HomeMy WebLinkAbout09-082RESOLUTION NO. 09-082
A RESOLUTION AMENDING RESOLUTION NO. 05-378
WHICH AMEN~ED THE INVESTMENT POl.ICY FOR ST.
LUCIE COVNTY, FLQRIpA; BY FURTHER AMENDING THE
INVESTMENT POLICY
WHEREAS, the Board of County Commissioners of St. Lucie Gounty, 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 und 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 8oard
adopted Resolution No. 97-190 which amended the investment policy and incorporated the
recommended changes of the Investment Committee.
5. On Apri I 4, 2001, the Investment Committee recommended that the Board adopt
certain amendments to the investment policy, c~nd on April 24,2001, theBoard adopted
Resolution 01-95 which amended the investment policy and incorporated the recommended
changes of the Investment Committee.
b. 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, and on December 11, 2007, the Board adopted
Resolution No. 07-396.
9. On January 23, 2008, the Investment Committee recommended the Board adopt
certain changes to the investment policy, and on February 12, 2008, the Board adopted
Resolution No. 08-068.
10. On January 27, 2009, the Investment Committee recommended the Board adopt
certain changes to the investment policy which 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 228.415, Florida Statutes.
2. Except as amended herein, the remaining terms and conditions of Reso(ution 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:
Chair Paula A, Lewis AYE
Vice Chair Charles Grande AYE
Commissioner poug Coward AYE
Commissioner Chris Dzadovsky AYE
Commissioner Chris Craft AYE
APPROVED AS TO LEGAL FORM AND
ST. LUCIE COVNTY
,-::,,~:. ~.
It~9VE5TMENT POLICY
TABI.E OF GONTENTS
T. SCOPE ............................................................................................................................................2
II. INVESTMENT OBJEC'17VE5 ................................................................................................2
~~, ~
IIT. DELEGATTUN OF AUTHORTTY .........................................:.............................................2;~
IV. TNVESTMENT PERFORMANCE AND REPORIZNG .......................................................3
V. PRUDENCE AND ETHICAL STANDARDS ....................................................................3,4
VI. AUTHORTZED INVESTMENTS .......................................................................................4,5
VIT. MATURITY AND LIQUIDITY REQUIREMENTS .......................................................5,6
VIII. PORTFOLIO C~MPOSITZON ........................................................................................6,7;8
IX. RISK AND DTVERSIFZCATION ............:...............................................................................$
X AUTHORIZED INVESTMENT TNSTITUTIONS AND DEALERS ..........................8,9
XT. THIRD PARTY CUSTODTAL AGREEMENTS .......................................................................9
XTT. MASTER REPURCHASE ~IGREEMENT ...................................................................................9
XITI BIQ REQUIREMENTS ..........................................................................................................9,10
XTV. INTERNAL CONTROLS ......................................................................................................11,12
EXHIBIT
~ ,~~„
I. SCOPE
This investment pol+cy applies to nll surplus funds held by or for the benefit of the
St. Lucie County Board of Counfiy Commissioners, hereinafter referred to as the County.
~ These poiicies were adopted using Sections 125.31 and 218.415, Florida Statutes.
I 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 fihe Tnvestment Policy.
! II. INVESTMENT OBJECTIVES
The County shall strive ta achieve with each investment opportunity, the following
ob jectives, in ORDER OF PRIORITY:
1. SAFETY - The primary ob jective of the County's investment activities is the
protection of investment capital.
2. LTQUIDITY - The Caunty'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 AVTHORTTY
The responsibility for providing oversight and direction in regard to the
management of the investment program resides with the Clerk of the Circuit Court. The
Board of County Commissioners will appoinfi an Tnvestment Committee that will serve in an
advisory capucity and report to the 8oard 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 quarterly to review the
Clerk's investment strategy 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 trans4ctions is delegated to
the Clerk of Circuifi Court or designee. The Clerk of Circuit Court ar designee shall
establish written procedures for the operation of the investment portfolio nnd a system of
internal accounting and administrative controls to regulate the investment activities. The
Clerk may employ investment manager(s) to assist in managing some of the Board's
investment portfolio. Such investment manager must be registered under fihe investment
Advisors Act of 1940.
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IV. INVESTMENT PERFORMANCE AND REPORTTNG
A portfolio report shall be prepared each quarter by the Finance Director or
designafied staff inember, and be provided to the Clerk of the Circuit Court and
appropriate managemenfi 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 Tnvestment Committee
on a quarterly basis. The report shall include information relating to transactions, murket
values, performance and adherence to policy. The Clerk of Gourt is authorized to u#ilize 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 County Commissioners will appoint nn Investment Committee that will
serve in an advisory capacity and report to the Board of County Commissioners. Each
Commissioner will select one of the f~ve Investment Committee members who will possess
relevant financial experience. The Tnvestment 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 scheduie a special committee meeting fio
discuss the proposed action. If a special committee meeting is not possible due to time
constraints or schedufing problems, the Finance Director shall individually notify. a minimum
of #hree committee members to obtain approval of the proposed action.
V. PRUDENCE AND ETHICAI_ STANDARDS
The "prudent person" standard shail 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.
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The "prudent person" standard is herewith understood to mectn the following:
Tnvestments shall be macJe 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 td be derived.
VI: AUTHORIZED INVESTMENTS
The Clerk of the Court acting through the Finance Director, or other designee ofi
the Clerk's office, shall purchase or sell investment securities at prevailing market rates,
with a preference to par bonds or those at u discount. Authorized instruments are ns
follows:
A. The Local Government Surplus Funds Trust Fund, the State Tnvestment Pool
administered by the State Baard of Administration; also known as S.B.A.
B. The Florida Local Government Investment Trust, also known as the F.L.6.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 fio, the following:
1. Treasury Bills
2. Treasury Notes
3. Treasury Bonds
D. Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by Unified States agencies provided such obligations are backed by the full
fa+th and credit of the United States Government. Such securities will include, but not be
limited to, the folfowing:
1. Farmers Home Administration
2. Government National Mortqaqe Associution (GNMA
E. Bonds, debentures, notes of or other evidence of indebtedness issued or
guaranteed by United States Government agencies (Federal Tnstrumenfialities) which are
noi' full faith and credit agencies limited to the following:
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.
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1: Federal Farm Credit Bank (FFCB)
2. Federal Home Loan Bank or its district bnnks (FHLB)
3. Federal National Mortgage Association (FNMA)
4. Federa) Home Loan Mortgage Corporation (Freddie-Macs)
F. Non-negotiable interest-bearing time certificates of deposit, money market
accounts or savings accounts +n banks/savings and ban associntions 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.
Tnvestment 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 vnriable 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 contracfis, interest rate swaps, interest
rate floor or ceiling contracts, and linked index investments.
VII. MATURITY AND L.IQUI~ITY REQUIREMENTS
To the extent possible, an attempt will be made to match investment maturities
with known cash needs and antir,ipated cash flow requirements. Investments, including
investment pools, of current operafiing funds shall have maturities of up to„five (5) ~ears
_ _ _..
c~~~:v~'~~ ~,~~~.~~sr~ ~.?h.~ x.s. ~~fifistt ~.'' ,., ~ ~ .; x ~ ~~ w,~ ~ ~; "
~Jb~rc~t~~~~~~~a11 be=~~a~~e;.~~, ye~trs,f,rom ~~e~~late of purchase:.The Finance Director an
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 shal) have
a term appropriate to the need for funds, and in accordance with debt covenants, but shall
not exceed five (5) years, unless permifited by the fierms of the bond documents.
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H. Securities and Exchange Commission registered money market funds with
the highest credit quality rating from a nationally recagnized rating agency.
A liquidity amount of ctpproximately three (3) months of anticiputed
disbursements, excluding bond construction payments or other bond payments made from
escrow or trust accounts, will be kept in relafiively short-term investments. These would
include the State Investment Pool (58A), F.L.G.I.T., money market accounts and
Repurchase Agreements.
VIII. PORTFOLIO COMPOSITION
The follawing are the guidelines for investments and (imits on security issues,
issuers, and maturities as established by the Coun~hy. 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 camposition 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% of fihe portfolio may be invested in the SBA,
however, bond proceeds may be temporarily deposited in the SBA until alternative
invesfiments have been purchased and Are not a part of this calculation.
B. The Local Government Investment Trust fund (F.L.G.T.T,)
1. A maximum of 35% of the partfolio may be invesfied in {F.L.G.I.T~.
C. Non-negotiable Tnterest-Bearing Time Certificates of Deposit
1. A maximum of 40% 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) two (2) year from the time of purchase.
3. A maximum of 10% of the partfolio may be deposited in the
instruments of any one issuer.
p. United States Government Securities
; 1. A moximum of 75% of the portfalio may be invested in United States
Government Securities which are defined as negotiable direct obligations, or obligations
, 6
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the principcti and interest of which are unconditionally guaranteed, by the United States
Government.
2. The maximum (ength of maturiiy of any direct investment in
government securities is Y ~` ~ ~~~ ~~ ' ~`~~~ ~~i~l~~~`~~~i~t~~ ~~:'~}~,
.. a~:~w... ,. k
E. United States Federal Agencies
1. A maximum af 50% of the portfolia 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 len~th of mafiurity of an~ direct investment in Federal
~"2 ~ .-~~,~,^fi`,~~~ "~a$~,~3'F ~ ^s ,~ ~ ~.~ w ~ ~ M r~ ~ ~ ,~. 3
Agencies Securities is ~~~~~~~ and;,p.~` ~EiI~C~:~~~~c,c~~~.
3. A maximum of 25% of the porttolio may be invested in the
instruments of any one issuer. ~
F. FederalInstrument~tlit+es
1, A maximum of 40% of the portfolio may be invested in Federa)
Instrumentaiities which are not full-faith and credit United States 6overnment Agencies.
2 The maximum fen~th of maturity of anY direct investment in Federal
"a'~~r~,~~„".'"^~' s~~~4.~ ~e ~.~' d''~~~ "~~'sa~~ ~z,~ `"'c~~'~~x o ; ~~mua~~ ~
Tnstrumentn(ities ~s ~~~~,e~, ~~~s u-~~',an~;~~i~~~~~,~~)~~ea`~s~~
.r ~ ~._.~ ~ .
3. A maximum of 25% of the porffolio may be invested in the
instruments of any one issuer.
G. Repurchase Agreements
1. A maximum r~f 10% of the portfolio may be invested in repurchase
agreements with the exceptivn of one (J.) business day agreements and overnight sweep
agreements which mQy go as high as 25%.
2. The maximum term of ct repurchase agreement will be one (1) year.
3. A maximum of 10% of the portfolio may be invested in fihe
instruments of any one issuer with the exception of one (1) business day agreements and
overnight sweep agreements which may go as high as 25°10.
H. Money Market Fund~
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1. A maximum of 80% of the portfolio may be invested in institutional
maney market funds.
2. Money market funds must have nn "AAA" rating from Moody's,
Standard and Poor's or Fitch
3. A maximum of 25% of the portfolio may be invested in any one money
market fund
_ ~ yS ~3,~ ~ '~.~ ~" =~csr".st5',~' +r~r> &+ ed~y~.t[cs~ a py. ~s~~~r ~y~3~ ~
'~ ~~' N ~'~,a F~iL ~~{'1QI'~~`~~ ~~Uf~~ll.kk~l.l'..
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IX. RISK AND DIVERSIFIGATION
Assets held shall be diversified to control the risk of (oss resulting from the over
concentration of assets in a specific maturity, issuer, instrument, dealer, or bunk through
which these instruments are bought and sold. Diversification strutegies wifihin the
established guidelines shall be reviewed and revised periodically as necessary by the
appropriate management staff.
X. AUTHORIZED INVESTMENT INSTITUTIONS AND ~EALERS
The County shall only purchase securities from financial institutions which have
offices located within the State of Florida and are qualif ied as public depositories by the
Treasurer of the State of Florida, from primQry 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 nuthorized fiinancial institutions and brokers/dealers will
be developed qnd maintnined by the Finance Director and approved by the Cferk of the
Court.
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~:~u~~n~ .~~t:`~~r~ax~r~~~i~`i~~. ~ a.l~~:of.~~:~~~a~la~~~:.~`~[ncf~~~r-~ ~~~~i~~r~s~~c~`~v~~Fc ~ _ .~"~
If at any time the Clerk of the Court is appropriately notified ofi any threat to the
integrity o~F the investment portfolio, proper security measures may be suggested and
implemented, and the Clerk ofi 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 se~condary 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.
XI. THIRD PARTY CUSTODIAL AGREEMENTS
The Glerk of the Court will execute a Third Party Custodial safekeeping Agreement
with a eommercia) banlt's trust d~epartment which is separately chartered by the United
5tcttes Government or the State of Florida. Al) securities purchased and/or collateral
o6tained by the Clerk of the Courfi shafl 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 ar in part, shctll be made from safekeeping except by an authorized staff inember.
The Third Party Custodial Safekeeping Agreement shal) inclUde letters of authority from
the Clerk of the Court, details as to responsibilities of each party, notifica~tion of security
purchases, sales, delivery, repurchase agreements, w+re transfers, safekeeping and
transacfion costs, procedures in case of wire failure or other unforeseen mishaps including
liabili#y of, each pdrty.
XIT. MASTER REPURCHASE A~REEMENT
The Clerk of the Court will require al( approved insfitufions and dealers transacting
repurchase agreements to execute and perform as stated in the Master Repurchase
Agreement. All repurchase agreement transattions will adhere to requiremenfs of the
Master Repurchase Agreement. The agreement shall specify that the underlying securities
have a market value of at least 103% of the principal balance of the investment. The
markefi value is to be determined nn a monthly basis.
XTII. BID REQUTREMENT
Alfihough in most situations the competitive bid pracess shall be utilized, there is no
obligation to secure competitive bids from all financial institutions and dealer/brokers on
the approved list.
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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 ~irector, has determined
the approximate mnturity date based on the cash flow needs and market conditions and has
nnalyzed and selected one or more optimal types of investments, Q 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. Tf for any reason the highest interest rate bid was not selected, then
the reasons leading to thnt decision will be clearly indicuted on the bid form.
4. If the maturing investment is funds to be invested are from a
. certificafie 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. Tn certain circumstances where a dealer or bank informs the County
of n pofiential sale that must be completed within minutes of notification, the competitive
bidding policy will be waived. The Clerk of the Caurt will have final approval an 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 Iocal area, certificates of deposit may be purchased from an
institution as described in Section V.F provided that the following additiona) 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. '
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c. The institution awurded the bid is subject to the portfolio
limitation requirements and may not exceed said (imitations.
d. Banks/savings ctnd loan associations included on fihe approved
list must be Qualified Public Depositories, as determined by the State of Florida.
XTV. 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 af such controls by independent auditors as
part of an~ financial audit periodical{y required of the unit of locczl government. Such
interna! controls shall consist of the following:
A. Al) securities p~trchased or sold will be trnnsferred only under the "delivery
versus payment" (D.V.P.) method #o ensure that funds or securities ctre not released until
all criteria relating to the specific transaction ure met.
B. The Clerk of the Caurt 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 shali 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 dacumentation and/or confirmation of telephone transactions and
wire transfers wil) be maintained.
E. There will be adequate separation of duties with clear delegation of
authority among investment personneL
F. Custodial safekeeping shall be praperly utilixed.
G. Operation review cand performance evaluations and repor#ing, interim and
nnnual, shall be done by the Finanr.e pirector.
H. There will be an avaidance af no 6earer-fiorm securifiies.
I. There wi(1 be no physica) delivery of securities.
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_ _ _ _.. : . _ _ . _ . _ _ _.
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J. There will be specific limitations regarding securities Iosses 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 shafl 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 quurterly custodial account
statements shall be maintained.
N. Investment policy shal) 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 inifiate all investment activities: ,
1. Clerk of the Court
2. Finance Director
3. All other designees will be at the d+scretion 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 Courfi.
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