December will be my last month as treasurer of PORAC. It has been an honor to serve PORAC as its treasurer for these last two years. I will continue to serve on the PORAC Board of Directors and will continue to be available to PORAC as a resource whenever I am needed. This year, there was no PORAC Conference due to COVID-19. As a result, my end-of-year Treasurer’s Report was sent electronically to the membership. I will run through some of the highlights from my report.
PORAC is in an excellent financial state. PORAC is a stable organization due to its good employees and its sound financial principles. Stable finances, a well-prepared budget and an efficient staff allow PORAC to achieve its mission and to have the resources it needs to fulfill its mission of serving California’s public safety officers.
PORAC has long had a tradition of ensuring that its finances are stable and that there are sufficient safeguards and oversights in place to prevent and detect misuse and fraud. Those safeguards continue to function and create an environment in which PORAC and its finances are stable. This stability allows the organization to focus on its core mission of serving law enforcement officers.
PORAC Bylaws require an audit to be conducted each year. PORAC contracts each year with an outside accounting firm to conduct an independent audit of PORAC and its financials. For the year 2020, PORAC contracted with Winkler & Forner CPA to review our 2019 finances. The audit conducted by Winkler & Forner encountered no problems and confirmed that PORAC was acting “in conformity with accounting principles generally accepted in the United States of America.”
PORAC investments are controlled by the PORAC Investment Policy, which was enacted by the PORAC Board of Directors. The policy calls for diversity in our investments and sets a ratio of 75% equities and 25% fixed incomes. This balanced approach has served PORAC well and is the hallmark of an intelligent investment strategy. Our investments are managed by Mark Sikorski from UBS Financial Services. PORAC has had a long relationship with Sikorski and UBS, and they have done an outstanding job of managing PORAC’s investments. Sikorski and his team of account managers handle the day-to-day placement of our investments.
PORAC ended 2019 with our investments up 22.28% for the year. In February and March of 2020, the markets saw a significant decline as a result of the COVID-19 outbreak. This was the fastest decline on record and was followed by the fastest recovery on record. PORAC stayed the course, and as a result, this year we have seen growth in our investments. As of the time of writing, our investments are up 7.52% on the year. PORAC has seven accounts with UBS Financial with a total balance of over $16.5 million. Five of the accounts are investment accounts and are invested in the market with the 75/25 ratio. The other two accounts are low-risk investment accounts. Our pension fund is invested in an ultra-short duration bond fund that currently pays 1.90% and has a value of over $7.1 million. While this account is earning a significantly lower rate than our other investments, this was at the direction of the Board of Directors to ensure security of the investment and instant access to funds. (All numbers in the paragraph above are as of close of business on November 11, 2020.)