Policy Tightens City Investment Options

The city has adopted a new investment policy designed to clarify the roles of finance officials and to keep municipal funds safe.

The document, unanimously adopted by the City Council this week, was the product of several committees appointed last year in the wake of the Orange County bankruptcy.

The city had about $28 million of its $120-million portfolio invested in the Orange County pool when it collapsed in December 1994. As officials analyzed events in the following months, they realized that some of the city’s written policies had been ignored and advice had been overlooked.

Soon after the bankruptcy, the council appointed an Investment Oversight Committee, made up of city officials, and a Citizens Advisory Committee composed of local financial experts.

The policy has been completely overhauled and updated, said Finance Director Helen Bell.

The most significant changes ensure that financial officers can only make low-risk investments. The city will reduce its investment in the state pool from $40 million to $17 million, for example, even though the state investment fund has not had any problems.

“It limits your investment options,” said Rick Ulivi, a member of the Citizens Advisory Committee. “I think that’s the way to go. There will be no hanky-panky.”

The policy also requires frequent reports on the state of the funds.