[Ord. No. 605 §1, 8-7-2000]
A.
This
policy applies to the investment of all operating funds of the City
of Concordia, Missouri. Longer-term funds, including investments of
employee's retirement funds and proceeds from certain bond issues,
are covered by separate ordinances.
1.
Checking account for general operation. Except for cash
in certain restricted and special funds, the City of Concordia will
consolidate cash balances from all funds in one (1) checking account
for operating purposes. The depository for the general checking account
will be bid every three (3) years with a July first (1st) effective
date. As required by State statutes, only financial institutions within
the City of Concordia will be solicited. Interest paid on the general
checking account will be allocated to the various funds based on their
respective participation in generating income.
2.
Investments. Funds maintained for reserves or special long-term
purposes will be invested. Management of these investments will be
as described in this policy. Every effort will be made to invest locally
in certificates of deposits if the interest rate is competitive. Certain
benefits accrue to the City's economy if money is invested locally.
Local financial institutions are encouraged to offer an aggressive
loan policy, not only to stimulate economic growth, but also to create
loan demand and thereby the ability to offer higher rates of interest
on certificates of deposit. For the purposes of this policy, a one
percent (1%) interest differential will be assigned to the benefits
of investing locally.
3.
External management of funds. The City of Concordia may
enlist professional help in investment decisions. Investment through
external programs, facilities and professionals operating in a manner
consistent with this policy will constitute compliance.
[Ord. No. 605 §2, 8-7-2000]
A.
The primary
objectives, in priority order, of investment activities shall be safety,
liquidity, and yield.
1.
Safety. Safety of principal is the foremost objective of
the City of Concordia's investment program. Investments shall be undertaken
in a manner that seeks to ensure the preservation of capital in the
overall portfolio. The objective will be to mitigate credit risk and
interest rate risk.
a.
Credit risk. The City of Concordia will minimize credit
risk, the risk of loss due to the failure of the security issuer or
backer, by:
b.
Interest rate risk. The City of Concordia will minimize
the risk that the market value of securities in the portfolio will
fall due to changes in general interest rates, by:
2.
Liquidity. The investment portfolio shall remain sufficiently
liquid to meet future requirements that may be reasonably anticipated.
This is accomplished by structuring the investments so that securities
mature concurrent with cash needs to meet anticipated demands. The
general checking account receives competitive interest income by virtue
of the three year bid process and is used to meet the day-to-day operating
expenses as budgeted.
3.
Yield. The investment portfolio shall be designed with the
objective of attaining a market rate of return throughout budgetary
and economic cycles, taking into account the investment risk constraints
and liquidity needs. Return on investment is of secondary importance
compared to the safety and liquidity objectives described above. The
core investments will be limited to low risk securities such as competitively
solicited bank certificates of deposit. Securities shall not be sold
prior to maturity with the following exceptions:
[Ord. No. 605 §3, 8-7-2000]
A.
Prudence. The standard of care to be used by investment
officials shall be the "prudent person" standard and shall be applied
in the context of managing an overall portfolio. Investment officers
acting in accordance with written procedures and this investment policy
and exercising due diligence shall be relieved of personal liability
for an individual security's credit risk or market price changes.
Deviations from expectations must be reported in a timely fashion
to the Board of Aldermen and the liquidity and the sale of securities
are to be carried out in accordance with the terms of this policy.
Investments shall be made with judgement 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.
B.
Ethics And Conflicts Of Interest. Officers and employees
involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management
of the investment program, or that could impair their ability to make
impartial decisions. Employees and investment officials shall disclose
any material interests in financial institutions with which they conduct
business.
C.
Delegation Of Authority. Responsibility for the operation
of the investment program is hereby delegated to the City Administrator,
who shall act in accordance with the established written procedures
and internal controls for the operation of the investment program
consistent with this investment policy. The City Treasurer will manage
the day-to-day activities of the investment program under the supervision
of the City Administrator.
[Ord. No. 605 §4, 8-7-2000]
A.
Authorized Financial Dealers And Institutions. The City
Administrator will approve all financial institutions and broker/dealers
considered for investment services by the City Treasurer. Prior to
approval, they maybe required to submit all or some of the following
information:
1.
Audited
financial statements;
2.
Proof
of National Association of Securities Dealers (NASD) certification;
3.
Proof
of State registration; and/or
4.
Certification
of having read and understood and agreeing to comply with the City
of Concordia's investment policy.
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A periodic review of the financial condition and registration
of qualified financial institutions and broker/dealers will be conducted
by the City Treasurer. In the event financial institutions within
the City of Concordia are used for investments, the above qualification
requirements may be waived.
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B.
Internal Controls.
1.
The
City Administrator is responsible for establishing and maintaining
an internal control structure that will be reviewed annually with
the City of Concordia's independent auditor.
2.
The
internal control structure shall be designed to ensure that the assets
of the City of Concordia are protected from loss, theft or misuse
and to provide reasonable assurances that these objectives are met.
The concept of reasonable assurance recognizes that (1) the cost of
control should not exceed the benefits likely to be derived and (2)
the valuation of costs and benefits require estimates and judgements
by management.
3.
Internal
control will address the following points:
a.
Control
of collusion;
b.
Separation
of transaction authority from accounting and record keeping;
c.
Custodial
safekeeping;
d.
Clear
delegation of authority;
e.
Written
confirmation of telephone transactions;
f.
Documentation
of transaction strategies; and
g.
Monitoring
of ethics and conflict of interest provisions of this policy.
[Ord. No. 605 §5, 8-7-2000]
A.
Investment Types. In accordance with and subject to restrictions
imposed by current statutes, the following list represents the entire
range of investments that the City of Concordia will consider and
which shall be authorized for the investment of funds.
1.
Certificates of deposits. Instruments issued by financial
institutions which State that specified sums have been deposited for
specified periods of time and at specified rates of interest. The
certificates of deposit are required to be backed by acceptable collateral
securities as dictated by State statute.
2.
United States Treasury Securities. The City of Concordia
may invest in obligations of the United States Government for which
the full faith and credit of the United States are pledged for the
payment of principal and interest.
3.
United States Army Securities. The City of Concordia may
invest in obligations issued or guaranteed by any agency of the United
States government, such as:
a.
U.S.
Government Agency Coupon and Zero Coupon Securities. Bullet coupon
bonds with no embedded options.
b.
U.S.
Government Agency Discount Notes. Purchased at a discount with maximum
maturity of one (1) year.
c.
U.S.
Government Agency Securities. The coupon rate is fixed for an initial
term. At a coupon date, the coupon rate rises to a new, higher fixed
term. This provision is restricted to securities with final maturity
of three (3) years or less.
d.
U.S.
Government Floating Rate Securities. The coupon rate floats off one
(1) index. Restricted to coupons with no interim caps that reset at
least quarterly.
e.
U.S.
Government Mortgagee Backed Securities. Restricted to securities with
final maturity of three (3) years or less.
B.
Prohibited Transactions. To provide for the safety and liquidity
of the City of Concordia's funds, the investment portfolio will be
limited only to the investment instruments listed above. Certificates
of deposits with financial institutions outside the City limits of
the City of Concordia will be taken only if the interest rate differential
exceeds one percent (1%). Local financial institutions are encouraged
to offer an aggressive loan policy, not only to stimulate economic
growth, but also to create loan demand and thereby higher rates of
interest on certificates of deposits.
C.
Collateralization. All deposits placed in financial institutions
must be at least one hundred percent (100%) collateralized with approved
securities. All securities, which serve as collateral against the
deposits of a depository institution must be safe-kept at a non-affiliated
custodial facility. Depository institutions pledging collateral against
deposits must, in conjunction with the custodial agent, furnish the
necessary custodial receipts.
[Ord. No. 605 §6, 8-7-2000]
A.
Diversification. The investments shall be diversified to
minimize the risk of loss resulting from over concentration of assets
in specific maturity, specific issuer, or specific class of securities.
Diversification strategies will be established and periodically reviewed.
B.
Maturities. To the extent possible, the City of Concordia
will attempt to match its investments with anticipated cash flow requirements.
Because of inherent difficulties in accurately forecasting cash flow
requirements, a large portion of the investment portfolio will be
continuously invested in readily available funds such as one (1) year
certificates of deposits with staggered maturities.
[Ord. No. 605 §7, 8-7-2000]
A.
A report
will be issued quarterly by the City Treasurer which gives the following
information regarding the investments of the City:
1.
Investment
type, issuer, maturity, par value, and dollar amount invested in all
securities and monies held by the City.
2.
Funds
or investments managed by contracted parties.
3.
Market
value as of the date of the report and the source of valuation.
4.
Citation
of compliance with the City's investment policy/regulation or an explanation
for non-compliance.
5.
Percentage
of the City's total investments which comprise each category of the
investment set out herein.
B.
The quarterly
investment report will be provided to the Mayor and Board of Aldermen
in the packet provided for the regular open meeting. Additional explanation
will be provided if requested by the Board of Aldermen.
