Article I. General Policy
It is the policy of the Library 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 Library while conforming to all state and local statutes governing the investment of public funds.
Article II. Scope
This policy includes all funds governed by the Board of Library Trustees.
Article III. Prudence
The standard of prudence to be used by investment officials shall be the “prudent person” standard. 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.
Article IV. Objective
The primary objective, in order of priority, shall be:
- Legality – conformance with federal, state and other legal requirements.
- Safety – preservation of capital and protection of investment principal.
- Liquidity – Maintenance of sufficient liquidity to meet operating requirements.
- Yield – Attainment of market rates return.
The portfolio should be reviewed periodically as to its effectiveness in meeting the Library’s need for safety, liquidity, rate of return, diversification and its general performance.
Article V. Delegation of Authority
Management and administrative responsibility for the investment program is hereby delegated to the Treasurer of the Board of Library Trustees or the Treasurer’s appointed delegate. For purposes of this policy, the Treasurer hereby appoints the Library Director as its designated delegate.
Article VI. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions.
Article VII. Authorized Financial Institutions
Qualified and licensed financial institutions shall be selected which qualify as depositories or custodians under Illinois Law. In making these selections, the Library District shall consider the financial stability and strength of the institutions and the availability of financial data regarding the institution.
Should it become necessary to select an investment or money manager, at least three firms shall be considered prior to selection. Interviews may be conducted by the Board as a whole or by delegated Trustees and/or staff. The final selection will be made by the Board.
Article VIII. Authorized and Suitable Investments
Investments may be made in any type of security allowed for by Illinois statutes regarding the investment of public funds. Consistent with the GFOA Policy Statement on State and Local Laws Concerning Investment Practices, the following investments will be permitted by this policy if and to the extent permitted by the Public Funds Investment Act (30 ILCS 235).
- U.S. Government obligations, U.S. Government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value;
- Certificates of deposit and other evidences of deposit at financial institutions, banker’s acceptances, and commercial paper, rated in the highest tier (e.g. A-1, P-1, F-1, or D-1 or higher) by a nationally recognized rating agency;
- Investment-grade obligations of state and local governments and public authorities;
- Repurchase agreements whose underlying purchased securities consist of the foregoing;
- Money market mutual funds regulated by the Securities Exchange Commission and whose portfolios consist of only dollar-dominated securities; and
- Local governmental investment pools, either state-administered or through joint powers statutes and other intergovernmental agreement legislation.
Investment derivatives of the above instruments shall require authorization of the Board. (See the GFOA Recommended Practice on “Use of Derivatives by State and Local Governments,” 1994)
Article IX. Collateralization
Funds on deposit (checking accounts, certificates of deposit, etc.) in excess of FDIC limits must be insured with proof of such provided to Library or secured by some form of collateral, witnessed by a written agreement and held at an independent-third party institution in the name of the Library.
Article X. Safekeeping and Custody
All security transactions, including collateral for repurchase agreements, entered into by the Library shall be conducted in a manner that ensures safety. The Library is required to keep receipts and a written record of all transactions.
Article XI. Diversification and Maturation
The Library shall diversify its investments to the best of its ability based on the nature of the funds invested and the cash flow needs of those funds. Diversification can be by investment type, number of institutions invested in, and or length of maturity.
Article XII. Operational Procedures/Internal Control
The investments are perused each month noting when the investments are maturing and what the cash needs are within each fund established by the Library. The Treasurer and Library Director shall discuss the cash needs within the respective funds and project investment or reinvestment in accordance to the highest rates and terms available at that time, any trades necessary shall be executed by the Library Director. No monies from any Library accounts are to be transferred into any accounts other than those accounts belonging to the Library. Bank confirmations are to be received on all investments transactions and all transfers between funds.
Article XIII. Performance Standards
This investment portfolio will be managed in accordance with the parameters specified within this policy.
Article XIV. Reporting
The Treasurer or designee shall prepare an investment report at least monthly which shall contain a summary of all accounts/investments opened and/or closed during the period. The report should be provided to the Board of Library Trustees and be available on request. The report should be in a format suitable for review by the general public. An annual report should also be provided to the Board. The report shall include information regarding securities in the portfolio by class or type, book value, income earned and market value as of the report date.
Article XV. Investment Policy Adoption
The investment policy shall be adopted by the Board of Library Trustees. The policy shall be reviewed on an as needed basis. Modifications made to the policy must be approved by the Board of Library Trustees.