Agenda Item Wording:
title
Accept the City of Visalia Cash and Investment Report - Accept the third quarter report of the fiscal year which consists of months January, February, and March 2026.
body
Agenda Date: 06/01/2026
Prepared by: Jason Montgomery, Finance Manager, jason.montgomery@visalia.gov, 713-4425; Renee Nagel, Finance and Technology Services Director, renee.nagel@visalia.gov, 713-4375
Department Recommendation: Staff recommends that the Council accept the City of Visalia Cash and Investment Report for the third quarter of the fiscal year which consists of months January, February, and March of 2026.
Summary:
The City accumulates significant cash assets before they are spent on a variety of governmental operations. For example, several large capital projects have accumulated substantial cash as they approach the start of the projects in the near future, or in some cases, have already begun. Some of these projects are the Civic Center Phase 2 project, cape seal of various streets, Shirk Street improvements, and the major rehab of Caldwell Avenue from Santa Fe to Lovers Lane. Money is also accumulated for future capital assets, such as solid waste trucks, and unforeseen things like potential mandated upgrades to the Water Reclamation Facility.
The quarterly investment report is intended to inform the City Council and community about the status of City investments and holds staff accountable for the investment and management of these funds.
Background Discussion:
The City’s investments are diversified by the various maturities and credit types which are allowed under the City’s Investment Policy and California Government Code Section 53600 et seq. It is the policy of the City to invest public funds in a manner which will provide the greatest security with the maximum investment return while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of public funds. The City continues to be conservative and prudent with the investment objectives, which in order of priority is safety, liquidity, and yield, while maintaining compliance with federal, state, and local laws and regulations. These investments will enable the City to meet expenditure requirements for the next six months, as required by state law.
Economic Outlook
On March 31, 2026, the national unemployment rate was 4.3% improving slightly from the prior quarter with about 7.2 million people unemployed. The Consumer Price Index was at 3.26%, an increase from the December 2025 rate of 2.68%. At its April 29, 2026 meeting, the Federal Open Market Committee (FOMC) voted to keep the Federal Funds Rate (the rate at which institutions borrow and lend overnight funds to each other) at its current range of 3.50% to 3.75% as the committee acknowledged that economic activity was expanding but “the developments in the Middle East are contributing to a high level of uncertainty about the future economic outlook.” Movements of the Federal Funds Rate are closely linked to Treasury Security rates; as the Federal Funds Rate decreases, typically so do Treasury Security rates. Treasury Securities are investments that the City can purchase and are key benchmarks for other financial assets that the City can purchase (i.e.: Federal Agency’s). Table I shows the rate comparison of the Federal Funds Rate and short-term Treasury Securities between the second quarter and the third quarter of the fiscal year as well as recent rates. Rates have recently been increasing with the general market consensus being that the gap between short term and long-term rates will widen. The City remains laddered across all maturities.
Portfolio Performance
The March 31, 2026 investment portfolio managed balance was $623,885,280.
The earnings rate as of March 31, 2026 was 3.97%. Key benchmarks and performance statistics for the City’s portfolio are shown in Table II, Managed Portfolio Performance Statistics.
Table II: Managed Portfolio Performance Statistics (dollars in millions)
The following Charts I and II show the portfolio ladder and distribution as of March 31, 2026. The portfolio ladder (Chart I - Maturity Ladder) shows our investments based on when they are to mature (ie. 1 year and under, 1-2 years, 2-3 years, etc…). The City invests in different maturity dates to take advantage of different earnings rates (usually the longer the maturity, the higher the earning rate) as well as to spread out maturities so that the proceeds are reinvested at regular intervals. In addition, the City will keep funds for operating costs in short-term maturities, while investing funds in longer-term maturities for those funds that are not yet needed (future projects). Chart II - Maturity Distribution shows what percent each maturity level is of the total investment portfolio.
Chart I
Maturity Ladder
• Note: Percent above each bar represents the average interest earnings rate for that maturity level
Chart II
Maturity Distribution
Table III: 3rd Quarter Investment Activity, shows investment activity for the quarter (January 2026 - March 2026).
Table III: 3rd Quarter Investment Activity
Fiscal Impact including annual maintenance and operating costs: n/a
Prior Council Action: City of Visalia Cash and Investment Reports are reviewed and accepted quarterly.
Alternatives: n/a
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to accept the City of Visalia Cash and Investment Report for the third quarter of the fiscal year which consists of months January, February, and March of 2026.
Environmental Assessment Status: n/a
CEQA Review: n/a
Deadline for Action: n/a
Attachments: Attachment #1, City of Visalia Cash and Investment Summary Attachment #2, City of Visalia Investment Report by Maturity Date
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
|
☐ Economic Vitality |
☐  Organizational Excellence |
☒ Fiscal Strength |
☒  Infrastructure & Growth |
☒  Quality of Life |