Staff Report. Financial and Investment Report March 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
FINANCE COMMISSION REPORT
MEETING DATE:05/16/2023 ITEM NO: 2
DATE: May 10, 2023
TO: Mayor Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Monthly Financial and Investment Report (March 2023).
RECOMMENDATION:
Receive the Monthly Financial and Investment Report (March 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 March 2023 Monthly Financial and Investment Report which fulfills
this requirement.
The Finance Commission received this report on May 8, 2023.
Attachment 1 includes a Fund Balance Schedule, representing estimated funding available for
all funds at the end of the March 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.
As of March 31, 2023, the Town’s financial position (Assets $80.1M, Liabilities $26.2M and Fund
Equity $53.9M) remains strong and there are no issues meeting financial obligations in the near
future.
PAGE 2 OF 3 SUBJECT: Monthly Financial and Investment Report (March 2023) for Fiscal Year 2022/23 DATE: May 10, 2023
DISCUSSION (continued):
As of March 31, 2023, the Town’s weighted portfolio yield for investments under management
was 2.71% which was below by 12 basis points the Local Agency Investment Fund (LAIF) yield of
2.83% for the same reporting period. Currently the LAIF portfolio’s weighted average maturity
(WAM) is 275 days versus the Town’s longer WAM of 410 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 2.71% at the close of March was 5 basis points higher when compared to the
prior months return of 2.66% reported as of February 28, 2023.
Since December 31, 2022, LAIF yields had climbed from 217 basis points (2.17%) to 2.83 basis
points (2.83%) through the end of March 2023. In addition, the Town transferred $5 million to
the LAIF account during March, and the increased balance yielded a higher monthly interest
earnings.
Staff in coordination with the Town’s investment advisor continued primarily replacing
maturing investments with shorter to medium term maturities in the two- to three-year
maturity range. These investments capture current yields that exceed the rates expected to be
earned in the LAIF pool during that same time period. The State LAIF pool typically lags the
market when current market yields are either increasing or decreasing.
As of March 2, 2023, the Federal Reserve voted to approve a ¼ percentage basis point increase
from 4.75% to 5.00%. This action was followed with further hikes in the following months, the
most recent in May 2023 from 5.00% to 5.25%. Through these actions over time, the Federal
Open Market Committee’s (FOMC) goal is to bring year to year inflation to a its targeted level
2%. Following this announcement from FOMC, labor market data showed that about 311,000
new jobs were added in February, however tech layoffs started to show up in the data as
information sector was the largest detractor with employment falling. This in turn affected the
unemployment rate which rose to 3.6% from 3.4%.
The Town's investments are in compliance with the Town's Investment Policy dated February
21, 2023 and also in compliance with the requirements of Section 53600 at seq. of the
California State Code. Based on the information available, the Town has sufficient funds to
meet the cash demands for the next six months.
Total Cash 70,079,332$
Plus: Assets 10,045,530$
Less: Liabilities (26,237,403)$
Estimated Fund Balance 53,887,459$
Reconciling Cash to Fund Balance
PAGE 3 OF 3 SUBJECT: Monthly Financial and Investment Report (March 2023) for Fiscal Year 2022/23 DATE: May 10, 2023
CONCLUSION:
Receive the Monthly Financial and Investment Report (March 2023).
Attachment:
1. Financial and Investment Report (March 2023)