Interest rates of under one percent convinced Monmouth's city council to adopt a formal investment policy.
City Administrator Eric Hanson said the did not have a formal investment policy and put all its money into CDs.
He said, “So with this new policy, which mirrors the state statute in terms of what we're allowed to do, we're hopeful we can put together a portfolio of some of our funds. That, hopefully, will get a return of around three or four percent.”
The policy will provide the city with much more flexibility to get the best yields it can. He said the city will be able to put money into bond funds and a very few mutual funds. It cannot invest in funds that involve stocks.
Hanson said, “You don't want to put public funds at risk. But on the other hand, when you have reserve funds sitting in an account getting, basically nothing, that's not (a) sound business practice.”
The city will implement the new policy when the fiscal year begins May 1st.
Hanson expects the city will consult with outside firms to get the best rates.