The Milpitas City Council on Oct. 28 adopted the city’s annual investment policy for fiscal year 2025–26 after a staff presentation summarizing governance, portfolio performance and planned administrative changes.

What the policy does: Finance Director Luz Cofresti (transcribed name) told the council the policy is an annual legal requirement that establishes guidelines and controls for managing city funds. The policy emphasizes three priorities — safety (preserve capital), liquidity (meet operating needs) and return (market‑rate return commensurate with risk) — in that order, and it outlines authorized investments, prohibited practices and internal controls.

Portfolio and management details: Staff reported total cash and investments in the larger portfolio were about $420 million as of June 30, 2025. The city’s Section 115 trust (a separate pension‑designated account) was reported at roughly $40 million and is explicitly excluded from the general investment policy because it is governed by a separate policy and oversight committee.

Performance and advisers: The larger portfolio’s yield to maturity was reported at about 3.84% as of June 30. Staff said the city’s primary investment advisers (Chandler Investments for the larger portfolio and PFM for the Section 115 trust) will complete existing contracts next spring and the city plans to issue requests for proposals for adviser services.

Policy updates and controls: The updated policy strengthens ethics and conflict‑of‑interest language, clarifies internal control and delegation procedures, expands the glossary of investment terms, and reiterates prohibitions on equities, derivatives, reverse repurchase agreements and foreign currency trades. Staff said they will add procedural material for monitoring investment advisers and will bring any significant procedural updates to council in the coming year.

Council questions and next steps: Council members asked about fee arrangements and the level of staff oversight. Finance staff said adviser fees are standard and nominal relative to portfolio size, and that the city treasurer receives trade tickets and quarterly compliance reports. Staff also signaled an intent to work with the actuarial team and council to evaluate options for applying Section 115 trust funds to reduce pension liabilities over time.

Formal action: The council adopted a resolution approving the investment policy for fiscal year 2025–26 by unanimous vote. Staff said the policy becomes effective immediately and will be distributed to the city’s advisers and approved broker/dealers. The city will continue quarterly investment reporting to the council and proceed with the planned RFPs for manager contracts.

Fiscal note: Staff said the policy changes do not themselves change investment strategy or require additional resources. The city’s next regular investment policy review will occur in one year.