Staff Report. Financial and Investment Report February 2023
PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: 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:04/18/2023 ITEM NO: 7
DATE: April 11, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Monthly Financial and Investment Report (February 2023).
RECOMMENDATION:
Receive the Monthly Financial and Investment Report (February 2023).
DISCUSSION:
California Government Code Section 41004 requires that the Town Treasurer submits 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 February 2023 Monthly Financial and Investment Report which
fulfills this requirement.
Attachment 1 contains a Fund Balance Schedule, representing estimated funding available for
all funds at the end of the February 2023. The fund balances are estimated at the 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.
As of February 28, 2023, the Town’s financial position (Assets $78.8M, Liabilities $26.6M and
Fund Equity $52.2M) remains strong and there are no issues meeting financial obligation in the
near future.
PAGE 2 OF 3 SUBJECT: Monthly Financial and Investment Report (February 2023) for Fiscal Year 2022/23 DATE: April 11, 2023
DISCUSSION (continued):
As of February 28, 2023, the Town’s weighted portfolio yield for investments under
management was 2.66% which exceeded by 4 basis points the Local Agency Investment Fund
(LAIF) yield of 2.62% for the same reporting period. Currently the LAIF portfolio’s weighted
average maturity (WAM) is 287 days versus the Town’s longer WAM of 475 days. The longer
maturity will benefit the Town for additional cashflow earned with bond interests. This slightly
longer maturity allows the Town to pick up higher yields available on the later maturities. The
Town’s weighted average rate of return on investments under management of 2.66% at the
close of February was 21 basis points higher when compared to the prior months return of
2.45% reported as of January 31, 2023.
Since December 31, 2022, LAIF yields had climbed from 217 basis points (2.17%) to 2.62 basis
points (2.62%) through the end of February 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.
As of February 2, 2023, the Federal Reserve voted to approve a ¼ percentage basis point
increase from 4.5% to 4.75%. With this increase, the Federal Open Market Committee (FOMC)
expects that this will bring back the inflation target of 2% over time. Following this
announcement from FOMC, labor market data showed that about 517,000 new jobs were
added in January. This in turn affected the unemployment rate which declined to 3.4% from
3.5%.
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.
The Finance Commission is receiving this Report at its April 17, 2023 meeting.
Total Cash 69,108,644$
Plus: Assets 9,701,729$
Less: Liabilities (26,572,208)$
Estimated Fund Balance 52,238,165$
Reconciling Cash to Fund Balance
PAGE 3 OF 3 SUBJECT: Monthly Financial and Investment Report (February 2023) for Fiscal Year 2022/23 DATE: April 11, 2023
CONCLUSION:
Receive the Monthly Financial and Investment Report (February 2023).
Attachment:
1. Financial and Investment Report (February 2023)