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District investments returned above benchmark in 2024, PFM tells Marion County School Board
Summary
PFM Asset Management presented the district's annual investment report, saying the cash-reserve portfolio outperformed its benchmark in the year ending June 30, 2024 and the calendar year 2024. Staff said portfolios comply with district policy and Florida statutes.
PFM Asset Management delivered Marion County Public Schools' annual investment report at the April 3 administrative work session, saying the district's cash-reserve portfolio outperformed its benchmark for both the fiscal year ending June 30, 2024 and the calendar year 2024.
The presentation matters because the district uses those reserves to fund capital projects and to smooth cash flow through the year. Better-than-benchmark returns increase available earnings without new tax revenue or budget cuts.
Richard Pengelly, managing director at PFM Asset Management, told the board the long-term reserve portfolio returned 5.1% for the fiscal year versus a 4.54% benchmark, an outperformance of roughly 0.5 percentage points. He said the calendar-year performance translated to about $1.3 million in accrual earnings through Dec. 31, 2024. "On accrual basis, the earnings translated into earnings of 700,000," Pengelly said of the fiscal-year results, and he later reiterated the larger calendar-year figure in dollar terms.
PFM described the portfolio as short-duration, high-quality fixed-income holdings with an average credit quality around AA on an S&P scale and an average duration near 1.74 years. Pengelly said a majority of holdings are U.S. Treasuries or U.S. government securities and that the portfolio was managed to the district's investment policy, last updated in 2023, and to the limits in Florida law. He referenced "Florida state statutes 218.415" as defining allowable investments for school districts.
In discussion with board members, PFM framed recent returns in the context of changing Federal Reserve policy, market uncertainty around federal fiscal policy and tariffs, and the impact of interest-rate moves on short-duration portfolios. Pengelly said the Fed's bias toward lowering rates from the then-current level was a primary driver of expectations for the coming months.
No board action was taken at the session; the presentation was for information and staff follow-up. Board members did not ask the firm to change strategy at the meeting.
Ending: The presentation will be included in BoardDocs for the district's finance records. Staff confirmed the portfolio was in compliance with the investment policy as of Dec. 31, 2024 and said they will continue routine reviews with the adviser.
