13.2 SR 10-21-2024The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
13.2
Meeting Date
October 21, 2024
Prepared By
Lori Stich, Finance Manager
Item Description
Investment Report - 3rd Quarter
Reviewed by
Cal Portner
Tina Allard
Action Requested
Information only.
Background/Discussion
The purpose of this report is to update the City Council on the status of city financial investments as of
September 30, 2024.
The investment policy complies with state statutes and generally follows the Government Finance Officers
Association (GFOA) model.
The investment goals for the City of Elk River are passive due to the allowable investments permitted under
state statutes. The city has four objectives for investing. In order of importance, they are: 1) safety of
principal, 2) liquidity, 3) return on investment, and 4) maintaining public trust. This means we are focused on
not losing on the original investment, having sufficient funds on hand to meet ongoing operating cash needs,
getting a market rate of return, and not purchasing speculative investments.
State statutes limit the city’s ability to invest in risky types of investments. The city is generally limited to
federal and state government obligations or agencies backed by them, rated debt of local governments, short-
term highly rated commercial paper, certificates of deposit, and money market accounts (with collateralization
if in excess of FDIC insurance amounts).
The city intends to hold investments until maturity, which means we will get the rate of return on which we
invest our funds. The finance staff makes sure the city is sufficiently liquid by continually updating our forecast
on the anticipated cash flow needs over the next five-year time horizon. We anticipate two large tax
settlements each year along with the regularly scheduled debt service payments. We also build a reserve
balance maintained in money market accounts in case of unexpected expenditures.
Page 292 of 294
Cities generally use a short-horizon benchmark such as the two-year Treasury Bill or some similar measure.
As of 9/30/24, the two-year T-bill was at 3.66%, down from 4.71% on 6/30/24. Our current portfolio yield is
roughly 4.11%.
Our primary reserve account is our 4M Fund, which is a money market account where many cities pool their
funds. It currently yields 5.063% with daily withdrawal privileges. It is important the city maintain a strong
diversified portfolio, prioritizing safety, liquidity, and flexibility in this market environment.
Financial Impact
N/A
Mission/Policy/Goal
Responsible for every dollar - good stewards.
Attachments
1. 09-2024 Investment summary
Page 293 of 294
Page 294 of 294