Neptune Beach staff move to invest reserves after CFO presents cash-flow analysis

Neptune Beach—s finance committee heard Tuesday that the city has significant idle cash and is preparing to move a portion into higher-yield investments.

CFO Jerry Hernandez presented a five-year cash-flow analysis for the fiscal year ending Sept. 30, 2025, and said the city closed the year with about $11.4 million in cash. He told committee members the only notable recent deviation in the five-year trend was a one-time ARPA inflow of roughly $3.2 million. "On page 6 and 7, you will see a cash flow analysis for the fiscal year that just ended in September 30 of, 2025," Hernandez said as he walked through the handout.

Committee members said the city—s average cash balance (about $12 million) represented a large missed opportunity to earn returns in recent years. The chair said that if the city had earned roughly 3% on those balances over several years, it could have realized about $1.4 million in additional revenue. Hernandez acknowledged the city had no formal investment policy historically: "We never had an investment policy," he said, and described steps the administration has taken to change that.

Implementation and proposed allocation

Hernandez said the investment policy took effect in July and staff opened two sweep accounts to capture overnight earnings and preserve liquidity. He said the city is currently sweeping and investing roughly $8.5 million monthly into higher-yield bank products and has earned about $50,000 since starting those movements. Hernandez projected that, given market fluctuations, the city could earn roughly $280,000 on investments over a full year.

As a near-term step, Hernandez proposed investing about $4,000,000 (the city—s reserve target) in government securities and placing smaller pilot allocations into other municipal trust funds to evaluate performance. "Out of the $4,000,000 I will take at least $2,000,000 and put them under government security, then use the 2 other million dollars to just go ahead and invest a little bit on each one and to see how they react," he said.

Trust membership and legal review

Staff said joining the Florida Municipal Investment Trust (the trust) requires a council resolution authorizing the city to open accounts and to identify which city funds will be invested. Hernandez said he would forward a draft resolution to the city—s legal reviewer, Mr. Waters, for review before placing the item in the next full council packet. The committee did not take a formal vote on the trust authorization during the meeting.

Public comment and risk appetite

During public comment, resident Chuck McHugh criticized prior administrations for leaving substantial funds idle and urged faster action and stronger oversight. McHugh said residents should insist public reporting on the city—s cash balances so the issue remains visible.

Committee members debated risk tolerance and allocations. The chair said he favored some domestic large-cap equity exposure for inflation protection, while cautioning against overexposure or illiquid real-estate funds. Hernandez said the trust offers a menu that includes fixed-income, equity and a real-estate option but emphasized that core allocations would be government securities.

Next steps

Staff will prepare a draft resolution and a suggested portfolio allocation for council consideration and legal review. No formal council authorization occurred at the committee meeting; staff characterized the next step as placing the resolution and allocation in the upcoming city council agenda for action.