CA SB 1438
enrolledLocal government: investments and deposits.
California · 2025-2026 Regular Session · upper
Quick answers
Did CA SB 1438 pass?
Not yet law. CA SB 1438 has passed both chambers and is enrolled, awaiting executive action (signature or veto) as of 2026-08-27. Latest recorded action (2026-09-04): Enrolled and presented to the Governor at 2 p.m.
What is CA SB 1438 about?
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.
Who sponsors CA SB 1438?
Committee on Local Government is the primary sponsor of CA SB 1438.
Description
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.
- Introduced
- 2026-03-11
- Latest action
- 2026-09-04 — Enrolled and presented to the Governor at 2 p.m.
- Bill type
- bill
- Last updated
- —
Subjects
Sponsors
- Committee on Local Governmentauthor
Committees
Not provided by source.
Action timeline
2026-03-11
Introduced. Read first time. To Com. on RLS. for assignment. To print.
introduction,reading-1,referral-committee
2026-03-12
From printer. May be acted upon on or after April 11.
2026-03-18
Referred to Com. on L. GOV.
referral-committee
2026-04-09
Set for hearing April 22.
2026-04-13
From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. GOV.
amendment-passage,committee-passage,reading-1,reading-2,referral-committee
2026-04-22
From committee: Do pass. Ordered to consent calendar. (Ayes 7. Noes 0. Page 4015.) (April 22).
committee-passage,committee-passage-favorable
2026-04-23
Read second time. Ordered to consent calendar.
reading-1,reading-2
2026-04-30
Read third time. Passed. (Ayes 36. Noes 0. Page 4113.) Ordered to the Assembly.
passage,reading-1,reading-3
2026-04-30
In Assembly. Read first time. Held at Desk.
reading-1
2026-05-18
Referred to Com. on L. GOV.
referral-committee
2026-06-01
From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. GOV.
amendment-passage,committee-passage,reading-1,reading-2,referral-committee
2026-06-18
From committee: Do pass. Ordered to consent calendar. (Ayes 10. Noes 0.) (June 17).
committee-passage,committee-passage-favorable
2026-06-22
Read second time. Ordered to consent calendar.
reading-1,reading-2
2026-06-25
Read third time. Passed. Ordered to the Senate.
passage,reading-1,reading-3
2026-06-25
Read third time. Passed. (Ayes 73. Noes 0. Page 5864.) Ordered to the Senate.
passage,reading-1,reading-3
2026-06-25
In Senate. Concurrence in Assembly amendments pending.
2026-08-25
Ordered to special consent calendar.
2026-08-27
Assembly amendments concurred in. (Ayes 39. Noes 0.) Ordered to engrossing and enrolling.
amendment-passage,committee-passage,committee-passage-favorable
2026-09-04
Enrolled and presented to the Governor at 2 p.m.
executive-receipt
Versions
Documents
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Votes
Do pass and be ordered to the Consent Calendar
2026-04-22 · pass · 7-0
Member-level votes (7)
- Choi: yes
- Durazo: yes
- Ashby: yes
- Laird: yes
- Arreguín: yes
- Seyarto: yes
- Cervantes: yes
Consent Calendar 2nd SB1438 L. GOV.
2026-04-30 · pass · 36-0
Member-level votes (40)
- Ochoa Bogh: yes
- Choi: yes
- Archuleta: yes
- Blakespear: yes
- Durazo: yes
- Rubio: yes
- Seyarto: yes
- Limón: yes
- Strickland: yes
- Cervantes: yes
- Cabaldon: yes
- Grove: yes
- Jones: yes
- Menjivar: yes
- Wiener: yes
- Richardson: yes
- Umberg: yes
- Allen: yes
- Alvarado-Gil: yes
- McNerney: yes
- Niello: yes
- Stern: yes
- Becker: yes
- Hurtado: yes
- Laird: yes
- Grayson: yes
- Weber Pierson: yes
- Cortese: yes
- Reyes: yes
- McGuire: yes
- Dahle: yes
- Gonzalez: yes
- Ashby: yes
- Padilla: yes
- Pérez: yes
- Smallwood-Cuevas: yes
- Caballero: other
- Arreguín: other
- Valladares: other
- Wahab: other
Do pass. To Consent Calendar.
2026-06-17 · pass · 10-0
Member-level votes (10)
- Alanis: yes
- Stefani: yes
- Pacheco: yes
- Fong: yes
- Carrillo: yes
- Wilson: yes
- Ward: yes
- Ta: yes
- Blanca Rubio: yes
- Ransom: yes
Related bills
No related bills recorded for this bill.
Official source
Attribution
Data from openstates_api_sync, retrieved 2026-09-06T05:44:07.117425Z
Inspect retained evidence for changes recorded after evidence tracking began:
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