SB 998

Bill Subjects

Abstract

Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies to agree to jointly exercise a common power. Existing law specifically authorizes 2 or more public agencies that have the authority to invest funds in their treasuries to agree to jointly exercise that common power and describes how funds subject to that agreement may be invested. This bill would authorize a joint powers authority formed as described above to establish the terms and conditions pursuant to which agencies may participate and invest in pool shares. The bill would specify that a federally recognized Indian tribe is eligible to participate in a joint powers authority formed for this purpose, consistent with its status as a public agency under the Joint Exercise of Powers Act, or to otherwise invest in pool shares consistent with the terms and conditions established by the joint powers authority. Existing law regulates the investment of public funds by local agencies, as defined. Existing law authorizes the legislative body of a local agency, as specified, that has money in a sinking fund or in its treasury not required for immediate needs to invest the money as it deems wise or expedient in certain securities and financial instruments. In this regard, existing law authorizes investment in prime quality commercial paper issued by entities meeting certain criteria. Existing law prohibits local agencies, other than counties, from investing more than 25% of their moneys in eligible commercial paper and further prohibits these agencies from purchasing more than 10% of the outstanding commercial paper of any single issuer. Existing law authorizes local agencies, as specified, to invest in medium-term notes, which are defined as corporate and depository institution debt securities with a maximum remaining maturity of 5 years or less, issued by specified corporations or by depository institutions. This bill would prohibit a local agency, other than a county or a city and a county, from investing more than 10% of its total investment assets in the commercial paper and the medium-term notes of any single issuer. This bill, until January 1, 2026, for local agencies that have more than $100,000,000 of investment assets under management, would instead prohibit investing more than 40% of their moneys in eligible commercial paper. Existing law generally prohibits a local agency from investing any funds pursuant to specified authorizations in a security that could result in zero-interest accrual if held to maturity. This bill, until January 1, 2026, would create an exception to this prohibition by authorizing a local agency to invest in securities issued by, or backed by, the United States government that could result in zero- or negative-interest accrual if held to maturity, as specified.