Title
Consider and take action on resolution authorizing a two-year agreement with Meeder Public Funds, Inc. for investment advisory services for an amount not to exceed $85,000 (Director of Finance)
Background:
The Public Funds Investment Act states that the governing body of an investing entity may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) to provide for the investment and management of its public funds or other funds under its control. A contract may not be for a term longer than two years. A renewal or extension of the contract must be made by the governing body of the investing entity by order, ordinance, or resolution. Approval of this item will authorize a two-year contract with Meeder Public Funds, Inc. from October 1, 2024 thru September 30, 2026 with an option to renew for three, one-year additions.
The City released the RFP for investment advisory services in July and received five responses. Members of a selection committee, comprised of three City staffs and one member of the Finance Committee, independently reviewed and evaluated all proposals. To ensure pricing was evaluated consistently and with no subjectivity across all proposals, the Purchasing Department calculated the pricing formula based on the City’s current investment amount of $170M and provided the scoring for each proposal. The fee structure for investment advisory services varied by proposal, with either a price based on assets or a flat fee, but pricing was calculated so an equitable comparison could be made.
Quotes from five investment advisory firms were received and it was determined that Meeder Public Funds, Inc. was most advantageous and will best meet the City's needs for the best price. As an investment advisor, Meeder Public Funds, Inc. will assist the City in finding appropriate investment strategies to achieve the City's objectives, advise the City on market conditions, general information and economic data, analyze risk/return relationships between various investment alternatives, assist in the selection, purchase, and sale of investments, make presentations to the City’s Finance Committee and 4B Board to support recommendations relating to investment strategy, amongst other investment advisory services. Meeder Public Funds, Inc. will not have discretionary investment authority and the City will remain in control of executing all investment options.
Cost for Meeder’s services will be a flat annual fee of $40,000 for 1st year and $45,000 for 2nd year, with a two-year contract totaling $85,000. It is expected that the use of an investment advisor will fully cover the cost of the expense incurred. While maintaining compliance with the Public Funds Investment Act, implementing a more effective and active strategy of portfolio management will position the City to earn more interest income in the future.
The investment advisory fee above is inclusive of all fees associated with the management of the City’s account, except for custodial fees, if any. There will not be any trading fees or ‘mark ups’ on transactions undertaken on the City’s behalf.
Attachments:
1. Proposed Resolution
2. Contract
3. Evaluation Summary Matrix
CONTRACT ORIGINATION:
{X} Funding in the amount of $40,000 is available from Accounting Professional Services account #1400000-53050 for FY2025. The remaining $45,000 (FY2026) will be allocated upon Council’s approval of future budgets.
STRATEGIC PLANNING
{X } Addresses Strategic Planning Critical Success Factor, Financial Sustainability