Des Moines Finance Committee updates 30-year-old investment policy to enhance safety and transparency

The Finance Committee of Des Moines City, WA convened on April 3, 2025, to discuss the draft of a revised investment policy, a significant update to a document that has been in place since 1995. The meeting focused on modernizing the policy to reflect current accounting practices and investment strategies, ensuring the safeguarding of public funds.

The committee began by acknowledging the necessity of updating the investment policy, which is embedded in the municipal code and has not been revised for nearly 30 years. The proposed changes aim to enhance transparency and accountability in the management of the city's investments.

Key updates in the draft policy include:

1. **Scope and Authority**: The revised policy aligns with current accounting practices, particularly the pooling of cash and investments, which was not addressed in the previous version. It also introduces a requirement for staff training to keep investment knowledge current.

2. **Prohibited Investments**: The new policy explicitly prohibits high-risk investments, including cryptocurrency, which was not mentioned in the old policy. This change reflects a commitment to prioritize the safety of taxpayer funds.

3. **Authorized Financial Dealers**: The draft expands the requirements for financial dealers and institutions, mandating comprehensive documentation to ensure they meet necessary standards.

4. **Diversification and Investment Limits**: The revised policy introduces a more detailed schedule for investment diversification, limiting the percentage of the portfolio that can be invested in specific securities or institutions.

5. **Performance Measures**: The performance metrics will shift from using the six-month U.S. Treasury bill rate to the Local Government Investment Pool (LGIP) yield rate, which is currently at 4.4%.

6. **Reporting Requirements**: The revised policy will comply with state law by requiring monthly transaction reports and quarterly portfolio summaries, enhancing oversight and accountability.

7. **Investment Strategy**: The policy clarifies that the city will not engage in day trading or speculative investments, focusing instead on safety, liquidity, and yield.

The committee expressed a desire to move forward with the draft, emphasizing the importance of adapting to modern financial practices while ensuring the responsible management of public funds. The next steps will involve presenting the revised policy to the city council for adoption.