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Ferndale council hears introduction to Michigan CLASS investment pool
Summary
Council received an introductory presentation about Michigan CLASS, a Michigan public-agency investment pool, and staff said a formal resolution to join would be brought to a future meeting; no vote was taken May 20.
Ferndale City Council on May 20 heard an introductory presentation about Michigan CLASS, a statewide local-government investment pool that staff say could increase returns and provide daily liquidity for the city's cash.
City staff and a Michigan CLASS representative described the pool and answered council questions about eligible securities, account structure and operational limits. The presentation was informational only; council did not vote and staff said a formal resolution to join would be scheduled for a future meeting.
Why it matters: shifting maturing commercial-paper or short-term holdings into a pooled portfolio could raise investment yields on city cash while preserving access for operating needs. Council members pressed staff about the types of securities the pool holds, oversight, and whether the fund performs municipal lending or bond-arbitrage work.
Assistant City Manager provided background on the city's current practice of investing in commercial paper and said the city plans, as holdings mature, to move eligible funds into Michigan CLASS to achieve what staff described as “competitive rates on our return, with near instant liquidity.” Kristen, a Michigan CLASS representative, told council the pool operates under Michigan Public Act 20 and manages a diversified portfolio that typically includes bank products, U.S. Treasury securities, repurchase agreements and commercial paper.
Kristen said Michigan CLASS establishes an online portal with subaccounts for participants, allows authorized users to view and manage fund subaccounts, and maintains liquidity for participants while the portfolio managers rotate holdings behind the scenes. She also said Michigan CLASS is not a depository and does not make loans to municipalities, though it does hold bond proceeds for public agencies.
Council members asked whether Michigan CLASS monitors arbitrage or rebate requirements for bond proceeds; the representative said the pool can provide reports but is not a specialist in arbitrage compliance and recommended participants retain or consult their bond advisers for technical arbitrage work. The representative described governance as an interlocal agreement overseen by a board of trustees composed of peer finance officials from Michigan public agencies.
No formal action: Staff characterized the presentation as an introduction. The next step, the assistant city manager said, would be for council to consider and adopt a resolution at a subsequent meeting if it wishes to join the interlocal agreement.
Context: Michigan Public Act 20 was cited repeatedly during the presentation as the statutory framework that defines allowable investments for Michigan public agencies. The discussion ran approximately from the first reference to Item 4A through the end of the presentation and Q&A, after which council moved on to other business.
