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Finance commission reviews $110 million cash-pooling plan and monthly interest-allocation method
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Summary
Staff described a centralized cash-pooling approach covering roughly $110,000,000 of city balances, operational ledger accounting to keep fund ownership distinct, and a monthly interest-allocation method based on average daily fund balances; commissioners asked about CalPERS timing and liquidity for known large payments.
City finance staff presented an informational briefing on centralizing the city's cash and the methodology for allocating interest and realized gains/losses across funds.
Staff said the city currently holds approximately $110,000,000 in total cash across operating bank accounts, the advisory-managed portfolio (about $67,000,000), limited reserve accounts, and a state/local liquidity vehicle used for daily access. "One of the benefits of pulling our cash into one primary account is efficiency: it simplifies reconciliation and oversight and can provide access to higher-yield instruments," staff said.
Operationally, funds remain separate on the general ledger: every transaction is posted to the appropriate fund so the pooled bank balance is only a custody vehicle. Interest and investment gains or losses are allocated pro rata each month according to each fund's average daily cash balance; staff said allocations rely on bank statements, monthly reconciliations and worksheet calculations to ensure accuracy. Monthly reporting, treasurer filings and an external annual audit are part of the control framework.
Commissioners asked how much liquidity to retain for scheduled large payments (for example, the July CalPERS obligation) and whether certain pooled vehicles still meet reserve requirements. Staff said they plan holdings to meet known outflows, will keep sufficient ready liquidity, and can move cash within the pool to cover payments.
No formal vote was taken; commissioners supported the approach and asked staff to provide detailed reconciliations and the operational reconciliation worksheets as part of the council packet when the item moves to City Council.
