County treasurer reviews district share of pooled investment earnings; trustees ask how funds flow to general fund

Karen Adams, Merced County Treasurer, presented the county’s Investment Policy 2025 and a portfolio review at the board meeting on Oct. 14. She stressed a conservative approach prioritizing the return of principal, liquidity and safety and described self-imposed limits and oversight by a Treasury Oversight Committee created after the Orange County losses of the 1990s.

Adams reported that the pool’s book value was about $2.25 billion and that the portfolio’s mark-to-market was 99.92% at quarter end. She said the pool earned roughly $78 million in interest for the fiscal year, of which schools collectively received more than $42 million based on each participant’s share of the pool. Chief Business Officer Linda Parker confirmed that the district’s portion of interest is posted to the district general fund.

Board members asked practical questions: how the apportionment is calculated (answered: via an interest-apportionment process at the end of each quarter managed by the auditor-controller and reported in the investment policy), whether funds are discretionary (some interest flows to trust funds and non-discretionary accounts; others are available to operating funds), and how the district has used prior-year interest income. Trustees requested staff follow-up to show the amount that posted to the district general fund and how it was used to support student services.

Karen Adams also summarized returns (quarter and fiscal-year rates near 3.7%) and reminded trustees that participants include the county, school districts, Merced College and special districts. The treasurer emphasized preservation of capital and noted that if the portfolio were liquidated in a fire sale it would realize near 99.92% of book value, per GASB disclosures.

Trustees thanked Adams for the transparency and asked district staff to provide a breakdown of how the district posted and spent any interest apportionments received.