Dec MTN-C General Electric Cap 1,200,000 Wells Cap 15-Sep MTN-C Goldman Sachs 350,000 Wells Cap 15-Jan ABS Harley Davidson 1,100,000 Wells Cap 18-Dec ABS Honda Auto 720,000 Wells Cap 24-Sep MTN-C HSBC USA Inc 500,000 Wells Cap 1-Sep Municipal Inland Valley 750,000 Wells Cap 8-Jan MTN-C John Deere 390,000 Wells Cap 3-Mar MTN-C Johnson Johnson 500,000 Wells Cap 7-Jun MTN-C JP Morgan 910,000 Wells Cap 1-Nov Municipal Los Angeles, CA Muni 520,000 Wells Cap 25-Jul MTN-C Manuf Traders Trust 650,000 Wells Cap 15-Apr ABS Mercedes Benz Auto 1,200,000 Wells Cap 21-Apr MTN-C Morgan Stanley 750,000 Wells Cap 25-Apr MTN-C National Rural 950,000 Wells Cap 15-Apr MTN-C NBC Universal 400,000 Wells Cap 15-Feb Municipal New Jersey Economic 725,000 Wells Cap 18-Jun MTN-C New York Life Mtn 500,000 Wells Cap 16-Aug ABS Nissan Auto 1,050,000 Wells Cap 1-Sep Municipal Oakland Ca 650,000 Wells Cap 15-Sep MTN-C Paccar Fin Corp 600,000 Wells Cap 18-Oct MTN-C PNC Bank 575,000 Wells Cap 29-Apr MTN-C PNC Bank 400,000 Wells Cap 20-May MTN-C Qualcomm Inc. 150,000 Wells Cap 29-Apr MTN-C Reliance Stand Mtn 450,000 Wells Cap 1-Sep Municipal Riverside County 900,000 Wells Cap 1-Sep MTN-C Ryder System Inc 420,000 Wells Cap 1-Apr Municipal Sacramento Ca Public 1,200,000 Wells Cap 1-Jul Municipal San Diego Cnty 425,000 Wells Cap 1-Aug Municipal San Francisco 900,000 Wells Cap 15-Mar ABS Smart Trust 1,150,000 Wells Cap 18-Aug MTN-C State Street Corp 830,000 Wells Cap 12-Mar MTN-C Texas Instruments 630,000 Wells Cap 15-Oct ABS Toyota Auto 650,000 Wells Cap 18-Jul MTN-C Toyota Motor 500,000 Wells Cap 6-May MTN-C Union Bank 500,000 Wells Cap 1-Jul Municipal Univ California Ca 1,000,000 Wells Cap 28-Oct MTN-C US Bank Na Mtn 575,000 Wells Cap 15-Nov U.S. Govt Agency US Treasury Bill 240,000 Wells Cap 31-Jan U.S. Govt Agency US Treasury Bill 190,000 Wells Cap 31-Jan U.S. Govt Agency US Treasury Bill 1,100,000 Wells Cap 15-Apr U.S. Govt Agency US Treasury Bill 1,535,000 Wells Cap 31-May U.S. Govt Agency US Treasury Bill 625,000 Wells Cap 15-Jun U.S. Govt Agency US Treasury Bill 2,000,000 Wells Cap 31-Jul U.S. Govt Agency US Treasury Bill 300,000 Wells Cap 15-Sep U.S. Govt Agency US Treasury Bill 825,000 Wells Cap 30-Sep U.S. Govt Agency US Treasury Bill 1,950,000 Wells Cap 31-Dec U.S. Govt Agency US Treasury Bill 1,000,000 Wells Cap 31-Jan U.S. Govt Agency US Treasury Bill 900,000 Wells Cap 29-Feb U.S. Govt Agency US Treasury Bill 945,000 Wells Cap 15-Mar U.S. Govt Agency US Treasury Bill 4,000,000 Wells Cap 31-Mar U.S. Govt Agency US Treasury Bill 700,000 Wells Cap 31-May U.S. Govt Agency US Treasury Bill 1,650,000 Wells Cap 15-Jun U.S. Govt Agency US Treasury Bill 1,000,000 Wells Cap 31-Aug U.S. Govt Agency US Treasury Bill 1,055,000 Wells Cap 30-Sep U.S. Govt Agency US Treasury Bill 400,000 Wells Cap 30-Sep U.S. Govt Agency US Treasury Bill 1,500,000 Wells Cap 31-Oct U.S. Govt Agency US Treasury Bill 400,000 Wells Cap 30-Nov U.S. Govt Agency US Treasury Bill 150,000 Wells Cap 31-Dec U.S. Govt Agency US Treasury Bill 600,000 Wells Cap 28-Feb U.S. Govt Agency US Treasury Bill 700,000 Wells Cap 31-Mar U.S. Govt Agency US Treasury Bill 935,000 Wells Cap 30-Apr U.S. Govt Agency US Treasury Bill 875,000 Wells Cap 30-Jun U.S. Govt Agency US Treasury Bill 400,000 Wells Cap 30-Nov U.S. Govt Agency US Treasury Bill 1,160,000 Wells Cap 31-Dec U.S. Govt Agency US Treasury Bill 1,225,000 Wells Cap 28-Feb U.S. Govt Agency US Treasury Bill 390,000 Wells Cap 30-Apr U.S. Govt Agency US Treasury Bill 800,000 Wells Cap 30-Jun U.S. Govt Agency US Treasury Bill 660,000 Wells Cap 14-Dec MTN-C Visa Inc 700,000 West America Bank 24-Feb CD West America Bank 55,652 $ 245,901,372

22 KAWEAH DELTA HEALTH CARE DISTRICT SUMMARY OF FUNDS August 31, 2017 Self-insurance trust Maturity Investment G/L Date Yield Type Account Amount Total Wells Cap Money market ,243 Wells Cap Fixed income - L/T ,628, revenue bonds US Bank Project fund ,294,149 US Bank Principal/Interest payment fund ,510, A revenue bonds US Bank Principal/Interest payment fund , B revenue bonds US Bank Principal/Interest payment fund ,035,590 US Bank Project Fund ,077, revenue bonds US Bank Principal/Interest payment fund , general obligation bonds LAIF Interest Payment fund ,598,941 6,377,031 3,805, ,825 78,113, ,939 1,598,941 Operations Wells Fargo Bank 0.20 Checking (1,381,841) Wells Fargo Bank 0.20 Checking ,239,057 Payroll 5,857,216 Wells Fargo Bank 0.20 Checking (13,218) Wells Fargo Bank 0.20 Checking Benesyst ,328 Wells Fargo Bank Checking Resident Fund Bancorp Checking ,197 Union Bank Checking Workers' Comp ,157 5,914,373 Total investments $ 342,289,164 Kaweah Delta Medical Foundation Wells Fargo Bank Checking $ 3,390,761 Sequoia Regional Cancer Center Wells Fargo Bank Checking $ 502,989 Wells Fargo Bank Checking Kaweah Delta Hospital Foundation $ 502,989 VCB Checking Investments $ 407,739 Various S/T Investments ,001,951 Various L/T Investments ,364,024 Various Unrealized G/L ,501,830 $ 18,275,544 Summary of board designated funds: Plant fund: Uncommitted plant funds $ 188,047, Committed for capital 26,659, ,707,079 GO Bond reserve - L/T 1,947, k Matching 4,780, Cost report settlement - current 2,135, Cost report settlement - L/T 1,312, ,448,111 Development fund/memorial fund 115, Workers compensation - current 4,962, Workers compensation - L/T 15,941, ,903,000 $ 245,901,372

23 KAWEAH DELTA HEALTH CARE DISTRICT SUMMARY OF FUNDS August 31, 2017 Investment summary by institution: Total Trust Surplus Investments % Accounts Funds % Bancorp $ 42, % 42, % Cal Trust 20,792, % 20,792, % Local Agency Investment Fund (LAIF) 48,058, % 48,058, % Local Agency Investment Fund (LAIF) - GOB Tax Rev 1,598, % 1,598, % Wells Cap 88,035, % 6,377,031 81,658, % PFM 92,334, % 92,334, % Torrey Pines Bank 3,002, % 3,002, % Wells Fargo Bank 5,872, % 5,872, % US Bank 82,497, % 82,497, % Union Bank - 0.0% - 0.0% WestAmerica Bank 55, % 55, % Total investments $ 342,289, % $ 90,473,419 $ 251,815, % Investment summary of surplus funds by type: Investment Limitations Negotiable and other certificates of deposit $ 18,652,921 $ 75,545,000 (30%) Checking accounts 5,914,373 Local Agency Investment Fund (LAIF) 48,058,860 65,000,000 Cal Trust 20,792,024 Medium-term notes (corporate) (MTN-C) 43,549,000 75,545,000 (30%) U.S. government agency 86,163,000 Municipal securities 10,000,000 Money market accounts 1,252,027 50,363,000 (20%) Asset Backed Securties 17,433,540 50,363,000 (20%) $ 251,815,745 Return on investment: Current month 1.30% Year-to-date 1.37% Prospective 1.58% LAIF (year-to-date) 1.07% Budget 1.45% Material current-month nonroutine transactions: Sell/Called/Matured: FNMA, $1,250,000, 0.875% US TREASURY NOTE, $800,000, 1.00% US TREASURY NOTE, $1,6100,000, 1.50% HSBC BANK, $2,000,000, 1.54% SKANDIN ENS CD, $2,000,000, 1.48% TOYOTA MOTOR, $900,000, 1.700% Buy: US TREASURY NOTE, $500,000, 1.750% US TREASURY NOTE, $2,000, % ALLY AUTO, $360,000, 1.75% SKADIN Ens CD, $2,000,000, 1.84% US BANCORP, $900,000, 4.125% WESTPAC BKING CD, $1570,000, 2.05% INTL Bk, $1,250,000, 1.625% Fair market value disclosure for the quarter ended June 30, 2017 (District only): Quarter-to-date Year-to-date Difference between fair value of investments and amortized cost (balance sheet effect) N/A $ (574,634) Change in unrealized gain (loss) on investments (income statement effect) $ 222,009 $ (3,073,723)

24 KAWEAH DELTA HEALTH CARE DISTRICT SUMMARY OF FUNDS August 31, 2017 Investment summary of CDs: Bank of CD $ 1,200,000 Bank of Nova 2,000,000 Canadian C D 1,800,000 Nordea Bank 1,800,000 Royal Bank CD 1,800,000 Skandin Ens CD 2,000,000 Sumito Mtsu 1,625,000 Svenska NY CD 1,800,000 Torrey Pines Bank 3,002,269 Westpac Bking CD 1,570,000 West America Bank $ 55,652 18,652,921 Investment summary of asset backed securities: Ally Auto $ 680,000 American Express 330,000 BMW Vehicle Owner 980,000 Carmax Auto 384,264 Chase Issuance 1,100,000 Citibank Credit 1,100,000 FHLMC 168,028 FNMA 1,561,762 Ford Credit Auto 1,014,951 Harley Davidson 1,100,000 Honda Auto 1,620,000 Hyundai Auto 1,070,000 John Deere 535,000 Mercedes Benz Auto 1,200,000 Nissan Auto 1,843,182 Smart Trust 1,150,000 Toyota Auto 650,000 Toyota Auto Recvs $ 946,353 17,433,540 Investment summary of medium-term notes (corporate): American Express $ 450,000 American Honda Mtn 2,225,000 Apple, Inc 615,000 Automatic Data 800,000 Bank of America 435,000 Bank of NY 1,900,000 BB T Corp 1,730,000 Boeing Co 1,000,000 Burlington North 425,000 Charles Schwab 340,000 Cisco Systems Inc 1,235,000 Citigroup 1,750,000 Coca Cola Co 500,000 Comcast Corp 450,000 Costco Wholesale 1,000,000 Credit Suisse 500,000 E I DU PONT DE 500,000 Fifth Third Bank 800,000 General Electric Cap 1,700,000 Goldman Sachs 1,250,000 Home Depot Inc 425,000 HSBC USA Inc 500,000 IBM 875,000 Intl BK 1,250,000 John Deere 590,000 Johnson Johnson 500,000 JP Morgan 1,910,000 Manuf Traders Trust 650,000 Microsoft Corp 450,000 Morgan Stanley 1,200,000 National Rural 950,000 NBC Universal 400,000 New York Life Mtn 500,000 Oracle Corp 900,000 Paccar Fin Corp 600,000 Pepsico Inc 1,320,000 PNC Bank 975,000 PNC Funding Corp 494,000 Qualcomm Inc. 150,000 Reliance Stand Mtn 450,000 Ryder System Inc 420,000 State Street Corp 1,075,000 Texas Instruments 810,000 Toyota Motor 1,050,000 Union Bank 500,000 United Parcel 450,000 US Bank Na Mtn 575,000 US Bancorp 900,000 Visa Inc 700,000 Walt Disney Co 375,000 Wells Fargo Company $ 2,000,000 43,549,000 Investment summary of U.S. government agency: Federal National Mortgage Association (FNMA) $ 12,370,000 Federal Home Loan Bank (FHLB) 7,740,000 Federal Farmers Credit Bank (FFCB) 2,500,000 US Treasury Bill $ 63,553,000 86,163,000 Investment summary of municipal securities: California ST High $ 1,250,000 Connecticut ST 500,000 Inland Valley 750,000 Los Angeles, CA Muni 520,000 New Jersey Economic 725,000 Oakland Ca 650,000 Riverside County 900,000 Sacramento Ca Public 1,200,000 San Diego Cnty 425,000 San Francisco 900,000 Univ California Ca 1,000,000 Univ of CA $ 1,180,000 10,000,000

25 KAWEAH DELTA HEALTH CARE DISTRICT FINANCE DIVISION MEMORANDUM TO: FROM: Finance Committee, Board of Directors, Chief Executive Officer and Executive Team Malinda Tupper, Interim Chief Financial Officer (ext. #4065) and Jennifer Stockton, Director of Finance (ext. #5536) DATE: October 12, 2017 SUBJECT: Semi-annual Investment Report Each month the Board of Directors receives an investment report depicting the specific investments held by the District including the nature, amount, maturity, yield, and investing institution. On a semiannual basis, the District s Chief Financial Officer is required to review the District s investment policy with the Board, to discuss our compliance with that policy, to review the purpose of our various investment funds and to report on the performance, quality and risk profile of our current portfolio. At the Board s request, fulfillment of this requirement is hereby made by means of this written report and accompanying schedules. The purpose of this report is to assure the Board that the following primary objectives have been satisfied with respect to its fiduciary responsibility for the sound and prudent management of the District s monetary assets: 1) The Board of Directors understands and approves of the District s investment policy and is confident that management has effectively complied with this policy. 2) Management has effectively established appropriate funds and managed investments in a manner that safeguards the District s assets, meets the ongoing liquidity needs of the District and provides necessary funds for the various projects and budgets approved and adopted by the Board. 3) Within the constraints of the investment policy and the funding needs of the District, management effectively maximizes its return on investments to meet the income expectations adopted by the Board as part of the annual budget. 4) The acceptance/approval of this report includes the semi-annual review and approval of the investment policy (and any changes proposed) as well as the delegation of authority contained within the policy. For the purpose of assessing performance relative to each of these objectives, this written report describes and evaluates each of the following documents accompanying this report and demonstrates achievement of the stated objectives.

26 General Deposit and Investment Policy Included in this packet is a copy of the current investment, with no changes proposed. The District s current investment policy reflects strict compliance with the California Government Code (Code) sections through which govern the investment of surplus funds by governmental entities of the State of California, including political subdivisions thereof. At June 30, 2017 the District s investment portfolio complies with all reporting and investment provisions of this policy. Statement of Purpose Guidelines District Funds This document describes the various funds established by the District for the purpose of setting aside cash and investments for specific uses. The establishment of these funds (other than revenue or general obligation bond proceeds) is entirely at the discretion of the Board and are not mandated or controlled by any third-party or regulatory agency. Summary of Investment Funds This document depicts the carrying value, equal to amortized cost, of investments held at June 30, 2017 in each of the various funds established by the District. As indicated in this report, the District s total adjusted surplus funds at June 30, 2017 are $281.0 million. The following table depicts the District s adjusted surplus funds over the past three and one half years; the number of days cash on hand, a measure of liquidity; and the District s average daily operating expenses (excluding depreciation expense), the denominator used in the calculation of the liquidity measure; and the percent increase in each year over the prior year: June 30, 2017 December 31, 2016 December 31, 2015 December 31, 2014 Adjusted Surplus Funds $280,988,000 $262,399,000 $237,459,000 $233,171,000 Days Cash on Hand Average Daily Operating Expenses (excluding depreciation expense) $1,661,000 $1,648,000 $1,417,000 $1,226,000 Percent Increase in Daily Expenses 0.8% 16.3% 15.6% 5.1% Days Cash on Hand Benchmarks: Moody s A Rated Hospitals Days Revenue Bond Covenants 90 Days As illustrated in the above table, the District s liquidity ratio (days cash on hand) exceeds the covenant amount required by the District s revenue bond indentures. Total surplus funds have experienced a 20.5% increase from December 31, 2014 to June 30, 2017, but the number of days cash on hand has decreased 11.0% from The increase in total surplus funds of $47.8 million from 2014 to 2017 is mainly attributable to four factors:

27 1) The District generated cumulative net income of $58.3 million for the period. 2) Charitable contributions restricted for capital purchases of $3.3 million which are not included in net income but provide cash for use of specific projects as determined by the donor. 3) Cumulative debt payments of $18.2 million for the period. 4) Purchases of property, plant and equipment of $62.7 million of property, offset by cumulative depreciation expense of $56.0 million that is included in net income above. The total purchases amount does not include the amount funded from revenue bonds, general obligation bonds, or capital leases. Given the District s current average daily operating expense total of $1,661,000, achievement of the Moody s A -rated hospitals days cash on hand benchmark of would require approximately $76.9 million of additional cash resources. The District s surplus funds investment portfolio is separated into three different categories including short-term funds, medium-term funds and long-term funds. For the year ended June 30, 2017 the District experienced a total return of 0.71% on funds invested short-term including mainly its investment in the Local Agency Investment Fund (LAIF). The average return for LAIF for the year ended June 30, 2017 was 0.75%. The District s total return of 0.21% for the same twelve-month period for medium-term investments includes funds held with CalTrust. The CalTrust investment exceeded its benchmark, the ML 1-3 Corp & Government, which was 0.15% for the same period. The CalTrust yields at a higher rate than the LAIF portfolio due to its longer term nature, but the total return was impacted by unrealized losses during the period. The District s long-term portfolio is managed by PFM Asset Management (PFM) and Wells Capital Management (Wells Cap). The twelve-month total return of the portfolio managed by PFM was 0.00% (net of fees), while the twelvemonth total return of the portfolio managed by Wells Cap was 0.15% (net of fees). Both the Wells Cap portfolio and the PFM portfolio performance exceeded the benchmark of (0.08%) for the period. The Wells Cap portfolio outperformed the PFM portfolio for the period mainly due to its larger allocation to asset backed, municipal securities and corporate securities. The benchmark for the managed portfolios is a custom index including 70% of the Merrill Lynch 1-5 year US Treasury Index and 30% of the Merrill Lynch 1-5 year A-AAA Corporate Index. The benchmark does include security types that the District is not allowed to purchase and that because of their nature tend to carry higher yields. These include foreign issuers, foreign agencies, and private placement securities. As of June 30, 2017, the District s investment portfolio had a weighted average prospective yield of 1.51%. The District s targeted rate of return of 1.51% was used to project interest income in the District s Annual Budget for the fiscal year. Both the prospective yield and the targeted rate of return exclude market value fluctuations that are included in the total return figures noted above. Investment Summary by Institution This document depicts the amount of District investments held by various financial institutions as of June 30, In each case, the financial institution may be the issuer of an investment security, the custodian of securities, or the investment advisor managing the securities.

28 Investment Summary of Surplus Funds by Type This document depicts the amount of District funds invested into the various categories of investments permitted by the District s investment policy and the Code, as well as the percentage of total surplus funds invested in each category and the corresponding limitation established by the Code for compliance measurement. Investment Summary of Surplus Funds by Maturity This document depicts the amount of District funds maturing each year over the five-year investment time horizon permitted by the District s investment policy. The measurement period for each year commences on July 1 and runs to June 30. The purpose of this schedule is to assess the overall liquidity of the District s portfolio, which has a weighted average maturity of 2.59 years at June 30, Investment Summary of Surplus Fund s Unrealized Gains and Losses All investment summaries referenced above include the amortized cost of investments and do not reflect current market values. This document depicts the status of securities with respect to unrealized gains and losses at June 30, The District measures and records an adjustment to reflect the current fair market value of its total investment portfolio each quarter. The unrealized loss on the District s surplus fund portfolio at June 30, 2017 was $471,000.

29 Kaweah Delta Health Care District General Deposit and Investment Policy Scope This policy sets forth the deposit and investment policy governing all District funds and related transactions and investment activity. This policy does not apply to the Employer Retirement Plan Trust. Bond proceeds shall be invested in securities permitted by the applicable bond documents. If the bond documents are silent as to the permitted investments, bond proceeds will be invested in the securities permitted by this Policy. Notwithstanding the other provisions of this Policy, the limitations (credit quality, percentage holdings, etc.) listed elsewhere in this Policy do not apply to bond proceeds. With the exception of permitted investment requirements, all other provisions of this policy will apply to the investment of bond proceeds to the degree they do not conflict with the requirements of the applicable bond documents. Goals and Objectives Legal Compliance: All District deposits and investments shall be in compliance with sections through of the California Government Code (Code) for local agencies. This policy sets forth certain additional restrictions which may exceed those imposed by the Code. Prudence: The District Board of Directors (Board) and any persons authorized to make investment decisions on behalf of the District are trustees and therefore fiduciaries subject to the prudent investor standard. When managing District investment activities, a trustee shalt act with care, skill, prudence and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the District, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of like character and with like aims, to safeguard the principal and maintain the liquidity needs of the District. Goals: In order of priority, trustee goals shall be: 1) Safety - The principal of the portfolio will be preserved by investing in high quality securities and by maintaining diversification of securities to include various types, issuers and maturities. Investments will be limited to those allowed by the Code as outlined in the permitted investments section below. Due to the complexity of various investment options and the volatility of market conditions, the trustee may seek professional advice in making decisions in order to optimize investment selections.

30 The trustee will also monitor the ongoing credit rating of selected investments by reference to monthly investment statements and council with investment advisors. 2) Liquidity - The portfolio will be managed to ensure sufficient liquidity to meet routine and non-routine budgeted cash flow requirements as well as provide for unanticipated cash needs. Based upon these needs, investments with appropriate maturity dates will be selected. Generally, these investments will be held to maturity once purchased unless called by the issuer. Securities may be sold prior to maturity under the following circumstances: 1) A security with declining credit may be sold early to minimize loss of principal. 2) A security trade would improve the quality, yield, or target duration in the portfolio. 3) Liquidity needs of the portfolio require that the security be sold. 3) Rate of Return - The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Performance will be measured by the ability to meet the targeted rate of return, which will equal or exceed the average return earned on the District's investment in the State of California Local Agency Investment Funds. Safekeeping District investments not purchased directly from the issuer shall be purchased either from an institution licensed by the State as a broker-dealer or from a member of a federally-regulated securities exchange, a national or state-chartered bank, a federal or state association or from a brokerage firm designated as a primary government dealer by the Federal Reserve Bank. Investments purchased in a negotiable, bearer, registered or nonregistered format shall be delivered to the District by book entry, physical delivery or third party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book entry delivery. A counterparty bank's trust or separate safekeeping department may be used for the physical delivery of the security if the security is held in the District's name. Authorized Financial Dealers and Institutions: If the District utilizes an external investment adviser, the adviser may be authorized to transact with its own Approved Broker/Dealer List on behalf of the District. In the event that the investment advisor utilizes its own Broker/Dealer List, the advisor will perform due diligence for the brokers/dealers on its Approved List.