[HISTORY: Adopted by the Board of County
Commissioners of Doña Ana County 1-25-2011 by Res. No. 2011-15. Amendments noted
where applicable.]
GENERAL REFERENCES
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.
A.
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.
(1)
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.
(a)
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:
[1]
Portfolio maturities shall be staggered to avoid undue concentration
of assets in a specific maturity sector.
[2]
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.
(b)
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.
(c)
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.
(d)
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.
(e)
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.
(2)
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.
(3)
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.
B.
Local considerations.
Where possible, funds shall be invested in local banks for the betterment
of the economy of Doña Ana County.
A.
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.
B.
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.
C.
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.
D.
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.
E.
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:
(1)
Bonds
or negotiable securities of the United States, the state or any county,
municipality or school district as specified in the statute; or
(2)
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
(3)
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
(4)
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
(5)
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
(6)
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.
F.
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.
A.
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.
B.
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.
A.
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.
B.
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.
C.
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.
D.
Bonding.
The County Treasurer and Deputy Treasurer shall be bonded according
to NMSA §§ 10-1-13, 6-10-38, and 4-44-35.
E.
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.
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. 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.
B.
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.
C.
The Investment
Committee will select a Chairperson and a Vice-Chairperson annually
at its first meeting after March 1.
D.
The Investment
Committee is charged with the following responsibilities:
(1)
Review
and recommend changes to the Investment Policy at least annually.
(2)
Monitor
the investment transactions to ensure that proper controls are in
place to guarantee the integrity and security of the Treasurer's investment
portfolio.
(3)
Assure
that County investments are in compliance with current state laws
and policies of the County Board of Finance.
(4)
Recommend
written investment procedures.
(5)
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.
(6)
Recommend
depositories, custodians and brokers/dealers.
(7)
Compose
requirements for, and give advice related to the hiring of, an investment
advisor to assist Doña Ana County with its Investment Policy.
