Title
a. Receive and Accept the Treasurer’s Report of Investments for the Quarter Ending June 30, 2022; and
b. Receive and Approve the Treasurer’s Investment Policy for FY 2022-2023; and
c. Renew the Delegation of Investment Authority to the Treasurer-Tax Collector pursuant to California Government Code 53607.
Report
RECOMMENDATION:
a. Receive and Accept the Treasurer’s Report of Investments for the Quarter Ending June 30, 2022; and
b. Receive and Approve the Treasurer’s Investment Policy for FY 2022-2023; and
c. Renew the Delegation of Investment Authority to the Treasurer-Tax Collector pursuant to California Government Code 53607.
SUMMARY:
Government Code Section 53646 (b) (1) states the Treasurer may submit a quarterly report of investments. The attached exhibits provide a narrative portfolio review of economic and market conditions that support the investment activity during the April-June period, the investment portfolio position by investment type, and the investment portfolio by maturity range.
The Treasurer also reviews the Monterey County Investment Policy annually and has recommended updates for Board approval. Two updates this year consist of the addition of a new section defining socially responsible investment considerations and a revision of the Gift section to align it with the State Political Reform Act and the Treasurer’s Conflict of Interest Code. Finally, annual Board delegation of investment authority to the Treasurer-Tax Collector is being requested as prescribed by Government Code sections 53607 and 53646.
DISCUSSION:
The U.S. economy during this period was characterized by the following factors: high inflation, a strong labor market, depressed consumer confidence, and growing potential for an economic recession.
The Federal Reserve continues to tighten monetary policy through aggressive interest rate increases to battle persistent inflation. Short-term federal funds rates are projected to reach 3.25% to 3.75% by year end. The Federal Reserve also began its balance sheet reduction this quarter and plans to double the pace of this beginning in September.
On June 30, 2022, the Monterey County investment portfolio contained an amortized book value of $2,705,970,313 spread among 259 separate securities and funds. The par value of those funds was $2,713,566,160 with a market value of $2,638,757,893 or 98% of amortized book value. The portfolio’s net earned income yield for the period was 0.71%. The portfolio produced an estimated quarterly income of $4,603,440 that will be distributed proportionally to all agencies participating in the investment pool. The investment portfolio had a weighted average maturity of 482 days. The County Treasury continues to utilize shorter term debt to provide portfolio liquidity and enhanced investment opportunities.
The investment portfolio follows all applicable provisions of state law and the adopted Investment Policy and contains sufficient liquidity to meet all projected outflows over the next six months. Market value pricings were obtained through resources such as Bloomberg LLP, US Bank, and live-bid pricing of corporate securities.
OTHER AGENCY INVOLVEMENT:
A copy of this report will be distributed to all agencies participating in the investment pool. The Treasury Quarterly Reports are also posted on the County Treasurer’s website. A monthly report of investment transactions is provided to the Board of Supervisors as required per Government Code section 53607.
FINANCING:
The investment portfolio contains sufficient liquidity to meet all projected expenditures over the next six months. Investment earnings in the General Fund are expected to fall below the CAO’s FY 2021-22 budget due to significantly lower yields on investments purchased during the COVID-19 Pandemic.
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
This recommendation supports the Administration initiative by providing transparency and accountability in the management of County funds in the Treasurer’s investment portfolio.
__Economic Development
X Administration
__Health & Human Services
__Infrastructure
__Public Safety
Prepared by: Lupe Reyes, Chief Deputy Treasurer-Tax Collector, x5415
Approved by: Jake Stroud, Assistant Treasurer-Tax Collector, x5828
Approved by: Mary A. Zeeb, Treasurer-Tax Collector, x5015
Attachments:
Board Report
Exhibit A - Investment Portfolio Review 06.30.22
Exhibit B - Portfolio Management Report 06.30.22
Exhibit C - Aging Summary 07.01.22
Exhibit D - Investment Policy 2021-2022 Red Line
Exhibit E - Investment Policy 2022-2023 Proposed
cc:
Auditor-Controller - Internal Audit Section
All depositors
County Administrative Office
County Counsel