 |
Sni Valley Fire Protection District Policy Manual
|
|
Investment
882 Investment
Effective Date:
Revision Date:
It is the policy of the Sni Valley Fire Protection District to invest public funds in a manner which ensures maximum security of principal; produces optimal investment returns; meets daily cash flow requirements; and conforms to all state and District ordinances governing the investment of public funds.
Effective cash management is recognized as essential to good fiscal management. A stable cash management and investment policy will be pursued to take advantage of investment interest as viable and material revenue to all District funds.
SCOPE
The investment policy applies to activities of the District with regard to investing the financial assets of all funds, including but not limited to: General Revenue Fund, Debt Service Fund, and Capital Projects Fund.
Funds will be invested and collateralized in compliance with the provisions of Missouri Revised Statutes 110.010 and 110.020. Investments will be in accordance with written policies and administrative procedures. Investment of all funds will comply with federal legislation and regulations governing reinvestment of proceeds and arbitrage. Earnings from investments will be used in a manner that will best serve the interests of the Sni Valley Fire Protection District, in accordance with generally accepted accounting principles.
OBJECTIVES
The District's investment objectives are:
SAFETY: As custodians of the public trust, preservation of capital and the protection of investment principal shall be the primary objective. In order to maintain this objectives, diversification is required (as much as possible or reasonable) to avoid incurring unreasonable risks regarding specific security types and individual financial institutions. All investments shall be made in conformance with federal, state and other legal requirements.
LIQUIDITY: Maintenance of sufficient liquidity to meet operating requirements.
YIELD: Attainment of a market rate of return throughout budgetary and economic cycles, acknowledging the District's investment risk constraints and the cash flow needs of the District. It is the District's policy to earn a rate of return at least equal to a "risk free" rate of return indicator, such as the return on three-month Treasury bills or federal funds. Where possible, prepayment funds for long term debt service shall be invested to ensure a rate of return at least equal to the interest being paid on the bonds.
DELEGATION OF AUTHORITY
The Treasurer is designated as the Investment Officer of the District and is responsible for investment decision and activities including requirements for safekeeping; repurchase agreements; wire transfers; collateral/depository agreements and banking service contracts. The Investment Officer shall provide monthly reports to the Board of Directors for their approval.
PRUDENCE
The standard of prudence to be used by investment officials is the "prudent investor" rule, which states, "Investments shall be made with judgment 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."
The Investment Officer, acting in accordance with written procedures and exercising due diligence will be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations are reported immediately and that appropriate action is taken to control adverse developments.
INTERNAL CONTROLS
The District shall establish a system of written internal controls, which shall be reviewed semi-annually by an independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions. Under no circumstances shall the functions of financial record keeping and operational functions such as investments be conducted by the same person.
AUTHORIZED INVESTMENT INSTRUMENTS
Assets of the District may be invested in any of the following:
U.S. TREASURY BILLS Short-term obligations of the United States government issued and sold at a discount, with maturities less than two years.
U.S. TREASURY NOTES AND BONDS Obligations of the United States government issued with a fixed coupon rate and original maturities less than two years.
COLLATERALIZED PUBLIC DEPOSITS (NEGOTIABLE CERTIFICATES OF DEPOSIT) Instruments issued by banks that state specified sums have been deposited for specific periods of time and at specified rates of interest. The certificates of deposit are to be backed by acceptable collateral securities as dictated by State and local law. The right of substitution of collateral may be granted to the financial institution upon approval of the Investment Officer. INterest will be calculated on a 365 day year/actual day-month basis, or another method approved by the Investment Officer in writing.
FEDERAL HOME LOAN BANK DISCOUNT NOTES consolidated obligations of the twelve district banks, issued on a discount basis, with maturities under one year.
REPURCHASE AGREEMENTS Contractual agreements, authorized by a singed Master Repurchase Agreement, with primary dealers and national supervised commercial banks, collateralized by U.S. Treasury securities or U.S. Government Agency instrumentality securities which are market to market.
GOVERNMENT INVESTMENT POOLS Repurchase and reverse repurchase agreements, authorized by a signed Master Repurchase Agreement, collateralized by the investment instruments listed above.
COMMERCIAL PAPER Commercial paper rated at no less than A1/P1 as rated by Standard & Poor's Corp. and Moddy's Investor Services. Commercial paper is limited to corporations operating within the United States and that have a commercial paper program in excess of $500,000,000. Commercial paper must mature within 180 days and shall represent no more than 15% of the District's total investments.
OTHER SECURITIES Securities not specifically mentioned but which are listed in RSMO. 30.270 and other enabling statutes.
DIVERSIFICATION
Unless in U.S. Treasury notes, bonds, securities, etc., no more than 50% of any investment may be made with one financial institution. Repurchase Agreements shall not make up more than 25% of the total investment portfolio.
INVESTMENT MATURITY SCHEDULES
Investment maturities shall be scheduled to coincide with projected cash flow needs, taking into account large routine expenditures as well as considering timing of anticipated revenue. Investments shall be limited to maturities not exceeding two years.
At the end of each maturity date, a competitive, documented telephone bid process shall be utilized before reinvestment to determine the best possible rates for the District. After the District's cash flow needs have been determined, the request for bids will reflect the appropriate instrument and maturity date. The successful bid will be determined by which provides the best rate of return for the District at the maturity desired.
AUTHORIZED FINANCIAL INSTITUTIONS
Banks shall be selected, based on the credit worthiness of the institutions, after a review of the prospective depository's characteristics and financial history. The Board of Directors shall select from banks located within the boundaries of the District. Banks will be asked to provide their most recent statement of financial condition. The selection of the primary depository shall be made in compliance with RSMO. 95.355. In order to maximize investment capabilities and minimize banking costs, centralization of deposits in a primary banking institution will be maintained. The Investment Officer shall prepare a request for proposal and solicit competitive bids for banking services every three years. The Board of Directors shall select the successful depository upon the recommendation of the Investment Officer. If a depositor does not meet the District's standards of financial stability by maintaining a bank rating of at least a "B", the bank will be required to come into compliance within six (6) months or lose the depository contract and the opportunity to bid on investment instruments.
COLLATERALIZATION
Collateralization will be required on District investments and funds on deposit with a depository bank, other than investments which are obligations of the United States government and it's agencies, in compliance with RSMO.110.010. The District considers repurchase/reverse repurchase agreements as simultaneous sales and purchases of securities rather than as collateralized loans. The purchase of securities underlying repurchase agreements will be referred to as "collateral" under this policy.
The financial institution will be required to provide delivery of securities pledged as collateral to the District in sufficiently documented form. In compliance with RSMO 110.020, the District's depository bank shall be required to ensure 100% collateralization of all District funds at all times. The depository is required to pledge collateral securities with a market value of at least 100% of the amount deposited plus accrued interest, less the amount which is an insured deposit pursuant to the Federal Deposit Insurance Act of 1950 (64 Stat. 873). The Investment Officer will review pledged collateral no less than once a year to ensure sufficient collateral is in place.
The following securities shall be acceptable as collateral for District funds:
A. Marketable treasury securities of the United States
B. General obligations debt service securities issued by the State of Missouri
C. General obligation bonds of any city in Missouri having a population of not less than 2,000
D. General obligation bonds of any county in Missouri
E. General obligation bonds approved and registered, of any school district in Missouri
F. General obligation bonds approved and registered, of any special district in Missouri
G. General obligation bonds of any of the 50 states
H. Debt securities of Federal Agencies allowed by RSMO. 30.270 with maturities less than three years
I. Surety Bonds issued by an insurance company licensed under the laws of the State of Missouri whose claims - paying ability is rated in the highest category by Duff and Phelps, A.M. Best, Standard and Poor's, or Moody's
J. Other securities not specifically mentioned which are listed in RSMO. 30.270 (as amended) and other enabling state statutes
SAFEKEEPING
All securities pledges as collateral to the District shall be deemed purchased securities and will be held by the District or the current depository at the time. The custodian shall hold the securities pledged in a segregated account with clearly marked evidence of ownership (safekeeping receipt) supplied to the Dsitrict. Securities must not be pledged to any other entity.
|
 |
 |
 |
