MOUNT VERNON — Interest income from the county’s investment portfolio was stronger than expected in 2023.
“It was a little over $1.1 million, way over what we anticipated,” County Treasurer Shelley Coon told the county commissioners on Thursday.
That compares to a little over $435,000 in interest earnings in 2022.
Coon estimated $700,000 in interest revenue for 2024 budget purposes but believes it will be higher.
Coon met with the commissioners along with Scott Gruber and Harold Meadows of Meeder Investment Management. Meeder is the county’s investment portfolio financial advisor.
As of Feb. 29, the county’s $77,430,450 portfolio included $41,121,905 in securities and $36,308,545 in cash. Coon said the cash was a bit inflated because she had not yet distributed property tax receipts to the schools, townships, and other entities.
The average maturity of securities is 2.38 years with an average yield of 2.75 percent. Forty percent is in three- to five-year assets.
Gruber recommended increasing the amount in the longer-term investments to lock in current interest rates, which are around 4 percent.
He noted that while the economy is still pretty positive, economic indicators warn of recession. Global conflict, elections, and AI’s impact on the labor force are additional areas to watch.
Meadows said the market expects rates to decline in 2024. While no one knows exactly when, the Federal Reserve is expected to cut rates in June and possibly May.
“There are still some really good rates out there for the long term,” Meadows said.
What money goes into the investment portfolio?
Revenue comes into the county every day, but the county does not necessarily spend it every day.
“Instead of putting that money in a checking account where it gets zero interest, they invest it until it’s needed,” explained County Administrator Jason Booth.
The $12.1 million the county received in American Rescue Plan Act money is an example of money that could go into the investment portfolio.
The money came in two installments in June 2021 and June 2022. However, not all of the projects are completed. Until they are and the bills become due, the county can invest the unused portion of the ARPA money.
Another example is the money Knox DD used for its recent building expansion. Superintendent Steve Oster said DD saved money for six or seven years to pay for the nearly $2 million price tag.
Other examples include grant money received in January for projects that start in July, the carryover amount that funds the county in the first quarter of a new year, and local dollars used to match grant money.
Booth acknowledged that $70 million seems like a big number but noted it is spread across 100 departments.
The county can only invest in assets guaranteed to return the principal amount plus interest. No variable rates are allowed and assets must have a high rating.
