LOS ALAMITOS : Council Adopts Strict New Investment Policy

Hoping to safeguard public funds in the wake of the county’s bankruptcy, the City Council has approved strict new guidelines to keep city money out of risky investments.

The revised investment policy, adopted Monday, limits the types of funds the city may invest in, restricts investment in long-term bonds and prohibits the city from borrowing money for the purpose of investing it.

“The primary purpose of our investment is not to make money but to earn interest on our money while it’s idle,” Councilman Ronald Bates said.

The policy allows the city to invest in U.S. Treasury or other federal agency securities, bankers’ acceptances, certificates of deposit, negotiable certificates of deposit, the state-administered Local Agency Investment Fund, passbook savings accounts, money-market accounts and repurchase agreements.

It prohibits investment in commercial paper, medium-term corporate notes, mutual funds, county-pooled funds and financial futures or options.

To ensure liquidity, the policy stipulates that the city may not purchase any securities with a maturity greater than two years unless they are matched to a specific cash flow.

“We want safe investments, and we want liquidity, because the investment picture can change from year to year,” Councilwoman Alice Jempsa said. “When you are investing someone else’s money, you want to be very conservative.”