ROB WILLARD EXPLAINS HOW
Two events occurred at the end of September. The Kansas City Royals clinched a playoff berth and Platte County surpassed $10 million earned in investment income since 2013, when Platte County Treasurer Rob Willard took office.
Willard said he did not realize that the milestone had been reached until he undertook a review of the portfolio anticipating interest cuts by the Federal Reserve.
Platte County is on pace this year for the most interest earned in a calendar year in county history.
Willard announced that the county’s pooled cash investment fund has already earned $1,980,417.96 with three months left to go in the year.
The previous record was set last year with close to $2.5 million in interest earned.
“My office uses a ‘ladder’ type approach to investing where funds are diversified and maturing at different times,” Willard said, explaining that actions by the Fed will not have an impact on the investment portfolio in the near term.
Missouri law empowers the county treasurer to invest funds “not needed for current operations.” The treasurer manages banking and investments comprised of “pooled cash,” which includes not only county revenues but also road districts and other entities.
Platte County benefited from a restructured investment portfolio, record tax revenue, along with rising interest rates, resulting in a sharp increase in investment revenue.
“Investing isn’t a solo act. My co-workers in the treasurer’s office, the auditor’s office, and the banking community all play a part in these decisions,” Willard said.
Although Platte County has benefited from the returns of the treasurer office’s portfolio, Willard stresses that investment income is not the purpose of safeguarding and investing public funds.
“Getting the best possible yield on investments for the county is important but it’s not the most important goal. It’s not even the second most important goal,” Willard said, highlighting that Missouri law dictates that public investment priorities are safety, liquidity, and yield, in that order.
State law strictly limits the types of investments allowed, such as certificates of deposits, treasury bills, and federal agency securities, and the length of time money may be invested to no longer than five years. Platte County’s investments include cash yielding around a 2% rate in the overnight repurchase market, to 5-6% in US Treasuries.
“It’s a common misunderstanding that public tax dollars are just sitting in a bank account earning little or no interest, or that it’s all in cash sitting in a vault,” Willard said. “The portfolio is diversified and I can promise you that there are no Platte County tax dollars in the stock market and the portfolio does not include bitcoin or lottery scratch off tickets.”
The historic returns on the treasurer’s investments in recent years have been a respite from more than a decade of financial uncertainty. Near zero interest rates shackled the markets after the Great Recession and hung like a cloud over Willard’s first few years in office, the treasurer said.
Rates slowly rose and the county eclipsed over $1 million in interest income for the first time in history in 2018.
The pandemic and lockdown in 2020 brought rates back down to near zero at a breakneck speed, dragging down the county’s investment income. Inflation forced the Fed to raise interest rates to their highest levels in decades.
Turbulence in the economy and world events aside, Platte County outperformed the market with an average yield of 2.75% on investments in Treasuries over an average maturity of 1.71 years. The average yield for Treasuries with two and five year maturities is currently 2.39%.
“I had a meeting with a banker shortly before I took office,” Willard recalled looking back at the fall of 2012. “They said that the only way to earn ‘the magic one percent’ return on an investment was that the county had to lock down a large amount of funds for five years. I told the banker that if one percent was magic then he was an awful magician.”
Willard remarked that Platte County’s eventual success was not a magic trick but a conservative and balanced investment portfolio.
