Budget committee recommends investment policy updates after manager outlines statutory changes and portfolio position

The Pleasant Hill Budget Committee voted to recommend updates to the city’s investment policy after an investment manager summarized state law changes and the city’s portfolio position.

Carlos, the investment manager participating from Chandler, said the policy edits reflect changes enacted in Senate Bill 595 (2025) that take effect in 2026. “The biggest one is that commercial paper has been extended a maturity of from 270 days out to 397 days,” Carlos said, and he added that a prior restriction limiting purchases to no more than 10 percent of a single issuer’s commercial paper has been removed (a 25 percent aggregate commercial‑paper limit remains in place). He also described code-driven updates about placement services (CD‑placement services may be treated up to a 50 percent portfolio limit through 2031), allowable money‑market/mutual‑fund language, and an extension of a previously time‑limited allowance for zero or negative interest accrual on government securities.

Why it matters: the changes align the city’s written investment policy with current California government code and with recent practice. Carlos told the committee the edits are “not controversial” and are intended to ensure compliance with state code and reflect current market tools.

The briefing also covered the city’s current portfolio and market outlook. According to the treasurer’s snapshot presented to the committee, the city’s consolidated cash and investments at Dec. 31 totaled about $38.7 million, of which roughly $8.2 million is managed by Chandler on the city’s behalf and about $2.1 million is in a pension savings trust; the remainder is held in bank cash and other accounts. Carlos said the Chandler‑managed portion is positioned for safety and liquidity with a duration target of 1.81 years and a yield‑to‑maturity of about 4.12 percent. “Your portfolio is managed to a duration target,” he said, explaining that at a 1.81‑year duration a 100‑basis‑point rise in rates would lower fair‑value by about 1.81 percent on paper.

Committee members pressed on how unrealized (“paper”) gains and losses affect budgeting. The treasurer and Carlos clarified that paper gains change GAAP financial statements (reported in the ACFR) but are not spendable budget dollars. “It’s not money I can spend,” Carlos said of paper gains, adding that such gains can be realized through active trading but remain an accounting distinction until converted to cash.

Action taken: a committee member moved and the committee voted to recommend the investment policy updates and acceptance of the treasurer’s report to the full City Council. Staff was instructed to include the treasurer’s monthly/quarterly transaction reporting language in future council materials so the council and public can review the transactions and the quarterly summary when prepared.

Next step: the committee’s recommendation will be forwarded to the full council for final consideration; the treasurer’s report is expected to appear in an upcoming April council packet for further review.