The county treasury investment portfolio is summarized in Att. 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 approximately $429 million as of June 30, 2018. The portfolio consisted of 5.5% ($23.6 million) in cash at bank; 35.9% ($154 million) in short term investments in government investment pools such as the Local Agency Investment Find (LAIF) and the California Asset Management Program (CAMP); 58.5% ($251 million) in an investment pool that is actively managed by a professional investment advisor, PFM Asset Management, LLP (PFM). These investments consist mostly of fixed income securities as authorized by government code, such as U.S. Treasuries; securities issued by federal agencies such as FNMA (Fannie Mae), FHLMC (Freddie Mac) and Federal Home Loan Bank; corporate notes; commercial papers; and certificates of deposit. The detail of investments in the Pooled Portfolio is shown in Att. B. PFM Performance Report and the Nonpooled investment holdings are shown in Att. C. Nonpooled Holdings. In their quarterly investment review for the 2nd quarter of calendar year 2018, PFM noted continued economic growth, inflation near the Fed’s target of 2%, strong labor market conditions and the Fed appears poised to raise rates further. As a result of the expectation for one or two additional hikes in 2018 and three to four more in 2019, their view remains that interest rates will increase gradually over the near-term. PFM prefers to maintain a defensive duration posture to mitigate a portion of interest rate risk relative to the benchmark.
The chart (Att. D. Cash Balances) depicts the cash balances of the three major operation funds of the County, and their combined balance. June 30, 2018, this unaudited balance was $37.3 million; increased $4.7 million from the prior quarter due to normal operating revenues and expenditures.
The Yolo County investment pool is in compliance with the Yolo County Investment Policy. Our analysis indicates that the investment holdings in the Yolo County Investment Pool are of proper amount and duration to meet the estimated cash flow requirements of the County and all pool participants for the next six months, barring substantial cash payment deferrals from the State government or other unforeseen cash needs.