Okaloosa County BOCC — October 18, 2016 — County Investment Policy final — reading text

INVESTMENT POLICY OF THE BOARD OF COUNTY COMMISSIONERS I. SCOPE This Investment Policy of the Board of County Commissioners applies to all monetary assets of the government of Okaloosa County with the following exceptions: (1) deferred compensation, which is administered by a separate insurance carrier; (2) investments administered by third parties governed by bond resolutions; and (3) funds held by other agencies (i.e., Tax Collector, State of Florida) during collection periods which are governed by the agencies' investment policies. All monetary assets of the Okaloosa County Board of County Commissioners which are recorded to the General Fund, Special Revenue Funds, Capital Project Funds, Debt Service Funds, Enterprise Funds, Internal Service Funds, Trust and Agency Funds, and other funds that exist or may be created from time to time shall be administered in accordance with the provisions of this Policy. Investment income earned on the monetary assets of Okaloosa County Board of County Commissioners shall be used for the same purposes and projects as the assets upon which the investment income was earned. II. INVESTMENT OBJECTIVES The following investment objectives will be applied in the management of the Board of County Commissioners' monetary assets: A. Safety of principal is the foremost objective of the government of Okaloosa County. Each investment transaction shall seek to first ensure that capital losses are avoided, whether they be from security defaults or erosion of market value. Purchases and sales shall be made for investment purposes and not speculation. B. The investment portfolio will remain sufficiently liquid to enable the Okaloosa County Board of County Commissioners to meet operating requirements and other needs which may be reasonably anticipated. C. In investing public funds, the Clerk to the Board will strive to maximize the return on the portfolio and to preserve the purchasing power but will avoid assuming unreasonable investment risks. A minimum standard for the overall portfolio rate of return is to exceed the current SBA rate for short term investments (one to twelve months), and to exceed the bond equivalent yield of the current one-year Treasury Bill for investments with a maturity beyond one year. 1  D. The Clerk to the Board will employ mechanisms to control risks and diversify its investments regarding specific security types or individual financial institutions. E. Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism worthy of the public trust. The governing body, however, recognizes that, in a diversified portfolio, occasionally measured losses are inevitable and must be considered within the context of the overall portfolio's investment return, provided adequate diversification has been implemented. III. PRUDENCE The standard of prudence to be used by investment officials shall be the "prudent person" and shall be applied in the context of managing an overall portfolio consisting of public funds. Investment officers acting in accordance with written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. The “prudent person” standard is herewith understood to mean the following: Investment shall 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 from the investment. IV. INVESTMENT AUTHORITY A. AUTHORITY OF THE CLERK. In accordance with Section 28.33, Florida Statutes, the responsibility for the investment of County funds, in conformity with this Investment Policy, rests with the Clerk of Circuit Court. Management responsibility for the investment program is hereby delegated to the Director of Finance, who shall establish written procedures for the operation of the investment program, consistent with this Investment Policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. The Director of Finance will also complete the eight hours of continuing education in compliance with section 218.415(14), Florida Statutes. 2  The Clerk shall report to the Board on an annual basis the investments that have been made of County funds and the return that has been achieved. B. INVESTMENT ADVISORY COMMITTEE. The Investment Advisory Committee is hereby established with the following members:  The Clerk of the Circuit Court & Comptroller;  A County Commissioner as designated by the Board;  The Director of Finance;  A designee of the Board consisting of either counsel to the County , the financial advisor to the County or a member of County staff;  An Okaloosa County Citizen (from the financial and/or investment profession) nominated by the Clerk and subject to the approval by the Board. C. ROLE OF THE INVESTMENT ADVISORY COMMITTEE. The Board of County Commission is responsible for setting guidelines for the investment of the counties portfolio through the adoption of this Investment Policy. The Board recognizes that there is an expertise required both for setting the guidelines and the review of performance, which may exceed the technical background of individual commissioners and has, therefore, created the Investment Advisory Committee. This Committee is charged with the responsibility to review this Policy on a regular basis and to recommend changes. The Clerk will provide the Committee with reports in sufficient detail as may be requested by the Committee in order for them to review the performance of the portfolio. The Committee will provide recommendations to the Board of County Commission concerning this Investment Policy and modifications that would be appropriate. V. AUTHORIZED INVESTMENTS The Clerk to the Board may purchase investment securities, at prevailing market rates, at an appropriate amount thereof in: A. STATE AUTHORIZED INVESTMENTS PER SECTION 218.415, FLORIDA STATUTES 1. Negotiable direct obligations of, or obligations the principal and interest of which are unconditionally guaranteed by, the United States Government at the then prevailing market price for such securities [Treasury bills, State and Local Government Series (SLGS), notes, and/or bonds]. 3 2. Obligations of federal farm credit banks (FFCB)*; the Federal Home Loan Mortgage Corporation (Freddie Mac), including Federal Home Loan Mortgage Corporation participation certificates* and collateralized mortgage obligations; or the Federal Home Loan Bank FHLB)* or its district banks or but not limited to the agencies and instrumentalities listed above.] 3. Obligations of the Federal National Mortgage Association (FNMA), including Federal National Mortgage Association participation certificates, collateralized mortgage obligations and mortgage pass-through certificates guaranteed by the Federal National Mortgage Association*; [Small Business Administration **; Federal Housing Administration (FHA)II; Farmers Home Administration (FmHA)**; and General Services Administration (GSA)**]. [Included but not limited to the agencies and instrumentalities listed above.] * Instrumentalities - FFCB; Freddie mac; FHLB; FNMA ** Agencies - GNMA; Small Business Administration; FHA; FmHA; GSA 4. Local Government Surplus Funds Trust Fund [State of Florida State Board of Administration (SBA)]. 5. Interest-bearing time deposits or savings accounts in banks organized under the laws of this state, in national banks organized under the laws of the United States and doing business and situated in this state, in savings and loan associations which are under state supervision, or in federal savings and loan associations located in this state and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. [Certificates of Deposit are under the same guidelines. The institutions must be fully insured by the Federal Deposit Insurance Corporation and approved by the State Treasurer as a public depository.] 6. Securities of, or other interests in, any open-end or closed-end, management type investment company or investment trust registered under the Investment Company Act of l940, l5 U.S.C. ss80a-l, et seq., as amended from time to time, provided the portfolio of such investment company or investment trust is limited to United States Government obligations and to repurchase agreements fully collateralized by such United States Government obligations and provided such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. [Average 4  portfolio maturity shall be under 90 days. Investment objectives must include the maintenance of a stable price of $1.00 per share.] B. AUTHORIZED INVESTMENTS BY RESOLUTION/ORDINANCE 1. Any term repurchase agreements with any primary brokers/dealers who report daily to the NY Federal Reserve Bank provided such agreements are: (l) in writing; (2) fully secured by securities (A)(l, 2, or 3) above, and provided further that (a) such collateral is held by the County or any agent acting solely for the County during the full term of such agreements (b) such collateral is not subject to liens or claims of third parties (c) such collateral has a market value (determined at least every seven days) as defined in Section IX; (d) the County has a perfected first security interest in such collateral; (3) such agreement shall provide that the failure to maintain such collateral at the level acquired by Clause (c) above will require the County or its agents to request additional collateral or liquidate when such request is not met. 2. Overnight repurchase agreements with collateral held by the trust department of bank(s) or custodian bank(s). 3. Bonds, notes, or obligations of any state of the United States, any municipality, political subdivision, agency, or authority of this state, which are exempt from the federal income taxation, if such obligations are insured and rated by at least one (l) of the nationally recognized rating agencies for municipal bonds in any one of the two highest classifications. 4. Bankers' acceptances which are inventory-based and domestic only. Bankers' acceptances must be eligible to qualify for use as collateral at the Federal Reserve Bank. 5. S.E.C. - registered, open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities. The average maturity of bond mutual funds shall not exceed four years. No sales or load charge may be added to the purchase price or