DEPARTMENT: Finance
FILE TYPE: Consent Action
TITLE
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Authorization To Execute Contracts For Investment Portfolio Management
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PURPOSE/ACTION REQUESTED
Authorize the Enterprise Finance and Information System (EFIS) Director to execute contracts with PFM Asset Management LLC (PFMAM), RBC Global Asset Management Inc. (RBC), and PMA Asset Management, LLC (PMA) for external investment portfolio management.
SUMMARY
Prudent management of public funds on behalf of the citizens of Dakota County is a County Board objective. Funds shall be invested in accordance to Minnesota Statute Chapter 118A and County Policy 2254 to ensure the preservation of principal, provide for liquidity, and gains interest. Minnesota Statute Chapter 118A.04 provides a list of the types of securities in which local governments may invest public funds. Unrestricted public funds are limited to the securities available in the bond market and commercial paper that are fully insured by the Federal Deposit Insurance Corporation. The portfolio will be actively managed to achieve growth of capital through appreciation of securities held and reinvestment of interest income.
Dakota County issued a request for proposal for portfolio management in October 2022. Four responses were received, and an internal evaluation committee reviewed and selected three as finalists. Committee members considered the value of proposals, knowledge and experience with local government investment portfolios, and references. Two of the three finalists (RBC and PFMAM) are currently under contract with Dakota County. They will retain their current holdings and market value of investments. The third (PMA) will be a new contract. PMA will replace an existing vendor and assume their current investment holdings. Dakota County Finance Department will continue to manage a small portion of the investment portfolio.
Over the past three completed years (2019 - 2021), fees for services averaged 1.9 percent of the total interest received. Interest earnings for fiscal years 2019 - 2021 totaled $26.6 million and fees for investment services totaled $505,096.
The total costs for all three contracts for the three fiscal years 2023 - 2025 is estimated at $475,000. The contract terms include the option of renewing for three additional one-year periods for fiscal years 2026 - 2028. Price of services are at a set rate depending on the total market value of the portfolio.
RECOMMENDATION
recommendation
Staff recommend the Board authorize the EFIS Director to execute contracts with PFMAM, RBC, and PMA for investment portfolio management services.
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EXPLANATION OF FISCAL/FTE IMPACTS
The costs for these services are budgeted annually and are included in the County Manager’s recommended 2023 budget.
☐ None ☒ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
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WHEREAS, Dakota County’s objective is to provide for the prudent management of public funds on behalf of its citizens according to the County’s investment policy; and
WHEREAS, Dakota County issued a request for proposal to select external investment portfolio management firms to manage a portion of the County’s investment portfolio; and
WHEREAS, staff recommends entering a contract with PFMAM, RBC, and PMA for investment portfolio management services.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board hereby authorizes the Enterprise Finance and Information Systems (EFIS) Director to execute individual contracts with PFMAM, RBC, and PMA for investment management services estimated at $475,000 for three years, subject to approval as to form by the County Attorney’s Office; and
BE IT FURTHER RESOLVED, That the Dakota County Board hereby authorizes the Enterprise Finance and Information Systems (EFIS) Director to extend individual contracts with PFMAM, RBC, and PMA for three one-year extensions.
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PREVIOUS BOARD ACTION
17-651; 12/12/17
ATTACHMENTS
Attachment: None.
BOARD GOALS
☐ A Great Place to Live ☐ A Healthy Environment
☐ A Successful Place for Business and Jobs ☒ Excellence in Public Service
PUBLIC ENGAGEMENT LEVEL
☐ Inform and Listen ☐ Discuss ☐ Involve ☒ N/A
CONTACT
Department Head: Peter Skwira
Author: Peter Skwira