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
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APPRO'V-E- D 'FORM:
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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.
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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