Cal Cities announces launch of new investment pool for public agencies

Jul 6, 2022

The League of California Cities has announced a new local government investment pool, California Cooperative Liquid Assets Securities System (California CLASS). California CLASS was created in response to the growing investment needs of California public agencies.

The investment program, endorsed by Cal Cities and the California Special Districts Association (CSDA) in collaboration with Public Trust Advisors, LLC, is a California Joint Powers Authority governed by a board of trustees comprised of city and special district finance professionals.

California CLASS provides public agencies with an additional diversification option for their daily liquidity and strategic reserve investments. Public Trust, in its capacity as the investment advisor and fund administrator, is committed to providing California CLASS participants with an exceptional user experience and professional portfolio management.

The fundamental purpose of California CLASS is to develop and sustain an investment program wholly committed to the tenets of safety, liquidity, and yield for the benefit of participating public agencies. California CLASS will offer two investment fund options:

California CLASS Prime is designed to maintain a stable net asset value of $1, preserve capital, provide daily liquidity, and generate competitive returns for its participants. S&P Global Ratings has assigned its 'AAAm' principal stability fund rating to California CLASS Prime, the highest rating assigned to principal stability funds.

California CLASS Enhanced Cash is a variable NAV fund that is most suitable for public agencies seeking to develop a well-rounded investment program that includes strategic reserves. Enhanced Cash seeks to complement the daily liquidity offering of the Prime Fund by providing an investment option for those agencies seeking access to longer-dated securities that may generate higher income than those in a stable NAV Fund.

The longer weighted average maturity of the Enhanced Cash Fund relative to the Prime Fund makes it an appropriate option for any strategic reserves that an agency does not anticipate withdrawing for 12 or more months. FitchRatings has assigned the California CLASS Enhanced Cash a rating of ‘AAAf/S1’. According to FitchRatings, a fund rated ‘AAAf/S1’ demonstrates the highest underlying credit quality and very low sensitivity to market risk.

“Public agency funds keep our cities running and are vital to delivering essential services to our communities,” said Cal Cities Executive Director and CEO Carolyn Coleman. “We are excited to work with CSDA and Public Trust to launch California CLASS to provide access to cash management solutions and an investment advisor with a successful track record nationally.”

The California CLASS Joint Exercise of Powers Agreement was fully executed in June by the founding participants. The governing Board of Trustees for California CLASS is Chairperson Christina Turner (city of Morgan Hill); Vice Chairperson Ryan Clausnitzer (Alameda County Mosquito Abatement District); Treasurer George Harris (city of Lancaster); and Secretary Margaret Moggia (West Basin Municipal Water District).

“[We are] excited to offer the Prime and Enhanced Cash funds to provide a cash management option that prioritizes the public agency investor experience,” said Turner. “California CLASS provides valuable investment options and is a powerful diversification tool for public agency investors seeking safety, convenience, transparency, and competitive returns.”

“Our team at Public Trust is thrilled to partner with Cal Cities and CSDA. Together, we seek to provide an exceptional investment experience to California public agency investors,” Public Trust Managing Director Tom Tight said. “The professionals at CSDA and Cal Cities provide exceptional levels of service to their members and share the same client-first values that our team at Public Trust commit to achieving every day.”

Currently, Public Trust provides investment services for more than 5,000 local government investment pool clients nationally, with combined assets of more than $55 billion as of May 31, 2022. U.S. Bank, North America, serves as the custodian, and San Francisco-based law firm Orrick provides special legal counsel to the program.

For additional information about the services provided by California CLASS, please visit the California CLASS website or contact client services at (866) 987-4445 or clientservices@californiaclass.com