[Ord. No. 2012-02 §I, 2-27-2012]
The purpose of this investment policy is to establish the guidelines
and requirements for investing of all City revenue funds.
[Ord. No. 2012-02 §II, 2-27-2012]
A. The
primary objectives, in priority order, of investment of activities
shall be safety, liquidity, and yield.
1. Safety. Safety of principal is the foremost objective
of the investment program. Investments shall be undertaken in a manner
that seeks to ensure the preservation of capital in the overall portfolio.
The objective will be to mitigate interest rate risk, custodial risk,
and market risk.
a. Interest rate risk. The City of Seneca will minimize
the risk that the market value of investments will fall due to changes
in general interest rates by:
(1)
Structuring investments so that securities mature to meet cash
requirement for ongoing operations, thereby avoiding the need to sell
securities on the open market prior to maturity; and
(2)
Investing operating funds primarily in shorter-term securities.
b. Custodial risk. The City of Seneca shall have a
depository contract and pledge agreement with each safekeeping bank
that will comply with the Financial Institutions, Reform, Recovery,
and Enforcement Act of 1989 (FIRREA). This will ensure that the City's
security interest in collateral pledged to secure deposits is enforceable
against the receiver of a failed financial institution.
c. Market risk. The City shall comply with State Statute
as to types of investments that will be made. The standard investment
type will be Collateralized Public Deposits (Certificates of Deposit)
but can also include United States Treasury Securities, United States
Agency Securities, and other as allowed by State Statute.
2. Liquidity. The investment portfolio shall remain
sufficiently liquid to meet all operating requirements that may be
reasonably anticipated. This is accomplished by structuring the portfolio
so that securities mature concurrent with cash needs to meet anticipated
demands.
3. Yield. The investment portfolio shall be designed
with the objective of attaining a market rate of return throughout
the budgetary and economic cycles, taking into account the investment
risk constraints and liquidity needs. Return on investment is of secondary
importance to the safety and liquidity objectives described above.
The core of investments is limited to relatively low risk securities
in anticipation of earning a fair return relative to the risk being
assumed. Securities shall not be sold prior to maturity with the following
exceptions:
a. A security with declining credit may be sold early to minimize the
loss of principal.
b. Liquidity needs of the portfolio require that the security be sold.
[Ord. No. 2012-02 §III, 2-27-2012]
A. Delegation Of Authority. Authority to manage the investment
program is delegated to the City Clerk, who shall act as the investment
officer in accordance with the established written procedures and
internal controls for the operation of the investment program consistent
with this investment policy. No person may engage in an investment
transaction except as provided under the terms of this policy and
the procedures established by the investment officer. The investment
officer shall be responsible for all transactions undertaken and shall
establish a system of controls to regulate the activities of subordinate
officials.
B. Ethics And Conflicts Of Interest. Officials and employees
involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management
of the investment program, or that could impair their ability to make
impartial decisions. Employees and investment officials shall disclose
any material 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. Employees and officials shall refrain from undertaking
personal investment transactions with the same individual with which
business is conducted with the City of Seneca.
C. Prudence. The standard of care to be used by the City Clerk
shall be the "Prudent Person Rule" and shall be applied in the context
of managing an overall portfolio. Investment officers acting in accordance
with the written procedures and this investment policy and exercising
due diligence shall be relieved of personal liability for an individual
security's credit risk or market price changes, provided deviations
from expectations are reported in a timely fashion to the Governing
Body and the liquidity and the sale of securities are carried out
in accordance with the terms of this policy.
[Ord. No. 2012-02 §IV, 2-27-2012]
A. Authorized Financial Dealers And Institutions. A list will
be maintained of financial institutions authorized to provide investment
transactions. Periodic review of qualifications of financial institutions
will be conducted by the City Clerk. Selection of financial institutions
will be made in compliance with the yield objectives of this policy.
Preference will be given to those institutions doing business in the
City of Seneca.
B. Internal Controls. The City Clerk is responsible for establishing
and maintaining internal controls that will be reviewed annually with
the City of Seneca's independent auditor. The internal control structure
shall be designed to ensure that the assets of the City of Seneca
are protected from loss, theft, or misuse and to provide reasonable
assurance that these objectives are met.
[Ord. No. 2012-02 §V, 2-27-2012]
A. Reconciliation. Investment funds shall be reconciled monthly
in accordance with the internal control policies of the City.
B. Reporting. An investment report shall be provided at least
quarterly to the Board of Aldermen.