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Portage officials detail proposed investment-policy changes and new cash-management practice that generated $1.23 million
Summary
City staff outlined proposed amendments to the Portage investment policy under Michigan Public Act 20 and described a cash-management tactic — weekly remittances to levying entities in exchange for retaining interest — that produced about $1.23 million in additional revenue over two years and an unaudited $600,000 in annual interest income.
Portage officials presented proposed changes to the city's investment policy and described a cash-management practice that officials said has produced meaningful new revenue for the city.
At the Sept. 9 council meeting Deputy Director Taylor (Treasury and Revenue) reviewed the city's governing statute, Michigan Public Act 20, and the permissible investment vehicles it allows, including U.S. Treasuries, agency securities, insured certificates of deposit, short-term top-rated commercial paper and eligible mutual funds or investment pools. Taylor said the city's policy priorities are safety, liquidity and yield and that forthcoming amendments (scheduled for Sept. 23) will place added emphasis on financial institutions with a physical presence in Portage.
Taylor also described an operational change in how the city handles funds collected on behalf of other levying entities (the county, transit authority and schools). Instead of following the statutory twice-monthly disbursement schedule, the city agreed with its partners to make weekly disbursements in exchange for retaining the interest earned on those funds while they are held. "In the last 2 years we've been able to make an additional $1,230,000 by doing that," Taylor said. He added that the city's traditional interest portfolio generated about $600,000 in unaudited interest income in the most recent fiscal year.
City Manager Pat McGinnis said the practice improves cash flow for partner entities while allowing the city to capture interest that helps the general fund. "We hold it till the statutory deadline, and collect interest," McGinnis said, explaining the weekly delivery arrangement with levying entities.
Council members asked about concentration risk and oversight. Taylor responded that the investment policy contains limits on holdings with individual banks and that the policy and operational controls are how the city seeks to balance safety and yield. He pointed to a list of brokerages and local institutions the city currently uses, including regional and national firms paired with local banks and credit unions.
The council was told staff will return on Sept. 23 with proposed policy amendments for formal action. No ordinance or formal investment authorization was adopted at the Sept. 9 meeting.
