HomeMy Public PortalAboutResolution 00-38331
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RESOLUTION NO. 00 -3833
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE
CITY ACKNOWLEDGING THE RECEIPT AND FILING OF THE
STATEMENT OF INVESTMENT POLICY FOR FISCAL YEAR 2000-
2001
WHEREAS, the California State Legislature passed legislation during the 1995 session amending
Section 53600 et seq. of the California Government Code with respect to authorized investments, written
statements of investment policy and quarterly reporting by local public agencies; and
WHEREAS, Governor of the State of California signed such legislation into law effective January
1, 1996, Section 53600 et seq. of the California Government Code
WHEREAS, the City Treasurer of the City of Temple City declares the 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
claim that a Statement of Investment Policy for the City of Temple City has been filed by the City
Treasurer for the Fiscal Year 2000 -2001.
APPROVED AND ADOPTED this 6th day of June, 2000.
A'1'1'EST:
'LbCk
City Clerg
I, hereby certify that the foregoing Resolution, Resolution No. 00 -3833 was duly adopted by the
City Council of the City of Temple City at a regular meeting held on the 6th day of June, 2000 by the
following vote:
AYES: Councilman - Breazeal, Brook, Gillanders, Wilson, Souder
NOES: Councilman -None
ABSENT: Councilman -None
ATTACHMENT A
CITY OF TEMPLE CITY
STATEMENT
OF
INVESTMENT POLICY
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I. PURPOSE
II. OBJECTIVE
III. SCOPE
CITY OF TEMPLE CITY
STATEMENT OF INVESTMENT POLICY
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
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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" standard as set
forth in Section 53600.3 of the California Government
Code, which states in part that, When investing,
reinvesting, purchasing, acquiring, exchanging, selling,
and managing public funds, a trustee shall act with care,
skill, prudence, and diligence under the circumstances
then prevailing, that a prudent person acting in a like
capacity and familiarity with those matters would use in
the conduct of funds of a like character and with like
aims, to safeguard the principal and maintain the
liquidity needs of the Agency ". The prudent investor
standard 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 execute investment transactions are those positions
who are authorized signatures for warrants and checks.
No other person may execute an investment transaction.
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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
(the above signer as
well as one of signers
listed below)
City Clerk, City Manager
Investment verification
and recordation
Finance Supervisor
Reconcile investment
records to bank
statements
Junior Accountant
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 53601 and 53635)
allows the City to invest in the following instruments:
CGC
Section
Investment Type
Maximum
Maturity
Authorized
Limit ( %)
Required
Rating
53601(a)
Local Agency Bonds
5 years
None
None
53601(b)
U.S. Treasury Obligations
5 years
None
None
53601(c)
State of California Obligations
5 years
None
None
53601(d)
CA Local Agency Obligations
5 years
None
None
53601(e)
U.S. Agencies
5 years
None
None
53601(f)
Bankers Acceptances*
270 days
40%
Fed
Reserve
Eligible
53601(g)
Commercial Paper **
180 days
15% OR 30%
Al/P1
Rating
53601(h)
Negotiable Certificates of
5 years
30%
None
Deposit
53601(i)
Repurchase Agreements
1 year
None
None
53601(i)
Reverse Repurchase
92 days
20% of base
None
Agreements****
53601(j)
Medium Term Notes
5 years
30%
A rating
53601(k)
Mutual Funds * * **
N/A
20%
Multiple
53601(k)
Money Market Funds
N/A
20%
Multiple
53601(m)
Collateralized Bank Deposits
5 years
None
None
53601(n)
Mortgage Pass - Through
5 years
20%
AA Rating
Securities
53601(d)
Local Agency Investment Fund
N/A
None
None
(LAIF)
53601(d)
County Pooled Investment Funds
N/A
None
None
53635
Time Deposits
5 years
None
None
* No more than 30% of surplus funds may be invested in Bankers Acceptances of any one commercial bank.
**
* **
Limit is 30% if dollar weighted average maturity of all commercial paper does not exceed 31 days.
Commercial paper issuers must be U.S. Corporations with $500 million plus in assets. Purchases may not
represent more than 10% of outstanding paper of an issuing corporation.
Reverse Repurchase Agreements must be made with primary dealers of the Federal Reserve Bank of New
York and the securities used for the agreement must have been held by the issuer for at least 30 days.
No more than 10% of an agency's surplus funds may be invested in any one mutual fund.
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STATEMENT OF INVESTMENT POLICY
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For Fiscal Year 2000 -2001, the City of Temple City is limiting
its purchase of investments to the following vehicles:
o 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 $30,000,000 as of July 1, 1998 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 fifteen
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 -half of one
percent of the earnings.
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.
• 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 quarterly investment report as
required by Section 53646 of the California Government Code
which provides a clear picture of the status of the current
STATEMENT OF INVESTMENT POLICY
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VII. REPORTING METHODS (CON'T)
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 or issuer
c) Date of Maturity
d) Amount of deposit or cost of security
e) Current market value of securities and source of market
value
f) State that there are sufficient funds to meet the next 6
months' obligations or provide an explanation as to why
sufficient monies shall or may not be available.
g) State that investments are in compliance with the City's
investment policy or manner in which the portfolio is not
in compliance
VIII. POLICY CONSTRAINTS
1. CITY CONSTRAINTS
The City of Temple City operates its pooled idle cash
investments under the Prudent Investor Standard. 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 on margins or invest
in derivative type investments such as inverse floaters,
range notes or interest only strips derived from a pool
of mortgage as prohibited under Section 53601.6 of the
California Government Code. 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.
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STATEMENT OF INVESTMENT POLICY
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IX. POLICY REVIEW
As required by Section 53646 of the California Government
Code, this Statement of Investment Policy shall be reviewed at
least annually as a public meeting of the City Council 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.