HomeMy WebLinkAbout01-095RESOLUTION NO. 01-95
A RESOLUTION AMENDMENT RESOLUTION NO, 97-190
WHICH AMENDED THE INVESTMENT POLICY FOR ST.
LUCIE COUNTY, FLORIDA; BY FURTHER AMENDING THE
INVESTMENT POLIC~
WHEREAS, the Board of County Commissioners of St. Lucie County, Florida, has mode
the following determinations:
1. Pursuant to Section 218.415, Florida Statutes, on or before October 1, 1995,
counties that hove custody of public funds in excess of the amounts needed to meet current
expenses who elect to conduct investment activity themselves rather than depositing these
funds in the Local Government Surplus Funds Trust Fund for investment by the 5tote Board
of Administration, ore required to conduct such investment activity in accordance with o
written investment plan and on investment policy adopted by the Board of County
Commissioners or in the alternative to invest in specified Iow-risk instruments.
2. On September 26, 1995, the Board adopted Resolution No. 95-168 which
adopted an investment policy os recommended by the Investment Subcommittee of the St.
Lucie County Citizens Budget Review Committee.
3. On December 6,1995, the Investment Committee recommended that the Board
adopt certain amendments to the investment policy; and on January 2, 1996, the Board
adopted Resolution No. 95-275 which amended the investment policy and incorporated the
recommended changes of the Investment Committee.
4. On becember 3,1997, the Investment Committee recommended that the Board
adopt certain amendments to the investment policy and on December 16, 1997, the Board
adopted Resolution No. 97-190 which amended the investment policy and incorporated the
recommended changes of the Investment Committee.
5. On April 4, 2001, the Investment Committee recommended that the Board
adopt certain amendments to the investment policy, which amendments ore attached os
Exhibit "A'.
NOW, THEREFORE, BE ~ RESOLVED by the Board of County Commissioners of St.
Lucie County, Florida:
1. This Board does hereby adopt the amendments to the investment policy
attached hereto and made a part hereof as Exhibit "A", pursuant to Section 218.415, Florida
Statutes.
2. Except as amended herein, the remaining terms and conditions of Resolution No.
c)5-tfi8, as amended, shall remain in full force and effect.
3. This resolution shall take effect on adoption.
After motion and second, the vote on this resolution was as follows:
Chairperson Frannie Hutchinson
Vice Chairman Doug Coward
Commissioner Paula Lewis
Commissioner ~Tohn D. Bruhn
Commissioner Cliff Barnes
AYE
AYE
AYE
AYE
AYE
PASSED AND DULY ADOPTED this 24th day of April, 2001.
Deputy Clerk
BOARD OF COUNTY COMMT$STONF~,$
ST. Luc'rE,~COUNTY //~-
APPROVED ~ TO FORM Al
EXHIBIT' "A"
ST. LUCIE COUNTY
'rNYESTMENT POL]:CY
TABLE OF CONTENTS
I. SCOPE ................................................................ !
II. INVESTMENT ......................................................... !
III. INVESTMENT PERFORMANCE AND REPORTING .......................... 1
IV. PRUDENCE AND ETHICAL STANDARD5 ................................. 2
V. AUTHORIZED INVESTMENTS ......................................... 2
VI. MATURITY AND LIQUIDITY REQUIREMENT5 .......................... 4
VII. PORTFOLIO COMPOSITION ........................................... 5
VIII. RISK AND DIVERSIFICATION ......................................... 7
IX. AUTHORIZED INVESTMENT INSTITUTION5 AND DEALER5 ............. 8
X. THIRD PARTY CUSTODIAL AGREEMENT5 ............................... 8
XI. MASTER REPURCHASE AGREEMENT .................................... 8
XII. Bib REQUIREMENT5 ................................................. 9
XIII. INTERNAL CONTROLS ................................................ 10
I. SCOPE
This investment policy applies to all funds held by or for the benefit of the St. Lucia
County Board of County Commissioners, hereinafter referred to as the County.
These policies were adopted using Sections 125.31 and 218.415, Florida Statutes. Bond
proceeds may be further limited or expanded by their respective bond resolutions or
covenants and shall not be considered to be in conflict with the Investment Policy.
II. INVESTMENT OB~ECI'IVES
The County shall strive to achieve with each investment opportunity, the followin9
objectives, in ORDER OF PRZORII'Y:
SAFETY - The primary objective of the County's investment activities is the
protection of investment capital.
LI(~UIDII'Y - The County's investment strategy will provide sufficient liquidity
such that cash flow requirements ore met through the utilization of
marketable securities with structured maturities.
INVESTMENT INCOME - In investing public funds, the County will strive to
maximize the return on the portfolio but will minimize investment risk,
III. INVESTMENT PERFORMANCE AND REPORTING
A portfolio report shall be prepared each month by the Investment Accountant
Finance Director or designated staff member and be provided to the Clerk of the Circuit
Court and appropriate management staff. The report will also be made available to the Board
of County Commissioners. The report shall include a breakdown of the portfolio as well as its
overall performance and the current market pricing at month-end.
A detailed analysis of the investment portfolio will be prepared by the Investment
Accountant Finance Director and presented to the Board of County Commissioners on a
quarterly basis. The report shall include information relating to transactions, market values,
performance and adherence to policy. The Clerk of Court is authorized to utilize an
investment accounting service to obtain necessary information. The Board of County
Commissioners will conduct an annual meeting to review the investment portfolio and evaluate
the investment policy.
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The Board of County Commissioners will appoint an Investment Committee that will
serve in an advisory capacity and report to the 19oard of County Commissioners. Each
Commissioner will select one of the five Investment Committee members who will possess
relevant financial experience. The Investment Committee will rely on the Clerk of the Court,
Investment Accountant Finance Director, and their staff for support. The Investment
Committee and the Board of County Commissioners shall receive a copy of the portfolio
pricing analysis prepared by the third party service and shall also receive copies of all
transaction advices prepared by approved brokers.
The Clerk of the Circuit Court shall be notified immediately upon exceptions from
currently approved investment policies by the Investment Accountant Finance Director.
In the event of on emergency situation requiring noncompliance with policy guidelines,
the Finance Director shall attempt to schedule a special committee meeting to discuss the
proposed action. If a special committee meeting is not possible due to time constraints or
scheduling problems, the Finance Director shall individually notify a minimum of three
committee members to obtain approval of the proposed action.
IV. PRUDENCE AND ETHICAL STANDARD5
The "prudent person" standard shall be used in the management of the overall
investment portfolio.
The Investment Accountant Finance Director, and other persons performing the
investment function, shall act es o"prudent person" in accordance with these written policies
and procedures, exercising due diligence and investing in investments authorized by law.
The "prudent person" standard is herewith understood to mean the following:
Investment shall be mode with judgment and core, 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 es well es the probable income to be derived.
V. AUTHORIZED INVESTMENTS
The Clerk of the Court acting through the Investment Accountant Finance Director,
or other designee of the Clerk's office, shall purchase or sell investment securities at
prevailing market rates. Authorized instruments are as follows:
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A. The Local Government Surplus Funds Trust Fund, the State Investment Pool
administered by the State Board of Administration, also known as 5.B.A.
B. The Florida Counties Investment Trust, also known os the F.C.I.T., administered
by the Florida Association of Court Clerks and Comptrollers and the Florida Association of
Counties.
C. Negotiable direct obligations of, or obligations the principal and interest of
which are unconditionally guaranteed by, the United 5totes Government. Such securities will
include, but not be limited to, the following:
1. Treasury Bills
2. Treesury Notes
3. Treasury Bonds
b. Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by United States agencies provided such obligations are backed by the full faith
and credit of the United States Government. Such securities will include, but not be limited
to, the following:
2.
3.
4.
Farmers Home Administration
Federal Financing Bank
Federal Housing Administration bebentures
Government National Mortgage Association (GNMA)
E. Bonds, debentures, notes of other evidence of indebtedness issued or
guaranteed by United 5totes Government agencies (Federal Instrumentalities) which are not
full faith and credit agencies limited to the following:
2.
3.
4.
5.
Federal Form Credit Bank (FFCB)
Federal Home Loan Bank or its district banks (FHLB)
Federal National Mortgage Association (FNMA)
Federal Home Loan Mortgage Corporation (Freddie-Macs)
Student Loan Marketing Association (Sallie-Mae)
F. Non-negotiable interest-bearing time certificates of deposit, money market
accounts or savings accounts in banks/savings and loon associations organized under the laws
of the United 5totes, doing business and situated in this state, provided that any such
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deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida
Statutes.
G. Repurchase agreements (the underlying securities for purchase and subsequent
sale) for any of the investments authorized above in items ¢, b and E.
Investment in derivative products is not authorized.
IV. MATURITY AND LI~UIblTY REQUIREMENTS
To the extent possible, an attempt will be made to match investment maturities with
known cash needs and anticipated cash flow requirements. Investments, including investment
pools, of current operating funds shall have maturities of up to three ($) years. The
]~nvestm~nt Accountant Finance Director and other persons performing the investment
function will provide an appropriate mix of maturities to maximize the return on the portfolio
while minimizing investment risk. Investment of bond reserves, construction funds, and other
non-operating funds shall have a term appropriate to the need for funds, and in accordance
with debt covenants, but shall not exceed five (5) years, unless permitted by the terms of
the bond documents.
]Investments do not necessarily have to be made for the same length of time that the
funds are available. The basic criteria for consideration for investments are as follows:
A. Keep maturities short in a period of constantly rising interest rates based on
Treasury bill auctions or the daily Federal Funds rate.
Keep maturities short in a period of on inverted treasury yield curve (short-
term rates higher than long-term rates).
¢. Maturities should be lengthened when the treasury yield curve is normal and
is expected to remain that way based on economic reports taken as a whole. The yield curve
is normal when short-term rates are lower than long-term rates.
b. Maturities should be lengthened when interest rates are expected to fall based
on economic reports taken as n whole.
E. From time to time, securities may be traded for other similar securities to
improve yield, maturity or credit risk. For these types of transactions, a temporary loss may
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be incurred for accounting purposes, provided the loss is more than offset by the higher
yield. The following circumstances are considered appropriate for a swap to be considered:
1. The yield has increased.
Market aberrations are often caused by supply and demand conditions for
particular securities. For example, if a short supply exists for a particular maturity range,
then it may be advantageous to swap out of the security in a short supply and into another
similar security in a different maturity range.
2. The maturity has been reduced.
Market aberrations occasionally create a situation where longer maturity
securities are yielding the same or less than securities with a shorter maturity. Portfolio
quality can be improved by switching from the longer maturity security to the shorter
maturity with little or no interest penalty.
3. The quality of the investment has improved.
Market aberrations occasionally create a situation where certain higher risk
securities yield the same or less than an equivalent lower risk security. Portfolio quality can
be improved by switching from the higher risk security to a lower risk security without any
interest rate penalty.
F. A liquidity case of approximately two (2) months of anticipated disbursements,
excluding bond construction payments or other bond payments mode from escrow or trust
accounts, will be kept in relatively short-term investments. These would include the 5tote
Investment Pool (SBA), Certificates of Deposit, U.5. Treasury Obligations and Repurchase
Agreements.
Although many securities are acceptable for investment using the authorized
list, some are not very desirable from a liquidity standpoint; accordingly, only those securities
with an active secondary market may be purchased from that list.
VTT. PORTFOL.~O COMPOSITION
The following are the guidelines for investments and limits on security issues, issuers,
and maturities as established by the County. The Znvestment Accountant Finance Director,
or appropriately designee, shall have the option to further restrict or increase investment
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percentages from time to time based on market conditions. Purchases of investments based
on bond covenant requirements shall not be included in the portfolio composition calculation.
The following maximum limits are guidelines established for diversification by instrument:
A. The Local Government Surplus Trust Fund (SBA) and the Florida Counties
Investment Trust.
1. A maximum of 80% of the portfolio may be invested in these Trusts;
however, bond proceeds may be temporarily deposited in the Trust Fund Investment Pools
until alternative investments have been purchased and are not a part of this calculation.
B. Non-negotiable Interest-Bearing Time Certificates of beposit
1. A mc~ximum of 40% of the portfolio may be invested in non-negotiable
interest bearing time certificates of deposit or savings accounts.
2. The mm<imum maturity on any certificates shall be no greater than one
(1) year from the time of purchase.
of any one issuer.
A maximum of 25% of the portfolio may be deposited in the instruments
C. United States Government Securities
1. A maximum of 75% of the portfolio may be invested in United States
Government Securities which are defined as negotiable direct obligations, or obligations the
principal and interest of which are unconditionally guaranteed, by the United States
Government (example: Treasury Bills, Notes).
2. The mc~imum length of maturity of any direct investment in government
securities is five (5) years.
b. United States Federal Agencies
Z. A maximum of 50% of the portfolio may be invested in United States
Federal Agency securities which are backed by the full faith and credit of the United States
Government (example: GNMA, Farmers Home Administration).
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Maturity will be limited to the requirements of United State Government
securities.
of any one issuer.
A maximum of 25% of the portfolio may be invested in the instruments
E. Federal Znstrumentalities
1. A maximum of 40% of the portfolio may be invested in Federal
Instrumentalities which ore not full-faith and credit United 5totes Government Agencies
(example: FFCB, FNMA).
2. Maturity will be limited to the requirements of the United States
~;overnment securities.
of any one issuer.
A maximum of 25% of the portfolio may be invested in the instruments
F. Repurchase Agreements
A maximum of I0% of the portfolio may be invested in repurchase
agreements with the exception of one (t) business day agreements and overnight sweep
agreements which may go c~ high as 25%.
2. The maximum term of a repurchase agreement will be one (t) year.
3. A maximum of 10% of the portfolio may be invested in the instruments
of any one issuer with the exception of one (t) business day agreements and overnight sweep
agreements which may go as high as
VZII. I:~$K AND DZVERSZFICA'I'ZON
Assets held shall be diversified to control the risk of loss resulting from the over
concentration of assets in a specific maturity, issuer, instrument, dealer, or bank through
which these instruments are bought and sold. Diversification strategies within the
established guidelines shall be reviewed and revised periodically as necessary by the
appropriate management staff.
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IX. AUTHORIZED TNVESTMENT ~[NSTITUTIONS AND DEALERS
The County shall only purchase securities from financial institutions which have offices
located within the 5tote of Florida and ore qualified as public depositories by the Treasurer
of the 5tote or Florida, from primary securities brokers/dealers designated by the Federal
Reserve Bank of New York or from specified dealers, with an office located in St. Lucia
County. Such specified dealers must be recommended by the Investment Committee and
approved individually by the Board of County Commissioners. Documented lists of the
authorized financial institutions and dealers/brokers will be developed and maintained by the
Invcstment Accountant Finance Director and approved by the Clerk of the Court.
If at any time the Clerk of the Court is appropriately notified of any threat to the
integrity of the investment portfolio, proper securil7 measures may be suggested and
implemented, and the Clerk of the Court shall have the option to further restrict investment
in selected instruments, to conform to the then-present market conditions.
Repurchase Agreements will be conducted through, and negotiated only with primary
securities brokers/dealers or Qualified Public Depository financial institutions. A written
N~aster Repurchase Agreement will be negotiated with any institutions with which the County
through the Clerk of the Court enters into a specific repurchase agreement.
X. THZRD PARTY CUSTODIAL AGREEMENTS
The Clerk of the Court will execute a Third Party Custodial safekeeping Agreement
with a commercial bank's trust department which is separately chartered by the United
States ~overnment or the State of Florida. All securities purchased and/or collateral
obtained by the Clerk of the Court shall be properly designated as an asset of the County and
held in safekeeping by the trust department and no withdrawal of such securities, in whole
or in part, shall be made from safekeeping except by an authorized staff member. The Third
Party Custodial Safekeeping Agreement shall include letters of authority from the Clerk of
the Court, details as to responsibilities of each party, notification of security purchases,
sales, delivery, repurchase agreements, wire transfers, safekeeping and transaction costs,
procedures in case of wire failure or other unforeseen mishaps including liability of, each
party.
XT. MASTER REPURCHASE A~REEMENT
The Clerk of the Court will require all approved institutions and dealers transacting
repurchase agreements to execute and perform as stated in the Master Repurchase
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Agreement. All repurchase agreement transactions will adhere to requirements of the
Master Repurchase Agreement. The agreement shall specify that the underlying securities
have a market value of at least 105% of the principal balance of the investment. The market
value is to be determined on a monthly basis.
XlI. BID REQUIREMENT
Although in most situations the competitive bid process shall be utilized, there is no
obligation to secure competitive bids from all financial institutions and dealer/brokers on the
approved list. Rather a decision will be made by the Clerk of the Court through the
Inwstment Accountant Finance birector as to the institutions that have been the most
competitive over the preceding weeks and these will be contacted for a bid.
A. After the Clerk of the Court, through the Inves,ment Accountant Finance
birector, has determined the approximate maturit7 date based on the cash flow needs and
market conditions and has analyzed and selected one or more optimal types of investments,
a minimum of three (3) qualified banks and/or dealers will be contacted and asked to provide
bids on the securities in question.
Bids will be held in confidence until the highest bid is determined end
awarded.
bocumentation will be retained for all bids, with the winning bid clearly
identified.
3. If for any reason the highest interest rate bid was not selected, then
the reasons leading to that decision will be clearly indicated on the bid form.
4. If the maturing investment is a certificate of deposit, the present
holder of the funds will be one of the contacts mode, subject to the portfolio diversification
requirements in this policy.
5. In certain circumstance~ where a dealer or bank informs the County of
a potential sale that must be completed within minutes of notification, the competitive
bidding policy will be waived. The Clerk of the Court will have final approval on these
particular transactions before they have been completed.
6. Notwithstanding the above, in order to afford financial institutions
(banks and/or savings and loan associations) within St. Lucie County opportunities to enhance
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the economy of the local area certificates of deposit may be purchased from an institution
~s described in Sections V.F provided that the following additional conditions have been
satisfied:
a. The institution, or a branch office, is located within the
boundaries of St. Lucie County.
b. The institution has the highest and best bid of all bidding
institutions as described in Section V.F.
c. The institution awarded the bid is subject to the portfolio
limitation requirements and may not exceed said limitations.
d. Banks/savings and loan associations included on the approved list
must be Qualified Public Depositories, as determined by the 5tote of Florida.
XIII. TNTERNAL CONTROLS
The Clerk of the Court shall exercise and monitor a set of internal controls to be
conducted through the Investment Accountant Finance Director, which said controls ore
designed to protect the County's funds and ensure proper accounting and reporting of the
securities transactions, The investment policy shall provide for review of such controls by
independent auditors as mart of any financial audit periodically required of the unit of local
government. Such internal controls shall consist of the following:
A. All securities purchased or sold will be transferred only under the "delivery
versus payment" (D.V.P.) method to ensure that funds or securities are not released until all
criteria relating to the specific transaction are met.
B. The Clerk of the Court is authorized to accept, on behalf of and in the name
of St. Lucie County, bank trust receipts or confirmations as evidence of actual delivery of the
obligation or securities in return for investment of funds.
C. Trust receipts or confirmations shall fully describe the various obligations or
securities held. The receipt or confirmation shall state that the investment is held in the
nome of St. Lucie County.
b. Written documentation and/or confirmation of telephone transactions and wire
transfers will be maintained.
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E. There will be adequot¢ separotion of duties with clear delegation of outhority
among investment personnel.
F. Custodial safekeeping shall be properly utilized.
Operation review and performance evaluations and reporting, interim and annual,
shall be done by the Investment Accountant Finance Director.
H. There will be an avoidance of bearer-form securities.
I. There will be no physical delivery of securities.
~T. There will be specific limitations regarding securities losses and remedial action
shall be taken as soon as possible.
K. A development of a wire transfer agreement with the custodial bank outlining
the various controls and security provisions for making and receiving wire transfers shall be
made.
b. Prohibition of collusion.
NL Written dealer confirmation and monthly and/or quarterly custodial account
statements shall be maintained.
N. Investment policy shall be established by the Board of County Commissioners
considering the recommendations of the Investment Committee. All daily investment activity
will be coordinated and reviewed by the Investment Accountant Finance Director. In the
absence of the Investment Accountant Finance Director and Clerk of the Court investment
activity must be approved by their designee and later approved by the Investment
Accountant Finance Director or Clerk of the Court.
O. The following positions are designated by the Clerk of the Court as having the
authority to initiate all investment activities:
Clerk of the Court
Investment Accountant Finance Director
All other designees will be at the discretion of the Clerk of the Court.
P. Periodic raining and educational opportunities will be provided and made
available concerning investment and related subjects for appeopriate investment personnel.
g:\atty\~reemnt \investment policy-O1 ' ]- ],-
All of~:icials responsible for making investment decisions, or the Finance b/rector, shall
complete 8 hours of continuing education annually in subjects or courses of study related to
investment practices and products.
C~. Such additional internal controls as established by the Clerk of the Court.
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