RCRC strongly opposes Assembly Bill 2214, authored by Assemblymember Dr. Corey Jackson (D-Moreno Valley). This measure seeks to authorize the use of local agency funds on deposit with the State Treasurer’s Pooled Money Investment Account (PMIA) for purposes that are inconsistent with liquidity requirements of the local agencies investing in that fund.
Specifically, AB 2214 would carve out $4 billion in PMIA funds, transfer those dollars to a new fund, and dedicate those funds for small business and housing lending activities that are not consistent with the fund’s management and investors’ needs. While recently amended to no longer explicitly draw from the Local Agency Investment Fund (LAIF), LAIF constitutes a significant portion of PMIA.
The Local Agency Investment Fund (LAIF) is managed by the California State Treasurer’s Office (STO) and invests in high-quality, low-risk securities (like U.S. Treasuries). It is part of the Treasurer’s Pooled Money Investment Account (PMIA). Its purpose is to preserve capital, and the return on investment is a tertiary priority for local agencies that place deposits with LAIF. Due to the high-quality investments the STO uses for funds in PMIA, this is an ideal repository for public funds that must be protected and regularly called upon to meet near-term payments and meet near-term budgetary obligations of local agencies.
RCRC has joined with other local agency partners in strong opposition to AB 2214 because the practical consequence of making changes to PMIA would be for local agencies to withdraw their funds from LAIF and find a similar option that meets their safety and liquidity requirements. This could reduce the cost efficiencies of pools as large as LAIF, thereby reducing the benefit to the taxpayer.
AB 2214 was amended on April 13 and will be heard by the Assembly Banking & Finance Committee on Monday, April 20, followed by the Assembly Local Government Committee on Wednesday, April 22. With recent amendments, the bill will require a 2/3rds vote on the Assembly Floor to advance. RCRC’s most recent letter with our coalition partners can be found HERE.
For additional information, contact RCRC Senior Policy Advocate Sarah Dukett.