City Controller Annise Parker feels "pretty comfortable" starting FY06 with a near-record $107 million in cash reserves and unusually accurate FY05 predictions from both the administration and the Controller's Office.
The controller delivered the annual report card along with FY05's last MFOR (Monthly Operating Report) last week.
"Our initial projections were very close to where we are today," she said. "I'm happy with our information exchange."
When compared to estimates from the first MFOR, the Controller's Office was right on the money in projecting property taxes and a little low, but still in the ballpark, on sales taxes, Parker reported. She said the administration’s original projection for property taxes was a little high, but its sales tax projection was accurate.
Perhaps the biggest mixed blessing of the financial report involves HPD. While the FY05 budget surplus ballooned to $15 million largely because of a $10.3 million drop in HPD spending, the savings can be attributed to an unexpectedly large number of police officers retiring near the end of the fiscal year.
The Controller's Office projects total FY05 general fund revenues of nearly $1.45 billion. This is about $23 million above last July's original projection. Parker explained that the original projection did not include an additional $10 million from METRO. The administration’s current revenue projection of approximately $1.45 billion is about the same as its original projection a year ago. |
The city’s $1.7 billion general pool investment portfolio yielded an average 3.16% return for the final quarter of FY05 that ended June 30. FY04's final quarter averaged 2.33%.
The general pool, which includes operating funds, comprises about 98% of the total investment portfolio. All investments are governed by state law and the city’s investment policy, which dictates four investment objectives: 1) safety, 2) liquidity, 3) return on investments and 4) legal requirements.
General Pool 960
(Quarter ending 6/30/05) |
Sector |
Market
Value |
Money market |
23,917,409 |
Commercial paper |
135,177,182 |
Treasuries |
18,110,180 |
Agency disc. notes |
242,642,000 |
Agency notes |
1,019,490,055 |
Agency call. notes
|
41,414,188 |
Municipals (taxable)
|
104,879,171 |
| CDs |
297,000 |
| Mortgages |
93,572,874 |
| CMOs* |
7,057,609 |
| Total |
$1,686,557,667 |
*Note: CMOs (collateralized mortgage obligations) were
first purchased
in November 2004. |
About 82% of city investments are invested in securities issued by U.S. government-sponsored enterprises, such as the Federal Home Loan Bank, Fannie Mae and Freddie Mac. The remaining funds are invested in various instruments, including U.S. Treasury obligations, municipal securities, high-grade commercial paper, repurchase agreements and money market accounts.
The securities in the city’s portfolios generally have an AAA or equivalent long-term rating and at least an A-1, P-1 or equivalent short-term rating by the major bond rating companies, indicating a portfolio of the highest quality and lowest credit risk.
The weighted average maturity of the city’s investments has historically ranged from one to two years. Average maturity is currently about 1.7 years. From an operating standpoint, about half of the funds invested are designated to be spent on capital projects such as roads and bridges, the water and sewer system and the airport system.
Investment maturities are arranged to coincide with needed expenditures for these capital projects or to meet short-term obligations, such as payroll and debt service payments.
Standard & Poor's Investment Services has assigned its AAAf credit rating and S1 volatility rating to the general pool. The AAAf credit quality rating is the highest S&P rating. The S1 volatility rating recognizes the pool's sensitivity to changing market conditions as a result of its low market risk profile and conservative investment policies.
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