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Investments: <br />Bond Interest rates have been volatile for all of 2014 with a decline of almost 100 basis points <br />from the beginning of the year to the end of the year. This could translate into lower interest <br />rates going forward. In the interim, investment income will show a substantial increase due to <br />accounting requirements to adjust investments to market at year-end. This is reflected by <br />higher accrued interest revenue in the financial statements. The City will experience similar to <br />increasing investment returns through 2015 and into 2016. Investment income for 2014 is <br />$271,056 compared with $291,818 for the same period in 2013. Our portfolio for December 31, <br />2014 was 27,168,852 compared with $27,172,046 for 2013. <br /> <br />Treasury Securities 2014 2013 <br /> 2 year .61 .35 <br /> 5 year 1.55 1.71 <br />10 year 2.09 3.03 <br />Jumbo CD’s <br /> 1 year .40 .25 <br /> <br />The Federal Open Market Committee (FOMC) has maintained the current discount rate at 0% to <br />.25%. The market is trying to determine if a rate increase is coming but signals by the FOMC is <br />that they keep delaying any increase due to softness in Europe, Japan, and China. They have <br />indicated that they will keep rates low into 2015. <br /> <br />State unemployment as of December was 3.6% state-wide compared to national unemployment <br />of 5.6%. Economists see the national number stabilizing in 2015. The labor force participation <br />rate continues to hover at a 35 year low as more discouraged unemployed workers continue to <br />leave the workforce and more are under employed with part-time work. <br /> <br />Finance Department Operations: <br />Perennial projects include year-end financials and preparation for our annual audit; this takes <br />place during the 1st and 2nd quarter. There are also a number of state reporting requirements <br />that are completed in the 1st and 2nd quarters. Once the audit is complete staff moves onto our <br />five year financial plan for the remainder of the 2nd quarter. Staff also begins working on the <br />new budget and this will continue until the end of the year. The 3rd quarter is dominated with <br />budget work and special assessment roll preparation and franchise fee ordinances. The 4th <br />quarter includes certifying assessments, preparing our insurance application, and continuing <br />budget work up to final adoption and certification to the county. <br /> <br />Future Development: <br />Staff is still considering software upgrades that will provide for more self-service and process <br />improvements. <br /> <br />Respectfully Submitted, <br /> <br /> <br /> <br />Mark Beer