Title
Consider a memorandum/resolution approving participation in a Public Funds Investment Pool known as Texas Class.
Body
DATE: September 17, 2024
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Approval to participate in Texas Class
BACKGROUND AND FINDINGS:
The Texas Cooperative Liquid Assets Securities System Trust (referred to as Texas Class) is a public funds investment pool created to offer one or more investment funds. These funds allow Texas local government entities to pool their funds or funds they manage to preserve principal, maintain liquidity, and maximize yield. This is done in accordance with the Public Funds Investment Act (Section 2256.001 et seq., Texas Government Code) and other relevant Texas laws governing the investment of participant funds.
Under the Trust Agreement, there are four general objectives of the Trust:
• Legality - investing only in investments legally permitted under Texas law
• Safety - minimizing risk by managing portfolio investments to preserve principal, maintain a stable net asset value, and maintain the highest rating for the Funds from a nationally recognized statistical rating organization for so long as such rating is required by Texas law
• Liquidity - managing portfolio investments to ensure that cash will be available as required to finance Participants’ operations
• Yield - maximizing current income to the degree consistent with legality, safety, and liquidity.
Texas Class has been reviewed by the staff and has met all required criteria of the City’s Investment Policy for approval as an authorized investment. The Texas Class yield as of August 16, 2024, was 5.2575%. For comparison purposes, TexStar (our current investment pool) average daily yield on August 16, 2024, was 5.2913%. Texas Class is rated at AAAm by Standard & Poors. The City currently has temporary resources invested in our depository institution, as well as TexStar public funds investment pool. Investing a portion of the City’s resources in Texas Class would benefit the city by providing greater diversification and flexibility while providing a competitive return on the City’s assets. Participation in Texas Class will not undermine the existing depository contract.
THE ALTERNATIVES CONSIDERED:
N/A
Which alternative is recommended? Why?
N/A
CONFORMITY TO CITY POLICY:
The process for approving the participation in Texas Class is governed by:
1. State of Texas Local Government Code, Chapter 105 - Municipal Depository Act.
2. State of Texas Local Government Code, Chapter 176 - Conflict of Interest Act;
3. State of Texas Government Code, Chapter 2256 - Public Funds Investment Act
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
N/A
Is this a one-time or recurring revenue/expenditure?
N/A
Is this revenue/expenditure budgeted?
N/A
If not, where will the money come from?
Fees accrue daily and are deducted from the daily earnings accrual prior to distribution to the city. There will be no transaction fees.
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
Staff recommends that City Council Approve the participation of the City in the Texas Class investment pool, and authorize the City Manager, or designee, to execute the agreement.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Investment Policy
Trust Agreement
Information Statement
Presentation