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HomeMy WebLinkAboutResolution 94-054-CCBOARD OF COUNTY COMMISSIONERS GRANT COUNTY, WASHINGTON A RESOLUTION OF THE COUNTY OF GRANT ADOPTING A POLICY FOR INVESTMENT RESOLUTION # 94- 54 -CC OF COUNTY FUNDS WHEREAS, the Grant County Commissioners have been asked by the County Treasurer to adopt the Investment Policy of Grant County, dated April 16,1994, and attached hereto, BE IT HEREBY RESOLVED BY THE COUNTY COMMISSIONERS OF GRANT COUNTY, that they do hereby adopt the Investment Policy of the County of Grant, dated April 16,1994. Copies of said Policy shall be available for inspection during business hours of the County at the office of the County Treasurer, and shall be provided upon request to interested parties. Said Rules are subject to amendment by resolution of the County Commissioners and shall take effect immediately. Done this 25th day of April, 1994 BOARD OF COUNTY COMMISSIONERS ATTEST: GRANT COUNTY, WASHINGTON YC {yrr, J ' i� A t. Clerk of W Board (f ,Chairman LA,, r County of Grant Ephrata, Washington Resolution No. A RESOUJTION OF THE COUNTY OF GRANT ADOPTING A POLICY FOR INVESTNENT OF COUNTY FUNDS, BE IT RESOLVED BY THE COUNTY FINANCE COMMITTEE OF GRANT COUNTY AS FOLLOWS: The County Finance Committee hereby adopts the Investment Policy of the County of Grant, dated -/'-!61 - if . Copies of said Policy shall be available for inspection during business hours of the County at the office of the County Treasurer, and shall be provided upon request to interested parties. Said Rules are subject to amendment by resolution of the County Finance ComT ttee. ADOPTED by the County Finance Col, 0, et6e on this /l. day of April, 1994. THE COUNTY OF GRANT Chair, Board of County Commissioners By, Cdian Treasurer By, County Auditor. Section 1. Policy 2. Scope 3. Objective 4. Prudence 5. Delegation of Authority 6. Authorized Financial Dealers and Institutions 7. Authorized Investments 8. Safekeeping and Custody 9. Diversification 10. Maturities 11. Internal Controls 12. Performance Standards 13. Competitive Selection 14. Reporting 15. Ethics and Conflicts of In 16. Investment Policy Adoptic 17. Notice to Financial Deal( APPENDIX A Page 1 1 2 2 3 3,4 4 5 5,6 6 INVESTMENT POUCY County of Grant 1.0 Pdiicy It is the policy of Grant County to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands on the Treasury and conforming to all Washington statutes and County Resolutions governing the investment of public funds. All participants in the County's investment process shall act responsibly as custodians of the public trust. Investment officials shall recognize that the investrnent portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism that is worthy of the public trust. This investment policy applies to all financial assets held or controlled by the Grant County Treasurer. These funds are accounted for in the County's Annual Financial Report and include: Funds: Surplus Funds, County Funds ( Data Processing, Employee Benefits, Insurance, ESCD, CRID Guaranty), Public Works Funds (Solid Waste, Equipment Rental, Pits & Quarries, Sign Shop), Cities and Towns Funds, Cemetery District Funds, Water District Funds, Hospital District Funds, Port District Funds, Fire District Funds, Weed District Funds, Mosquito District Funds, Irrigation District Funds, Public Health Funds, School District Funds. This investment policy applies to all transactions involving the financial assets and related activity of all the foregoing funds. 1 3.0 objective Funds of the County will be invested in accordance with the Revised Code of Washington, the BARS manual, these policies and written administrative procedures. The primary objectives, in priority order, of the County's investment activities shall be: Safety. Safety of principal is the foremost objective of the County. Investments of the County shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, cliver:sificafm is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. Each investment transactions shall seek to first ensure that capital losses are avoided, whether they be from security defaults or erosion of market value. Investment decisions should not incur unreasonable investment risks in order to obtain current investment income. UO&T. The County's investment portfolio will remain sufficiently liquid to enable the County to meet all operating requirements which might be reasonably anticipated. Retum: The County's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the County#s investment risk constraints and the cash flow characteristics of the portfolio. 4.0 Prudence The standard of prudence to be used by investment officials shall be the "prudent investor" rule and shall be applied in the context of managing an overall portfolio. It must be recognized that regardless of how prudent the County is, all investment decisions may not meet the desired result. Therefore, investment officers acting in accordance with written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. The "prudent investor" rale states: Investments shall be made with judgement and care, under circumstances then prevailing, which 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. 5.0 Delegation of AWvAy Authority to manage the county's investment program is derived from RCW 36.29.020 which delegates, in part, as follows: The Treasurer may invest funds when authorized by the governing bodies of the relevant municipal corporations or by the Finance Committee. The governing bodies may instruct the Treasurer to invest in a range of qualifying investments. When not already authorized by statute or the Board of County Commissioners and the governing bodies of the relevant municipal corporations, the Finance Committee authorizes the County Treasurer to invest any remaining funds in accordance with this investment policy. Management responsibility for the investment program is hereby delegated to the County Treasurer who shall establish written procedures for the operation of the investment program, consistent with this investment policy. Procedures should include reference to: safekeeping, wire transfer agreements, custody agreements and investment related banking services contracts. 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 County Treasurer. The County Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. No deposit shall be made except in a qualified public der,,. w.. j in the State of Washington. Banks shall provide the County Treasurer with a letter stating they are a qualified public depositary under the PDPC, as provided by RCW 39.58.010. The County Treasurer will maintain a list of financial institutions that are qualified public depositories as determined by the Public Deposit Protection Commission. Additionally, a list will be maintained of approved security broker/dealers selected on the basis of their qualifications, including creditworthiness (and shall be rffnited tD instate brokeddearem). mese may include primary dealers or regional dealers that qualify under SEC Rule 1503-1, the uniform net capital rule. Security brokers and dealers must conduct their business with the County within the State of Washington. No public deposits shall be made except in qualified public depositaries as provided in Chapter 39.58 RCW. 3 • � • I • / • �'• III Security brokers and dealers shall be required to fill out a Broker/Dealer Questionnaire and Certification application as provided for by the County (see the Treasurer's Procedures Manual for a copy of the Questionnaire). Broker/dealers doing business with the County will be provided a copy of this investment policy and will be expend tD assure that the transactions a.r....,Jished fbr the Casty fall within these born darkm The CountyTreasurer shall monitor financial dealers' and institutions' credit and financial histories throughout the period in which County funds are deposited or invested. The County shall require each broker/dealer to comply with the Uniform Net Capital Adequacy Rule through the most recent trading period, provide immediate disclosure to the County whenever the firm's capital position falls short of the capital adequacy standard, and provide independent certification by an outside auditor that the firm complied with the capital adequacy standard on its most recent balance sheet date. A current audited financial statement shall be on file for each financial institution and broker/dealer with which the County invests or deposits funds. RCW citations provide authorization for the Grant County Treasurer to purchase varying types of instruments for the County and its junior taxing districts (see RCW 35.39.030, 36.29.020, 39.59.020, 39.59.030, and 43.84.080). Within these limitations and parameters, the County has chosen to invest in the following types of securities: Non-negotiable certificates of deposit with qualified public depositories. Obligations of the US government, its agencies and instrumentalities. Prime Bankers' acceptances purchased on the secondary market from the 75 largest banks in the world based on total assets. Commercial Paper purchased on the secondary market. State Investment Pool. County Local Government Pools? (researching the legality of this option) Registered Warrants of Grant County taxing districts. (See Appendix A for examples of securities not eligible as investments by the County, Mether by statute or as recommended by the Treasurer and include in this policy. 4 8.0 Safekeeping and Custody All security transactions entered into by the County, shall be conducted on a delivery versus payment (DVP) basis. Securities purchased by the entity will be delivered against payment and held in a custodial safekeeping account with the trust department of a bank. The trust department of a bank, a third party custodian, will be designated by the CountyTreasurer. The custodian shall issue a safekeeping receipt to the County listing the specific instrument, rate, maturity, and other pertinent info. Securities shall be held in (1) the County's safekeeping account with the trust department of a bank selected through a competitive process and insured by the Federal Deposit Insurance Corporation, or (2) at the Federal Reserve Bank.. Certificates of deposit are purchased in the name of the County for each entity and are kept in the county's vault. The originating institution's financial status is reviewed by the treasurer and insured by Washington Public Deposit Protection Commission. The State of Washington Local Government Investment Pool investments are protected by the collateralization of banks where invested as well as possession of all securities, and the taxing authority of the State of Washington. These securities are pooled and held by the State. Also through the depository bank the county has a Municipal Investment Account which is insured by the FDIC and WPDPC. 9.0 Diversification The County's investment portfolio will be diversified to reduce the risk of loss to avoid incurring unreasonable and avoidable risks associated with concentrating investments in specific maturities, specific financial institutions, or in specific classes of securities. The following diversification strategies and constraints apply: Nlatuftim A. Portfolio maturities shall be staggered in a way that avoids undue concentration of assets in a specific maturity sector. Maturities shall be selected which provide for stability of income and reasonable liquidity. B. Liquidity shall be ensured through practices that include covering the next vendor disbursement and payroll dates through maturing Investments. Additionally, the use of U.S. Treasury Bills orthe State Investment Pool will provide sufficient liquidity to meet anticipated or unanticipated requirements. 5 9.0 Diversification Cont. Financial ItutiftAkxw A. No more than 20% of the overall portfolio may be invested in the securities (certificates of deposit and bankers` acceptances) of a single financial institution. B. In accordance with the Public Deposit Protection Act, County deposits including certificates of deposit shall not exceed the total paid-up capital (to include capital notes and debentures) and surplus of any depository bank. Security Classes: A. The maximum proportion of the total portfolio that shall be placed at any one time in each of the categories of investment are as follows: 1. One Hundred percent (100%) in U.S. Treasury Bills and the State Investment Pool. 2. Twenty percent (20%) in bankers' acceptances. 3. Ten percent (10%) in any other obligations that do not bear the full faith and credit if the U.S. Government or which is not fully collateralized or insured. To the extent practical, the County will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow requirement, the County will not invest in securities maturing more than five years from date of purchase. If matched to a specific cash flow requirement (such as Reserve or CIP funds), securities may be purchased that mature not to exceed sox years from the date of purchase. Additionally, in order to preserve liquidity and to lessen market risk, no more than 50% of the portfolio may be invested beyond twelve months, and the weighted average maturity of all securities shall not be over one and a haff years. N. 11.0 Internal Conbrols The County Treasurer shall establish a system of written internal controls designed to protect Grant County and its junior taxing districts' cash and cash equivalent assets and which shall be reviewed annually by the State Aucftr. This review will provide internal control by assuring that policies and procedures are being complied with. Such review may also result in recommendations to change operating procedures to improve internal control. The controls shall be designed to prevent loss of public funds due to fraud, error, misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees and officers of the County. Investment officials shall be bonded to protect the public against possible embezzlement and malfeasance. 12.0 Perftxrnanae Standards The County investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the County's investment risk constraints and cash flow needs. Given a passive investment strategy, the benchmarks used by the County to detemvne whether market yields are being achieved shall be the six mornh U.S. Treasury Bill and the State Investrnent Pod. Since ftse indcatom are relatively risk ffee be, id v i arks they comprise a minimum standard for the portfolio's rate of return. The investment program shall seek to augment returns above this threshold, consistent with prudent investment principles and the risk limitations identified herein. 13.0 Competitive Selection Before the County invests any temporarily surplus funds, a competitive bid process shall be conducted. If a specific maturity date is required, either for cash flow purposes or for oonfomrance to maturity guidelines, bids will be requested for instruments which meet the maturity requirement. If no specific maturity is required, a market trend (yield curve) analysis may be conducted to determine which maturities would be more advantageous. Bids will requested from three to five financial institutions or broker/dealers (previously approved) for various options with regards to term and instrument. The County will accept the bid which provides the highest rate of return with the maturity required and within the other parameters of these policies. Records will be kept of the bids offered, the bids accepted and a brief explanation of the decision which was made regarding the investment. 7 14.0 Reporting The County Treasurer is charged with the responsibility of including a report on investment activity and retums in the County's monthly and annual financial reports. Investment reports will include transaction information, portfolio listings, interest eamings, comparative performance data and any other financial or economic information which may affect investment results. 1�6.IIII► =. AZA» The County Treasurer shall submit a monthly financial report to the County Finance Committee, and the junior taxing districts fund managers. The monthly report shall include: A. Detailed listing of investment and deposits in the portfolio by fund and by investment, providing essential identifying characteristics for each investment or deposit, including purchase and maturity dates, market values, cost, coupon or discount rate and current yield. B. The month's investment purchases, sales and maturities, and indicate their effect by investment category. C. Percentage of the portfolio represented by each investment, investment category, and financial institution/broker/dealer D. The portfolio yield for each program and the overall portfolio, together with monthly eamings by item, by category and in total, and changes in yields from the previous period. E. Distribution of the portfolio by the following maturity categories: 0-30 days, 30-90 days, 90-180 days, 180.365 days, and over 1 year. F. Other relevant detail to accomplish disclosure of investment activity and portfolio status. Antral Reporting Within 60 days of the end of the fiscal year, the County Treasurer shall present a comprehensive annual report of the investment program and investment activity to the entities listed above. The annual report shall include twelve-month comparisons of retum, shall suggest policies and improvements that might enhance the investment program, and include an investment plan for the ensuing fiscal year. F 16.0 Ettt m and CorrAic s of Interest Officers and employees of the County 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. The County Treasurer and investment officials shall disclose to the County Finance Comrmttee any material financial interests in financial institutions that conduct business within this jurisdiction, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the County's portfolio. A disclosure statement shall also be completed whenever there is a change in such information. Disclosure statements shall be reviewed by the County Treasurer and maintained in employee files. Employees and officers shall subordinate their personal investment transactions to those of the County, particularly with regard to the time of purchases and sales. 16.0 Investment Pdicy Adoption The County Investment Policy shall be adopted by resolution of the County Finance Committee. The policy shall be reviewed on an annual basis by the Board of County Commissioners. The policy must be re -approved not more than 60 days after the beginning of each fiscal year. 17.0 Ndice to Financial Dealers and Irrsftftras Annually, the County Treasurer shall send the current edition of this investment policy to all institutions which are approved to execute County investments. The insfikAw shall ..... ,iirm in writing that the policy has been received, reviewed, and accepted by apprcpriabe pe.,a....,J. In the absence of such acceptance, business transactions shall not be executed with the dealer or ireftdian. 9 APPENDIX A EXAMPLES OF SECURITIES NOT EJGIBLE AS INVESTMENTS FOR COUNTY FUNDS (whether by statute or by recomnrmndation of the County Treasurer) *Negotiable Certificates of Deposit *Commercial Paper (not from secondary market) *Collateralized Mortgage Obligations (inc. REMICS) *Corporate Stocks *Corporate Bonds *Foreign Government Obligations *Options and Futures Contracts *Real Estate *Limited Partnerships 10 -CERTIRCATION- I hereby certify that I have personally read the investment policies and ojectives of the Government of Grant County and have implemented reasonable procedures and controls designed to prohibit investment transactions inconsistent with your policies. Whenever we are notified in writing, we will inform our sales personnel of your investment objectives, outlook, strategy and risk constraints. VVe will notify you immediately by telephone and in writing in the event of a material adverse change in our financial condition. VVe pledge to exercise due diligence in informing you of fundamental risks associated with financial transactions conducted with our firm. Price markups will be consistent with prevailing institutional pricing at the time of each transaction. I attest to the accuracy of our responses to your questionnaire. Signed: (Countersigned by corporate officer responsible for compliance)