Title
Fiscal Year 2026 4th Quarter Briefing on County Investments and 4th Quarter Financial and Budget Overview
Body
To keep Council informed of the County's financial status, the County Chief Financial Officer (CFO) will present the FY2026 4th Quarter Investment Summary as well as the FY2026 4th Quarter Budget Overview of the General Fund and all other funds. The attached reports represent year-to-date amounts as of June 30, 2026 (FY 2026). It should be noted that these reports are unaudited.
Recent Investment Performance
Investment performance for FY 2026 reflected a volatile but constructive interest-rate environment. Short-term rates remained elevated for much of the fiscal year, supporting earnings on the County’s liquidity and short-term fixed income investments. For shorter-term investments, including checking accounts, certificates of deposit, U.S. Agency securities, and U.S. Treasury securities, investment rates moderated from prior peak levels, but overall earnings remained strong. Interest earned on the liquidity portfolio decreased from 3.55% to 3.22%, while the earnings rate on investments increased from 3.70% to 3.92%.
Longer-term investments with the New Mexico State Investment Council’s long-term investment funds are invested in a combination of equity and fixed income securities. These funds have greater price volatility because of the nature of the underlying investments and the long-term purpose of the funds. During FY 2026, the value of these investments increased as positive equity market performance and higher interest rates contributed to attractive returns and supported long-term value for the permanent funds. The greater volatility associated with these investments is generally deemed acceptable because the long-term nature of the funds allows for a strategy that accepts higher short-term volatility in exchange for higher expected long-term average returns.
The positive investment of the GPA managed asset performance had several important impacts:
i. The total return on the investment component of the County’s pooled investments was 3.07%, compared with the benchmark return of 2.97%.
ii. This combination of positive returns resulted in total earnings of $6,793 million, compared with $6.334M ex SIC last year.
The results also demonstrate the benefit of maintaining a diversified portfolio structure. Liquidity investments continued to provide flexibility and cash flow support for County operations. The short-term fixed income component contributed stable earnings and competitive market performance. The longer-term State Investment Council allocation added diversification and supported overall portfolio returns. Together, these components helped the County generate meaningful investment income while maintaining prudent risk management and policy discipline.
Stable earnings are anticipated in FY 2027 as the portfolios continue to benefit from diversified investments and disciplined decision-making. However, both fixed income and equity markets are expected to remain volatile, particularly if interest rates shift materially, inflation trends change, or equity market conditions weaken. The investment discipline applied to portfolio decision-making should continue to support consistent market returns, preserve liquidity, and maintain responsible stewardship of public funds.
Attachments
A - CIP Project Length Schedule as of June 30, 2026-Unaudited
B - FY2026 4th Quarter Budget Overview-Unaudited
C - FY2026 4th Quarter Financial Overview Presentation