[HISTORY: Adopted by the Board of County Commissioners of Doña Ana County 7-27-2021 by Res. No. 2021-67[1]. Amendments noted where applicable.]
[1]
Editor's Note: This resolution also superseded former Ch. 60, Investment Policy, adopted 1-25-2011 by Res. No. 2011-15.
It is the policy of the Doña Ana County Board of Finance and the Doña Ana County Treasurer to invest public funds in a prudent manner that maximizes return on investment while preserving principle and maintaining liquidity. The guidelines and terms contained herein adhere to this policy and those set by New Mexico state statutes.
This policy applies to all County funds entrusted to the care, custody, and control of the Doña Ana County Treasurer.
This policy is based on the authority of, enacted and promulgated under NMSA § 6-10-1 et seq. The Doña Ana County Board of Commissioners, acting as the County Board of Finance pursuant to 6-10-8, NMSA 1978, shall have the authority to set policy for the management of County investments and shall ensure that such policy is carried out. The Doña Ana County Treasurer is the County's Investment Officer and shall be responsible for the investment activity consistent with the terms of this policy.
The primary objectives, in order of priority, of investment activities shall be safety, liquidity, and yield.
A. 
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.
B. 
Liquidity. The investment portfolio shall remain liquid to meet all operating requirements that may be reasonably anticipated.
C. 
Yield. The County's investment portfolio shall regularly meet or exceed performance benchmarks as described in § 60-12 herein, and shall not be lower than the current return of a three-month U.S. Treasury bill.
A. 
Prudence. The standard of prudence to be used shall be in accordance with the "prudent person" standards and shall be applied in the context of managing the overall portfolio. Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy. 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. Officers 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 officers shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Doña Ana County.
The County Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of Doña Ana County are protected from loss, theft, or misuse. The internal control structure shall be designed to provide reasonable assurance for the following:
A. 
Compliance with all federal, state, and local regulations.
B. 
Control of collusion.
C. 
Separation of duties (decision making, recordkeeping, and reconciliation).
D. 
Timeliness in reporting.
E. 
Security of fund transfers.
F. 
Clear delegation of authority.
G. 
Retention of records.
A. 
Safekeeping and custody services. All investment securities purchased through broker/dealers shall be held in third-party safekeeping with a qualified financial institution. The Treasurer shall approve one or more financial institutions to provide safekeeping and custodial services for the County. A safekeeping agreement that adheres to the County's Investment Policy shall be executed with each custodian bank.
B. 
Authorized financial dealers and institutions. A list will be maintained of financial institutions authorized to provide investment services. In addition, a list will be maintained of approved security broker/dealers with a minimum capital requirement of $10,000,000 and at least five years of experience. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule).
(1) 
All financial institutions and broker/dealers must supply the following as appropriate:
(a) 
Audited financial statements.
(b) 
Proof of National Association of Securities Dealers (NASD) certification.
(c) 
Proof of Financial Industries Regulatory Authority (FINRA) registration.
(d) 
Conflict of interest disclosures.
(e) 
Certification of having read, understood, and agreeing to comply with the Doña Ana County's investment policy.
(2) 
From time to time, the County Treasurer may choose to invest in instruments offered by minority and community financial institutions. In such situations, a waiver to the criteria above may be granted.
C. 
Delivery vs. payment. All trades where applicable will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities will be held by a third-party custodian as evidenced by safekeeping receipts.
Consistent with NMSA § 6-10-36(B), County funds may be deposited in noninterest-bearing checking accounts in one or more banks, savings and loan associations or credit unions designated as checking depositories and located within the geographical boundaries of the County to the extent the deposits are insured by an agency of the United States.
A. 
Fiscal agent. A bank whose services are procured by the County Treasurer and the County Board of Finance shall act as the fiscal agent for the County and provide depository services for county operating cash needs. Agreements and contracts for banking services shall comply with New Mexico Procurement Code.
B. 
Security/collateralization. Public money deposited with the fiscal agent bank, other banks, savings banks, and credit unions must be FDIC or NCUA insured, and shall comply with statutory collateral requirements for bank deposits governed by §§ 6-10-16 through 6-10-20 NMSA 1978. Financial institutions with county deposits in excess of $250,000 shall enter into a collateral security agreement with the County Treasurer. These balances above the amount insured by FDIC or NCUA will be collateralized by the financial institution at 50% to 102% as determined by the most recent NM State Treasurer's Quarterly Collateral Requirements report. If the financial institution is not listed on this report, then the County Treasurer may determine the level of collateralization as outlined by New Mexico Administrative Code 2.60.4.9.
All money not immediately necessary for public use or not invested in or deposited in banks, savings and loans, or credit unions shall be invested in accordance with New Mexico Statutes Annotated 1978 §§ 6-10-10 and 6-10-10.1, including but not limited to the following:
A. 
United States government obligations. Bonds or negotiable securities backed by the full faith and credit of the U.S. government. May include:
(1) 
U.S. Treasury bills.
(2) 
U.S. Treasury notes.
(3) 
U.S. Treasury bonds.
B. 
United States government agency obligations. Securities that are issued by the United States government or by its agencies or instrumentalities, including government sponsored enterprises. Investments may include:
(1) 
Federal Home Loan Mortgage Corporation (Freddie Mac).
(2) 
Federal National Mortgage Association (Fannie Mae).
(3) 
Federal Farm Credit Bank (FFCB).
(4) 
Federal Home Loan Banks (FHLB).
(5) 
Student Loan Marketing Association (Sallie Mae).
(6) 
Tennessee Valley Authority (TVA).
C. 
Federally insured obligations. Investment instruments that are FDIC insured up to $250,000 increment per security. Investments may include:
(1) 
Brokered certificates of deposit.
(2) 
Certificate of deposits in account registry systems.
(3) 
Federally insured cash accounts.
D. 
Money market mutual funds. Shares of an open-ended diversified investment company registered pursuant to the Investment Company Act of 1940 that invests in fixed-income securities or debt instruments as specified in the statute.
E. 
Local government investment pool (LGIP). Shares of pooled investments managed by the state investment officer, as provided for in Subsection E of § 6-8-7 NMSA 1978.
F. 
Supranationals. Funds may be invested in bonds issued by the International Bank for Reconstruction and Development (World Bank), the International Finance Corporation (IFC), and the Inter-American Development Bank (IDB), provided that the securities:
(1) 
Are eligible for purchase and sale within the United States;
(2) 
Are denominated in United States dollars;
(3) 
Have a maturity date that does not exceed three years from purchase date; and
(4) 
Are rated "AA" or its equivalent or better by a nationally recognized statistical rating organization.
G. 
Commercial paper. Issued by corporations organized and operating within the United States and having a maturity at purchase of no longer than 180 days (six months). Shall be rated at "A1" or "P1," or "prime" quality, as recognized by a national statistical rating organization.
H. 
Repurchase agreements. Contracts with banks, savings and loan associations or credit unions for the present purchase and resale at a specified time in the future of specific securities at specified prices at a price differential representing the interest income to be earned by Doña Ana County.
I. 
Municipal securities. Securities issued by the State of New Mexico, its agencies, institutions, counties, municipalities, school districts, community college districts, or other subdivisions of the state, or as otherwise provided by law. Securities issued by states other than New Mexico or governmental entities in states other than New Mexico.
J. 
Local bank deposit accounts. Cash at banks, savings and loan associations or credit unions whose deposits are insured by an agency of the United States and are certified or designated as eligible to receive public funds in New Mexico. Accounts shall be collateralized as described in § 60-8 herein. Local considerations: where possible, funds shall be invested in local banks for the betterment of the economy of Doña Ana County. Investments may include:
(1) 
Interest-earning demand deposit accounts.
(2) 
Savings accounts.
(3) 
Certificate of deposits.
(4) 
Money market accounts.
Doña Ana County recognizes that the overall portfolio may be subject to the following risks:
A. 
Concentration credit risk. The risk of loss attributed to the magnitude of Doña Ana County's investment in a single issuer or single maturity level.
B. 
Custodial credit risk - deposits. The risk that in the event of a bank failure, Doña Ana County's funds (in excess of FDIC or NCUA insurance) may not be recovered.
C. 
Custodial credit risk - investments. The risk that in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.
D. 
Credit risk. The risk that in the event an issuer or backer to an investment does not fulfill its obligations. Doña Ana County will not be able to recover the value of its principal.
E. 
Interest rate risk. The risk that changes in interest rates will adversely affect the fair value of Doña Ana County's investments.
To mitigate for the risk factors identified in § 60-10, and to meet the primary objectives of this policy, the investment portfolio shall be subject to the following general restrictions notwithstanding of additional restrictions that are not listed below for certain investments.
A. 
Diversification. The portfolio shall be diversified to reduce concertation credit risk of a specific issuer or class of securities. The following limits apply to asset allocation:
Authorized Investment Type
Diversification Limits
Additional Limitations
U.S. government obligations
100%
35% per issuer
U.S. government agency obligations
100%
35% per issuer
Federally insured obligations
35%
$250,000 per issuer
Money market mutual funds
60%
LGIP
60%
Supranationals
15%
Commercial paper
35%
5% per issuer
Repurchase agreements
10%
Municipal securities
35%
5% per issuer
Local bank deposit accounts
60%
5% per issuer
B. 
Maturity limits. The portfolio shall spread maturities to mitigate interest rate risk. Additionally, maturities are structured so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). Furthermore, since not all possible cash demands can be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets (dynamic liquidity). The following maturity limits apply to the overall portfolio:
Maturity Limit
Percentage of Portfolio
Constraints
0 to 3 years
>=60%
Includes overnight assets
3 to 5 years
<=30%
5+ years
<=10%
10-year limit
C. 
Credit quality. Issuer credit ratings shall be from a nationally recognized rating agency. The following credit ratings shall apply:
Asset Category
Rating
Quality
Short term
A1, P1, F-1, MIG-1 or better
Prime, high grade, upper-medium grade
Long term
A, A-, A3 or better
A. 
Monthly report. The County Treasurer shall prepare an investment report at least monthly, including a summary that provides all of the portfolio holdings and their respective cost and fair market value balances. In addition, the report shall include the purchase and maturity dates of each asset.
B. 
Annual report. The County Treasurer shall prepare an investment report at least once per calendar year to include a summary of the following features of the portfolio:
(1) 
Description of holdings.
(2) 
Market values.
(3) 
Performance.
(4) 
Portfolio diversification.
(5) 
Policy compliance.
C. 
Performance standards. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. Appropriate benchmarks shall be established against which portfolio performance shall be compared on a regular basis.
A. 
An Investment Committee shall be appointed with the specific purpose and responsibility of monitoring for compliance and evaluating the effectiveness of the investment policy.
B. 
The Investment Committee consists of seven voting members:
(1) 
The County Treasurer.
(2) 
A County commissioner (appointed).
(3) 
The County Manager.
(4) 
The Director of Financial Services.
(5) 
Two members of the local banking community (appointed).
(6) 
A local private citizen (appointed).
C. 
Appointments shall be made by the County Board of Finance no later than the second Board of County Commissioners meeting of January of each year. Appointed members may serve a term of two years, and must be reappointed annually thereafter.
D. 
The Investment Committee shall meet two times per year, or as often as may be needed to:
(1) 
Review and recommend changes to the investment policy.
(2) 
Monitor the investment transactions to ensure that proper controls are in place.
(3) 
Assure that County investments comply with current investment policy.
(4) 
Recommend written investment procedures.
(5) 
Deliberate such topics as economic outlook, portfolio diversification and maturity structure, potential risks and the target rate of return on the investment portfolio.
(6) 
Review depository, custodian, and broker/dealer agreements.
(7) 
Provide advice and recommendations as necessary.