Carlsbad board approves 2026 work plan, reviews Q1 portfolio decline and broker controls

The Carlsbad Investment Review Board on an informational session unanimously approved its proposed annual work plan for calendar year 2026 and reviewed the first-quarter investment portfolio, staff said.

Presenter (speaker 4) introduced the work plan "for calendar year 2026," noting the Carlsbad Municipal Code requires each board to provide an annual plan and a subsequent report of accomplishments to the City Council. After brief questions about how the board could add items later, the chair moved to approve the work plan and the motion passed unanimously.

Staff then presented the fiscal year 2026 first-quarter investment review, summarizing quarter activity: "$47,800,000 in maturities, $66,500,000 in purchases, $39,000,000 of calls, a $13,800,000 decrease in overnight cash and a $34,200,000 net decrease in total portfolio," the presenter said. Staff framed oversight around three priorities: safety, liquidity and return.

The presenter flagged six securities that were technically out of compliance with state code (described as out‑of‑state local agency investments) but said the treasurer chose to "hold these until maturity" because they remained highly rated and were paying interest on time. When asked whether those holdings were inherited, the official identified in the meeting as Christian acknowledged they were "inherited by me" and said the investment policy has been updated to address the prior allowance for such investments.

Board members pressed staff on controls to prevent future noncompliant purchases. The presenter described contractual agreements with brokers that require them to sell only permissible securities, and the treasurer described a three-layer defense: broker certifications, treasurer review of offers and additional staff review before transactions are completed. When asked whether any security is purchased without the treasurer seeing it, the treasurer said no.

Members discussed pooled investment funds and yields. Staff explained CAMP is a pooled investment fund managed by PFM and contrasted it with LEIF (a state-managed pool). The presenter said pooled funds can show higher short-term yields because they invest in shorter-duration, higher-yield instruments and are not constrained to the city’s laddered maturity structure.

On policy constraints, staff reiterated the city's liquidity requirement that a large portion of the operating budget be maintained in liquid maturities within 12 months; the presenter said the board maintained liquidity above that requirement for the quarter. The treasurer described the portfolio construction practice as a laddered portfolio (roughly one-third in 0–12 months, one-third in 2–3 years and one-third in 4–5 years) and said matching maturities to forecasted cash flows is the primary driver of security selection.

No formal action was required on investment holdings during the review. However, a board member moved — and another seconded — to agendaize a deeper discussion at a future meeting about the treasurer’s resources, potential advisor arrangements and an overview of custodians and brokers; the motion passed unanimously. Staff said that future informational item will include an overview of treasury operations, custody arrangements and the broker list (currently not publicly posted).

A member also asked whether assets in the city’s Section 115 pension trust fall under the board’s oversight. Staff said those trust assets are not directly overseen by the treasurer or the investment review board; PFM manages that trust’s investments and staff will consult the city attorney about whether an informational item should be brought forward.

The board scheduled the next quarterly review for Feb. 26 and then adjourned.

The meeting was informational; no investment actions were taken beyond the board’s approval of its annual work plan.