STAFF REPORT
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Meeting Date:
September 9, 2025
SUBJECT: MONTHLY INVESTMENT REPORT (JUNE 2025)
RECOMMENDATION: It is recommended that the City Council:
1. Receive and file the June 2025 monthly investment report, with submissions from the City Treasurer, Laura Parisi, and the City’s surplus funds investment manager, Meeder Investments.
Appropriation: $0 Fund: N/A
Submitted By: Approved: .
Dave Kiff, City Manager Dave Kiff, City Manager
SUMMARY OF THE MATTER
The City’s investment portfolio is managed in part by the elected City Treasurer, Laura Parisi, and in part by Meeder Investments. Ms. Parisi manages shorter-term investments needed for operational liquidity purposes and Meeder manages the investment of those funds deemed surplus.1 Attached are two reports – one from Treasurer Parisi and one from Meeder Investments. In summary:
• Ms. Parisi managed $100,902,000 with an effective duration of less than a year and an average yield of
3.53%. She also managed the bank funds used in operations. • Meeder managed $81,527,000 invested in securities with durations after December 1, 2025, an average credit rating of AA and a yield of 1.57% less management fees. • The portfolio includes US government agency instruments (45% of the portfolio), high-yield, fully collateralized bank accounts (19%), treasury securities (13%), the Local Agency Investment Fund “LAIF” (16%), negotiable CDs (1%), municipal bonds (1%), corporate bonds (4%) and supranational bonds (such as those issues by the World Bank – 1%).
This staff report includes a more detailed discussion than typically provided, as we want to inform the Council and community more about our investment approaches, assumptions, and communications.
DISCUSSION
This staff report includes the Treasurer’s Monthly (investment) Report (for June 2025) required by law under Government Code §41004 and LBMC §3.04.010. The staff report and related materials can be considered a consolidated report showing fund balances, receipts and disbursements, the investment portfolio along with current values, Ms. Parisi’s updated financial forecasts, and Meeder’s market summary 1 In this context, “surplus” means City funds not necessary for immediate liquidity purpose or otherwise earmarked or required for other immediate City costs/expenses. This is not meant to be construed as an overall budget surplus or something akin to that.
MONTHLY INVESTMENT REPORT (JUNE 2025)
September 9, 2025
information. As noted, the intent of this staff report is to continue to expand upon the City’s financial and investment approach.
By the time that the July 2025 report is in, readers will see the move of $25 million to Meeder’s investment portfolio, as shown (for illustration only) in Chart 1 below.
Chart 1 – Fund Movement from Short-Term (Treasurer) to Longer-Term (Meeder) In the June report, Treasurer Parisi puts forth her updated financial cash flow forecast, which she updates quarterly – it is also shown in this staff report as Chart 2. Treasurer Parisi and I have discussed this cash flow forecast, and want to summarize our discussions for the Council and public:
Chart 2 – Treasurer’s Forecast
MONTHLY INVESTMENT REPORT (JUNE 2025)
September 9, 2025
• The cash flow forecast is based on estimates that can vary month-to-month, especially should a large purchase or receipt be booked at a time slightly different than the previous year (an example: three warrant runs or three payroll runs in a month versus two will skew that month’s year-to-year comparison until the close of the year, when it is caught up).
• Chart 2 suggests that in October 2025, we may have $8 million as fully liquid investments – this is right before the larger apportionments of property taxes come in during November and December 2025.
While we should be able to manage through the month, I want to note this for Council awareness, as well as that it resulted in large part from my recommendation to move more funds to Meeder to build a laddered maturity schedule and to follow a time-balanced investment approach that Meeder suggests. • So, what amount should the City retain in overnight liquidity to achieve operational needs? We should discuss this more in a future staff report (it would relate to the number and value of payroll runs and warrant runs in a month, averaged, with a contingency), but preliminarily, an appropriate goal for 2026 may be to always stay above at least $20M in highly liquid “overnight” accounts managed by Ms. Parisi, including LAIF, CAMP and High Yield Savings. Given the quantity of investments reaching maturity in just the first half of 2026 (over $45 million between Meeder and Ms. Parisi – see Chart #3), this can likely be done across early 2026.
• In Charts #3 and #4, we compare June 2025 and July 2025 and show that Meeder is accomplishing an appropriate laddering of maturities – timing investments so that they maximize yield and reach maturity during our “dry” periods between June and October 2026, 2027, and 2028 – as requested.
Chart 3 – June 2025 Maturity Ladder
MONTHLY INVESTMENT REPORT (JUNE 2025)
September 9, 2025
Chart 4 - Maturity Ladder After July 2025 Meeder Investments • Lastly, part of improving our fiscal house will be to communicate better as we estimate City operational cash flow needs today. A stronger partnership and communication between the City Manager, Ms.
Parisi, the Finance Director, the Public Works team and Meeder Investments can do that. With expenditures for Fire Station #4, the Promenade, and other one-time efforts coming up in late 2025 and across 2026, as well as things like the possibility of delayed TOT caught up in bankruptcy proceedings, this early planning is essential for appropriate cash-flow forecasting.
Going Forward – Investment Split. What we have not done as of this staff report – and still intend to do – is to determine, for 2026, what amount of funds beyond $20M should be in the Short-Term Account (and invested by Treasurer Parisi) and what should be in the Longer-Term Account (and invested by Meeder).
Arguably, this may be something we could set annually in fall, once cash flow forecasts are updated after the 3rd Quarter.
In a typical year, if we were to look at the laddered maturity goal suggested by Meeder (see Chart #5), Treasurer Parisi could be assigned about 25% of the City’s overall portfolio (about $44M) primarily to invest overnight, and Meeder would have $130M to invest in maturities with laddered durations per Chart #5. The amount noted ($44M) may be lower than Ms. Parisi would prefer – she makes the case that “the prudent investor” noted in Section 3.0 of our 2025 Investment Policy would be making decisions differently than Meeder outlines below.
MONTHLY INVESTMENT REPORT (JUNE 2025)
September 9, 2025
Chart #5 – Hypothetical Portfolio for Laguna Beach – Suggested by Meeder Lastly – CAMP. Also of note, Meeder, Ms. Parisi, and the City Manager conferred and would respectfully recommend that the City (via Ms. Parisi) participate in the California Asset Management Program or CAMP (a California Joint Powers Agency started in 1989) as a vehicle for some of our short-term investments (not exclusively, but within a portfolio that included LAIF and high-yield savings). In some cases, CAMP can make more sense than a high-yield savings account or LAIF, as CAMP can sometimes earn slightly more than LAIF and does not have a minimum investment like a high-yield savings. Unless Council objects, we will likely propose this addition in the 2026 update to the City’s Investment Policy later this fall (with consultation with the Investment Advisory Committee).
As always, we welcome the Council and the community’s input on this important issue.
FINANCIAL ANALYSIS
This staff report does not directly involve an appropriation, but it certainly involves the finances of the City, as discussed in the body of the staff report.
ENVIRONMENTAL ANALYSIS
The recommended action has no environmental impact.
MONTHLY INVESTMENT REPORT (JUNE 2025)
September 9, 2025
ATTACHMENTS
1. Report from Laura Parisi, elected City Treasurer Parisi (Pgs. 7-12)
2. 2. Report from Meeder Investment Managers Rick Phillips and Greg Balls (Pgs. 13-37) Report Prepared By: Coordinated With:
Dave Kiff, City Manager Laura Parisi, City Treasurer