02 Staff Report.Financial and Investment Report July 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: 09/19/2023 ITEM NO: 2
DATE: September 11, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Monthly Financial and Investment Report for July 2023
RECOMMENDATION:
Receive the Monthly Financial and Investment Report for July 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.
The Finance Commission will receive these reports at its next scheduled regular meeting.
Attachment 1 includes Fund Balance Schedules, representing estimated funding available for all
funds at the end of the July 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.
Total Cash 71,462,894$
Plus: Assets 13,327,623$
Less: Liabilities (28,155,644)$
Estimated Fund Balance 56,634,873$
Reconciling Cash to Fund Balance
PAGE 2 OF 3 SUBJECT: Monthly Financial and Investment Report for July 2023 DATE: September 11, 2023
DISCUSSION (continued):
As of July 31, 2023, the Town’s financial position (Assets $84.8, Liabilities $28.2M and Fund
Equity $56.6) 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 3.53% which was 22 basis points above the Local Agency Investment Fund (LAIF) yield of
3.31% for the same reporting period. Currently, the LAIF portfolio’s weighted average maturity
(WAM) is 254 days versus the Town’s longer WAM of 459 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 3.53% at the close of July was 34 basis points higher when compared to the
prior months return of 3.19% reported as of June 30, 2023.
Since December 31, 2022, LAIF yields had climbed from 217 basis points (2.17%) to 353 basis
points (3.53%) through the end of July 2023.
Staff, in coordination with the Town’s investment advisor, continued primarily replacing
maturing investments with medium to longer term maturities in the three- to five-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 behind 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 eased from 3.7% to 3.6% even
though the participation rate remained level at 62.6%.
The Town's investments are in compliance with the Town's Investment Policy dated February
21, 2023 and 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 for July 2023.
Attachment:
1. Financial and Investment Report July 2023