Staff Report. Financial and Investment Report April 2023
PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/20/2023 ITEM NO: 12
DATE: June 12, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Monthly Financial and Investment Report (April 2023).
RECOMMENDATION:
Receive the Monthly Financial and Investment Report (June 2023).
DISCUSSION:
California Government Code Section 41004 requires that the Town Treasurer submit to the
Town Clerk and the legislative body a written report and accounting of all receipts,
disbursement, and fund balances. The Finance Director assumes the Town Treasurer role.
Attachment 1 contains the April 2023 Monthly Financial and Investment Report which fulfills
this requirement.
The Finance Commission will receive this report on June 22, 2023 at a special meeting as its
regular meeting was cancelled due to lack of a quorum.
Attachment 1 includes a Fund Balance Schedule, representing estimated funding available for
all funds at the end of the April 2023. The fund balances are estimated at a point in time and
will be finalized at the final close of the fiscal year.
Please note that the amount in the Fund Schedule differs from the Portfolio Allocation and
Treasurer’s Cash Fund Balances Summary schedule because assets and liabilities are
components of the fund balance. As illustrated in the summary below, Total Cash is adjusted
by the addition of Total Assets less the amount of Total Liabilities to arrive at the Ending Fund
Balance – which represents the actual amount of funds available.
PAGE 2 OF 3 SUBJECT: Monthly Financial and Investment Report (April 2023) for Fiscal Year 2022/23 DATE: June 12, 2023
DISCUSSION (continued):
As of April 30, 2023, the Town’s financial position (Assets $84.3M, Liabilities $27.0M and Fund
Equity $57.3M) remains strong and there are no issues meeting financial obligations in the near
future.
As of April 30, 2023, the Town’s weighted portfolio yield for investments under management
was 2.77% which was below by 10 basis points the Local Agency Investment Fund (LAIF) yield of
2.87% for the same reporting period. Currently the LAIF portfolio’s weighted average maturity
(WAM) is 268 days versus the Town’s longer WAM of 385 days. The longer maturity (WAM) for
Town assets under management reflects the Town’s strategy to take advantage of higher yields
associated with longer maturities balanced with shorter term yields available on investments
held with the State’s LAIF. The Town’s weighted average rate of return on investments under
management of 2.77% at the close of April was 6 basis points higher when compared to the
prior months return of 2.71% reported as of March 31, 2023.
Since December 31, 2022, LAIF yields had climbed from 217 basis points (2.17%) to 2.87 basis
points (2.87%) through the end of April 2023.
Staff, in coordination with the Town’s investment advisor, continued primarily replacing
maturing investments with shorter to medium term maturities in the two- to three-year
maturity range. These investments capture current yields that exceed the rates expected to be
earned in the LAIF pool during that same time period. The State LAIF pool typically lags the
market when current market yields are either increasing or decreasing.
On March 22, 2023, the Federal Reserve voted to approve a ¼ percentage basis point increase
from 4.75% to 5.00%. This action was followed with an additional hike in May 2023 from 5.00%
to 5.25%. Through these actions over time, the Federal Open Market Committee’s (FOMC) goal
is to bring year to year inflation to its targeted level of 2%. The labor market showed signs of
loosening. Job openings fell to the lowest level since March 2021, albeit they remained well
above pre-pandemic levels. Temporary workers saw the most job losses (and are considered
the first to lose their jobs when the labor market turns). Wage growth fell from 4.6% to 4.2%,
the lowest since June 2021, however, the unemployment rate fell from 3.6% to 3.5%, despite
an uptick in the participation rate.
Total Cash 74,868,304$
Plus: Assets 9,451,020$
Less: Liabilities (26,974,112)$
Estimated Fund Balance 57,345,212$
Reconciling Cash to Fund Balance
PAGE 3 OF 3 SUBJECT: Monthly Financial and Investment Report (April 2023) for Fiscal Year 2022/23 DATE: June 12, 2023
DISCUSSION (continued):
The Town's investments are in compliance with the Town's Investment Policy dated February
21, 2023 and also in compliance with the requirements of Section 53600 at seq. of the
California State Code. Based on the information available, the Town has sufficient funds to
meet the cash demands for the next six months.
CONCLUSION:
Receive the Monthly Financial and Investment Report (April 2023).
Attachment:
1. Financial and Investment Report (April 2023)