HomeMy Public PortalAboutResolution 96-34791
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RESOLUTION NO. 96 -3479
A RESOLUTION OF THE CITY OF TEMPLE CITY
ACKNOWLEDGING THE RECEIPT AND FILING OF THE REVISED
STATEMENT OF INVESTMENT POLICY FOR THE REMAINDER OF
THE FISCAL YEAR 1995 -96
WHEREAS, the California State Legislature passed legislation during the 1984 session requiring
the filing of an annual Statement of Investment Policy by local public agencies; and
WHEREAS, Governor of the State of California signed such legislation into law effective January
1, 1985 (Chapter 1226); and
WHEREAS, the City Treasurer of the City of Temple City declares the revised Statement of
Investment Policy to be as attached (Attachment A).
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Temple City
claims that a revised Statement of Investment Policy for the City of Temple City has been filed by the City
Treasurer for the remainder of FiseR1 Year 1995 -96.
APPROVED AND ADOPTED this 6th day of February, 1996.
�1�1o�/I,01 1 ,D! /.��
MAYOR
ATTEST:
I, hereby certify that the foregoing Resolution, Resolution No. 96 -3479 was duly adopted by the
City Council of the City of Temple City at a regular meeting held on the 6th day of February, 1996, by the
following vote.
AYES: Councilman - Budds, Gillanders, Souder, Wilson, Breazeal
NOES: Councilman -None
ABSENT: Councilman -None
CITY OF TEMPLE CITY
STATEMENT
OF
INVESTMENT POLICY
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CITY OF TEMPLE CITY
STATEMENT OF INVESTMENT :POLICY_
I. PURPOSE
II. OBJECTIVE
III. SCOPE
IV. STANDARDS OF CARE
1. PRUDENCE
2. DELEGATION OF AUTHORITY
V. INTERNAL CONTROLS
VI. SUITABLE AND AUTHORIZED INVESTMENTS
VII. REPORTING METHODS
VIII. POLICY CONSTRAINTS
1. CITY CONSTRAINTS
2. LEGAL CONSTRAINTS
IX. POLICY REVIEW
CITY OF TEMPLE CITY
STATEMENT OF INVESTMENT POLICY
I. PURPOSE
This statement is intended to provide a guideline for the
prudent investment of temporary idle cash, trust funds and
restricted monies and to outline a policy for maximizing the
efficiency of the cash management system. Ultimate investment
goal is the protection of cash investments.
II. OBJECTIVE
The cash management system of the City of Temple City is
designed to accurately monitor and forecast expenditures and
revenues, thus insuring the investment of monies to the
fullest extent possible. Attempts to obtain highest interest
yields possible are a statement of fact as long as investments
meet the criteria required for safety and liquidity.
III. SCOPE
This investment policy applies to activities of the City with
regard to investing the financial assets of all funds,
including the following: General Fund, Special Revenue Funds,
Assessment Funds, Internal Service Funds, Capital Projects
Funds, Debt Service Funds, Reserve Funds, Trust and Agency
Funds, and any other Funds that may be created from time to
time.
IV. STANDARDS OF CARE
1. PRUDENCE
The standard of prudence to be used by investment
officials shall be the "prudent investor" rule, which
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."
The prudent investor rule shall be applied in the context
of managing the overall portfolio.
2. DELEGATION OF AUTHORITY
The authority to manage and operate the investment
program is granted to the Treasurer pursuant to Section
53607 of the California Government Code. Individuals who
may engage in investment transactions are those positions
who are authorized signatures for warrants and checks.
No other person may engage in an investment transaction.
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STATEMENT OF INVESTMENT POLICY
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V. INTERNAL CONTROLS
The Treasurer is responsible for establishing and maintaining
an internal control structure designed to ensure that the
assets of the entity are protected from loss, theft or misuse.
The Treasurer shall establish the investment functions so that
specific responsibility for the performance of duties and
segregation of duties are assigned with a clear line. The
functions of authorizing, recording transactions, and
performing reconciliations are handled by separate persons to
reduce the risk that a person is in a position to conceal
errors or fraud in the normal course of duty.
The current segregation of duties are as follows:
Function
Responsibility
Develop formal investment
policy
Treasurer
Review formal investment
policy
City's Auditing Firm
Adopt formal investment
policy
City Council
Execute investment
transactions
Treasurer, Deputy Treas.
(one of the above signers
as well as one of the
signers listed below)
City Clerk, City Manager
Investment verification and
recordation
Accounting Technician II
Reconcile investment
records to bank
statements
Accounting Technician I
While no internal control system, however elaborate, can
guarantee absolute assurance that the City's assets are
safeguarded, it is the intent of the City's internal control
system to provide reasonable assurance that management of the
investment function meets the City's objectives. These
internal controls shall be reviewed annually by the
independent auditor.
STATEMENT OF INVESTMENT POLICY
PAGE 3
VI. SUITABLE AND AUTHORIZED INVESTMENTS
The California Government Code (Section 53600, et seq., 53635)
allows the City to invest in the following instruments:
O US Treasury Obligations (Bill, Notes and Bonds)
O US Government Agency Securities and Instrumentalities of
Government Sponsored Corporations
O Banker's Acceptances
O Commercial Paper
O Repurchase Agreements
O Certificates of Deposit
O Negotiable Certificates of Deposit
O Passbook Savings Accounts
O Interest Bearing Checking Accounts
O Money Markets
O Local Agency Investment Fund (State Pool)
For the balance of Fiscal Year 95 -96, the City of Temple City
is limiting its investments to the following vehicles:
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LAIF (Local Agency Investment Fund) - a special fund in
the State Treasury which local agencies may use to
deposit funds for investment. There is no minimum
investment period and the minimum transaction is $5,000,
in multiples of $1,000 above that, with a maximum balance
of $20,000,000 for any agency. However, any investment
with LAIF must comply with other self- imposed
restrictions as specified in this Investment Policy. The
City is restricted to a maximum of ten transactions per
month. It offers high liquidity because deposits can be
converted to cash in twenty -four hours and no interest is
lost. All interest is distributed to those agencies
participating on a proportionate share basis determined
by the amounts deposited and the length of time they are
deposited. Interest is paid quarterly. The State
retains an amount for reasonable costs of making the
investments, not to exceed one - quarter of one percent of
the earnings.
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STATEMENT OF INVESTMENT POLICY
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The interest rates are fairly high because of pooling the
State's surplus cash with the surplus_ cash. deposited.
This creates a multi - billion dollar money pool and allows
diversified investments. In a high interest rate market,
the City does better than LAIF, but in times of low
interest rates, LAIF yields are higher. The City
continually invests in the Local Agency Investment Fund.
o Certificates of Deposit - time deposits of a bank or
savings and loan. They are purchased in various
denominations with maturities ranging from 30. to 360
days. The interest is calculated on a 360 -day basis and
is payable monthly.
o Passbook Savings Account - a certificate of deposit
issued in any amount for a non specified amount of time.
Interest rate is much lower than CD's but the savings
account allows flexibility.. Funds can be deposited and
withdrawn according to daily needs.
o Interest Bearing Checking Accounts - a checking account
which receives revenues and pays disbursements. Interest
earned can be paid to the local jurisdictions- on a
regular basis or left in the account to offset the fees
for monthly services.
VII. REPORTING METHODS
The Treasurer shall prepare a monthly investment report which
provides a clear picture of the status of the current
investment_ portfolio. The report should be provided to the
City Manager and legislative body. The report should include
the following:
a) Type of investment
b) Institution
c) Date of Maturity
d) Amount of deposit or cost of security
e) Current market value of securities with maturity in
excess of twelve months
f) Rate of interest
g) State that there are sufficient funds to meet the next 6
months' obligations
STATEMENT OF INVESTMENT POLICY
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VIII. POLICY CONSTRAINTS
1. CITY CONSTRAINTS
The City of Temple City operates its pooled idle cash
investments under the Prudent Man rule. The Treasurer
will evaluate local banks and savings institutions and
may invest idle cash funds with such institutions when
the criteria for prudent investment previously stated are
met. The City operates its investment pool according to
State and self- imposed constraints. It does not buy
stocks; it does not speculate; it does not deal in
futures or options. It does not purchase or sell
securities or margins or invest in derivative type
products. Any investment extending beyond a five -year
period requires prior City Council approval.
Additionally, a minimum of 50% of the outstanding
investments must mature within a one -year time period.
2. LEGAL CONSTRAINTS
Surplus funds must be deposited in State or national
banks, State or Federal savings association or State or
Federal credit unions within the State of California. The
deposits cannot exceed the amount of the bank's or
savings and loan's paid -up capital and surplus.
The bank or savings and loan must secure public funds
deposits with eligible securities having a market value
of 110% of the total amount of the deposits. State law
also allows as an eligible security, first trust deeds
having a value of 150% of the total amount of the
deposits.
IX. POLICY REVIEW
This Statement of Investment Policy shall be reviewed at least
annually to ensure its consistency with the overall objectives
of preservation of principal, liquidity and return, and its
relevance to current law, financial and economic trends.
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