City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 05/09/2023
Subject: Investment in California Asset Management Program (CAMP) for liquid funds RECOMMENDED ACTION:
This resolution would authorize the City to invest liquid funds into California Asset Management Program (CAMP), in addition to Local Agency Investment Fund (LAIF), to realize a bigger return when interest rates are rising. In addition, the City Administrator and City Clerk would be authorized to transfer funds between LAIF and CAMP as necessary.
BACKGROUND:
The City of Ripon has three main banking accounts where it deposits and withdraws its money:
1. Bank of Stockton (day-to-day operations)
2. LAIF (short term investments)
3. Bank of New York (long term investments).
The City Clerk manages the cash between these accounts. Each May, the City Clerk and City Administrator analyze the amount of funds needed short term to cover operating costs and projected capital costs. If there is any excess, these funds are transferred to Bank of New York for a longer-term investment. On a weekly basis, the City Clerk reviews the day-to-day operations bank balances and makes transfers, as necessary, between Bank of Stockton and LAIF.
Staff was recently made aware of another short-term investment option – California Asset Management Program (CAMP). CAMP is a Joint Power Authority (JPA) for California Public agencies and is governed by a Board of Trustees, which is made up of various participants including counties, cities, and school districts.
The CAMP Pool, like Local Agency Investment Fund (LAIF), is managed to be liquid funds.
The CAMP Pool pays out interest monthly versus LAIF paying out interest quarterly. CAMP’s funds are shorter in duration. With rising interest rates, shorter durations return higher returns.
In a stable/solid interest rate environment, LAIF may have better returns than the CAMP Pool, so it could be helpful to have both investment options available.
Below is a table that compares the returns from CAMP and LAIF as of December 2022:
CAMP LAIF
Month 4.3191% 2.173%
3-Month 3.8570% 2.07%
1-Year 1.7553% 1.065%
3-Year 0.8401% 0.839%
5-Year 1.3751% 1.337%
LAIF tracks the interest rate at a slower pace than CAMP because of how they each manage their portfolios. As you can see in the table above, especially for the recent past, the returns for CAMP are significantly higher than LAIF.
DISCUSSION/ANALYSIS:
Our current investment policy (Resolution 03-68) lists “any other investment security authorized under that provisions of California Government Code Section 5933, Section 53601 and Section 53635”. As a JPA, CAMP is permitted by Section 53601(p), so we would not have to make any changes to our investment policy in order to invest in this Program. However, when reviewing the investment policy, there are certain changes staff recommends the City Council consider at a future city council meeting.
There are two ways to invest in CAMP. We can join as an investor or a participant. As an investor, we are allowed to fully use the program and this is similar to how we invest in LAIF.
As a participant, the Governing Body has to pass a resolution and we have the same rights as investors, but we would join the JPA and have the ability to vote and serve on the Board.
As of March 31, 2023, we have $34,804,939 in LAIF. My recommendation would be that we move the majority of these funds into CAMP to reap the benefit of increasing interest rates. The Feds have raised interest rates again in May. CAMP will react faster than LAIF in these instances and we will see a large return on our investment. Staff recommends that the City of Ripon join CAMP as an investor and if we decide we want more control and want to be a participant in the future, we can pass that resolution at that time.
Keeping the investment option of LAIF in addition to CAMP will allow staff to transfer funds between these liquid fund options when interest rates change, depending on which is getting the best return at the time.
With the addition of CAMP investments, the City Clerk will analyze the returns of CAMP and LAIF on a monthly basis and make transfers between those accounts, as necessary. In addition, the quarterly investment report will be updated to show the City Council where the funds are invested and the return for each account.
FISCAL IMPACT:
The fiscal impact of investing in CAMP versus LAIF will be additional interest income into all of our funds based upon the larger returns currently realized by CAMP during rising interest rates.
RESOLUTION NO. 23-22
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RIPON AUTHORIZING INVESTMENTS OF MONIES IN
CALIFORNIA ASSET MANAGEMENT PROGRAM
WHEREAS, the City Council is desirous of having a second investment option for liquid funds that may provide better and/or more stable returns than Local Agency Investment Fund (LAIF), during times of rising interest rates; and
WHEREAS, California Asset Management Program (CAMP) is a Joint Power Authority (JPA) for California Public agencies and is governed by a Board of Trustees, which is made up of various participants including counties, cities, and school districts; and WHEREAS, the City of Ripon’s current investment policy (Resolution 03-68) lists as permissible investments “any other investment security authorized under the provisions of California Government Code Section 5933, Section 53601 and Section 53635”; and WHEREAS, as a JPA, CAMP is permitted by Government Code Section 53601(p) and therefore permissible under the City’s current investment policy; and WHEREAS, PFM Asset Management, LLC serves as the Program Administrator and Investment Advisor to CAMP; and
WHEREAS, the City of Ripon is able to invest in CAMP either as an investor, being allowed to fully use the program in a similar investment style as LAIF, or as a participant, having the same rights as an investor, but joining the JPA and having the ability to vote and serve on the Board.
NOW THEREFORE, BE IT RESOLVED THAT:
1. The City Council does hereby authorize deposits and withdrawals of money in California Asset Management Program through PFM Asset Management LLC as the Program Administrator and Investment Advisor to CAMP.
2. The City of Ripon does hereby join CAMP as an investor according to CAMP’s definitions.
3. The City Council authorize the City Administrator and the City Clerk to order the deposits or withdrawals of monies into or out of CAMP.
4. The City Council authorizes the City Administrator and the City Clerk to transfer funds between LAIF and CAMP as necessary.
5. The City Administrator and the City Clerk are authorized to execute such other and further documents as may be necessary and appropriate in order to implement the actions authorized herein.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Ripon this 9th day of May, 2023, by the following vote:
RESULT: ADOPTED BY CONSENT VOTE [UNANIMOUS]
MOVER: Leo Zuber, Vice Mayor
SECONDER:Gary Barton, Council Member
AYES: Michael Restuccia, Leo Zuber, Gary Barton
ABSENT: Daniel de Graaf, Dean Uecker
THE CITY OF RIPON,
A Municipal Corporation
By ________________________________
MICHAEL RESTUCCIA, Mayor
ATTEST:
By: ___________________________
LISA ROOS, City Clerk