the municipal secretary desktop reference manual - Southwestern ...

SECTION XI
MUNICIPAL INVESTMENT POLICIES
AND PROCEDURES
Foreword
A jurisdiction=s governing body should take seriously its obligation to maximize the earning
power of Aidle money@ by designating an investment officer, preferably the secretary. Idle moneys
are those funds which are not needed immediately to finance a local government=s day-to-day
operations. Such moneys exist in any municipality because of the uneven flows of fiscal resources
into and out of a municipal treasury.
To be a prudent investor of this available capital, the appropriate investment officer need not
be a seasoned stock market participant, but does need to be aware of the types of investments that are
permissible by law, or at the very least, the various programs that make those permissible
investments for the municipal government unit. Whether individual investments are purchased, or
an investment program is utilized, the result should be a return on an investment as well as a return
of the investment - SAFETY FIRST!
To maximize its investment opportunities, a local governing body should adopt and adhere to
an investment policy which establishes a means to determine:
! the amount of money which may be available for investment purposes,
! when this money may be available, and
! the length of time the money may be available.
To arrive at these conclusions and maintain the maximum investment capabilities, the
administration must:
! develop a cash flow (budget) plan,
! adopt regulations to control the cash flow, and
! develop a portfolio plan which relates to those cash flow projections.
In budgets that total less than $500,000, it may be determined that the largest amount of Aidle
monies@ does not qualify, at any given time, for high-yield investments. Investment rates,
comparable to those of locally available certificates of deposit, are usually offered by investment
pools and are available on an everyday basis, without the requirements of a minimum initial
investment or balance. Information on these types of investment programs is included in this
section.
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