HomeMy WebLinkAbout08-26-19 Fiscal Affairs Committee Meeting
CHUCK ENGELKEN, CHAIR
JAY MARTIN
Councilmember District 2
Councilmember District 5
JOHN ZEMANEK
NANCY OJEDA
Councilmember, At Large A
Councilmember District 6
Alternate
MINUTES OF MEETING OF FISCAL AFFAIRS COMMITTEE
MAY 13, 2019
The Fiscal Affairs Committee of the City of La Porte met on May 13, 2019, at the City Hall Council Chambers, 604
West Fairmont Parkway, La Porte, Texas, at 4:30 p.m., with the following in attendance:
Committee members present: Nancy Ojeda, Jay Martin
Committee members absent: Chuck Engelken, John Zemanek
Council-appointed officers present: Corby Alexander, City Manager, Lee Woodward, City Secretary
1. Call to Order Committee member Martin called the meeting to order at 4:31 p.m.
2. Consider approval or other action regarding minutes of the meeting held on March 11, 2019. \[Lee Woodward,
City Secretary\]
Committee member Ojeda moved to approve the minutes: the motion was adopted 2-0.
3. Receive and review months of December (FY 2018), January and February (FY2019) Purchasing Card
Expenditures. \[Cherell Daeumer, Purchasing Manager\]
Cherell Daeumer, Purchasing Manager, provided the report with reference to the documents in the meeting packet.
4. Receive and review Second Quarter (FY2019) Investment Report. \[Shelley Wolny, Treasurer\]
Shelley Wolny, Treasurer, provided the report.
5. Administrative Reports. \[Corby Alexander, City Manager\]
There were no reports.
6. Set date for next meeting. \[Michael Dolby, Finance Director\]
Committee members set August 26, 2019, as the next meeting date.
7. Adjournment - Without objection, Committee member Martin adjourned the meeting at 4:40 p.m.
________________________________
Lee Woodward, City Secretary
CITY OF LA PORTE
Interoffice Memorandum
TO:Chuck Engelken, Councilmember
Jay Martin, Councilmember
Thomas Garza, Councilmember
Corby Alexander, City Manager
Jason Weeks, Assistant City Manager
FROM: Michael Dolby, Director of Finance
Shelley Wolny, Treasurer
DATE: July 31, 2019
SUBJECT: Quarterly Investment Report
For the third quarter of the 2019 fiscal year, the City’s investment portfolio yield averaged 2.36%, which is just
above the average yield of our benchmark at 2.35% (see graph below). The total interest earned through June
2019 for all funds is $1,850,655, which is 286% of the budget of $647,700.
City vs. Benchmark
3.00%
2.50%
2.00%
1.50%
1.00%
`
0.50%
0.00%
Portfolio YieldBenchmark
th
A breakdown of the investment portfolio by investment type is shown below. At June 30, the City’s portfolio
totaled $102,563,350 and consisted of 22% in Texpool, 29% in Agency Notes, 12% in Texas Class and 37% in Logic.
By Investment Type
12%
37%
29%
22%
TexpoolLogicTexas CLASSAgency Notes
The City receives approximately half of revenues by January due to tax collections and in-lieu payments. These
funds are moved into the various investment pools, and reinvested in agency notes throughout the year. At the
end of the third quarter, the City’s portfolio consisted of 71% of the portfolio maturing overnight, 21% maturing
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within 1 year, 4% maturing in 1-2 yearsand 4% maturing beyond two years.Alarger share of the portfolio is in
the pools due to four investment maturities and three called investments during the quarter. Staff will continue
to focus on laddering and diversifying the portfolio through the purchase of agencies to strengthen returns.
By Investment Maturity
4%
4%
21%
71%
Overnight1-12 Months
12-24 Months24-36 Months
Currently, the 3-month T-Bill is at 2.22%; 2-year, at 1.81%; 5-year, at 1.83%; and, the 20-year is at 2.36%. Financial
volatility at the conclusion of 2018 caused the yield curve to begin flattening, with rates dropping at the long end
and rising at the short end of the yield curve, as market uncertainty created more desirability for liquidity.
Yield Curve
4.00%
3.00%
2.00%
1.00%
0.00%
Treasury Bills
1 year ago3 months agocurrent
The Fed cut the target rate by 25 basis points to a range of 2.00% to 2.25% at the July Federal Open Market
Committee meeting. This marks the first decrease since 2008. Concerns regarding the global economy and weak
inflation figures prompted the Federal Reserve to lower rates in an effort to preserve U.S economic growth. The
door to future cuts remains open as “uncertainties to the outlook remain.” Staff continues to monitor rates and
economic conditions, and the strategy for the portfolio will, as always, focus on laddering to pick up yield along
the curve and maintaining a constant cash flow and liquid position.
2
2 Year T-Note
8.00%
6.00%
4.00%
2.00%
0.00%
In summary, we will continue to invest the City’s funds in conservative investments, as authorized by the Public
Funds Investment Act, always keeping in mind Safety first, and then Liquidity and lastly Yield.
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Portfolio Composition and Value
as of June 30, 2019
80.00%
60.00%
ParBookMarketDays to
ValueValueValueMaturity
40.00%
Investment Pools 72,563,350 72,563,350 72,563,350 44
Agencies 30,000,000 30,000,000 29,992,513 344
20.00%
Total 102,563,350 102,563,350 102,555,863 132
0.00%
Investment PoolsAgencies
Jun-19Jun-18
Investment Maturity Schedule
as of June 30, 2019
Book
ValuePercent
Overnight
1-12 months
Overnight 72,563,35070.75%
1-12 months 22,000,00021.45%
1-2 years 4,000,0003.90%
2-3 years 4,000,0003.90%
Total 102,563,350100.00%
1-2 years
2-3 years
Portfolio Performance
for the month of June 30, 2019
2.50%
Weighted
PortfolioBenchmarkAverage
2.00%
YieldYield*Maturity
Pooled Funds2.34%2.17%4.56 months
1.50%
Bond Funds2.38%2.22%36 days
1.00%
Total2.36%2.19%4.45 months
0.50%
0.00%
*The pooled funds benchmark is based on the average monthly yield of a 6-month Treasury.
Pooled FundsBond FundsTotal
The bond funds benchmark yield is based on the average monthly yield of a 1-month Treasury.
The total is based on weighted average monthly benchmark yields.
Portfolio YieldBenchmark Yield*
Portfolio Earnings
as of June 30, 2019
1,000,000
800,000
BudgetActualPercent
General 400,000 963,175240.79%
600,000
Enterprise 114,750 235,599205.31%
Internal Service 45,500 125,401275.61%
400,000
Other Funds 87,450 526,480602.04%
200,000
Total 647,700 1,850,655285.73%
-
GeneralEnterpriseInternalOther Funds
Service
BudgetActual
Yield Curve
WAM -Pooled Funds
3.00%
6.00
June
2.50%
5.00
% of funds invested in:20192018
2.00%
Securities & Pools91.50%97.49%
4.00
1.50%
Bank Depository8.50%2.51%
1.00%
3.00
Total % of funds invested100.00%100.00%
0.50%
2.00
Operating Account Balance 9,525,047 2,461,162
0.00%
3 mo6 mo1 yr2yr5yr1.00
0.00
Apr-19May-19Jun-19
Apr-19May-19Jun-19
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Portfolio Yield vs Benchmark
Jul-19
Apr-19
Jan-19
Oct-18
0.00%0.50%1.00%1.50%2.00%2.50%3.00%
Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-19Aug-19Sep-19
Portfolio Yield
2.05%2.11%2.18%2.29%2.34%2.38%2.38%2.36%2.34%
Benchmark
2.46%2.52%2.54%2.51%2.50%2.51%2.45%2.42%2.17%
Additional Earnings
(over 6 month Treasury Bill)
40,000
20,000
-
(20,000)
(40,000)
(60,000)
(80,000)
(100,000)
(120,000)
(140,000)
Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-19Aug-19Sep-19
Add Erng
(28,585)(26,240)(23,825)(16,390)(11,824)(11,863)(6,406)(5,221)14,873
Cumm Erng
(28,585)(54,825)(78,650)(95,040)(106,863(118,726(125,132(130,353(115,480(115,480(115,480(115,480
Investment Maturity & Cashflow
(excluding Texpool & Logic)
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
5
Market Gain (Loss)
by Month
-
(50,000)
(100,000)
(150,000)
(200,000)
(250,000)
(300,000)
(350,000)
(400,000)
OCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEP
AGENCIES
(345,308)(299,936)(202,794)(164,996)(156,732)(104,846)(90,030)(40,222)(7,487)
Monthly Portfolio Division
7%
47%
46%
Coastal SecuritiesCantor FitzgeraldFTN Financial
Average Return on Investments
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
CoastalCantor FitzgeraldFTN Financial
Securities
Series1
1.67%2.10%2.19%
6
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