Budget and Finance committee backs new investment policy targets; recommends FI‑12 to governing board

The Budget and Finance Committee reviewed proposed changes to investment policy FI‑12 on April 15, 2025, and voted to forward the working group’s recommendations to the governing board for consideration. Chair Treasurer Director Christine Novello introduced the item and described the working group's directive to minimize language changes while clarifying investment objectives. Mickey Jacobs, a working group member, moved to forward the proposal; committee members voiced agreement and the item was scheduled to go to the governing board workshop in May.

What changed: The proposed FI‑12 revisions distinguish short‑, medium‑ and long‑term reserve needs, clarify allowable instruments for each horizon and set a new equity target for the overall reserve portfolio. The committee agreed to an equity target of 25% of the total reserve fund with a discretionary operating range of 15%–35%; the remainder would be fixed income (including cash equivalents and treasury/federal agency instruments). Staff and the working group emphasized that equities would be used only in the long‑term portion of the reserves (funds not needed for at least 10 years).

Process and oversight: The working group and legal counsel refined the draft; legal changes were highlighted separately. The committee directed that a professional investment advisory firm (CapTrust) would manage the portfolio subject to an investment policy statement (IPS) and report quarterly to the CFO and the Budget and Finance Committee. Committee discussion covered transition options (dollar‑cost averaging versus an immediate reallocation) and reporting cadence. Committee members asked that CapTrust and staff present an implementation plan and IPS at the governing board workshop; CapTrust is scheduled to attend that meeting to explain how the policy could be implemented.

Committee questions: Members asked how the short/medium/long buckets would be defined and measured. Nikki (working group member) and Mickey explained the buckets are tied to the five‑year financial plan and to projected net short‑term capital expenditures; short‑term holdings must be highly liquid (cash equivalents, short treasuries), medium‑term holdings are bond‑focused and long‑term holdings may include equities. Several members asked for clear reporting on rebalancing frequency; staff and CapTrust are expected to present rebalancing and reporting mechanics in the IPS.

Votes and outcomes: The working group’s recommendation to forward the FI‑12 amendments to the governing board was made by Mickey Jacobs and the committee voiced agreement; the item will be placed on the governing board workshop agenda for May for further review and for CapTrust to present implementation options. The committee also voted earlier in the meeting to retain policy FI‑04 (reserve fund policy) as written and forward it to the governing board; one committee member stated an objection during that voice vote.

Ending: The committee recommended the governing board review the FI‑12 draft, hear CapTrust’s implementation plan and return a final policy for board consideration. Committee members asked that staff include clear IPS reporting metrics, an implementation timeline and a recommended rebalancing schedule when FI‑12 comes before the governing board.