Local government: investments and deposits

Cities, counties, school districts, and other local agencies may use additional banking and investment options while remaining subject to principal-protection, liquidity, and prudent-investor standards.

What the law does ​

• Allows qualifying local agencies to invest up to 40% of managed assets in eligible commercial paper when they have at least $100 million in investment assets, without the prior 2031 reduction to 25%.
• Authorizes eligible commercial paper issued by qualifying banks and foreign-bank branches, and adds Inter-American Investment Corporation obligations to permitted investments.
• Permanently allows investments in U.S.-issued or backed securities that could yield zero or negative interest during periods of negative market interest rates.
• Lets certain large counties, cities, and pooled-investment agencies accept qualifying letters of credit from an out-of-state bank's regional Federal Home Loan Bank as deposit security.
• Recodifies and updates cross-references for local-agency investment and deposit rules without changing the underlying safeguards.

Who it affects ​

• Counties, cities, special districts, school districts, community college districts, and other local agencies investing surplus public money.
• Local treasurers, governing boards, county treasurers, and officials responsible for public funds.
• Banks, credit unions, public banks, investment pools, and financial firms that provide eligible investments or depository services.

Context ​

The bill consolidates statutes governing local public-fund investments and deposits.