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Council agrees to study alternative investment options for surplus revenues after public caution on Section 115 plans
Summary
The council gave straw-vote approval to conduct a study session on alternative investment options for city surplus funds. Public commenters urged caution, noting Newport Beach’s participation in CalPERS and the unique risks of a Section 115 trust.
The Newport Beach City Council gave a straw-vote nod Dec. 9 to consider a study session evaluating alternative investment options for city surplus revenues.
Mayor Stapleton introduced the item and sought a straw vote; the council indicated support by voice and the clerk noted the item passed by straw vote. The proposal would direct staff to return with a report at a later meeting.
Public comment included an extended statement by a speaker with professional experience in public finance who cautioned against pursuing a Section 115 trust for Newport Beach. The commenter noted that Newport Beach participates in CalPERS, described CalPERS as “the largest and most sophisticated municipal funds investor,” and said only a handful of California cities have implemented Section 115 plans — those with markedly different pension profiles. He warned the approach requires assuming sustained above-assumption returns and cited examples (Laguna Woods, Irwindale, Sebastopol) where participation levels and amounts differed.
Mayor Stapleton characterized the city’s existing pension-paydown program as a notable accomplishment and the speaker concluded by encouraging the council to continue current course rather than adopt an alternative arrangement.
The straw vote directs staff to prepare a study session and report; no change to pension investments or fund allocations was made at the meeting.
