Title
A Resolution Approving the City’s Investment Policy
Presenter:
Charae McDaniel, Chief Financial Officer
Body
Summary:
The proposed Investment Policy provides updates to adhere to changes in Colorado State statute that governs investment of public funds, reflects changes the City has implemented, and updates language for clarity in the policy. The attached policy would replace the previously approved policy. Per City Code, City Council approves the City’s Investment Policy.
Background:
City funds that are not needed in the short term for cash-flow purposes are eligible to be invested. These funds, from various accounts, are pooled for investment purposes. Funds that are held in certain restricted or special accounts are not included in the investment pool. The investment income derived from the pooled investment is allocated back to each account based upon the proportion of the respective average balances relative to the total pooled balance.
The purpose of the Investment Policy is to establish the investment scope, objectives, eligible investments and transactions, diversification requirements, and risk tolerance for the investment of the funds of the City of Colorado Springs.
The City Finance Department contracts with a professional Investment Advisor to invest and manage the funds on behalf of the City. The Investment Advisor is selected through an open, competitive procurement process. The most recent procurement process was conducted at the end of 2023, for the 2024 contract. During this procurement, the bidders were asked to provide proposals for managing both the operating fund and the reserve fund. Historically, the City has secured separate contracts for the investment services of the operating and reserve funds. During the latest procurement process, the top-rated firm was the same for both the operating and reserve funds. As a result, the City contracted with that firm, Insight Investment, and has consolidated the two investment funds into the operating fund, so there is now one investment fund.
As part of the contract with the Investment Advisor, the Investment Policy is periodically reviewed by the City and the Advisor to ensure the Policy reflects updates to the Colorado State Statue language that governs investment of public funds, reflects changes the City has implemented such as the consolidation of the investment funds, and updates language for clarity in the policy.
In the attached red-line version of the updated Policy there are 15 proposed changes - 7 are updates to reflect changes to Colorado State Statue, 2 are related to the combining of the operating and reserve funds, and the remaining 6 are updates for clarification in the Policy.
The attached Exhibit A is a Summary of the Recommended Investment Policy Updates which provides a list of the changes in each category of changes related to Colorado State Statue, changes related to the combining of the operating and reserve funds, and changes related to clarification in the Policy.
Previous Council Action:
City Council adopted the City’s original Investment Policy by resolution on September 28, 1993. The policy has since been revised and approved by City Council a number of times since 1993, most recently on February 28, 2023.
Financial Implications:
There are no explicit financial implications related to these policy changes, however, the policy changes are intended to provide the Investment Advisors a policy within which they can best secure a reasonable minimal-risk return.
City Council Appointed Board/Commission/Committee Recommendation:
This item is being heard by the City Council Budget Committee on October 8, 2024.
Stakeholder Process:
N/A
Alternatives:
N/A
Recommended Action
Proposed Motion:
Move approval of the Resolution Approving the City’s Investment Policy.
Summary of Ordinance Language
N/A