Chemung County Library District

10. INVESTMENT POLICY

Introduction
Section 1:  Scope
Section 2: Objectives
Section 3: Delegation of Authority
Section 4: Prudence
Section 5: Diversification
Section 6:  Internal Controls
Section 7: Designation of Depositories
Section 8: Collateralizing of Deposits
Section 9: Safekeeping and Collateralization
Section 10: Permitted Investments
Section 11: Authorized Financial Institutions and Dealers
Section 12: Purchase of Investments


Introduction

Section of the General Municipal Law requires each local government, including county library districts, to adopt by resolution a comprehensive investment policy detailing the local government's operative policy and instructions to officers and staff regarding the investing, monitoring and reporting of funds of the local government. The plan must be reviewed annually by the local government. Section 39 requires that the adopted policy address, at a minimum, broad areas, which are designed to achieve the basic objectives. These areas are:

  • a list of authorized investments,
  • procedures to ensure the local government's financial interest in investments,
  • standards for written agreements consistent with legal requirements,
  • procedures for the monitoring, control, deposit and retention of investments and collateral,
  • standards for security agreements and custodial agreements consistent with legal requirements,
  • standards for diversification of investments including diversification as to type of investments and firms with whom the local government transacts business, and
  • standards for qualification of investment agents which transact business with local governments.

References

General Municipal Law § 10 General Municipal Law § 11 General Municipal Law § 39
Local Finance Law § 165.00

Section 1:  Scope

This investment policy applies to all moneys and other financial resources available for investment on behalf of the Chemung County Library District or on behalf of any other entity or individual.

Section 2: Objectives

The primary objectives of the Chemung County Library District's investment activities are, in priority order,

  • to conform with all applicable federal, state and other legal requirements,
  • to adequately safeguard principal,
  • to provide sufficient liquidity to meet all operating requirements, and
  • to obtain a reasonable rate of return.

Section 3: Delegation of Authority

The Board's responsibility for administration of the investment program is delegated to the Chief Fiscal Officer, or other officer so designated, having custody of money, who shall establish written procedures for the operation of the investment program consistent with these investment guidelines. Such procedures shall include an adequate internal control structure to provide a satisfactory level of accountability based on a database or records incorporating description and amounts of investments, transaction dates, and other relevant information and regulate the activities of subordinate employees.

Section 4: Prudence

All participants in the investment process shall seek to act responsibly as custodians of the public trust and shall avoid any transaction that might impair public confidence in the Chemung County Library District to govern effectively.

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 safety of the principal as well as the probable income to be derived.
All participants 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.

Section 5: Diversification

It is the policy of the Chemung County Library District to diversify its deposits and investments by investment instrument and by maturity scheduling.

Section 6:  Internal Controls

It is the policy of the Chemung County Library District for all public moneys collected by any officer or employee of the Library to transfer those funds to the Chief Fiscal Officer within the time period specified by law.
The Chief Fiscal Officer is responsible for establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use of disposition, that transactions are executed in accordance with management's authorization and recorded properly, and are managed in compliance with applicable laws and regulations.

 Section 7: Designation of Depositories

The banks and trust companies authorized for the deposit of monies up to the maximum amounts are:

Depository Name                Maximum Amount

Chemung Canal Trust Company  $

Section 8: Collateralizing of Deposits

In accordance with the provisions of General Municipal Law, §10, all deposits, including certificates of deposit and special time deposits, in excess of the amount insured under the provisions of the Federal Deposit Insurance Act shall be secured:

  1. By a pledge of "eligible securities" with an aggregate "market value", or provided by General Municipal Law §10, equal to the aggregate amount of deposits from the categories designated in Appendix A to the policy.
  2. By an eligible "irrevocable letter of credit" issued by a qualified bank other than the bank with the deposits in favor of the government for a term not to exceed 90 days with an aggregate value equal to 140% of the aggregate amount of deposits and the agreed upon interest, if any. A qualified bank is one whose commercial paper and other unsecured short-term debt obligations are rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization or by a bank that is in compliance with applicable federal minimum risk based capital requirements.

Section 9: Safekeeping and Collateralization

Eligible securities used for collateralizing deposits shall be held by a third party or trust company subject to security and custodial agreements.

The security agreement shall provide that eligible securities are being pledged to secure local government deposits together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposits upon default. It shall also provide the conditions under which the securities may be sold, presented for payment, substituted or released and the events, which will enable the local government to exercise its rights The custodial agreement shall provide that securities held by the bank or trust company, or agent of and custodian for, the local government, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be co­mingled with or become part of the backing for any other deposit or other liabilities. The agreement should also describe that the custodian shall confirm the receipt, substitution or release of the securities. The agreement shall provide for the frequency of revaluation of eligible securities and for the substitution of securities when a change in the rating of a security may cause ineligibility. Such agreement shall include all provisions necessary to provide the local government a perfected interest in the securities.

Section 10: Permitted Investments

As authorized by General Municipal Law §11, the Chemung County Library District authorizes the Chief Fiscal Officer, or other officer so designated, having custody of money, to invest moneys not required for immediate expenditure for terms not to exceed its projected cash flow needs in the following types of investments:

  • Special time deposit accounts authorized to do business in New York State;
  • Certificates of deposit;
  • Obligations of the United States of America;
  • Obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America;
  • Obligations of the State of New York;
  • Obligations issued pursuant to Local Finance Law § 24.00 or 25.00 (with approval of the State Comptroller) by any municipality, school district or district corporation other than the Chemung County Library District;
  • Obligations of public authorities, public housing authorities, urban renewal agencies and industrial development agencies where the general State statutes governing such entities or whose specific enabling legislation authorizes such investments.

All investment obligations shall be payable or redeemable at the option of the Chemung County Library District with in such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable at the option of the Chemung County Library District within two years of the date of purchase. The designated depository will confirm all purchases and transactions in writing to the Chemung County Library District.

Section 11: Authorized Financial Institutions and Dealers

The Chemung County Library District shall maintain a list of financial institutions and dealers approved for investment purposes and establish appropriate limits to the amount of investments, which can be made with each financial institution or dealer. All financial institutions with which the local government conducts business must be credit worthy. Banks shall provide their most recent Consolidated Report of Condition (Call Report) at the request of the Chemung County Library District. Security dealers not affiliated with a bank shall be required to be classified as reporting dealers affiliated with the New York Federal Reserve Bank, as primary dealers. The Chief Fiscal Officer, or other officers so designated, having custody of money, is responsible for evaluating the financial position and maintaining a listing of proposed depositaries, trading partners and custodians. Such listing shall be evaluated at least annually.

Section 12: Purchase of Investments

The Chief Fiscal Officer, or other officers so designated, having custody of money, is authorized to contract for the purchase of investments:

  1. Directly, including through a repurchase agreement, from an authorized trading partner.
  2. By participation in a cooperative investment program with another authorized governmental entity pursuant to Article 5G of the General Municipal Law where such program meets all the requirements set forth in the Office of the State Comptroller Opinion No. 88­46, and the specific program has been authorized by the Board.
  3. By utilizing an ongoing investment program with an authorized tracking partner pursuant to a contract authorized by the Board.

All purchased obligations, unless registered or inscribed in the name of the local government, shall be purchased through, delivered to and held in the custody of a bank or trust company. Such obligations shall be purchased, sold or presented for redemption or payment by such bank or trust company only in accordance with prior written authorization from the officer authorized to make the investment. All such transactions shall be confirmed in writing to the Chemung County Library District by the bank or trust company. Any obligation held in the custody of a bank or trust company shall be held pursuant to a written custodial agreement as described in General Municipal Law § 10.

The custodial agreement shall provide that securities held by the bank or trust company, as agent of and custodian for, the Chemung County Library District, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement shall describe how the custodian shall confirm the receipt and release of the securities. Such agreement shall include all provisions

Approved by the Chemung County Library District Board of Trustees
February 16, 2012

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