Investment Policy

It is the policy of Schaumburg Township District 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 and conforming to all state and local statutes governing the investment of public funds.

Scope

This investment policy applies to the investment activities of all funds of the Library. The Illinois Compiled Statutes will take precedence except where this policy is more restrictive, in which case this policy will take precedence.

Prudence

The standard of prudence to be used by the investment officials shall be the “prudent person” standard, and shall be applied in the context of managing an overall portfolio.

Investments shall be made with the judgement 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.

Investment officials of the Library, acting in accordance with this investment policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion, and appropriate action is taken to control adverse developments.

Investment Objectives

The primary investment objectives, in order of priority, shall be:

  • Legality: The investment activities of the Library will conform with federal, state and local legal requirements.

  • Safety: The preservation of capital and protection of investment principal shall be the primary concern of the investment officials in selecting depositories or investments.

  • Liquidity: The investment portfolio shall remain sufficiently liquid to meet all operating requirements, which might be reasonably anticipated.

  • Return on Investment: The investment officials shall seek to obtain a market average or better rate of return throughout budgetary and economic cycles, taking into account risk constraints, cash flow and legal restrictions on investments.

  • Sustainability: Material, relevant and decision-useful sustainability factors have been or are regularly considered by the Library, within the bounds of financial and fiduciary prudence, in evaluating investment decisions.

Safety

Safety refers to the preservation of capital and protection of investment principal. The protection of investment principal is the foremost objective of the investment program. Library investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio by mitigating credit risk and interest rate risk.

Credit Risk

Credit risk is the risk of loss due to the failure of the security issuer or backer. The objective will be to minimize credit risk by:

  • Limiting investments to the safest type of securities,

  • Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Library will do business, and

  • Diversifying the investment portfolio so that potential losses on individual securities will be minimized. Diversification reduces the risk that potential losses on individual securities might exceed the income generated from other investments.

Interest Rate Risk

Interest rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. The objective will be to minimize interest rate risk by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby minimizing the need to sell securities on the open market prior to maturity, and investing operating funds primarily in shorter-term securities, or cash funds.

Liquidity

Liquidity is the availability of sufficient funds to meet operating requirements.

The objective will be for the investment portfolio to remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. The Library will maintain sufficient liquidity by:

  • Structuring the portfolio so that securities mature concurrent with the cash needs to meet anticipated demands (static liquidity), and

  • Since all possible cash demands cannot be anticipated, the Library portfolio will consist largely of securities with active secondary or resale markets (dynamic liquidity), and

  • Utilizing qualifying money market mutual funds or local government investment pools which offer same- day liquidity for short-term investment.

Return on Investment/Yield

Yield is the return on investments. Return on investment is of secondary importance compared to the legality, safety and liquidity objectives described above.

The objective will be to attain a market rate of return over budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs of the Library. The Library will accomplish this objective by:

  • limiting the core of investments to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed;

  • holding securities to maturity with the following unusual exceptions;

    • a declining credit security could be sold early to minimize loss of principal;

    • a security swap would improve the quality yield, or target duration in the portfolio; or

    • unplanned liquidity needs of the portfolio require that the security be sold.

Delegation of Authority

Management and administrative responsibility for the investment program is hereby delegated to the Library’s Director of Finance, who shall be responsible for all transactions undertaken. The Treasurer of the Library Board of Trustees shall be responsible for overseeing the investment activities of the Director of Finance.

The Director of Finance is responsible for establishing written procedures for the operation of the investment program, including reference to safekeeping, wire transfers, banking service contracts and collateral/depository agreements.

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. Investment officials shall disclose to the Executive Director any material financial interests in financial institutions that conduct business with the Library.

Authorized Investment Advisors, Managers, Brokers/Dealers and Financial Institutions

Investment officials shall only utilize the service of investment advisors, managers, broker/dealers and financial institutions approved by the Library Board of Trustees. Exhibit A, attached hereto, is a current listing of all approved investment advisors, managers, broker/dealers and financial institutions. All designees are required to acknowledge receipt of this policy and exercise their best effort to facilitate compliance with these terms and conditions.

Investment managers are granted authority to select broker/dealers of their choosing, provided the manager has the Library’s best interests in mind when making such selections.

It shall be the policy of the Library to select financial institutions on the following basis:

  • Security: The Library will not maintain funds in any financial institution that is not covered by the Federal Deposit Insurance Corporation (FDIC). Furthermore, the Library will not keep funds in any financial institution not willing or capable of posting collateral or insurance for funds in excess of the FDIC limits.

  • Size: The Library will not select as a depository any financial institution in which the Library’s funds on deposit exceed 50% of the institution’s stated capital stock and surplus.

  • Location: The Library will maintain operating accounts in financial institutions located within, or in close proximity to, Schaumburg Township.

  • Statement of Condition: The Library will maintain for inspection the last two sworn statements of resources and liabilities which the institution is required to file with the commissioner of banks or the comptroller of the currency.

  • Service and Fees: Fees for banking services shall be mutually agreed to by the depository bank and the Library. Whenever possible, the Library will cover fees for services by means of compensated balances.

Authorized and Suitable Investments

The Library may invest in any of the following types of securities allowed by the Public Funds Investment Act (30 ILCS 235/):

  • Notes, bonds, certificates of indebtedness, treasury bills, or other securities, which are guaranteed by the full faith and credit of the United States of America as to principal and interest.

  • Notes, bonds, debentures, or similar obligations, of the United States of America, its agencies, and its instrumentalities.

  • Interest bearing bonds of any state, county, township, city, village, municipal corporation, or school district, provided that said bonds are rated at the time of purchase within the four highest general classifications established by a rating service of nationally recognized expertise in rating bonds of states and their political subdivisions.

  • Interest bearing savings accounts, interest bearing certificates of deposit, or interest bearing time deposits or any other investment constituting direct obligations of any bank as defined by the Illinois Banking Act.

  • Money market mutual funds registered under the Investment Company Act of 1940, provided that the portfolio of any such money market mutual fund is limited to obligations described in subsections A and B of this section.

  • Illinois Funds, the investment pool administered by the Illinois State Treasurer.

  • Illinois Metropolitan Investment Fund.

  • Fully FDIC insured certificates of deposit issued by banks and savings associations through reciprocal transactions of the certificates of deposit registry service (“CEDARS”), provided that (a) the funds are placed through a bank or savings association designated an authorized depository by the Library Board; and (b) all other requirements of this policy have been satisfied.

Investments shall be made that reflect the cash flow needs of the fund for which investments are being made.

The Library has chosen to further restrict its investment policy by prohibiting investments in commercial paper, repurchase agreements, reverse repurchase agreements or securities lending.

Collateralization

Funds on deposit in excess of FDIC insurance limits must be secured by some form of collateral, witnessed by a written agreement and held in the name of the Library at an independent/third party (“custodial”) institution.

The Library will accept any of the following assets as collateral:

  • United States of America securities

  • Obligations of agencies or instrumentalities of the United States of America

  • Obligations of the State of Illinois

  • General obligation municipal bonds rated “A” or better by a nationally recognized rating service

  • Insurance policies issued by insurance companies rated “A” or better by a nationally recognized rating service

  • A Federal Home Loan Bank irrevocable Letter of Credit

The amount of collateral provided will not be less than one hundred percent (110%) of the fair value of the total amount of public funds in excess of FDIC insurance that is being secured. The ratio of the fair value of the collateral to the amount of funds being secured will be reviewed at least quarterly.

Safekeeping and Custody

All investment securities purchased by the Library will be held by an independent third-party custodian designated by the Director of Finance, and evidenced by safekeeping receipts and a written custodial agreement.

Diversification

The Library shall diversify its investments to the best of its ability based on the type of funds invested and the cash flow needs of those funds. In order to reduce the risk of default, the investment portfolio of the Library shall not exceed the following limits:

Security Maximum % of portfolio
U.S. Treasury Obligations (Full Faith and Credit) 100%
U.S. Agency Obligations 90%
State and Local Government Bonds 50%
Bank Certificates of Deposit 50%
Money Market Mutual Funds 75%
Illinois Funds Money Market 50%
Illinois Metropolitan Investment Fund 50%

Maximum Maturities

To the extent possible, the Library shall attempt to match its investment maturities with anticipated cash flow requirements. For investment purchases made after the adoption date of this investment policy, maturities are generally not to exceed two years from the settlement date except for funds invested for the Special Reserve Fund. For callable securities, the final maturity date, rather than the call date, is to be used to meet the two-year restriction.

With regard to the investment of reserve funds, it might be beneficial for a security’s maturity to exceed two years. In order for a security’s maturity to exceed two years, both the Director of Finance and the Treasurer of the Library Board of Trustees must agree in writing to the longer maturity. In no event should an investment maturity exceed five years. No more than 35% of the value of the investment portfolio can be in securities with a final maturity longer than two years.

Internal Control

The Director of Finance is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Library are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits require estimates and judgments by management.

  • Performance Standards: The Library’s investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a competitive rate of return during a market/economic environment of stable interest rates. Portfolio performance should be compared to a benchmark of similar maturity, liquidity and credit quality as the portfolio.

  • Reporting: The Director of Finance shall prepare and distribute an investment report each month to the Library Board of Trustees. The report shall contain a listing of all securities held by the Library, including the settlement date, maturity date, yield to maturity, par value, original cost and current market value.

  • Investment Policy Adoption: The investment policy shall be adopted by a resolution of the Library Board of Trustees. The policy shall be reviewed by the Director of Finance on an annual basis, with any recommendations for change being brought to the Library Board of Trustees.

This investment policy supersedes any previous investment policies adopted by the Library Board of Trustees.

Exhibit A: Listing of Authorized Depositories, Investment Advisors, Managers and Brokers/Dealers

Authorized Depositories

Schaumburg Bank and Trust

Wintrust Wealth Management

List of Authorized Investment Advisors

Metlife Investment Management

List of Authorized Investment Managers

None at this time

Approved by the Schaumburg Township District Library Board of Trustees on April 20, 2026.