In a recent government meeting, officials discussed the performance and management of the city’s investment portfolio, which has yielded a 10% annual return over the past decade. The conversation highlighted the conservative growth strategy employed, focusing on larger company stock funds and balanced funds that combine stocks and bonds. After accounting for management fees averaging 0.65% annually, the net return remains robust.

The city’s investment approach, initiated in 1990, aims to gradually shift from a growth-oriented strategy to a more conservative allocation as funds are drawn down for operational needs. Financial advisors outlined plans to adjust the asset allocation from a current 75% stocks and 25% bonds to a more conservative 60% to 50% mix over time, ensuring sustainability while allowing for annual withdrawals of approximately $100,000 to $150,000 without depleting the principal.

Officials emphasized the importance of utilizing the city’s solid fund balance, currently around $3 million, rather than maintaining a high unassigned fund balance without purpose. The strategy includes withdrawing 5% of the portfolio annually to support the capital budget, which is expected to maintain the portfolio's value over time despite market fluctuations.

The meeting also addressed compliance with state investment regulations, assuring attendees that the proposed changes align with statutory guidelines. Auditors confirmed that the strategy of utilizing a portion of the investment portfolio is common practice among municipalities, particularly when managing endowments.

As the city prepares for the 2025 budget, officials are committed to making informed decisions regarding the timing and amount of withdrawals, aiming to enhance financial stability while responsibly managing taxpayer funds.