Claycord's Misleading Reporting on Clayton's Investments

Claycord's October 20 article about the City of Clayton's investments is a textbook example of how technically accurate facts can be assembled into a deeply misleading story. The article emphasizes investment policy violations, a $142,000 realized loss, and missing quarterly reports. What it fails to explain is why those events occurred, and what the City's investment decisions actually accomplished.

This information was not hidden from the public. The Council's investment strategy was discussed in open meetings, with supporting materials published in advance. A review of that public record would have produced a substantially different story. Instead, Claycord chose an alarming headline and a narrative of apparent financial mismanagement, without providing readers the information necessary to evaluate either.

Claycord Missed the Most Important Story: The Council Deliberately Improved Investment Returns

In May 2023, the City Council recognized that its investment portfolio was not taking advantage of the prevailing interest rate environment.  At the time, the portfolio was yielding approximately 1.88%, with a substantial concentration in certificates of deposit (CDs), many purchased when interest rates were considerably lower. Meanwhile, market interest rates had increased significantly, creating opportunities to earn substantially more on safe, highly liquid investments.

The Council understood this disparity and deliberately revised its investment policy on May 2, 2023. The new policy reduced allowable CD concentration to 30% and supported greater investment in U.S. Treasury securities. Our objective was to take advantage of higher available yields while maintaining safety and liquidity.  By September 30, 2026, the portfolio's estimated weighted-average stated interest rate had increased to approximately 3.8%, based on the investment schedule reviewed at the October 20 Council meeting.

That is approximately double the original rate.

For a city managing approximately $12 million in investments, that improvement is financially significant. Yet Claycord's article provides no meaningful discussion of the original portfolio's low yield, the Council's rationale for changing the investment policy, or the subsequent improvement.  In fact, adopting the stricter policy itself created the principal compliance exception highlighted in the article.

The Policy Exceptions Were Not a Newly Discovered Problem

Claycord reports that the City exceeded its 30% CD concentration limit for five consecutive quarters. That is accurate, but the article omits the circumstances that created the condition.  When we adopted the stricter policy in May 2023, we knew the existing portfolio exceeded the new CD limit.  The concentration exceptions were therefore an anticipated consequence of changing the policy, not evidence that the Council was unaware of its investments.

The City subsequently brought the portfolio into compliance with its measurable investment limits beginning March 31, 2025. The report also identifies other exceptions, including two CDs purchased after the policy change with terms exceeding the permitted limit. Those are separate issues that warrant follow-up.  A responsible article would have distinguished the expected transition from those additional exceptions. Claycord did not.

The $142,000 Loss Was Not an Unexplained Investment Failure

Claycord prominently features a $142,222 realized investment loss in early 2025 but provides virtually no explanation of the underlying investment decision. On February 4, 2025, the Council publicly considered and approved transitioning to professional investment management through UBS.

The agenda packet explained that the City's existing portfolio was not capturing available investment opportunities. Some CDs were earning less than 1%, while substantially higher yields were available on U.S. Treasury securities. Selling those investments before maturity involved a cost. The financial rationale was that reinvesting the proceeds at higher rates was expected to generate enough additional income over time to justify that cost.

The realized loss was associated with that deliberate portfolio repositioning. It was not an unexpected speculative trading loss. Whether the decision ultimately produced a positive financial return should be evaluated by comparing the cost of exiting the CDs with the additional income generated by replacement investments.

Claycord did none of that analysis. It presented the loss as an alarming standalone figure, despite the public record explaining the City's investment strategy. That is not meaningful financial analysis. It is selective reporting.

Claycord Left Out the Context and Publicly Available Investment Statements

The article also highlights nearly three years of missing quarterly investment reports. That reporting requirement was not met, and it should have been. There is no reason to minimize that deficiency. But Claycord again leaves out important context.

The Council was aware of the backlog. Preparing these reports was a labor-intensive process requiring staff to manually compile detailed investment information. With limited staff and competing priorities, the Council directed that underlying investment statements be made available on the City's website.

Staff continued reviewing investment information, and the underlying statements remained publicly available. The absence of the formal reports did not mean the investments were unmonitored.

The City has also substantially improved its reporting process. Staff now use AI-assisted tools to complete work that previously took days or weeks in hours or less, while retaining responsibility for reviewing and validating the results. Posting statements did not fulfill the formal reporting requirement. But that is a very different situation from the impression of secrecy or financial neglect created by the article.

The Actual Financial Results Were Substantial

The same October 20 report cited by Claycord shows that, over ten complete quarters, the City generated:

• $1.13 million in gross investment income.
• $947,000 in net investment earnings after management fees and realized losses.
• Sufficient projected resources to cover six months of anticipated expenditures throughout the period.

Claycord briefly mentions these results but gives them almost no meaningful analysis.

It is difficult to understand the City's financial management without examining its investment performance, the purpose of the policy changes, or the economic rationale for repositioning the portfolio. A $142,000 realized loss makes for an alarming headline. Explaining the investment decisions behind it takes a little more effort, or journalism.

The Council deliberately revised its investment policy in May 2023 to take advantage of higher market interest rates. The portfolio's estimated stated interest rate subsequently increased from approximately 1.88% to 3.8%. We publicly discussed our investment strategy, approved professional management in February 2025, and brought the portfolio into compliance. We also improved the reporting process to address the administrative burden on our small staff.

The missing context was readily available through public Council meetings and published agenda materials.  Claycord did not need special access or an extensive investigation to find it. It simply needed to examine the decisions behind the numbers rather than select the numbers that made for the most alarming headline.