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HomeMy Public PortalAboutResolution 96-34791 1 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 1 1 1 1 1 1 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. 1 1 STATEMENT OF INVESTMENT POLICY PAGE 2 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: 0 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. 1 1 1 1 1 STATEMENT OF INVESTMENT POLICY PAGE 4 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 PAGE 5 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. 1 1 1