TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: JANUARY 28, 2025
Reviewed by:
City Manager: AP
SUBJECT:
Title
INVESTMENT REPORT - QUARTER ENDING DECEMBER 31, 2024
Body
SUMMARY
As required by the City of Claremont Investment Policy and State law, a Quarterly Investment Report showing investment activity is to be presented to the City Council for its review and acceptance.
RECOMMENDATION
Recommended Action
Staff recommends the City Council receive and accept the Investment Report for the quarter ending December 31, 2024.
Body
ALTERNATIVE TO RECOMMENDATION
In addition to the recommendation, there is the following alternative:
• Request additional information.
FINANCIAL REVIEW
The City’s investment portfolio is highly liquid, with the Local Agency Investment Fund (LAIF) and the Collateralized Savings funds available with 24-hour notification. The weighted average of days to maturity of all City investments is approximately 125 days.
As of December 31, 2024, the market value of City-held investments totaled $49,151,279 of which $23,538,621 (47.89 percent) was invested in LAIF; $14,811,000 (30.13 percent) in Certificates of Deposit; $10,158,114 (20.67 percent) in United States Treasury Bills; and $643,544 (1.31 percent) in Collateralized Savings/Money Market Accounts. These investments fully comply with the City’s current Investment Policy.
In addition to the above investments, the City established a Section 115 pension trust with Public Agency Retirement Services (PARS) to prefund pension costs. As of December 31, 2024, the market value of the trust totaled $4,965,970.
The cost of staff time to research this issue, prepare documentation, and complete this report is estimated to be $544. Funding is included in the operating budget of the Financial Services Department.
ANALYSIS
During the quarter ending December 31, 2024, the City maintained investments in Certificates of Deposit (CD), Collateralized Savings/Money Market Accounts, and in the Local Agency Investment Fund (LAIF), which is managed by the Treasurer’s Office of the State of California. Investments in LAIF earned interest in the amount of $278,712, CD interest amounted to $167,425, United States Treasury Bills amounted to $118,208, and collateralized savings/safekeeping account interest amounted to $1,793.
There was an overall decrease of $2,501,432 in the City’s treasury investment portfolio from the previous quarter as shown in the Investment Report (Attachment). The decrease in invested funds was primarily the result of an additional contribution towards the unfunded liability of the City’s CalPERS pension plans and a transfer to the PARS account. Later in the fiscal year, revenues received that exceed the amount required to maintain City operations will be deposited into the City’s investment accounts to replenish their balances.
In March 2024, surplus funds of $4,981,139 were invested in 6-month United States Treasury Bills in an effort to diversify the City’s treasury investment portfolio. In August 2024, an additional $4,894,520 was invested in 6-month Treasuries. In September 2024, upon maturity of those Treasuries purchased in March, $5,092,152 in funds were reinvested in new 6-month Treasuries earning returns greater than LAIF. These investments fully comply with the City’s current Investment Policy.
In 2021, the City Council authorized the establishment of a Section 115 pension trust with PARS for future discretionary contributions and/or disbursements to the City’s pension obligations, while allowing local control of funds in the Trust. The City selected a moderately conservative portfolio at the Trust’s inception. The current asset allocation policy is 30 percent in stocks, 65 percent in bonds and 5 percent in cash.
In 2021-22 the City Council approved a contribution of $1 million to the Trust. In October 2022, the City Council authorized an additional contribution of $1.5 million to the Trust. An additional $1 million contribution was authorized by the City Council in October 2023 from 2022-23 surplus funds. These funds were deposited and are reflected in this Investment Report. Lastly, an additional $1 million contribution was authorized by the City Council in October 2024 from 2023-24 surplus funds, which was transferred in January.
The market value of the Section 115 Trust totaled $4,965,970 as of December 31, 2024, representing a loss of 1.78 percent in the last quarter. To provide benchmarks for the returns in the City’s Section 115 Trust, the S&P 500 and Dow 30 stock indices had returns of 2.1 percent and 0.5 percent during the same time period, respectively.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it relates to the following City Planning Documents: Council Priorities, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a paper copy, please contact the City Clerk’s office.
Submitted by: Prepared by:
Jeremy Starkey Bibi Ameer
Finance Director Accounting Supervisor
Attachment:
Quarterly Investment Report