City treasurer reports record pool earnings, advises cautious stance as rates fall

Jeff Stearns, the city treasurer, gave the commission the annual pooled investment update, reporting the pooled investment fund stood at about $785,000,000 at the end of fiscal 2024 and that pool earnings for the year were the highest on record.

Stearns said earnings on the pool were 4.38% for fiscal 2024, producing $35,700,000 in actual earnings — roughly $6.5 million higher than the prior year — and that amount was about 1.47 percentage points above the city’s chosen earnings benchmark. He described the pool’s chief objectives as “safety of principle, liquidity, and investment return, and in that order.”

The pooled investment fund provides liquidity for city operations, including Lakeland Electric and water and sewer utilities, and is managed by the finance department under an investment policy approved by the city commission. Stearns outlined the portfolio mix (cash equivalents, U.S. government guaranteed debt, federal agencies, corporate bonds, commercial mortgage-backed securities and asset-backed securities) and said roughly 54% of holdings were AAA-rated securities by rating agencies, while some asset-backed and mortgage-backed securities are unrated at the end of life because managers sometimes stop paying for ratings.

Stearns said the city uses two measures to track performance: an earnings index (reflecting a 20% cash/80% five‑year bond ladder) and a mark‑to‑market total‑return benchmark (Bloomberg intermediate aggregate), and he reported the pool ranked in the top 19% of comparable bond managers for fiscal 2024. He added that recent declines in short‑term rates tied to Federal Reserve easing could reduce yields going forward and stressed that the fund’s practice of making many small investments over time helps average interest income and limit reinvestment exposure.

Commissioners and Finance Director Brotzart praised Stearns and his staff for outperforming the index and driving what Brotzart described as “real money” for the city; Brotzart and several commissioners noted the $12,000,000 margin above the benchmark had meaningful budgetary impact. Commissioners also asked about the public improvement endowment (established for hospital lease prepayments), retiree subsidy processes, and the stability of the pool’s daily balances. Stearns said the public improvement endowment started with about $215,000,000 from the hospital and that some withdrawals (about $20–$25 million) had been made for projects.

The commission took no formal action on the presentation; commissioners thanked Stearns and moved on to the consent agenda.

Ending

Stearns emphasized that the pool’s governing policy prioritizes safety and liquidity over return, and he recommended continuing the city’s policy-based approach while monitoring the changing interest-rate environment. Commissioners lauded staff for taxable‑revenue gains that helped city operations.