City treasurer reports $1.07 million interest earned; staff to provide fund-level breakdown

Eugene Solomon, Redondo Beach city treasurer, told the Budget and Finance Commission on June 30 that the city's investment portfolio earned $1,074,006.43 year to date and that staff prioritize safety, liquidity and yield when investing public funds. He said the portfolio includes short-term cash, money market and LGIP-style holdings, treasuries, agencies, medium-term notes and corporates and that policy and California Government Code restrictions guide purchases.

Solomon described a Clearwater reporting feature that flagged a corporate concentration as noncompliant even though the department's compliance determination is based on concentration at the date of purchase. "We are in compliance with our city investment policy, but the Clearwater feature does not recognize the manner in which it's set up," he said. He also reviewed upcoming maturities and recent purchases, noting staff purchased two securities in the past month and are reallocating some funds toward higher-yielding accounts while preserving liquidity.

Commissioners asked whether the reported 60/40 split of investment earnings (60% to general fund, 40% to pooled funds/other funds) is exact. Solomon and finance staff called it an approximation and agreed to provide a detailed ownership breakdown showing which funds comprise the 40% allocation. Neelish Mehta, a finance staff member on the call, added that some special-revenue funds are treated differently depending on grant restrictions.

On bank operations, staff said they regularly benchmark banking services (a request-for-information roughly every two to three years), and that the city uses an "earned credit rate" to offset account-analysis fees. Staff said the earned credit increased in the last procurement and helps offset roughly $90,000 to $100,000 in annual banking fees.

Commissioners raised internal-control questions about how funds are redeemed and applied to payments. Solomon said the city has internal controls, including dual signatories and AP review processes: finance receives vendor billing, approves transfers, and reconciles allocations to ensure money is used for the intended purpose. "The person requesting the money is never the person who can redeem the security," he said.

The commission voted to receive and file the treasurer's report. Staff committed to sending monthly trade tickets and a fund-level breakdown showing the ownership of the pooled cash that currently represents the approximate 40% of investment income not allocated to the general fund.