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Board debates liquidity and higher-yield options as town cash balances rise
Summary
Board members debated using some cash to chase higher interest rates versus keeping funds liquid under the town's conservative investment policy. Kathy Randall urged exploring longer maturities given large STIF balances; the Town Manager emphasized liquidity in policy and agreed to provide historical cash-usage data.
Kathy Randall urged the board to consider strategies to capture higher interest income given the spread between long-term Treasuries and short-term rates, noting the town's available STIF balances "approaching $20 million." Tom DiStasio said the town's investment policy prioritizes liquidity and that staff would consider options while minimizing risk, and the board agreed to request historical data on times when cash dipped below current STIF balances.
The discussion covered trade-offs between locking funds into longer maturities (and exposure to principal fluctuations) versus keeping highly liquid short-term investments tied to the Fed's short-term rates. Houston Putnam Lowry and Carl Gisnarian joined in the discussion; staff committed to follow up with comparative analyses at the next meeting.
