TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Jennifer Terry, Finance Manager
SUBJECT:
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Annual Adoption of the Investment Policy for Fiscal Year 2025/26
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RECOMMENDATION
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Adopt Resolution No. 25-4897 entitled: A Resolution of the City Council of the City of Murrieta, California, Adopting the Fiscal Year 2025/26 Investment Policy.
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PRIOR ACTION/VOTE
On April 18, 2023, the City Council adopted Resolution No. 23-4657, approving the Fiscal Year 2022/23 Investment Policy (Vote: 4-0-1).
On December 5, 2023, the City Council adopted a Resolution No. 23-4718, approving the Fiscal Year 2023/24 Investment Policy (Vote: 5-0).
On December 3, 2024, the City Council adopted a Resolution No. 24-4797, approving the Fiscal Year 2024/25 Investment Policy (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
DISCUSSION
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, the Finance Department staff ensures the inclusion of the latest best practices from recognized industry groups such as the Government Finance Officers Association, California Society of Municipal Finance Officers, California Municipal Treasurers Association, and the Association of Public Treasurers of the United States and Canada.
CAM has reviewed the City’s current policy to make sure it is consistent with the Government Code and recommends four changes to the Investment Policy (Attachment 2) for Fiscal Year 2025/26, consistent with the passage of Assembly Bill (AB) 2618 that went into effect on January 1, 2025:
• Section VII, Letter Q
o Certificates of Deposit Placement Service is being updated to Placement Services Deposits. Under a provision sunsetting on January 1, 2031, no more than 50% of the portfolio may be invested in deposits through a placement service, including Certificates of Deposit, if the Agency is a city, district, or local agency that does not pool money with other local agencies;
• Section VII, addition of Letter S
o Shares of Beneficial Interest Issued by a Joint Powers Authority (JPA), provided that: The JPA is organized pursuant to California Government Code Section 6509.7 and invests in the securities and obligations authorized in subdivisions (a) to (r), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the JPA. The JPA has retained an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years’ experience investing in instruments authorized by Section 53601, subdivisions (a) to (q);
• Summary of Allowable Investments Table and footnotes amended to incorporate the two changes above; and
• Adjusted, added, or deleted several terms in the Glossary of Investment Terms consistent with the other proposed edits and addressed best practices.
FISCAL IMPACT
There is no fiscal impact associated with the recommended action.
ATTACHMENTS
1. Resolution No. 25-4897
2. FY 2025/26 Investment Policy - Redline Version