Through the end of the second quarter of Fiscal Year 2025, interest revenue has maintained its record-setting pace in Collier County. As indicated in past articles, one of the Collier County Clerk of the Circuit Court’s many statutory responsibilities, as Collier County Comptroller, is the investment of county funds. These funds are invested by the Comptroller’s Office 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 primarily investing in products for which there is little to no risk that the principal will not be returned. These investments 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. They also include Federal agency securities, which enjoy the implied backing of the United States government.
Liquidity refers to the ability to convert an individual investment into cash. This is a primary concern for the Clerk’s investment program, as the County’s $2.1 billion budget requires a continuous cash flow to support operations. Individual investments are selected for their ability to be sold quickly and converted to cash.
Yield is the money earned through the investment of funds. Investing is important because, during times of inflation, the value of a dollar decreases over time. Investment yield helps to offset the loss of purchasing power caused by inflation. While not the primary focus of a responsibly managed governmental investment program, competitive and safe yields can significantly benefit government initiatives.
Through March 31, 2025, the Clerk and Comptroller’s investment program has generated over $39 million in interest revenue, helping to offset the costs of various County programs. This amount exceeds the $35 million earned during the same period in Fiscal Year 2024. One of the primary drivers behind the increased interest income was the reinvestment of funds in the portfolio at higher rates, which offset a decrease in short-term rates. Earned interest on long-term investments currently totals $18 million for Fiscal Year 2025, compared to $7 million for the same period in Fiscal Year 2024.
The Clerk and Comptroller’s investment program is managed in-house by Clerk’s Office employees. Techniques used to formulate the investment strategy include close monitoring of the Federal Reserve Bank’s actions and communications, as well as an awareness of the influence that commodities such as oil, gold, and other precious metals have on the economic landscape. Heavy reliance is placed on cash flow forecasts, which allow funds to be invested optimally. These forecasts must account for both estimated receipts and disbursements of County funds. They are developed using a vast amount of historical data and input from County staff. As noted above, all investment decisions are governed by the Board’s adopted investment policy. Key provisions of the investment policy include:
- Up to 100% may be invested in United States Treasury securities
- Up to 100% may be held at a Qualified Public Depository Bank
- Up to 80% may be invested in United States Agency securities
- Maximum maturity is five (5) years
- No investment in equities, commodities, currencies, cryptocurrencies, or hard assets
Current investments 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, also offers a 100% collateralized investment account indexed to the Florida State Board of Administration’s Florida PRIME pool rate. The County’s available bank balances also 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.