Investment of Public Funds
Library Board approved September 20, 2005
- PURPOSE AND SCOPE
The purpose of this policy statement is to outline the responsibilities, general objectives, and specific guidelines for management of public funds by the Oak Park Public Library. Its scope is all public funds of the Library.
All investment policies and procedures of the Oak Park Public Library will be in accordance with Illinois Law. The authority of the Library Board of Library Trustees to control and invest public funds is defined in the Illinois Public Funds Investment Act and the investments permitted are described therein. Administration and execution of these policies are the responsibility of the Finance Officer who is hereby designated “chief investment officer” of the Library acting under the authority of the Library Board of Library Trustees.
- DELEGATION OF AUTHORITY
Management and administrative responsibility for the investment program is hereby delegated to the Chief Investment Officer. The Chief Investment Officer, and by designation, the Library Director, is responsible for establishing internal controls and written procedures for the operation of the investment program.
- “PRUDENT PERSON” STANDARD
All Library investment activities shall use a “prudent person” standard of care. This standard shall be applied in the context of managing an overall portfolio and specifies that 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 probable safety of their capital, as well as the probable income to be derived. Investment officers, acting in accordance with this Policy and the written procedures of the Library, and exercising due diligence, shall be relieved of personal responsibility for a security’s credit risk or market price/value changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
In selecting financial institutions and investment instruments to be used, the following general objectives should be considered in the priority listed:
Legality (conforming with all legal requirements)
Safety (preserving capital and including diversification appropriate to the nature and amount of the funds)
Liquidity (maintaining sufficient liquidity to meet current obligations and those reasonably to be anticipated)
Yield (attaining a market rate of return on investments)
The following guidelines should be used to administer the general investment policy:
- Legality and Safety
Investments will be made in:
Securities issued by the U.S. government or by a U.S. government agency Securities guaranteed by the U.S. government
Deposits in Financial Institutions which have full insurance from one of the FDIC administered funds (BIF or SAIF)
Deposits in Financial Institutions which exceed the statutory FDIC insurance limits provided however that such funds are either secured by US Government obligations or US Government agency collateral
Deposits in FDIC insured Financial Institutions that are not so collateralized; provided that such deposits do not exceed 15% of the unimpaired capital of the financial institution
Funds that invest solely in the classes of investment listed above (e.g. The State of Illinois Public Treasurer’s Investment Pool)
Any other investments allowed under State law “30 ILCS 235/1” that satisfy the investment objectives of the library, provided that the Board of Trustees of the Library shall authorize such other investments in advance of their purchase.
In general, investments should be managed to meet liquidity needs for the current month plus one month (based on forecasted needs) and any reasonably anticipated special needs.
- Yield – Return on investment
Within the constraints on Illinois law, considerations of safety, and this investment policy, every effort should be made to maximize return on investments made. All available funds will be placed in investments or kept in interest bearing deposit accounts.
- Simplicity of management
The time that is required by library administrative staff to manage investments shall be kept to a minimum.
Investments, fund balances and the status of such accounts will be reported at each regularly scheduled meeting of the Library Board and at least quarterly include information regarding securities in the portfolio by class or type, book value, income earned, and market value as of the report date. At least annually, the Chief Investment Officer shall review this Policy for any needed modifications and report to the Board on the investment portfolio, its effectiveness in meeting the Library’s need for safety, liquidity, rate of return, diversification and general performance. These reports will be available to the general public upon request.
- INTERNAL CONTROLS
In addition to these guidelines, the Chief Investment Officer shall establish a system of internal controls and written operational procedures designed to prevent loss, theft or misuse of funds.
- AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
Any investment advisors, money managers and financial institutions shall be considered and authorized only by the action of the Board of Library Trustees upon the recommendation of the Chief Investment Officer. The Chief Investment Officer will maintain a list of financial dealers and institutions authorized to provide these investment services. Should an investment advisor (manager) be authorized by the Board of Library Trustees, the investment advisor (manager) shall acknowledge in writing they are fiduciary, a registered investment adviser, are a prudent person, will adhere to the Library’s investment policy, and will follow State of Illinois statutory investment limitations for Libraries.
- CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business activities that might conflict with the proper execution and management of this investment program, or that could impair their ability to make impartial decisions, or that could give the appearance of impropriety. Officers and employees shall disclose any material interests in financial institutions with which the Library conducts business. They shall further disclose any personal or business financial/investment positions that could be related to the performance of the Library’s investment portfolio.