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Committee reviews falling investment yields; PIP fund balance and capital obligations reported
Summary
Finance staff reported investment income is down from last year as interest rates fall but projected to be above budget; the PIP (capital) fund has a $4.4 million unspent balance with encumbrances including a fire-truck order and boat-related invoices.
The Finance Committee heard reports May 27 that investment income has softened compared with the prior year as short-term interest rates have declined, but staff nonetheless project investment income will finish the year above budget.
Finance Director Tamara Ingersoll said April investment income was about $10,000 lower than the same month last year and that LGIP/pinnacle investment rates have dropped roughly one percentage point, a trend she expects to continue. Staff told the committee the budget included $1.1 million for investment income and current projections show the city may be about $500,000 over that budgeted figure, though that projection relies on month-to-month interest-rate movements and the amount of unassigned fund balance available for investment.
Committee members also reviewed the PIP (capital) fund report. Staff reported an ending snapshot balance of approximately $4,400,000 in the fund, before accounting for encumbrances. In that report staff listed capital obligations, including a fire-truck purchase described in the packet as $22,000,000 in encumbrances and a water-rescue boat expenditure of approximately $62,000 for which invoices have been received but not fully paid. As staff explained, purchase orders move from encumbrances to actual expenditures as invoices are paid.
No committee action was taken; members asked clarifying questions and staff said they would continue to monitor investment yields and capital-project expenditures.
