101-City Council Staff Report.pdf
ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3220 www.cupertino.org
CITY COUNCIL STAFF REPORT
Meeting: August 17, 2010
Subject
Treasurer’s Investment and Budget Report for quarter ending June 2010
Recommended Action
Accept the report
Description
Investments
The market and book value of the City’s portfolio both totaled $49.2 million at June 30, 2010. The
portfolio’s June yield of 0.38% was down from 0.44% in month ending March 31, 2010 and 0.74% a
year ago due to the decision to take the portfolio to a safe and liquid mix of investments given the
risk and volatility of the current market. The LAIF benchmark was at 0.53% for June, down from
0.55% in month ending March 31, 2010 and 1.38% a year ago, reflective of their move to a higher
percentage of investments backed by the full faith and credit of the federal government.
The City’s portfolio decreased from the month ending March 31, 2010 by $2.4 million due to the net
of sales and property tax receipts in April and the transfer of money to the Retiree Medical PARS
Trust in June. $19.5 million in Treasuries and $2 million in Agency Notes matured this quarter most
of which was re-invested in $20 million worth of Treasury notes.
The Retiree Medical PARS Trust, established on June 21, 2010, at $7 million, lost about $15,000 in
market value through June 30, 2010 due to declines in equities. Because of the trust’s allocation
between bond, equity, and money market mutual funds, short-term volatility of market value is
anticipated, with positive returns expected in the long run to fund future retiree medical obligations.
Investments are in full compliance with the City investment policy and State law and are tiered to
provide sufficient cash flows to pay City obligations over the next six months.
Market values on individual securities in the investment portfolio are provided by Wells Fargo Bank
Institutional Trust Services using valuations from Interactive Data Pricing and Reference Data, Inc.
General Fund Revenues and Expenditures
Revenues, excluding transfers, ended the fiscal year 12% or $5.1 million below last year and 5% or
$1.7 million below budget. Property taxes, sales taxes, permit, fine, and interest revenues led the
decline. Transient occupancy taxes, utility taxes, franchise fees, and other taxes were steady.
Charges for services improved over last year, but not to the degree expected in the budget.
The business-to-business sales tax sector did not recover as expected and a portion of permit
revenues from the Rosebowl development were delayed. The State’s borrowing of City property
taxes occurred this year. Interest earnings indicated the yearly difference of the City’s investment
yield, as discussed above.
To offset the revenue picture, expenditures, excluding transfers, were kept within 7% or $2.3 million
under budget, as departments held the line on discretionary spending. Outlays were 2% or $0.7
million over last year.
Prepared by: David Woo, Deputy City Treasurer
Reviewed by: Carol A. Atwood, City Treasurer
Approved for Submission by: David W. Knapp, City Manager
Attachments: Investment Portfolio and Charts
General Fund Budget Report and Charts