[HISTORY: Adopted by the Board of County Commissioners of Doña Ana County 1-25-2011 by Res. No. 2011-15. Amendments noted where applicable.]
Code of Conduct — See Ch. 14.
This policy is based on the authority of, enacted and promulgated under NMSA § 6-10-1 et seq.
This Deposit and Investment Policy applies to all County funds entrusted to the care, custody and control of the Doña Ana County Treasurer.
The primary objective with respect to investments is the safety of principal. The second objective is to have liquidity of County funds for available use. The maximum rate of return on investments is the third objective, taking into consideration markets available to county treasurers and the interest rate policy on public funds. Doña Ana County seeks to at least attain and maintain state-required rates of return on all investments. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
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 Doña Ana County Investment Policy overall portfolio. The objective will be to mitigate concentration credit risk, custodial credit risk - deposits, custodial credit risk - investments, credit risk and interest rate risk.
Concentration credit risk. Concentration credit risk is the risk of loss attributed to the magnitude of Doña Ana County's investment in a single issuer. Generally accepted accounting principles (GAAP) requires disclosure when any one issuer is 5% or more of the investment portfolio. Diversification strategies will be employed to avoid incurring concentration risk. The following general policies and constraints shall apply:
Portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector.
With the exception of U.S. Treasury securities, securities backed by the full faith and credit of the United States government and authorized pools, no more than 35% of the total investment portfolio will be invested in a single security type or with a single financial institution or at a single maturity.
Custodial credit risk - deposits. Custodial credit risk is the risk that in the event of a bank failure, Doña Ana County's funds (in excess of FDIC insurance) may not be returned to it. The County shall obtain from each bank that is a depository for public funds pledged collateral in an aggregate amount equal to 50% of the public money to be received for deposit (NMSA § 6-10-17). No security is required for the deposit of public money that is insured by the Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration or other federal deposit insurance fund.
Custodial credit risk - investments. Custodial credit risk is 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. The County's investment policy requires that all security transactions, including collateral for repurchase agreements, entered into by the County shall be conducted on a delivery-versus-payment basis. The investment policy further requires that all collateral securities held by a third-party custodian, designated by the County Treasurer, shall be held in the County's name and evidenced by a safekeeping receipt or Federal Reserve book-entry reporting.
Credit risk. Credit risk is the risk that in the event an issuer or other counterparty to an investment does not fulfill its obligations. Doña Ana County will not be able to recover the value of its principal. The County's general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital and, in general, avoid speculative investments. The County Board of Finance or the Investment Committee shall periodically review its asset allocation strategies and guidelines for the percentage of its total portfolio that may be invested in securities other than repurchase agreements, U.S. Treasury bills and notes or Doña Ana County Investment Policy insured/collateralized certificates of deposit. The guidelines are to be reviewed considering the probability of market and default risk in various investment sectors as part of its allocation evaluation.
Interest rate risk - investment pipe. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of Doña Ana County's investments. The County's investment policy shall limit the County's exposure to interest rate risk by requiring that no less than 60% of the funds invested in the internal investment pool or in other discretionary funds be in maturities of no more than three years from date of purchase. No more than 40% of the funds may be invested in maturities of up to five years. Investment of nondiscretionary assets, including funds to be held in trust, may be committed to maturities up to 10 years from the date of purchase. In no case will the interest rate on investments be less than 100% of the asked-price on U. S. Treasury bills of the same maturity on the day of deposit.
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 (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). Alternatively, a portion of the portfolio may be placed in money market mutual funds or local government investment pools, which offer same-day liquidity for short-term funds.
Yield. The County's investment portfolio shall be designed with the objective of regularly meeting or exceeding a performance benchmark, which could be the average return on three-month U.S. Treasury bills. The investment program shall seek to augment returns above this threshold, consistent with risk limitations identified herein and prudent investment principles.
Local considerations. Where possible, funds shall be invested in local banks for the betterment of the economy of Doña Ana County.
Consistent with NMSA § 6-10-36(B), County funds may be deposited in non-interest-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.
Consistent with NMSA § 6-10-36, all County funds available for investment may be placed in interest-bearing deposits in qualified banks and savings and loan associations within the geographical boundaries of the County. The funds are to be equitably distributed among the depositories in the proportion that each bank's or savings and loan association's deposit bears to the total deposits of all banks and savings and loan associations within the geographical boundaries of the County. Also, funds may be placed in interest-bearing deposits in credit unions located within the geographical boundaries of the County to the extent that such deposits are insured by an agency of the United States. Public money in excess of that for which banks, savings and loan associations and credit unions within the geographical boundaries of the government unit have qualified may be invested as provided by law.
Consistent with NMSA § 6-10-44, if the County Treasurer has on hand more money than can be equitably and ratably divided among the qualified depositories (per NMSA § 6-10-36 noted above), the County Treasurer may temporarily invest such excess funds in United States bonds or Treasury certificates.
Consistent with NMSA § 6-10-10.1 (regarding the Participating Government Investment Fund), where the County Treasurer is unable to receive interest on County funds as set forth in NMSA § 6-10-36, and said funds are not required for current expenditure, the Treasurer may remit some or all such money to the State Treasurer for deposit for the purpose of investment.
Consistent with NMSA § 6-10-10, where the County Treasurer has on hand sinking funds or money remaining unexpended from proceeds of any issue of bonds or other negotiable securities of the County and all money not immediately necessary from public use, the Treasurer may invest said monies in:
Bonds or negotiable securities of the United States, the state or any county, municipality or school district as specified in the statute; or
Securities that are issued by the United States government or by its agencies or instrumentalities and that are either direct obligations of the United States, the federal Home Loan Mortgage Association, the federal National Mortgage Association, the federal Farm Credit Bank, federal home loan banks or the student loan marketing association or that are backed by the full faith and credit of the United States government; or
Shares of a 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; or
Individual, common or collective trust funds of banks or trust companies that invest in fixed-income securities or debt instruments as specified in the statute; or
Shares of pooled investments managed by the state investments managed by the state investment officer, as provided for in Subsection E of NMSA § 6-8-7; or
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 the investor (i.e., "repurchase agreements") secured as required by statute.
Pursuant to NMSA § 6-10-36(E), the rate of interest to be paid on County funds deposited in interest-bearing accounts is that amount set by the State Board of Finance, but in no case is the amount to be less than 100% of the asked price on United States Treasury bills of the same maturity on the day of deposit.
Consistent with NMSA § 6-10-16.1, all deposits of County funds shall be secured by securities as defined by NMSA § 6-10-16 in the amount required by law or by surety bonds as provided for in NMSA § 6-10-15.
Consistent with NMSA § 6-10-16, all deposits shall be secured by securities of the United States, the State of New Mexico, its agencies, its counties, municipalities, or other subdivisions, or by securities that are guaranteed by the United States or the State of New Mexico, or by revenue bonds underwritten by a member of the National Association of Securities Dealers, or by letters of credit issued by a federal home bank.
Under NMSA § 6-10-8, the Board of County Commissioners sits as the County Board of Finance and has supervision over the determination of the qualifications and selection of banks, savings and loan associations and credit unions which shall qualify as financial institutions to receive the deposit of County funds.
Under NMSA § 6-10-8, the County Treasurer has supervision of the deposit and safekeeping of County money and, with the advice and consent of the Board of Finance, designates the banks, savings and loan associations and credit unions to receive deposits and determines how to deposit and invest County funds.
Consistent with NMSA § 6-10-8 and with Bd. of Co. Commissioners v. Padilla, 111 N.M. 278 (Ct. APP. 1990), the County Board of Finance of Doña Ana County delegates to the County Treasurer the decision-making for deposits and investments under this Deposit and Investment Policy; however, said decisions must be made within the parameters of the Investment Policy as set forth herein.
Bonding. The County Treasurer and Deputy Treasurer shall be bonded according to NMSA §§ 10-1-13, 6-10-38, and 4-44-35.
Ethics. The Treasurer's office maintains a high standard of ethical conduct in pursuing the interests of the County and seeks to avoid conflicts of interest. In particular. under no circumstances shall the County Treasurer and key employees involved with County investments purchase or sell personal securities with the same individual with whom securities are bought and sold on behalf of the County. All investment trades require two signatures.
An Investment Committee shall be appointed with the specific purpose and responsibility of monitoring for compliance and evaluating the effectiveness of the Investment Policy. The Investment Committee consists of seven voting members: the County Treasurer, a member appointed from the County Board of Finance, the County Manager, the Director of Financial Services, two members of the local banking community appointed by the County Board of Finance, and a private citizen appointed by the County Board of Finance.
The appointment of the County Commissioner as a member of the Investment Committee will be made annually in January at the first meeting of the Board of County Commissioners in its capacity as the County Board of Finance. One of the first two members of the local banking community will serve until June 30, 2008, at which time the Board of County Finance will replace or reappoint this member for a new two-year term to end June 30, 2010. The second member from the local banking community will serve an initial term through June 30, 2009, at which time the Board of County Finance will replace or reappoint this member for a two-year term. The private citizen's initial term of appointment will end June 30, 2009, at which time the Board of County Finance may reappoint or replace this member for a two-year term. If a vacancy occurs before the end of the term of the public sector appointees, the Board of County Finance will appoint a new member to complete the term of the vacant position.
The Investment Committee will select a Chairperson and a Vice-Chairperson annually at its first meeting after March 1.
The Investment Committee is charged with the following responsibilities:
Review and recommend changes to the Investment Policy at least annually.
Monitor the investment transactions to ensure that proper controls are in place to guarantee the integrity and security of the Treasurer's investment portfolio.
Assure that County investments are in compliance with current state laws and policies of the County Board of Finance.
Recommend written investment procedures.
Meet quarterly to deliberate such topics as economic outlook, portfolio diversification and maturity structure, potential risks and the target rate of return on the investment portfolio.
Recommend depositories, custodians and brokers/dealers.
Compose requirements for, and give advice related to the hiring of, an investment advisor to assist Doña Ana County with its Investment Policy.