Investment of Public Funds

Investment of Public Funds          

1.0 PURPOSE AND SCOPE.  The purpose of this policy statement is to outline the responsibilities, general objectives, and specific guidelines for management of public funds by the Reddick Public Library District. Its scope includes all funds governed by the Library Board of Trustees. 

2.0 RESPONSIBILITIES.  All investment policies and procedures of the Reddick Public Library District will be in accordance with Illinois law. The authority of the Library Board of Library Trustees to control and invest public funds is defined in the Illinois Public Funds Investment Act, and the investments permitted are described therein. Administration and execution of these policies are the responsibility of the Treasurer, and, by designation, the Library Director acting under the authority of the Library Board of Trustees. Investments, fund balances, and the status of such accounts will be reported at each regularly scheduled meetings of the Library Board.

3.0  OBJECTIVES AND GUIDELINES. The primary objective in the investment of District funds is to ensure the safety of principal, while managing liquidity to pay the financial obligations of the District and providing the highest investment return using authorized instruments.In selecting financial institutions and investment instruments to be used, the following general objectives should be considered:

A.   Safety:  Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the portfolio. 

B.   Maintenance of sufficient liquidity to meet current obligations:  In general, investments should be managed to meet liquidity needs for the current month plus one month (based on forecasted needs). 

C.   Return on investment:  Within the constraints of Illinois law and this investment policy, every effort should be made to maximize return on investments made. All available funds will be placed in investments or kept in interest-bearing deposit accounts at all times.

D.   Simplicity of management:  The time required by library administrative staff to manage investments shall be kept to a minimum.

 

4.0  PRUDENCE.  Investments shall be made with the judgment and care under the 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 preservation of their capital as well as the probable income to be derived.  This “prudent person” standard shall be used by all investment officers of the district and shall be followed in making investments for the district and in managing those investments.

5.0  ETHICS AND CONFLICT OF INTEREST:  Officers and employees involved in the investment process shall refrain from personal business activities that might conflict with the proper execution and management of this investment program, or that could impair their ability to make impartial decisions, or that could give the appearance of impropriety.  Officers and employees shall disclose any material interests in financial institutions with which the Library conducts business.  They shall further disclose any personal or business financial/investment positions that could be related to the performance of the Library’s investment portfolio.

6.0  DELEGATION OF AUTHORITY:  The Board of Library Trustees may employ one or more investment advisor(s) possessing superior capabilities in the management of assets of governmental bodies. The Board shall require the investment advisor(s) selected to meet the following conditions:

A.   To take actions in the exercise of its discretion which in its best professional judgment are in the best interests of the district and in accordance with this Policy.

B.   To execute all investment transactions on behalf of the District at the best net price, utilizing such approved brokers and dealers as it deems appropriate to obtain the best execution capabilities and/or valuable information with respect to the economy, at the lowest cost to the District.

C.   Such additional responsibilities as are set forth in such investment advisor’s written contract with the District.

The District’s investment advisor(s) shall be responsible for establishing the internal controls in written procedures for the operation of the District’s investment program as set forth in this Policy.

Until the Board of Library Trustees appoints one or more investment advisor(s), management responsibility for the investment program set forth in this Policy is delegated to the Treasurer, and, by designation, the Library Director acting under the authority of the Library Board of Trustees.

7.0  AUTHORIZED BROKERS/DEALERS AND FINANCIAL INSTITUTIONS:  All financial institutions and brokers/dealers who want to qualify to bid for investment transactions must initially, and on a periodic basis upon request, provide to the District’s authorized investment officers the following, where applicable:

A.   Audited financial statements;

B.   Trading resolution;

C.   Proof of State of Illinois registration;

D.   Certification of notice and knowledge of the District’s Investment Policy;

E.   Published reports for brokers from rating agencies with investment grade ratings; and

F.   Consolidated Reports of Condition and Income.

An annual review of the financial condition and registration of qualified bidders will be conducted by the District’s authorized investment officers. More frequent reviews may be conducted if warranted.

A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the District has established a depository, trading, or safekeeping relationship.  Qualified bidders shall submit annual audited financial statements and shall submit financial statements when a material change occurs in the financial condition or registration of qualified bidders.

8.0  AUTHORIZED AND SUITABLE INVESTMENTS:  The list of authorized investments shall include those authorized by Section 2 of the Public Funds Investment Act (30 ILCS 235/2). 

9.0 INVESTMENT RESTRICTIONS: 

A.   Authorized investment officers shall not invest in tri-party repurchase agreements of derivative products, and will not leverage assets through reverse repurchase agreements.

B.   Except for repurchase agreements of government securities which are subject to the Government Securities Act of 1986, the District shall not purchase or invest in instruments which constitute repurchase agreements, and no financial institution may enter into such an agreement with or on behalf of the district unless the instruments and the transaction meet the requirements of Section 2(h) of the Illinois Public Funds Investment Act (30 ILCS 235/2(h)).

C.   Repurchase agreements may be executed only with approved financial institutions or brokers/dealers meeting the District’s established standards, which shall include a mutual execution of a Master Repurchase Agreement adopted by the District.

 

Adopted by the Library Board of Trustees 11/09/09; Amended 02/13/12