The 300-Day Commercial Paper Offer

No. The purchase fails at least three requirements. First, the offered maturity is 300 days, but the policy caps commercial paper at 270 days. Second, the proposed position would be $3.6 million out of a $42 million portfolio, or about 8.57%, which exceeds the 8% per-issuer cap. Third, the policy requires the treasurer to review purchases over $1 million before execution, and the treasurer is unavailable. The absence of a written exception memo is an additional failure, but an exception memo cannot by itself cure a hard maturity or concentration limit unless the policy expressly permits that. The deputy should decline the trade, tell the broker the policy constraints, and not rely on the broker's assurances about safety. If the city wants higher yield, it should choose an eligible security within the 270-day limit and 8% cap, or pursue a formal policy amendment through the council. A council member's yield question is not a reason to violate the policy.

Escalate to the finance director or treasurer immediately, in writing. Record the offer, the relevant policy sections, and the reason for declining. Notify the broker in writing that no trade is authorized and preserve the solicitation. If there is pressure to proceed, ask for a written direction from the official who has authority, but never execute an ineligible trade on an oral instruction. Prepare a short memo for the file and, if appropriate, for the council member explaining the safety, liquidity, and yield trade-offs. Also check whether the existing $2.9 million position plus the proposed purchase would breach the cap; it would. This turns a potential violation into a documented control event and gives the city a basis for training and for answering the council's question without promising speculative yield.

The proper path is a policy review, not an ad hoc trade. Staff should compare the current limits with the city's liquidity needs, statutory constraints, and risk tolerance; model the impact of maturity and concentration changes; and present options to the council or investment committee. Any change should be adopted in writing with a clear effective date, and the treasurer should document approval. Until then, the deputy should invest within existing limits and report the opportunity cost to the council. This preserves the policy's role as a control rather than treating it as a barrier to be worked around when yield is attractive. It also protects the deputy, who lacks the authority to reinterpret the policy alone.