The following statement has been prepared in response to recent inquiries regarding the state of the City of Oceanside Treasury:
In accordance with Government Code Section 53600.3, the City of Oceanside manages its investment portfolio using the “prudent investor” standard which aims to safeguard the principal of investments while maintaining the liquidity needs of the City.
As presented at the June 22, 2022 City Council meeting in conjunction with the Fiscal Year 21/22 Third Quarter Treasury Report, the City’s total investment portfolio has a book value of $491 million, with interest earnings totaling $3.2 million. The Third Quarter Treasury Report also noted an unrealized loss of $14.72 million. While accounting standards require the City to report this unrealized loss, the City will not incur an actual loss, as all securities will be held to maturity and not sold before their maturity date at market value. The unrealized loss is primarily related to the rapid increase in interest rates, which has impacted municipal investment portfolios nationwide. This does not impact the safety or liquidity of the City’s funds.
The City’s Treasury Division actively manages the investment portfolio by managing interest rate risk though a laddered approach, which is achieved through staggering maturity dates. This laddered approach investment strategy is the recommended best practice in Treasury Management in order to manage interest rate risk and meet the cash flow needs for City operations.
All investments are reviewed quarterly by the Citizen Investment Oversight Committee to ensure compliance with California State Code requirements and the City’s adopted Investment Policy which is reviewed annually.
In summary, the City’s Investment Portfolio remains healthy and all investments comply with the City’s Investment Policy and State law.
For more information, please visit: City of Oceanside, California – Investments
