HomeMy WebLinkAboutRes - 2007.23 - Establishing an Investment Policy for Public FundsBoarcl Memorandum
From,: Brian W. Tompkins, CFO/Treasurer
Subject: Investment Policy
Recommendation:
Approve Resolution No. 2007.17 adopting the attached
investrent policy (new format) for the 2007-08 fiscal year
Background:
Date: August 28, 2007
Government Code section 53646(a) requires that the Treasurer of a local agency annually render to the
legislative body a Statement of Investment Policy for consideration at a public meeting.
Attached and submitted for your consideration is East Valley Water District's investment policy as
adopted in previous years. The District's policy is more restrictive than the Government Code in that
certain types of investments allowed by Code section 53601 are not incorporated into the attached
policy. The excluded investment types are:
Banker's acceptances -maximum 180-day maturity
Commercial paper -restricted to highest Moody's rating; issued by US Corporations with in-
excess-of $500 million in assets -maximum 270-day maturity.
Repurchase and reverse repurchase agreements
Mortgage securities
Medium term corporate notes -maximum of 5 years maturity
Staff is not recommending any substantive changes to the policy at this time. However, staff has made
some changes to the format and appearance of the policy to allow referencing, making it easier to
incorporate this policy into a comprehensive fiscal and/or administrative policy manual.
For comparison purposes, the investment policy adopted for fiscal year 2006-07 is also attached.
1.0 POLICY
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EAST VALLEY WATER DISTRICT
INVESTMENT POLICY
WHEREAS; The Legislature of the State of California has declared that the deposit and
investment of public funds by local officials and local agencies is an issue of statewide concern
California Government Code Sections 53600.6 (CGC §53600.6) and 53630.1); and
WHEREAS; the legislative body of a local agency may invest surplus monies not required for the
immediate necessities of the local agency in accordance with the provisions of California
Government Code Sections 5921 and 53601 et seq.; and
WHEREAS; the General Manager and/or Financial Officer of the East Valley Water District shall
annually prepare and submit a statement of investment policy and such policy, and any changes
thereto, shall be considered by the Board of Directors at a public meeting; (CGC §53646(a)); now
THEREFORE; it shall be the policy of the East Valley Water District to invest funds in a manner
which will provide the highest investment return with the maximum security while meeting the
daily cash flow demands of the entity and conforming to all statutes governing the investment of
East Valley Water District funds.
SCOPE
This investment policy applies to all financial assets of the East Valley Water District. These
funds are accounted for in the annual district audit and include:
The Enterprise Fund of the General District.
There are no Funds excluded from this policy.
PRIJDENCE
Investments shall be made with judgment and Gaze, 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. The standard of prudence to be used by investment officials
shall be the "prudent investor" standard (CGC §53600.3) and shall be applied in the context of
managing an overall portfolio. Investment officers acting in accordance with written procedures
and the investment policy 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 aze reported in a timely fashion and appropriate action is taken to control adverse
developments.
OBJECTIVES:
As specified in CGC §53600.5, when investing, reinvesting, purchasing, acquiring, exchanging,
selling and managing public funds, the primary objectives, in priority order, of the investment
activities shall be:
1. Safety: Safety of principal is the foremost objective of the investment program. Investments of
the East Valley Water District shall be undertaken in a manner that seeks to ensure the