HomeMy WebLinkAbout061-R-19 Amending the City of Evanston Investment Policy & Procedures Manual Excluding Fiduciary and Library Endowment Funds6/7/2019
61-R-'19
1-1 Z1 *-Is] 1ih i Is] :l
Amending the City of Evanston Investment Policy & Procedures
Manual Excluding Fiduciary and Library Endowment Funds
WHEREAS, the City Council of the City of Evanston desires to have
City funds invested in secure depositories and realize maximum returns on these
investments; and
WHEREAS, on August 10, 2009 the City Council adopted Resolution
45-R-09 which established an investment policy and procedures manual to guide
the investment of City funds to meet these objectives; and
WHEREAS, the City Finance Division recommends certain
modifications to the policy to protect and investment of the City's funds; and
WHEREAS, the amended investment policy and procedures is in
accordance with the Municipal Treasurers' Association Model and the State of
Illinois Auditing Standards Policy,
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF EVANSTON, COOK COUNTY, ILLINOIS:
SECTION 1: The policy for investment of City funds set forth in the
document entitled City of Evanston Investment Policy & Procedures Manual
Excluding Fiduciary and Library Endowment Funds, attached hereto as Exhibit A
and incorporated herein by this reference, is hereby adopted as the official policy
for investment of City funds.
61-R-19
SECTION 2: That this Resolution 61-R-19 shall be in full force and
effect from and after its passage and approval in the manner provided by law.
Stephen H. agerl,
Attes Approved as to form: .
�
Devon, City Clerk Michelle L. Masoncup, orboration Counsel
I�NAdopted: QA , 2019
—
61-R-19
Exhibit A
City of Evanston Investment Policy & Procedures Manual
Excluding Fiduciary and Library Endowment Funds
CITY OF EVANSTON
INVESTMENT POLICY & PROCEDURES MANUAL
EXCLUDING FIDUCIARY AND LIBRARY
ENDOWMENT FUNDS
TABLE OF CONTENTS
A.
Policy 2
B.
Scope 2
C.
Investment Objectives 2
D.
Investment Instruments 3
E.
Delegation of Authority 3
F.
Prudence 4
G.
Investment Parameters 4
H.
Collateral & Broker/Dealer Requirements 5
I.
Safekeeping & Custody 6
J.
Investment Reports 6
K.
Internal Controls 6
L.
Effective Date 6
61-R-19
A. POLICY
It is the policy of the City of Evanston to invest public funds in a manner which will
provide the most competitive investment return with the lowest possible risk while
meeting daily cash flow demands of the City of Evanston and conforming to all state
and local statutes governing the investment of public funds.
B. SCOPE
This investment policy applies to all City non -fiduciary Funds as accounted for in the
City of Evanston Comprehensive Annual Financial Report.
The Firefighters' Pension, Police Pension, and Library Endowment Funds are not
covered by this policy. Investment transactions for these funds are governed and
authorized by the respective pension and library endowment boards.
C. INVESTMENT OBJECTIVES
1. SAFETY OF PRINCIPAL: Safety of principal is the foremost objective of the City
of Evanston. Investments of the City shall be undertaken in a manner that seeks to
ensure the preservation of principal in the overall portfolio. To further attain this
objective, diversification is also required so that potential losses on individual securities
and/or financial institution deposits are greatly limited. To obtain this safety, the City will
seek to mitigate credit risk by only investing in securities as allowed under the
INVESTMENT INSTRUMENTS section in this policy. To mitigate interest rate risk, the
City will structure the investment portfolio in such a manner as to be able to meet cash
requirements for normal operating expenditures, thereby avoiding the need to sell
securities on the open market prior to maturity.
2. LIQUIDITY: The City's investment portfolio shall remain sufficiently liquid to
enable the City to meet all operating requirements which may be reasonably anticipated
within each of the City's individual Funds.
3. RATE OF RETURN: The investment portfolio of the City shall be designed with
the objective of attaining a competitive rate of return, taking into account the City's risk
constraints as shown in Sections C1 & C2 and the cash flow characteristics of
the portfolio.
-5-
61-R-19
D. INVESTMENT INSTRUMENTS
Consistent with the Illinois Public Investment Act 301LCS 235, the following investments
will be permitted under this policy:
1. Bonds, notes, bills, or other securities which are guaranteed by the full faith and
credit of the United States of America.
2. Bonds, notes, debentures, or other similar obligations of the United States of
America or its agencies.
3. Interest bearing savings accounts/certificates of depositltime deposits or any
other investments constituting direct obligations of any FDIC insured bank and as
defined by the Illinois Banking Act.
4. Shed term eOblioations of corporations organized in the United States with
assets exceeding five hundred million dollars ($500,000,000) if, a) such obligations are
rated at one of the three (3) highest classifications established by at least two (2)
standard rating services and which mature not later than three hundred sixtv-five (365)
nnn_hlindrad_eighty (18 days from date of purchase, b) such purchases do not exceed
ten percent (10%) of the corporation's outstanding obligations, and c) no more than one
third (113) of City's funds are invested in such corporate short term obligations.
5. Interest bearing bonds of any county, township, city, village, incorporated town,
municipal corporation, or school district, of any State in the United States of America.
The bonds shall be rated at time of purchase within the four highest general
classifications established by a rating service.
7. Public Treasurers' Investment Pool created under Section 17 of the State
Treasurer Actor such fund as managed, operated, and administered by a bank.
8. Anv AAAm rated Local Government Investment Pools.
98. Repurchase agreements of government securities having the meaning set out in
The Government Securities Act of 1986. Such securities, unless registered in the name
of the City, must be purchased through a bank authorized to do business in the
State of Illinois.
109. In addition to the above, investments in the Water and Sewer Funds are further
restricted by any such language per outstanding revenue bond ordinances.
E. DELEGATION OF AUTHORITY
Management responsibility for the investment program is hereby delegated to the
City Treasurer or authorized designee. No position may engage in an investment
transaction except as provided under the terms of this policy and per the
19--Z
61-R-19
authorization as established by the Treasurer or designee. The Treasurer shall be
ultimately responsible for all transactions undertaken, initiated by an authorized
employee, and shall establish a system of internal controls to regulate the activities
of subordinate officials.
F. PRUDENCE
Investments shall be made with 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
primary objective of safety and liquidity as well as the secondary objective of the
obtainment of market rates of return as previously described in the INVESTMENT
OBJECTIVES Section C above.
G. INVESTMENT PARAMETERS
It is the preference of the City of Evanston to concentrate its investments with
commercial banks located within the City of Evanston. However, investment efforts
shall not be limited to this alone. Investments will be selected on the following basis:
1. The institution offering the investment must meet all the criteria as stated per
FINANCIAL INSTITUTIONS section of this policy statement.
2. The maturities of the investments should strive to coincide with cash
requirements of the City to meet short or long term needs.
3. The City will not invest in non-negotiable securities maturing more than three (3)
years from the date of purchase which may not be sold prior to maturity without penalty.
4. The percent of total deposits at any one financial institution and/or public
investment pool shall not exceed fifty percent (50%) of City's total deposits/investments.
5. To prevent an over -concentration in any one type of security, the City shall not
invest more than a) seventy-five percent (75%) of total Funds in US government agency
securities, b) twenty percent (20%) in state/county/municipal securities, or c) ten percent
(10%) in corporate securities/commercial paper. There will be no limitation on
purchasing risk -free US Treasuries or depositing in FDIC insured accounts subject to
Section G4 above.
All such investments shall be in the name of the City of Evanston. Safekeeping account
receipts will be held by the City's Finance Department.
-7-
61-R-19
H. COLLATERAL AND BROKERIDEALER REQUIREMENTS
Financial institutions shall be required to meet the following criteria in order to receive
City funds for investment:
1. City funds shall be deposited only in financial institutions insured by the Federal
Deposit and Loan Insurance Corporation.
2. Collateral is required for City deposits equal to or greater than the amount of City
deposits which exceed FDIC insured amounts. Obligations that may be pledged as
collateral are as follow:
a) US Treasury bills, notes and bonds.
b) Actively traded US government agency securities.
Obligations pledged to secure deposits must be delivered to a bank other than the
institution in which the deposit is made. Written custodial agreements are required. At
least quarterly, the City will determine that the collateral has a market value adequate to
cover the deposits and that all such collateral is held by an independent third party
custodian. The City Treasurer shall have full authority to execute the necessary
collateral agreements.
3. Upon request, each financial institution shall be required to furnish the City a
copy of all statements of resources and liabilities which it is required to furnish to the
Commissioner of Banks and Trust Companies or the Comptroller of Currency.
BROKER/DEALERS:
Broker Dealers who desire to become qualified bidders must provide the following for
the City of Evanston:
Membership of the Security Investor Protection Corporation (SIPC).
2. Audited Financial Statements for most recent three years.
3. Proof of National Association of Securities Dealers (NASD) certification.
4. Minimum Capital Requirements of at least fifty million dollars ($50,000.000).
5. Minimum five (5) years in operation.
61-R-19
1. SAFEKEEPING & CUSTODY
1. Delivery vs. Payment
All trades of marketable securities will be executed by delivery versus payment to
ensure that securities are deposited in an eligible financial institution prior to releasing
any funds.
2. Safekeeping
Securities will be held by an independent third party custodian selected by the entity
and agreed to by the City as outlined in Section H of this policy.
J. INVESTMENT REPORTS
At a minimum, there shall be quarterly investment reports to the City Council
summarizing such investment data by security type, purchase price, current market
values at report date, and actual year-to-date or estimated annual income expected to
be earned. Such reports will be used by Treasurer and other designated Finance staff
to evaluate and/or adjust the City investment portfolio as necessary.
K. INTERNAL CONTROLS
There shall be reasonable assurance that internal control objectives are met.
Reasonable assurance recognizes the following: 1) the cost of controls should not
exceed the benefits to be derived, and 2) the valuation of costs and benefits require
estimates and judgments by management.
The primary internal controls are as follow:
a) Investment purchases/sales may only be transacted by the Treasurer or
authorized designee.
b) Investments are tracked monthly utilizing spreadsheets. Investmentlbank
statements are reconciled to the general ledger and investment earnings recorded.
Treasurer or authorized designee shall review such reconciliations monthly.
c) Quarterly investment reports are prepared for City Management
and Council.
L. EFFECTIVE DATE
This policy shall become effective immediately upon City Council approval.
-9-