Jeffco’s investment managers expect to earn $7 million in investment income in 2009, which would be an average 2.3 percent return.
Jeffco treasury officer and portfolio manager Mark Hubbard told the county commissioners Aug. 4 that the county’s investment portfolio was at about $304 million at the end of June and that the county had already earned nearly $4.3 million on interest in 2009. Earnings are expected to rise to $7 million by the end of 2009, Hubbard said.
After the briefing, Hubbard said low interest rates are keeping the county from earning more money.
"We are in the midst of historically low interest rates," Hubbard said. "It's a tough time to be an investor in terms of the return you'll receive."
Hubbard told the commissioners that despite recent projections by some economists that investing opportunities are improving, county investment returns will remain low.
"(Economists') projections are not always in sync with the real world," Hubbard said. "We're not out of the woods yet investment-wise."
Rates should improve by the end of the year, though, so Hubbard said he will start to shift more toward long-term investments. Generally speaking, the county can invest unused tax dollars in investments with up to a five-year return.
"But right now is not the best time to be taking on a lot of five-year investments," Hubbard said, "because we'd be holding those for five years and be locking in this lower rate for a fairly long period of time."
That reasoning, along with the high amount of tax revenue the county collected at mid-June, explains why the county has more than $89 million invested in bank savings accounts, an investment that can be recalled at almost any time.
"There's not a whole lot of difference between an overnight rate and a one-year investment," Hubbard said. "There's not a lot of incentive to go out further, but rates are starting to inch upward."
Jeffco Treasurer Tim Kauffman told the commissioners that there would be less money invested in bank savings accounts and more in structured investments by the end of the year.
Commissioner Kathy Hartman said during the briefing that the low interest rates were OK for now, but with the county's budget situation expected to get tougher as property tax collections decrease, investment revenue will become more important.
"Two years from now, we may need investment income more than we do now," she said.
Todd Leopold, the county's director of administrative services, told Hartman that investment revenue is generally used for one-time expenses, so "these fluctuations don't significantly impact operations."
Later in the week, Hubbard said interest rates are what they are, and he's not going to put taxpayer dollars at risk to make more money.
"The first goal is not to make money but to make safe investments," Hubbard said. "In general, the types of things we invest in doesn't really change."
Even in tough economic times, Hubbard said he won't push risky investments.
"I'm not going to try and find something that has a higher yield just because we need more yield," he said. "If we can't get it, we can't get it. We're not looking for some sort of exotic investment that's going to earn three times the amount of money we're making."