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 as to place the highest priority on the safety of principal. Secondary to this priority is the balance of investment objectives.

Investment Objectives

The following investment objectives apply to the management of the Will County Treasurer’s funds:

  1. Provide investments that conform to all federal, state, and regulatory requirements.
  2. Maintain the Public Trust by including participants in the investment process that seek to act responsibly and that avoid transactions that may impair public confidence.
  3. Implement an investment strategy that provides sufficient liquidity to meet the county’s operating, payroll, capital, and statutory disbursement requirements.
  4. Structure investments to preserve principal capital and perfect the county’s interests.
  5. Establish procedures to control risk and diversify the portfolio regarding security types, maturities and financial institutions.
  6. Invest public funds to maximize overall portfolio yield while minimizing risk.

Prudence Standards

The standard used by the Will County Treasurer, Deputy Treasurer, Assistant Deputy Treasurers, and Investment Manager shall be the “prudent person” standard which means 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 Investment Manager (hereinafter “Chief Investment Officer”), who shall act in accordance with all local, state and federal laws and the establishment of 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, Chief Deputy Treasurer, Assistant Deputy Treasurers, and Investment Manager shall refrain from personal business activity that is in fact or gives the appearance of a conflict with proper execution of the investment program of which could impair their ability to make impartial investment decisions.

In addition to any other disclosures required by law, the Chief Deputy Treasurer Assistant Deputy Treasurers, and Investment Manager 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 related to the performance of the investment portfolio.

In accordance with the spirit of the aforementioned, the County Treasurer shall make same said disclosure to the County Board. The County Treasurer, Chief Deputy Treasurer, Assistant Deputy Treasurers, and Investment Manager 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 Investment Act (30 ILCS 235 et seq.) and/or the Counties Code at 55 ILCS 5/3-11006 is amended and one or more investments are 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 Chief Investment Officer, on a quarterly basis, shall determine the market average rate of return by comparing the following two rate sources:

  • The 3-month average of the 90-day Treasury Bill rated as quoted by Bloomberg L.P.
  • The MFR all-taxable 7 day simple yield as reported on www.iMoneyNet.com.

Reviewing Guidelines

The Will County Treasurer shall review repurchase agreement activity for compliance with Illinois law, the diversification strategy, and FDIC quarterly call reports on a periodic basis.

Diversification

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

Collateralization

It is the policy of the Will County Treasurer to require 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 federally and non-federally insured institutions must fully collateralize deposits using instruments and Collateral Ratios (Market Value divided by Amount Deposited) as follows:

  • Direct Obligations of the United States of America = 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 Will County Treasurer, or his designee, shall review monthly the Collateral Ratios to the amount of funds secured. The Treasurer will request additional collateral when the ratio declines below the level required.

The Collateral Ratio 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%). The Collateral Ratio shall apply to the market value of eligible collateral as determined by the County.

Reporting

Investment reports will be prepared as required by statute or more frequently as needed. 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 that have been designated depositories. In addition, the Treasurer also will maintain a list of approved security broker/dealers, selected by credit worthiness, authorized to provide investment services in the State of Illinois. The Treasurer shall make no public deposit except in a qualified public depository as established by state statute.

Commercial Banks – Commercial banks shall have a Tier I Risk-Based Capital Ratio (Tier I Capital divided by Total Risk-Weighted Assets) of no less than 5%. Additionally, commercial banks shall have a Texas Ratio (Non-Performing Assets plus Loans 90 Days Past Due divided by Tier I Capital plus Loan Loss Reserves) of less than 50%.

Total investments and deposits shall not exceed 75-percent of an individual commercial bank’s capital stock and surplus.

Credit Unions – Credit unions shall have a Net Worth Ratio (Total Net Worth divided by Total Assets) of no less than 7%. Additionally, credit unions shall have a Loss Coverage Ratio (Non-Performing Assets plus Loans 180 Days Past Due divided by Total Net Worth plus Allowance for Loan Loss) of less than 50%.

Total investments and deposits shall not exceed 50-percent of an individual credit union’s unimpaired capital and surplus, which shall include shares, reserves and undivided earnings.

A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the County invests.

All financial institutions must pledge additional collateral to exceed the statutory limit, such as collateral backed by the full faith and credit of the United States of America and held by a third-party custodial institution.

Collateral Pledge Schedule (Banks)

Based upon a commercial bank’s Tier I Risk-Based Capital Ratio as described above, the commercial bank shall pledge collateral on its accounts using the following Collateral Ratio Schedule:

Tier I Risk-Based Capital Ratio Required Collateral Pledge
10.0 % and above 102 %
9.0 – 9.9 % 104 %
8.0 – 8.9 % 104 %
7.0 – 7.9 % 106 %
6.0 – 6.9 % 106 %
5.0 – 5.9 % 108 %
4.0 – 4.9 % 108 %
3.0 – 3.9 % 110 %
0.0 – 2.9 % 110 %

Collateral Pledge Schedule (Credit Unions)

Based upon a credit union’s Net Worth Ratio as described above, the credit union shall pledge collateral on its accounts using the following Collateral Ratio Schedule:

Net Worth Ratio Required Collateral Pledge
10.0 % and above 102 %
9.0 – 9.9 % 104 %
8.0 – 8.9 % 104 %
7.0 – 7.9 % 106 %
6.0 – 6.9 % 106 %
5.0 – 5.9 % 108 %
4.0 – 4.9 % 108 %
3.0 – 3.9 % 110 %
0.0 – 2.9 % 110 %

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 external auditor will perform an independent review of investment records annually. 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 the Will County Treasurer must approve any modifications.

Adopted by Will County Treasurer Steve Weber, CPA, on August 15, 2011.  Appendix A amended on July 28, 2011.

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