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Central Treasury Overview

The City and Borough of Juneau (CBJ), manages its cash and cash equivalents (investments) using a Central Treasury management approach. This requirement is in compliance with CBJ Charter section 9.13(d).

Except as otherwise provided by the assembly by ordinance, the assembly shall provide that all funds of the municipality from whatever source, including the education function, shall be deposited in a central treasury.

In compliance with this requirement, all CBJ operations (general government, school district and enterprise operations) pool their cash and cash equivalents into a single Central Treasury location. This approach provides a number of financial and operational benefits including an economy of scale. The size of the centralized cash pool allows for longer term higher interest bearing investments and the ability to better balance operational and capital project cash flows. With Central Treasury Management, cash flow income from one area can be used to meet cash flow expenditures from another while maintaining the integrity of each entity, thus allowing for smaller short-term operational cash balances.

 

 

Management of Investments

The CBJ Assembly has adopted a code and policy regarding the management of Central Treasury Investments. The code and policy identifies the intent, judgment, authorized investments, investment terms, conditions, collateral, etc. The code and policy requires that -

The Finance Director and Treasurer exercise the judgment and care under the circumstances then prevailing which an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of investments under the investment objectives of these investment policies and the CBJ codes.

The investment of the Central Treasury is directed to the objectives (in order) of safety, liquidity and yield. The investment strategy for the internally managed portfolio investments is buy and hold (not active trading).

 

Portfolio Structures

The Central Treasury investments are divided between four different portfolios. Each portfolio has different invest objectives. The portfolios include-

Short Portfolio –
Investments include Treasury, Agency and AAA Corporate securities with maturities of less than 2 years. CDs and managed pool accounts (AMLIP) are also available investments.

Short-Intermediate Portfolio –
Investments include those available for the Short Portfolio, but with maturities up to 5 ½ years.

External Portfolio –
Investments include those available for the Short Portfolio but include investment grade corporate securities and have no maturity limit. The Portfolio is restricted to the duration of the Barclays Intermediate Gov/Credit Index.

Long Portfolio –
Investments include mutual funds as specified in BBJ Code and Investment Policy. The portfolio is maintained by Vanguard Institutional Investments and managed internally.

The Short, Short-Intermediate and Long Portfolios are managed internally. The External Portfolio is managed externally by the firm of Alaska Permanent Capital Management.

 

Earnings Allocations to City Functions

The CBJ Finance Department maintains an accounting by fund, function or project. Accounting includes the tracking cash and cash equivalents for each area. Interest is allocated to all self-funded cost centers (enterprise funds) and other areas where interest is required to be allocated (grants, bond proceeds, endowments, agency funds, etc). Earnings are determined based on each entity’s cash balance by portfolio on the rate of return for each month.

Additional information on the CBJ’s Central Treasury investment program can be found at the following links:

Quarterly Investment Reports -
	December 31, 2012
	September 30, 2012
	June 30, 2012
	March 31, 2012
	December 31, 2011
	September 30, 2011
	June 30, 2011

 

Investment Codes and Policies -
	CBJ Investment Code
	CBJ Investment Policy

Callan Associates (CBJ's Investment Advisor) Reports -
	December 2006
	January 2003
	September 1998