Travis County Commissioners Court
December 16, 2008
Items 29
Number 29, consider and take appropriate action on request for exemptions to Travis County investment policy requiring that obligations of u.s. Agencies be 75 percent or less of the operating and pooled bond investment portfolios.
>> good morning. First I would like to assure you that in these troubled financial times we have a very safe and conservative portfolio. We have not lost any principal and we certainly do not expect to lose any. We don't even vest in the kinds of securities that you've seen in the news. We currently have u.s. Treasurys and u.s. Government agencies in the portfolio. So the policy allows, and we have at times in the past invested in commercial paper. In these financial times we do not consider that a conservative investment and will wait until things calm down to reinvest. However, the -- we have made some changes in the way we invest. One is in a we have invested in more agencies in order to lock in a yield because we thought rates were going down. Unfortunately we were correct. We have also invested in fewer treasuries because the yield on treasurys has been extremely low. Most of the time lately it has been actually an entire percentage point lower for a treasury than an agency. So as a result we have a lot of agencies in our portfolio. And what that has caused is that we currently have in both the operating and the pool bond portfolios more than 75% of the portfolio is in agencies. And the -- the investment policy requires that we keep it below 75%. Now, it gives us 30 days to cure that and we're still within those 30 days so we're not outside of the policy. But we think that we will be for a fairly short period of time and so we're asking for an exemption, a temporary exemption so that we can simply wait until these things cure themselves. For operating, the cure will be tax receipts. We expect somewhere around 120 million to come in in December. We already have gotten 30 million. We need 30 million more to cure the problem. And we have -- if we get anywhere near expectation, we have, like, 50,000 -- or 50 million to go. So by January 8th we expect to have all the December tax receipts into the portfolio and we believe that there are will automatically bring agencies down below. 75%. So harvey is going to talk about pool bond which is a slightly different case.
>> in a pool bond, right now the percentage is between 75 and 76%. And this will cure itself when we have $8 million maturity in the latter part of January. I think it -- the pool bond situation, it -- we've had higher than expected expenditures out of the pool bond in the last couple of months and that -- that's what caused it to go over 75%. Of course, we again are trying to invest as much as we could into agencies to lock in the yields that have -- that we, you know, have benefited the county because rates have really gone down.
>> when I hear agencies, I should think government instruments basically.
>> u.s. Government agencies. We invest in the four largest, yes.
>> okay. So the action today is to authorize defeating from the 75% -- deviating from the 75% I requirement.
>> yes, until January 8th for the operating portfolio often January 23rd for pool bonds. Incidentally certainly when we bought these agencies, we were within compliance. You know, it was subsequent spending that caused the percentages to change.
>> the downside is that without this action, there is a technical violation of the percentage requirement.
>> if you do not agree with this proposal and grant us the exception, I would think we need to sell agencies and get back within compliance, if you are concerned about it.
>> that's why I move approval.
>> second.
>> discussion? All in favor? That passes by unanimous vote of those present with Commissioner Davis temporarily away. As well as Commissioner Daugherty. Move we recess to 1:30.
>> second.
>> all in favor? That passes by unanimous vote.
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Last Modified:
Tuesday, December 16, 2008 1:45 PM