Exhibit CC 02-05-13 #6 Treasurer's Investment and Budget Report C -2 (0/3
ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
c,-t.ivs` 10300 TORRE AVENUE•CUPERTINO, CA 95014-3255
TELEPHONE:(408)777-3220 www.cupertino.org
CUPERTINO
CITY COUNCIL STAFF REPORT
Meeting: February 5, 2012
Subject
Treasurer's Investment and Budget Report for Quarter Ending December 2012
Recommended Action
Accept the report
Discussion and Fiscal Impact
Investments
The market value of the City's portfolio totaled $55.2 million at December 31, 2012,
slightly above the book value of $55.1 million. The portfolio's December yield of 0.26%
was up from the September 2012 yield of 0.23% and down from rate of 0.28% a year ago
due to the portfolio's increased investment in LAIF. The LAIF benchmark was at 0.33%
for December, down from 0.35% in September and 0.38% a year ago, due to lower
market interest rates.
The portfolio total was $2 million down from last quarter, due to retiree health trust
contributions ($1.4 million) and the bi-annual debt service payment ($600,000). Two
million dollars of maturing Treasuries during the last quarter went toward these
disbursements with six million dollars o E other maturities re-invested into new
Treasuries.
The retiree health trust market value increased to $12.8 million at December 31, 2012, up
$3.3 million from a year ago, resulting from $2.1 million in contributions and $1.2
million in investment gains. The trust was up $1.5 million during the quarter mostly
due to the $1.4 million contributed from the City's investment portfolio. The stock,
bond, and cash portfolio returned 12.5% in the past year and 7.5% since inception thirty
months ago. In a December 2012 investment strategy change that reduces fund costs
from 0.68% to 0.51% of assets, staff authorized the trust investment manager to move
the large-capitalization stock portion of the portfolio from actively-managed mutual
funds to passively-managed exchange-traded. funds.
Investments are tiered to provide sufficient cash flows to pay City obligations over the
next six months. They are in compliance with City investment policy and State law.
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 Budget Report
Revenues for the quarter ending in December 2012 are up 9% from a year ago and
tracking to end the year approximately $340,000 (1%) above modified budget levels.
Fourth quarter data shows transient occupancy tax, charges for services, and sales tax
exceeding expectations while licenses and permits, use of money and property, and
fines and forfeitures are coming in below projections. Transient occupancy tax revenue
is up 29% compared to last year and is expected to end the year 22% ($713,000) above
the budgeted revenue estimate as a result of higher tax, occupancy, and average room
rates. Charges for service revenues are also trending higher than projected as a result of
two unanticipated development projects, one of which was budgeted in licenses and
permits. This has contributed to lower than anticipated revenue from licenses and
permits. Previously anticipated sales tax and permit revenues from large development
projects are now expected to come in next fiscal year, as discussed in the December 2012
mid-year budget report.
Actual expenditures for the fourth quarter are up 1% from last year, and are projected
to end the year with approximately $3.3 million (8%) in budget savings mostly due to
salary savings and project delays. Administrative Services is tracking to end the year
15% ($700,000) below budgeted levels mostly attributed to vacancy savings, contractual
savings, and supply and equipment savings. Community Development is also tracking
to end the year 15% ($700,000) below budget due to vacancy and contractual service
savings. Public Works is tracking to end the year 9% ($1.3 million) below budgeted
levels mostly due to vacancy savings and in engineering, repair, and maintenance
contract work.
The Audit Committee accepted this report on January 24, 2013.
Prepared by: David Woo, Deputy Treasurer and Jaqueline Guzman, Senior
Management Analyst
Reviewed by: Carol Atwood, City Treasurer
Approved for Submission by: David Brandt, City Manager
Attachments:A - Investment Portfolio
B - Investments by Type, Rate of Return, and Compliance Charts
C -Retiree Health Trust Report
D- General Fund Budget Report