[HISTORY: Adopted by the Town Board of the Town of Parma 1-4-2000. Amendments
noted where applicable.]
The objectives of the Investment Policy of the Town of Parma
are to minimize risk; to ensure that investments mature when the cash
is required to finance operations; and to ensure a competitive rate
of return.
A.
In
accordance with this policy, the Chief Fiscal Officer or the officer
appointed by the Chief Fiscal Officer is hereby authorized to invest
all funds including proceeds of obligations and reserve funds in:
(1)
Certificates of deposit issued by a bank or trust company authorized
to do business in New York State.
(2)
Time deposit accounts in a bank or trust company authorized to do
business in New York State.
(3)
Obligations of the State of New York.
(4)
Obligations of the United States government.
(5)
Repurchase agreements involving the purchase and sale of direct obligations
of the United States.
All other Town of Parma officials receiving money in their official
capacity must deposit such funds in negotiable order of withdrawal
accounts.
A.
Authorized
depositories. Public moneys must be deposited in either a bank or
trust company located and authorized to do business in New York State.
The depositories must be designated by the governing board.
B.
Types
of accounts. There are several types of bank accounts in which local
governments are authorized to invest idle moneys, including special
time deposit accounts and certificates of deposit. These include N.O.W.
accounts, Super N.O.W. accounts, money market deposit accounts and
seven- to thirty-one-day accounts.
C.
Investment
in obligations. Local governments may invest in obligations, such
as bonds, notes or other such forms of indebtedness. Generally, obligations
of the United States and of the State of New York are permissible
investments.
D.
Certificates
of deposit. Certificates of deposit (CD's) comprise a major portion
of many governments' portfolios because of their familiarity,
their direct issuance by traditional depositories, flexible maturities
and money market rates of return for larger deposits. CD's are
purchased for specific periods of time which may be as short as seven
days or as long as a year or more. Federal Deposit Insurance Corporation
(FDIC) coverage is provided for government deposits, but only for
the first $100,000 on deposit on behalf of a given entity at a single
bank or trust company.
E.
Repurchase
agreements. A repurchase agreement (REPO) is a transaction in which
a local governmental unit purchases from a trading partner authorized
securities. Simultaneously the unit agrees to resell and the trading
partner agrees to repurchase the security at a future date. Prices
and dates for the sale and resale are agreed upon at the time of the
initial purchase by the local government. The security purchased under
a repurchase agreement should only be federal securities.
A.
Security
over and above the Federal Deposit Insurance Corporation (FDIC) coverage
is required to protect a local government from a possible loss of
funds in time deposits or certificates of deposit. The type of security
required depends on the nature of the investment.
B.
The
FDIC coverage is $100,000 for demand accounts and $100,000 for time
and savings accounts.
C.
For
amounts in excess of FDIC coverage, a pledge of obligations as collateral
is required to secure the investment. The obligations which may be
pledged are:
(1)
Obligations of the United States.
(2)
Obligations of agencies of the United States if the payment of principal
and interest is guaranteed by the federal government.
(3)
Obligations of New York State.
(4)
Obligations of any municipality, school district or district corporation
in the state.
(5)
Obligations of a public authority (Public Authorities Law, various
sections); and obligations of a public housing authority (Public Housing
Law, § 49).
D.
The
Officer in charge should determine on a regular basis whether:
(1)
The transactions are recorded on the books of the custodial bank;
(2)
The proper obligations have been pledged;
(3)
The obligations have an adequate market value to cover the deposits
or investments;
(4)
The obligations have been segregated either physically or by appropriate
book entry; and
(5)
The fiscal officer's written consent is required for the release
and substitution of the pledged obligations.
E.
The
bank with which the investment is made will be permitted to hold the
collateral in either the bank's trust department or in a custodial
account at the Federal Reserve for the benefit of the Town of Parma.
