City Investment Policy
Annually, staff reviews the City's Investment Policy and makes changes for conformity with the State of California's Government Code (Code). Additionally, the City Council adopts the City’s Statement of Investment Policy for the fiscal year and delegates authority for the investment of City funds. The annual adoption of the investment policy and delegation of investment authority are required by Government Code §53646 and §53607, respectively. These requirements are also part of the City’s Investment Policy.
The following additions and revisions have been made to the City’s Investment Policy (See Exhibit A) for Fiscal Year (FY) 2021-22 and are illustrated in the attached redline version:
- Updated Section XIV 7. COMMERCIAL PAPER to reflect the increase in the maximum investment allocation from 25% to 40%. This will align the City’s Investment Policy with Senate Bill No. 998 (SB-998) that was enacted on January 1, 2021, and provide additional opportunities for the City’s investment program through January 26, 2026.
- Updated Section XV (b) PROHIBITED INVESTMENTS AND TRANSACTIONS
to remove some language that was repetitive given the investment criteria already defined to be at the time of purchase defined in Section XIV. Authorized Investments, on page 8 of the City’s Investment Policy. Language was also added to this section to align the City’s Investment Policy with SB-998 that was enacted on January 1, 2021, to ensure local agencies could secure their funds in safe investments if negative yields started to occur in the United States. Only in exigent circumstances and after all options have been exhausted, would the City place funds into a negatively yielding investment.
Public Agency Retirement Services Trust
On September 13, 2016, the City Council approved the adoption of the Public Agency Retirement Services (PARS) program to address net position unfunded liabilities through a City-controlled Trust and authorized an initial contribution of $5,000,000. This contribution was funded by the General Fund. On November 14, 2017, the City Council approved an additional contribution of $1,318,000 funded by the Water Utility and Sewer Utility funds in the amounts of $930,000 and $388,000, respectively. On January 31, 2021, the market value was $8,441,653.
This program provides an alternative to sending funds to the San Bernardino County Employees’ Retirement Association (SBCERA). Annually, the City Council must adopt the Investment Guidelines for the PARS invested funds (see Exhibit B, PARS Investment Guidelines). Additionally, the City Council must annually delegate its investment authority for the PARS program to its appointed City Treasurer by ordinance or resolution pursuant to Government Code §53607.
Only clerical changes were made to these guidelines. It is recommended for FY 2021-22, that the City Council adopt the amended Statement of Investment Policy and the PARS Investment Guidelines. Additionally, it is recommended to continue to delegate investment authority to the City’s Finance Director/City Treasurer. This annual adoption and delegation does not preclude the City Council from revising the Investment Policy, the PARS Investment Guidelines, or changing the investment authority delegation during the fiscal year.