HomeMy Public PortalAboutCC-100_Cash Management and Investment Policy_Effective 09-06-23City of Lebanon
New Hampshire
Section 1.0: Purpose
To ensure the administration of the City’s cash management system shall be
handled as its highest public trust. The custody and investment of City funds shall
be made in a manner that will provide the highest investment return with the
maximum security of principal invested while meeting the cash flow needs of the
City while conforming to State law.
Section 2.0: Scope
1) General – This Policy applies to all cash, cash equivalents (assets that are
readily convertible into cash) and investments in the custody of the City
Treasurer (NH RSA 48:16).
2) Exceptions – This Policy does not apply to cash, cash equivalents and
investments in the custody of the Trustees of the Trust Funds and the Board
of Trustees of the Library who must formally adopt an investment policy that
is reviewed and confirmed at least annually for all investments made by
them or by their agents for any trust funds in their custody (NH RSA 31:25
and NH RSA 202-A:23).
3) Pooling of Funds – The City will consolidate cash for management purposes
to achieve efficiency, effective management and maximum investment
opportunity unless effective administration requires otherwise such as in the
instance of accounting for bond proceeds associated with capital
improvements. Ownership of cash, cash equivalents and investments shall be
identified and accounted for by fund. Interest earnings shall be allocated
annually on a proportional basis to ten funds: general, solid waste disposal,
water treatment and distribution, sewage collection and disposal, municipal
airport, capital improvements, Lebanon open space, water investment fee
funds, public facilities impact fees, and tax increment fund district and
cemetery maintenance fund.
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 1 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
Section 3.0: Definitions
1) Cash Flow – is a measure of cash inflow and outflow from the City. Positive
cash flow means more money is coming into the City than is leaving;
negative cash flow is the converse.
2) Banking Services -- consist of, but are not limited to: account maintenance
services (account analysis; reconciliation services; and daily collected funds
reports), cash concentration services (lock-box; concentration account;
sweep accounts), investment services (overnight repurchase facilities) and
credit facilities.
3) Rate of Return – is the amount of income received from an investment
expressed as a percentage. Market rate of return is the yield that an investor
can expect to receive in the current interest-rate environment utilizing a buy-
and-hold to maturity investment strategy.
4) Fund -- segregates resources (revenue) and requirements (expenditures)
that are legally restricted to specific uses. A fund is analogous to a filing
cabinet with each drawer a separate fund. Within each drawer, or fund, there
are many file folders, or municipal functions which, in turn contain programs,
services and activities managed by City departments aimed at accomplishing
a function for which the City is responsible.
Section 4.0: Policy Detail
1) Investment Objective:
a. It is the policy that City funds be managed and invested with three
primary objectives in order of priority: safety, liquidity and yield.
Effective cash management is recognized as essential to good fiscal
management. The City shall maintain a cash management system
that includes collection of accounts receivable, prudent investment of
available cash, management of banking services and disbursement of
payments in accordance with invoice terms, the City’s Purchasing
Policy, Purchase Agreements Policy and City Charter.
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 2 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
2) Selected Objectives:
a. Safety of Principal – is the foremost objective of this Policy. Each
investment and/or depository transaction shall be undertaken in a
manner that seeks first to ensure the preservation of capital in the
overall portfolio.
b. Liquidity – The investment and/or depository portfolios shall remain
sufficiently liquid to meet all operating requirements that may be
reasonably anticipated.
c. Yield – The investment and/or depository portfolios shall be designed
with the objective of attaining a market rate of return considering
investment risk constraints and liquidity needs. Return on investment
is of least importance as an objective as compared to the safety and
liquidity objectives.
3) Authority and Responsibilities:
a. Authorized Representative of the City – The City Treasurer (NH RSA
48:16) is authorized to act on behalf of the City, to execute, for the
purpose of purchasing cash management products and services offered
by a banking services provider, such applications, agreements,
schedules, service requests and related documents and amendments
to such applications, agreements, schedules, service requests and
related documents in such forms as may be provided and/or required
by the banking services provider and in so doing shall bind the City to
the terms and conditions of the cash management document(s) so
executed.
b. Authority to Issue Tax Anticipation Notes – On December 17, 1996,
the City Council authorized the City Treasurer (Municipal Finance Act,
NH RSA 33:7), with approval of the City Manager, to borrow in
increments as the need arises, a sum or sums of money from time to
time during the current financial year, to issue and sell with interest at
maturity, temporary notes of the City in an amount sufficient to cover
expenses and to refund such note expenses.
c. Electronic Payment – The payment of local taxes, charges generated
by the sale of utility services, or other fees or charges by use of a
credit card, debit card, or such other means of electronic transaction is
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 3 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
authorized in accordance with NH RSA 80:52-c or any other applicable
State law. A service charge for the acceptance of such payments may
be added to the amount due at the time of billing in addition to any
penalties and interest payable; at the time of billing the amount of the
service charge shall be disclosed.
d. Depository Designation – The City Council is responsible for
designating the depository or depositories for City funds (419:46).
Important considerations in the selection and retention of a banking
services provider include credit-worthiness, credit characteristics,
financial history, institutional capabilities, resources and relevant
experience in managing the operational aspects of municipal cash
management and investment needs and requirements. The City
Treasurer is responsible for investment and depository management
decisions and activities including, but not limited to, the selection of
acceptable depository and investment instruments in accordance with
this Policy and State law.
e. Custody of City Funds – The City Treasurer, appointed by the City
Manager in accordance with City Charter Section 419:32, shall have
custody of all City funds (NH RSA 48:16).
f. Investment of Excess City Funds – Whenever the City Treasurer has in
custody an excess of funds which are not immediately needed for
expenditure, the City Treasurer shall invest same in authorized
investments in accordance with this Policy and State law.
g. Recording and Reporting – The City Treasurer shall keep in suitable
books provided for the purpose a fair and correct account of all sums
received into and paid from the City treasury, and of all notes given by
the City, with the particulars thereof.
h. Independent Audit – At the close of each fiscal year, a reporting shall
be made to the City by the City Treasurer giving an account of all
financial transactions during the year which shall be independently
audited.
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 4 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
4) Standards of Care:
a. Prudence -- The standard of prudence to be used by the City Treasurer
shall be the “prudent person” standard and shall be applied in the
context of managing an overall portfolio. The City Treasurer, acting in
accordance with established procedures and this Policy, and exercising
due diligence, shall be relieved of personal responsibility for an
individual security’s credit risk or market price changes, provided that
deviations from expectations are reported in a timely fashion, that
appropriate action is taken to control adverse developments, and that
the liquidity and sale of securities are carried out in accordance with
the terms of this Policy. 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.
b. Ethics and Conflicts of Interest -- City employees, officials, and
representatives and agents of the City involved in the cash
management process shall refrain from personal business activity that
could conflict (or appear to conflict) with the proper execution of the
investment program, or that could impair their ability to make
impartial decisions. Employees and investment officials shall disclose
any material financial interests in financial institutions with which they
conduct business. They shall further disclose any personal financial or
investment positions that could be related to the performance of the
investment portfolio.
c. Position Bonding -- The City Treasurer and others as prescribed by
State law shall be bonded by position under a blanket bond from a
surety company authorized to do business in the State of New
Hampshire (NH RSA 41:6). The bond shall indemnify against losses
through the failure of City employees covered to faithfully perform
their duties or to account properly for all moneys or property received
by virtue of their positions, or fraudulent or dishonest acts committed
by the covered employees.
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 5 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
5) Internal Controls:
a. Internal Control System – The City Treasurer shall establish and
maintain a system of internal controls that shall be reviewed annually
with the independent auditors. The controls shall be designed to
prevent loss of public funds arising from fraud, employee error,
misrepresentation by third parties, unanticipated changes in financial
markets, or imprudent actions by employees of the City.
b. Cash Flow Forecasting – The City Treasurer shall maintain a cash flow
forecasting process designed to monitor and forecast cash positions for
cash management and investment purposes.
c. Written Confirmation of Telephone and Electronic Transactions for
Investments and Wire Transfers – Due to the potential for error and
improprieties arising from telephone transactions, all telephone and
electronic transactions shall be supported by written communications
and approved by the appropriate person.
d. Documentation of Transactions – All transactions undertaken through
this Policy shall be appropriately documented to facilitate review of the
transactions by the independent auditors.
e. Remittance of School District and County Tax Assessments – Property
taxes billed and collected by the City include taxes levied for the
Lebanon School District and Grafton County, which are remitted to
those governmental units as required by law. The former is paid over
the course of the year in accordance (NH RSA 198:5) based on a cash
requirements schedule provided by the district; the latter is paid in
December (NH RSA 29:11). Ultimate responsibility for the collection of
taxes rests with the City.
6) Authorized Investments:
a. General – City Treasurer may invest in participation units in the public
deposit investment pool established (NH RSA 383:22), or in deposits,
including money market accounts, or certificates of deposit, or
repurchase agreements, and all other types of interest bearing
accounts, of federally insured banks chartered under the laws of New
Hampshire or the federal government with a branch within the State,
or in obligations fully guaranteed as to principal and interest by the
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 6 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
United States government. The obligations may be held directly or in
the form of securities of or other interests in any open-end or closed-
end management-type investment company or investment trust
registered under 15 U.S.C. section 80a-1 et seq., if the portfolio of the
investment company or investment trust is limited to such obligations
and repurchase agreements fully collateralized by such obligations. As
additional types of securities are approved for investment by State law
they will be eligible for investment by the City Treasurer.
b. Maturities – Investment maturities shall be scheduled to coincide with
projected cash-flow needs, taking into account anticipated revenue
inflows, routine expenditures and large non-routine expenditures.
7) Safekeeping and Collateralization:
a. City funds shall be secured in accordance with NH RS 48:16.
b. Interest-bearing Deposits Meeting Certain Conditions -- Excess funds
held by the City may invested in interest-bearing deposits which meet
all of the following conditions: (a) The funds are initially invested
through a federally insured bank chartered under the laws of New
Hampshire or the federal government with a branch within the state,
selected by the treasurer. (b) The selected bank arranges for the
redeposit of funds which exceed the federal deposit insurance
limitation of the selected bank in deposits in one or more federally
insured financial institutions located in the United States, for the
account of the treasurer. (c) The full amount of principal and any
accrued interest of each such deposit is covered by federal deposit
insurance. (d) The selected bank acts as custodian with respect to
each such deposit for the account of the treasurer. (e) On the same
date that the funds are redeposited by the selected bank, the selected
bank receives an amount of deposits from customers of other federally
insured financial institutions equal to or greater than the amount of the
funds initially invested through the selected bank by the treasurer.
c. Collateralization -- Excess funds held by the City may for deposit or
investment, including repurchase agreements, may be secured by
collateral having a value at least equal to the amount of such funds.
Such collateral shall be segregated for the exclusive use of the City.
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 7 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067
City of Lebanon
New Hampshire
Only securities defined by the bank commission as provided by rules
adopted pursuant to RSA 383-B:3-301(e) shall be eligible to be
pledged as collateral.
8) This Policy, in accordance with NH RSA 47:6, shall be reviewed and
readopted annually by the City Council with revisions as warranted.
Section 5.0: References (Charter/Code/State Statues)
1) City Charter Section 419:46 Depository.
2) NH 29:11 Tax Warrants and Extents.
3) NH 31:25 Custody; Investment.
4) NH RSA 41:6 Surety Bond Required.
5) NH RSA 47.6 Financial Supervision.
6) NH RSA 48:16 City Treasurer; Duties.
7) NH RSA 80:52-c Electronic Payment.
8) NH RSA 198:5 Assessment.
9) NH RSA 202-A:23 Exceptions.
10) NH RSA 383:22 Public Deposit Investment Pool.
11) NH RSA 383-B:3-301(e) Banking Business.
Section 6.0: Policy & Procedure Revision History
Section Revisions Date
Original Adoption 6/20/18
Re-Adoption 6/19/19
Re-Adoption 7/15/20
Amendment 2.0.3 Amended Section 8/04/21
Re-Adoption 8/03/22
Re-Adoption 9/06/23
COUNCIL POLICY
Cash Management and Investment Policy
Policy Number Effective Date Last Revision Page No.
CC-100 06/20/2018 08/04/2021 Page 8 of 8
Approved by: City Council
DocuSign Envelope ID: 74F3EE28-AB48-4BD5-ACCE-69F543D10067