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ACCEPTANCE OF THE QUARTERLY INVESTMENT REPORT FOR QUARTER ENDED JUNE 30, 2025
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RECOMMENDATION
It is recommended that the City Council, by motion, accept the Quarterly Investment Report for the quarter ending on June 30, 2025
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Summary
Pursuant to California Government Code section 53646 and the City’s Investment Policy No. 17.01.030 (Attachment D), the City Treasurer (Chief Financial Officer) is required to provide a quarterly report and certification to the City Council, City Manager, and City Auditor.
Due to the specialized services and expertise required to assist the City with the varied investment options available, effective July 1, 2022, the City moved to have two portfolio managers manage separate portions of the City’s Reserve portfolio. The Quarterly Investment Reports for PFM Asset Management (PFMAM) (Attachment A), Chandler Asset Management (Attachment B), and the Certification for the quarter ending June 30, 2025 (Attachment C), are being provided as required.
The City’s consolidated investment portfolio was $1,060,775,169 as of June 30, 2025, which represents an increase of $33 million from the prior market value for the quarter ending on March 31,2025. This consolidated investment portfolio includes the City’s liquidity position, short-term investments, and the reserve portfolios. (Attachment A- PFMAM Investment Report, page 18).
Total Program Breakdown:
• Reserve Portfolio - $815,359,573
• Short Term Portfolio - $31,638,658
• BMO Main Account - $117,219,682
• California Asset Management Program (CAMP) - $95,688,874
• Local Agency Investment Fund (LAIF) - $868,382
DISCUSSION
Background
To comply with state law and City policy, the City is required to present quarterly certification and investment reports detailing the City’s investment portfolio to the City Council, City Manager, and City Auditor. The City also posts monthly transaction reports to the City’s website. The Quarterly Investment Report shall include a complete description of the portfolio, the types of investments, the issuers, maturity dates, par value, and dollar amounts invested in all securities, investments, or programs that are under the management of contracted parties, including lending programs. The certification must provide assurances that investments were made consistent with the City’s Investment Policy and that the City will meet its obligations for the next six months.
The authority of the Council to invest, reinvest funds, sell, or exchange securities is delegated to the City’s Chief Financial Officer, who also serves as City Treasurer (Resolution No. 2024-06-18-1603). Pursuant to the Investment Policy, the City Treasurer may and does delegate fiduciary responsibility to external investment managers. An investment manager’s fiduciary responsibility is a legal requirement related to registration with the Securities and Exchange Commission under the Investment Advisor Act of 1940.
Present Situation
The City divides its investment portfolio into Reserve and Liquid portions. The Reserve portion represents the long-term assets managed by PFMAM and Chandler Asset Management, and the Liquid portion represents funds invested in several short-term investment vehicles including State of California LAIF, CAMP, and Dreyfus Treasury Money Market, to maintain adequate liquidity and optimize returns.
City staff work closely with both PFMAM and Chandler Asset Management to monitor the status of the City’s investment portfolios and their returns. Details on these returns are reflected in Attachment A, page 25 (PFMAM Investment Report) and on Attachment B, page 25 (Chandler Investment Report). The quarterly return valuation includes funds from all activities, restricted and unrestricted, and includes changes in fair market value (unrealized gains/losses).
The City’s investment portfolio complies with California Government Code section 53601. It is invested solely in fixed-income securities (no stock holdings) that, while earning certain rates of interest, gain in market value when interest rates fall and lose market value when interest rates rise.
FINANCIAL SUMMARY
There is no financial impact related to the presentation and acceptance of these reports.
Attachment A - PFMAM Investment Report
Attachment B - Chandler Investment Report
Attachment C - Certification of Quarterly Investment Report