Township approves investment portfolio option
By Dana Casadei
It took less than five minutes for the Bloomfield Township Board of Trustees to approve a resolution to add the Michigan Cooperative Liquid Assets Securities System (MiCLASS) to the township’s portfolio of investment vehicles at their meeting on Monday, January 8.
But, if there had been questions before the motion passed 7-0, treasurer Michael Schostak joked he would happily talk about it for three hours. Instead, he only needed a few minutes. “Part of my responsibility as treasurer is to manage our funds in a way that is safe and liquid, but also able to generate a good or reasonable return,” he said.
Currently, most of the township’s short-term funds are in a JPMorgan Money Market Fund, where the fund is paying about 35 basis points, or .35 percent, lower than MiClass.
According to Schostak, based on his calculations, if they were to transfer $30 million of their short-term funds from JPMorgan to MiCLASS, the township could be earning an additional interest of $2,000-$3,000 per week. He explained that they would lose nothing in terms of safety of principal or liquidity of funds by using MiCLASS.
The MiCLASS pool invests in things like U.S. Treasury obligations, federal agency obligations of the U.S. government, and approved money market funds, among other items, and has an excellent credit quality as well, with more than 50 percent of the portfolio invested in securities rated A-1-plus, and the remainder in A-1 rated securities.
MiCLASS allows public agencies, like Bloomfield Township, to pool funds together to collectively earn dividends on investments, where the funds are invested in prime or high-grade, short-term fixed-income instruments. The portfolio investment strategy seeks to enhance safety via diversified investments while also prioritizing minimizing market risk.
Since they began operation in 1991, MiCLASS has been very familiar with managing not only for local governments. The MiCLASS pool also has the highest principal stability fund rating assigned by S&P Global Ratings with a AAA rating, Schostak explained.
The group is run by the private investment advisor Public Trust Advisors LLC, which manages investment pools in 17 states with an aggregate of $77 billion in public money under management.
In Michigan alone they have a $4 billion local government investment pool, with 740 local government agencies using MiCLASS, including Birmingham, Oakland County, Bloomfield Hills Schools, among countless others.
This investment pool is overseen by a board of directors consisting of treasurers and finance directors from county and local government agencies around Michigan, including West Bloomfield Treasurer Teri Weingarden.
“I think it’s a great use of our resource and additional returns,” said trustee Neal Barnett, who made the motion to pass the resolution after thanking Schostak for his presentation.