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City Treasurer Overview
• The City Treasurer is an elected position and, by charter, is the custodian of all public funds belonging to, or under the control of, the City or any office, department, or agency thereof. As custodian of all public funds, the City Treasurer, with the cooperation and assistance of the Finance Department, receives all monies coming into local financial institutions.
• In order to maintain a good investment program, the City Treasurer must have a good cash flow analysis of funds coming into the City, as well as funds being paid out. The Treasurer can then place the funds in various legal investments that will yield the highest return to the City over the terms of the investments.
• The Treasurer independently reviews all banking and investment accounts, after which is provided a monthly report to the City Council that summarizes all cash and investment balances, investment transactions, and a reconciliation of all bank accounts
2022-2023 Goals & Accomplishments
• Goal #1: Improve investment returns
Partnered with Kosmont Municipal Treasury Consulting to build a synchronized and optimized cash flow and investment timing model.
Improved Weighted Average Yield from 1.10% (Feb -2022) to 2.80% (Feb -2023) • Goal #2: Increase investment diversification without default risk Increased number and types of holdings:
Feb -2022: 1 investment Pool, 5 CDs, 2 Federal Agencies Feb -2023: 2 investment Pools, 9 CDs, 6 Federal Agencies, 7 Treasury Notes, 1 Money Market Investment pools are backed by State of Calif.; CDs and Money Market are FDIC insured to $250,000; Treasuries and Agencies back by US government guarantee • Goal #3: Evaluate banking services for value and service Existing banking service agreement expired 12/31/2022
RFP process commenced with 6 proposals received and 4 banks interviewed Citizens Business Bank was selected to replace Banc of California ECR increased from 45 BP to 55 BP; $24K savings in merchant service fees • Goal #4: Timely and accurate reporting to City Council Monthly Treasurer's update to City Council within 15 days of month-end
2023 -?^'4 Goals & Objectives
• Goal #1: Achieve market rate investment returns and grow capital Leverage partnership with Kosmont to provide accurate cash flow forecasts Quarterly investment review calls with Kosmont and City's Director of Finance Continue to build out the laddered portfolio to achieve full 5 -year durations Monitor future cash flow needs as to avoid premature investment liauidation • Goal #2: Maintain a sound investment policy within applicable laws Review, update and present the Investment Policy to City Council by July 1 Monitor city investments to comply with Calif. GC Sections 53600 through 53610 Report any sustained or repetitive non-compliance to City Council Advise and develop corrective action plans in collaboration with Director of Finance • Goal #3: Timely and accurate reporting to City Council Monthly Treasurer's Report to City Council within 90 days of month-end Monthly Treasurer's Update to City Council within 15 days of month-end
What are Public Agency Investment Requirements?
❖ Investment of Surplus :Government agencies must comply with California Government Code (GC) Section 53600 ❖ Monthly (or quarterly) report to the governing body outlining cash assets invested, investment types, purchases, sales, market conditions, and affirming agency projection of sufficient cash availability to meet operating needs. (GC Section 53607) ❖ Annual Investment Policy update (GC Section 53646)
❖ Compliance with GC Section 53600.3
❖ Prudent Investor Standard — Safeguarding of principal and liquidity ❖ Compliance with GC Section 53600.5
❖ Safety of Principal
❖ Liquidity
❖ Yield
*Requirements include but are not limited to other governmental compliance and regulatory provisions. 11 0
0 0
Permitted Investments under GC Section 53601
Bonds issued by the local agency
US Treasury Notes, Bonds, Bills
State Treasury Notes & Bonds
Registered Treasury Notes & Bonds of other 49 states
Bonds of other local agencies within the state
Federal or US GSE's or "Agencies"
Banker's Acceptance (180 days, 40%, 30%)
Commercial Paper (270 days, A-1, 40%)
u Negotiaoie CD's (30%)
0 Repurchase Agreements (92 days, 20%)
0 Medium Term Notes (5 years, A, 30%)
0 Shares of Beneficial Interest (20%)
0 Trustee Held Funds (bond covenants)
0 Collateralized Securities
Li Mortgage -Backed Securities (20%, AA)
0 Shares of Beneficial Interest with JPA (30%)
0 Supranationals (30%, AA)
0 Public Bank Securities
0 County Pool — Government Code Section 27133
LAIF - Government Code Section 16429.1 (Limited)
0 FDIC insured commercial banks and money markets
0 Other investments as approved by board/council of
agency allowable under Calif. Government Code
Section 53600
Investment Objective
• Objective #1: Safety through diversification and compliance Diversification is the practice of spreading your investments around so that your exposure to any one type of asset or risk is limited. This practice is designed to help reduce the volatility of your portfolio over time.
Investment compliance ensures that a business adheres to internal controls and external rules. Investment compliance follows policies and regulations in order to protect investors and ensure that portfolios are fair, efficient and transparent. • Objective #2: Maintain liquidity to fund current obligations Liquidity generally refers to how easily or quickly a security can be bought or sold in a secondary market. Liquid investments can be sold readily and without incur a hefty cost or loss to get money when it is needed.
• Objective #3: Maximize yield through laddered investment strategy Laddered investing is based on allocating portions of your total investments and staggering maturity dates so that each portion of your portfolio matures at regular intervals. Laddering allows you to receive the benefit of earning the higher interest rates of longer-term investments while still enjoying some liquidity.
Investment Policy Compliance
INVESTMENT POLICY COMPLIANCE MATRIX
Authorized Investment Category
City's Investment Policy Compliance Requirement
Maximum
Maturity
Max Percentage
of Portfolio
Max Investment
in One Issuer
City's current investment status... In -Compliance
Positions Held
Total
Investment
US Treasury Bills, Notes and Bonds
Federal Agency Obligations
Negotiable CDs/Time Deposits
Non -Negotiable CDs/Time Deposits
Money Market Funds
Passbook Savings/Demand Deposits
Commerical Paper
Bankers Acceptances
Local Agency Investment Fund (LAIF)
Orange County Investment Pool
CalTrust (JPA}
Calif. Asset Mgmt Program (CAMP)
Repurchase Agreements (Repos}
5 years
5 years
5 years
5 years
NJA
NJA
270 days
180 banker days
NJA
NJA
NJA
N/A
1 year
NJA
3096
3096
4096
2096
NJA
2596
3096
NJA
NJA
NJA
NJA
3096
N/A
1596
$ 250,000
$ 250,000
1096
N/A
1096
3096
N/A
N/A
N/A
NJA
N/A
Yes
Yes
No
Yes
Yes
No
No
No
Yes
No
No
Yes
No
Data as of Feb 28, 2023
$ 24,647,533
$ 5,282,171
$ 2,052,131
$ 185,838
$
16,026
3,544,217
Maximum
Maturity
Max Percentage
of Portfolio
Non -Compliance
Max Investment
in One Issuer
5 years
69.0%
$ 9,999,930
5 years
14.8%
4.2%
N/A
N/A
N/A
5 years
5.7%
$ 249,000
1 month
0.5%
0.5%
N/A
N/A
NJA
N/A
N/A
N/A
N/A
N/A
N/A
1 month
0.0%
0.0%
N/A
N/A
N/A
N/A
N/A
N/A
1 month
9.9%
9.9%
N/A
N/A
N/A
1 1
1 1
1 1
1 1
1 O • 3
January
February
March
April
May
June
July
August
September
amt
1.11 W W a
S S S S
D
A
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
▪ rJ
N
January
February
March
April
May
June
July
August
September
w
October
November
December
January
February
March
April
May
June
0 July
August
September
October
November
December
N �
N
January
February
March
April
May
June
July
1 August
September
October
November
December
January
February
March
April
May
June
A
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Min Cash in Bank $5 million
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Performance by the Numbers
Feb -2019
Feb -2020
Feb -2021
Feb -2022
Feb -2023
Cash in Bank $ 3,187,350 $ 4,400,420 $ 11,876,446 $ 12,046,164 $ 7,892,084 LAIF & CAMP $ 5,689,637 $ 17,424,907 $ 10,093,324 $ 22,647,767 $ 3,560,243 Other Investments $ 728,718 $ 493,614 $ 1,498,923 $ 1,934,657 $ 32,167,673 Total Cash & Invests $ 9,605,706 $ 22,318,941 $ 23,468,694 $ 36,628,587 $ 43,620,001 # of Investments 5 4 5 8 25
CAMP Yield N/A N/A N/A N/A 4.73%
LAIF Yield 2.39% 1.91% 0.41% 0.28% 2.62%
Other Invests Yield 1.86% 2.00% 2.25% 0.84% 2.80%
Weighted Avg Yield 2.35% 1.92% 0.75% 0.32% 2.80%
Trig 12 mos earnings $ 93,358 $ 249,664 $ 178,534 $ 69,707 $ 935,409
Cash & Investment Trends (2019 to 2023)
Cash & Investment Trends
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019
2020
2021
t 2022
2023
Cash by Fund Types (Feb -2021 to Feb -2023)
Available Cash by Fund Type (excl. Fiscal Agent)
O,y'"Y cciy 0;rO.yy ati1 6titi Oyv 29 253
Otiy O.tiy 29 253
OyL �'Y ;70 253
�L Otiti �.ti'L L ptiti O.y'L Otil IS'
otiL ory'3 "9..yb
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.1/41.„;§ o a Ns> �QQ Q�` �� Qe� 'ate lea
Cash & Inv (GL) General Fund • Other Funds'
Trend Line {Total Cash & Inv)
13 Trend Line (General Fund)
$50,000,000
$47,500,000
$45,000,000
$42,500,000
$40,000,000
$37,500,000
$35,000,000
$32,500,000
$30,000,000
$27,500,000
$25,000,000
$22,500,000
$20,000,000
$17,500,000
$15,000,000
$12,500,000
$10,000,000
$7,500,000
$5,000,000
$2,500,000
$-
Investment Earnings (Feb -2021 to Feb -2023)
Cumulative Earned Income (TTM)
$1,000,000
$950,000 F
$900,000
$850,000
$800,000
$750,000
$700,000 I
$650,000
$600,000
$550,000
$500,000
$450,004
$400,000
$350,000
$300,000 F
$250,000
$200,000
$150,000
$100,000 _
•� _- _
$50,000 f ` - �y
Feb -21 Mar -21 Apr -21 May -21 Jun -21 Jul -21 Aug -21 Sep -21 Oct -21 Nov -21 Dec -21 Jan -22 Feb -22 Mar -22 Apr -22 May -22 Jun -22 Jul -22 Aug -22 Sep -22 Oct -22 Nov -22 Dec -22 Jan -23 Feb -23 LRIF " $168,417 $168,417 $100,083 $100,083 $100,083 $68,334 $68,334 $68,334 $57,590 $57,590 $57,590 $54A42 $54A42 $54,442 $59,279 $59,279 $59,279 $45437 $45,437 $45,437 $29,586 $29,586 $29,586 $16,426 $16,026 1 1-1- OTHERi* $10,117 $9,777 $9,766 $9,754 $9,743 $9,732 $9,720 $9,709 $9,760 $10,425 $11,083 $11,749 $15264 $19,875 $62,695 $104,586 $146,493 $188,402 $346,660 $416,429 $489,148 $569,572 $627,288 $731,893 $919,3831 1t TOT{LL•• $178534 $178,194 $109,849 $109,837 $109,826 $78,066 $78,054 $78,043 $67,350 $68,015 $64673 $66,191 $69,707 $74318 $121,975 $163,866 $205,772 $233539 $392,097 $461,866 $518,734 $599,158 $656,875 $747,919 $935,4091
Investment Yield (Feb -2021 to Feb -2023)
3.25%
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
LAIF
t OTHER
SWAY"
Investments Performance Yield
v
/8
I 1
Feb -21 Mar -21 Apr -21 May -21 Jun -21 Jul -21 Aug -21 Sep -21 Oct -21 Nov -21 Dec -21 Jan -22 Feb -22 Mar -22 Apr -22 May -22 Jun -22 Jul -22 Aug -22 Sep -22 Oct -22 Nov -22 Dec -22 Jan -23 Feb -23
0.41% 0.36% 0.34% 0.32% 0.2696 0.2296 0.2296 0.21% 0.20% 0.20% 0.2196 0.2396 0.2896 0.3796 0.52% 0.68% 0.86% 1.0996 1.2896 1.5196 1.7796 2.0195 2.1795 2.43% 2.6296
2.2595 0.7595 0.75% 0.75% 0.7596 0.7596 0.7596 0.8095 0.80% 0.84% 0.8496 0.8496 0.8496 1.8996 1.8994 1.8995 L89% 1.8996 2.3096 2.7196 2.7196 2.3895 2.3895 2.97% 2.8096
2.6094 1.06% 1.06% 1.04% 0.9996 0.9596 0.9696 1.00% 1.0094 1.02% 1.0396 1.0596 1.1096 1.8996 1.8994 1.8994 L89% 1.8994 2.3096 2.7196 2.7196 2.3896 2.3894 2.9794 2.80%
Recommendations
• Retain existing engagement with Kosmont (KMT) — they're doing good work • Produce bank reconciliations within 15 days of month-end • Produce Treasurer Reports within 90 days of month-end • Finalize ACFR (CAFR) within 6 months of fiscal year-end
Questions?