BUENA PARK : Group to Study City Investment Policy

City Council members will soon appoint an ad hoc committee of residents with financial expertise to review the city’s investment policy.

The council also decided last week to invest only in agencies that do not put more than 10% of their funds into derivatives or leveraged instruments, the risky types of investing that caused the county bond pool to collapse.

The council also froze some small expenditures in its $35-million budget to cover the loss of about $500,000 in interest because of the county bankruptcy. The city had $28 million invested in the pool when the county declared bankruptcy Dec. 6.

Even with the loss of funds, the city is still in the black because of a large credit from the state retirement system, said Greg Beaubien, finance director and treasurer.

“We’re going to be $1 million worse off than we were when we adopted the budget,” Beaubien said. “But even with the impacts of the bankruptcy, we are anticipating having a positive year.” The city started the 1994-95 fiscal year with an expected surplus of $1.5 million, he said. That surplus now will be closer to $900,000.

The council gave tentative approval to a Police Department request for a $24,000 computerized file system and Recreation and Community Services Department request for $3,200 to cover increases in utility bills.

Beaubien also went over the city’s investment policy and suggested some options for the future. Council members unanimously agreed to have Beaubien consult advisers at various financial institutions about investment decisions, but decided not to hire an investment manager or appoint a permanent oversight committee.

“I think we should have leaders in the community review our policy (with Beaubien) and make some recommendations,” said Councilman Donald L. Bone. “That opens up the process and let’s the community see what we are doing with their money.”