CITY
COUNCIL STAFF REPORT
Meeting: May 19, 2026
Subject
Annual review and acceptance of the City’s Investment Policy Recommended Action
Adopt Resolution No. 26-XXX accepting the City's Investment Policy Reasons for Recommendation
Background
To ensure the City's investment policy i s up-to-date and a ligned with its investment objectives, the Audit Committee conducts an annual review prior to presentation to the City Council. Th e most recent review and acceptanc e of the investment policy by the Audit Committee occurred on April 27, 2026.
The investment policy is the foundation of the City's investment goals and priorities.
Careful research, effective drafting , and regular review of the policy ensure s that it continues to meet the City's investment objectives and helps protect the City’s assets .
The existence of an approved investment policy demonstrates that the City is performing its fiduciary responsibilities, thereby inspiring trust and confidence among the public that it serves.
The policy also provides guidance on
the proper management of the City's temporary
idle cash, outlining protocols to maximize cash efficiency.
California Government Code (Code) section 53646(a)(2) states:
[T
]he treasurer or chief fiscal officer of the local agency may annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy, which the legislative body of the local agency shall consider at a public meeting. Any change in the policy shall also be considered by the legislative body of the local agency at a public meeting.
Assembly Bill 2853 (Chapter 889, Statutes of 2004) amended section 53646(a)(2) to make presentation of the investment policy to the City Council optional. While no longer required by Code, the City annually presents the investment policy to the Audit Committee before submitting it to City Council for approval.
Chandler Asset Management
In FY 2018- 19, the City conducted a Request for Proposal (RFP) for investment management services and selected Chandler Asset Management. Under the City Treasurer's direction, Chandler Asset Management manages the City's investment portfolio in accordance with the City's investment objectives. The City's investment objectives, in order of priority, are to provide:
• Safety to ensure the preservation of capital in the overall portfolio • Sufficient liquidity for cash needs
• A market rate of return consistent with the investment program
The performance objective is to earn a total rate of return through a market cycle equal to or above the return on the benchmark index. To achieve the objective, Chandler Asset Management invests in high -quality fixed-income securities consistent with the City's investment policy and Code.
Investment Policy Review
With the implementation of the two recommendations below, Chandler concludes that the City's Investment Policy continues to be well -written, is effective in guiding the management of the City’s investment portfolio , complies with the California Government Code and aligns with current industry best practices.
The summarized updates below have been incorporated into the attached redline version of the policy:
- Local Government Investment Pools (LGIPs): Policy language has been expanded to provide additional clarity regarding eligibility criteria, including requirements related to investment advisor registration, experience, and assets under management. These enhancements align with Government Code provisions and strengthen oversight while continuing to allow for flexible liquidity management.
- Legislative Updates (SB 585): Minor updates have been made to reflect changes to applicable dates and statutory references resulting from SB 585.
Staff concurs with Chandler's recommendations and has incorporated these revisions into the Investment Policy. The revised policy ensures continued compliance with state law while providing the City with greater clarity and flexibility to manage its investments in a prudent and efficient manner. If Council does not adopt the resolution, the above summarized statements will not be taken into account in the City’s investment strategies.
City Work Program (CWP) Item/Description
Yes: Financial, Investment, and Cashflow Policy Review - Review and assess the City’s investment policy and best practices with an analysis of quarterly treasurers report.
Establish a cashflow management policy with the goal to reduce the total percentage in cash from 20% to 2% and to reduce the total percentage in cash and cash-equivalent to at most 10%, on par with other cities.
Council Goal:
Fiscal Strategy
California Environmental Quality Act
No California Environmental Quality Act Impact
Sustainability Impact
No sustainability impact.
Fiscal Impact
No fiscal impact.
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Prepared by: Jonathan Orozco, Acting Director of Administrative Services Reviewed by: Kirsten Squarcia, Deputy City Manager
Approved for Submission by: Tina Kapoor, City Manager
Attachments:
A – Cupertino Investment Policy (Clean)
B – Cupertino Investment Policy (Redline)
C – Cupertino Investment Policy Statement Review Memo
D – Draft Resolution