It is the policy of the Schaumburg Township District Library (the "Library") to invest in 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.
This investment policy applies to the investment activities of all funds of the Library. The Illinois Compiled Statues will take precedence except where this policy is more restrictive, in which case this policy will take precedence.
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 official of the Library acting in accordance with this investment policy and exercising due diligence shall be relieved of personal responsibility for and 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.
4. Investment objectives
The primary investment objectives, in order of priority, shall be:
a) Legality: The investment activities of the Library will conform with federal, state, and local legal requirements.
b) Safety: The preservation of capital and protection of investment principal shall be the primary concern of the investment officials in selecting depositories or investments.
c) Liquidity: The investment portfolio shall remain sufficiently liquid to meet all operating requirements, which might be reasonably anticipated.
d) 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.
5. 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 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.
6. 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.
7. Authorized investment advisors, managers, brokers/dealers, and financial institutions
Investment officials shall only utilize the service of investment advisors, managers, brokers/dealers, and financial institutions approved by the Library Board. Exhibit A, attached hereto, is a current listing of all approved investment advisors, managers, brokers/dealers, and financial institutions.
Investment managers are granted authority to select brokers/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:
a) Security: The Library will not maintain funds in any financial institution that is not covered by the Federal Deposit Insurance Corporation. 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.
b) 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.
c) Location: The Library will maintain operating accounts in financial institutions located within, or in close proximity to, Schaumburg Township.
d) 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.
e) 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.
8. 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/):
a) 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.
b) Notes, bonds, debentures, or similar obligations, of the United States of America, its agencies, and its instrumentalities.
c) Interest bearing bonds of any state, county, township, city, village, municipal corporation, or school district, provided that said bond 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.
d) 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.
e) 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.
f) Illinois Funds, the investment pool administered by the Illinois State Treasurer.
g) Illinois Metropolitan Investment Fund.
h) Fully FDIC insurance 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.
Funds on deposit in checking accounts, money market accounts, and certificates of 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 institution.
The Library will accept any of the following assets as collateral: (a) United States of America securities, (b) Obligations of agencies or instrumentalities of the United States of America, (c) Obligations of the State of Illinois, (d) General obligation municipal bonds rated "A" or better by a nationally recognized rating service, and (e) Insurance policies issued by insurance companies rate "A" or better by a nationally recognized rating service.
The amount of collateral provided will not be less than one hundred and ten percent (110%) of the fair value of the total amount of the public funds in excess of FDIC insurance that is being secured. The rations of the fair value of the collateral to the amount of funds being secured will be reviewed at least quarterly.
10. 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.
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%|
12. 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 exceed two years from the settlement date. 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 must agree in writing to the longer maturity. In no event should an investment maturity exceed five years. No more than 35% of the the value of the investment portfolio can be in securities with a final maturity longer than two years.
13. 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 should be designed to provide reasonable, not absolute, assurance that these objectives are met.
14. 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. The Library will use the BoA/Merrill Lynch 3-Month Treasury Bill Index as its benchmark.
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. The report shall also provide the average weighted maturity and average weighted yield of the portfolio.
16. Investment policy adoption
The investment policy shall be adopted by a resolution of the Library's 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 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 broker/dealers
List of authorized depositories:
BMO Harris Bank
Fidelity Investors Money Market Account
Merrill Lynch Broadcort
Illinois Funds Money Market Account
List of authorized investment advisors:
List of authorized investment managers:
List of authorized broker/dealers:
Mischler Financial Group, Inc.
Approved by the Schaumburg Township District Library Board of Trustees on Aug. 25, 2014.
Authorized investment advisors, managers, and broker/dealers updated and approved by the Board of Trustees on May 23, 2016.