City's $180M Investment Strategy Yields Above Benchmark Amid Interest Rate Changes

The Overland Park Finance, Administration, and Economic Development Committee meeting on August 20, 2025, highlighted the city's strategic investment approach, revealing a robust portfolio aimed at maximizing returns while ensuring liquidity. The city currently holds $180 million in U.S. Treasuries with an average yield of 3.8%, alongside $118 million in U.S. agencies at 4.02%, and $20 million in certificates of deposit (CDs) averaging 4.39%. This investment strategy has resulted in a year-to-date interest earnings of approximately $6 million, a notable increase from $4.5 million during the same period in 2024.

The committee discussed the city's weighted average yield, which stands at 3.8%, slightly surpassing the benchmark two-year Treasury bill rate of 3.72%. The city's investment maturity is strategically laddered, with 45% of investments maturing within the next year and the remaining 55% maturing between July 2026 and May 2029. This approach is designed to ensure that funds are available when needed, particularly for capital improvement projects and payroll.

Committee members expressed interest in understanding the balance between policy and actual investment practices. The city adheres to strict state laws regarding investment types, primarily focusing on CDs, U.S. Treasuries, and municipal investment pools. The investment team emphasized a buy-and-hold strategy, prioritizing security and cash flow over attempting to time the market, which has proven effective despite recent fluctuations in interest rates.

As the city continues to navigate its investment landscape, the committee remains open to exploring third-party investment advice, weighing the potential benefits against associated costs. The overarching goal remains clear: to secure the city's financial future while maximizing returns on its investments.