REPORT TO THE CITY COUNCIL FROM: MICHAEL A. LIMA, Controller/Finance Director/(ex-officio)Treasurer Finance Department BY: CORRINA BARBARITE, Treasury Officer Finance Department SUBJECT ..Title ***RESOLUTION - To Adopt an Investment Policy for Public Funds for Fiscal Year 2022-2023. (Subject to Mayor's Veto) ..Body RECOMMENDATION Staff recommends City Council approve the City of Fresno (the "City") Investment Policy for Fiscal Year 2022-2023. EXECUTIVE SUMMARY 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 money" that is 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. There is one change from the FY 2021-2022 Investment Policy. Specifically, language was added to convey the maximum maturity of debt issued by the other 49 States and debt issued by Local Agencies within California: deposits in these issuances as permitted under Section III A (1) (a) must mature within five years of the date of purchase as required by the State Treasurer. BACKGROUND Although State Law no longer requires it, good cash management necessitates a detailed plan for handling cash resources. 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 also contains numerous other stipulations that pertain to the City's investment program. Government Code Section 53601 (Section 53601) sets forth certain parameters that govern a local agency's investment program. This law states that "The legislative body of a local agency having monies in a sinking fund or monies in its treasury not required for the immediate needs of the local agency may invest any portion of the monies 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. Operating cash is thus differentiated from surplus cash. These monies are aggregated together in a City-wide Pool for investment purposes. Each PeopleSoft Fund owns "shares" in the Pool, based on the Fund's cash balance. Cash from the Pool is invested in financial instruments allowed by State Law, and the interest earnings are credited back to each Fund. Section 53601 sets forth the types of investment instruments eligible for purchase by a local agency, the investment grade of those instruments, the maximum maturity of the investment instruments and the percentage of the local agency's surplus monies that can be invested in each type of security. Since the City's first investment objective is conformity with State Law, the Investment Policy generally conforms to Section 53601. Government Code Section 53601 mandates the maximum maturity of investment instruments held by local agencies. To make explicit this Government Code section in the investment policy, language has been added to the body of the investment policy clarifying that five years is the maximum maturity of investment instruments issued by the other 49 states and California Local Agencies. Previously this was only conveyed in Appendix D of the Investment Policy. Staff recommends that Council approve the City's Investment Policy for Fiscal Year 2022-2023. 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 2022-2023 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 PeopleSoft Funds based on their cash balances. Attachments: Attachment 1: Resolution adopting Investment Policy for Fiscal Year 2022-2023 Exhibit A: Investment Policy for Fiscal Year 2022-2023