OPINION-Is IVGID management investing cash correctly?
At June 30, 2022, the District had $49,947,779 in cash, yet according to the audited financial statements, the investment of the cash lost $110,920. How is that possible?
Almost $15 million is in checking accounts and probably earn no interest. But what about the other $35 million?
Here is the breakdown:
1) Certificate of Deposits of $1.4 million with maturities spread equally between 2025 and 2027.
2) Government Agency Securities of $3.4 million with maturities spread equally between 2023 to 2026.
3) US Government Money Markets funds of $14.7 million have maturities of one year or less but the yield is unknown.
4) Investments in the Nevada Local Government Investment Pool are $15.1 million and regulated by the Board of Finance and can be redeemed from the pool at any time. At June 30, 2022 the fund was earning 1.% annually. It now stands at over 4.8% annually.
5) $452,000 are restricted funds held in the Nevada Local Government Investment Pool.
Under Management Practice 2.11.0 which was written 16 years ago, the Investment Officer shall be either the General Manager, the Director of Finance, or the Accounting and Investment Officer (which position does not exist).
A quarterly report is to be provided to the District Board of Trustees within 30 days after the quarter ends and at least annually and not later than 60 days after the close of the fiscal year. At least quarterly, the Investment Officer shall prepare a projection of cash flows for the succeeding five years investment period. NONE OF THIS HAS BEEN DONE FOR SEVERAL YEARS. AT THIS STAGE NO ONE MAY BE OR KNOW THEY ARE THE INVESTMENT OFFICER.
Beginning in October 2022, interest earned on cash investments began to rise rapidly and the Local Investment Pool sits at 4.8% annually as of September 2023. Investments in Certificate of Deposits can now earn over 5% per annum with maturities between a 12 to 24 month period.
Simple math would indicate that $35 million invested at an average return of 5% per annum can earn $1.8 million per year.
Should investments be looked at? We would think so!
The Management practice should be reviewed and updated. It is interesting that the practice DOES not include the Beach Fund which was established on July 1, 2008 nor the engineering department. Also the practice still includes the Workman’s Compensation Fund which was eliminated in 2018.
Lastly, we believe that the amounts in checking accounts which earn very little or possibly nothing is far in excess of what is needed. Operating expenses and debt service average about $3 million per month yet the checking accounts with $15 million provide a five month supply to pay operating costs. This should be studied. Two or three months should be adequate. Capital projects costs should also be examined; however, maturities of investments can match capital requirements.
Our opinion is that IVGID is running on an empty tank. If cash investments cannot not be properly handled then we must be at the bottom of the sea gasping for air.
How much cash does the District have?
The author, Cliff Dobler, is a long-time resident and property owner of Incline Village and a registered voter. J. Gumz, a long-time resident, owner, and voter of Incline Village, contributed to this article.
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It is just basic common sense business practice to safely and productively invest funds held by any organization. There are NRS rules regarding safety that need to be followed but $15 million in a checking account?
Thanks for the transparency. It is fortunate Incline has residents who dig into the records to reveal these matters. Lord knows the IVGID historical management has been reluctant to reveal anything and these columns hint at why management was reluctant.
It truly may be likely that no staff member knows that they are charged with the investment responsibility. That revelation alone is alarming.
To those who charge that trustee’s are too involved in the management of IVGID …. I say it is high time all trustee’s look very closely at the IVGID operations. Hopefully this time trustee’s select a new GM and Finance chief who are skilled and capable of cleaning up this GID.
Why don’t we use a professional company who handles investments…….there are many available who manage municipalities investments.