Fiscal year 2024 was another record-setting year for interest revenue in Collier County. As indicated in past articles, one of the Clerk of the Circuit Court and Comptroller’s many statutory responsibilities include the investment of county funds. Funds are invested pursuant to the provisions of the County’s lawfully adopted investment policy. The policy prioritizes the safety of investment principal while recognizing the importance of liquidity and yield.
Safety, as it relates to the investment of public funds, refers to the risk involved with the future return of the underlying investment principal. The government must protect against the loss of principal by largely investing in products for which there is little to no risk that the principal will not be returned. These investments would include United States Treasury instruments and bank balances that are collateralized by an insurance program such as the State of Florida’s Qualified Public Deposits program. These investments would also include Federal agencies, which enjoy the implied backing of the United States government.
Liquidity refers to the ability to convert the individual investment to cash, which is a primary concern in the Clerk’s investment program, as the County’s $2B budget demands continuous cash flow. Individual investments are chosen for their ability to be sold in a short period of time and thus converted to cash.
Yield is the money earned by the investment of funds. Investment yield helps to offset the loss of purchasing power brought about by inflation. While not the primary focus of a responsibly run governmental investment program, competitive and safe yields can significantly benefit government initiatives.
Through September 30, 2024, the County’s investment program, managed by the Clerk’s Office, has generated over $79M in interest revenue that will help to offset the cost of various County programs. This amount exceeded the fiscal year 2023 amount of $49M. For financial reporting purposes, total investment income, which includes unrealized gains and losses, was over $127M for the fiscal year 2024.
The investment program is managed in-house by Clerk’s employees. The techniques used to formulate investment strategy include a close monitoring of the Federal Reserve Banks’ actions and dialog, as well as acknowledging the role other commodities such as oil, gold and other precious metals play in the economic landscape. Heavy reliance is placed upon cashflow forecasts, which allow funds to be optimally invested. The cash forecast must account for both estimated receipts and disbursements of County funds. These forecasts are developed using the vast amount of historical data available and input from County staff on the progress of large projects. As noted above, all investment decisions are governed by the Board’s adopted investment policy. Key provisions of the investment policy are as follows:
- 100% may be invested in the United States Treasury
- 100% may be held at a Qualified Public Depository Bank
- Up to 80% may be invested in United States Agencies
- Maximum maturity is five (5) years
- No investment in equities, commodities, currencies, and hard assets
Current investments held include United States Treasury holdings, various Federal agencies such as the Federal Home Loan Bank and Federal Farm Credit Bank, as well as corporate notes and local government investment pools. Collier County’s depository bank, First Foundation Bank, offers a collateralized investment account indexed to the Florida State Board of Administration’s Florida PRIME pool rate. Collier County’s available bank balances earn interest at a contracted rate of 95% of the monthly Federal Funds Effective Rate. All bank deposits are 100% collateralized pursuant to Florida Statutes, Chapter 280, titled “Security for Public Deposits”. For more information on the investment of Collier County funds, including the Investment Policy, please visit our website at www.collierclerk.com.