This document will govern the investment activities of the Worthington Libraries (the Library). It is designed to cover all monies under the control of the Library. Except in the case of certain restricted and special funds, the Library will consolidate cash balances from all funds to maximize investment earnings.
The investing authority and management responsibility shall reside with the Fiscal Officer. The Fiscal Officer shall be responsible for the implementation of the investment program and the establishment of investment procedures consistent with this policy. Such procedures shall include delegation of authority to persons responsible for investment transactions. The Fiscal Officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate employees and agents acting on behalf of the Library.
It is the policy of the Library to invest public funds in a manner which will provide the highest return with the maximum security while meeting cash flow demands. All investments will conform to all applicable laws and regulations governing the investment of public funds, including Section 135 of the Ohio Revised Code.
The primary objectives, in priority order, of the library's financial investments are safety, liquidity, and yield.
Safety of Principal - Safety of principal is the foremost objective of the investment program. All investments shall be undertaken in a manner that seeks first to preserve capital and second to fulfill other investment objectives, within the context of the following criteria:
Credit Risk will be minimized by (1) diversifying assets by issuer; (2) ensuring that the required minimum credit quality ratings exist prior to the purchase of commercial paper and bankers acceptances; maintaining adequate collateralization where required; and utilizing the FDIC insured amounts for CDs, pursuant to the method as determined by the Fiscal Officer.
Market Risk Fluctuations will be managed by (1) maintaining adequate liquidity so that current obligations can be met without a sale of securities; (2) diversification of maturities; and, (3) diversification of assets.
Liquidity will be maintained in the library's investment portfolio to enable the Library to meet all operating requirements which might be reasonably anticipated. The portfolio may be structured so that securities mature concurrent with cash needs. A portion of the portfolio may also be placed in money market mutual funds or local government investment pools, which offer same-day liquidity for short-term funds.
Return on Investments (Yield) will be managed to consistently maintain a market rate of return equivalent to the average yield of the three month U.S. Treasury Bill. This target should be maintained throughout budgetary and economic cycles. Whenever possible, and consistent with risk limitations and prudent investment management, the Library will seek to augment returns above the target rate of return through the implementation of active portfolio management strategies. The library's investments should generate the highest available return without sacrificing the first two objectives outlined above.
Delegation of Authority
Management responsibility for the Library's investment program is hereby delegated to the Fiscal Officer. The Fiscal Officer shall be responsible for the implementation of the investment program and the establishment of investment procedures consistent with this Policy. No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Fiscal Officer.
Authorized and Suitable Investments
The following financial instruments are deemed to be suitable for inclusion in the library's investment program. The Fiscal Officer is authorized to invest library funds in only those investments specifically delineated in Ohio Revised Code Section 135.14 provided the Fiscal Officer has the required training by the Treasurer of State's Office for the type of investment.
U.S. Treasury Bills, Notes, Bonds, and bond, notes, debentures issued by any federal goverment agency as defined under Section 135.14(B)(1) and (2). Bills are short term (one year or less) obligations issued and sold at a discount. Notes have fixed coupon rates with original maturities of between one and five years. Any eligible investment may be purchased at a premium or a discount, and can include instruments that may be called by the issuer prior to the final maturity date.
Ohio Subdivision's Funds (STAR Ohio and STAR Plus), managed by the State Treasurer of Ohio.
Demand deposit accounts (such as checking accounts) established with local financial institutions.
Certificates of Deposit (CDs) issued by local financial institutions mentioned in Section 135.32 of the Ohio Revised Code and in federally insured Certificate of Deposit as described in Section 135.145 of the Ohio Revised Code.
Commercial paper notes issued by companies incorporated under the laws of the United States; specific limitations apply as defined under Section 135.14(B)(7).
Bankers acceptances issued by any domestic bank rated in the highest category by a nationally recognized rating agency; specific limitations apply as defined under Section 135.14 (B)(7)
No-load money market mutual funds rated in the highest category by at least one nationally recognized rating agency, investing exclusively in the same types of eligible securities as defined in Division B(1) or B(2) under Section 135.14 ORC and repurchase agreements secured by such obligations. Eligible money market funds shall comply with Section 135.01 ORC, regarding limitations and restrictions.
Repurchase agreements with any eligible institution mentioned in section 135.03 ORC, or any eligible securities dealer pursuant to division (J) of this section, except that such eligible securities dealers shall be restricted to primary government securities dealers. Repurchase agreements will settle on a delivery vs. payment basis with collateral held in safekeeping by a third party custodian as agreed to by the Fiscal Officer. The market value of securities subject to a repurchase agreement must exceed the principal value of the repurchase agreement by at least two percent as defined under the Ohio Revised Code. The Fiscal Officer reserves the right to require an additional percentage of collateral securing such repurchase agreements. Prior to the execution of any repurchase agreement with an eligible dealer, a master repurchase agreement will be signed by the Fiscal Officer and the eligible dealer.
Federally insured certificates of deposit issued through the Certificate of Deposit Account Registry Service (CDARS) by financial institutions located in the United States, provided that (i) the funds are initially invested by the jurisdiction through a financial institution that is participating in CDARS and that is located and doing business in this State; (ii) the financial institution in the State receives reciprocal deposits from customers of other financial institutions in an amount equal to the funds initially invested by the jurisdiction; and (iii) each such certificate of deposit is in an amount that is eligible for full FDIC insurance coverage.
Bonds and other obligations of the State of Ohio, or the political subdivisions of the State of Ohio provided that the provisions of Section 135.14(B)(4) are met.
Prohibited Investments/Other Restrictions:
The use of derivative securities, as defined in Section 135.14, is expressly prohibited.
A repurchase agreement under the terms of which the investing authority agrees to sell securities to a purchaser and agrees with that purchaser to unconditionally repurchase those securities.
The investment into a fund established by another subdivision if the fund was established for the purpose of investing public monies of other subdivisions.
The use of leverage, in which the investing authority uses its current investment assets as collateral for the purpose of purchasing other assets.
The issuance of taxable notes for the purpose of arbitrage.
Contracting to see securities that have not yet been acquired, for the purpose of purchasing such securities on the speculation that bond prices will decline.
Maturity of Investments
To the extent possible and prudent, the Library will attempt to match its investment maturities with anticipated cash flow requirements. No investment shall have a maturity date of more than five (5) years from its date of purchase, unless the investment is matched to a specified obligation or debt from the library. Any investment made must be entered into with a reasonable expectation to be held to maturity unless defined opportunities exist to better achieve investment objective denoted in the Investment Policy.
All deposits, other than federally insured certificates of deposit as described in Secton 135.144 of the Ohio Revised Code, shall be collateralized pursuant to the Ohio Revised Code (Section 135). The library's Board of Trustees shall designate its public depositories in accordance with Section 135 of the Ohio Revised Code. Any eligible financial institution that has offices within the territorial limits of the Library may become a public depository of the funds of the Library.
The Fiscal Officer shall maintain monthly investment reports which clearly provide the following information regarding the investment portfolio: types of investment, depository institutions, principal balances, rates of return and maturities. The report shall be provided to the library's Board of Trustees at a minimum of once a quarter following the end of the quarter or additionally as requested.
Accounting of Investments
The investing authority shall maintain an inventory of all obligations and securities. A description of each security includes type (issue/issuer), cost (original purchase cost or current book value), par value (maturity value), maturity date (receipt date of par value), settlement date (delivery versus payment date of purchased or sold securities), and any coupon (interest) rate. The investing authority will also include a record of all security purchases and sales, and will maintain a monthly portfolio report, detailing the current inventory of all securities, all monthly transactions, any income received (maturities, interest payments, sale proceeds, called bond proceeds), and any expenses paid. The report shall also include the yield of each security, and the average-weighted yield and average-weighted maturity of the aggregate portfolio. Investment income shall be distributed or allocated to various library accounts in such amounts and at such times as determined by the Fiscal Officer.
Investment Advisors, Qualified Dealers, and Financial Institutions
The Library is authorized to retain the services of an investment advisor, pursuant to Section 135.341 (D) of the ORC. The investment advisor shall make recommendations regarding the investment of library funds and/or manage the portfolio of the Library, including the execution of investment transactions.
The investment advisor is authorized to execute the purchase and/or sale of securities on behalf of the Library with eligible Ohio financial institutions, primary securities dealers regularly reporting to the New York Federal Reserve Bank, and regional securities firms or broker dealers licensed with the Ohio Department of Commerce, Division of Securities.
All persons or entities transacting investment business with the Library are required to sign the approved investment policy as an acknowledgment and understanding of the contents of said policy.
Investment Policy Adoption
The library's Investment Policy shall be adopted by resolution of the Library's Board of Trustees. The Policy shall be reviewed no less than annually by the Finance/Operations Committee of the Board of Trustees and any modifications made thereto must be approved by the library's Board of Trustees.
The approved Investment Policy must be filed with the Auditor of the State of Ohio. The Fiscal Officer shall maintain a copy of the filed Policy. That copy must be signed by the following:
All entities conducting investment business with the investing authority;
All brokers, dealers and financial institutions initiating transactions with the investment authority by giving advice or making investment policy thereby acknowledging their agreement to abide by the policy's content;
All brokers, dealers and financial institutions executing transactions initiated by the investment authority, having read the policy's contents thereby acknowledging their comprehension and receipt.
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