The County treasury investment portfolio is summarized in Att. A - Investment Summary. It includes county funds and deposits from special districts and school districts totaling $372.3 million as of September 30, 2016. The portfolio consisted of 5.9% ($22.0 million) in cash at bank; 13.6% ($50.6 million) in short term investments in government investment pools such as the Local Agency Investment Fund (LAIF) and the California Asset Management Program (CAMP); 80.5% ($299.6 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 is shown in Att. B - Investment holdings. The decreases in the investments in government investments pools during the quarter was due to normal business operations during this period of the year which is one of the drier periods in between property tax collections and distributions.

In their quarterly investment review for the 3rd quarter (Att. C - Investment Performance), PFM noted that yields drifted modestly higher during the third quarter as Brexit fears faded after the vote on June 23rd vote and US economic data rebounded which is bringing the Fed closer to considering an eventual rate hike, perhaps in late 2016. The county is continuing with the approved strategy of maintaining a 30% short-term and 70% long term target. PFM reported that the portfolio complies with government code and county investment policy and is well diversified.

CASH BALANCES

The chart (Att. D - Cash Balances) depicts the cash balances of the three major operation funds of the County, and their combined balance. On September 30, 2016, this balance was $22.9 million; down $17.4 million from the prior quarter due to normal operating revenues and expenditures. This period of the year is the driest period in between property tax disbursements to the County funds which are performed in January and May. As a result, cash balances in the General fund decline during this period.

CERTIFICATION
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 an all pool participants for the next six months, barring substantial cash payment deferrals from the State government or other unforeseen cash needs.