DATE: December 6, 2022
TO: Mayor and City Council
FROM: Director of Finance
SUBJECT: Adopt a Resolution Accepting the Fiscal Year 2023 Statement of Investment Policy and Delegation of Authority
RECOMMENDATION
That the Council adopts a resolution (Attachment II) reaffirming the updated Fiscal Year 2023 Statement of Investment Policy and Delegation of Authority.
SUMMARY
There are changes to California Government Code Section 53601 (Code) that will go in effect on January 1, 2023. To address these changes, staff recommends the City add the new Code language to Policy Section X: Investment Instruments, as shown in the attached marked-up Policy (Attachment IV).
BACKGROUND
The City’s Statement of Investment Policy (Policy) requires that staff submit to the Council for approval any recommended changes to the Policy. In addition, the State statutes that govern investment activity require the Council to annually affirm the Policy and to annually confirm the delegation of investment authority, which in the City of Hayward, is to the Director of Finance. This year’s Policy has recommended changes under Policy Section X: Investment Instruments, to address recent California Government Code (“Code”) changes that will go into effect on January 1, 2023, following the passage of Senate Bill 1489 (“SB 1489”) in September 2022. A detailed summary of the proposed changes is available in Attachment III. Staff worked in conjunction with the City’s portfolio manager, PFM Asset Management, to review the policy.
DISCUSSION
As part of the overview of the FY 2022 year-end investment portfolio, staff reviewed and evaluated the need for any changes to the Policy. PFM, the City’s portfolio manager, has also reviewed the Policy and prepared a memorandum (Attachment III) recommending the City add the new Code language. to Policy X: Investments Instructions.
Senate Bill 1489, also known as the Local Government Omnibus Act of 2022, made several changes to Code, including several that impact the investment of public funds and the reporting practices of public agencies. Changes were made to Code Section 53601, the section of Code that governs the investment of public funds, including language stating that an investment’s term or remaining maturity shall be measured from the settlement date to final maturity, and that a security purchased in accordance with Code Section 53601 shall not have a forward settlement date exceeding 45 days from the time of investment.
Previously, the Code was silent on these items. To address these Code changes, staff recommends new Code language to Policy Section X: Investment Instruments, as indicated in the PFM Investment Policy Review Memorandum (Attachment III). In conjunction with the City’s portfolio manager, staff recommends that the Council approve the FY 2023 Policy with the recommended edits (Attachment IV).
Staff and PFM presented these changes to the Council Budget and Finance Committee on November 16, 2022 and the Committee recommended that the Council adopt the changes.
STRATEGIC ROADMAP
This is a routine operational item and does not relate to any of the priorities outlined in the Council’s Strategic Roadmap.
FISCAL IMPACT
There is no fiscal impact.
PUBLIC CONTACT
The recommended changes to the Policy (Attachment IV) were discussed by the Investment Advisory Committee during its quarterly meeting on November 14, 2022, and presented to Council Budget and Finance Committee on November 16, 2022.
Prepared and Recommended by: Nicole Gonzales, Deputy Director of Finance Dustin Claussen, Director of Finance
Approved by:
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Kelly McAdoo, City Manager