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Advisor to League of Minnesota Cities outlines 4M investment options; city urged to analyze liquidity and ladder dollars
Summary
An investment advisor described the League of Minnesota Cities' 4M program, recommended cash‑flow analysis and suggested the city consider moving a portion of short‑term cash into longer, laddered investments to capture higher yields while maintaining liquidity.
An investment advisor from a firm administering the League of Minnesota Cities’ pooled cash programs presented options and recommended a cash‑flow analysis to determine whether Corcoran can shift a portion of short‑term cash into longer‑term instruments to earn higher yields.
The presenter (Corey) said the 4M program offers a variety of options: highly liquid money‑market products (4M and 4M Plus), a term series (fixed‑term pooled investments up to 13 months), and longer‑duration vehicles for reserves. He said the program is designed to comply with Minnesota public investment statutes and emphasized a focus on safety and liquidity.
Corey described a free cash‑flow tool (Cash Flow Max) the firm will use with city staff to model short‑term needs and identify dollars that could be committed to longer terms without jeopardizing operations. He said the money‑market yields have been about 4.2–4.3% recently and that if short‑term rates fall later in the year, it may make sense to ladder some dollars out to lock substantially higher long‑end rates available today.
On Corcoran’s accounts, Corey reported a general account balance of approximately $8.5 million, plus two bond‑proceeds subaccounts (including a 2023 bond account with roughly $3.7 million currently held and a 2025 bond closing expected in April). He reiterated that bond proceeds must be segregated and monitored for IRS arbitrage rules and said the fund provides bond‑proceeds monitoring as a no‑charge service to help avoid future liabilities.
Councilmembers and staff discussed liquidity needs, the tradeoffs of moving some funds into fixed terms, and whether to transfer balances held at Farmers Bank into the 4M program. One councilmember observed that interest income offsets taxes for residents and expressed support for pursuing higher returns where appropriate.
Corey said the firm can work with city staff to model operational liquidity needs and recommend an appropriate "waterfall" of holdings — a sequence of pooled products and maturities that preserves cash for near‑term needs while seeking higher yields on longer reserves.
