Investment Policies
There are three primary purposes for adopting an investment policy. The first is to establish the investment philosophy, addressing such issues as the level of risk the municipality is willing to tolerate in exchange for a return on its investments, and whether or not funds should be invested with local, statewide or national financial institutions. The second is to provide guidelines and directives to the municipal official statutorily responsible for investment activities, which is usually the treasurer. The third purpose is to ensure compliance with statutory requirements regarding the annual review and adoption of an investment policy. From an operational perspective, a well-constructed investment policy will ensure that funds are invested conservatively to provide additional income, while at the same time ensuring that liquidity needs are met, meaning that cash is available to meet all financial obligations as necessary.
Policies should address:
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Example policies: (Word format)
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Important Note Regarding Example Investment Policies
Several of these example investment policies have not yet been revised to reflect recent statutory deposit and investment changes and collateral requirements. Additionally, state and federal regulations continue to be revised and updated in response to recent economic conditions. It is recommended that the most recent RSAs governing municipal deposits and investments, as well as FDIC regulations, be reviewed prior to the adoption or revision of any investment policy.
Please note: All example policies are for illustrative purposes only. None of these example policies have been reviewed by LGC legal staff for enforceability or compliance with applicable laws. LGC makes no express or implied endorsement or recommendation of any example policy, nor does it make any express or implied guarantee of the legal enforceability, legal compliance, or quality of any particular policy. Likewise, we do not represent that any particular policy or portion of a policy is appropriate for any particular municipality. Legal counsel should review any proposed financial policy before a municipality adopts it.