Boonville Investment policy ordinance (§ 2-19)

(a) Policy. It is the policy of the City of Boonville to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the city and conforming to all state and local statutes governing the investment of public funds.

(b) Scope.

(1) This investment policy applies to all financial assets and all funds of the City of Boonville. (c) Prudence.

(1) Investments 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.

(2) The standard of prudence to be used by investment officials shall be the "prudent person" standards and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with 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 are reported in a timely fashion and appropriate action is taken to control adverse developments.

(d) Objective. The primary objectives, in priority order, of the city's investment activities shall be:

(1) Safety. Safety of principal is the foremost objective of the investment program. Investments of the city shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.

(2) Liquidity. The city's investment portfolio will remain sufficiently liquid to enable the city to meet all operating requirements which might be reasonably anticipated.

(3) Return on investment. The city's investment portfolio shall be designed with the objective of attaining a market rate of return throughout the budgetary and economic cycles, taking into account, the city's investment risk constraints and the cash flow characteristics of the portfolio.

(e) Delegation of authority. Authority to manage the city's investment program is derived from the Missouri Constitution Article IV, Section 15. Management responsibility for the investment program is hereby delegated to the bookkeeper under the direct supervision of the city administrator. No person may engage in an investment transaction except as provided under the terms of this policy. The bookkeeper shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and maintain records thereof.

(f) Ethics and conflicts of interest.

(1) Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the city administrator any material financial interests in financial institutions that conduct business with the City of Boonville, and they shall further disclose any large personal financial/

investment positions that could be related to the performance of the city's portfolio. Employees and officers shall subordinate their personal investment transactions to those of the city, particularly with regard to the time of purchases and sales.

(2) All employees with investment authority shall file the appropriate reports with the secretary of state disclosing potential conflicts of interest and substantial interests in accordance with Boonville city ordinance.

(g) Authorized financial dealers and institutions.

(1) In order for a financial institution to qualify for investment of city funds, certain conditions must exist. Financial institutions shall be restricted to banks which are members of the Federal Deposit Insurance Corporation. No public deposit shall be made except in a qualified public depository in the State of Missouri.

(2) A current audited financial statement is required to be on file for each financial institution in which the city invests.

(h) Authorized and suitable investments. The city is empowered by statute to invest in the following types of securities:

(1) Bonds, bills, or notes of the United States or an agency of the United States.

(2) Negotiable certificates of deposit, savings accounts, and other interest earning deposit accounts of financial institutions whose operations for the two most recent years have resulted in a profit.

(3) Repurchase agreements against eligible collateral, the market value of which must be maintained during the life of the agreements at a level equal to or greater than the amount advanced. An undivided interest in the instruments pledged for such agreements must be granted to the city.

(4) The Missouri State Treasurer's Repurchase Agreement Pool.

(i) Collateralization.

(1) All investments which exceed the financial institution's insurance limits shall be secured by eligible collateral. The market value of the collateral must be equal to or greater than the value of the investment instrument less the amount of insurance coverage. Eligible collateral shall mean all securities which would otherwise be qualified for purchase under this policy and which are on the State of Missouri Office of the State Treasurer's list of securities acceptable as collateral to secure state deposits.

(2) All investments purchased under this policy are to be issued in negotiable, bearer form to the city or in the form of a safekeeping receipt.

(3) Collateral will always be held by an independent third party. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the city and retained.

(4) The right of collateral substitution is granted.

(j) Safekeeping and custody. All security transactions, including collateral for repurchase agreements, entered into by the city shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian designated by the bookkeeper and evidenced by safekeeping receipts.

(k) Diversification. The city will make every effort to diversify its investments by security type and institution.

(l) Maximum maturities. To the extent possible, the city will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the city will not directly invest in security maturing more than two years from the date of purchase, unless circumstances warrant other consideration, as approved by the city administrator.

(m) Internal control. The city administrator shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures.

(n) Performance standards. The investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the city's investment risk constraints and cash flow needs.

(o) Reporting. The bookkeeper is charged with the responsibility of preparing a report on the investment activity to be provided to the independent external auditor. Reports will include the issuing financial institution, the type of security, the term to maturity, the interest rate, the amount of principal, performance, interest earnings, etc.

(p) Investment policy adoption. The city's investment policy shall be adopted by ordinance of the city council, and any modifications made thereto must be approved by the city council.