TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Geovanny Calvopina, Financial Analyst
SUBJECT: Annual Adoption of the Investment Policy for Fiscal Year 2023/24
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RECOMMENDATION
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Adopt Resolution No. 23-4718 entitled: A Resolution of the City Council of the City of Murrieta, California, Adopting the Fiscal Year 2023/24 Investment Policy.
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PRIOR ACTION/VOTE
On April 18, 2023, the City Council adopted Resolution 23-4657, approving the Fiscal Year 2022/23 investment policy (Vote: 4-0-1).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
California Government Code Section 53646 (Government Code) requires that the Treasurer of a local agency annually submit a statement of investment policy to the City Council at a public meeting for their approval.
The investment policy establishes the procedures and guidelines for investing to ensure the prudent management of the City of Murrieta’s (City) excess funds and to ensure compliance with the requirements of the Government Code. Additionally, the City’s investment policy is consistent with Government Code Section 53600, et seq., which provides standards regarding investment policies and reports, securities, and repurchase agreements for local agencies.
The City has four primary goals with respect to its investments, which are listed below in priority order.
• Safety - Protect and preserve the City’s capital investments;
• Liquidity - Ensure readily available cash and mitigate the need to sell securities to obtain cash;
• Yield - Provide the highest level of earnings, without sacrificing safety and liquidity, while complying with the Government Code; and
• Diversification - Avoid incurring unreasonable market risk.
The City contracts with investment advisor Chandler Asset Management (CAM) to assist in the administration of the City’s investment portfolio. CAM reviews the City’s investment policy on an annual basis and makes suggestions as to how the policy can evolve. The review includes a comparison against any actions adopted by the California legislature that might affect the investment policy, with recommendations for revisions as needed.
In collaboration with CAM, Finance Department staff ensures the inclusion of the latest best practices from recognized industry groups such as the Government Finance Officers Association (GFOA), California Society of Municipal Finance Officers (CSMFO), California Municipal Treasurers Association (CMTA), and the Association of Public Treasurers of the United States and Canada (APTUSC).
There are no recommended changes to the Investment Policy (Attachment 1) or the City’s investment strategy for Fiscal Year 2023/24. Of note, there is a legislative change that will impact investments as of January 1, 2024. Senate Bill 882 will bring clarity on how Federal Agency-securitized debt obligations are treated. Fortunately, the City’s policy (section VII.D - Mortgage-Backed Securities) is already aligned with this clarification.
FISCAL IMPACT
There is no fiscal impact associated with the recommended action.
ATTACHMENTS
1. Resolution No. 23-4718