Menlo Park commission backs investment-policy changes to allow supranationals, longer treasuries and insured cash sweep

Adrian Petit, the city's management analyst, presented the finance and audit commission with three proposed changes to Menlo Park's fiscal-year 2026-27 investment policy and asked the body to recommend adoption by the City Council. The changes would add supranational bonds to the authorized list, extend the allowable U.S. Treasury maturity from five to seven years (with a 20% sublimit), and explicitly authorize use of CDARS/ICS insured-cash-sweep services the city began using in February 2026.

Those changes were framed as updates to the city's toolkit for managing safety, liquidity and yield. "State law requires that the investment policy be reviewed and adopted annually," Petit said, and the proposed amendments would let staff take advantage of market conditions while remaining consistent with statutory limits. City consultants from Insight explained the expected payoff: Mary Donovan said "1 basis point on the $180,000,000 portfolio does translate into $18,000 of incremental return," and advisers described the incremental yield on a seven-year Treasury as modestly higher than the five-year Treasury in current markets.

Why it matters: the amendments are intended to let Menlo Park pursue small yield improvements without changing the city's stated priorities of safety and liquidity. Advisers told the commission the supranational allocation mirrors a statutory maximum and that the 7-year maturity cap is designed to limit duration risk: "this 20% cap helps to preserve the liquidity of the portfolio and also limits us from interest-rate risk," Donovan said. Advisers also emphasized that trade execution is nondiscretionary — recommended trades are routed to city staff for approval before execution.

Key debate points: commissioners asked whether a 30% supranational limit and a 20% 5-to-7-year cap were large. Advisers said 30% is the limit in California code and that it would be difficult in practice to reach that level; they suggested a phased approach (for example, 15% to start) is feasible. Advisers also noted a degree of political sensitivity around supranationals and advised a cautious, incremental adoption.

The commission voted to recommend the amended investment policy to the City Council; the motion passed unanimously. The recommendation will go to the City Council for final adoption, and advisers said a three-month waiting period applies after adoption before staff may begin implementing the extended-maturity trades.

The vote was procedural: the commission recommended adoption to the City Council; no changes to existing appropriations or expenditures were made at the meeting.