HomeMy WebLinkAboutFY 2023 Annual Investment ReportCity of Euless
Annual Investment Report
Fiscal Year 2022-2023
201 North Ector Drive, Euless, Texas 76039
www.eulesstx.gov
Investment Committee Meeting
1 /9/2024
* Compliance Summary - Legislative Requirements
Introduction
Investment Strategy Compliance
* Annual Review, Fiscal Year 2023
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
* Certification
* Minutes from 8/21/2023
* Appendices
Appendix A - Investment Portfolio by Fund
Appendix B - Investment Purchases
Appendix C - Investment Maturities
Appendix D - Investment Types and Institutions
* Investment Policy
* Broker / Dealers
* Economic News
1
INTRODUCTION
This report is written and submitted in accordance with Chapter 2256 of the Texas Government Code
entitled the "Public Funds Investment Act," which states that "at least once each year, the investment
officer of a state agency or political subdivision shall prepare a written report concerning the agency's or
subdivision's local funds investment transactions for the preceding year and describing in detail the
investment position of the agency or subdivision as of the date of the report."
The City's investment policy designates the Investment Officers as the responsible managers of the
City's investment program. The daily investment procedures are monitored by the City's Finance
department and reviewed by the Investment Officers. This report has been signed by each Investment
Officer as required by the Public Funds Investment Act and the City's investment policy.
In compliance with the City's investment policy, the Finance department fulfills four main objectives:
compliance, safety, liquidity, and yield, in that order. Compliance is maintained through regular
reporting to City management on a monthly, quarterly and annual basis. Safety is insured by 1)
investing only in securities allowed by Chapter 2256 of the Texas Government Code entitled the "Public
Funds Investment Act;" 2) using delivery vs. payment for all purchases; 3) protecting all non -
government securities (cash and bank certificates of deposit) with collateral including Federal Deposit
Insurance Corporation (FDIC) Insurance, Federal Savings and Loan Insurance Corporation (FSLIC)
Insurance and/or eligible securities as defined in Government Code Chapter 2257 Collateral for Public
Funds Section 2257.002; and 4) diversifying investment purchases into different security markets to
minimize individual market risk.
Liquidity is met by matching investment terms to future operating cash needs such as payroll, accounts
payable, debt service, and capital improvement disbursements. The City also utilizes money market
funds and local government investment pools to provide daily liquidity needs. Per the Investment
Policy, the yield or rate of return which the City receives is measured against the 90-day treasury bill
yield.
The information contained in this report will quantitatively and graphically demonstrate the achievement
of these City objectives for Fiscal Year 2022-23.
Investment Strategy Compliance
The strategy for all pooled funds is to assure that cash flows are matched with projected needs and provide
adequate liquidity and safety. This may be accomplished by purchasing high quality securities in a laddered
structure or utilizing an investment pool. Furthermore, the following purposes are also considered when investing.
-Operating Funds will be structured in such a way as to minimize volatility during economic cycles. This may be
accomplished by purchasing high quality short-term securities. The weighted average maturity on these funds will
remain within the 6 to 9 month range. These funds include:
101
General Fund
265
Glade Parks PID #2 Fund
201
Hotel -Motel Tax Fund
270
Midtown PID Fund
202
Juvenile Case Fund
275
Midtown TIRZ #4 Fund
210
'/2¢ Sales Tax Operations Fund
501
Water & Wastewater Fund
220
Crime Control & Prevention District Fund
504
Service Center Fund
221
Police Seized Asset Fund
510
Drainage Utility Fund
225
PID Narcotics Task Force Fund
520
Recreation Classes Fund
230
Police Drug DEA Awards Fund
521
Arbor Daze Fund
231
Police Drug State Awards Fund
530
Parks @ Texas Star Operations Fund
240
Car Rental Tax Fund
540
TSGC Operations Fund
243
American Rescue Plan Fund
601
Equipment Replacement Fund
245
Glade Parks PID Fund
610
Health Insurance Fund
250
Glade Parks TIRZ #3 Fund
615
Risk Management/Worker's Comp Fund
260
Cable PEG Fund
-Funds for Capital Improvement Projects (CIP) and Special Purposes may purchase securities which allow for
flexibility and unanticipated project outlays by having a portion of their investments in highly liquid securities. The
stated final maturity dates of securities held should not exceed the estimated project completion dates. These
funds include:
301
Developer's Escrow Fund
330
Car Rental CIP Fund
305
Streets CIP Fund
502
Water & Wastewater CIP Fund
310
'/20 Sales Tax CIP Fund
505
Water Impact Fees Fund
320
General CIP Fund
508
Wastewater Impact Fees Fund
321
Redevelopment CIP Fund
511
Drainage CIP Fund
322
Midtown Development CIP Fund
543
TSGC CIP Fund
325
Police Facility CIP Fund
552
TSSC CIP Fund
-Debt Service Funds should assure adequate liquidity to cover the debt service obligations on the required payment
dates. These funds include:
401 Debt Service/General Obligation Fund
410 '/2¢ Sales Tax Debt Service Fund
402 Star Center Debt Service Fund
506 Water & Wastewater Debt Service Fund
403 Glade Parks Debt Service Fund
541 TSGC Debt Service Fund
404 Midtown Development Debt Service Fund
-Emergency, Contingency, Operating and Debt Service Reserve funds will have the ability to generate a
dependable revenue stream to the appropriate fund from securities with a low degree of volatility. Such securities
will tend to hold their value during economic cycles.
The stated final maturity dates of securities held should not
exceed five years. These funds include:
102 General Fund Emergency Fund
507 Water & Wastewater Emergency Fund
103 General Fund Contingency Fund
509 Water & WW Rate Stabilization Reserve Fund
211 '/2¢ Sales Tax Debt Reserve Fund
532 PATS Reserve Fund
240 Car Rental Tax Fund ($2,000,000 Reserve)
542 TSGC Reserve Fund
323 Midtown Development Reserve Fund
705 Star Center Escrow Fund
503 Water & Wastewater Debt Reserve Fund
Based on the above strategies, the investment portfolio reported herein is in compliance with the City's adopted
investment policy.
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 2023, is
summarized by instrument as shown below.
Distribution by Instrument
Weighted
Weighted
% of
Average
Avg. Yield
Instrument $ Cost
Portfolio
Yield
Prior Qtr.
Agencies & CD's $ 74,125,371
40%
1.64%
1.70%
Gov't Pools & Escrows $113,397,023
60%
3.19%
2.71%
$187,522,394
100.00%
The Distribution by Instrument table shows approximately 60% of the City funds are
invested in overnight investment pools and escrows, while the remaining 40% is invested in
government agencies and CD's. As of the date of this report, the weighted average yield
on the portfolio was 4.83%. When compared to prior quarter levels, the yield on the
portfolio continues to increase. The portfolio composition below demonstrates the diversity
within the portfolio.
US TREAS
FAMCA 1%.
1%�
CD
1%
FHLMC
13%
FNMA
2%
FHLB
20%
FFCB
2%
Portfolio Composition
as of September 30, 2023
Other
60%
Escrows
0%
TexPool
21%
TexasClass
18%
TexStar
21%
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2023, is
summarized by maturity as shown below.
Distribution by Maturity
# of months
$ Cost
% of Portfolio
Overnight
$113,397,023
60%
< 1 mo
$ 3,999,190
2%
up to 6 mos
$ 23,473,750
13%
6 to 9 mos
$ 8,474,000
5%
9 to 12 mos
$ 8,720,000
5%
12 to 18 mos
$ 13,478,431
7%
18 to 24 mos
$ 5,480,000
3%
> 24 mos
$ 10,500,000
5%
$187,522,394
100.0%
The Distribution by Maturity table reflects the degree of liquidity in the City's
portfolio. Currently, access to 60% of the portfolio is available within 24 hours, with
an additional 15% available within 6 months. This liquidity strategy was followed to
meet cash flow requirements for construction projects, payroll, debt service, and
other operating expenses. An additional 10% of the portfolio matures within one
year. The City has 7% of the portfolio invested from 12 - 18 months, with 3%
invested in the 18-24 month range. The remaining 5% is invested in the greater than
24 month range. The weighted average maturity on the portfolio is currently 142.79
days.
Investment Maturity Distribution
as of September 30, 2023
> 24 mos = $10.5
18 to 24 mos $5.5
12 to 18 mos = $13.5
9 to 12 mos $8.7
6 to 9 mos $8.5
up to 6 mos $23.5
< 1 mo $4.0
Overnight
$0.0 $15.0 $30.0 $45.0 $60.0
Shown in millions
113.4
$75.0 $90.0 $105.0 $120.0
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2023, is
summarized by institution as shown below.
Institution
Duncan Williams
FHN Financial
Hilltop Securities
Financial Northeastern
Samco Capital
Vining Sparks KNA Stifel
TexPool
TexasCLASS
TexStar
Escrows
Distribution by Institution
$ Cost
% of Portfolio
$
12,998,181
7%
$
13,000,000
7%
$
11,000,000
6%
$
11,627,440
6%
$
12,500,000
7%
$
12,999,750
7%
$
39,511,771
21 %
$
33,891,626
18%
$
39,993,625
21 %
$
-
0%
$187,522,394
100%
The City strives to not only diversify the portfolio by the type of instruments that are
purchased, but also by the institution from which they are purchased. The City uses
the following guidelines:
-No more than 10% in repurchase agreements,
-No more than 33% in investment pools with any single institution,
-No more than 33% in money market mutual funds, and
-No more than 33% by individual brokerage firms.
The chart below demonstrates the City's compliance with the above guidelines.
Investments by Institution
as of September 30, 2023
Escrows $-
TexStar $40.0
TexasCLASS $33.9
TexPool $39.5
Vining/ Stifel $13.0
Samco $12.5
FNS1*$11.0
$11.6
Hilltop
FHN $13.0
Duncan E01i $13.0
$0.0 $8.0 $16.0 $24.0
Shown in millions
$32.0 $40.0 $48.0
6
Investments at June 30, 2023
Investment Purchases/Dividends
Investment Maturities
City of Euless
Pooled Portfolio Summary
for Fiscal Year Ending
September 30, 2023
Cost
Principal Only
* $ 168,647,088
$ 61,337,441
$ (42,462,134)
Investments at September 30, 2023 * $ 187,522,395
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
* Hard coded data on this summary creates rounding differences.
Book
Value
$ 168,630,096
$ 187,517,549
Market
Value
$ 168,041,093
$ 187,145,587
Summary of Investments by Fund
The following is a summary of cash and investments held by each fund at June 30, 2023 and September 30, 2023. The changes include all
investment purchases, maturities, revenues, expenses, and transfers that occurred during the fourth quarter of FY2023.
Cash & Investment
Cash & Investment
Increase/
at Market Value
at Market Value
(Decrease)
6/30/2023
9/30/2023
In Fund
101
General Fund
25,042,987
21,493,163
(3,549,823) Operating expenses
102
General Fund Emergency
498,480
495,730
(2,750)
103
General Fund Contingency
991,270
992,635
1,365
201
Hotel -Motel Tax Fund
2,019,916
2,342,147
322,231 tax revenue
202
Juvenile Case Fund
213,325
220,131
6,806
210
'/20 Sales Tax Operations Fund
3,567,506
4,220,709
653,203 tax revenue
211
'/20 Sales Tax Debt Reserve Fund
401,125
401,125
-
220
Crime Control & Prevention District F
1,574,764
1,727,880
153,116 tax revenue
221
Police Seized Asset Fund
217,684
215,993
(1,690)
225
PID Narcotics Task Force Fund
184,957
277,570
92,613
230
Police Drug DEA Awards Fund
255,339
245,199
(10,139)
231
Police Drug State Awards Fund
218,974
217,216
(1,758)
235
Public Safety Grant Fund
57,814
(240,795)
(298,609) Operating Revenues
236
Police Grant Fund
-
237
Texas Transportation Grant Fund
(7,494)
(9,839)
(2,345)
240
Car Rental Tax Fund
13,649,813
17,244,285
3,594,472 Motor vehicle tax collection
240-R Car Rental Reserve Fund
1,994,528
1,992,123
(2,405)
243
American Rescue Plan Fund
10,436,434
10,438,409
1,975
245
Glade Parks PID Fund
750,000
749,846
(154)
250
Glade Parks TIRZ #3 Fund
4,620,753
4,511,256
(109,497)
260
Cable PEG Fund
611,978
583,263
(28,715)
265
Glade Parks PID #2 Fund
-
-
270
Midtown PID Fund
156,362
77,183
(79,179)
275
Midtown TIRZ #4 Fund
944,291
756,358
(187,933)
301
Developer's Escrow Fund
2,386,024
2,418,067
32,043
305
Streets CIP Fund
7,040,545
6,863,831
(176,714) Capital outlay
310
%0 Sales Tax CIP Fund
3,704,178
3,480,030
(224,148) Capital outlay
320
General CIP Fund
12,263,384
12,985,087
721,703 Car rental tfr for FS#2 addl funding
321
Redevelopment CIP Fund
1,495,633
1,125,914
(369,719) Capital outlay
322
Midtown Development CIP
74,034
74,043
9
323
Midtown Development Reserves Fur
1,004,515
1,004,710
195
325
Police Facility CIP
630,189
22,517,428
21,887,239 Bond issuance
330
Car Rental CIP Fund
1,409,700
1,368,043
(41,657)
401
Debt Service/General Obligation Fun
2,085,870
1,621,381
(464,490) Debt service payments
402
Star Center Debt Service Fund
715,496
135,507
(579,988) Debt service payments
403
Glade Parks Debt Service Fund
401,738
21,416
(380,322) Debt service payments
404
Midtown Development Debt Service
1,416,073
926,782
(489,290) Debt service payments
410
EDC Debt Service Fund
227,112
17,218
(209,894) Debt service payments
501
Water & Wastewater Fund
10,564,992
11,084,500
519,508 Operating Revenues
502
Water & Wastewater-CIP Fund
5,315,541
4,846,381
(469,161) Capital outlay
503
Water & Wastewater Debt Reserve F
733,593
733,593
504
Service Center Fund
423,743
415,203
(8,539)
505
Water Impact Fees Fund
2,596,093
2,618,838
22,745
506
Water & Wastewater -Debt Service Fi
1,384,100
614,678
(769,421) Debt service payments
507
Water & Wastewater -Emergency Fui
500,000
500,000
508
Wastewater Impact Fees Fund
776,225
691,808
(84,417)
509
W/WW Rate Stabilization Fund
3,796,983
3,670,931
(126,052)
510
Drainage Utility Fund
272,832
279,745
6,913
511
Drainage CIP Fund
948,455
961,274
12,819
520
Recreation Classes Fund
580,361
555,666
(24,695)
521
Arbor Daze Fund
93
93
0
530
Parks @ Texas Star Operations Funi
569,756
562,715
(7,041)
532
PATS Debt Reserve Fund
406,064
413,664
7,599
540
TSGC Operations Fund
1,308,074
1,434,015
125,941
541
TSGC Debt Service Fund
(61,402)
59,167
120,569
542
TSGC Debt Reserve Fund
853,981
850,045
(3,937)
543
TSGC CIP Fund
146,973
120,366
(26,606)
552
PATS CIP Fund
149,621
151,418
1,797
601
Equipment Replacement Fund
22,745,757
22,615,018
(130,739) equipment expense
610
Health Insurance Fund
6,363,941
4,486,346
(1,877,595) claim expenses
615
Risk Management/Worker's Comp Fi
2,595,851
2,891,246
295,395 Operating transfers & interst income
701
Payroll Clearing Fund
700,159
706,195
6,037
705
Star Center Escrow Fund
1,438,181
1,439,448
1,267
TOTAL
168,365,265
186,213,403
17,848,138
II. PERFORMANCE SUMMARY
Cash and Investment Balances - Full utilization of funds and minimization of idle cash is
necessary to pursue additional interest income for the City. The average percent of
invested funds is 100% for FY2023. The monthly data below shows the continued utilization
of City funds through investments.
Consolidated
Invested
Percentage
FY2022
Cash
Balance
Invested
October
$
1,152,582
$
129,350,588
99%
November
$
975,522
$
130,908,945
99%
December
$
821,298
$
135,779,513
99%
January
$
769,022
$
147,915,670
99%
February
$
1,108,146
$
153,334,908
99%
March
$
(45,598)
$
140,981,168
100%
April
$
920,871
$
140,331,816
99%
May
$
699,147
$
140,650,985
100%
June
$
263,540
$
147,279,971
100%
July
$
613,307
$
149,069,238
100%
August
$
567,292
$
146,834,324
100%
September
$
601,078
$
154,405,149
100%
Average
$
703,851
$
143,070,190
100%
Consolidated
Invested
Percentage
FY2023
Cash
Balance
Invested
October
$
801,855
$
154,650,055
99%
November
$
696,018
$
157,570,216
100%
December
$
(90,341)
$
163,464,132
100%
January
$
1,091,761
$
173,542,788
99%
February
$
1,918,936
$
178,333,466
99%
March
$
485,916
$
164,119,013
100%
April
$
117,179
$
165,731,792
100%
May
$
565,218
$
167,244,153
100%
June
$
326,218
$
168,647,087
100%
July
$
354,790
$
168,820,787
100%
August
$
490,515
$
165,018,816
100%
September
$
(867,834)
$
187,522,393
100%
Average
$
490,853
$
167,888,725
100%
This graph shows how the City's funds continue to be invested, always in pursuit of 100%.
105.00% ,
100.00%
95.00%
c
i 90.00%
m
85.00%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Fiscal Year
9
Cash management performance - effectiveness of the cash management program has
been measured utilizing actual figures for FY2023 as shown below:
Average
City's
Number
Estimated
90-day
Invested
Days in
Interest
Month
T-bill Yield
Balance
Month
Earnings
October
4.06%
$
154,650,055
31
$533,267
November
4.27%
$
157,570,216
30
$553,007
December
4.30%
$
163,464,132
31
$596,980
January
4.58%
$
173,542,788
31
$675,058
February
4.72%
$
178,333,466
28
$645,714
March
4.68%
$
164,119,013
31
$652,339
April
4.95%
$
165,731,792
30
$674,279
May
5.26%
$
167,244,153
31
$747,146
June
5.17%
$
168,647,087
30
$716,635
July
5.28%
$
168,820,787
31
$757,057
August
5.32%
$
165,018,816
31
$745,614
September
5.32%
$
187,522,393
30
$819,961
Estimated earnings at benchmark yields
$8,117,057
Actual FY2023 interest income (un-audited)
$6,128,250
Earnings over benchmark
($1,988,807)
Annual Average
4.83%
$
167,888,725
$8,109,025
Key rate comparisons - an objective of the investment policy is for the City's average rate
of return to consistently exceed that of the three-month U.S. Treasury Bill, as stated
before. Therefore, returns for both have been presented for comparative purposes below.
Benchmark
City's
Basis
90-day
Wtd Avg
Point
Month
T-bill vield
Portfolio Yld
Difference
October
4.06%
2.10%
-196
November
4.27%
2.61 %
-166
December
4.30%
2.93%
-137
January
4.58%
3.33%
-125
February
4.72%
3.55%
-117
March
4.68%
3.68%
-100
April
4.95%
3.93%
-102
May
5.26%
4.18%
-108
June
5.17%
4.41 %
-76
July
5.28%
4.50%
-78
August
5.32%
4.70%
-62
September
5.32%
4.83%
-49
Average
4.83%
3.73%
-110
Recent indicators suggest that growth of economic activity has slowed from its strong pace
in the third quarter. Job gains have moderated since earlier in the year but remain strong,
and the unemployment rate has remained low. Inflation has eased over the past year but
remains elevated. The U.S. banking system is sound and resilient. Tighter financial and
credit conditions for households and businesses are likely to weigh on economic activity,
hiring, and inflation. the extent of these effects remains uncertain. The Federal Open
Market Committee (FOMC) remains highly attentive to inflation risks. The FOMC seeks to
achieve maximum employment and inflation at the rate of 2 percent over the longer run. In
support of these goals, the FOMC decided to maintain the target range for the federal
funds rate at 5 1/4 to 5 1/2 percent. The FOMC will continue to assess additional
information and its implications for monetary policy. The FOMC is strongly committed to
returning inflation to its 2 percent objective.
10
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
III. INTEREST INCOME SUMMARY
FY19 Audit
$2,629,198
FY20 Audit
$1,423,661
FY21 Audit
$165,992
FY22 Audit
$812,687
FY23 Unaudited
$6,128,250
FY23 Budgeted
$788,949
Interest Income Summary
FY19 Audit FY20 Audit FY21 Audit
FY22 Audit FY23 FY23 Budgeted
Unaudited
Interest income increased over the budgeted level for fiscal year 2023. When compared to prior
year, interest earnings has increased substantially due to continued rate hikes throughout the
year. The rate hikes are in hopes returning the inflation rate to the 2% goal. While the City's
average yield is below the 90 day T-Bill yield, it will continue to climb as investments continue to
mature and are reinvested at much higher current market rates.
is
Interest Income By Fund
For Fiscal Year Ending September 2023
# Fund
FY 22 FY 22 Actual
FY 23
Budget Audited
Budget
101 General
$71,838 $126,233
$38,402
201 Hotel/Motel
400 12,497
3,307
202 Juvenile Case Fund
200 1,171
503
210 1/2 Cent Sales Tax -Operations
3,300 39,109
12,653
211 1/2 Cent Sales Tax -Reserve
220 Crime Control & Prevention District
221 Police Seized Asset Funds
225 PID Narcotics Task Force Fund
230 Police Drug DEA Awards
231 Police Drug State Awards
240 Car Rental Tax
245 Glade Parks PID
250 Glade Parks TIRZ
260 Cable PEG Fund
270 Midtown PID
301 Developer's Escrow
305 Streets CIP
310 1/2 Cent Sales Tax - CIP
320 General Capital Projects
321 Redevelopment CIP Fund
322 Midtown Development CIP
323 Midtown Development Reserves
325 Police Facility CIP
330 Car Rental CIP
401 GO Debt Service
402 Star Center Debt
403 Glade Parks Debt Service
404 Midtown Development Debt Service
410 1/2 Cent Sales Tax Debt Service
501 Water and Wastewater
502 Water and Wastewater CIP
503 Water and Wastewater Reserve
504 Service Center Fund
505 Water Impact Fees
508 Wastewater Impact Fees
509 W/WW Rate Stabilization
510 Drainage
511 Drainage CIP
520 Recreation Classes
521 Arbor Daze
530 Parks At Texas Star
531 PATS Debt Service
532 PATS Reserve
540 Texas Star Golf Course
541 TSGC Debt Service
542 TSGC Reserve
543 TSGC CIP Fund
550 Parks At Texas Star
552 TSSC CIP
601 Equipment Replacement
610 Health Insurance
615 Risk Mgmt/Worker's Comp
Total
0
462
100
0
250
250
25,300
0
1,000
400
0
0
5,937
341
2,784
576
0
0
0
0
1,000
450
0
1,000
0
20,000
194
0
0
0
0
20,000
110
0
2,000
106
2,500
0
1,000
500
0
2,500
0
0
0
20,000
10,000
1,200
$195,698
0
12,524
1,423
0
1,910
1,564
137,438
0
22,563
4,021
1,024
9,518
49,258
6,758
51,333
6,179
0
0
0
6,881
10,217
2,362
1,011
12,674
1,014
76,046
28,035
0
0
16,698
5,407
15,568
1,296
6,358
2,144
14
3,241
0
2,146
5,015
100
4,686
1,209
0
961
88,248
22,634
14,199
$812,687
0
2,178
435
0
755
581
27,106
0
5,151
1,029
641
2,454
175,481
17,149
318,863
51,725
0
0
0
2,759
4,043
1,601
556
3,668
275
14,226
11,963
0
0
4,261
1,429
21,000
549
2,030
616
0
1,044
0
545
803
28
2,397
315
0
243
33,203
20,000
2,982
$788,949
FY 23 Actual
(Unaudited)
$762,121
93,038
8,616
117,583
0
64,454
9,524
0
11,204
9,819
1,168,749
0
186,532
28,286
5,624
87,218
319,750
167,950
574,089
73,689
0
0
78,668
35,176
98,246
18,139
8,789
97,212
5,607
483,211
167,790
0
0
117,965
34,013
66,805
10,676
43,367
21,310
1
23,159
0
17,250
50,897
2,263
37,806
9,625
0
6,152
720,512
190,654
94,711
$6,128,250
Diff FY23
Bud. -Act.
$723,719
$89,731
$8,113
$104, 930
$0
$62,276
$9,089
$0
$10,449
$9, 238
$1,141,643
$0
$181,381
$27,257
$4, 983
$84,764
$144, 269
$150, 801
$255,226
$21,964
$0
$0
$78,668
$32,417
$94,203
$16,538
$8,233
$93,544
$5,332
$468,985
$155,827
$0
$0
$113,704
$32,584
$45,805
$10,127
$41,337
$20,694
$1
$22,115
$0
$16,705
$50,094
$2,235
$35,409
$9,310
$0
$5,909
$687,309
$170,654
$91,729
$5,339,301
Note that interest earnings are being earned on all investable City funds and great efforts are pursued to meet budgeted
levels. This report points out that the unaudited interest earnings for the end of the fiscal year have exceeded budgeted
expectations due to numerous Fed rate hikes thoughout the year.
Several funds were budgeted conservatively or not at all due to the volatility of revenues and expenditures. However,
these funds are used for investment purposes when available. These funds include Capital Improvement Projects, DEA
Funds, Grant Funds, and Debt Service Funds.
IV. COLLATERAL REVIEW
The first and most important objective of investing public funds is safety. One way to ensure the safety of the City's
assets is to have them fully secured with "collateral." Acceptable collateral is defined in the City's investment policy as
Federal Deposit Insurance Corporation (FDIC) Insurance, Federal Savings and Loan Insurance Corporation (FSLIC)
Insurance and/or eligible securities as defined in Government Code Chapter 2257 Collateral for Public Funds Section
2257.002. Bank balances are monitored daily to assure full coverage. The amount of collateral required by the
depository bank varies with the expected level of deposits (typically correlates with large receipts such as property taxes,
franchise taxes and investment maturities).
Pledging
Institution
Frost Bank
City of Euless
Collateral Analysis for
Cash
as of 09/30/23
Safekeeping Pledged Sec. Security Market Value Inv. Value
Location Description Market Value (w/FDIC Ins.) () Mat'v (P & 1)
Produced By:
Director of Finance
$2,275,972 $2,525,972 $2,165,604
Bank of New Payroll $19,127
York Mellon various bonds $2,275,972 Operating $1,698,742
Insurance $447,735
Reviewed by:
Assistant Director of Finance
Difference
Over/(Under)
$360,369
This review is practiced on a regular basis assuring coverage. Another regular practice is reviewing each individual
instrument pledged. This assures compliance with the investment policy and consideration of the underlying security.
This separate but thorough practice has protected the City's portfolio against derivative products.
13
V. BROKER SELECTION PROCESS
This section of the report is to provide a brief explanation of the process undertaken to
select brokers with which the City invests. The broker/dealer list is reviewed annually,
and additions/deletions are made as necessary. The City currently maintains a list of six
broker/dealers. The process is outlined below:
1. Brokers express an interest in doing business with the City.
2. A questionnaire is sent to the broker which requests the necessary information for
management to review including references, capital adequacy ratios, etc.
3. The Finance Department reviews all received questionnaires, summarizes the
information and recommends the desired list of brokers with explanatory notes in
conjunction with the first quarter investment report.
4. The list is presented to the investment committee annually for their approval.
5. All brokers are notified after the selection is complete.
VI. SUMMARY
The primary objectives of compliance, safety, liquidity and yield have been achieved for
the reporting period as evidenced by this report. These objectives will continue to be
pursued for the City of Euless as provided by the investment policy. This year proved to
be another successful year for the investment program. The City of Euless, like all other
local governments, is faced with the challenge of meeting benchmark levels triggered by
the Fed's actions. The City's investment program will continue to seek new techniques,
instruments, etc. to enhance the return on the City's funds, as well as the return of all
City funds.
The investment committee will meet on January 9, 2024 to discuss the Annual
Investment Report. Once the annual report is approved by the committee, it will be
forwarded to the City Council.
Janina Jewell
Jackie Theriot
Director of Finance Assistant Director of Finance
14
CERTIFICATION
This report has been examined and approved by the Investment Officers of the City of
Euless. Information presented in this report to the Investment Committee and City Council
represents an accurate description of the City's investment activity for the fiscal year ending
September 30, 2023. This report meets all requirements specified by the Public Funds
Investment Act and the Policy of the City of Euless.
Investment Officers
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
Diana L Ayala
Budget and Treasury Manager
Ross Fairclo
Accounting Manager
15
Minutes — 08/21/2023 4:00 p.m. Investment Committee Meeting
Members: Linda Martin, Mayor
Loretta Getchell, City Manager
Chris Barker, Deputy City Manager
Janina Jewell, Director of Finance
Committee members present included Mayor Martin, Loretta Getchell, Chris Barker, and Janina Jewell. Non -
committee present included Diana Ayala, Budget / Treasury Manager.
Jewell presented the Third Quarter Investment Report for Fiscal Year 2023. She stated it was in compliance
with Chapter 2256 of the Public Funds Investment Act. Ms. Getchell referred the committee to page 2 that
showed the City's investment strategy for the various funds of the City as of June 30, 2023. Page 2 notes that
operating funds were invested with a weighted average maturity (WAM) ranging from 6 to 9 months, capital
improvement projects (CIP) and special purpose funds were invested in accordance with drawdown
schedules of the projects and would not exceed the estimated project completion dates, debt service funds
were invested to assure adequate liquidity to cover the debt service obligations on the required payment
date, and finally that emergency, contingency, operating and debt service reserve funds could not exceed
five year investment timelines. It was noted that there were no changes made during the quarter to the
strategy and that the presented investment portfolio followed those strategies for the third quarter of Fiscal
Year 2023.
Jewell referred the committee to page 3 where she noted significant increases and decreases in fund
investments since March 31, 2023. She specifically noted most of the changes occurred because we had
received a significant portion of property taxes and had paid the DFW revenue sharing last quarter so this
quarter showed just the opposite with General Fund spending for normal operations and Car Rental collecting
taxes. Overall there was an increase of over $4.4 million. The total market value of cash and investments
was stated to be $168,365,265.
On page 4 Jewell pointed out the portfolio shows its diversity in investment types on this page. She noted
that the weighted average yield on the portfolio was 4.41% and was up 73 basis points from the last quarter.
On page 5 she noted the diversity of the portfolio by maturity and specifically cited that 82% of the portfolio
maturity had a maturity of less than one year. This was 1% lower than the last quarter and 4% lower than
December. This is changing due to the committee's instructions last fall to invest longer to gain some higher
returns. The WAM on the portfolio was 167.63 days which is well within the 365-day guideline in the
investment policy. Page 6 noted the portfolio diversity by institution and that no one institution had more
than a third of the City's portfolio invested with them. Page 7 was noted to show the market value of the
portfolio as of June 30, 2023, of $168,041,093 which, if investments had been liquidated, the City would have
to show a loss of $589,003.
On page 8 Jewell noted the comparison of average 90-day T-Bills for the quarter compared to the portfolio
average maturity. The portfolio averaged 95 basis points under the 90 Day T-Bill benchmark. The 90-day T-
Bill had come down 9 basis points in the last month. So while the City is locking into longer term investments
and is below the benchmark, with the benchmark rates coming down, it should help the City's weighted
io.
average yield to be invested longer. This page also showed that cash was 100% invested for the quarter.
Jewell noted on page 9 that the City was fully collateralized as of June 30, 2023.
Jewell then noted that the report was certified by City Investment Officers. Mr. Barker made a motion to
approve the quarterly investment report. The Mayor seconded the motion and the vote was unanimous.
Minutes for the May 9, 2023, Investment Committee Meeting were presented. Ms. Getchell motioned to
approve. The Mayor seconded the motion and the committee approved unanimously.
Ms. Jewell commented on the economic outlook noting that consumer resiliency continues to keep us out of
recession. Service are strong but manufacturing is down. While the Fed vote to increase the Fed Fund Rate
last time was unanimous, it does not appear everyone is on the same page going forward. Maybe more news
after the upcoming Thursday and Friday annual symposium in Jackson Hole.
The meeting was adjourned at 4:06 p.m.
17
APPENDICES
18
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2023
Inv. CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type Number
Call Date
Value
09/30/2023
06/30/2023
Market Value
09/30/2023
06/30/2023
Book Value
OPERATING FUNDS:
FHLB 3130AVQB1
01/19/2024
1,000,000
998,811
997,656
1,155
1,000,000
1,000,000
-
FNMA 3135GAGL9
10/17/2024
1,000,000
996,020
996,530
(510)
1,000,000
1,000,000
-
FHLB 3130AVWY4
02/08/2024
1,000,000
998,710
997,130
1,580
1,000,000
1,000,000
-
FHLB 3130AW3U2
02/22/2024
1,000,000
998,610
996,930
1,680
1,000,000
1,000,000
-
FNMA 3135GAHK0
05/08/2024
1,000,000
997,040
995,573
1,467
1,000,000
1,000,000
-
FNMA 3135GAHP9
11/15/2024
1,000,000
994,830
995,160
(330)
1,000,000
1,000,000
-
FHLMC 3134GYC34
12/30/2024
1,000,000
994,460
994,830
(370)
995,706
995,376
330
US TRE, 91282CDA6
09/30/2023
1,000,000
1,000,000
988,125
11,875
998,320
998,320
-
FFCB 3133ENBN9
10/20/2023
1,000,000
997,900
985,134
12,766
999,250
999,250
-
FHLB 3130APQU2
11/22/2023
1,000,000
993,454
981,587
11,867
1,000,000
1,000,000
-
FHLB 3130APYZ2
12/08/2023
1,000,000
991,398
979,345
12,053
1,000,000
1,000,000
-
FHLB 3130AQ5T6
12/29/2023
1,000,000
988,995
977,131
11,864
1,000,000
1,000,000
-
FHLB 3130AVYV8
05/09/2025
1,000,000
994,406
995,460
(1,054)
1,000,000
1,000,000
-
FFCB 3133ENLF5
01/18/2024
1,000,000
987,065
975,864
11,201
1,000,000
1,000,000
-
FFCB 3133ENLY4
01/25/2024
1,000,000
986,030
974,606
11,424
999,250
999,250
-
FHLB 3130AWD64
03/07/2024
1,000,000
998,710
999,920
(1,210)
1,000,000
1,000,000
-
FHLB 3130AWD64-2
03/07/2024
1,000,000
998,710
999,920
(1,210)
1,000,000
1,000,000
-
CD 98970LG80
06/13/2024
237,000
236,858
237,000
(142)
237,000
237,000
-
CD 759701B07
06/13/2024
237,000
236,787
237,000
(213)
237,000
237,000
-
FHLB 3130AQVV2
02/28/2024
1,000,000
984,185
974,129
10,056
1,000,000
1,000,000
-
FHLB 3130ARLW9
01/26/2024
1,000,000
990,800
983,110
7,690
1,000,000
1,000,000
-
FHLB 3130ARMV0
04/26/2024
1,000,000
983,690
977,325
6,365
1,000,000
1,000,000
-
FHLB 3130ARWC1
11/16/2023
1,000,000
996,435
989,376
7,059
1,000,000
1,000,000
-
FHLB 3130ASA33
11/24/2023
1,000,000
995,824
988,838
6,986
1,000,000
1,000,000
-
FHLB 3130AS4B2
02/26/2024
1,000,000
989,842
982,932
6,910
1,000,000
1,000,000
-
FHLB 3130ARV65
05/17/2024
1,000,000
984,700
979,140
5,560
1,000,000
1,000,000
-
FHLMC 3134GXUH5
05/24/2024
1,000,000
985,070
979,390
5,680
1,000,000
1,000,000
-
FHLB 3130AWEL0
06/14/2024
1,000,000
997,500
997,542
(42)
1,000,000
1,000,000
-
FHLB 3130ASW47
11/28/2023
1,000,000
997,217
992,596
4,621
1,000,000
1,000,000
-
FHLB 3130ASBN8
03/22/2024
1,000,000
986,822
980,593
6,229
1,000,000
1,000,000
-
FHLB 3130ASF79
03/28/2024
1,000,000
988,045
984,200
3,845
1,000,000
1,000,000
-
FHLMC 3134GXUM4
06/07/2024
1,000,000
984,460
978,930
5,530
1,000,000
1,000,000
-
CD 06063HQX4
12/13/2024
240,000
239,440
240,000
(560)
240,000
240,000
-
FHLB 3130ATKG1
10/27/2023
1,000,000
999,315
996,980
2,335
1,000,000
1,000,000
-
FHLB 3130ATLS4
04/26/2024
1,000,000
995,287
993,504
1,783
1,000,000
1,000,000
-
FHLMC 3134GX6V1
11/25/2024
1,000,000
995,600
994,210
1,390
1,000,000
1,000,000
-
FHLMC 3134GY4F6
11/26/2024
1,000,000
995,210
993,770
1,440
1,000,000
1,000,000
-
FHLMC 3134GYBU5
07/26/2024
1,000,000
996,150
994,440
1,710
1,000,000
1,000,000
-
FHLMC 3134GY7J5
09/27/2024
1,000,000
996,510
995,140
1,370
1,000,000
1,000,000
-
FHLMC 3134GYA69
09/27/2024
1,000,000
995,770
995,550
220
1,000,000
1,000,000
-
FHLMC 3134GYAB8
12/30/2024
1,000,000
996,090
994,810
1,280
1,000,000
1,000,000
-
FHLB 3130AUENO
01/17/2024
1,000,000
998,828
997,700
1,128
1,000,000
1,000,000
-
FHLMC 3134GYCY6
07/12/2024
1,000,000
997,350
995,420
1,930
1,000,000
1,000,000
-
FHLMC 3134GYD25
01/27/2025
1,000,000
995,440
994,290
1,150
1,000,000
1,000,000
-
FHLMC 3134GYDE9
01/27/2025
1,000,000
996,250
995,310
940
1,000,000
1,000,000
-
FHLMC 3134GYEZ1
01/27/2026
1,000,000
999,830
998,550
1,280
1,000,000
1,000,000
-
FHLMC 3134GYFA5
01/28/2026
1,000,000
990,740
998,780
(8,040)
1,000,000
1,000,000
-
FHLB 3130AUVB7
11/28/2023
1,000,000
999,366
998,522
844
1,000,000
1,000,000
-
FHLB 3130AUUQ5
02/13/2025
1,000,000
996,150
992,860
3,290
1,000,000
1,000,000
-
FHLMC 3134GYJH6
02/28/2025
1,000,000
997,270
995,340
1,930
1,000,000
1,000,000
-
FHLB 3130AUND2
08/O1/2025
1,000,000
995,930
994,890
1,040
1,000,000
1,000,000
-
FHLMC 3134GYHC9
02/09/2026
1,000,000
991,230
991,000
230
1,000,000
1,000,000
-
FAMCA 31422XX23
02/23/2026
1,000,000
1,001,773
1,010,344
(8,571)
1,000,000
1,000,000
-
FHLB 3130AV2K7
03/08/2024
1,000,000
999,115
997,321
1,794
1,000,000
1,000,000
-
CD 17886TAN9
03/20/2024
237,000
236,744
236,902
(158)
237,000
237,000
-
CD 653344BY6
03/20/2024
237,000
236,798
236,984
(187)
237,000
237,000
-
CD 15987UAV0
09/23/2024
240,000
240,024
240,432
(408)
240,000
240,000
-
CD 70212YBM3
09/17/2025
240,000
238,387
239,550
(1,164)
240,000
240,000
-
CD 337158BP3
12/16/2024
240,000
239,438
240,000
(562)
240,000
240,000
-
FHLMC 3134GYTM4
06/06/2025
1,000,000
994,610
996,260
(1,650)
1,000,000
1,000,000
-
FHLMC 3134GYT05
06/05/2026
1,000,000
990,700
993,440
(2,740)
1,000,000
1,000,000
-
Purchases
FHLB 3130AWP79
07/19/2024
1,000,000
996,900
-
996,900
1,000,000
-
1,000,000
FHLMC 3134GYY30
07/18/2025
1,000,000
999,890
-
999,890
1,000,000
-
1,000,000
FHLB 3130AWPQ7
07/24/2026
1,000,000
997,660
-
997,660
1,000,000
-
1,000,000
FHLB 3130AWRD4
07/24/2026
1,000,000
998,180
-
998,180
1,000,000
-
1,000,000
FHLB 3130AWS27
08/23/2024
1,000,000
999,630
-
999,630
1,000,000
-
1,000,000
FHLMC 3134GYYQ9
08/O1/2025
1,000,000
999,810
-
999,810
1,000,000
-
1,000,000
19
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2023
Inv.
CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type
Number
Call Date
Value
09/30/2023
06/30/2023
Market Value
09/30/2023
06/30/2023
Book Value
FHLB
3130AXA73
09/25/2026
1,000,000
999,090
-
999,090
1,000,000
-
1,000,000
Maturities
CD
05580AB94
07/31/2023
249,000
-
247,979
(247,979)
-
249,000
(249,000)
FFCB
3133EM2E1
08/10/2023
1,000,000
-
994,714
(994,714)
-
997,070
(997,070)
CD
795451AM5
08/11/2023
249,000
-
247,644
(247,644)
-
249,000
(249,000)
FAMCA 31422XMA7
09/01/2023
1,000,000
-
991,743
(991,743)
-
1,000,000
(1,000,000)
CD
87165HD23
09/18/2023
249,000
-
246,697
(246,697)
-
249,000
(249,000)
CD
70962LAQ5
09/29/2023
249,000
-
246,271
(246,271)
-
249,000
(249,000)
CD
923450CQ1
09/29/2023
249,000
-
246,219
(246,219)
-
249,000
(249,000)
FNMA
3135G05G4
07/10/2023
1,000,000
-
999,018
(999,018)
-
986,000
(986,000)
US TRE,
912828S92
07/31/2023
1,000,000
-
997,070
(997,070)
-
1,000,000
(1,000,000)
FAMCA 31422XTT9
08/03/2023
1,000,000
-
996,432
(996,432)
-
997,945
(997,945)
CD
052392BF3
08/16/2023
249,000
-
247,942
(247,942)
-
249,000
(249,000)
CD
70337MGR3
08/18/2023
248,000
-
246,869
(246,869)
-
248,000
(248,000)
FFCB
3133ENF39
08/08/2023
1,000,000
-
997,814
(997,814)
-
1,000,000
(1,000,000)
FHLB
3130ATLN5
07/27/2023
1,000,000
-
999,265
(999,265)
-
1,000,000
(1,000,000)
Par total does not
Total Operating:
includemauniries
$ 61,908,000
$ 61,589,888
$ 63,140,979
$ (1,551,091)
$ 61,900,526
$ 63,623,210
$ (1,722,684)
20
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2023
Inv. CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type Number
Call Date
Value
09/30/2023
06/30/2023
Market Value
09/30/2023
06/30/2023
Book Value
CIP FUNDS
FHLB 3130AVS52
04/24/2026
1,000,000
992,380
991,840
540
1,000,000
1,000,000
-
FHLB 3130APQN8
11/22/2023
1,000,000
993,421
981,493
11,928
1,000,000
1,000,000
-
CD 95763PNS6
06/16/2025
240,000
238,927
240,000
(1,073)
240,000
240,000
-
FHLB 3130ATP50
05/10/2024
1,000,000
996,480
994,713
1,767
1,000,000
1,000,000
-
FHLMC 3134GY4B5
08/26/2024
1,000,000
995,700
994,010
1,690
1,000,000
1,000,000
-
FHLB 3130AUFV1
07/26/2024
1,000,000
995,400
993,770
1,630
1,000,000
1,000,000
-
CD 084601YR8
09/17/2024
240,000
239,520
239,817
(297)
240,000
240,000
-
CD 69478QGYO
09/23/2024
240,000
239,904
240,288
(384)
240,000
240,000
-
Purchases
Maturities
FHLB 3130ANYM6
08/28/2023
1,000,000
-
992,119
(992,119)
-
996,526
(996,526)
FHLB 3130ATDTI
09/29/2023
1,000,000
-
996,660
(996,660)
-
1,000,000
(1,000,000)
Par total does not
Total CIP:
include maturities
$ 5,720,000
$ 5,691,732
$ 7,664,710
$ (1,972,978)
$ 5,720,000
$ 7,716,526
$ (1,996,526)
RESERVE FUNDS:
FFCB 3133ENAL4
10/12/2023
1,000,000
998,585
986,129
12,456
1,000,000
1,000,000
-
FHLB 3130AQBY8
12/29/2023
1,000,000
989,054
977,420
11,634
1,000,000
1,000,000
-
FHLB 3130AUA87
12/27/2024
1,000,000
992,635
991,270
1,365
1,000,000
1,000,000
-
FHLMC 3134GYLNO
12/13/2024
1,000,000
999,300
997,700
1,600
1,000,000
1,000,000
-
FHLMC 3134GYKP6
03/14/2025
1,000,000
997,520
996,665
855
1,000,000
1,000,000
-
FHLMC 3134GYTXO
03/12/2026
1,000,000
994,120
997,380
(3,260)
1,000,000
1,000,000
-
FHLB 3130AWG95
06/26/2026
500,000
495,730
498,480
(2,750)
500,000
500,000
-
Purchases
Maturities
Par total does not
Total Reserve:
includematurities $
6,500,000
$ 6,466,944
$ 6,445,044
$ 21,900 $
6,500,000
$ 6,500,000
$ -
OVERNIGHT INVESTMENTS:
Beginning Ball
Ending Ball
Texpool
Balance
31,968,040
39,511,771
39,511,771
31,968,040
7,543,731
39,511,771
31,968,040
7,543,731
Purchases
15,863,355
Maturities
8,319,623
TexasCLASS
Balance
28,704,469
33,891,627
33,891,626
28,704,469
5,187,157
33,891,626
28,704,469
5,187,157
Purchases
8,319,669
Maturities
3,132,511
Texstar
Balance
30,103,037
39,993,625
39,993,625
30,103,037
9,890,588
39,993,625
30,103,037
9,890,588
Purchases
30,154,182
Maturities
20,263,594
BofT
Balance
14,814
-
(0)
14,814
(14,814)
(0)
14,814
(14,814)
Purchases
235
Maturities
15,050
US Bank
Balance
-
-
-
-
-
-
-
-
Purchases
-
Maturities
-
Total Overnight:
$
113,397,023
$ 113,397,022
$ 90,790,358
$ 22,606,663 $
113,397,022
$ 90,790,358
$ 22,606,663
Par total does not
Total Portfolio includematurities $ 187,525,023 $ 187,145,587 $ 168,041,093 $ 19,104,494 $ 187,517,549 $ 168,630,096 $ 18,887,453
21
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24
CITY OF EULESS
FINANCE POLICY
DATE: June 26, 1990 PREPARED BY:Finance Department
REV: January 25, 2022 REVIEWED BY:City Manager
RE: Investment Policy APPROVED BY:City Council
I. SCOPE
This investment policy applies to the investment activities of the Government of the City of
Euless, Texas. This policy serves to satisfy the statutory requirements of defining and adopting
a formal investment policy. The policy and strategy shall be reviewed annually by the Investment
Committee and any modifications must be approved by the Investment Committee and
forwarded to City Council for final approval. The City Council must adopt a written instrument
by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and
investment strategies. Any changes made to either the policy or strategies will be recorded in
this written instrument. This Investment Policy, as approved, is in compliance with Chapter 2256
of the Texas Government Code, also known as "The Public Funds Investment Act."
A. FUNDS INCLUDED All financial assets of all funds, including the General Fund and any
other accounts of the City not specifically excluded in these policy guidelines are included.
These funds, as well as funds that may be created from time -to -time, shall be administered
in accordance with the provisions of these policies. All funds will be pooled for investment
purposes. The strategy developed for this pooled fund group will address the varying needs,
goals, and objectives of each fund.
B. FUNDS EXCLUDED None.
II. OBJECTIVES AND STRATEGY
A. COMPLIANCE The City must adopt rules, designate staff to manage local funds, and submit
related reports as outlined by Chapter 2256 of the Texas Government Code, also known as
the Public Funds Investment Act ("PFIA"). All investments made on behalf of the City must
comply with the Public Funds Investment Act and all federal, state, and local statutes, rules,
or regulations. In conjunction with the annual comprehensive financial audit and report, the
City will perform, or have performed, a compliance audit of management controls on
investments and adherence to the City's approved investment policy.
B. SAFETY OF PRINCIPAL The primary objective of the City's investment activity is the
preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and
interest rate risk.
Credit Risk — The City of Euless will minimize credit risk, which is the risk of loss due
to the failure of the security issuer or backer, by:
a. Limiting investments to the types of securities listed in Section V of this investment
policy.
25
b. Pre -qualifying the financial institutions, broker/dealers and advisors with whom the
City of Euless will do business.
c. Diversifying the investment portfolio so that the impact of potential losses from any
type of security or from any one issuer will be minimized.
2. Interest Rate Risk —The City of Euless will minimize interest rate risk, which is the risk
that the market value of securities in the portfolio will fall due to changes in market
interest rates by:
a. Structuring the portfolio so that securities mature to meet cash requirements for
ongoing operations, avoiding the need to sell securities prior to maturity.
b. Investing operating funds primarily in shorter -term securities, money market
mutual funds, or similar investment pools.
C. LIQUIDITY The City's investment portfolio will remain sufficiently liquid to enable the City to
meet operating requirements that might be reasonably anticipated. Liquidity shall be
achieved by matching investment maturities with forecasted cash flow requirements and by
investing in securities with active secondary markets. In addition, all or a portion of the
portfolio may be invested in money market mutual funds or local government investment
pools which offer same day liquidity for short-term funds.
D. YIELD The City's cash management portfolio shall be designed with the objective of regularly
exceeding the average rate of return on three-month U.S. Treasury Bills, or the average
Federal Reserve Discount whichever is higher. The investment program shall seek to
augment returns above this threshold consistent with risk limitations identified herein and
prudent investment principles.
Funds held for future capital projects shall be invested in securities that reasonably can be
expected to produce enough income to offset inflationary construction cost increases.
E. RISK OF LOSS All participants in the investment process shall seek to act responsibly as
custodians of the public trust. Investment officials shall avoid any transaction that might
impair public confidence in the City's ability to govern effectively.
F. STRATEGY The strategy for all pooled funds is to assure that cash flows are matched with
projected needs and assume adequate liquidity and safety. This may be accomplished by
purchasing high quality securities in a laddered structure or utilizing an investment pool.
Furthermore the following purposes are also considered when investing:
1. Funds for Capital Improvement Projects or special purposes should allow for flexibility
and unanticipated project outlays by having a portion of their investments in highly
liquid securities. The stated final maturity dates of securities held should not exceed
the estimated project completion date. A weighted average maturity of 365 days or
less will be maintained and calculated by using the stated final maturity of each
security.
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2. Funds for Debt Service should assure liquidity adequate to cover the debt service
obligation on the required payment date. Surplus funds outside the debt service dates
will remain within the investment and fiscal policies.
3. Debt Service Reserves, Operating Reserves, Emergency and Contingency funds will
have the ability to generate a dependable revenue stream to the appropriate fund from
securities with a low degree of volatility. Such securities will tend to hold their value
during economic cycles. The stated final maturity dates of securities held should not
exceed five years.
4. Operating funds will be structured in such a way as to minimize volatility during
economic cycles. This may be accomplished by purchasing high quality short-term
securities which will complement each other in a laddered maturity schedule. The
weighted average maturity on these funds will remain within the 6 to 9 month range
and calculated by using the stated final maturity date of each security.
III. INVESTMENT COMMITTEE
A. MEMBERS There is hereby created an Investment Committee, consisting of the City
Manager and/or his designee, the Deputy City Manager, the Director of Finance, and the
Mayor or Mayor's designee. The Investment Committee shall meet at least quarterly to
determine general strategies and to monitor results and shall call a special meeting of the
Investment Committee within 24 hours of notification of any significant events related to the
City's portfolio including a downgrade in the investment rating. All prudent measures will be
taken to liquidate an investment whose rating has been downgraded to less than the required
minimum rating. The Investment Committee shall be authorized to invite advisors to the
meetings as needed including, but not limited to, the City Attorney, the City Council, or
outside advisors.
B. SCOPE The Investment Committee shall include in its deliberations such topics as:
performance reports, economic outlook, portfolio diversification, maturity structure, potential
risk to the City's funds, authorized brokers and dealers, and the target rate of return on the
investment portfolio.
C. PROCEDURES The Investment Committee shall provide for minutes of its meetings. Any
two members of the Investment Committee may request a special meeting, and three
members shall constitute a quorum. The Investment Committee shall establish its own rules
of procedures.
IV. RESPONSIBILITY AND CONTROL
A. DELEGATION Management responsibility for the Investment Program is hereby delegated
to the Director of Finance, who shall establish written procedures and internal controls for the
operation of the investment program, consistent with this Investment Policy. Such
procedures shall include, but not be limited to, account management procedures, cash flow
procedures, investment transaction procedures, authorized dealer selection process,
investment portfolio reporting requirements, and explicit delegation of authority to persons
responsible for investment transactions. No person shall engage in an investment transaction
except as provided under the terms of this policy and the procedures established by the
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Director of Finance. The Director of Finance shall be responsible for all transactions
undertaken and shall establish a system of controls to regulate the activities of the Authorized
Investment Officers and subordinate officials.
B. SUBORDINATES The Director of Finance will serve as the City's chief investment officer.
The Assistant Director of Finance, Treasurer, and the accountant responsible for cash and
debt analysis are hereby designated as Authorized Investment Officers, responsible for the
investment of the City's funds, pursuant to the Public Funds Investment Act Section 2256.005
Subsection F. Authority granted to a person to invest the funds on behalf of the City shall
remain in effect until rescinded by the City or until the person resigns from or is terminated
by the City. All authorized investment officers shall receive not less than 8 hours of
investment training relating to their investment responsibilities, as described by Section
2256.008 of the Public Funds Investment Act not less than once in a two-year period that
begins on the first day of the City's fiscal year and consists of the two consecutive fiscal years
after that date. This training must be provided by an independent source which has been
approved by the investment committee. At least one training session of not less than 10
hours of investment training related to their investment responsibilities as described by
Section 2256.008 of the PFIA must be completed by the investment officer within twelve
months of assuming their duties. The training must include, but is not limited to, education
in investment controls, security risks, strategy risks, market risks, diversification, and
compliance with the Public Funds Investment Act.
C. QUARTERLY REPORTS The Director of Finance shall prepare and submit investment
reports that are compliant with Government Code Chapter 2256 Public Funds Investment
Section 2256.023.
D. ANNUAL REPORTS Within 120 days of the end of the fiscal year, the Director of Finance
shall present a comprehensive annual report on the investment program and investment
activity. The annual report shall include twelve-month and quarterly comparison returns, and
shall suggest improvements that might be made in the investment program.
E. MONITORING OF MARKET PRICE OF INVESTMENTS The investment officer shall
determine the market value of each investment at least quarterly and at a time as close as
practicable to the closing of the reporting period for investments. Such values shall be
included on the investment reports. The following methods shall be used:
1. Certificates of deposits shall be valued at their face value plus any accrued but unpaid
interest.
2. Shares in money market mutual funds and investment pools shall be valued at par plus
any accrued but unpaid interest.
3. Other investment securities may be valued in any of the following ways:
a. the lower of two bids obtained from securities broker/dealers for such security;
b. the average of the bid and asked prices for such investment security as published in
the Wall Street Journal; or
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c. the bid price published by any nationally recognized security pricing service.
F. PRUDENCE The standard of prudence to be used by the investment officers shall be
"prudent person" standard and shall be applied in the context of managing an overall portfolio.
The "prudent person" standard states that, "Investments shall be made with judgement and
care, under circumstances then prevailing, which persons of prudence, discretion and
intelligence exercise in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the probable income
to be derived." Investment officers acting in accordance with written procedures and the
investment policy and exercising due diligence shall be relieved of personal responsibility for
an individual security's credit risk or market price changes, provided deviations from
expectations are reported in a timely fashion and appropriate action is taken to control
adverse developments.
G. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the
investment process shall refrain from personal business activity that could conflict with proper
execution and management of the investment program, or that could impair their ability to
make impartial investment decisions. Employees and investment officers shall disclose any
material interests in financial institutions with which they conduct business. They shall further
disclose any personal financial/investment positions that could be related to the performance
of the investment portfolio. Employees and officers shall refrain from undertaking personal
investment transactions with the same individual with whom business is conducted on behalf
of the City of Euless.
An investment officer who has a personal business relationship with a business organization
offering to engage in an investment transaction with the City shall file a statement disclosing
that personal business interest. Investment officers who are related within the second degree
by affinity or consanguinity to an individual seeking to sell an investment to the City shall also
disclose such relationship. A statement required under this section must be filed with the
Texas Ethics Commission and the City Council. For the purpose of this section, an
investment officer has personal business relationship with a business organization if:
1. The investment officer owns 10 percent or more of the voting stock or shares of the
business organization or owns $5,000 or more of the fair market value of the business
organization;
2. Funds received by the investment officer from the business organization exceed 10
percent of the investment officer's gross income for the previous year; or
3. The investment officer has acquired from the business organization during the previous
year investments with a book value of $2,500 or more for the personal account of the
investment officer.
V. AUTHORIZED AND SUITABLE INVESTMENT SECURITIES
A. ACTIVE PORTFOLIO MANAGEMENT The City intends to pursue an active versus a passive
portfolio management philosophy. That is, securities may be sold before they mature if
market conditions present an opportunity for the City to benefit from the trade.
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B. ELIGIBLE INVESTMENTS The following investments will be permitted by this policy as
defined by state and local law where applicable:
Obligation, including letters of credit, of the United States or its agencies and
instrumentalities, including the Federal Home Loan Banks (except for mortgage pass -
through securities);
2. Fully insured or collateralized certificates of deposits as authorized and described in
Texas Government Code Section 2256.010.
3. Fully collateralized repurchase agreements having a defined termination date, are in
accordance with a master repurchase agreement approved by the Investment
Committee, and as authorized by Texas Government Code Section 2256.011.
4. Investment Pools as authorized by Texas Government Code Section 2256.016. The
pool must enter into a contract approved (by resolution) by the City Council to provide
services to the City. The pool must be continuously rated no lower than AAA or AAA-m
or at an equivalent rating by at least one nationally recognized rating service.
5. No load money market mutual fund, registered with and regulated by the Securities
Exchange Commission, which complies with Federal Securities and Exchange
Commission Rule 2a-7 as defined in Texas Government Code Sec. 2256.014. Each fund
must provide the City with a prospectus and other information required by the Securities
Exchange Act of 1934 or the Investment Advisor Act of 1940.
6. Interest bearing checking accounts that are fully collateralized at 105% of ledger balance.
7. Other such securities or obligations as approved by City Council upon recommendation
of the Investment Committee. No securities will be purchased which have a potential for
price volatility that is inappropriate for the City and incompatible with its investment
strategies. This includes, but is not limited to, certain collateralized mortgage obligations,
such as principal and interest only securities, inverse floaters, capped and mismatched
floaters, and structures notes and range notes.
C. LENGTH OF INVESTMENTS Except for monies of Reserve funds, Emergency funds,
Contingency funds and construction funds, the City of Euless shall invest in instruments
whose maturities do not exceed two (2) years at the time of purchase.
1. For the General Fund, Water & Wastewater Utility Fund, and any other operating funds,
the weighted average maturity of each fund's portfolio will remain within the 6 to 9 month
range. Assets held from bond proceeds may be invested in maturities with a final stated
maturity greater than (2) years based on estimated project completion dates.
2. Assets held in the General Obligation Interest & Sinking Fund may be invested in
maturities which provide liquidity adequate to cover the debt service payment dates.
3. Assets held in the General Emergency, General Contingency, Water & Wastewater
Emergency, and the Car Rental Tax Reserve Funds may be invested in maturities not
exceeding five (5) years.
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4. An average remaining maturity of 365 days or less shall be maintained on bond proceeds
subject to arbitrage rebate restrictions, and the total portfolio average remaining shall not
exceed one year.
D. DIVERSIFICATION It is the policy of the City of Euless to diversify its investment portfolios.
Assets held in the common investment portfolio shall be diversified to eliminate the risk of
loss resulting from one concentration of assets in a specific maturity, a specific issuer or a
specific class of securities. Diversification strategies shall be determined and revised
periodically by the Investment Committee. In establishing specific diversification strategies,
the following general policies and constraints shall apply:
Portfolio maturities shall be staggered in a way that protects interest income from the
volatility of interest rates that avoids undue concentration of assets in a specific maturity
sector.
2. Securities shall be selected which provide for stability of income and reasonable liquidity.
In addition, the City will invest a portion of the City's portfolio in readily available funds
such as local government investment pools and money market funds to ensure that
appropriate liquidity is maintained in order to meet ongoing obligations.
3. The Investment Committee shall establish strategies and guidelines for the percentage
of the total portfolio that may be invested in securities other than repurchase agreements,
treasury bills, or insured and collateralized certificates of deposit.
4. The Investment Committee shall conduct a quarterly review of these guidelines, and shall
evaluate the probability of market and default risk in various investment sectors as part
of its considerations.
5. The investment officer will obtain at least three competitive bids from approved brokers
on our broker/dealer list before making an investment transaction except for a)
transactions with money market funds and local government investment pools (which are
deemed to be made at prevailing market rates), b) treasury and agency securities
purchased at issuance through an approved broker/dealer or financial institution, and c)
fully insured certificates of deposit placed in accordance with the conditions prescribed in
Section 2256.010(b) of the Public Funds Investment Act. In the event of a tie, the choice
will be made by a cumulative and objective manner.
E. ARBITRAGE Although steps have been taken to distribute bond issuance annually in
amounts not to exceed $5 million dollar increments, if this process does not occur, the City
of Euless will fall under arbitrage regulations.
The Tax Reform Act of 1986 provided limitations restricting the City's investing of tax-exempt
General Obligation Bond proceeds and debt service income. New arbitrage rebate
provisions require that the City compute earnings on investment from each issue of bonds
on an annual basis to determine if a rebate is required. To determine the City's arbitrage
position, the City is required to perform specific calculations relative to the actual yield earned
on the investment of the funds and the yield that could have been earned if the funds had
been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision
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states that periodically (not less than once every five years, and not later than sixty days after
maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess
earnings based on the City being in a positive arbitrage position. The Tax Reform restrictions
require extreme precision in the monitoring and recording facets of investments as a whole,
and particularly as relates to yields and computations so as to insure compliance. Failure to
comply can dictate that the bonds become taxable, retroactively from the date of issuance.
The City's investment position relative to the new arbitrage restrictions is the continued
pursuit of maximizing yield on applicable investments while insuring the safety of capital and
liquidity. It is a fiscally sound position to continue maximization of yield and rebate excess
earnings, if necessary.
VI. SELECTION OF BANKS AND DEALERS
A. BIDDING PROCESS Periodically, a Depository shall be selected through the City's banking
services procurement process, which shall include a formal request for proposal (RFP)
issued in compliance with applicable State law. The contract can be extended as per the
RFP specifications. In selecting depositories, the credit worthiness of institutions shall be
considered, and the Director of Finance shall conduct a comprehensive review of prospective
depositories credit characteristics and financial history.
B. INSURABILITY Banks and Savings & Loan Associations seeking to establish eligibility for
the City's competitive investment program, shall submit financial statements, evidence of
federal insurance and other information as required by the Director of Finance.
C. AUTHORIZED BROKER/DEALERS A list will be maintained of "primary" dealers and
regional dealers that qualify under the Securities and Exchange Commission (SEC) Rule
15C3-1 (uniform net capital rule). All financial institutions and broker/dealers who desire to
become qualified for investment transactions must supply the audited financial statements,
proof of state registration, and a completed broker/dealer questionnaire. All brokers and
dealers must be authorized by the Investment Committee, as analyzed by this Broker
Questionnaire. Investment Officers shall not conduct business with any firm with whom
public entities have sustained losses on investments or whose name has been removed from
an approved list by the Investment Committee. At least annually, the investment committee
will review, revise and adopt a list of qualified brokers that are authorized to engage in
investment transactions with the City.
D. COMPLIANCE A written copy of the investment policy will be presented to any investment
pool or business organization offering to engage in an investment transaction with the City.
A qualified representative (as described by section 2256.002, subdivision 10 of the Texas
Government Code) of such business organization shall execute a written instrument, in a
form acceptable to both the City and the organization, certifying that they have received and
reviewed a written copy of the City's investment policy. The firm must acknowledge that it
has implemented reasonable internal procedures and controls in an effort to preclude
investment transactions conducted between the City and the organization that are not
authorized by the City's investment policy, except to the extent that this authorization is
dependent on an analysis of the makeup of the City's entire portfolio or requires an
interpretation of subjective investment standards or relates to investment transactions of the
entity that are not made through accounts or other contractual arrangements over which the
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business organization has accepted discretionary investment authority. The investment
officer of the City may not acquire or otherwise obtain any authorized investment described
in the City's investment policy from a business organization that has not delivered such
instrument. This instrument does not, at any time, relieve the City of the responsibility of
monitoring all investment transactions to determine if they are in compliance with this policy.
VII. COLLATERAL IZATION, SAFEKEEPING AND CUSTODY
A. COLLATE RALIZATI ON OF DEPOSITS The City requires that all uninsured collected
balances plus accrued interest, if any, in depository accounts be secured in accordance with
the requirements of this Policy and Chapter 2257, Government Code ("Public Funds
Collateral Act") and the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA). Financial institutions serving as City depositories will be required to sign a
depository agreement with the City which details securities that can serve as eligible
collateral, collateral ization ratios, standards for collateral custody and control, collateral
valuation, rights of substitution and conditions for agreement termination.
Pledged securities serving as collateral will always be held in the City's name or on behalf of
the City by an independent third party with which the City has a current custodial agreement.
Depository and custodial records shall assure the notation of the City's ownership of or
explicit claim on the securities. Collateral levels will be reviewed no less than monthly to
ensure the market value of the pledged securities is at least 105% of the deposit and
investment balances less any amount insured by FDIC or FSLIC. Eligible collateral is as
follows:
B. ELIGIBLE COLLATERAL
1. FDIC and FSLIC insurance coverage.
2. Eligible securities that are compliant with Government Code Chapter 2257 Collateral for
Public Funds.
The City's Investment Officers reserve the right to accept or reject any form of collateral or
enhancement at their sole discretion.
C. SUBJECT TO AUDIT All collateral shall be subject to inspection and audit by the Director of
Finance, or designee, as well as the City's independent auditors.
D. SAFEKEEPING AND CUSTODY Safekeeping and custody of the City's investments shall
be in accordance with applicable law and accounting standards. Investment securities will
be held by a Custodian designated by the City and will be required to issue safekeeping
receipts clearly detailing that the securities are owned by the City. Monthly safekeeping
reports detailing the City's securities held by the Custodian will be provided no less than
monthly.
E. DELIVERY VS. PAYMENT Treasury Bills, Notes and Bonds and Government Agencies'
Securities, and all other investment transactions, except investment pools and mutual funds,
shall be purchased using the delivery versus payment method (DVP). That is, funds shall
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not be wired or paid until verification has been made that the security was received by the
Custodian.
VIII. MANAGEMENT AND INTERNAL CONTROLS
The Director of Finance, or designee, shall establish a system of internal controls which shall be
reviewed by an independent auditor. The controls shall be designed to prevent losses of public
funds arising from fraud, employee error, misrepresentation by third parties, unanticipated
changes in financial markets, or imprudent actions by employees or Investment Officers of the
City.
Controls and managerial emphasis deemed most important that shall be employed where
practical are:
A. Control of collusion;
B. Separation of duties;
C. Separation of transaction authority from Accounting and Record -keeping;
D. Custodian safekeeping receipts records management;
E. Avoidance of physical delivery securities;
F. Clear delegation of authority;
G. Documentation of investment bidding events;
H. Written confirmation of transactions for investments and wire transfers;
I. Reconcilements and comparisons of security receipts with the investment subsidiary records;
J. Compliance with investment policies;
K. Accurate and timely reports;
L. Validation of investment maturity decisions with supporting cash flow data;
M. Adequate training and development of Investment Officials;
N. Verification of all interest income and security purchase and sell computations;
O. Review of financial conditions of all brokers, dealers, and depository institutions; and
P. Staying informed about market conditions, changes and trends that require adjustments in
investment strategies.
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The City's list of six brokers currently includes FHN Financial, Hilltop Securities, Stifel, South
Side Duncan Williams, Samco Capital, and Financial Northeastern Securities.
The Public Funds Investment Act and the City's investment policy require staff to review the
broker/dealer list annually. At this time, we recommend approval of the six brokers we
currently have as they continue to fill our portfolio needs. The recommended broker/dealer list
for 2024 includes:
FHN Financial - Buddy Saragusa
Hilltop Securities - Gilbert Ramon
Stifel - Mike Smith
South Side Duncan Williams - Patrick Boyer/Doug Boyer
Samco Capital Markets - Robert Phillips
Financial Northeastern Securities, Inc. - Steven Azzato
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Economic News
0,