Receive and file the Yolo County Treasurer's Report on Investments for the quarter ended September 30, 2024. (No general fund impact) (Haynes)

The County Treasury investment portfolio is summarized in Attachment A (Investment Summary) and includes the Treasurer's Investment Pool and the investment accounts managed by the Treasury that are not pooled together for investment returns. The pooled portfolio includes county funds, deposits from special districts, and school districts totaling $862,778,092 million as of September 30, 2024.  

The portfolio consisted of 2.3% ($19.5 million) in cash at the bank, 35.8% ($308.8 million) in short-term investments in government investment pools such as the Local Agency Investment Fund (LAIF) and the California Asset Management Program (CAMP), and 61.9% ($534.4 million) in an investment pool that is actively managed by the County’s investment advisor, PFM Asset Management, LLC (PFM). These investments consist mostly of fixed income securities as authorized by government code, such as: U.S. Treasuries; US Agency commercial mortgage-backed securities (Agency CMBS); corporate notes; asset-backed securities; Federal Agency securities; certificates of deposit; and Municipal securities.

The investment details for the pooled portfolio along with the investment performance are shown in Attachment B (PFM Performance Report) while the non-pooled holdings are shown in Attachment C (Non-pooled Holdings).  The non-pooled portfolio of $127.1 million consists of specific investments for various entities and programs. These include $33.8 million in government medium-term funds (LAIF and CAMP) for various districts and the 2017 Lease Revenue Bonds, $28.6 million in investments managed by PFM for various county programs (Landfill Closure, Cache Creek, etc.), $64.6 million in section 115 trusts held by PARS for County OPEB (Other Post-Employment Benefits) and pension funding, and $43,371 in cash in money market accounts.

In their quarterly investment review for the first quarter of 2025, PFM continues to monitor economic conditions and the Federal Reserve (Fed) activities. They noted signs of moderating economic growth, while inflation is edging closer to the Fed’s 2% target. In their September meeting, the Fed delivered the much-anticipated interest rate cut and reduced the overnight rate by 50 basis points (bps), to a new target rate range of 4.75% to 5.0%. It is projected that one more 50 bps rate cut may still occur in the remainder of 2024 and 100 bps of rate cuts in 2025 with a "neutral" policy rate of 2.875 by the end of 2026. In anticipation of possible rate cuts, County staff performed cash-flow analysis to determine whether there is excess liquidity that could be invested in the longer-term portfolio to lock in higher rates, which may enhance future investment earnings as rates decline. Staff worked with PFM to finalize the cash-flow analysis and determined that sufficient liquidity exists to move funds into the investment portfolio.  To this end, staff has begun investing $25 million on a bi-weekly basis until it reaches the goal of $200 million in December 2024. 

CASH BALANCES
Attachment D (Cash Balances) depicts the cash balances of the three major funds of the County and their combined balance. On September 30, 2024, unaudited balance was $42.3 million. The General Fund encompasses multiple operating and revenue funds, including the General Fund, Health and Human Services’ Operation, Public Health, and Social Services. 

Other agencies having deposits in the pool include: school districts, special districts and cities. A copy of the report is posted and available on the Department of Financial Services' website. The Financial Oversight Committee reviews investment performance quarterly. All reports from the County's investment advisor PFM  Asset Management LLC are available in the County Treasurer's office.