Milford Finance and Audit Committee – September 14, 2026

The Milford Finance and Audit Committee met on September 14, 2026, to receive the quarterly investment performance review for the quarter ended June 30, 2026, and the annual Investment Policy Statement (IPS) review. A fiscal 2025 audit update was also on the agenda, but the available transcript does not show it being presented before adjournment. No agenda or minutes were provided; this summary is based solely on the raw transcript.

Public Comments & Testimony

• A 15-minute public comment period was opened (three minutes per person). No members of the public appeared in the audience or online, and the period was closed without testimony.

Investment Policy Statement Annual Review

• Finance Director Lou Vitola reported that PFM led the required annual IPS review and recommended no changes; staff reviewed and concurred.
• Vitola said he will update the IPS headers to note the review at the start of fiscal 2027 and recirculate the statement; any future issues would be brought to the committee.
• Jeff Facino of PFM Asset Management said last year's minor sector-allocation tweaks (such as increasing asset-backed securities) were sufficient and the policy is in good shape for the coming year.

Quarterly Investment Performance Review (Quarter Ended June 30, 2026)

• Jeff Facino presented the market outlook and portfolio results.
• Market context: The economy remained resilient despite geopolitical noise (including the Strait of Hormuz); the Fed held its policy rate at 3.5%–3.75% during the quarter. Treasury yields rose, especially at the front end, and the 10-year Treasury was at 4.99% around the meeting date. Energy prices rose dramatically, keeping inflation elevated, while the labor market stayed strong; earlier expectations of rate cuts were reversed.
• Fed outlook: PFM expected a quarter-point rate hike at the Fed's meeting that week, possibly another later in the year, and then a wait-and-see period.
• AI spending: A council member cited Anthropic's warning to the AI industry and asked whether slowing AI-related capital spending could lead to additional unemployment. Facino agreed a slowdown would come at some point but said AI-driven efficiencies could still benefit other sectors.
• Volatility protection: A councilwoman asked what Milford is doing to protect the portfolio, citing an equity market concentrated in a few companies and international bond-market shifts. Facino replied that the city holds no equities and no international debt; the portfolio consists of high-quality U.S. bonds, with liquidity and safety prioritized ahead of yield.
• Portfolio composition: Total portfolio just over $35 million; AA credit quality; diversified across U.S. treasuries, agencies, commercial paper, corporations, and asset-backed securities (ABS at 4.8% of the portfolio, representing equipment leases, auto loans, and high-quality collateral). The 43% corporate allocation consists of high-quality senior debt vetted by PFM's corporate credit research team.
• Sector changes: Commercial paper declined from 5% to 1%, reflecting the $4 million withdrawal during the quarter; other sector changes mostly reflected that withdrawal.
• Performance: The portfolio outperformed its benchmark for the quarter, one-year, and since-inception periods. Councilman Mariabella (transcribed variously as 'Mara Pela' and 'Bell') asked how much was withdrawn and what portion represented profit; Vitola said $4 million was withdrawn, the portfolio's net value declined by $3.6 million for the quarter (with earnings covering the difference), and over the trailing 12 months the portfolio was down $2 million after the $4 million withdrawal – roughly $2 million of positive performance – exceeding the city's conservative budget expectation of about $1 million.
• Duration and policy: Vitola explained that securities purchased at par and held to maturity return the stated yield, and unrealized losses from rising rates erode to zero as interest is collected. Yield ranks third behind safety and liquidity; the IPS governs all decisions, and a future withdrawal would be sourced across sectors proportionally to remain policy-compliant.
• Upcoming cash needs: Vitola said additional withdrawals are expected this quarter for the Milford Corporate Center, including water and sewer reserves to pay contractor George & Lynch. The segment tied to the 2016 general obligation bonds is about $3 million-plus, with draws planned over the roughly six years remaining.

Presentation Format

• The committee was asked to evaluate the new slide format (pages 1–16 before the account summary on page 17). Members said the more visual, easier-to-digest layout was a plus; one member with computer trouble still praised it.

Key Outcomes

• No formal votes were taken. The committee received the quarterly investment report and accepted PFM's recommendation of no IPS changes; Vitola will update the IPS headers and recirculate the statement.
• Councilman Mariabella said he was glad the portfolio is conservative; Councilman Bell later concurred that 'it's not our money' and praised the decision to engage PFM about three to four years ago.
• The chair emphasized safety, liquidity, and yield, stated the city is 'not gamblers' with taxpayer dollars, and credited the investment program with helping Milford avoid tax increases.
• The city manager thanked the committee for its questions, and the meeting adjourned.
• The fiscal 2025 audit update was listed on the agenda and mentioned by the Finance Director, but it does not appear in the transcript before adjournment; this may reflect an incomplete transcript.