What is the responsibility of a CMFO when reviewing investment policies?

The responsibility of a Certified Municipal Finance Officer (CMFO) when reviewing investment policies encompasses ensuring compliance with state regulations, as well as prioritizing safety and liquidity of investments. State regulations establish a framework within which municipal investments must operate, and it is essential for the CMFO to ensure that all policies align with these legal requirements to avoid any potential liabilities or penalties.

In addition to regulatory compliance, safety and liquidity are crucial components of sound investment practices. Safety refers to the importance of protecting public funds from losses, while liquidity ensures that assets can be easily converted to cash to meet immediate financial obligations. This dual focus helps to maintain the financial health of the municipality and supports responsible fiscal management.

Maximizing returns, minimizing risks at all costs, or advocating for aggressive investment strategies do not align with the prudent and balanced approach that a CMFO must take. A CMFO must adopt a strategy that judiciously considers risk and return while adhering to legal standards and safeguarding the municipality's financial stability. This holistic perspective is essential for effective municipal finance management.