Res 2014-031/adopting revised Investment Policies for Operating Funds and Reserve Funds

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designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees, contracted investment managers or financial counterparties of the City. Loss of Rating The Investment Officer or investment adviser shall monitor, on no less than a weekly basis, the credit rating on all authorized investments in the portfolio based upon independent information from a nationally recognized rating agency. If any security falls below the minimum rating required by Policy, the Investment Officer or adviser shall notify the City Manager of the loss of rating, conditions affecting the rating and possible loss of principal with liquidation options available, within two weeks after the loss of the required rating. Monitoring FDIC Status The Investment Officer or Investment Adviser shall monitor, on no less than a weekly basis, the status and ownership of all banks issuing brokered CDs owned by the City based upon information from the FDIC. If any bank has been acquired or merged with another bank in which brokered CDs are owned, the Investment Officer or Adviser shall immediately liquidate any brokered CD which places the City above the FDIC insurance level. XV. PERFORMANCE STANDARDS The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and demands of the City for the reserve funds. A benchmark for performance of the portfolio will be included in the quarterly reports based on the portfolio's maximum weighted average maturity of twenty -four (24) months. The periodic total return of the Merrill -Lynch 1 -3 Year Treasury Index will be used as the City's benchmark for this reserve portfolio. XVI. REPORTING The Investment Officer(s) shall provide the City Council quarterly investment reports as required by the Act and a monthly report to the Investment Committee. The reports will reflect both detail and summary information enabling the reader to determine the value and risk associated with the portfolio. Market values for the report will be derived from an independent source. A management report will be included with the quarterly investment report. The management report should include comments on the fixed income markets and economic conditions, discussions regarding diversification, allocation restrictions on percentage of investments by categories, possible changes in the portfolio structure going forward and thoughts on investment strategies. XVII. CASH MANAGEMENT PROGRAMS AND ACTIVITIES The Department of Finance is committed to the overall success of the City's cash management programs. These programs address a variety of cash management issues, including: 1. The design and implementation of reliable and effective cash flow forecasting methodologies to assist Finance Department personnel and Investment Officers in the determination of the amounts of cash available for investment, the time period for which the funds may be invested with a reasonable level of confidence, and a measure of the volatility of specific cash forecasts, which will allow viable determination of the required liquidity. 2. The design and implementation of appropriate "revenue - acceleration programs ", aimed at enhancing the speed at which monies are collected and deposited by the City and the elimination of bad debt expense /write -offs. City of San Marcos Investment Policy Page 6