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Adopt a resolution to renew annual delegation of investment authority to the County Treasurer; Approve the proposed County Investment Policy; and Adopt a resolution to approve the proposed County PARS 115 Trust Investment Policy
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Published Notice Required? Yes ____ No __X_
Public Hearing Required? Yes ____ No __X_
DEPARTMENTAL RECOMMENDATION:
It is recommended that the Board of Supervisors:
1. Adopt a resolution to renew the annual delegation of investment authority to the County Treasurer;
2. Approve the proposed County Investment Policy; and
3. Adopt a resolution to approve the proposed County PARS 115 Trust Investment Policy.
SUMMARY/DISCUSSION:
California Government Code §27000.3 provides that the Board of Supervisors is the agent of the County that serves as a fiduciary and is subject to the prudent investor standard for the County Investment Pool unless an annual delegation of authority has occurred pursuant to Government Code §53607. Section 27000.1 permits the Board to delegate to the County Treasurer the authority to invest funds in the County Treasury for a period of one year. When such a delegation occurs, the County Treasurer, not the Board of Supervisors, serves as the fiduciary and is subject to the prudent investor standard.
On February 10, 2015, this Board adopted Resolution 2015-21 establishing the PARS 115 Pension Trust (the Trust). The Trust will be used exclusively to fund contractual obligations to provide pension benefits. This Board also delegated to the Treasurer investment authority for the Trust. While not mandated, in keeping with the tenets of §27000.1, the Treasurer is requesting an annual reaffirmation of the delegation and investment policy to provide transparency.
In consultation with Chandler Asset Management, enhancements have been made to the investment policy to provide additional clarity and enact enhanced restrictions beyond those established in code. These restrictions promote diversification of asset classes and enhanced limits on concentration levels in the portfolio, which will provide additional security and stability.
By enhancing diversification and tightening concentration limits, the portfolio can be more resilient against market fluctuations and potential risks. Increased policy clarity also ensures that investment decisions align with long-term financial objectives while maintaining security and stability.
Retirement trust funds have different objectives and statutory prohibitions than the County Treasurer’s Pool and therefore require a separate investment policy that reflects those differences. The purpose of these funds requires staff to manage the funds to a risk profile unique from the investment pool. These differences include the ability to purchase and hold equities, private placement securities, and fixed income investments with risk profiles greater than those in a cash management pool, such as the Treasurer’s Pool. Since these funds will be held longer and have more predictable cash flow needs, they can be invested in securities that provide the potential for a greater return on investment than might otherwise be achievable.
FINANCING:
The cost to prepare this agenda item is nominal and is included in the Treasurer’s FY2024/25 Working Budget. The full cost of operations for the Treasurer’s Office is paid from the Treasury pool's investment earnings, which are allocated to all pool participants proportionately to their share of the pool investments.
ALTERNATIVES:
The Board may choose not to renew the delegation of authority to the Treasurer and instead keep the investment responsibilities and serve as fiduciary. The Board could elect to make changes to either of the proposed policies.
OTHER AGENCY INVOLVEMENT:
None.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION