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Stafford council approves new account with Texas CLASS to diversify $40 million portfolio
Summary
Council voted to open an account with Texas CLASS, a government investment pool, and to move a portion of the city's pooled funds to diversify holdings; staff said roughly $15 million could be shifted from the city's existing pool to Texas CLASS.
The Stafford City Council on April 16 approved creating an account with Texas CLASS, a local-government investment pool, as part of a plan to diversify the city's investment portfolio.
Finance staff told council the city's total investment portfolio is about $40 million; roughly 60% was currently invested in a single government pool (referred to in the meeting as "LOGIC"). The finance director said staff recommended moving about half of that LOGIC holding — roughly $15 million — into Texas CLASS to reduce concentration risk while maintaining liquidity.
Why it matters: The city's investment policy prioritizes preservation and safety of capital while seeking yield within the constraints of the Public Funds Investment Act. Council members and public commenters asked about relative returns, fees, collateral and insurance. Staff said government pools invest primarily in U.S. Treasuries and government agencies; pools are not FDIC insured but are AAA-rated and structured for public funds.
Details from the meeting: The finance director presented a brochure and said the current bank rate on certain short instruments was about 2.28%, while one of the pools had a reported current yield near 4.24% (figures cited in the meeting). Council asked whether fees were negotiable and whether local banks could match the return; staff responded banks typically could not match current pooled rates. Public commenters supported diversification and urged fee negotiation with existing providers. A motion to approve creating the Texas CLASS account and moving funds passed unanimously.
Outcome: Council approved establishing a Texas CLASS account and directing staff to move a portion of the city's pool funds into it. Staff said monthly investment reports would continue to be provided to council.
Quotations (selected): "I would like to move half of that to Texas CLASS," the finance presenter said, noting the city's desire to limit concentration risk. "Banks will not ever offer that rate," a staff member told council about pooled-fund yields versus bank offers.
Ending: The council action diversifies the city's cash holdings across government pools; staff will report monthly on the investment performance.
