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ACCEPT AND APPROVE AMENDMENTS TO THE CITY OF STOCKTON’S INVESTMENT POLICY NO. 17.01.030
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RECOMMENDATION
It is recommended that the City Council approve a motion to amend City Policy No. 17.01.030 “City Investment Policy” as presented in Attachment A.
It is further recommended that the City Manager be authorized to take appropriate and necessary action to carry out the purpose and intent of the motion.
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Summary
The City Council Policy Chapter 5.03 - Investments (Attachment B) was last approved on October 3, 2017, and the City’s Investment Policy No. 17.01.030 was approved by the City Council on June 20, 2023. Policy 17.01.030 has been amended to include changes related to Senate Bills 595 and 858 that revised section 53601 of California Government Code (“CGC”). The recommended action would reaffirm the City’s existing investment policy with revisions.
City staff and the City’s investment consultants recommend incorporating these policy changes in the following areas: Policy Modifications related to State Code Changes. A red-lined version of the policy changes is included as Attachment C. No changes are needed to the City Council level policy at this time.
DISCUSSION
Background
The CGC contains specific provisions regarding the types of investments and practices that a City Council may authorize after considering the broad requirements of preserving principal and maintaining liquidity before seeking yield. These provisions are intended to promote the use of reliable, diverse, and safe investment instruments. The Council sets forth its policies and practices in this regard by adopting the City Investment Policy at a public meeting.
Thereafter, pursuant to Section 53646 of the CGC, the City Treasurer may annually render to the City Council a statement of investment policy and bring any recommendations for changes for the Council’s consideration at a public meeting.
The City of Stockton’s Investment Policy is reviewed annually by the Chief Financial Officer, acting in the capacity of City Treasurer. This policy outlines the structure and oversight responsibilities, including the delegation of authority by the City Council to the City Treasurer for investment decisions, and grants authority to the City Treasurer to delegate to an external investment manager the day-to-day management of the City’s investment portfolio. The City contracts with both PFM Asset Management and Chandler Asset Management for investment portfolio management services.
Present Situation
While the adoption of an investment policy is no longer required by statute, it is in the best interest of the local agency to present and discuss the policy with the agency’s legislative body and/or oversight committee, and then have the policy approved by a vote of the legislative body. Having a public vote signifies that the legislative body shares fiduciary responsibility with the Treasurer, increases the authority and legitimacy of the investment policy, and provides transparency and disclosure.
The annual review includes affirming the investment goals and objectives of the City. According to the California Debt and Investment Advisory Commission (CDIAC), priorities of a comprehensive investment policy should include, but not be limited to, the following:
• Ensuring safety of principal.
• Ensuring that the liquidity needs for operations and other City obligations are met.
• Seeking maximum yield on the City’s investments after ensuring the two priorities above are met.
The City’s current adopted Investment Policy follows these priorities. The policy allows investment types that conform to CGC.
In January 2026, changes were made to CGC concerning the investment of public funds that went into effect on January 1, 2026. The proposed Investment Policy revision will include CGC, section 53601, updates from Senate Bills 595 and 858 to the following areas:
Commercial Paper
• The maximum maturity for eligible commercial paper was extended from 270 to 397 days.
• Local agencies with at least $100 million in investment assets are permitted to invest a maximum of 40% of its portfolio in commercial paper until January 1, 2031, then reverts to a maximum of 25%.
Mitigating Risk in the Portfolio
• In periods of low interest rates, CGC authorized local agencies to invest in U.S. government securities that could result in zero-interest accrual if held to maturity, provision sunsets January 1, 2031.
FINANCIAL SUMMARY
There is no financial impact as a result of approving the amended Investment Policy.
Attachment A - Proposed City Policy No 17.01.030 “City Investment Policy”
Attachment B - City Council Policy Chapter 5.03 Investment
Attachment C - Redline Policy Revisions to City Policy No 17.01.030 “City Investment Policy”