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Home My WebLink About71-95 RESOLUTIONRESOLUTION NO. 7L 95 A RESOLUTION TO ES'T'ABLISH AN INVESTMENT POLICY AND GRANTING CERTAIN POWERS ASSOCIATED WITH THE INVESTING OF CITY FUNDS TO THE MAYOR AND ADMINISTRATIVE SERVICES DIRECTOR. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the Council hereby establishes a investment policy and grants certain powers associated with the investing of city funds to the Mayor and Administrative Services Director. A copy of the investment policy and delegation of power is attached hereto as Exhibit A. PASSED AND APPROVED this St day of May 1995. ATTEST: By: Traci Paul, City Clerk APPROVED: By:/ LA /+c . Fred Hanna, Mayor EXHIBIT A CITY OF FAYETTEVILLE, ARKANSAS POLICY & PROCEDURE INVESTMENT POLICY Subject: Number: Eff. Date: Revision: Investments ACCT -2 May 16, 1995 Replaces AC -2 issued Jure 5, 1989 Resolution No: ACCT -2.0 PURPOSE The purpose of this directive is to establish a policy and related procedures for investment of the City's idle cash (other than cash held by Investment Maracers or Bond Trustees) in secured investments in order to protect principal, maintain adequate cash `_low, and maximize interest earnings. ACCT -2.1 POLICY Investments will be made in compliance with applicable State laws and this policy. Investment decisions will 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. Investment of the funds of the City of Fayetteville shall be directed to the primary objective of safety of principal; the secondary objective shall be maintaining adequate cash flow; and the final objective shall he maximizing investment yield. ACCT - 2.2 AUTIICRITY The Mayor and the Administrative Services Director and their desicnees are authorized to: Open and close accounts with financial institutions in the name of the City; make wire transfers cf funds for the City; make deposits of funds for the City; execute collateral, depository and investment agreements for the City; and any other such actions needed to carry out their responsibilities for the depositing and investing cf the City's funds as authorized by State Statutes and this policy. ACCT -2.3 RESPONS:BI:.I:v Management cf the investment of City funds under authority granted by State Statute and the City Council by this policy sha_1 be the responsibility of the Mayor and the Administrative Services Director. The Mayor and the Administrative Services Director may delegate authority for investment transactions. The Mayor, the Administrative Services Director, and other individuals assigned to manage the investment portfolio, acting within the intent and scope of this Investment Policy, shall be relieved of personal responsibility for an individual security's credit risk or market risk. Officers and employees involved in the investment process shall refrain from personal business activities that conflict with proper execution of the investment program or impair their ability tc make impartial nvestment decisions. ACCT -2.4 PROCEDURES Frequency: Cn a weekly basis, or more often if necessary, a review of available cash and maturing investments will be made by the Accounting Manager or his/her designee to determine the amount cf funds available for investment and the maturity dates required tc maintain an adequate cash flow. These decisions will be approved by the Administrative Services Director. Investment Type: Investments must be limited to direct obligations of the United States of America and obligations, the principal and interest of which are fully guaranteed by the United States of America, as allowed by the Arkansas Code Annotated, and Certificates of Deposit. The Administrative Services Director may further limit Government Securities tc U. S. Treasury Bonds or U. S. Treasury Bills. If bids are received for Government Securities other than bonds or bills, they will be considered on an individual basis and may be rejected by the Administrative Services Director. The bidding may also be limited tc only Certificates of Deposit or only Government Securities for any particular amount and/or maturity date cr dates. Any Arkansas state legislative action that provides for additional investment vehicles cr further restricts investment vehicles will be incorporated into the City's investment policy and will supersede any previous language. Collateralization: Collateralization is required for investments other than investments in U. S. Government Securities. Tc reduce market risk, the collateralization level will be 105% of the market value of the certificate of deposit and accrued interest. A collateral agreement between. the City and the financial institution will be executed prior to the purchase or delivery cf the certificate of deposit. Allowed Institutions: Investments will be purchased only from financial institutions which are authorized to do business in the State of Arkansas and which have offices located within the corporate city limits of the City of Fayetteville or directly from the U. S. Treasury through the Federal Reserve Bank. The City may require that institutions be members cf the Security Investors Protection Corporation and be a National Association of Securities Dealers member firm to bid or. Government Securities. Certificates cf Deposit will be purchased only from. banks with which the City has depository and collateral agreements. Government Securities will be purchased only through financial institutions with which the City has depository and/or investment agreements which include acceptable investor's insurance and safekeeping procedures or through the Federal Reserve Bank directly from the U. 5. Treasury. The City may require that safekeeping procedures include third party custodial agreements. Method: Verbal quotes for interest earnings on approximate investment amounts and maturity dates are requested from participating financial institutions. A bid sheet is prepared for each investment documenting the purchase date, type of investment, investment amount, maturity date , and interest earrings bid by each participating financial institution. (A sample of the bid sheet is attached to this Policy as Exhibit A.) These bids are reviewed by the Accounting Manager or his/her designee. aids are accepted, based on the highest effective yield. The effective yield calculation will include the amount, frequency of payment and reinvestment of interest to maturity. The reinvested interest calculation will assume a rate of interest equal to the interest rate of the security. If the bid process results in a tie bid, the Administrative Services Director may award the bid on any reasonable basis. The completed bid sheets are signed by the Administrative Services Director and copses are distributed to the City Clerk, and to each participatir_a financial institution which submitted a bid on that investment. Moneys from individual funds of the City may be pooled fcr investment purposes and interest earnings prorated to the individual funds on the basis of amounts invested by each fund. Cashing of matured investments and purchases of new investments will be accomplished by wire transfer through an investment account. The wire transfers will be made by the Administrative Services Director. CITY OF FAYETTE VILLE EXHIBIT A BID OUOT AT IONS 01 Purctw. Data Investment °Mould Maturity Det. Requested Number of Days SETTLEMENT DATE MATURITY DATE DISCOUNT OR COUPON RATE YIELD DAYS BID T -BILL BIDS ALCULATEDYIELD FACE VALUE BOON VALUE HANDUNG FEE T -BILL INTEREST EARNINGS T-NOTE/OTHER BIDS FACEVALUE BOOK VALUE HANDUNG FEE T -NOTE INTEREST EARINGS CALCULATED YIELD DISCOUNT/(PREMIUM} PURCHASE INTEREST CD BID 01 .-- 02 03 04 CD INTEREST EARNINGS INTEREST ON INTEREST BASIS CD EFFECTIVE YIELD T- BILL EFFECTIVE YIELD T- NOTE/OTHER EFFECTIVE YIELD INVESTMENT NUMBER LOGGED ON COMPUTER BY LOGGED OFF COMPUTER BY REPLACED BY ADMINISTRATIVE SERVICES DIRECTOR OR DESIGNEE ADMINISTRATIVE POLICIES a PROCEDURES MANUAL ACCOLNrING Irves:nent Proc dares NUMBER SUPERSEDES REVISIONS EFFECTIVE DATE. A P P R 0 VE0�131 Janes L. Pennington, City Manager PAGE 1 of 5 AC -2.0 PURPOSE: The purpose of this directive is to establish procedures to invest the City's idle cash in secured investments in order to maximize interest earning while maintaining adequate cash flow, and to prevent unauthorized funds transfers. AC -2.1 PROCEDURES: A. A review of funds is made by the Accounting Supervisor or a designated Finance employee, to determine amounts of funds available and the length of time for which they can be invested. These decisions are approved by the Assistant City Manager. B . Interest rate quotes are obtained from institutions with a facility in the corporate limits of the City of Fayetteville, unless waived by the Board of Directors. The investments must be limited to those defined in Arkansas Statute 13-901, and Certificates of Deposit (CD's) will be invested through institutions listed with the Arkansas Bank Commissioner, that are "doing business in this State, and which are members of the Federal Deposit Insurance Corporation." C. Rate quotes are received on CD's and Government Securities from participating local banks. These rates are reviewed by the Accounting Supervisor or a designated Finance employee to determine the highest effective yield. If only one bank bids a CD, and the CD rate is within .05% of the Government Security effective yield, then the bank bidding the CD will be notified to see if they would like to match the highest effective yield on the Government Security. In the case of a tie the investment will go to either the financial institution which held the maturing investment or the institution that the City staff determines to be the most cooperative with the City in other financial arrangements. Once the bids have been awarded, the Assistant City Manager or the Accounting Supervisor (or a designated employee in their absence) signs the bid sheet. (copy attached - Example A). D . If funds are to be wired, a wire transfer form ( copy attached - Example B) is completed by an Accounting Clerk and approved by the Accounting Supervisor. Wire instructions are given by personnel who have been authorized by the City Manager with written notification given to the financial institutions. Funds may only be wired to accounts which include "City of Fayetteville" in their title. E. If funds to be invested are in the form of a check, payment is delivered to the financial institution. CD's are signed for by the Assistant City Manager or the Accounting Supervisor. CD's are kept in the first floor vault in the Finance section. Investments held in safekeeping at other institutions should have a safekeeping receipt kept with the investment documentation. F. A journal entry is made to record the investment transactions, and the investments are entered into the subsidiary investment ledger. All documentation concerning the investments are kept by an Accounting Clerk, with copies of bid sheets distributed to the participating banks, the Board of Directors, the Assistant City Manager, and the Accounting Supervisor. G. All deposits with banks over the $100,000 FDIC insurance must be collateralized according to the City's collateral agreement (see attached - Exhibit C). The banks are responsible to maintain adequate pledging to cover the average balance in the City's demand deposit accounts. Collateral on CD's are maintained on a subsidiary system by the City. The City Manager and the Assistant City Manager are the designated staff to release or accept pledging through the Federal Reserve.