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Cash Management and Investments

Sometimes, public agencies have funds on hand that are being held for longer-term needs.

These may be invested in a variety of bonds (but not stocks), notes and other instruments allowed by state law.

The governing body’s role is to be a wise steward of the public’s resources. The objectives in managing public funds are, in priority order:

  1. Safety (the likelihood that the agency will get all its money back)
  2. Liquidity (the agency’s ability to withdraw funds on short notice)
  3. Yield (the interest or other return on the investment)

In light of these objectives, prudent public agency investment managers never seek to earn maximum returns on the agency’s portfolio at the expense of safety or liquidity. This would expose the agency to an unacceptable level of too much risk.

For more information, including questions to ask about cash management and investment issues, see information at right.

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