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Staff Report.TownInvestmentPolicy PREPARED BY: Gitta Ungvari Finance Director Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● (408)354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 1/10/2023 ITEM NO: 14 DATE: January 11, 2023 TO: Mayor and Town Council FROM: Laurel Prevetti, Town Manager SUBJECT: Review and Approve the Town’s Response to the 2022 Civil Grand Jury of Santa Clara County Report Entitled, “Show Me the Money: Financial Transparency Needed” and the Changes to the Town’s Operating Portfolio Investment Policy as Reviewed by the Finance Commission RECOMMENDATION: Review and approve the Town’s response to the 2022 Civil Grand Jury of Santa Clara County report entitled, “Show Me the Money: Financial Transparency Needed” and the changes to the Town’s Operating Portfolio Investment Policy as reviewed by the Finance Commission. BACKGROUND: On December 14, 2022, the 2021-2022 Civil Grand Jury of Santa Clara County released a report entitled, “Show Me the Money: Financial Transparency Needed.” The Grand Jury’s final report is included as Attachment 1. General law cities in California are required to comply with California Government Code Section 41004 (Section 41004), which states, “at least once each month, the city treasurer shall submit to the city clerk a written report and accounting of all receipts, disbursements, and fund balances. The city treasurer shall file a copy with the legislative body.” The benefit of the law is to ensure financial accountability and public transparency as well as to foster better fiscal affairs. Treasurer's reports provide city councils with timely and accurate financial information necessary to make reliable and sound decisions. The Grand Jury’s final report includes the following finding related to the Town of Los Gatos: PAGE 2 OF 3 SUBJECT: Operating Portfolio Investment Policy Review and Recommendation to Town Council DATE: January 11, 2023 BACKGROUND (continued): Finding: The Town of Los Gatos produced reports that contain the required content but does not produce the treasurer’s reports on a monthly basis as required by California Government Code section 41004. Recommendation: The Town of Los Gatos should produce its reports on a monthly basis to comply with California Government Code section 41004 by March 15, 2023. Pursuant to Penal Code Sections 933 and 933.05, the Grand Jury requested a response from the Town of Los Gatos and other jurisdictions by March 14, 2023. DISCUSSION: The Town’s current Investment Policy was last reviewed by the Finance Committee in January 2021 and adopted by Council in November of 2021. The Investment Policy establishes the investment scope, objectives, delegation of authority, standards of prudence, reporting requirements, internal controls, State mandated eligible investments, transactions, diversification requirements, risk tolerance, and safekeeping and custodial procedures for the investment of the operating funds of the Town. All Town funds are invested and/or will be invested in accordance with the Investment Policy and with applicable sections of the California Government Code. The Finance Commission is tasked with the review of the Town Investment Policy. At its January 10, 2023 meeting, the Finance Commission reviewed the proposed changes provided by staff and suggested one additional change to clarify that the monthly report will comply with Government Code Section 41004 (Attachment 2). Town Council approval of the staff and Commission recommendations will ensure the Town is in compliance with California Government Code Section 41004. The Finance Commission plans to review additional elements of the Investment Policy and potentially recommend supplemental reporting. The draft Town response to the Civil Grand Jury of Santa Clara County for Town Council consideration is included as Attachment 3. The response is consistent with the proposed changes to the Town’s Investment Policy. FISCAL IMPACT: There is no fiscal impact associated with responding to the Grand Jury and modifying the Investment Policy. PAGE 3 OF 3 SUBJECT: Operating Portfolio Investment Policy Review and Recommendation to Town Council DATE: January 11, 2023 Attachments: 1. 2021-22 Civil Grand Jury Report “Show Me the Money: Financial Transparency Needed” 2. Town Council Policy 4-02: Investment Policy - Redlined 3. Staff Response to the Civil Grand Jury Report “Show Me the Money: Financial Transparency Needed”