(A) Policy. It is the policy of the village 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 entity and conforming to all state and local statutes governing the investment of public funds.
(B) Scope. This policy includes all funds governed by the Board of Trustees.
(C) Prudence. 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. 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; and
(d) Yield: attainment of market rates of return.
(2) The portfolio should be reviewed periodically as to its effectiveness in meeting the entity’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 delegated to the Village Treasurer who, under the delegation of the Board of Trustees, shall establish written 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 Village Treasurer will maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security brokers/dealers selected by credit worthiness.
(H) Authorized and suitable investments. Investments may be made in any type of security allowed for in state statutes regarding the investment of public funds. Investments shall be made that reflect the cash flow needs of the fund type being invested. The village has heretofore, and shall continue, investing its surplus funds in the State Public Treasurer Investment Pool created under 15 ILCS 505/17 (“IPTIP”) and it determines that the requirements are met by its usage of IPTIP.
(I) Collateralization. Funds on deposit (checking accounts, certificates of deposit and the like) 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 village.
(J) Safekeeping and custody. All security transactions, including collateral for repurchase agreements, entered into by the village shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by an independent third-party custodian designated by the Village Treasurer and evidenced by safekeeping receipts and a written custodial agreement.
(K) Diversification. The village shall diversify, when it determines further diversification is in its best interest, its investments to the best of its ability 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. To the extent possible, the village shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the village will not directly invest in securities maturing more than three years from the date of purchase. Reserve funds may be invested in securities exceeding three years if the maturity of such investments are made to coincide as nearly as practicable with the expected use of the funds.
(M) Internal control. The Village Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse.
(1) The internal control structure shall be designed to provide reasonable assurance that these objectives are met.
(2) The internal controls shall address the following points:
(a) Control of collusion;
(b) Separation of transaction authority from accounting;
(c) Custodial safekeeping; and
(d) Written confirmation of telephone transactions for investments and wire transfers.
(N) Performance standards. This investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a comparable rate of return during a market/economic environment of stable interest rates. Portfolio performance should be compared to the rate of return provided by IPTIP.
(O) Reporting. The Village Treasurer shall prepare an investment report at least monthly. The report should be provided to the Board of Trustees and 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 Board.
(P) Marking to market. A statement of the market value of the portfolio shall be issued to the Board of Trustees quarterly.
(Q) Investment policy adoption. The investment policy shall be adopted by the Board of Trustees. The policy shall be reviewed on an annual basis by the Village Treasurer and any modifications made thereto must be approved by the Board of Trustees.
(Prior Code, § 36.03) (Ord. 99-12-01, passed 12-13-1999)