City staff, aldermen review proposed investment policy to clarify previous questions

By Martha Stoffel

O’FALLON – The city’s investment policy received another review by the Finance & Administration Committee Monday night. The policy was sent back to committee by council last week for minor adjustments to wording and to allow for any additional discussions.

Director of Finance, Sandy Evans, went through the redlined policy one page at a time to make sure all the language within the document was acceptable to the committee.

City staff was recommending an update to the policy to align it with state statutes and more clearly define the policies and procedures of the city’s investments. The current policy, found under the Treasurer section of the Code of Ordinances, had not been updated in several years. The city is planning to issue requests for proposals (RFPs) soon for banking/financial services and investing services, and it was recommended to update the policy to potentially get more favorable rates. 

The new policy creates an advisory investment committee consisting of the Treasurer, Mayor, Director of Finance, City Administrator and the chair of the Finance & Administration Committee. The policy does not specify who shall chair the committee. Some council members have made the recommendation the policy list the Treasurer as the committee chair. 

The originally proposed policy required final approval of investments fall to the City Council. Upon the recommendation of the Finance & Administration committee, that provision was removed prior to the last city council meeting. The new policy state the Investment Committee “shall make investment decisions.” 

In alignment with the state statute, the new policy also names a chief investment officer. The state statute requires the investment policy include the “identification of the chief investment officer who is responsible for establishing the internal controls and written procedures for the operation of the investment program.” The city’s new policy names the Director of Finance as the chief investment officer. 

Questions continue to be raised if this new investment policy is changing the role of the Treasurer. Evans said the new policy will “enhance his (the Treasurer’s) involvement in the investments.” The city has a lot more to invest now, more than even a couple of years ago during the construction of St. Elizabeth’s hospital, so Evans indicated the treasurer’s role will be greater now because of the investment committee and the treasurer’s ability to bring more suggestions. 

Resident Ron Zelms asked when there’s excess funds, whether it’s truly excess funds or a CD coming due, what mechanism is there to review whether or not the funds should continue to be invested, a new investment (if it’s new money) versus using that money for a capital project or to pay off some other short-term or long-term debt. Evans responded that she would look to the investment committee for guidance on where the money should go. Ultimately the staff and council would review overall funds when preparing upcoming budgets, and that is where a determination to invest excess funds or use towards other projects would be made.  

The committee unanimously approved the amended City Investment Policy move to council for second reading. Committee members Mark Morton and Ned Drolet were absent.

In other committee news:

• The staff are reviewing lease agreements on all city-owned properties. The lease agreement with the O’Fallon-Shiloh Chamber of Commerce for the O’Fallon Depot Building was presented for approval. The new contract will be for three years and automatically extended for successive three year periods for $450 per month. The Chamber will be taking over the full building now, the east side of the property was previously used by Metro Bus.

• In July, council approved the refunding of a series of bonds, with the intent to save the city money in interest costs. The Direct of Finance shared with the committee the first series was successfully refunded with an additional $50,000 in savings than originally projected. The second series will be issued October 1, 2018 with the third series to follow fifteen days later.