A. Policy: It is the policy of the city to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the city and conforming to all state and local statutes governing the investment of public funds.
B. Scope: This section shall apply to all funds governed by the city council.
C. Prudence:
1. 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.
2. 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 an overall portfolio.
D. Objective:
1. The primary objective, in order of priority, shall be:
a. Legality: Conformance with federal, state and other legal requirements.
b. Safety: Preservation of capital and protection of investment principal.
c. Liquidity: Maintenance of sufficient liquidity to meet operating requirements.
d. Yield: Attainment of market rates of return.
2. The city's portfolio should be reviewed periodically as to its effectiveness in meeting the city's needs for safety, liquidity, rate of return, diversification and its general performance.
E. Delegation Of Authority: Management and administrative responsibility for the investment program is hereby delegated to the treasurer who, under such delegation of the city council, shall establish procedures for the operation of the investment program.
F. 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.
G. Authorized Financial Dealers And Institutions: The treasurer will maintain a list of financial institutions authorized to provide investment services. Further, the treasurer will maintain a list of approved security brokers/dealers which shall be selected by credit worthiness.
H. Authorized And Suitable Investments: Investments may be made in any type of security allowed for in Illinois statutes regarding the investment of public funds. Investments shall be made that reflect the cash flow needs of the fund type being invested.
I. Collateralization: Funds on deposit (checking accounts, certificates of deposit, etc.) in excess of FDIC limits must be secured by some form of collateral, witnessed by a written agreement and held at an independent third party institution in the name of the city.
J. Safekeeping And Custody: All security transactions, including collateral for repurchase agreements, entered into by the city shall be conducted on a delivery versus payment (DVP) basis. Securities will be held by an independent third party custodian designated by the treasurer and evidenced by safekeeping receipts and a written custodial agreement.
K. Diversification: The city's policy is diversification of its investment portfolio based on the type of funds invested and the cash flow needs of those funds. Diversification can be by type of investment, number of institutions invested in, and length of maturity.
L. Maximum Maturities:
1. To the extent possible, the treasurer shall attempt to match the city's investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the treasurer will not directly invest in securities maturing more than two (2) years from the date of purchase.
2. Reserve funds may be invested in securities exceeding two (2) years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds.
M. Internal Control: The treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the city are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The internal controls shall address the following points:
1. Control of collusion.
2. Separation of transaction authority from accounting.
3. Custodial safekeeping.
4. Written confirmation of telephone transactions for investments and wire transfers.
N. Performance Standards: The investment portfolio will be managed in accordance with the parameters specified within this section. The portfolio should obtain a comparable rate of return during a market/economic environment of stable interest rates. Portfolio performance should be compared to benchmarks with similar maturity, liquidity and credit quality as the portfolio, such as the IPTIP fund.
O. Reporting: The treasurer shall prepare an investment report at least quarterly. The report should be provided to the city council and shall be available on request. The report should be in a format suitable for review by the general public. An annual report should also be provided to the council. Such report shall include a statement of the market value of the portfolio.
P. Adoption; Annual Review: This section is hereby adopted by the city council. This section shall be reviewed on an annual basis by the treasurer, and any proposed modifications shall be forwarded to the city council for approval. (Ord. 99-O-77, 12-7-1999)