Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Investment Policy topic
No spam. Unsubscribe anytime.
Finance committee weighs extending investment maturities and trade-offs between locked rates and liquidity
Summary
Committee members discussed updating the district's investment policy (currently limiting maturities to 24 months) to allow longer maturities (up to five years was suggested), and debated whether to keep referendum bond funds in the state LGIP for immediate drawdowns or move some dollars to a private institution offering higher locked rates.
The Dorchester 02 finance committee discussed whether to update the district’s investment policy and how to balance liquidity needs with opportunities to earn higher, locked interest rates.
Staff told the committee that the district's board-adopted investment policy (policy DIA, adopted in February 2014) currently restricts maturities to 24 months and that the district follows state code "section 59 69 2 15." Staff said the committee should consider whether a longer maximum maturity—"no more than 5 years," as one example cited—might be advantageous for some funds while preserving liquidity for projects that need drawdowns.
Members also discussed a recent approach from a private financial institution that offered to invest some referendum bond dollars at locked rates. The staff member reported the institution quoted about 4.1% for two-year investments and about 4.0% for three-year investments but cautioned that locked accounts could reduce the district's ability to access funds quickly: "For 2 years, it was 4.1%. For 3 years, it was 4 percent, but it's locked in," the staff member said. Staff noted the district currently keeps referendum bond and capital project funds in the South Carolina local government investment pool (LGIP), which offers daily drawdowns and currently yields about 4.45% according to the presentation.
Committee members urged caution. One member recommended delaying any change until staff can produce a clear drawdown schedule for projects, so the district would know how much of the bond proceeds could safely be locked without jeopardizing current project timelines. Another member pointed out political and market uncertainties as reasons to preserve flexibility.
Next steps: staff recommended bringing any proposed amendments to policy to the policy committee for further review and to solicit formal proposals only after the district develops a drawdown plan for referendum and capital project funds.
