June 24, 2025
Finance Department
DATE: June 24, 2025
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
Subject:
Contract with Meeder Public Funds, Inc. for Investment
Management and Advisory Services
FINANCIAL IMPACT: Fees will be deducted from the assets under management and reduced from interest income.
PREVIOUS COUNCIL
ACTION:
April 30, 2024
December 3, 2024
April 15, 2025
STATEMENT OF THE
ISSUE:
The City currently has high-interest rate risk based on the current asset allocation of its investment portfolio. Given, the possibilities of federal interest rates impact on the City’s portfolio, it is imperative to be efficient with long- term investment selections. The City seeks to piggyback off the procurement process and contract with Meeder
Public Funds, Inc. to provide Investment Management
and Advisory Services.
RECOMMENDED ACTION:
APPROVE a piggyback contract with Meeder Public
Funds, Inc. in an amount not to exceed $465,000 to
provide Investment Management and Advisory Services,
over a three-year term from July 1, 2025, through June
30, 2028, with an option to extend the contract an
additional two years – Finance Department (Andrea
Miller 510-620-6790/ Mubeen Qader 510-412-2077/Jerry
Gurule 510-620-6591).
AGENDA
REPORT
June 24, 2025
DISCUSSION:
On April 15, 2025, the City Council presented an update by the City staff on the City of Richmond’s Investment Program, a status update on investment portfolio composition, actions taken by City staff and updates to the Investment Policy. City staff continue to explore options to refine investment strategies based on the Investment Policy and the City Council’s goal of socially responsible investing.
Contracting with an investment management firm has been identified as a strategic decision for the City seeking expert guidance, financial planning, and potentially improved investment outcomes. City of Richmond staff recommend approval of a piggyback contract with Meeder Public Funds, Inc., based on the contract approved by the City of Laguna Beach, to provide the City with Investment Management and Advisory Services. Meeder Public Funds, Inc. possess specialized knowledge and experience in financial markets, investment strategies, and risk management exceeding current staff capabilities. Diversification, asset allocation, and other risk management techniques employed by Meeder can help minimize risk and protect the City’s principle during market downturns. Meeder Public Funds provided City staff with an analysis of the City’s portfolio in May 2025 which highlighted the need to efficiently diversify the portfolio as future fed rate cut projections threaten the City’s portfolio (Attachment 1).
The City currently has high-interest rate risk based on the current asset allocation of its investment portfolio being primarily liquid in overnight securities. Changes to the federal interest rate will impact the City’s portfolio at a faster rate than if the portfolio is laddered out with maturities along the interest rate curve. With economists projecting two to three interest rate cuts in the next six months, it is imperative to be efficient with long-term investment selections. Meeder Public Funds will be able to effectuate securing interest rates long-term through their extensive experience and resources as described in the City of Laguna Beach procurement process below.
Investment Management and Advisory Services – City of Laguna Beach
The City of Laguna Beach published their RFP on the City's online procurement platform, PlanetBids, on November 7, 2023, for five weeks (Attachment 2). The RFP yielded eight proposals. The evaluation panel considered: qualifications and experience, conformance and responsiveness to the RFP, project scope and methodology, references from local government agencies, and competitive cost. Based on the initial evaluation, the top four (4) ranking proposers were invited to in-person interviews. The four proposed firms were:
Chandler Asset Management, Inc.
Garcia Hamilton & Associates, LP
Meeder Public Funds, Inc.
Public Trust Advisors, LLC
Following the interviews, the evaluation panel unanimously identified Meeder Public Funds Inc. (Meeder) as the highest-qualified proposer to provide the desired investment
June 24, 2025
management services to the City of Laguna Beach. Meeder demonstrated significant experience in managing local government investments in compliance with investment policies, understood the importance of cash flow assessment, and emphasized monthly reporting that included information reports and access to real time portfolio information through a web portal.
The Laguna Beach Ad Hoc Committee presented the results of the RFP process to the full Committee on February 26, 2024. After further discussion and an additional in- person interview with Rick Phillips, Meeder's Senior Vice President, Chief Investment Strategist, and the person who would have direct responsibility for overseeing the City of Laguna Beach's investment decisions at Meeder, both the Ad Hoc Committee and full Committee endorsed Meeder as the top firm based on:
• Experience: Meeder manages assets of 367 public entities, including several municipalities in Orange County, including Irvine, Anaheim, Garden Grove, and Aliso Viejo. The Meeder team has significant experience in managing public entity portfolios, with Portfolio Managers averaging more than 18 years of experience in the fixed-income markets managing the portfolios of public entities. During the interview, Meeder recognizes that managing portfolios of the size of the City of Laguna Beach brings its own challenges and unique circumstances that must be taken into consideration.
• Holistic Approach: The Meeder team will work with the City to take a holistic approach to the investment of its funds, focusing on its entire financial picture, reviewing the City's cash flow, and offering recommendations on all aspects of the City's treasury management process.
• Trusted Advisors: Meeder's goal is to be the City's trusted advisor and be available for the City in all aspects of its treasury management program, not just the investment of its funds.
• Investments Managed: As of December 31, 2022, Meeder manages $25.3 billion in assets for 367 public entities. In December 2023, FHN Financial Main Street Advisors merged with the Meeder Team. As of 12/31/2022, FHN Financial Main Street Advisors manages $21.4 billion of assets for 30 public entities.
• Pricing: Meeder proposed an asset-based advisory fee based on the following schedule:
For example, if the City of Laguna Beach had $150 million in assets under management with Meeder (approximate current balance), the total annual fees would be approximately $80,000. The Committee expects Meeder to provide a greater portfolio return than the City currently earns, offsetting the fees to be paid. For example, if Meeder increases the portfolio return by 20 percent or 20 basis points (on $150 million
June 24, 2025
under management), it would provide $300,000 more in return. After fees are paid, the City of Laguna Beach could expect approximately $220,000 more in return than it would have otherwise earned. The pricing is competitive with other proposals.
The Committee did note that Meeder recently merged with FHN Main Street Advisors.
This change added $21.4 billion in investment assets for public agencies and raised some concern over the ability of Meeder's staff to give the City's investment portfolio appropriate attention. The Committee also noted that Meeder is based primarily in Ohio, Nevada, and Texas, with a satellite office in California. However, Meeder noted that it has developed significant expertise in California and is committed to a high service level for Laguna Beach. For example, Rick Phillips, CCM, would be directly involved in the decision-making for the City's investment portfolio. Mr. Phillips has 34 years of experience in municipal cash and investment management. Mr. Phillips serves on the California Municipal Treasurers' Association, the GIOA Investment Policy Certification Committees, and the California Debt and Investment Advisory Commission's Local Agency Investment Guidelines Review Committee.
Following the review and in-person interview of Mr. Phillips during the March 4, 2024, Committee meeting, the Committee concluded unanimously that outsourcing the management of City investments presented several compelling advantages. These included:
• Expertise and Specialization: Outsourcing allows cities to tap into the expertise of professional investment managers who specialize in managing portfolios. These experts stay updated on market trends, risk management strategies, and investment opportunities. By outsourcing, cities can access a broader range of investment products and strategies that may not be feasible to manage in-house.
• Improved Investment Solutions: Outsourcing advisors often deliver better investment solutions due to the specialized knowledge and resources of external investment managers. The City can benefit from customized investment strategies tailored to specific financial goals and risk tolerance.
• Risk Management: Professional investment managers actively monitor and manage risks associated with investments. They diversify portfolios, conduct due diligence, and adjust strategies as needed. Outsourcing helps cities mitigate risks and adhere to regulatory requirements.
• Cost Efficiency: While outsourcing investment management incurs fees, these costs are often outweighed by the potential benefits of improved investment performance and risk management.
• Compliance and Regulatory Oversight: Investment firms are subject to stringent regulatory oversight and compliance requirements, ensuring that they operate within the bounds of the law and adhere to industry’s best practices. By partnering with reputable
June 24, 2025
investment firms, the City can enhance transparency and accountability in its investment practices, reducing the risk of regulatory violations and reputational damage.
Based on this analysis and the benefits received, the Committee unanimously recommended that the City Council outsource the management of the City of Laguna Beach investment portfolio to Meeder Public Funds, Inc. At the City of Laguna Beach Council meeting on April 9th, 2024, the City Council awarded a contract to Meeder Public Funds, Inc., for Investment Management and Advisory Services.
Due to market uncertainties, potential federal interest rate cuts, staffing constraints, additional approved Investment Policy restrictions and the Richmond City Council’s goal of socially responsible investing. City staff recommends approval of a piggyback contract with Meeder Public Funds, Inc., based on the procurement process and contract approved by the City of Laguna Beach, to provide the City with Investment Management and Advisory Services (Attachment 3). The proposed contract complies with the Richmond Municipal Code Section 2.52.330, Piggyback Procurement, which allows the City to use solicitations by another public agency, provided it is in the best interest for the City of Richmond (Attachment 4).
NEXT STEPS:
City staff will collaborate with the recommended firm, Meeder Public Funds Inc., to further implement the Investment strategies in place. Further investment updates will be provided in the monthly finance reports to the City Council.
DOCUMENTS ATTACHED:
Attachment 1 – City of Richmond Discussion May 2025
Attachment 2 – City of Laguna Beach Request for Proposal – Investment Management and Advisory Services
Attachment 3 – Standard Contract Meeder Public Funds Inc.
Attachment 4 – Piggyback Approval Form