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PFM reviews investment-policy changes and says city portfolio is performing well
Summary
PFM and the city's financial director presented a revised investment policy and a market update; PFM noted the operating portfolio under management exceeds $150 million and reported recent accrual earnings of roughly $3.5 million year-to-year.
Chris Tenney, the city's Director of Financial Services, said the investment policy was last updated in January 2021 and that PFM Asset Management has been working with the city on recommended changes.
Danny Metz of PFM reviewed the policy's three-pronged framework (state statutes, Association of Public Treasurers guidance, and GFOA best practices) and explained a clarified scope linking liquidity needs to investment maturities. Metz said the policy clarifies matching short-term maturities to expected expenditures to maintain liquidity.
Sean Gannon of PFM gave a market update and a portfolio review. He said PFM manages the city's operating funds as a fixed-income, short-duration portfolio and that the portfolio is well diversified and positioned for recent rate cuts. "PFM manages for you is a portfolio of fixed income... It is your operating funds," Gannon said, adding that the firm manages "more than $150,000,000 of city funds." He highlighted that the city's 1-year accrual-based earnings were just over $3.5 million and reported a 1-year benchmark roughly at 7% for the period discussed.
Council members asked about maturity limits (policy uses a 1'to'5-year horizon), liquidity, yield and how yields compared across allocations; PFM replied that the portfolio is tailored to the city's risk-return goals and that treasuries remain the safest core holdings while corporates add incremental yield.
Tenney said the updated policy will be brought forward by resolution for future council approval.
