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RESOLUTION NO. 05- 378
A RESOLUTION AMENDING RESOLUTION NO. 01-95
WHICH AMENDED THE INVESTMENT POLICY FOR ST.
LUCIE COUNTY, FLORIDA; BY FURTHER AMENDING THE
INVESTMENT POLICY
WHEREAS, the Board of County Commissioners of St. Lucie County, Florida, has made
the following determinations:
1. Pursuant to Section 218.415, Florida Statutes, on or before October 1, 1995,
counties that have 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 State Board
of Administration, are required to conduct such investment activity in accordance with a
written investment plan and an investment policy adopted by the Board of County
Commissioners or in the alternative to invest in specified low-risk instruments.
2. On September 26, 1995, the Board adopted Resolution No. 95-168 which
adopted an investment policy as 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 December 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, and on April 24,2001, the Board adopted
Resolution 01-95 which amended the investment policy and incorporated the recommended
changes of the Investment Committee.
6. On September 21, 2005, the Investment Committee recommended that the
Board adopt certain changes to the investment policy, which amendments are attached as
Exhibit "A".
NOW, THEREFORE, BE IT 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.
01-95, 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 AYE
Vice Chairman Doug Coward AYE
Commissioner Paula Lewis AYE
Commissioner Joseph E. Smith AYE
Commissioner Chris Craft AYE
PASSED AND DULY ADOPTED this 11th day of October, 2005.
ATTEST:
BOARD OF COUNTY COMMI~IONERS
ST. LtXIE çdUNTY / '.
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Deputy Clerk
BY ::.-'l I~ . i'.'~'Y1¿';-""-·V?:1/;-ii1,/LZfâ2;:;t..}-
Cf\äirma~
APPROVED~O FORM AND
C~~RE ~~
BY: (jIlt
County At orne
EXHIBIT "A"
ST. LUCIE COUNTY
INVESTMENT POLICY
TABLE OF CONTENTS
I. SCOPE.................................................................................................................·.........·....····.... .....1
II. INVE S T MENT ..............................................................................................................................1
III. INVESTMENT PERFORMANCE AND REPORTING ....................................................... 1,2
IV. PRUDENCE AND ETHICAL STANDARDS ........................................................................... 2
V. A UTHORIZED INVESTMENTS ..................................................................................... 2,3,4
VI. MA TURITY AND LIQUIDITY REQUIREMENTS ..........................................................4,5
VII. PORTFOLIO COMPOSITION ......................................................................................... 5,6,7
VIII. RIS K AND DIVERSIFICA TION ......................................................................................... 7,8
IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS ................................ 8
X. THIRD PARTY CUSTODIAL AGREEMENTS ...................................................................8,9
XI. MASTER REPURCHASE AGREEMENT ................................................................................. 9
XII. BID REQUIREMENTS ......................................................................................................... 9,10
XIII. INTERNA L CONTROLS ............................................................................................... 10,11,12
I. SCOPE
This investment policy applies to all surplus funds held by or for the benefit of the
St. Lucie 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 OBJECTIVES
The County shall strive to achieve with each investment opportunity, the following
objectives, in ORDER OF PRIORITY:
1. SAFETY - The primary objective of the County's investment activities is the
protection of investment capital.
2. LIQUIDITY - The County's investment strategy will provide sufficient
liquidity such that cash flow requirements are met through the utilization of
marketable securities with structured maturities.
3. 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 mOAth quarter by the 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 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 Board of County Commissioners. Each
Commissioner will select one af the five Investment Committee members who will possess
relevant financial experience. The Investment Committee will rely on the Clerk of the
Court, 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 Finance Director.
In the event of an 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 STANDARDS
The "prudent person" standard shall be used in the management of the overall
investment portfolio.
The Finance Director, and other persons performing the investment function, shall
act as a "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 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.
V. AUTHORIZED INVESTMENTS
The Clerk of the Court acting through the Finance Director, or other designee of
the Clerk's office, shall purchase or sell investment securities at prevailing market rates..
with a preference to par bonds or those at a discount. 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 S.B.A.
B. The Flerida Cel:lRties II'I\'estmel'lt Trl:lst Florida Local Government Investment
Trust, also known as the F.C.I.T. F.L.G.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 States Government. Such securities
will include, but not be limited to, the following:
1. Treasury Bills
2. Treasury Notes
3. Treasury Bonds
D. 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:
1. Farmers Home Administration
2. Fcderal Fil'lal'lcil'l§ Bal'll~
3. Federal Heusil'l§ Admil'listratiol'l Debel'ltures
4:- f.. Government National Mortgage Association (GNMA)
E. Bonds, debentures, notes &f. or other evidence of indebtedness issued or
guaranteed by United States Government agencies (Federal Instrumentalities) which are
not full faith and credit agencies limited to the following:
1. Federal Farm Credit Bank (FFCB)
2. Federal Home Loan Bank or its district banks (FHLB)
3. Federal National Mortgage Association (FNMA)
4. Federal Home Loan Mortgage Corporation (Freddie-Macs)
5. Studel'lt Loal'l Marl<etil'l§ ,".sseciatiol'l (Sallie Mae)
F. Non-negotiable interest-bearing time certificates of deposit, money market
accounts or savings accounts in banks/savings and loan associations organized under the
laws of the United States, doing business and situated in this state, provided that any
such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280,
Florida Statutes.
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G. Repurchase agreements collateralized by Treasury Bills or Notes havinQ a
maturity of two (2) years or less (the uAderl'fil'1g securities far 3urchase aAt:! subsequer'lt
sale) far al'1, ef the iAt'estmel'1ts autherized abo'..e il'1 items C, D al'1t:! E.
Investment in derivative products is not authorized.
IV. MATURITY AND LIQUIDITY 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 (3) years
five (5) years. The 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. Il'1vestmel'1t ef beAd reserves, cOl'1structioA
fUAds, aAt:! ether 1'101'1 G 3eratiAg fUAds shall have a term ap 3repriate to tI<Je Aeed far fl:ll'1ds,
al'1d iA accart:!al'1ce with debt COVeI'lGAts, but shall I'1Ot e><ceed five (5) years, I:IAless
permitted by the terms ef the bel'1d docl:lmeAts.
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.
B. Keep maturities short in a period of an inverted treasury yield curve (short-
term rates higher than long-term rates).
C. 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.
D. Maturities should be lengthened when interest rates are expected to fall
based on economic reports taken as a 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 be incurred for accounting purposes, provided the loss is more than offset by the
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higher yield. The following circumstances are considered appropriate for a swap an
exchanQe of securities 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 trade 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 ease amount of approximately two (2) months of anticipated
disbursements, e)(cludiA~ beAd ceAstructicm pa'fmeAts er ather beAd paymeAts made fram
escrew or trust acceuAts, will be kept in relatively short-term investments. These would
include the State Investment Pool (SBA), F.L.G.I.T., Certificates of Deposit, U.S. Treasury
Obligations and Repurchase Agreements.
G. 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.
VII. PORTFOLIO COMPOSITION
The following are the guidelines for investments and limits on security issues,
issuers, and maturities as established by the County. The Finance Director, or their
appropriately designee, after consulting with the Clerk of Circuit Court, shall have the
option to further restrict or increase investment percentages from time to time based on
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market conditions. Purchases af il'lvestmel'lts based aA b(3I'Id ca'¡el'lal'lt re<iuiremeAts shall
l'Iet be il'lcll:lded il'l the 3artfelia cam 3asitiel'l calcl:llatiel'l. The following maximum limits are
guidelines established for diversification by instrument:
A. The Local Government Surplus Trust Fund (SBAt al'ld the flarida Cel:lAties
Il'I'lestmel'lt Trl:lst.
1. A maximum of 80/'0 of the portfolio may be invested in tRese Trusts
the SBA. 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. The Local Government Investment Trust fund (F.L.G.I.T.)
1. A maximum of 35/'0 of the portfolio may be invested in (F.L.G.I.T).
-B.C. Non-negotiable Interest-Bearing Time Certificates of Deposit
1. A maximum of 40/'0 of the portfolio may be invested in non-negotiable
interest bearing time certificates of deposit or savings accounts.
2. The maximum maturity on any certificates shall be no greater than
one (1) year from the time of purchase.
3. A maximum of 25/'0 of the portfolio may be deposited in the
instruments of anyone issuer.
G.D. United States Government Securities
1. A maximum of 75/'0 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 maximum length of maturity of any direct investment in
government securities is five (5) years.
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~.E. United States Federal Agencies
1. A maximum of 50'}'o 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).
2. Maturity will be limited ta the re'iUiremeAts of UAited States
GO'.'erAmeAt securities.
-ð-; 2. A maximum of 25'}'o of the portfolio may be invested in the
instruments of anyone issuer.
E.F. Federal Instrumentalities
1. A maximum of 40'}'o of the portfolio may be invested in Federal
Instrumentalities which are not full-faith and credit United States Government Agencies
(example: FFCB, FNMA).
2. Matl:Jrity will be limited ta the re'il:Jircmer'lts af the UAited States
GoverAmeAt secl:Jrities.
-ð-;2. A maximum of 25'}'o of the portfolio may be invested in the
instruments of anyone issuer.
F-:~ Repurchase Agreements
1. A maximum of lO'}'o of the portfolio may be invested in repurchase
agreements with the exception of one (1) business day agreements and overnight sweep
agreements which may go as high as 25'}'o.
2. The maximum term of a repurchase agreement will be one (1) year.
3. A maximum of lO'}'o of the portfolio may be invested in the
instruments of anyone issuer with the exception of one (1) business day agreements and
overnight sweep agreements which may go as high as 25,},o.
VIII. RISK AND DIVERSIFICATION
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
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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.
IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
The County shall only purchase securities from financial institutions which have
offices located within the State of Florida and are qualified as public depositories by the
Treasurer of the State &f' of Florida, from primary securities brokers/dealers designated
by the Federal Reserve Bank of New York.. or from secondary brokers/dealers, specified
dealers, with al'l affice located il'l 'st. Lucie Co u 1'11)', with an office located in the State of
Florida. Such specified brokers/dealers must be receml'Rel'lded reviewed by the
Investment Committee~ al'ld appra·..ed il'ldividually by the Board af Caul'lty COl'Rl'Rissiol'lers.
Documented lists of the authorized financial institutions and brokers/dealers will be
developed and maintained by the 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 security 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 eiWt with
primary securities brokers/dealers, or secondary brokers/dealers, or Qualified Public
Depository financial institutions. A written Master 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. THIRD 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 Government 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
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transaction costs, procedures in case of wire failure or other unforeseen mishaps including
liability of, each party.
XI. MASTER REPURCHASE AGREEMENT
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
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 ~ 103'Yo of the principal balance of the
investment. The market value is to be determined on a monthly basis.
XII. 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
Finance Director 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 Finance Director, has determined
the approximate maturity 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.
1. Bids will be held in confidence until the highest bid is determined and
awarded.
2. Documentation 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 irwestmerit is funds to be invested are from a
certificate of deposit, the preseRt halder af the fURds issuer of the CD will be one of the
contacts made, subject to the portfolio diversification requirements in this policy.
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5. In certain circumstances 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 the economy of the local area.. certificates of deposit may be purchased from an
institution as 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 i.nstitution 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 State of Florida.
XIII. INTERNAL CONTROLS
The Clerk of the Court shall exercise and monitor a set of internal controls to be
conducted through the Finance Director, which said controls are 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
i'ft6f"I' part 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.
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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
name of St. Lucie County.
D. Written documentation and/or confirmation of telephone transactions and
wire transfers will be maintained.
E. There will be adequate separation of duties with clear delegation of
authority among investment personnel.
F. Custodial safekeeping shall be properly utilized.
G. Operation review and performance evaluations and reporting, interim and
annual, shall be done by the Finance Director.
H. There will be GR GvsidGRce af no bearer-form securities.
I. There will be no physical delivery of securities.
J. 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.
L. There is a prohibition of collusion between those makinQ investment
decisions and those providing investment services.
M. 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 Finance Director. In the absence of the
Finance Director and Clerk of the Court investment activity must be approved by their
designee and later approved by the 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:
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1. Clerk of the Court
2. Finance Director
3. All other designees will be at the discretion of the Clerk of the Court.
P. All officials responsible for making investment decisions, or tl<le Fil'lGl'lce
Directer, shall complete 8 hours of continuing education annually in subjects or courses of
study related to investment practices and products~
Q. Such additional internal controls as established by the Clerk of the Court.
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