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IV. CASH INVESTMENT POLICIES AND PROCEDURES 8cction S of '.'crnon' 0 TCJcu.o Ci...il l'.nnota.tcd 8ta.tutco ota.tco. Chapter 2256, Section 6 of the Public Funds Investment Act, of the Texas Government Code states: Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital, and the probable income to be derived. Investment of funds shall be governed by the following investment objectives, in order of priority: 1) preservation and safety of principal; 2) liquidity; and 3) yield. In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration: 1) the investment of all funds, or funds under the City of San Marcos control, over which the officer had responsibility rather than a consideration as to the prudence of a single investment; and 2) whether the investment decision was consistent with the written investment policy of the City of San Marcos. This forces a variety of responsibilities upon the City Manager. These responsibilities include, but are not limited to: the need for prudence and care in the selection of appropriate investment securities; and the need for rational criteria for the selection of financial institutions and securities dealers with whom the City conducts business; and a distinct concentration upon the maximization of investment yield within the parameters of the other listed responsibilities. To meet these responsibilities, the City Council has established the following policies and procedures for cash investments. A. Investment Instruments: The City Manager, or the City Manager's designee, shall invest the temporarily idle funds of the City in those investment instruments that are listed below: 1. Obligations of the United States or its agencies and instrumentalities, not to exceed two years to the stated maturity; 2. Direct obligations of the State of Texas or its agencies and instrumentalities, not to exceed two years to the stated maturity; 3. Other obligations, the principal of and interest of which are unconditionally guaranteed or insured by the full faith and credit of, the State of Texas or the United States or. their respective agencies and instrumentalities, not to exceed two years to the state maturity; City of San Marcos Cash Management and Investment Policy Page 4 of 24