09. Treasurer's ReportADMINISTRATIVE SERVICES DEPARTMENT
CUPERTINO
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 950143255
(408} 777-3220 • FAX (408) 777-3109
SUMMARY
Agenda Item No. ~_
SUBJECT AND ISSUE
Meeting Date: August 5, 2008
Accept the Treasurer's Investment and Budget Report for June 2008, including a status
report on General Fund Revenue and Expenditures.
BACKGROUND
INVESTMENTS
The market value of the City's portfolio totaled $61.86 million at June 30, 2008, at a cost
of $61.84 million. The $20,000 unrealized gain difference results from the economy's low
interest rates, which drives up the market value of fixed interest securities in the portfolio.
With interest rates declining, the portfolio's yield fell to 2.86% in June, compared to 2.94%
the previous month and 4.88% a year ago. The Local Agency Investment Fund (LAIF}
yielded 2.89% for June, down from 3.07% for the previous month and 5.25% a year ago.
Four million dollars in Federal Farm Credit and U.S. Treasury securities matured. Three
million in Freddie Mac bonds were sold at a profit of $39,000, leaving no individual
holdings of these or of Fannie Mae in the City's portfolio. The credit risk associated with
these bonds in light of the growing mortgage foreclosure problem is deemed to be too high
to warrant keeping these investments. This sale occurred prior to legislation strengthening
the federal government's backing of these two mortgage entities.
The proceeds from the matured and sold securities were re-invested into Federal Home
Loan Bank and Farm Credit notes, used to cover the City's semi-annual debt payment, and
spent on Mary Avenue Footbridge and Stevens Creek Corridor Park construction.
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.
GENERAL FUND REVENUES AND EXPENDITURES
The preliminary results for the year ending June 30, 2008 are in. Revenues are down
$600,000 or 1% from last year's results and from the current budget. Downturns in
building and planning fees, construction taxes, fines, and one-time property sales are, by
and large, offset by increases in sales taxes, property taxes, transient occupancy (hotel)
taxes, utility user taxes, and use of money and property (interest and rent). Property taxes
s-~
Treasurer's Investment and Budget Report
August 5, 2008
Page 2 of 2
and planning fees end up higher than budget, but sales taxes and building permits finish the
year below budget. The recession, led by the housing industry, effected development
revenues and sales taxes somewhat, but resilient local demand for housing and avoidance
of a severe downturn in the region's technology and business-to-business sector has spared
the Ciry so far from the heavy financial impacts effecting many other municipalities.
operating expenditures are estimated to end up $1.6 million or 5% below budget after
accounting for projected budget and purchase order carryovers to next year. These savings,
reduced by the above $600,000 revenue shortfall, leaves a $1 million budget surplus to
carryover into fiscal 2008-09, which was anticipated and used to balance the current five-
year budget. The final revenue, expenditure and budget surplus results will be known in
November after the annual audit, whereupon the Council will be informed of the outcome.
RECOMMENDATION
Accept the Treasurer's Investment and Budget Report for June 2008.
Submitted by:
~~`~
David Woo
Deputy Treasurer
Reviewed by:
Carol A. Atwood
City Treasurer
Attachments:
1. Investment Portfolio
Approved for submission:
~~~~! ~
David W. Knapp
City Manager
2. Rate of Return Comparison and Investments by Type
3. Compliance with Investment Policy
4. General Fund Budget Report
5. Revenue and Expense Trend Charts
s-2
City of Cupertino
Investment PortfoCio
June 30, 2008
~
'
~'
-
15
~
CR'7PTION o Mafuri
SECURITIES MATURED
11/21/05 06/23/08 FFCB 5.79% 4.65% 1,000,000 1,000,000 1,000,000 0
02/29/08 06/12/08 US Treasury Bill 1.76% 1.80% 2,000,000 2,000,000 2,000,000 0
01/28/08 06/30/08 US Treasury Note 5.13% 2.25% 1,000,000 1,000,000 __
1,000,000 ~ 0
Realized Profit
SECURITIES SOLD ____ pon a e
12/30/03 12/30/08 FHLMC callable, step coupon 4.75% 3.90% 1,000,000 1,000,000 1,008,880 8,880
11/21/05 07/12/10 FHLMC 4.13% 4.73% - 988,982 1,000,000 1,012,350 23,368
12/15/05 12/15/10 FHLMC callable 5.04% 5.04% 1,000,000 1,000,000 1,006,500 6,500
SECURITIES PURCHASE"D _
06/26/08 06/26/09 FHLB callable 3.13% 3.13% 1,000,000 1,000,000 1,001,250 1,250
06/18/08
_ 06/18/10 FHLB callable 3.35% 3.35% r 1,000,000 _
1,000,000 996,880 (3,120)
06/30/O8 12/30/09 FHLB callable 3.25% 3.25% 1,000,000 1,000,000 1,002,188 2,188
06/25/08 OS/07i 10 FFCB ~ 4.75% 3.38% 1,024,360 1,000,000 1,028,750 4,390
___ _
l CITY PORTFOLIO
__._ _
CASH
06/30/08 Wells Fargo -Workers Comp Checking _ _ _ 14,010 ^~t4,010 14,010 ~ 0
06/30/08 Wells Fargo - Regulaz Checking 403,483 403,483 403,483 0
417,493 417,493 417,493 0
I.AiF
~_ 46/30/O8 I.AIF -State Pool ~~ ~ 2.84% 2.89% 17,039,962 17,039,962 17,039,962 0
~
CERTIFICAT ES OF DEPOSIT
_ 03/26/04 09!26/08 South Coast Community Bank 3,20% 3.20% 98,004 98,000 98,025 ~ 25
l ]!23/07 11020/08 Arizona Bank & Trust 4.88% 4.88% ____
10,108 10,108 10,108 0
11/23/07 11/20/08 Sanktrust 4.88% 4.88% _ _
~ _ 94,000 94,000 94,0110 0
11/23/07 11/20/08 Cardinal State Bank 4.88% 4.88% 94,000 94,000 _
~ 94,000 __
~ 0
1(/23/07 1120/08 Colonial Bank NA 4.88% 4.88% _
94,000 94,000 94,000 0
11/23/07 1]20/08 Covenant Bank 4.88% 4.88% 94,000 94,000 94,000 0
11/23/07 1120/08 Four Oaks Bank & Trust Co 4.88% 4.88% 94,000 94,000 94,000 0
11/23/07 1120/08 Johnson Bank 4.88% 4.88% 94,000 94,000 94,000 0
1123/07 1120/08 Midwest Bank of Western Illinois 4.88% 4.88% 94,000 94,000 94,000 0
1123/07 1120/08 Solutions Bank 4.88% 4.88% 48,892 48,892 48,892 0
I F23/07 1120/OS The Brand Banking Co 4.88% 4.88% 94,000 94,000 94,000 0
1123/07 1120!08 Vision Bank 4.88% 4.88% 94,000 94,000 94,000 0
1123/07 1123/U8 Pinnacle Bank 4.88% 4.88% 95,000 95,000 95,000 0
_ 03!17/04 03/17/09 Peoples State Bank 3.40% 3.40% 99,000 ~ 99,000 98,833 (167)
0324/04 0324/09 Washita State Bank 3.35% 3.35% 99,000 99,000 98,799 (201)
12/30/05 12/30/09 Meridian Bank 4,80% 4.80% 99,000 99,000 98,063 (937)
1228/05 1228/10 Nat'l Bank of New York City 4.90% 4.40% 97,000 97,000 ~ 95,725 _
_ (1,275)
^~~
1,492,000 1,492,000 1,489,445 (2,555
)
MONEY MARKET FUNDS
~T _
06/30/08
Wells Fargo Government
2.09'/
°
2.09% _ _
11,629,041
11,629,041
11,629,041
0
06/30/08 Wells Fargo 100%Treasury _
1,30% _
4 1.30% 100,000 100,000 100,000 0
11,729,041 11,729,041 11,729,041 0
9-3
City of Cupertino
Investment Portfolio
June 30, 2008
-
o Maturi AL
UE
AGENCY NOTES _ ____.
01/30/08 09/12/08 FFCB 4.50% 2.70% 1,003,572 1,000,000 1,Q03,750 178
01/28/OS 10/Ol/08 FFCB discount note 2.68% 2.77% 993,077 1,000,000 993,800 723
06/26/08 06/26/09 FHLB callable 3.13% 3.13% 1,000,000 1,000,000 1,001,250 1,250
_
01/22/08 08/03/09 _
~
FFCB _5.25% 2.55% 1,028,687 1,000,000 1,025,000 (3,687)
06/30/08 12/30/09 _ _______
FHLB callable 3.25%
~ 3.25% 1,000,000 1,000,000 1,002,188 2,188
05/28/08 02/26/10 FHLB callableM _
f3.00% 3.OQ% 1,000,000 1,000,000 998,130 (1,870}
06/25/08 OS/07/l0 _
FFCB 4.75% 3.38% 1,024,360 1,000,000 1,028,750 4,390
05/20/08 05/20/10 FFCB callable 3.34% 3.34% 1,000,000 1,000,000 1,000,310 310
05/07/08 06/ll/10 FHLB 3.00% 2.98% 1,000,390 1,000,000 995,940 (4,450)
06/18/08 06/l8/l0 Ff1I,B callable 3.35% 3.35% 1,000,000 1,000,000 996,880 (3,120)
05/27/08 08/27/10 FHLB callable 330% 3.30% 1,000,000 1,000,000 998,750 _ (1,250)
11/19/07 11/19/10 FFCB callable 4.63% 4.63% _1,000,000 1,000,000 1,005,940 5,940
05/19/08 11/19/10 FHLB callable 3.15% 3.15% 1,000,000 1,000,000 994,Q60 (5,940)
_
__ 05/28/08 02/28/11 _
FHLB Callable 3.40% 3.40% 1,000,000 1,000,000 996,250 (3,750)
~' ____ ~ 1__4,050,086_ 1__4,000_,000
.__._._ ~ __14,040,998 __(_9_,088)
US TREASURY SECURIT IES _
12/10/07 07/31/08 US Treasury Note 5.00% 3.27% 2,002,857 _ 2,000,000 2,005_,000_ ___ 2,143
12/07/07 I O8/15;.18 US Treasury Note 4.13% 3.35% 1,000,941 ],000,000 1,(102,810 _ wM 1,869
12/10/07 08!31/08 US Treasury Note 4.88% 3.34% 2,005,045 _ 2,0_00,000 _2,009,680 4,635
12/07/07 09/30!08 US Treasury Note 4.63% 3.27% 1,003,280 1,000,000 1,007,110 _3,830
12/10/07 09/30/08 US Treasury Note 4.63% 3.29% 1,003,265 1,000,000 1,007,110 3,845 _
12/07/07 10/31/08 US Treasury Note __
4.88% 3.27% 1,005,199 1,000,000 1,009,450 4,251_
12/10/07 _
10/31/08 US Treasury Note _
4.88% 3.25% 1,005,306 1,000,000 1,009,450 4,144
12/07/07 11/15/08 US Treasury Note 4.38% _ 3.31% 1,003,886 1,000,000 1,008,280 4,394
12/10/07 11/15/08 US Treasury Note 4.38% 3.2.7% 1,004,047 1,000,000 1,008,280 4,233
12/10/07 12!31/08 US Treasury Note 4.75% _
_3.18% 2,015,304 2;000,000 2,025,460 10,156
T 12/20/07 01/31/09 US Treasury Note 4.88% 3.06°/a 1,010,375 1,000,000 1,015,860 5,485
02/19/08 02/15/09 US Treasury Note 3.00% ].77% 1,007,644 1,000,000 1,004,920 (2,724)
03!10/08 03/31/09 US Treasury Note 4.50% 1.44_% 1,022,737
~ 1,000,000 1,015,860 (6,877)
03/12/08 04/30/09 US Treasury Note 4.50% 1.51% 1,024,553 1,000,000 1,017,730 (6,823)
17,114,438 17,000,000 17,147,000 32,SG2
Total Managed Portfolio _ 61 843 020 G1 G78 49G G18G3 939 20 919
Average Yield _ 2.86%
Average Len gth to Maturity (ia years) 0.49 __~.
TRUST PORTFOLIO (KESTER TRUS"1)
CASH __
___
_
Y
.._
^J
__.__~
_ 06/30/08 Wells Institutional Money Mkt Acct 2.14% 2.14% 47,687 47,687 47,b87 0
Total Trust Portfolio `~ ~~ 47 G87 47 687 47 687 0
BOND RESERVE PORTFOLIO
Bond Reserve Acct Ambac Assurance Security Bond _ I 1 1
Bond Payment Acct Wells Treasury Plus Money Mkt 1.24% 1.24% 2,444,531 2,444,531 2,444,531 0
Total Bond Reserve Portfolio ~ 2 444 31 2 444 531 2444 531 0
9-4
Rate of Return Comparison
5.50%
5.00%
4.50%
--~- LAI F
--^-Cupertino
4.00%
3.50%
3.00%
2.50% ~ T, '
~\~1 ~~01 0~~~ 001 ~~~1 ~01
~ ~ ~
^~04~ ~0~ ,5~04~ ~~0~ 0~~~ ~~O`b
COMPLIANCE WITH INVESTMENT POLICY
City of Cupertino
_
June 30, 2008 -- .
Cate or Standard Comment
___
Treasury Issues No limit Complies
US Agencies No limit Complies
Medium Term Corporate Bonds
LAIF 30%.with A rating
$40 million Complies
Complies
Money Market Funds 20% ~ Complies
Maximum Maturities Up to 5 years Complies
Per Issuer Max 10% {except for Treasuries and US Agencies) Complies
Bankers Acceptances
Commercial Paper 180 days & 40%
270 days & 25% Complies
Complies
Negotiable Certificates of Deposit 30% Complies
Repurchase Agreements 365 days Complies
Reverse Repurchase agreements : Prohibited ~ Complies
s-~
City of Cupertino
General Fund Budget Re ort
6/30/2008 Preliminary ~
Bud et Actual Prelimina
2006/07 2007/08 6/30/2007 6/30/2008 Anai sis of Trends
Taxes:
Sales Tax 11,575,000 14,190,000 11,252,341 13,665,282 . Strong business-to-business; retail weak
Pro a Tax 6,290,000 6,710,000 6,480,283 7,066,574 Values holdin u better than in other re ions
Transient Occu anc 2,363,000 2,660,000 2,511,184 2,668,936
Utili Tax 2,392,000 3,240,000 3,011,755 3,148,400
Franchise Fees 2,500,000 2,580,000 2,537,018 2,531,397
Other Taxes 2,308,000 1,400,000 2;365,443, 1,422,938 Transfer & construction taxes down
Licenses and Permits 3,050,000 3,030,000 3,325,844 2,656,017 Building ermits down
Use of Mone & Pro a 1,380,000 2,100,000 1,764,215 2,006,577 Strong cash osition but rates lower
Intergovernmental 4,706,114 4,509,871 4,587,018 4,532,981 Mandated cost reimb down; onetime VLF correction 07
Char es for Services 1,.482,000 1,151,685 1,537,527 1,351,578 Develo ment down; Senior Center now in Gen Fd
Fines & Forfeitures 680,000 800,000 926,310 725,851 Last year had $170k in one-time retroactive fines
Other Revenue 140,000 116,200 154,236 73,957 $67k unclaimed roe in FY07
Sale of Pro e 1 600,000 ~ 1,663,842 Two parcels sold Last year
Total Revenue 4 e 4 4 4 4 Down 1% from 07; ma end u $600k below bud et.
O eratin Ex enditures:
Administrative 1,362,195 1,499,095 1,287,101 1,348,946
Law Enforcement 7,177,378 7,982,421 6,975,517 7,488,444 Full ear of addt'1 de uties
Gommuni Service 917,644 1,275,848 1,121,438 1,171,095
Administrative Service 4,978,400 4,540,611 3,715,918 , 3,792,847
Recreation Service 2,428,298 3,910,044 2,403,296 3,743,913 BBF and Senior Center in General Fund this ear
Communi Develo ment 3,885,441 3,722,479 3,485,790 3,390,455 Less development activi
Public Works 9 845,280 ' 11,032,844 9,501 535 10,045,638 Addt'I ark and buildin maintenance
Total Ex enditures 4 I U 9% from 07; ma end u $ L6M below bud et
Transfers In 1,459,974 1,300,164 500,000 1,300,164 Resource Recovery; CTP savings
Transfers Out -7,026,296 -18,334,750 -14,577,SOO f -18 334 750 New CIP pro'ects and reserves
E
Net Gain/ Loss j - -4 - ] 4
Sales Tax Projections vs. Actual
~, $16,000
~a
N
$12,000
m
V
A
Q $8,000
V
d
$4,000
$0
-~-~-Projected, per budget
~FActual
r
8/07 9/07 10/07 11 /07 12/07
1 /08
after
budget
change
Month
2/08 3/08 4108 5/08 6/08
co
~o
Property Tax Projections vs. Actuat
y $8,000
N
r, ~ $6,000
«' ~
m
0
$4,000
d
} $2,000
$a
--•-Projected, per budget
-Actual
8/07 9/07 10/07 11107 12/07
1 /08
after
budget
change
Month
2/08 3/08 4/08 5108 6/08
0
Transient Occupancy Tax Projected vs. Actual
,~ 3,200
R
c 2,800
r
2,400
~- 2,000
b
0
0 1,600
:. .
~ ~ 1,200
aoa
400
0
J ~--~--Projected, per budget
-~-Actual
i
8/07 9/07 10/07 11 /07 12/07 1 /08
Month
2/08 3/08 4/08 5108 6/08
co
Licenses 8~ Permits Projected vs. Actual
w 4,000
. ~ 3,000
r
2,000
r
1,000
i
~~
0
--~-Projected, per budget
-~--Actual
r
.r r' ~/
i
~ '!'~~~
8/07 9/07 10/07 11 /07 12/07 1 /08 2/08 3/08 4/08 5/08 6/08
Month
N
Charges for Services Projected vs. Actual
~, 2, 000
a
c
0
::
0
~ 1,000
m
0
--~-Projected, per budget
~-Actual
~ ~
r ''' .r
8/07 9/07 10/07 11 /07 12/07 1 /08 2/08 3108 4/08 5/08 6/08
Month
w
General Fund Expenditures Projected vs. Actual
~~
i ~
~.. -i-Projected, per budget
-^-Actual
8/07 9/07 10107 11 /07 12/07 1 /08
Month
A
::
~v
0
0
~, ao,ooa
y 35,000
O
3o,oao
25,000
2o,aoo
1 s, aoo
10,000
5, 000
0
2/08 3/08 4/08 5/08 6/08