California Assembly Bill AB869

California 2021-2022 Regular Session

• Introduced: 2/17/21
• Refer: 2/25/21
• Report Pass: 4/7/21
• Refer: 4/8/21
• Report Pass: 4/19/21
• Refer: 4/19/21
• Report Pass: 4/28/21
• Engrossed: 5/6/21
• Refer: 5/6/21
• Refer: 5/19/21
• Report Pass: 6/8/21
• Refer: 6/8/21
• Enrolled: 6/24/21
• Chaptered: 7/9/21
• Passed: 7/9/21

Caption

State funds: investments.

Impact

The enactment of AB 869 is likely to have a significant impact on public finance management in California. By permitting investments in foreign government securities, the state treasury could potentially achieve higher yields than those available from traditional domestic investments. This could lead to increased revenues for the state budget, supporting various public expenditures and programs. Furthermore, setting criteria for the quality of such investments ensures that tax dollars are invested wisely.

Summary

Assembly Bill 869, authored by Bloom, amends Section 16430 of the Government Code to expand the range of securities eligible for investment by the Treasurer of California. The bill allows for the investment of surplus state funds in bonds, notes, warrants, and other securities that are direct obligations of governments of foreign countries recognized as advanced economies by the International Monetary Fund. This change aims to diversify California's investment portfolio and maximize returns on surplus funds while ensuring security standards are met.

Sentiment

Overall, the sentiment around AB 869 appears to be positive among proponents who view it as a prudent financial strategy that aligns with modern investment practices. By opening the door to foreign government bonds, supporters argue that it reflects a forward-thinking approach to financial management. However, there are concerns regarding the implications of investing in foreign obligations, especially related to foreign exchange risks and the potential for political or economic instability in the issuing countries.

Contention

Notably, contention arises from balancing risk with the benefits of increased investment opportunities. Critics may argue that while the potential for higher returns exists, it is essential to consider the implications of investing in non-domestic securities, especially in terms of governance and jurisdictional issues. It raises questions about the reliability of foreign governments and the importance of due diligence to ensure that investments remain secure and compliant with California law.