07. Treasurer's Report
.'
ADMINISTRATIVE SERVICES DEPARTMENT
CUPERTINO
CITY HALL
10300 TORRE AVENUE. CUPERTINO, CA 95014-3255
(408) 777-3220 . FAX (408) 777-3109
SUMMARY
Agenda Item No. 7
Meeting Date: December 18, 2007
SUBJECT AND ISSUE
Accept the Treasurer's Investment and Budget Report for October 2007, including a status
report on General Fund Revenue and Expenditures.
.BACKGROUND
INVESTMENTS
. :'~
The market value and cost of the City's portfolio totaled $56.4 million at October 31,2007.
Market interest rates continue to decline. The portfolio yielded 4.82% in October down
slightly from 4.83% the previous month but still up from 4.49% a year ago. The Local
Agency Investment Fund (LAIF) yielded 5.14% for October, down from 5.23% for the
previous month, but up from 5.1 % a year ago.
For October, a $1.5 million Federal agency note matured at 3.79% along with a $97,000
certificate of deposit at 5%. The City's cash & investment balance decreased by $700,000
due to Sheriff contract paym'ents.
The sub-prime mortgage situation and the housing slump continues to bring uncertainty in
financial markets, driving down the yields of the safest investments, Treasuries, and
causing losses at FHLMC and FNMA which forced those agencies to raise capital through
a preferred stock offering. The State of Florida's local government investment pool
recently suffered a bank run and a temporary freeze in withdrawals, after reports of losses
in investments related to subprime mortgages. When the fund reopened after a
restructuring, there was a 2% fee on large withdrawals. LAIF has stated that it does not
invest in structured investment vehicles or collateralized debt obligations, two areas that
have caused problems in the Florida pool and a few other states. LAIF does have about 5%
of its portfolio in asset-backed commercial paper with various entities and 0.12% in
corporate bonds with Countrywide Financial. Although no adverse news has been reported
from LAIF, the City cut its $36 million account in LAIF down to $15 million and invested
it in Treasuries during December 2007 as a precaution. This move lowers the portfolio
yield, but follows the City's investment policy of putting safety and liquidity as the top two
priorities.
Investments are in full compliance with City investment policy and/or State law, and are
tiered to provide sufficient cash flows to pay City obligations over the next six months.
7 - 1
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Treasurer's Investment and Budget Report
December 18, 2007
Page 2 of2
GENERAL FUND REVENUES AND EXPENDITURES
Revenues through four months of the year are down $611,000 or 7% from last year. Sales
taxes, property taxes, transient occupancy taxes, and interest earnings are up, while
permits, charges for services, state mandated reimbursements, vehicle license fees, and
construction taxes are down. The new major sales tax provider, last year's property tax
equity legislation, and solid local business economy has offset some of the heavy declines
in development~related feej.
Overall expenditures are up $891,000 or 9% through the first four months, inline with the
11 % budget increase, which includes the recreation enterprises that moved to the General
Fund this year.
RECOMMENDATION
Accept the Treasurer's Investment and Budget Report for October 2007.
SU;;G~
David Woo
Finance Director
:', Approved for submission:
,
liK"
David W. Knapp
City Manager
Reviewed by:
.~~a~
Carol A. Atwood
Director of Administrative Services
Attachments:
1. Investment Portfolio
2. Rate of Return Comparison and Investments by Type
3. Compliance with Investment Policy
4. General Fund Bu4get Report
7-2
City of Cupertino
October 31, 2007
I UAlli
04/05/06
04/18/05
CASH
LAIF
y
..~..
,.i;o
~~~~, AUJUl'iIJ::.U
KArJ::. CU1ST
I
YALUE-
SECURITIES PURCHASED
CITY PORTFOLIO
10/3 1/07 LAIF - State Pool
MONEY MARKET FUNDS
SECURITIES MATURED/CALLED
10/05/07 Mercantile Bank of Michigan
10/18/07 FHLB adjustable rate
5.00%
3.79%
97,000
1,500,000
CERTlFICA TES OF DEPOSIT
97,000
1,500,000
10/31/07 v.:,?!!~.!~rgo - Workers Comp Checking ]9,151
1 0/31/07 Wells~~~go - Regular ChecKil.1~___.__.______.-.-__ _._. 535,048
___...____.___.___ ._ S5~,..2.~_ .
19:151
535,048
554,19?_
10/31/07 Wells Fargo Government
VALUe n~vl'Il/LU;S;S
97,000
1,500,000
19,151
535,048
____~!~.22._
o
o
o
. 0
o
5.14% ~_~!1.~8,702. _...l.?!10~1?01 _..__~~!1..0.8.r2QI. _____.___0_
."
4.65% 97,000 97,000
4.75% 99,000 99,000
3.00010 _~,00.l2. _____ 99,000
3.05% 98,000 98,000
3.00% 99,000 99,000
3.00% 99,000 99,000
3.:~ 99,000 99,000
5.05% ____.9~.Q.~ __ 99,000
3.01% 97,000 97,000
3.20% 98,000 98,000
3.40010 99,000 99,000
3.3~~ __ 99,000 99,000
'I--'__~ ._~?E~ _______?9,000
4.90% 97,000 97,000
02/03/06
--.--
02/ 10/06
03/17/04
03/19/04
03/24/04
03/24/04
03/26/04
03/30/06
04/07/04
----".-
03/26/04
.._._........_ r___u___ ..._"-
03/17/04
03/24/04
12/30/05
-.--..--.
12/28/05
1,378,000
1,378,000
..-
4.85%
4,341,051
4,341,051
4,341,051
4,341,051
96,865
98,879
98,160
97,172
98,119
98,119
._~
98,172
98,955
96,930
96,349
. ~5,968
95,880
-.----.....----
97,449
95,115
1,362,132
4,341,051
4,341,051
(135)
(l~!l
(840)
. (828)
(881)
(881)
(828)
(45)
(70)
._._ (1,651)
(3,032)
(3,120)
. (1,551)
(1,885)
(15,868)
..-
o
7-3
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City of Cupertino
October 31,2007
I UATh Ann MAIUI{lIY
.~
. I D~Cj{lPTION RATh COST ---v AWE VALUE
- ._...
AGENCY NOTES
--.
._. ~..- _..__._._~-~
04/14/04 12/03/07 FNMA callable 2.50% 999,675 1,000,000 998,130 (1.545)
--..-.--.
12/13/05 ] 2/2 8/07 FFCB 4.75% I,~~~?~- ] ,000,000 __._I.~OOO,OOO (76)
-........ ..-.....-...-.- ---- --_.
04/23/04 01/23/08 FHLB callable 3.15% 1,499,066 1,500,000 1,494,840 (4;n6)
...._..._.._-~-_....- 1--. --
02/25/04 02/2 5/0 8 FHLMC 3.13% ],000,000 ] ,000,000 995,130 (4,870)
--.
11/21/05 06/23/08 FFCB 5.79% ],006,858 1,000,000 1,007,500 642
...-.---....-- -
0]/12/04 08/06/08 FHLB callable, step coupon 5.00% 999,685 1,000,000 1,000,000 ]]5
-----~--_..- -.----.
04/29/04 ] 0/29/08 FHLB callable, step coupon 4.00% 300,000 300,000 299,250 (750)
- -
12130/03 ] 2/30/08 FHLMC .?~!~~Ie, step coupon 4.75% ],000,000 ],O~~ 1,003,310 3,3]0
03/]6/04 03/] 6/09 FNMA callable 4.01% ],600,000 _.~~O~~ ],590,000 (IO,~~
-
12128/05 12/28/09 FHLB callable 5.04% 915,000 915,000 915,860 860
--. --.---
11/30/05 04/07/]0 FFCB callable 3.70% 97] .439 1,000,000 983,440 12,00]
] 1/21/05 07/121]0 FHLMC 4.13% __2_8~l.452 . __~~OO,~~ 993,440 7,988
.0. . _n
]21] 5/05 12/15/10 FHLMC callable 5.04% 1,000,000 ],000,000 1,004,530 4,530
.. _.__.~--_.
04/21/06 04/07/11 FNMA callable 5.75% 748,599 750,000 751,875 3,276
--- --
...------ -- .~._...~
-- 14,025,850 14,065,000 14,037,305 ___..__!!.455
--'-- ....-..-..---.-- --
---.- .-. .- .--.- --- :';.. .- --~---- 56.403.394 (4413)
Totall\1allaged Portfolio 56407.807 56 446.957
---- n___._.____..__._
A vl2:.age y'!eld 4.82%
------ -----
Avenge Length to Maturity (in yean) 0.35
--
- .- TRUST PORTFOLIO (K~TER TRUST)
CASH
o __ .. -
10/31/07 ~Ells Institutional Money Mid Acct 4.73% 46,558 46,558 46,558 0
...
Total Trust Portfolio 46.558 46.558 46,558 0
----.-'-'
-
BOND RESERVE PORTFOLIO
-
Bond Reserve Acct Ambac Assurance Security Bond I 1 1
~---_..._~ -
.Bond Payment Acct Wells Treasury Plus MoneY,Mk1 4,00% 4,545 4,545 4,545 0
Total Bond Reserve Portfolio 4.545 4.545 4545 0
7-4
;.~
. -
Inves~ents by Type
Managed Portfolio
Agency Notes
15%
CD'I
2%
IRate of Return Comparisonl.
5.40%
5.20%
5.00%
4.80%
4.60%
4.40%
4.20%
.4.00%
11/06 12/06 1107
2/07
3107
4107
5/07
6/07
7107
8107
9/07 10107
I=::~~no I
7-5
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COMPLIANCE WITH INVESTMENT POLICY
City of Cupe~tino T' uuu_______
October 31, 2007 . :
Category
Treasury Issues
US Agencies
Medium Term Corporate Bond~___
LAIF
u._. ..__ ... .___ .u_..
Money Market Funds
Maximum Maturities
Per Issuer Max
Bankers Acceptances
Commercial Paper
Negotiable Certificates of Deposit
Repurchase Agreements
Reverse Repurchase agreements
Standard
i
j
- -'-1-~'--~----
Comment
,No limit
I .. .
.. iNo limit
130% wj~h A rating
$~9 Illillion__ n'_ __.__ ___Un. _'___'n
120% ..
IUp to 5 years
I -- -
i 10% (except for Treasuries and US Agencies) .
i 180 days & 40%
l... .... .
!270 days & 25%
I
'30%
.365 days. \~
. Prohibited
,
_i .__. _ __ __._ __.
! Complies
I
I Complies
I Complies
Ic~mpii~s--
iComplies
I n -.- ..
,Complies
...1 .. ._. ________ __..
: Complies
I .-
iComplies
! C~~plies
.!C~mpiies
:Comp_l.ies
iComplies
7-6
City of Cupertino i 1 I
!
General Fund Budget Report ! !
October 31, 2007 i I
,
I
, !
Budget Actual -
i
Prior Year Amended i I
2006/07 2007/08 10/3112006 1013112007 j Analvsis of Trends
Taxes: I
Sales Tax 11,575,000 12,870,000 2,444,585 2,936,037 Strong electronic eQuip. sector & maior new provider
PropertY Tax 6,290,000 6,510,0001 430,290 506,516 TEA
Transient Occupancv 2,363,000 I 2,550,000 i I 598,558 668,036 Local business demand
Utility Tax 2,392,000 2,100,0001 . 756,931 742,190
Franchise Fees 2;500,000 2,580,000 I 370,062 380,823
Other Taxes 2,308,000 1,770,000 ! 1,108,752 429,377, Construction tax down : ~
Licenses and Permits 3,050,000 . 3,172,0001 1,213,143 864,508! Decrease in buildine: oermits
Use of Money & Property 1,380,000 1,483,000 i 710,835! 856,7311' Strone: cash nosition
Intenmvernmental 4,706,114 4,740,965 379,727! 191,0991.;; SB 90 claims down; Last yr'S VLF included corrections
Charges for Services 1,482,000 2,066,000 583,305 i 405,329 Planning fees down
Fines & Forfeitures i 680,000 690,000 119,448: 131,312
Other Revenue I 140,000 116,200 40,612: 33,145
Sale ofPropertv I 1,600000
! I
Total Revenue i ;It\ 41;1; 114 401;4l! II;, Sl7SID4Ri l!14'lInl Down 7%
I
1 i
Ooerating Expenditures: ! ;
,
Administrative 1,362,195 1,514,095! 371,7161 414,8921
Law Enforcement 7,177,378 7,935,894i 2,325,300 2,599;9241 Corresponds w/budget increase
Community Service 917,644 1,275,848 ! 293,303 382,1511 Corresponds w/budget increase
Administrative Service 4,978,400 4,529,5611 1,538,039 1,315,2061 Corresoonds w/budget decrease
Recreation Service 2,428,298 3,918,359, 1,319,444 1,260,949 BBF and Senior Center Enterprises this year
Community Development 3,885,441 3,882,0991 931,511 1,103,775 N Valleo Study; Economic Devlnmnt
Public Works 9,845,280 11,118.5381 2,790,883 3,384,064, Corresponds w/budtret increase
Total Exnenditures -'1\ .c;OA ,;-,,; ':1,4174104 9 .570.196 fI' AL:^^'11 Up 90/0, inline with II % bude:et increase
!
Transfers In I 1,459,974 1,230,000' 333,332. 410,0001 RDA payback; CIP closures
Transfers Out I .-7,026,296 -15,648,000 -3,071,664 -5,216,0001 New CIP
! I !
Net Gain/(Loss) I 4 ':1,ll'i 1'i1; _7 OAA ')')0 .':1, 'i'i' 'llll! .7 1'1 l!'illi
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