The city manager shall be and is hereby appointed the director
of finance with the powers and duties given that office by the charter,
including those of purchasing agent.
(Ordinance adopted 2/4/02)
It is the policy of the city that the administration of its
funds and the investment of those funds shall be handled as its highest
public trust. Investments shall be made in a manner which will provide
the maximum security of principal invested through limitations and
diversification while meeting the daily cash flow needs of the city
and conforming to all applicable state statutes governing the investment
of public funds.
(Ordinance 2004-05-03-012, sec.
2(I), adopted 5/3/04)
This investment policy applies to all financial assets of the
city and includes all funds of the city. The city may commingle its
funds into one pooled investment fund for investment purposes for
efficiency and maximum investment opportunity. These funds are and
are to be accounted for in the city’s comprehensive annual [financial]
report (CAFR) and [include] any new funds created by the city unless
specifically exempted by the city council and this policy.
(Ordinance 2004-05-03-012, sec.
2(II), adopted 5/3/04)
The city shall maintain a comprehensive cash management program,
to include the effective collection of all accounts receivable, the
prompt deposit of receipts to the city’s bank accounts, the
payment of obligations so as to comply with state law and in accord
with vendor invoices, and the prudent investment of idle funds in
accord with this policy and the Public Funds Investment Act (in this
division, the “act”).
(Ordinance 2004-05-03-012, sec.
2(III), adopted 5/3/04)
(a) It
is the policy of the city that all funds shall be managed and invested
with four primary objectives, listed in order of their priority: safety,
liquidity, diversification and yield.
(b) Effective
cash management is recognized as essential to good fiscal management.
Cash management is defined as the process of managing monies in order
to ensure maximum cash availability.
(Ordinance 2004-05-03-012, sec.
2(IV), adopted 5/3/04)
(a) Investments
shall be made with judgment and care, under circumstances then prevailing,
that 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) The
standard of prudence to be used by investment officials shall be the “prudent
person” standard and shall be applied in the context of managing
the overall portfolio. Investment officers acting in accordance with
written procedures, the act, and the 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
appropriate action is taken to control adverse developments.
(Ordinance 2004-05-03-012, sec.
2(V), adopted 5/3/04)
The finance director, as the city’s chief financial officer,
is responsible for overall management of the city’s investment
program and is designated as the city’s investment officer.
Accordingly, the finance director is responsible for day-to-day administration
of the investment program and for the duties listed below.
(1) Maintain
a general accounting system for the city and exercise financial control
over all offices, departments and agencies thereof.
(2) Maintain
current information as to available cash balances in city accounts
and as to the amount of idle cash available for investment.
(3) Certify
the availability of funds for all proposed expenditures. Unless the
finance director shall certify that an unencumbered balance exists
in the appropriations and funds available, no appropriation shall
be encumbered and no expenditure shall be made.
(4) Make
investments in accord with the act. No officer or designee may engage
in an investment transaction except as provided under the terms of
this policy and the procedures established.
(5) Ensure
that all investments are adequately secured.
(6) Submit
to the council through the city manager a monthly statement of all
receipts and disbursements in sufficient detail to show the exact
financial condition of the city.
(7) Designate
a staff person as a liaison/deputy in the event circumstances require
timely action and the investment officer is not available.
(8) Attend
training as prescribed by the Public Funds Investment Act provided
by the Texas Municipal League or the University of North Texas.
(Ordinance 2004-05-03-012, sec.
2(VI), adopted 5/3/04)
The investment officer shall establish a system of written internal
controls, which will be reviewed annually with the independent auditor
of the city. The controls shall be designed to prevent loss of public
funds due to fraud, employee error, misrepresentation by third parties,
unanticipated market changes, or imprudent actions by employees of
the city.
(Ordinance 2004-05-03-012, sec.
2(VII), adopted 5/3/04)
(a) Assets
of the city may be invested in instruments, funds, banks and securities
permitted by the Public Funds Investment Act; however, at no time
shall assets of the city be invested in any instrument or security
not authorized for investment under the act, as the act may be amended
from time to time.
(b) The
city shall maintain portfolios which utilize four specific investment
strategy considerations designed to address the unique characteristics
of the fund groups represented in the portfolios:
(1) Operating funds and commingled funds containing operating funds.
(A) The primary objective will be liquidity and reasonable market yield.
Funds will be invested in accordance with the investment policy. The
authorized securities chosen or pool utilized for this portfolio are
of the highest credit quality and marketability supporting the city’s
objectives of safety and liquidity. Securities, when not matched to
a specific liability, will be of a liquid nature to provide adequate
liquidity for the city. The portfolio shall be diversified to protect
against market and credit risk in any one sector. Diversification
requirements can be fully met through use of an authorized investment
pool.
(B) Weighted average maturity on the pooled investment group will be
of no greater than ninety (90) days. Because the funds are pooled
for investment purposes, the portfolio will address the varying needs
of all funds in the pooled fund, recognizing liquidity needs as well
as the desire to extend slightly for incremental return on core funds
in the pool.
(2) Debt service funds.
Investment strategies for debt service
funds shall have as the primary objective the assurance of investment
liquidity adequate to cover the debt service obligation on the required
payment date. Since this is one of the highest priorities of the city,
securities will be chosen with the highest priorities of safety. Securities
will be chosen for their maturity dates and not require the highest
degree of diversification. Securities purchased shall not have a stated
final maturity date which exceeds the next debt service payment date
until that date is fully funded, and shall be chosen secondarily with
regard to yield and diversification. The weighted average maturity
on the pooled investment group will be no greater than one hundred
eighty (180) days.
(3) Debt service reserve funds.
Investment strategies for
debt service reserve funds shall have as the primary objective the
ability to generate a safe, dependable revenue stream to the appropriate
debt service fund from securities with a low degree of risk. Except
as may be required by the bond ordinance specific to an individual
issue, securities should be of high credit quality, with short-to
intermediate-term maturities. The funds will have a maximum weighted
average maturity of two hundred seventy (270) days.
(4) Special projects and special purpose funds.
Investment
strategies for special projects or special purpose fund portfolios
will have as their primary objective to assure that anticipated cash
flows are matched with adequate investment liquidity for the safety
of the funds and the completion of the targeted projects. These portfolios
should include at least 10% in highly liquid securities to allow for
flexibility and marketability of the securities should funds be needed
for unanticipated project outlays. A diversified portfolio structured
with laddered maturities to match anticipated cash flows will be used
to provide a reasonable market yield in those comparable maturity
sectors. The stated final maturity dates of securities held should
not exceed the estimated project completion date. The funds will have
a maximum weighted average maturity of one hundred eighty (180) days.
(c) Acceptable
investments under this policy shall be limited to the instruments
listed below and as further defined and described by the Public Funds
Investment Act.
(1) Obligations of the United States government, its agencies and instrumentalities,
and government sponsoring enterprises, not to exceed two years to
stated maturity, excluding collateralized mortgage obligations (CMOs);
(2) Fully insured or collateralized certificates of deposit from a bank
doing business in the state and under the terms of a written depository
agreement with that bank, not to exceed one year to stated maturity;
(3) Commercial paper rated A-1/P-1 or the equivalent by at least two
nationally recognized rating agencies not to exceed 180 days to stated
maturity;
(4) Repurchase agreements and reverse repurchase agreements as defined
by the Public Funds Investment Act, not to exceed 180 days to stated
maturity, provided an executed PSA master repurchase agreement is
on file with the city and the counterparty bank or primary dealer;
(5) No-load, SEC registered money market funds, each approved specifically
before use by the city;
(6) Constant dollar Texas local government investment pools as defined
by the Public Funds Investment Act.
(d) No
security will be eligible for investment by the city until this policy
has been amended and the amended version approved by the city council.
(e) Delivery
versus payment. All security transactions, including collateral for
repurchase agreements, entered into by the city shall be conducted
on a delivery versus payment (DVP) basis.
(Ordinance 2004-05-03-012, sec.
2(VIII), adopted 5/3/04; Ordinance
adopting Code)
(a) The
finance director will maintain a list of financial institutions authorized
to provide investment services. In addition to a list, the finance
director will also maintain a list of approved security broker/dealers
selected by creditworthiness who are authorized to provide investment
services in the state. These may include “primary” dealers
or regional dealers that qualify under the Securities and Exchange
Commission uniform net capital rule. No public deposit shall be made
except in a qualified public depository as established by state laws.
(b) All
financial institutions and broker/dealers who desire to become qualified
bidders for investment transactions must supply the finance director
the following: latest audited financial statements, proof of state
registration, NASD certification (regional brokers only), and certification
of having read the city’s investment policy.
(c) Every
broker/dealer and bank with whom the city transacts business will
be provided a copy of this investment policy to assure that they are
familiar with the goals and objectives of the investment program.
A representative of the firm will be required to return a signed certification
stating the policy has been received and reviewed and that controls
are in place to assure that only authorized securities are sold to
the city.
(Ordinance 2004-05-03-012, sec.
2(IX), adopted 5/3/04)
(a) The
laws of the state and prudent treasury management require that all
purchased securities be bought on a delivery versus payment basis
and be held in safekeeping by either the city, an independent third
party financial institution, or the city’s designated banking
services depository.
(b) The
investment officer shall designate all safekeeping arrangements and
an agreement of the terms executed in writing. The third party custodian
shall be required to issue safekeeping receipts to the city listing
each specific security, rate, description, maturity, CUSIP number,
and other pertinent information. Each safekeeping receipt will be
clearly marked that the security is held for the city or pledged to
the city.
(c) All
securities pledged to the city for certificates of deposit or demand
deposits shall be held by an independent third party bank doing business
in the state. The safekeeping bank may not be within the same holding
company as the bank from which the securities are pledged.
(d) Collateralization
on time and demand deposits over the FDIC insurance coverage of 100,000
and repurchase agreements. In order to anticipate market changes and
provide a level of additional security for all funds, the collateralization
level required will be 102% of the market value of the principal and
accrued interest. An independent third party safekeeping agent will
hold collateral.
(Ordinance 2004-05-03-012, sec.
2(X), adopted 5/3/04)
The investment officer shall submit monthly reports to the city
manager and quarterly and annual reports to the city council containing
sufficient information to permit an informed outside reader to evaluate
the performance of the investment program and consistent with statutory
requirements. All reports shall be in compliance with the act.
(Ordinance 2004-05-03-012, sec.
2(XI), adopted 5/3/04)
The city will designate one banking institution through a competitive
process as its central banking services provider at least every three
years. This institution will be used for normal banking services including
disbursements, collections, and safekeeping of securities. The banking
institution must meet FIRREA requirements. Other banking institutions
from which the city may purchase certificates of deposit will also
be designated as a depository after they provide their latest audited
financial statements to the city.
(Ordinance 2004-05-03-012, sec.
2(XII), adopted 5/3/04)
The council shall adopt the city’s investment policy.
The city council or a designated committee shall review the policy
and strategies on an annual basis. A written resolution approving
that review and changes to the policy from the review will be passed
and recorded by the city council.
(Ordinance 2004-05-03-012, sec.
2(XIII), adopted 5/3/04)