ACTION REQUESTED:
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Communication from the City Manager, City Treasurer, and Finance Director/Comptroller with a Request to APPROVE a RESOLUTION Authorizing PMA FINANCIAL NETWORK, LLC, and PMA SECURITIES, LLC, to Provide Investment Services for the City of Peoria.
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BACKGROUND: Investment of public funds is dictated by the City's investment policy. City governments in Illinois are very restricted on what types of investments they can invest in. The City of Peoria currently primarily leaves cash in liquid investments like Money Market funds. While these types of fund provide easy liquidity, they do traditionally provide a lower investment return. The City also has most of its cash placed with 3 banking institutions which can exposure risk when too much of the City's money is placed with one financial institution.
The Treasurer's office and Finance Department met with multiple investment service providers to provide the City additional investment options to increase interest earnings. PMA Financial Network will provide with City with multiple investment options including Money Market Funds for liquid cash, term series investments for reserves, and project accounting for bond projects and large grant programs. Staff and PMA will work together on a cash flow analysis to ensure our investment mix matches the City's cash flow needs. All investments earnings are net fees and PMA does not receive any fees unless the City investments with them. The City will continue to use our existing banking partners as well look at other providers to ensure we are receiving the highest interest earnings.
FINANCIAL IMPACT: While exact interest earnings are subject to market conditions, staff believes the City will double its current investment income of $200,000 in 2021 to $400,000 in 2022.
NEIGHBORHOOD CONCERNS: N/A
IMPACT IF APPROVED: The City will have additional investment options and have higher interest earnings while retaining principal security.
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