October 21, 2026 · 5 min read
An educational overview from Ampersand Public Advisors for public sector finance leaders managing taxpayer dollars with safety, liquidity, compliance, and return in mind.
Public funds include taxpayer dollars, state aid payments, grant reimbursements, bond proceeds, utility revenues, fees, and other resources held by a public entity to support essential services. For school districts, municipalities, counties, and other public organizations, managing those dollars is both a financial responsibility and a public trust.
A sound starting point is to evaluate how public funds can be managed to support preservation of principal, availability when needed, consistency with applicable state statutes and policy, and an appropriate return within those constraints.
The right approach depends on the purpose of the funds, the timing of future cash needs, the entity’s investment policy, and the legal framework that applies.
Not every dollar has the same job. Operating cash may need to be available for payroll, vendor payments, utilities, or daily operations. Debt service funds may be set aside for scheduled principal and interest payments. Capital project funds may be held for construction timelines, equipment purchases, or multiyear planning. Grant funds, restricted donations, custodial funds, reserve balances, and utility revenues may each have different timing, use, or reporting considerations.
Understanding the purpose and expected timing of the funds can help finance leaders evaluate liquidity needs, potential investment periods, and relevant risk considerations. Wisconsin public entities should review the investment authority applicable to their particular entity and funds, including section 66.0603 of the Wisconsin Statutes where applicable, together with local policies, bond documents, grant requirements, and governing-body direction. Public entities should consult their legal and other professional advisors regarding their specific circumstances.
Preservation of principal is a primary objective when managing public dollars. Liquidity matters because funds must be available when expenses are due. Return is important, but it should be pursued within the boundaries of safety, liquidity, law, and policy. The Government Finance Officers Association’s Investment Program for Public Funds guidance emphasizes that governments have a fiduciary responsibility to manage and monitor investment activity, establish investment policies, define objectives, and communicate information to stakeholders.
These priorities are commonly evaluated in that order, subject to applicable law, policy, and the entity’s specific circumstances. A yield that looks attractive loses its appeal quickly if the funds are committed elsewhere during the week payroll clears. When the order holds, return becomes the result of good structure rather than the goal driving every decision.
Subject to applicable law, governing documents, investment policy, cash-flow needs, risk parameters, and the characteristics of the particular funds, public entities may be authorized to consider demand deposit accounts, money market deposit accounts, certificates of deposit, local government investment pools, U.S. Treasury securities, federal agency securities, and other permitted investments. Availability and authorization vary by jurisdiction, entity, fund type, provider, and transaction. These options can differ in liquidity, maturity, credit exposure, market-value risk, collateralization, deposit-insurance treatment, safekeeping requirements, fees, and return characteristics. Public entities should independently evaluate each option and consult appropriate professional advisors before making a decision.
It helps to think of these options as tools rather than a ranking from worst to best. A certificate of deposit maturing the week a construction draw is due can be a sensible choice. That same certificate can become a problem if the draw arrives early. No option is appropriate solely because of its product category. Its suitability depends on the entity’s authority, policy, objectives, timing, risks, costs, and specific circumstances.
Two resources are worth keeping close as you review your approach: the Government Finance Officers Association’s Investment Program for Public Funds guidance and Wisconsin Statutes section 66.0603.
Responsible public funds management begins with understanding what funds are held, why they are held, when they are expected to be needed, and which legal, policy, contractual, and operational requirements apply. Deposit and investment options are tools, not outcomes. Public entities should evaluate how each option supports preservation of principal, liquidity, compliance, transparency, and an appropriate return within the entity’s particular circumstances.
Next month, we’ll look at how cash flow forecasting can help public entities estimate liquidity needs and identify balances that may be available for longer planning periods.
Would a discussion of your current public funds approach be helpful? Ampersand Public Advisors can help public entities evaluate cash-flow needs, applicable requirements, liquidity considerations, and return objectives based on their particular circumstances. Reach out to info@public.trustampersand.com or call us at 1-262-381-8400.
Important Information: This material is provided for general informational and educational purposes only. It does not constitute municipal advisory, legal, tax, accounting, or investment advice, and it is not a recommendation regarding any deposit, security, financial product, or strategy. The information may not apply to every public entity or circumstance. Public entities should review applicable law, governing documents, investment policies, and the terms and risks of any financial product and consult their legal and other professional advisors before acting. Municipal advisory services, including recommendations regarding a public entity’s specific funds, investments, or financial circumstances, are provided only pursuant to a written municipal advisory agreement.
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