Investment management is a vital professional skill missing from our public sector and municipalities in particular. Similar to the accounting profession, professional investors must complete a globally recognized professional qualification program. The Chartered Financial Analyst (CFA) designation should be a minimum requirement given the large size of Municipal balance sheets. This is not the case across Ontario Municipalities. And it begs the question, are your hard-earned property tax dollars sitting in reserve funds underperforming the general market? Could your tax dollars be better invested to offset/reduce annual tax increases? The answer is a resounding yes!
The CFA Toronto is the largest local society of the CFA Institute globally. Education is the key ingredient to our future success. Unfortunately, the lack openness to learn about the global economy by our municipalities has created a failure in the ‘Duty of Care’ required for public asset (i.e. our property tax dollars) management, according to Canadian Law.
As inflationary pressures rise from de-globalization, professional investment management of our financial assets is imperative. Maximizing revenues through better money management must always be the theme, not maximizing tax increases to find those revenues.
Change begins with pressure on Municipal councillors and staff. The Canadian bond market is very large and liquid. Government bonds are used globally for balance sheet management. Technology advancements could help reduce the transaction costs faced by municipalities meaningfully.
Question to ask your municipalities: What are the investment holdings in our reserves and what are the transaction costs associated with those holdings? How are they being managed? Could we be getting a better return at a lower cost for our hard-earned tax dollars if the money were more professionally managed? The answer is very likely yes.
OPTA Management
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