EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: June 20, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Tomohito Oku, Finance Director
Bo-Kyoung Kim, Financial Services Manager
SUBJECT: Monthly Cash Treasury Report for April 2023
Recommendation
Accept and file the Cash Treasury Report for the month of April 2023.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
➢ Ensure Our Financial and Organizational Health
Background
Pursuant to Section 53646 of the Government Code of the State of California, the City Treasurer may submit a quarterly report to the City Council regarding the funds and investments of the City. Further, City Investment Policy Section XVIII requires monthly reporting of investment transactions, as specified. Because the City participates in State and County investments pools and does not independently broker or engage outside investment advisors to transact investments, the monthly reporting provides a snapshot of overall cash receipts, transfers, and disbursements on a monthly basis.
Analysis
The Monthly Cash Treasury Report (“Report”) covers cash and investments of the City in the three cash and investment accounts: Wells Fargo Bank, San Mateo County Pool, and the California State Local Agency Investment Fund. The Report does not include petty cash, or the California State Community Infrastructure Program (SCIP) bond proceeds held by a trustee in the name of the City. For investment purposes, City cash is pooled, except for bond proceeds held by a trustee. The City does not have, nor is it legally required to have, separate bank accounts for each individual fund. However, all cash is segregated in the City’s accounting records. Monthly cash transactions for the monthly period ending April 30, 2023, are as follows:
Account
Beginning
Balance Receipts Disbursements
Quarterly
Interest
Allocation
Inter-Account
Transfers Ending Balance
Wells Fargo Bank 9,972,356.14 12,291,931.10 (19,091,664.55) - 3,172,622.69 LAIF 32,944,732.71 130,544.59 - - 15,000,000.00 48,075,277.30 San Mateo County Pool 85,981,845.83 4,075,813.01 - - (10,740,000.00) 79,317,658.84 Total 128,898,934.68 16,498,288.70 (19,091,664.55) - 4,260,000.00 130,565,558.83 The Wells Fargo cash balance reflects the book value balance (i.e., total outstanding checks not cashed are deducted from the account balance). The month-to-date cash and investment balance decreased by approximately $6.8M compared to the balance as of March 31, 2023.
April receipts, a total of approximately $12.3M, primarily consist of Fund transfer from San Mateo County Pool ($10.7M), Tax distribution ($0.3M), Business Tax collection for March ($0.1M), PG & E ($0.1m), Veolia ($0.1M), and other various receipts.
April disbursements total $19.1M, primarily consist of Fund transfer to LAIF ($15.0M), Payroll costs ($1.1M), Teichert & Son settlement ($1.1M), G. Bortolotto invoices payment ($0.2M) and other recurring operating expenditures.
City staff made a strategic decision to transfer a portion of the investment fund from San Mateo County Pool to LAIF to achieve greater investment diversification and potentially higher returns while maintaining a prudent level of risk.
The table below reflects recent treasury yield comparisons up to five-year notes since that is the maximum maturity the City may invest:1
Apr-23 Mar-23 Apr-22
6-month Treasury Bill 4.86 4.72 1.37
2-year Treasury Note 4.04 4.06 2.70
5-Year Treasury Note 3.51 3.60 2.92
Local Agency Investment Fund (LAIF) average monthly effective yields were 2.870% in February which increased by 0.04% from March 2023. San Mateo County monthly gross earnings for March were 3.130% compared to 2.650% in February 2023. The County Pool earnings estimates for FY 22-23 are at 2.2%.
Staff believes the City has investment liquidity and anticipated revenues to meet the City’s anticipated expenditure requirements for the ensuing six months.
The following table shows a breakdown of cash and investment balance by fund type. 1 Daily US Treasury Yield Curve. Treasury.gov
Deposit Value Market Value
General Fund (Inc. Petty cash of $10,800) $ 27,313,142 $ 27,313,142 General Sub-Funds (Commited/Reserved) $ 19,342,195 $ 19,342,195 City Funds Restricted and Committed $ 80,565,593 $ 80,565,593 Successor Agency Trust $ 3,355,424 $ 3,355,424
Unrealized Gain on Investment Pools $ - $ (2,488,565)
$ 130,576,354 $ 128,087,789
Summary April 30, 2023
The book market value totals $128,087,789, including an unrealized loss2 of $2,488,565, reflecting treasury yields during the calendar year. All except for General Fund balance is restricted by either City Council or external parties for specific purposes. Unrestricted cash and investment balance under General Fund ($27,313,142) may be used at Council’s discretion.
Fiscal Impact
None. This report is informational.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment.
2 San Mateo Pool Investment FMV factor is provided Quarterly basis. Thus, as of 3/31/23 FMV factor is used to calculate Unrealized Gain on Investment Pools.