HomeMy WebLinkAbout08-068
RESOLUTION NO. 08-068
A RESOLUTION AMENDING RESOLUTION NO. 05- 378
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 April4, 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, and on October 11, 2005, the Board adopted
Resolution No. 05-378.
7. On October 25, 2006, the Investment Committee recommended that the Board
adopt certain changes to the investment policy, and on November 28, 2006, the Board adopted
Resolution No. 06-345.
8. On December 6,2007, the Investment Committee recommended the Board adopt
certain changes to the investment policy, which amendments are attached as Exhibit "A".
9. On January 23, 2008, the Investment Committee recommended the Board adopt
certain changes to the investment policy, which amendments are attached as Exhibit "Alii
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 "N, pursuant to Section 218.415, Florida
Statutes.
2. Except as amended herein, the remaining terms and conditions of Resolution No.
05-378, 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 Joseph E. Smith
Vice Chair Paula Lewis
Commissioner Doug Coward
Commissioner Charles Grande
Commissioner Chris Craft
AYE
AYE
AYE
AYE
AYE
PASSED AND ÞVl.Y ADOPTED this 12th day of February, 2008.
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ATTEST:
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BOARD OF COUNTY COMMISSIONERS
ST. LUCIE COUNTY, FLORIDA
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ST. LUCIE COUNTY
INVESTMENT POLICY
TABLE OF CONTENTS
I. SCOPE ................. ................. ...................................... ............ ......... .................. ................... ......... 2
II. INVE S T MENT 0 BJECTIVE S.............. ............................. ............ .................... ............... ...... 2
III. DELEGA TION OF A UTHORITY ....................................................................................... 2,3
H±; IV. INVESTMENT PERFORMANCE AND REPORTING ......................................................3
~ V. PRUDENCE AND ETHICAL STANDARDS ................................................................... 3,4
¥: VI. AUTHORIZED INVESTMENTS ....................................................................................... 4,5
¥f.: VII. MA TURITY AND LIQUIDITY REQUIREMENTS .................................................... 5,6
¥II-: VIII. PORTFOLIO COMPOSITION ...................................................................................... 6 ,7,8
¥HI-: IX. RISK AND DIVERSIFICA TION ....................................................................................... 8
~x AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS ......................8,9
X-: XI. THIRD PARTY CUSTODIAL AGREEMENTS ...................................................................9
Xf.:-XII. MASTER REPURCHASE AGREEMENT .............................................................................9
~ XIII BID REQUIREMENTS ...................................................................................................... 9,10
~ XIV. INTERNAL CONTROLS .................................................................................................11,12
EXHIBIT
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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. DELEGATION OF AUTHORITY
The responsibility for providing oversight and direction in re9ard to the
management of the investment pro9ram resides with the Clerk of the Circuit Court. 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 of the five Investment Committee members who will possess relevant
financial experience. The Investment Committee shall meet auarterly to review the
Clerk's investment strateQY and results. The Investment Committee will rely on the
Clerk of the Court. Finance Director. and their staff for support.
The management responsibility for all Board's funds in the investment program and
investment transactions is delegated to the Clerk of Circuit Court or designee. The Clerk
of Circuit Court or designee shall establish written procedures for the operation of the
investment portfolio and a system of internal accountin9 and administrative controls to
reQulate the investment activities. The Clerk may employ investment manager(s) to assist in
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mana9ing some of the Board's investment portfolio. Such investment manaQer must be
registered under the investment Advisors Act of 1940.
;HI-:- IV.
INVESTMENT PERFORMANCE AND REPORTING
A portfolio report shall be prepared each 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 and Investment Committee. 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 and Investment Committee
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 review of the investment portfolio and the investment
policy.
The Board of COUAty Com",issicmers will a 3 3eiAt aA IAvest",eAt Committee that will
serve iA aA advisery ca 3acit'f GAd report to the Board of COUAty CommissioAers. Each
Ce",missioAer will select eAe of the five IAvestmeAt Com",ittee ",emBers who will possess
rele'..aAt fiAaAcial e)(perieAce. The Investment Committee and the Board of County
Commissioners shall receive a copy of the portfolio pricing analysis.
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.
~ V. PRUDENCE AND ETHICAL STANDARDS
The "prudent person" standard shall be used in the management of the overall
investment portfolio.
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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:
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.
¥'7 VI. 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:
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 Florida Local Government Investment Trust, also known as the 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 Bi lis
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. Government National Mortgage Association (GNMA)
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E. Bonds, debentures, notes of 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)
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.
G. Repurchase agreements collateralized by Treasury Bills or Notes having a
maturity of two (2) years or less.
H. Securities and Exchange Commission registered money market funds with
the highest credit quality rating from a nationally recognized rating agency.
Investment in derivative products is not authorized. For the purposes of
this policy derivative products are defined as financial arrangements whose value are
derived from changes in an underlying variable such as a stock, bond, stock index, interest
rate index, currency, commodity, etc. Derivative investments include, but are not limited
to: futures contracts, options contracts, forward contracts, interest rate swaps, interest
rate floor or ceiling contracts, and linked index investments.
~VII.
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 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. 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.
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A liquidity amount of approximately three (3) months of anticipated
disbursements, excluding bond construction payments or other bond payments made from
escrow or trust accounts, will be kept in relatively short-term investments. These would
include the State Investment Pool (SBA), F.L.G.I.T., money market accounts and
Repurchase Agreements.
¥II-:- VIII. 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
appropriate 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 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).
1. A maximum of ~ 40'/'0 of the portfolio may be invested in the SBA,
however, bond proceeds may be temporarily deposited in the SBA 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 tF.L.G.I.T1.
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
ORe (1) two (2) year from the time of purchase.
3. A maximum of 10'/'0 of the portfolio may be deposited in the
instruments of anyone issuer.
D. United States Government Securities
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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.
2. The maximum length of maturity of any direct investment in
government securities is five (5) years.
E. United States Federal Agencies
1. A maximum of 50'Yo 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.
2. The maximum length of maturity of any direct investment in Federal
Agencies Securities is five (5) years.
3. A maximum of 25'Yo of the portfolio may be invested In the
instruments of anyone issuer.
F. Federal Instrumentalities
1. A maximum of 40'Yo of the portfolio may be invested in Federal
Instrumentalities which are not full-faith and credit United States Government Agencies.
2. The maximum length of maturity of any direct investment in Federal
Instrumentalities is five (5) years.
3. A maximum of 25'Yo of the portfolio may be invested In the
instruments of anyone issuer.
G. Repurchase Agreements
1. A maximum of lO'Yo 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'Yo.
2. The maximum term of a repurchase agreement will be one (1) year.
3. A maximum of 10 'Yo 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'Yo.
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H. Money Market Funds
1. A maximum of 80io of the portfolio may be invested in institutional
money market funds.
2. Money market funds must have an "AAA" rating from Moody's,
Standard and Poor's or Fitch
3. A maximum of 25io of the portfolio may be invested In anyone
money market fund
¥III.IX.
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
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.
~X.
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 of Florida, from primary securities brokers/dealers designated by
the Federal Reserve Bank of New York or from secondary brokers/dealers, with an office
located in the State of Florida. Such specified brokers/dealers must be reviewed and
approved by the Investment Committee and approved by the Board of County
Commissioners.
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 with primary
securities brokers/dealers, or secondary brokers/dealers, or Qualified Public Depository
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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-:- XI.
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
transaction costs, procedures in case of wire failure or other unforeseen mishaps including
liability of, each party.
XI-;- XII.
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 103'1'0 of the principal balance of the investment. The
market value is to be determined on a monthly basis.
XI!-:- XIII. 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)
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qualified banks and/or dealers will be contacted and asked to provide bids on the securities
in question.
1. Bi~S 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 investment is funds to be invested are from a
certificate of deposit, the present holder of the funds issuer of the CD will be one of the
contacts made, subject to the portfolio diversification requirements in this policy.
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 Section 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 State of Florida.
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XIY-:- XIV. 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
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" CD.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
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 an avoidance of 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.
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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 making 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:
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 the Finance
Director, 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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