HomeMy WebLinkAbout14-Consideration of an Increase to the District's Investments with Placer County Treasurer's Investment PoolAgenda Item #14
To:
From:
Date:
Subject:
Board of Directors
Robert Mescher
January 15, 2014
Consideration of an Increase to the District's Investments with
Placer County Treasurer's Investment Pool
ACTION
1. WHY THIS MATTER IS BEFORE THE BOARD
The Board of Directors requested a comparison of the Placer County Treasurer's
Investment Portfolio (PCTIP) and California's Local Agency Investment Fund (LAIF) in
consideration of possibly increasing investment in PCTIP.
2. HISTORY
The District adopted an Investment Policy in 2006 which allowed for investments in
instruments permitted by the California Government Code and the investments
permitted by the trust agreements on District financing, including investments in LAIF.
This pooled fund has historically provided acceptable yield on investment, while
maintaining an acceptable level of investment safety and liquidity.
LAIF is a conservative and stable fund. The return on investment is slow to change.
This benefits the District when other investment yield rates suddenly fall as they did in
2008. However, it penalizes the District when other investment yield rates recover as
they did in the past year. Below is LAIF's historical yield from 2006 to 2013:
2006 4.7%
2007 5.2%
2008 3.2%
2009 1.2%
2010 0.5%
2011 0.4%
2012 0.4%
2013 0.3%
The Placer County Treasurer manages the PCTIP. The District is able to participate in
the PCTIP because its service areas include a portion of Placer County. The average
yield of the PCTIP was more than 100 basis points higher than LAIF in the past year.
At the May 1, 2013 Board meeting, the Board authorized investment of up to $10
million in PCTIP.
Robert Mescher Michael D. Holley
Administrative Services Manager General Manager
Attachment 1 shows the increased interest earned since the PCTIP investment from
about $18,000 to over $30,000 per quarter.
Both LAIF and PCTIP meet the fundamental criteria of the Investment Policy:
Investments shall be undertaken to produce an acceptable rate of return after first
considering safety of principal and liquidity.
3. NEW INFORMATION
Attachment 2 is a table comparing the composition of the LAIF and PCTIP
investments.
At the end of 2013, the District had about $13 million invested in LAIF. More than half
of the LAIF investments are in Treasuries, which are the most conservative and the
lowest yielding investments. A third of the investments are in internal short-term loans
to the California General Fund and Certificates of Deposits (CDs). LAIF is a
component of the California Treasurer's Pooled Money Investment Account (PMIA).
Attachment 3 is the most recent quarterly report of the PMIA as of September 2013.
At the end of 2013, the District had over $9 million invested in PCTIP. A third of the
PCTIP is invested in Placer County Agency debt instruments, which typically produce
higher yield, but the concentrated geographic area slightly increases the risk. Almost a
quarter of the investments are in high-grade commercial paper, which have a slightly
higher risk and higher yield. Attachment 4 is the most recent monthly report of the
PCTIP as of November 2013.
4. FISCAL IMPACT
The District has $22,000,000 available to invest in LAIF and PCTIP. The District
currently invests about 60% in LAIF and 40% in PCTIP. The most recent yield from
LAIF is 0.3% and from PCTIP is 1.2%.
5. RECOMMENDATION
Review this report and provide direction to staff.