REPORT TO THE CITY COUNCIL
November 20, 2014
FROM: MICHAEL A. LIMA, Controller/Finance Director/(ex-officio)Treasurer
Finance Department
BY: KAREN M. BRADLEY, Assistant Controller
Finance Department
GREGORY S. WILES, Treasury Officer
Finance Department
SUBJECT
Title
Approve the City of Fresno (the "City") Investment Policy for Fiscal Year 2014-2015
1. ***RESOLUTION - Adopting an investment policy for public funds for fiscal year 2014-2015
Body
RECOMMENDATION
Staff recommends that Council approve the accompanying Resolution to adopt the City Investment Policy (the "Policy") for Fiscal Year 2014-2015
EXECUTIVE SUMMARY
There are no changes in the Investment Policy from last Fiscal Year. The Fresno Municipal Code ("FMC") requires that Council annually approve and adopt an Investment Policy, and delegate its authority to invest City funds to the City Treasurer. State Law refers to "surplus funds" that are not needed for current operations. Good cash management includes investing these funds, in accordance with an approved Investment Policy. Interest earnings on investments are allocated to all Funds based on the amount of cash the Fund has invested in the City-wide Pool.
BACKGROUND
Although State Law no longer requires it, good cash management necessitates a detailed plan for handling cash resources. The Fresno Municipal Code (the "FMC") therefore requires that Council annually adopt an investment policy for public funds. An investment policy establishes the objectives, guidelines, and types of investments for a government's public funds investment program. State Law does contain numerous other stipulations regarding the City's investment program. There have been no changes, either in the FMC or in State Law regarding municipal investments during the last Fiscal Year. Consequently, there are no changes in the Investment Policy from last Fiscal Year.
The California State Government Code 53601 sets forth the parameters that govern a local agency's investment program. This Law states that "The legislative body of a local agency having money in a sinking fund of, or surplus money in, its treasury not required for the immediate needs of the local agency may invest any portion of the money that it deems wise or expedient
" The Treasury Section of the Finance Department is responsible for balancing the operating cash needs of the City with the amount of money available for investment ("surplus funds). These monies are aggregated together in a City-wide Pool for investment purposes. Each Fund owns "shares" in the Pool, based on the Fund's cash balance.
Staff selects investments in accordance with procedures that are spelled out in the Policy and result in the most advantageous investment position for the City at the time. When interest payments are made on the City's investments, they are allocated through PeopleSoft to each Fund, based on that Fund's investment in the City-wide Pool.
Although not required by State Law, monthly reports on the status of the Investment Portfolio are published on the City's website, under the section for the Finance Department. In addition to the Investment Portfolio, however, this report details the status of all of the City's cash resources. This includes both surplus funds, and the monies earmarked for operations. Operating cash is reflected in the City's bank account, in anticipation of the need to meet cash demands for disbursements to employees and vendors.
Because there have been no changes in State Law or the FMC, staff recommends that Council approve the City's Investment Policy for Fiscal Year 2014-2015, which is identical to last Fiscal Year's edition.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a "project" and is therefore exempt from the California Environmental Quality Act requirements.
LOCAL PREFERENCE
Local preference was not considered because this Resolution does not include a bid or award of a construction or service contract.
FISCAL IMPACT
Approving this Resolution adopting an Investment Policy for Fiscal Year 2014-2015 will provide staff with direction on how to manage the City's cash resources, specifically, how they shall be used to fund operations or invested to obtain interest earnings if not currently needed. Interest earnings are allocated to funds based on their cash balances.
Attachments: Attachment 1: Resolution adopting Investment Policy for Fiscal Year 2014-2015
Exhibit A: Investment Policy for Fiscal Year 2014-2015