Making Cents

Investing local funds to achieve higher returns on investments re emerged on the agenda at the September 3 Saratoga Town Council meeting.

Another local government investment pool representative visited the council to inform them about governmental investment opportunities and options. As was previously reported, on August 6 Troy Hunsacker from Wyoming CLASS presented information from their investment pool.

Joan Evans of Wyoming Government Investment Fund (WGIF) said “Saratoga already has some funds in WGIF in the liquid asset series,” but offered more information on the group’s management of municipal funds.

“Safety is our number one priority—not how much we can make in interest,” Evans said.

Evans emphasized the council should explore the varying investment opportunities and “do what is right for the municipality.”

“WGIF has been AAAm rated since inception,” said Evans. “We emphasize safety, liquidity and then focus on you (Saratoga).”

According to spglobal.com “Principal Stability Fund Ratings”, the AAAm rating means “an extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk.”

According to The Motley Fool (“What is a Bond Rating” November 9, 2023), “Bonds with triple-A ratings are considered the safest investments available.” “Debt rated below BBB- will pay a higher rate of interest to the bondholder but will also come with a much greater risk of default.”

A chart linked to the article showed that credit quality decreases and risk increases as ratings decrease.

“WGIF is also the only local government investment pool in compliance with Governmental Accounting Standards Board (GASB) 79,” said Evans. The GASB statement 79 “addresses accounting and financial reporting for certain external investment pools and pool participants.”

The Wyoming CLASS handout given by Hunsacker said “Safety, liquidity, convenience, flexibility, competitive returns and legality are offered in their AAAm rated investment pool.”

As of the March 31, 2022 Financial Statement Disclosures, Wyoming Class “does not meet all of the specific criteria outlined in GASB 79.”

Saratoga has 15 funds with WYOSTAR and 2 with WGIF according to the June 30, 2024 combined cash investment breakdown of Saratoga funds.

According to WYOSTAR’s website, “Average portfolio credit quality must be at least BBB or equivalent.” WYOSTAR concentrates on “accessibility, liquidity and returns.”

Currently, the rate of returns found on each investment pool’s websites are WGIF—5.15%, Wyoming Class—5.257% and WYOSTAR—4.57%.

Mayor Chuck Davis said “We will take your (Evans) presentation under advisement” and thanked her for attending the meeting.

The next Saratoga Town Council meeting will have occurred September 17 at 6 p.m. at Saratoga Town Hall. The Council will meet again October 1 at 6 p.m. at Saratoga Town Hall.