HomeMy WebLinkAbout86-96 RESOLUTIONRESOLUTION NO. 8 6 - 9 6
A RESOLUTION AUTHORIZING A REVISED INVESTMEN 1'
POLICY TO ALLOW PARTICIPATION IN THE ARKANSAS
LOCAL GOVERNMENT CASH MANAGEMENT TRUST AS
AN ADDITIONAL OPTION FOR THE INVESTMENT OF CITY
MONIES.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council hereby approves a revised Investment Policy, No.
ACCT -2, of the City of Fayetteville's Policy & Procedures, to allow participation in the
Arkansas Local Government Cash Management Trust as an additional option for the investment
of city monies. A copy of the revision is attached hereto marked Exhibit "A" and made a part
hereof.
PASSED AND APPROVED this 16th day of July , 1996.
Traci Paul, City Clerk
APPROVED:
By:
Aryi-
Fred Hanna, Mayor
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CITY OF FAYETTEVILLE, ARKANSAS
POLICY & PROCEDURE
INVESTMENT POLICY
Subject:
Number:
Eff. Date:
Revision:
Investments
ACCT -2
July 2, 1996
Replaces ACCT -2 issued May 16, 1995
Resolution No: 86-96
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 Managers or Bond Trustees) in secured
investments in order to protect principal, maintain adequate cash
flow, 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 be maximizing investment yield.
ACCT - 2.2 AUTHORITY
The Mayor and the Administrative Services Director and their
designees are authorized to:
Open and close accounts with financial institutions in the
name of the City; make wire transfers of 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 of the City's funds as
authorized by State Statutes and this policy.
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ACCT -2.3 RESPONSIBILITY
Management of the investment of City funds under authority granted
by State Statute and the City Council by this policy shall 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 to make impartial investment decisions.
ACCT -2.4 PROCEDURES
Frequency: On 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 of
funds available for investment and the maturity dates required to
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, Certificates of
Deposit, and or a trust for the 'oint investment of
authorized by the Local Government Joint Investment Trust Act, Ark.
Code Annotated §§ 19-8-301 et seq., which has been approved by the
City Council ("Trust"). The Administrative Services Director may
further limit Government Securities to U. S. Treasury Bonds or U.
5. 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 to only Certificates of Deposit or
only Government Securities for any particular amount and/or
maturity date or dates. Moneys may be placed in the Trust without
rnmpetitive bids,
Any Arkansas state legislative action that provides for additional
investment vehicles or 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 or the Trust.
To 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
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delivery of the certificate of deposit.
Allowed Institutions: Investments, except investments in the
Trust, 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 of the Security Investors Protection Corporation and be a
National Association of Securities Dealers member firm to bid on
Government Securities.
Certificates of 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. S. 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 , and interest earnings 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. Bids 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 copies are distributed to the City Clerk, and to each
participating financial institution which submitted a bid on that
investment.
fhe_Administrative Services Director may direct that moneys be
placed in the Trust as an alternative to the bid process.
Moneys from individual funds of the City may be pooled for
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
• D IIBIT A •
CITY OF FAYETTEVILLE
BIO QUOTATIONS • t
Purchase Date
Investment Offered
Maturity Date Requested
Number of Days
SETTLEMENT DATE
MATURITY DATE
DISCOUNT OR COUPON
RATE
YIELD
DAYS BID
BOATMEN'S
MCILROY BANK OF FAYE CITIZENS
D8
CALCULATED YIELD
FACE VALUE
BOOK VALUE
HANDLING FEE
T—BILL INTEREST
EARNINGS
T- NOTE/OTHER BIOS
FACE VALUE
BOOK VALUE
HANDLING FEE
T— NOTE INTEREST
EARNINGS
CALCULATED YIELD
DISCOUNTI(PREMIUM)
PURCHASE INTEREST
CO BID
CD INTEREST EARNINGS
INTEREST ON INTEREST
BASIS
No Bid
CD EFFECTIVE YIELD
T—BILL EFFECTIVE YIELD
T— NOTE/OTHER
EFFECTIVE YIELD
INVESTMENT NUMBER
LOGGED ON COMPUTER
BY
LOGGED OFF COMPUTER BY
ADMINISTRATIVE SERVICES DIRECTOR
OR DESIGNEE
CITY OF FAYETTEVILLE
BID QUOTATIONS I1
Purchase Date
Investment Offered
Maturity Date Requested
Number of Days
SETTLEMENT DATE
MATURITY DATE
DISCOUNT OR COUPON
RATE
YIELD
DAYS BID
•
DaiiiKur
A. 0. EDWARDS DEAN WITTER
•
Pape 2 oft
LLAMA CO. MERRILL LYNCH
If -BILL BIDS
CALCULATED YIELD
FACE VALUE
BOOK VALUE
HANDLING FEE
T- BILL INTEREST
EARNINGS
'Y-NOTU TITER BIDS
FACE VALUE
BOOK VALUE
HANDLING FEE
T -NOTE INTEREST
EARNINGS
CALCULATED YIELD
DISCOUNT/(PREMIUM)
PURCHASE INTEREST
CD BID
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
ADMINISTRATIVE SERVICES DIRECTOR
OR DESIGNEE