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: 08/15/2023 ITEM NO: 9
DATE: August 8, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive Monthly Financial and Investment Reports (April Amended, May, and
June 2023)
RECOMMENDATION:
Receive Monthly Financial and Investment Reports (April Amended, May, and 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,
disbursements, and fund balances. The Finance Director assumes the Town Treasurer role.
Further staff review revealed that the April 2023 Monthly Financial and Investment Report
received by Council on June 20, 2023 included the correct year-to-date information; however,
the “current month data” that should have matched the year-to-date information was not
updated. Attachment 1 contains the amended April 2023 Monthly Financial and Investment
Report. The May and June Monthly Financial and Investment Reports are presented in
Attachment 2 and Attachment 3 respectively.
The Finance Commission will receive these reports at their next scheduled regular meeting.
Attachment 1 through 3 include Fund Balance Schedules, representing estimated funding
available for all funds at the end of the April, May, and June 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
PAGE 2 OF 3 SUBJECT: Monthly Financial and Investment Report (April Amended, May and June 2023) for Fiscal Year 2022/23 DATE: August 8, 2023
DISCUSSION (continued):
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 June 30, 2023, the Town’s financial position (Assets $89.1, Liabilities $28.0M and Fund
Equity $60.6) remains strong and there are no issues meeting financial obligations in the near
future.
As of June 30, 2023, the Town’s weighted portfolio yield for investments under management
was 3.19% which was above by 2 basis points the Local Agency Investment Fund (LAIF) yield of
3.17% for the same reporting period. Currently the LAIF portfolio’s weighted average maturity
(WAM) is 311 days versus the Town’s longer WAM of 399 days. The longer maturity (WAM) for
Town assets under management reflects the Town’s strategy to take advantage of higher yields
associated with longer maturities balanced with shorter term yields available on investments
held with the State’s LAIF. The Town’s weighted average rate of return on investments under
management of 3.15% at the close of June was 42 basis points higher when compared to the
prior months return of 2.77% reported as of April 30, 2023.
Since December 31, 2022, LAIF yields had climbed from 217 basis points (2.17%) to 3.17 basis
points (3.17%) through the end of June 2023.
Total Cash 74,868,304$
Plus: Assets 9,451,020$
Less: Liabilities (26,974,112)$
Estimated Fund Balance 57,345,212$
Reconciling Cash to Fund Balance - April 30, 2023
Total Cash 75,243,382$
Plus: Assets 8,963,217$
Less: Liabilities (27,013,170)$
Estimated Fund Balance 57,193,429$
Reconciling Cash to Fund Balance - May 31, 2023
Total Cash 78,384,948$
Plus: Assets 10,727,328$
Less: Liabilities (28,459,390)$
Estimated Fund Balance 60,652,884$
Reconciling Cash to Fund Balance - June 30, 2023
PAGE 3 OF 3 SUBJECT: Monthly Financial and Investment Report (April Amended, May and June 2023) for Fiscal Year 2022/23 DATE: August 8, 2023
DISCUSSION (continued):
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 additional hikes in May 2023 from 5.00%
to 5.25% and July from 5.25 % to 5.5 %. 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 remained resilient. The unemployment rate rose to 3.7% from 3.4% with the
participation rate unchanged at 62.6%.
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 Reports (April Amended, May and June 2023).
Attachments:
1. Financial and Investment Report Amended (April 2023)
2. Financial and Investment Report (May 2023)
3. Financial and Investment Report (June 2023)