To

Mayor and Council

Subject

Georgia Fund I Investment Pool

Initiator

Finance Department

Recommendation

Adopt a resolution authorizing the investment of funds of the Columbus \n \n Consolidated Government in the local government investment pool known as \n \n "Georgia Fund I" operated by the state Office of Treasury and Fiscal Services.

Approval

Approved

Background

O.C.G.A. 36-83-1, et. seq. authorizes local governments to invest funds

through an investment pool operated by the state. Georgia Fund I began

operations in July, 1981. The Consolidated Government has invested idle cash

in the pool for many years. The Office of Treasury and Fiscal Services

requires adoption of a new resolution by Council any time there are banking

changes, changes in the individuals who are authorized to deposit and withdraw

funds from the pool, or there is a need to provide new information. This

requested resolution is to change the bank account number from SouthTrust Bank

to Columbus Bank and Trust per our banking services contract which was

effective July 1, 2003.

Analysis

The investment pool is operated as a money market account which invests only in

securities authorized by the state law. "The pool has been rated 'AAA' by

Standard and Poor's, indicating it is prudently managed and offers minimal risk

of loss to local governments. The Standard and Poor's weighted average

maturity (WAM) is 60 days. The average yield of the pool for June, 2003 was

1.1544%, down from 1.1968% in May. As of June 30, Columbus had $

102,432,153.58 invested in the pool".



The balance of the invested portfolio consists of a variety of securities sold

by the U.S. Treasury or government agencies and certificates of deposit sold by

banks, and is managed internally by the City's investment officer. This

portion of the portfolio had an average yield of 3.84% as of June 30.



As a general rule, funds are invested in the pool to the extent expenditure

demands are uncertain. Because the pool is highly liquid, funds can be

withdrawn and obtained in one day without penalty. This makes the investment

pool an attractive cash management tool. Additionally, the Consolidated

Government utilizes interest bearing checking accounts for daily activity

through the banking services contract, and if the rate of return in the

investment pool falls below the overnight repo rate or the "super now" rate of

the interest bearing checking accounts, then eligible funds are moved to such

accounts. Funds which are known to be idle for longer periods of time are

invested in higher-yielding securities which are less liquid than the state

pool.

Financial Considerations

Continued use of the pool is expected to provide a favorable investment

return with minimal risk while assuring sufficient liquidity for the

Consolidated Government to meet its financial obligations. The invested

balance in the pool rises and falls with cyclical cash flows, which in turn are

influenced by tax and other revenue collections, bond proceeds for financing

projects, and the timing of expenditures for payrolls and accounts payable.

The yield of the pool rises and falls with the financial markets. Assuming

that the June balance invested in the state pool was an average daily balance,

the average daily yield of 1.1544% during the month of June resulted in

$97,189.87 of investment income. Investment income is allocated to all city

accounting funds based on their contribution to the total invested balance.

Projected Annual Fiscal Impact Statement

Legal Considerations

Investment in the state pool is authorized by O.C. G. A. 36-83-1, et. seq. and

by the Columbus Consolidated Government's investment policy.

Recommendations/ Actions

Adopt a resolution authorizing the investment of funds of the Columbus

Consolidated Government in the local government investment pool known as

"Georgia Fund I" operated by the state Office of Treasury and Fiscal Services.

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