Scope

This investment policy applies to activities of the Will County Treasurer with regard to investing financial assets of all funds as described in Illinois Compiled Statues.

Policy

It is the policy of the Will County Treasurer to structure investments in such a way as to place the highest priority on the safety of principal. Secondary to this priority is the balance of investment objectives including the optimization of investment returns.

Investment Objectives

The following investment objectives shall be applied in the management of the Will County Treasurer’s funds:

  1. Providing investments that conform to all federal, state, and regulatory requirements.
  2. Planning investments that have as a priority to preserve capital and principal. Both the credit quality of the investment and perfecting of the County’s interests are of prime importance.
  3. Maintaining the Public Trust by including participants in the investment process that seek to act responsibly and that avoid transactions that may impair public confidence.
  4. Provide an investment strategy that will allow for sufficient liquidity yield to meet the county’s operating, payroll, capital, and statutory disbursement requirements as can be anticipated reasonably.
  5. Investing public funds that will strive to maximize the overall investment yield of the portfolio while minimizing risk.
  6. Setting procedures to control risks and diversify investments regarding specific security types, maturities, and financial institutions.

Prudence Standards

The standard used by the Will County Treasurer, Deputy Treasurer, and Assistant Deputy Treasurers shall be the “prudent person” standard.  The “prudent person” standard is herewith understood to mean the following:

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 probably safety of their capital as well as the probable income to be derived from the investment.

Investment officers acting in accordance with written procedures of this investment policy, as well as the applicable local, state, and federal laws and exercising due diligence shall be relieved of personal responsibility for an individual’s security credit risk or market price changes provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments.

Delegation of Authority

In accordance with 55 ILCS 5/3-10005 and 5/3-11006, the County Treasurer delegates responsibility for the operation of the investment program to the Deputy Treasurer (hereinafter “Chief Investment Officer”), who shall act in accordance with all local, state and federal laws and the established written procedures and internal controls for the operation of the investment program consistent with this investment policy.

Procedures should include reference to safekeeping, delivery vs. payment, investment accounting, wire transfer agreements, and collateral/depository agreements.  Such procedures shall include explicit delegation of authority to persons responsible for investment transactions.

No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Chief Investment Officer.  The Chief Investment Officer shall be responsible for all transactions undertaken and shall establish systems of control to regulate the activities of subordinate officials.

Ethical Standards

The Will County Treasurer, Deputy Treasurer, and Assistant Deputy Treasurers shall refrain from personal business activity that is in fact or gives the appearance of a conflict with proper execution of the investment program or which could impair their ability to make impartial investment decisions.

In addition to any other disclosures required by law, the Deputy Treasurer and Assistant Deputy Treasurers shall disclose to the County Treasurer any material financial interests in financial institutions that conduct business with Will County and they shall further disclose any personal investments that could be related to the performance of the investment portfolio.

In accordance with the spirit of the aforementioned, the County Treasurer shall make same said disclosures to the County Board.  The County Treasurer, Deputy Treasurer, and Assistant Deputy Treasurers shall refrain from undertaking personal investment transactions with any individual or business that is a vendor of Will County.

Investment Instruments

The Treasurer may invest in any type of security allowed by Illinois law.  A listing of Permissible Investments appears in Appendix A.

Other Investments

If the Public Funds Deposit Act (30 ILCS 235 et seq.) and/or the Counties Code at 55 ILCS 5/3-11006 is amended and one or more investments is no longer permissible, the investment will automatically be removed from the list of Permissible Investments.  Under this circumstance, any newly ineligible investments will be allowed to mature or can be sold immediately at the Chief Investment Officer’s discretion.

If the Public Funds Investment Act (30 ILCS 235 et seq.) and/or the Counties Code at 55 ILCS 5/3-11006 is amended to add new investments, the new investments will automatically be added to the list of Permissible Investments but not recommended for use until approved by the County Treasurer.

Performance Measurement

The investment policy is designed to obtain a market average rate of return, taking into account investment risk constraints and cash flow needs.  The market average rate of return shall be determined by the Chief Investment Officer on a quarterly basis by comparing the following two rate sources:

1.    The 3-month average of the 90-day Treasury Bill rated as quoted by Bloomberg L.P.

2.    The MFR all taxable 7 day simple yield as reported on www.iMoneyNet.com.

Reviewing Guidelines

The Will County Treasurer shall periodically review repurchase agreement activity for compliance with Illinois law. In addition, diversification strategies shall be reviewed on a periodic basis.

Once per year, the Will County Treasurer shall review the FDIC quarterly call report.

Diversification

It is the policy of the Will County Treasurer to diversify the investment portfolio of Will County.  Investments shall be diversified to eliminate the risk of loss resulting from an over concentration in a specific issuer, maturity, or class of security.  Concentration in short-term corporate obligations will not exceed 90-percent of the limit contained in Illinois law.

Collateralization

It is the policy of the Will County Treasurer to require that time deposits in excess of FDIC or FSLIC insurance limits be secured by some form of collateral to protect public deposits in a single financial institution if it were to default due to poor management or economic factor.  All non-FDIC or non-FSLIC financial institutions must fully collateralize deposits.

Eligible collateral instruments and collateral ratios (using the “market value divided by depositor” method) are as follows:

  • Direct Obligations of the United States Government (Bills, Bonds, and Notes) = 102 – 110%
  • Obligations of Federal Agencies = 102 – 110%
  • Obligations of Federal Instrumentalities = 102 – 110%
  • Obligations of the State of Illinois = 102 – 110%
  • Obligations of Local Municipalities in Illinois = 102 – 110%

The ratio of fair market value of collateral to the amount of funds secured shall be reviewed quarterly as determined at the time of investment by the Treasurer’s representative and additional collateral will be requested when the ratio declines below the level required.

The collateral ratio for eligible collateral required under the terms and conditions of any Repurchase Agreement that Will County shall enter into shall be one-hundred and two percent to one-hundred and ten percent (102% — 110%), and such collateral ratio shall be applied to the market value of such eligible collateral as determined by the County.

Reporting

Investment reports will be prepared on daily, monthly, and yearly basis as required by statute or to meet daily operational needs.  The reports include, but are not limited to, a listing of individual securities held by the end of each period, a listing of investments by maturity date and institution, and income earned on investment by fund.

Authorized Financial Dealers and Institutions

The Will County Treasurer will maintain a list of financial institutions which have been designated depositories.  In addition, a list also will be maintained of approved security broker/dealers selected by credit worthiness who are authorized to provide investment services in the State of Illinois. No public deposits shall be made except in a qualified public depository as established by state statute.

A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the County invests. Each approved commercial bank shall have a Capital Adequacy Ratio of no less than 3%, and a Texas Ratio of less than 1:2.  All financial instruments shall not exceed 75-percent of its capital stock and surplus.

Additional collateral must be pledged to exceed the statutory limit, such as collateral being backed by the full faith and credit of the United States of America and held in a third-party custodial institution.

Safekeeping of Collateral

Third-party safekeeping is required for all collateral.  To accomplish this, a security can be held at the following locations:

  1. A Federal Reserve Bank or branch office
  2. Another custodial facility, generally in a trust department through book-entry at the Federal Reserve, unless physical securities are involved
  3. By an escrow agent of the pledging institution

Internal Control

An independent review of investment records will be performed annually by an external auditor.  This review will provide internal control by assuring compliance with established policies and procedures.

Special Use Money

From time to time, Will County issues bonds for various projects.  The proceeds from such bond issuances shall be invested in the manner prescribed by the County at the time the bonds are issued.

Investment Policy Adoption

The investment policy shall be adopted by the Will County Treasurer in conformance with the Public Funds Investment Act, 35 ILCS 235/2.5 and be presented to the Will County Executive and the Will County Board.  The policy shall be reviewed annually and any modifications must be approved by the Will County Treasurer.

Adopted by Will County Treasurer Steve Weber, CPA, on February 1, 2011.  Appendix A amended on July 28, 2011.

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