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HomeMy WebLinkAboutRes 04-13 WA Designating an Investment Officer WESTLAKE ACADEMY RESOLUTION NO. 04-13 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WESTLAKE ACADEMY, DESIGNATING AN INVESTMENT OFFICER. WHEREAS, the Public Funds Investment Act codified in Government Code Chapter 2256 governs local government investment; and WHEREAS, the Public Funds Investment Act (Section 2256.005(£) and the Academy's Investment Policy, require the Board to designate one or more investment officer(s) by rule, order, ordinance or resolution; and WHEREAS, the Public Funds Investment Act and the Academy's Investment Policy require the investment officer to perform certain duties and report regularly to the Board of Directors on the investment program, NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE WESTLAKE ACADEMY: SECTION 1: That Westlake Academy has complied with the requirements of the Public Funds Investment Act and the Westlake Academy Investment Policy and designates Debbie Piper to serve as the Investment Officer of the Academy and to exercise the judgment and care, under circumstances then prevailing, that a prudent person would exercise in the management of the person's own affairs and to perform all the requirements of the Act. The Board of Directors recognizes that the Board retains the ultimate responsibility as fiduciaries of the assets of the Academy(Section 2256.005(£)) SECTION 2: That this Resolution shall become effective upon the date of its passage. PASSED AND APPROVED ON THIS I lth DAY OF OCTOBER, 2004. ATTEST: Scott Bradley, President J 1 Ginger rosswySecre O. Petty,, Trent APPRO'V-E- D 'FORM: L. anton orney WESTLAKE ACADEMY INVESTMENT POLICY 1. POLICY STATEMENT It is the policy of the Westlake Academy (the "Academy") that the administration of its funds and the investment of those funds shall be handled as its highest public trust. Investments shall be made in a manner which will provide the maximum security of principal invested through limitations and diversification while meeting the daily cash flow needs of the Academy and conforming to all applicable state and Academy statutes governing the investment of public funds. The receipt of a market rate of return will be secondary to the requirements for safety and liquidity. It is the intent of the Academy to be in complete compliance with local law and the Texas Public Funds Investment Act(the "Act", Texas Government Code 2256). The earnings from investments will be used in a manner that best serves the public trust and interests of the Academy. II. SCOPE This Investment Policy applies to all the financial assets and funds held of the Academy. Any new funds created by the Academy will be managed under the provisions of this Policy unless specifically exempted by the Academy Board of Trustees and this Policy. III. OBJECTIVES AND STRATEGY It is the policy of the Academy that all funds shall be managed and invested with four primary objectives, listed in order of their priority: safety, liquidity, diversification and yield. These objectives encompass the following. Safety of Principal Safety of principal is the foremost objective of the Academy. Investments shall be undertaken in a manner that seeks to insure the preservation of capital in the overall portfolio. The suitability of each investment decision will be made on the basis of safety. Li uidi The Academy's investment portfolio will remain sufficiently liquid to enable it to meet all operating requirements which might be reasonably anticipated. Investment decisions will be based on cash flow analysis of anticipated expenditures. Diversification Diversification is required in the portfolio's composition. Diversification of the portfolio will include diversification by maturity and market sector and will include the use of a number of broker/dealers or banks for diversification and market coverage. Competitive bidding will be used on each sale or purchase. Yield The Academy's investment portfolio shall be designed with the objective of attaining a reasonable market yield, taking into account the Academy's risk constraints and cash flow needs. A reasonable market yield for the portfolio will be defined as the six month (180 day) U.S. Treasury Bill which compares to the portfolio's maximum weighted average maturity of six months. The authorized investment purchased will be of the highest credit quality and marketability supporting the objectives of safety and liquidity. Securities, when not matched to a specific liability,will be short term to provide adequate liquidity. The portfolio shall be diversified to protect against market and credit risk in any one sector. Westlake Academy The maximum weighted average maturity of the portfolio will be no more that 180 days and the maximum stated maturity of any security will not exceed two years. The funds are combined for investment purposes but the unique needs of all the funds in the portfolio are recognized and represented. Effective cash management is recognized as essential to good fiscal management. Cash management is defined as the process of managing monies in order to ensure maximum cash availability. The Academy shall maintain a cash management program which includes timely collection of accounts receivable,prudent investment,disbursement of payments within invoice terms and the management of banking services. IV. LEGAL LIMITATIONS,RESPONSIBILITIES AND AUTHORITY Specific investment parameters for the investment of public funds in Texas are stipulated in the Public Funds Investment Act, Chapter 2256, Texas Government Code, (the "Act"). The Act is attached as Exhibit A. The Public Funds Collateral Act, Chapter 2257, Texas Government Code, specifies collateral requirements for all public funds deposits. The Collateral Act is attached as Exhibit B. The Interlocal Cooperation Act, Chapter 791, Texas Government Code, authorizes local governments in Texas to participate in a Texas investment pool established thereunder. V. DELEGATION OF INVESTMENT AUTHORITY The Finance Director of the Town of Westlake, acting on behalf of the Board of Trustees, is designated as the Investment Officer of the Academy and is responsible for all investment management decisions and activities. The Board of Trustees is responsible for considering the quality and capability of staff, investment advisors, and consultants involved in investment management and procedures. All participants in the investment process shall seek to act responsibly as custodians of the public trust. The Investment Officer shall develop and maintain written administrative procedures for the operation of the investment program which are consistent with this Investment Policy. Procedures will include safekeeping,wire transfers,banking services contracts,and other investment related activities. The Investment Officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and staff. The Investment Officer shall designate a staff person as a liaison/deputy in the event circumstances require timely action and the Investment Officer is not available. No officer or designee may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Investment Officer and approved by the CEO. VI. PRUDENCE The standard of prudence to be used in the investment function shall be the "prudent person" standard and shall be applied in the context of managing the overall portfolio. This standard states: "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 expected income to be derived." Limitation of Personal Liability The Investment Officer and those delegated investment authority, when acting in accordance with the written procedures and this Policy and in accord with the Prudent Person Rule, shall be relieved of personal liability in the management of the portfolio provided that deviations from expectations for a specific security's credit risk or market price change are reported in a timely manner and that appropriate action is taken to control adverse market effects. Westlake Academy VII. INTERNAL CONTROLS The Investment Officer shall establish a system of written internal controls which will be reviewed annually with the independent auditor of the Academy. The controls shall be designed to prevent loss of public funds due to fraud, employee error,misrepresentation by third parties, or imprudent actions by employees of the Academy. VIII. AUTHORIZED INVESTMENTS Acceptable investments under this policy shall be limited to the instruments listed below. The choice of high-grade government investments and high-grade, money market instruments are designed to assure the marketability of those investments should liquidity needs arise. A. Obligations of the United States Government, its agencies and instrumentalities,not to exceed two (2)years to stated maturity,and excluding mortgage backed securities; B. Fully insured or collateralized certificates of deposit from a bank doing business in the State of Texas and under the terms of a written depository agreement with that bank,not to exceed one year to stated maturity; C. No-load, SEC registered money market mutual funds. No more than 80% of the entity's monthly average balance may be invested in money market funds;and D. Constant dollar, AAA-rated Texas Local Government Investment Pools as defined by the Public Funds Investment Act. If additional types of securities are approved for investment by public funds by state statute,they will not be eligible for investment until this Policy has been amended and the amended version adopted by the Board of Aldermen. Delivery versus Payment All investment security transactions shall be conducted on a delivery versus payment(DVP)basis to assure that the Academy has control of its assets and/or funds at all times. IX. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS Securities broker/dealers may be primary or regional broker/dealers and will meet other criteria as determined by the Investment Officer including state registration and completion of a Academy Broker/Dealer questionnaire (attached as Exhibit D). The following criteria must be met by authorized firms. - annual provision of an audited financial statement, - proof of certification by the National Association of Securities Dealers(NASD) - proof of current registration with the Texas State Securities Commission,and - completion of the Academy's broker/dealer questionnaire. Every bank and broker/dealer with whom the Academy transacts business will be provided a copy of this Investment Policy to assure that they are familiar with the goals and objectives of the investment program. The firm will be required to return a signed copy of the Certification Form(attached as Exhibit C)certifying that the Policy has been received and reviewed and only those securities approved by the Policy will be sold to the Academy. X. DIVERSIFICATION AND MATURITY LIMITATIONS It is the policy of the Academy to diversify its investment portfolio. Invested fiends shall be diversified to minimize risk or loss resulting from over-concentration of assets in a specific maturity, specific issuer, or specific class of securities. Diversification strategies shall be established and periodically reviewed. Westlake Academy XI. SAFEKEEPING AND COLLATERALIZATION The laws of the State and prudent treasury management require that all purchased securities be bought on a delivery versus payment (DVP) basis and be held in safekeeping by either an approved, independent third party financial institution or the Academy's designated depository. Securities Owned by the Academy All safekeeping arrangements shall be approved by the Investment Officer and an agreement of the terms executed in writing. The safekeeping bank may not be within the same holding company as the bank from with the securities are purchased. The custodian shall be required to issue original safekeeping receipts to the Academy listing each specific security, rate, description, maturity, cusip number, and other pertinent information. Collateral Collateralization shall be required on all bank time and demand deposits for principal and accrued interest amounts over the FDIC insurance coverage of $100,000 (by tax identification number). In order to anticipate market changes and provide a level of additional security for all funds, collateral with a market value equal to 102%of the total deposits are required. The pledging bank will be made contractually liable for monitoring and maintaining the collateral levels at all times. All collateral will be held by an independent third party bank outside the holding company of the bank,pledged to the Academy. Authorized collateral will include only: - Obligations of the US Government, its agencies and instrumentalities to include mortgage backed securities which pass the bank test, - Municipal obligations rated at least A by two nationally recognized rating agencies. The custodian shall be required to provide original safekeeping receipts clearly marked that the security is pledged to the Academy. XII. REPORTING The Investment Officer shall submit monthly reports to the CEO and quarterly reports to the Board of Trustees containing sufficient information to permit an informed outside reader to evaluate the performance of the investment program and in full compliance with the Act. At a minimum the report shall contain: - Beginning and ending market value of the portfolio by market sector and total portfolio - Beginning and ending book value of the portfolio by market sector and total portfolio - Change in market value during the period - Detail on each asset(book,market,description,par ad maturity date) - Earnings for the period - Overall weighted average maturity of the portfolio The report will be prepared jointly by all involved in the investment activity and be signed by the Investment Officer, It will contain all elements as required by the Act and be signed by the Investment Officers as in compliance with the Act and this Policy. Market prices for assignment of market values will be obtained from an independent source. The three month Treasury Bill average yield for the reporting period will be reported as a gauge of performance and risk. XIII. DEPOSITORIES The Academy will designate one banking institution through a competitive process as its central banking services provider at least every five years. This institution will be used for normal banking services including disbursements, deposits, and safekeeping of Academy owned securities. Other banking institutions from which the Academy may purchase only certificates of deposit will also be designated as a depository. All banking arrangements will be in written form in accordance with FIRREA which requires a resolution of approval of the agreement by the Bank Council or Bank Loan Committee. Westlake Academy XIV. INVESTMENT POLICY ADOPTION BY BOARD The Academy's Investment Policy and its incorporated strategies shall be adopted by resolution annually by the Board.The approval and any changes made to the Policy will be noted in the approving resolution. Westlake Academy