HomeMy WebLinkAboutRES.441.07-10-1989 BILL N0. 89-122 RESOLUTION N0.
A RESOLUTION STATING THE INVESTMENT POLICY OF THE
CITY OF CAPE GIRARDEAU, MISSOURI
WHEREAS, the City of Cape Girardeau is the custodian of public
monies and - City officials wish to exercise good judgment and
prudence in investing these funds .
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
CAPE GIRARDEAU, MISSOURI , AS FOLLOWS :
SECTION 1. SCOPE OF INVESTMENTS. The City of Cape
Girardeau, Missouri , hereby establishes the following investment
policy to apply to all financial assets of the City. Any and all
funds currently existing or anticipated are included unless
specifically excluded by the City Council or set aside in a
special escrow account .
SECTION 2. INVESTMENT OBJECTIVES. Investments shall be
undertaken in a manner that seeks to ensure the preservation of
capital in the overall portfolio. To attain this objective,
diversification is required in order that potential losses on
individual securities do not exceed the income generated from the
remainder of the portfolio .
Investment officials shall avoid any transaction that
might impair public trust . Since public trust is an important
ingredient in the investment policy, all participants in the
investment process shall seek to act responsibly as custodians of
the public trust by eliminating all speculation.
Investment officials shall assure that funds are
constantly available to meet immediate payment requirements
including payroll , accounts payable , and debt service .
The investment portfolio shall be designed to attain a
market average rate of return throughout budgetary and economic
cycles , taking into account investment risk constraints and the
cash flow characteristics of the portfolio .
SECTION 3. DELEGATION OF AUTHORITY. Management
responsibility for the investment program is hereby delegated to
the director of finance , who shall establish written procedures
for the operation of the investment program, consistent with this
investment policy. Such procedures shall include explicit
delegation of authority to persons responsible for investment
transactions . No person may engage in an investment transaction
except as provided under the terms of this policy and the
procedures established by the director of finance . The director
of finance shall be responsible for all transactions undertaken
and shall establish a system of controls to regulate the
activities of subordinate officials .
SECTION 4. PRIIDENCE REQIIIRED. Investments shall be made
with judgment and care--under circumstances then prevailing--wnich
persons of prudence, discretion and intelligence exercise in the
management of their own affairs, not for speculation, but for
investment , considering the probable safety of their capital as
well as the probable income to be derived .
The standard of prudence to be used by the investment
officials shall be the "prudent person" and shall be applied in
the context of managing an overall portfolio . Investment officers
acting in accordance with written procedures and exercising due
diligence shall be relieved of personal responsibility for an
individual security ' s performance provided that deviations from
expectations are reported in a timely fashion and appropriate
action is taken to control adverse developments .
SECTION 5 . INTERNAL CONTROLS. The comptroller shall
establish a system of internal controls , which shall be documented
in writing . The internal controls shall be reviewed by the
investment committee and with the independent auditor . The
controls shall be designed to prevent losses of City funds arising
from fraud, employee error , misrepresentation by third parties,
unanticipated changes in financial markets , or imprudent actions
by employees .
SECTION 6. INVESTMENT INSTRUMENTS. The City of Cape
Girardeau may invest its available operating and reserve funds in
the following instruments :
( a) Marketable Treasury securities of the United States .
(b) Debt securities of the Federal Farm Credit System or any
of the Banks of Cooperative, Federal Intermediate Credit
Banks or Federal Land Banks .
(c ) Debt securities of the Federal Home Loan Banks tFHLB ) .
(d) Debt securities of the Federal National Mortgage
Association (FNMA) .
( e) Debt securities of the Student Loan Marketing Association
( SLMA) .
( f ) Debt securities of the Government National Mortgage
Association ( GNMA) .
(g) Debt securities of the Federal Home Loan Mortgage
Corporation ( FHLMC) .
(h) Guaranteed Loan Pool Certificates of the Small business
Administration (SBA) .
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( i ) Farmers Home Administration insured notes .
( j ) Repurchase aareements collateralized by securities listed
above, documented by a written agreement, fully
collateralized by delivery to an independent third party
custodian, and are marked-to-market,
(k) Insured or collateralized deposits or certificates of
deposit of banks, savings and loan associations, and
other regulated financial institutions .
(1 ) Money market mutual funds whose portfolio consists of the
foregoing instruments. No sales or load charges may be
deducted from the fund invested in a mutual fund at the
time of purchase or redemption.
(m) Other prudent investment instruments approved prior to
purchase by a two-thirds majority of the City Council .
Proceeds of bond issues may be invested as allowed in the
bond indenture .
SECTION 7 . INVESTMENT COMMITTEE. There is hereby created
an investment committee consisting of the finance director and at
least two but not more than four other members as appointed by the
City Manager . Members of the investment committee shall serve
without compensation and shall meet at least quarterly to
determine general strategies and monitor results . The investment
committee shall include in its deliberations such topics as :
economic outlook ; portfolio diversification; maturity structure;
risk assessment ; and target rate of return on total portfolio.
SECTION 8 . RELATIONSHIPS WITH FINANCIAL INSTITUTIONS.
Depositories shall be selected through a procurement process which
includes issuing a formal request for proposals at least every
five years . In selecting depositories, the financial strength of
the institutions shall be considered .
Mutual fund advisers must be SEC-registered with a
minimum of five ( 5) years experience investing public funds and an
aggregate of $1 billion of money market assets under management .
No mutual fund may be purchased which charges sales or load
commissions at the time of purchase or redemption .
The investment committee shall establish written
procedures for the selection of financial institutions with whom
transactions will be conducted. Depositories, brokers and dealers
shall regularly submit their regulatory reports on financial
condition to the City. Financial institutions or dealers shall
agree to offer securities and transactions which comply with the
limitations and prudent provisions of this investment policy.
SECTION 9. DIVERSIFICATION. Investment officials shall
diversify use of investment instruments to avoid incurring
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unreasonable risks inherent in over-investing in specific
instruments, individual financial institutions or maturities .
Diversification strategies shall be determined and revised
periodically by the investment committee for all funds .
* Liquidity shall be assured through practices ensuring that
the next disbursement date and payroll date are covered through
maturing investments , marketable U. S. Treasury bills , overnight
delivery vs , payment repurchase agreements or money market funds .
* Market price volatility shall be controlled by allowing the
longest maturity of any fixed rate investment of the short-term
portfolio to be one tl ) year where the short-term portfolio is
defined as follows: all funds except those reserved for capital
projects (e .g . , bond sale proceeds ) and special assessment
prepayments being held for debt retirement . Maturity scheduling
for investments not included in the short-term portfolio shall be
timed according .to anticipated need .
* The investment committee shall establish strategies and
guidelines for the percentage of the total portfolio that may be
invested in any given type of investment . The committee shall
review these guidelines quarterly and evaluate the probability of
market and default risk for each of the various types of
investments as part of its considerations .
SECTION 10. SAFEREEPING AND CIISTODY. To protect against
potential fraud and embezzlement , investment assets shall be
secured through third-party custody and safekeeping procedures .
Bearer instruments shall be held only through third-party
institutions. Investment officials shall be bonded to protect the
public against possible embezzlement and malfeasance .
Collateralized securities such as repurchase agreements shall be
purchased using delivery vs . payment procedure. Unless prevailing
practices or economic circumstances dictate otherwise , ownership
shall be protected through third-party custodial safekeeping .
Mutual funds used for investments must provide for independent
custodians of their portfolios and delivery vs . payment on their
portfolio securities . Safekeeping procedures shall be reviewed
annually by the independent auditor .
SECTION 11 . ETHICS. Employees involved in the investment
process shall refrain from personal business activity that could
conflict with proper execution of the investment program, or which
could impair their ability to make impartial investment
decisions . Employees shall disclose confidentially to the City
Manager any material financial interests in financial institutions
that conduct business with the City and they shall further
disclose any large personal financial/investments positions that
could be related to the performance of the City' s portfolio .
Employees shall subordinate their personal investment transactions
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to those of the City, particularly with regard to the timing of
purchases and sales .
SECTION 12 . REPORTS. The investment committee shall submit
a quarterly report to the City Manager summarizing recent market
conditions and their effect on the City ' s investment strategy.
The report shall describe the portfolio in terms of description of
investments held and their maturities , yields, amounts, and any
other pertinent information.
PASSED AND ADOPTED THIS � DAY OF , 1989 .
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rancis E. Rhodes , Mayor
ATiEST:
E elyn G e ran , ity C er
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