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Resources Code;
<br />(5) registry funds deposited with the county or district clerk under Chapter 117, Local Government
<br />Code; or
<br />(6) a deferred compensation plan that qualifies under either Section 401(k) or 457 of the Internal
<br />Revenue Code of 1986 (26 U.S.C. Section 1 et seq.), as amended.
<br />(b) This subchapter does not apply to an investment donated to an investing entity for a particular purpose or
<br />under terms of use specified by the donor.
<br />Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 505, Sec. 24, eff. Sept.
<br />1,1997; Acts 1997, 75th Leg., ch. 1421, Sec. 2, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 8.21, eff. Sept. 1,
<br />1999; Acts 1999, 76th Leg., ch. 1454, Sec. 3, eff. Sept. 1,1999.
<br />Sec. 2256.005. INVESTMENT POLICIES; INVESTMENT STRATEGIES; INVESTMENT OFFICER. (a)
<br />The governing body of an investing entity shall adopt by rule, order, ordinance, or resolution, as appropriate, a written
<br />investment policy regarding the investment of its funds and funds under its control.
<br />(b) The investment policies must:
<br />(1) be written;
<br />(2) primarily emphasize safety of principal and liquidity;
<br />(3) address investment diversification, yield, and maturity and the quality and capability of investment
<br />management; and
<br />(4) include:
<br />(A) a list of the types of authorized investments in which the investing entity's funds maybe
<br />invested;
<br />(B) the maximum allowable stated maturity of any individual investment owned by the entity;
<br />(C) for pooled fund groups, the maximum dollar-weighted average maturity allowed based on
<br />the stated maturity date for the portfolio;
<br />(D) methods to monitor the market price of investments acquired with public funds; and
<br />(E) a requirement for settlement of all transactions, except investment pool funds and mutual
<br />funds, on a delivery versus payment basis.
<br />(c) The investment policies may provide that bids for certificates of deposit be solicited:
<br />(1) orally;
<br />(2) in writing;
<br />(3) electronically; or
<br />(4) in any combination of those methods.
<br />(d) As an integral part of an investment policy, the governing body shall adopt a separate written investment
<br />strategy for each of the funds or group of funds under its control. Each investment strategy must describe the investment
<br />objectives for the particular fund using the following priorities in order of importance:
<br />(1) understanding of the suitability of the investment to the financial requirements of the entity;
<br />(2) preservation and safety of principal;
<br />(3) liquidity;
<br />(4) marketability of the investment if the need arises to liquidate the investment before maturity;
<br />(5) diversification of the investment portfolio; and
<br />(6) yield.
<br />(e) The governing body of an investing entity shall review its investment policy and investment strategies not
<br />less than annually. The governing body shall adopt a written instrument by rule, order, ordinance, or resolution stating
<br />that it has reviewed the investment policy and investment strategies and that the written instrument so adopted shall
<br />record any changes made to either the investment policy or investment strategies.
<br />(f) Each investing entity shall designate, by rule, order, ordinance, or resolution, as appropriate, one or more
<br />officers or employees of the state agency, local government, or investment pool as investment officer to be responsible
<br />for the investment of its funds consistent with the investment policy adopted by the entity. If the governing body of an
<br />investing entity has contracted with another investing entity to invest its funds, the investment officer of the other
<br />investing entity is considered to be the investment officer of the first investing entity for purposes of this chapter.
<br />Authority granted to a person to invest an entity's funds is effective until rescinded by the investing entity, until the
<br />expiration of the officer's term or the termination of the person's employment by the investing entity, or if an investment
<br />management firm, until the expiration of the contract with the investing entity. In the administration of the duties of an
<br />City of San Marcos Investment Policy Page 20
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