Township of Pine, PA
Allegheny County
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Table of Contents
Table of Contents
[HISTORY: Adopted by the Board of Supervisors of the Township of Pine 2-2-2015 by Res. No. 917. Amendments noted where applicable.]

§ 19-1 Purpose.

The intent of the Investment Policy of the Township of Pine is to define the parameters within which funds are to be managed. In methods, procedures and practices, the policy formalizes the framework for the Township's investment activities that must be exercised to ensure effective and judicious management of the Township's funds. The guidelines are intended to be broad enough to allow the Board of Supervisors or their designees to function properly within the parameters of responsibility and authority, yet specific enough to adequately safeguard the Township's financial assets.

§ 19-2 Governing authority.

The Investment Policy shall be executed in compliance with the Pennsylvania Second Class Township Code, the Township of Pine Home Rule Charter, Pennsylvania Act 72 of 1971 (pertaining to collateralization of deposits exceeding insurable limits) and all other applicable federal, state and local requirements.

§ 19-3 Scope.

A. 
This Investment Policy applies to all financial assets of the Township of Pine which are funds accounted for in the Township of Pine Annual Financial Report and includes the following funds:
(1) 
General Fund.
(2) 
Recreation Fund.
(3) 
Transportation Impact Fund.
(4) 
Water/Sewer District Fund.
(5) 
Capital Projects Fund.
(6) 
Liquid Fuels Fund.
(7) 
Any new fund created by the legislative body, unless specifically exempted.
B. 
The Investment Policy excludes the Deferred Compensation and Municipal Employees' Pension Funds, for which the Township acts as trustee or fiduciary. Investments in these funds are determined by the individual employees, and the plan assets can only be used for the employees or their beneficiaries. Consequently, these funds fall outside the scope of this policy.

§ 19-4 Standards of care.

A. 
Prudence.
(1) 
The standard of prudence to be used by investment officials shall be the "prudent person" standard. Officers and designated employees acting in accordance with 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 and appropriate action is taken to control adverse developments.
(2) 
The "prudent person" standard states that, "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.
(1) 
Officers and employees involved in the investment process shall refrain from personal activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial investment decisions.
(2) 
The Commonwealth of Pennsylvania State Ethics Commission requires public officials and certain public employees to file a statement of financial interests form pursuant to the provisions of the Public Official and Employee Ethics Law, Act 170 of 1978 as amended by Act 9 of 1989, 65 P.S. § 401 et seq. Officers and employees making investment decisions must file the statement of financial interests form no later than May 1 of each year.
C. 
Delegation of authority and responsibilities.
(1) 
While ultimate authority rests with the governing body (the Board of Supervisors), the Township of Pine Code delegates authority to the Township Manager. Chapter 2, Article IV, § 2-21C states that the Township Manager, as head of the Department of Administration, is responsible for "the administration of activities pertaining to the receipt, expenditure, accounting, investment, custody and control of municipal funds and assets." This Investment Policy further establishes a Financial Management Team, consisting of the following three individuals:
(a) 
Township Manager (Township Treasurer).
(b) 
Assistant Treasurer.
(c) 
Financial Administrator.
(d) 
Two members of the Board of Supervisors.
(2) 
The Financial Management Team shall consult together in making investment decisions and shall act responsibly as custodians of the public trust. No team member may engage in an investment transaction except as provided under the terms of this policy. Team members acting in accordance with 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 that deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
(3) 
The governing body (Board of Supervisors) retains ultimate fiduciary responsibility and decision making authority for investments and cash management. The Board will receive performance updates as requested and review the investment policy annually.

§ 19-5 General objectives.

The primary objectives of this Investment Policy, in order of priority, are:
A. 
Safety. Preservation of principal is the foremost objective. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The goal will be to mitigate credit risk and interest rate risk.
B. 
Liquidity. Investments shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.
C. 
Return on investment. Funds shall be invested with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints of safety and liquidity needs.

§ 19-6 Specific objectives.

The Financial Management Team will consider the following factors when making investment decisions:
A. 
Diversification: The purpose of diversification is to reduce the overall risk within the investment portfolio while attaining market/benchmark rates of return. The Township of Pine shall diversify its investments among institutions to prevent over-concentration in an entity. As a guideline, no more than 40% of the Township's total financial assets should be invested in a single financial institution or security type. This percentage limit is a guideline to insure diversification; however, a reasonable temporary imbalance will not significantly impair this strategy as long as it is monitored regularly.
B. 
Maximum maturities: The Financial Management Team will attempt to match maturity dates of investments as closely as possible with anticipated cash flow requirements. In the General Fund, investments will be limited to those with maturity dates of one year or less. In the other funds, a longer maturity date may be used only if the rate of return is advantageous and the maturity date coincides with the expected use of the funds.
C. 
Performance standards:
(1) 
The financial assets of the Township will be managed in accordance with the parameters specified within this policy, but the expectation is that the assets should obtain a market average rate of return during an economic environment of stable interest rates. When interest rates are forecast to rise in the near future, the "prudent person" standard dictates that care be taken not to tie up large amounts of funds at a fixed interest rate that is expected to be lower than the expected future market rate. Conversely, when interest rates are forecast to decline, it is prudent to take advantage of investments bearing an interest rate that is higher than the expected future market rate.
(2) 
Financial performance should be gauged against an appropriate benchmark, such as the three-month U.S. Treasury Bill Rate or the monthly average federal funds rate.

§ 19-7 Authorized investments.

A. 
Section 3204 of the Pennsylvania Second Class Township Code (53 P.S. § 68204) allows the following six investment types:
(1) 
United States Treasury Bills.
(2) 
Short-term obligations of the Federal Government or its agencies or instrumentalities.
(3) 
Deposits in savings accounts or time deposits, other than certificates of deposit, or share accounts of institutions insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, the Pennsylvania Deposit Insurance Corporation or the Pennsylvania Savings Association Insurance Corporation, or their successor agencies, to the extent that the accounts are so insured and, for any amounts above the insured maximum, if approved collateral therefore is pledged by the depository.
(4) 
Obligations of the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth or of any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision.
(5) 
Share of an investment company registered under the Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.), if the only investments of that company are in the authorized investments for township funds listed in Subsection A(1) through (4) (above).
(6) 
Certificates of deposit purchased from institutions insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, the Pennsylvania Deposit Insurance Corporation or the Pennsylvania Savings Association Insurance Corporation, or their successor agencies, to the extent that the accounts are so insured. However, for any amounts above the insured maximum, the certificates of deposit shall be secured by a pledge or assignment of assets of the institution, and the collateral may include loans, including interest in pools of loans, secured by first mortgage liens on real property. Certificates of deposit purchased from commercial banks shall be limited to an amount equal to 20% of a bank's total capital and surplus. Certificates of deposit purchased from savings and loan associations or savings banks shall be limited to an amount equal to 20% of an institution's assets minus liabilities.
B. 
More specifically, the Board of Supervisors pre-authorizes the following institution: Pennsylvania Local Government Investment Trust (PLGIT). Shares in PLGIT, which is a financial services organization sponsored by seven statewide associations, including the Pennsylvania State Association of Township Supervisors (PSATS). PLGIT fully complies with all Commonwealth of Pennsylvania statutes and regulations for the allowable investment of public funds.

§ 19-8 Custodial credit risk, PA Act 72.

Custodial credit risk is the risk that, in the event of a bank failure, the government's deposits may not be returned to it. Bank balances up to $250,000 per bank are insured by the Federal Deposit Insurance Corporation (FDIC). Investments of Township financial assets shall first conform to the requirements of the Second Class Township Code. In addition, when the value of the Township's deposits exceeds the insurable limits of the institution, the additional sums shall be secured by collateral pledged by the depository pursuant to Pennsylvania Act 72 of 1971 (72 P.S. § 3836-1 et seq., "Standardizing the Procedures for Pledges of Assets") which requires banks to pledge collateral for Township deposits in excess of $250,000. Act 72 of 1971 was amended by Act 139 of 2000 to permit the depository institution to secure its public deposits with a Federal Home Loan Bank letter of credit rather than with a pledge of collateral.

§ 19-9 Investment Policy adoption.

The Township of Pine Investment Policy shall be adopted by resolution of the Board of Supervisors. The policy shall be reviewed at least annually and modifications made thereto must be approved by the Board of Supervisors.