CO-26-0170

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TranscriptWhat was said at each appearance is below it. Machine transcription, with speaker names inferred from voice matching. 54% of 28 lines carry a name. It shows what was said, not what was decided, and both the words and the names can be wrong.

1. 1May 5, 2026
   Board of County CommissionersR34Regular businessNo disposition in the minutes

   Open this item →▶ Play from 1:27:57
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   Left

   1:27:57That shall do it for the resolution. So now Madam Clerk, thank you for your patience and let us get to your item.

   Kathryn Starkey

   1:28:03Yes. So um we have R 34 so if um Matt and Sean could come up to the podium please Commissioners, this is our semi-annual financial investment report to the Board of County Commissioners. And coming to the podium is Mr. Sean Gannon with PFM. He is a director with PFM Asset Management, and PFM manages a portion of our investment

   1:28:33portfolio. And also with him is Matt Lazar. He is my My office's Director of Finance and my office also manages a large portion of the county's investments. So we'll start with a market update by Mr. Gannon. Then Matt will talk about the portfolio that my office actively manages, and then Sean will talk about the part part of the portfolio that PFM manages. Mr. Gannon, thank you.

   Unidentified speakerVoice A

   1:29:00Thank you. Um good morning. It's great to be with you all. Let's give this uh brief update. So as as Nikki mentioned, my name is Sean Gain with GFM Asset Management. I wanted to start by saying if you have any questions about the presentation, please feel free to interrupt me and ask those. But to start with um kind of what what we do, so we again we manage a portfolio of bonds of short-term fixed income on behalf of the county. So when we think about portfolio management, investment management, we take into account macroeconomic factors

   1:29:30as well. So on this slide, I'm not gonna read off of it directly, but just to say that the things that we're looking out for are the things that you see in the news headlines, right? Conflicts in the Middle East, the the uh rising prices that we've seen reflected in inflation um and the potential job uh growth or or lack thereof uh within the economy. The second focal point is the Fed. So you hear a lot about the Fed in in recent months. They have a direct impact on a lot of the county's investments.

   1:30:02So with the change that's happening where the Fed chair is stepping down, new chair is expected. There can be a policy shift, and that would have an impact on investments, on budgeted earnings, and And Hudson Data Shunts. Uh to look at at the so this is what we call the a yield curve. This represents where uh you can invest and and that the yields are a forward-looking number of expected earnings uh for the the investments

   1:30:32of the county. The shift you can see, and I'll touch on this later on, is that the dotted, the dashed line there represents where we were at the end of the prior quarter, the solid line represents where we are at the end of this quarter, and we see a shift upward. If you recall, maybe two, three years ago, we had pretty strong negative numbers, negative performance numbers. That was because interest rates shifted. Upward. So that reflected a negative market value movement. We saw the same thing happen in the past quarter.

   1:31:02Our performance was not negative. We did generate a positive performance, but it was reflective of a lower number, closer to that zero mark, because of this shift and move upward and yields. when I you know oh Matt hand it over here Matt in a second but just to to touch on something um the expected Fed policy is a more aggressive stance to move downward um their job is to control inflation and spur employment So

   1:31:33with Kevin Warsh expected to be the next chairman of the Federal Reserve, that would pull interest rates downward and decrease the yield curve would result in better income and better earnings in the short term for the portfolio as well. Um so with that Matt, I'll end it over to you for the next two slides.

   Matthew Lazar

   1:31:55Righty, sorry for the height difference. We'll move this down here a little bit. What I'm gonna do is take that broad brush that Sean just painted for the market and show you how that's impacted the portion of the portfolio that the clerk's man office manages on behalf of the county. Um we're gonna the total portfolio for the county. It's at over $2 billion. What we're gonna focus on here on this slide is the unrestricted portfolio, which is $1.7 billion. That is specific to not being

   1:32:26tied to a debt covenant. So about $500 million is specifically related to the debt acquisitions and the investment. Investments of those funds. But on here with the unrestricted investments, you have both the short term, which is going to be one year or less, and then the long-term investments down in blue, those are going to be one year or greater investments. Right now, the team that I have the pleasure of working with in finance, they are balancing all the information that Sean outputs with his team along

   1:32:56with all the various markets. Updates to find the best avenue to ensure that the unrestricted dollars for the county remain available for cash flow needs, as well as looking at the county's investment policy that was adopted back in 2017 in conjunction with Florida statute, which I just remind you it goes right-liquidity, safety of principle, and then very last is going to be return on investment. But why am invest if we can't get a return, so obviously it's always nice to see those. Overall, for

   1:33:26unrestricted investments, the county has seen for this fiscal year $24 million in interest earnings. That those funds are then taken and allocated across the county's over 100 funds. More specifically, the general fund has seen about $3 million in interest allocated. A few other operating funds that we monitor to see where balances sit is going to be the Municipal Services Fund, which is just under $250,000 so far in interest earnings this year.

   1:33:56The Municipal Services Fire Fund sits at just Excuse me, under $1 million this fiscal year. And then two other funds we we monitor on a quarterly basis will be the Stormwater Management Fund, which is a highly used fund, got about $650,000, and the newly established Road Rehabilitation Capital Projects Fund has received this year $253,000 in interest. Allocated based on earnings. Big picture when you look at this slide, the big takeaway

   1:34:27you're going to see here is right now the portfolio as a whole, even with the market being very uncertain, the clerk's office through management of these funds is exceeding all benchmarks when it comes to all county investments. For example, short-term investments just under 4% and about 3.5 per six is the industry standard. We are between four and four and a half on a lot of these earnings, and then the longer term in blue, they're about 3.76%, where

   1:34:57you can see we are exceeding, if you look at that trailing, 12-month total return well into the four. point two range. With that, any questions overall for the county's portfolio?

   Left

   1:35:11Yeah, good.

   Matthew Lazar

   1:35:13And then just this is last slide before Sean wraps it up, is this is the investment policy in picture form. So these are the restrictions for the different sectors for the uh county's investments. On the left are the different sectors. In gray, the outline box, that is the limit per the adopted investment policy. And you can see shaded in blue is where we currently stand as of March thirty-first, all well within The allowable amounts and percentages for the county's investment policy. With that, I will turn over to Sean

   1:35:43to do the last few slides.

   Unidentified speakerVoice A

   1:35:47Thank you, Matt. Um, so again, just to to be brief, you we see this slide every six months and and uh to highlight on the on the top right, we are well diversified across sectors. Um the issuers baked in here um are are not listed, but um roughly 170 different i issuers within the portfolio, so of a wide variety. of securities and the portfolio has done well and I want to call out two specific numbers in the table at the top

   1:36:17left. It's yield at cost and yield at market. So yield at cost represents the actual earnings in the portfolio. That is a number that changes on purchases, on sales, on maturities. Yield at market represents what you would be given if you went out with that basket of securities that's in the top right, that same diversification, and went out on March 31st, what would you get? So you can obviously see those numbers are different. Um you all are earning 4.1%. The portfolio or the market is giving 4.04%. Um A quarter

   1:36:48ago, that number, that yield, that yield at market was around 3.75. So the portfolio was was doing much better, but again, just kind of bringing it into the yield movements that we've seen just over the past month, that has compressed a little bit. So still outperforming, but outperforming by a smaller margin. Now, when we look at the performance, so again, yield forward looking, what can we expect to earn? Total return past looking, what did we earn? Um so looking at the

   1:37:18past quarter, so just the past three months, uh 0.37 compared to the benchmark 0.29. Um, you know, that that number is relatively low. Uh the reason for that, if you look up at the the dollar figures, right. Interest income month, you know, dollars generated into portfolio, 5.6 million. Um From a high side's goal. Five point eight. Five point eight. Yeah, five point eight million. Um and then the change in market value was negative, right? That's the that's represents that shift that we saw.

   1:37:48Uh the Fed decided they're not cutting interest rates, they're gonna slow it down. Uh there's concern about inflation. So that move in the market had an impact on the portfolio return. But when we look out over the past 12 months, still really strong performance, you know, 4.26% compared to the benchmark 3.75. So in a portfolio of fixed income, you know, the the idea is low and slow, it's not stocks, it's not private equity. The idea is to earn a steady return while achieving that

   1:38:18safety. Safety and liquidity goal first. So last slide, or you here we have you know another slide, but just to touch on this one too. This one strips out that market value movement. It just represents accrual-based earnings. Um over the past three months, past one year, uh, you know, past one year number to Matt's point. You know, just shy of uh $24 million in income generated uh over the the 12 months. Uh but you know still really strong numbers. We're enjoying some of these higher yields

   1:38:48in the portfolio, some higher returns, and with the uh shift in pet Fed policy, you know, we're expecting to see that hopefully stick around for a little bit longer. Um, but we will keep an eye on that for you. Um and with that I'll wrap up to see if you all had any questions or or comments before I

   Jack MarianoChair

   1:39:06Any questions? Good job. I just like to put a comment. You you guys have done a phenomenal job from when we first started looking at these things. Yeah. Bringing it forward, Madam Clerk. Uh it's gotten better and better and now it's like a nice stable position with the market you can't control, but what you're doing is maximizing results, which is phenomenal. Great. Thank you. Thank

   1:39:23you, Mr. Chairman Mariano. Thank you.