Project Description

Situation

MEAG is a power agency that provides the cooperative benefits in both generation capacity and economies of scale in wholesale electric power to cities and counties throughout the state of Georgia. The Municipal Competitive Trust was established in 1999 to pool reserves held by MEAG participants for nuclear decommissioning reserves, qualified plan assets and sinking fund cash balances.

Prior to establishment of the Municipal Trust, city and county utility agencies had the responsibility, and the inefficiency, of investing their portion of required cash reserves and sinking funds directly. This was inefficient both in the comparative lack of investment scale and competitive pricing that results, and in the additional personnel and man hours required to manage these assets.

Because of the fiduciary responsibility which each city and county utility has to their constituents, transparency of the Municipal Trust is paramount. While there are significant economies for combining resources to achieve investment efficiency, there is an equal need to track the ownership and attribution of which entity owns what portion of the pool, and is entitled to what allocation of income and capital gains.

Solution

Nottingham was brought in by the top five money center bank custodian that held the investment assets for the Municipal Trust. Nottingham was asked to design and implement an online platform that supports a custom web portal accessible at any time by the city and county beneficiary participants.

The platform implemented and in place utilizes public mutual fund accounting principles. A daily net asset value is calculated for each pool within the Municipal Competitive Trust. Accrued income and any realized and unrealized capital gains are allocated on a per unit basis, so that each participant receives their daily proportionate share of each component of their investments.

The platform enables the participants to create any series of sub accounts that span across multiple portfolios. The sub accounts allow for custom asset segregation and segregation by transaction codes, which may tie to either budget or balance sheet allocations within each city and county financial framework. The participants can easily view and download transaction and balance reports for each sub accounts, and grouping of sub accounts as designated by the participant.

The MEAG Competitive Trust program has been lauded by rating agencies and industry groups for its innovation and flexible structure.