SB 1438 — Local government: investments and deposits.

Summary

Existing law regulates the investment of public funds by local agencies, as defined. Existing law authorizes the legislative body of a local agency, as specified, that has money in a sinking fund or in its treasury not required for immediate needs to invest the money as it deems wise or expedient in certain securities and financial instruments. Among other things, existing law authorizes investment in commercial paper issued by entities meeting one of 2 sets of specified requirements and in United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by specified development banks if certain conditions are met. Existing law prohibits investment in securities that could result in zero-interest accrual unless issued by the United States government in the event, and for the duration, of a period of negative market interest rates. Existing law removes that exception on January 1, 2031. This bill would revise and recast the provisions regulating investment of public funds by local agencies, including, among other things, additionally authorizing investment in commercial paper issued by an entity organized as a federally or state-chartered bank or a federally or state-licensed branch of a foreign bank and in senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the Inter-American Investment Corporation. The bill would remove the January 1, 2031, sunset date for investments in United States-issued securities in a period of negative market interest rates, thereby extending that exception indefinitely. Existing law imposes various limits on local government investment in commercial paper. Specifically, existing law imposes a separate maximum percent investment limit for local agencies that are a county, city and county, the City of Los Angeles, or other local agency that pools investments with other local agencies that do not share the same governing body. Existing law sets those limits at 40% of total investments, with no more than 10% in commercial paper from any one issuer. For the remaining local agencies, and until January 1, 2031, existing law imposes a maximum of 25% for local agencies with less than $100,000,000 in total investment assets and at 40% for those agencies with $100,000,000 or more in investment assets. Beginning January 1, 2031, the limit is reduced to 25% for those local agencies with $100,000,000 or more in investment assets. This bill would revise and recast these provisions and would remove the January 1, 2031, reduction in the maximum investment for the above-described local agencies with $100,000,000 or more in investment assets. Existing law makes the treasurer of a local agency responsible for the safekeeping of money and authorizes them to enter into a contract with a depository, as specified. Existing law requires the depository and the depository agent to secure the deposits in eligible securities. Existing law defines eligible securities for this purpose to include, among other things, letters of credit issued by the Federal Home Loan Bank of San Francisco, as specified. This bill would make various nonsubstantive changes to those provisions and, for a county, city and county, or local agency that pools money in deposits or investments with other agencies, would additionally authorize an eligible bank headquartered outside of the state to submit letters of credit drawn on its regional federal home loan bank. This bill would make additional nonsubstantive changes, including, among other things, to update cross-references.

Bill Text

• Chaptered 09/27/26 - Chaptered html September 27, 2026
• Amended 06/01/26 - Amended Assembly Current pdf June 01, 2026
• Amended 04/13/26 - Amended Senate pdf April 13, 2026
• Introduced 03/11/26 - Introduced pdf March 11, 2026
• SB1438 View text html

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill amends 10 section(s) of the California codes: Section 27000.1 of the Government Code; Section 27000.3 of the Government Code; Section 53600.5 of the Government Code; Section 53635.2 of the Government Code; Section 53651 of the Government Code; Section 1702 of the Harbors and Navigation Code.

• Section 27000.1 of the Government Code

  (p) (p) Section → (o) (o)

  amended

• Section 27000.3 of the Government Code

  (p) → (o)

  amended

• Section 53600.5 of the Government Code

  (k) → (j) California California

  amended

• Section 53635.2 of the Government Code

  (j) and (k) → (h) and (i)

  amended

• Section 53651 of the Government Code

  controlled local agency agency debentures Act. warrants 53840) Chapter 4. warrants agency controlled warrants June 6, → controlled, local agency, agency, debentures, Act, as amended. warrants, 53840), chapter. warrants, agency, controlled, warrants,

  amended

• Section 1702 of the Harbors and Navigation Code

  is → are

  amended

• Section 12368 of the Public Utilities Code

  (r) → (q)

  amended

• Section 28818 of the Public Utilities Code

  (q) → (p)

  amended

• Section 107015 of the Public Utilities Code

  is → are

  amended

• Section 100.06 of the Revenue and Taxation Code

  he or she his or her → they their

  amended

Action History

1. September 04, 2026

   Enrolled and presented to the Governor at 2 p.m.

2. August 27, 2026

   Assembly amendments concurred in. (Ayes 39. Noes 0.) Ordered to engrossing and enrolling.

3. August 25, 2026

   Ordered to special consent calendar.

4. June 25, 2026

   In Senate. Concurrence in Assembly amendments pending.

5. June 25, 2026

   Read third time. Passed. (Ayes 73. Noes 0. Page 5864.) Ordered to the Senate.

6. June 22, 2026

   Read second time. Ordered to consent calendar.

7. June 18, 2026

   From committee: Do pass. Ordered to consent calendar. (Ayes 10. Noes 0.) (June 17).

8. June 01, 2026

   From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. GOV.

9. May 18, 2026

   Referred to Com. on L. GOV.

10. April 30, 2026

    In Assembly. Read first time. Held at Desk.

11. April 30, 2026

    Read third time. Passed. (Ayes 36. Noes 0. Page 4113.) Ordered to the Assembly.

12. April 23, 2026

    Read second time. Ordered to consent calendar.

13. April 22, 2026

    From committee: Do pass. Ordered to consent calendar. (Ayes 7. Noes 0. Page 4015.) (April 22).

14. April 13, 2026

    From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. GOV.

15. April 09, 2026

    Set for hearing April 22.

16. March 18, 2026

    Referred to Com. on L. GOV.

17. March 12, 2026

    From printer. May be acted upon on or after April 11.

18. March 11, 2026

    Introduced. Read first time. To Com. on RLS. for assignment. To print.

Sponsors

• Committee on Local Government · Primary

Votes

Subjects