Last week, Valencia County commissioners voted unanimously to allow the more than $26 million in taxpayer funds to be placed in a state-held investment pool.
Since February 2008, the mill levy funds have been deposited in a low-interest business money market plus account at Bank of the West, separate from the county’s operational funds.
Valencia County Treasurer Deseri Sichler said she had begun looking at investment options that would give the county a better rate of return on the money but also make it available for use quickly if the hospital project begins to move forward.
Under New Mexico law, neither the treasurer nor the county commission has complete say over investment decisions of county money, county attorney Adren Nance told the commissioners.
The funds have to be collateralized — guaranteed against loss — at 102 percent, since it is public money.
Sichler said the county could invest in the Local Government Investment Pool, which has the backing of the state treasurer’s office.
“You do have immediate availability — within 48 hours — the 102 percent collateralization,” Sichler said. “You also do have a fluctuating interest rate. The last statement was 1.9 percent, but the feds have been cutting rates and they are expecting to lower rates again in January.”
The treasurer said the Bank of the West money market account has been earning .35 percent, but when she informed the bank last year that the county was contemplating moving the money, it pushed the rate up to 1.5 percent.
“But now it’s down to 1.2 percent because of the most recent federal rate cuts,” she said.
Sichler said there are other investment options, such as certificates of deposit, that are fully collateralized and would offer a locked-in interest rate.
“The trade off is a stable rate versus the liquidity of the LGIP,” she said.
According to the New Mexico State Treasurer’s Office website, the pool is a fund created by state statute to allow municipal, city, county, tribe and quasi-governmental bodies to voluntarily remit money to the state treasurer’s office to receive professional money management on a pooled basis.
The LGIP is rated “AAAm” by Standard & Poor’s, the highest principal stability credit rating awarded by the company, and has been reaffirmed annually since August 2007.
As of March 31, 2019, fiscal year 2019 fund earnings are more than $13 million.
County attorney Dave Pato said the LGIP would be a safe move for the county, with the funds easily available if the hospital project began moving.
“It’s a safe way to increase returns, given it’s liquidity, so the county doesn’t lose money from here on,” Pato said.
The only reason to go with another option, Sichler said, would be if the county was wanting to keep funds at a locked in rate for the long term.
“The LGIP rate is going to fluctuate, but it will be earning a lot more than we are now,” she said.
The board also directed Sichler to research the benefits of moving its operational fund, which is also held at Bank of the West, to a different financial institute in the hopes of saving on fees by combining services.
Commissioner Gerard Saiz proposed giving the treasurer the authority to move the operating fund and report back to the commission.
The other commissioners said they were comfortable doing that. Sicheler said she would report back when that was completed.