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Fort Thomas finance committee to seek adviser before adopting investment policy
Summary
Committee members reviewed a draft investment policy and agreed to solicit investment advisers for guidance before approving a final policy; current city funds are largely in CDs and money-market accounts.
Fort Thomas’ finance committee reviewed a draft city investment policy and agreed to solicit outside investment advisers before asking the full council to adopt a final policy.
Committee members said the draft is an initial “first run” and that staff wants to identify advisers who understand Kentucky law and municipal constraints before council signs off. “Yes. Discussion won't be super in-depth. I did just want to send out, that draft policy is just a first run,” said Matt (city staff).
Why it matters: the policy will guide where the city places its cash beyond traditional certificates of deposit (CDs), balancing preservation of capital, liquidity and return. Committee members stressed that Kentucky Revised Statutes (KRS) limit what municipal governments may hold and that any asset allocation should reflect upcoming capital needs.
Staff described the city’s current holdings and the intended process. “Where it currently sits is about half and half. We've got about $8,000,000 invested, about $4,000,000 of those are in money markets, so for some liquidity. And the other half is currently in CDs,” Matt said. Committee members discussed liquidity needs, how long the city can leave funds invested and how penalties for early CD redemptions can affect timing for capital projects.
Members noted KRS limits on diversification and a statutory allowance that in practice constrains the share in higher-risk holdings. “KRS is only a percentage that you can do in each one. So you can't put it all in one fund,” Matt said. Committee members also discussed the Kentucky League of Cities (KLC) pooled option as a benchmark; staff will include that offering among proposals for comparison.
Next steps: staff will solicit proposals from several advisers, send them to the finance committee for review and likely arrange committee interviews. “If council is good with that over the next month, I'd like to try to find 4 groups to take a look at,” Matt said. Committee members agreed it made sense to pick an adviser first and then finalize the policy with the adviser’s input rather than adopt the current draft immediately.
The committee did not vote on the policy at the meeting; members directed staff to return with adviser proposals and to continue the discussion in committee before bringing a final recommendation to council.
