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HomeMy WebLinkAboutResolutions - 2022.04.14 - 35439°r • BOARD OF COMMISSIONERS April 14, 2022 MISCELLANEOUS RESOLUTION #22-112 Sponsored By: Gwen Markham Treasurer's Office - Policy Investment Policy of Oakland County Chairperson and Members of the Board: WHEREAS pursuant to Public Act 20 of 1943, as amended, Oakland County shall have an Investment Policy; and WHEREAS the Board of Commissioners by resolution may authorize the Treasurer, as the County investment officer, to invest public funds; and WHEREAS the Treasurer's Office, in collaboration with the Board of Commissioners, other county treasurers, outside advisors, and professional associations, has reviewed the policy in an effort to assess the ongoing needs of the County regarding investments. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners adopts the revised Investment Policy for Oakland County, as submitted by the County Treasurer. BE IT FURTHER RESOLVED that this policy shall remain in effect until amended or replaced by action of the Board of Commissioners. Chairperson, the following Commissioners are sponsoring the foregoing Resolution: Gwen Markham. "id Date: April 14, 2022 David Woodward, Commissioner Date: April 22, 2022 Hilarie Chambers, Deputy County Executive II X4&V� Date: April 25, 2022 Lisa Brown, County Clerk / Register of Deeds COMMITTEE TRACKING 2022-04-06 Finance Committee - recommend to Board 2022-04-14 Full Board VOTE TRACKING Motioned by Commissioner Gwen Markham seconded by Commissioner Penny Luebs to adopt the attached Policy: Investment Policy of Oakland County. Yes: David Woodward, Michael Gingell, Michael Spisz, Karen Joliat, Kristen Nelson, Eileen Kowall, Christine Long, Philip Weipert, Gwen Markham, Angela Powell, Thomas Kuhn, Charles Moss, Marcia Gershenson, William Miller III, Yolanda Smith Charles, Charles Cavell, Penny Luebs, Janet Jackson, Robert Hoffman, Adam Kochenderfer (20) No: None (0) Abstain: None (0) Absent: (0) Passed ATTACHMENTS 1. Revised Investment Policy - with Proposed Changes Highlighted 2. Revised Investment Policy - Proposed Final Draft 3. MI Public Act 20 of 1943: Investment of Surplus Funds of Political Subdivisions 4. 1998.03.18 - Resolution 498040 Approval of County Investment Policy 5. 2001.07.19 - Resolution 901177 Approval of Revised County Investment Policy STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on April 14, 2022, with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the Circuit Court at Pontiac, Michigan on Thursday, April 14, 2022. Lisa Brown, Oakland County Clerk/Register of Deeds Oakland County, Michigan Investment Policy I January 2022 1.0 PURPOSE In conformance with the Michiaan Public Act 20 of 1943. as amended, ("PA 20") (MCL 129.91 to 129.97a) the Investment of Surplus Funds of Political Subdivisions, it is the policy of Oakland County to invest public funds in a manner which will ensure the preservation of principal while providing the highest investment return with maxim umsecurity, meeting the daily cash flow requirements of the County and conforming to all state statutes governing the investment of public funds. 2.0 SCOPE This Investment Policy applies to all [financial] assets of the County, except for retirement and pension funds, under the control of the County Treasurer. 3.0 OBJECTIVES The primary objectives, in priority order, of the County Treasurer's investment activities shall be: 3.1 Safety: Safety of principal is the foremost objective in the investment of County funds. Investments shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 3.2 Diversification: The investments will be diversified by security type, as allowed by regulation, financial institution, and maturity of securities in order to reduce portfolio and market risks. Except for U.S. Treasury securities, authorized investment pools, and certificates of deposits insured by the Federal Deposit Insurance Corporation, no more than [25% was 15%] of the total investment portfolio will be invested in a single security issuer. With the exception of U.S. Treasury securities and authorized investment pools, nomore than [60% same] of the total investment portfolio will be invested in a single security type. 3.3 Liquidity: The investment portfolio shall remain sufficiently liquid to enable the County Treasurer to meet all operating requirements that might be reasonably anticipated. 3.4 Return on Investments: The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economiccycles, commensurate with the investment risk constraints and the cash flow characteristics of the portfolio. Return on investment shall be of secondary importance compared to the safety and liquidity objectives above. 3.5 Local Investment, Lendina and Environmental Social and Governance E( SG): Final consideration will be given to institutions prioritizing investment Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I January 2022 and lending in Oakland County as well as evaluating their ESG standards and Community Reinvestment Act rating. 4.0 AUTHORIZED INVESTMENTS Subject to the prior authorization of the Board of Commissioners, the County Treasurer is authorized to invest in one or more of the following types of securities as defined in Michiaan Public Act 20 of 1943. as amended. ("PA 20") (MCL 129.91 to 129.97a) 4.1 Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. 4.2 Certificates of deposit, savings accounts, or depository receipts of a qualified financial institution as defined in PA 20; certificates of deposit obtained through a qualified financial institution as provided in PA 20; or deposit accounts of a qualified financial institution as provided in PA 20. 4.3 Commercial paper rated at the time of purchase at the highest classification established by not less than 2 standard rating services and that matures not morethan 270 days after the date of purchase. 4.4 Repurchase agreements consisting of instruments in subdivision 4.1. The PSA Master Repurchase Agreement prototype agreement shall be employed with appropriate supplemental provisions regarding security delivery, security substitutions, and governing law. A signed Repurchase agreement must be on file before entering into a repurchase transaction. 4.5 Bankers' acceptances of United States banks. 4.6 Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service. 4.7 Mutual funds registered under the Investment Company Act of 1940 (15 USC 80a-1 to 80a-64) with authority to only purchase investment vehicles that are legal for direct investment bya public corporation as defined in PA 20. [Investment is limited to mutual funds that maintain a net asset value of $1.00 per share.] 4.8 Obligations described in subdivisions 4.1 through 4.7 if purchased through an inter -local agreement under the Urban C000eration Act of 1967, Act 7 of 1967 (Ex. Sess.), as amended (MCL 124.501 to 124.5120. 4.9 Investment pools organized under the Surplus Funds Investment Pool Act. Act 367 of 1982. as amended (MCL 129.111 to 129.118). 4.10 Investment pools organized under the Local Government Investment Pool Act, Act 121 of 1985, as amended, (MCL 129.141 to 129.150). 4.11 Or other eligible investments permitted by and subject to PA 20, as amended. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I January 2022 5.0 INVESTMENT POOLS / MUTUAL FUNDS A thorough investigation of each investment pool or mutual fund shall be required before investing, and on a basis after investing. A questionnaire shall be developed to perform due diligence and secure written responses to a set of questions. The questions shall, at minimum, include the following: 1. Does the investment pool or mutual fund have a written statement of investment policy and objectives?How are changes to the investment policy and objective statement communicated to participants? 2. Does the investment policy describe eligible investment securities? 3. A detailed description of interest calculations covering items such as: a. How is interest distributed? b. What is the frequency of interest payments? c. How aregains and losses treated? 4. How are securities safeguarded? How often are the securities priced to market? What audit steps are employed in this process? 5. Who can invest in the investment pool or mutual fund? How often? Any deposit/withdrawal size limitations? How many deposits or withdrawals can be made in a monthly period? What is the cutoff time for deposits and withdrawals? Does the investment pool or mutual fund allow for multiple accounts and sub -accounts? Do we get a confirmation after each transaction? 6. What is the schedule for receiving account statements and portfolio listings? 7. What is the fee schedule and describe in detail how and when these fees are assessed? 8. Does the investment pool or mutual fund retain any reserves? If so, describe in detail the reserve retention. 9. Will the investment pool or mutual fund accept bond proceeds subject to arbitrage rebate? Will the investment poolaccounting and record keeping system be suitable for arbitrage rebate? Is the investment pool's yield calculation acceptable to the IRS or will it need to be restated? Can a separate account be established for each purpose/project of a bond offering? 4.0 STANDARDS OF CARE 4.1 Prudence: Investments shall be made with judgement and care, under prevailing circumstances, 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 principal and probable income to be derived. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I January 2022 The standard of prudence to be used by the County Treasurer, officers, employees, and investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Acting in accordance with written procedures, this Investment Policy, and exercising due diligence, the County Treasurer, officers, employees and investment officials shall be relieved of personal responsibility for an individual security's credit risk or market price change provided deviations from expectations are reported in a timely fashion and appropriate action is taken. 4.2Ethics and Conflicts of Interest: The County Treasurer, officers, employees, and investment officials involved in the investment process shall refrain from personal business activity that could conflict with proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. The County Treasurer, officers, employees, and investment officials shall disclose [not less than annually] any material financial interest in financial institutions that conduct business with the County, and they shall further disclose any large personal financial or investment positions that could be related to the performance of the County's investment portfolio. The County Treasurer, officers, employees, and investment officials shall refrain from undertaking personal investment transactions with any individuals with whom business is conducted on behalf of the County. 5.0 DELEGATION OF AUTHORITY Authority and management responsibility for the investment program is hereby delegated to the County Treasurer as required by state statute (MCL 48.40). The County Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls and written procedures to regulate the activities of subordinate officials. 6.0 WRITTEN PROCEDURES The County Treasurer shall establish written investment procedures for the operation of the investment program consistent with this Investment Policy. The written procedures should include, at a minimum, references to: 1) safekeeping; 2) delivery vs payment; 3) investment accounting; 4) repurchase agreements; 5) wire transfer agreements; 6) collateral/depository agreements; and, 7) banking service contracts. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the written procedures established by the County Treasurer. 7.0 SAFEKEEPING AND CUSTODY All securities transactions (including collateral for repurchase agreements), except certificates of deposits as described below, shall be conducted on a delivery - Adopted by the Board of Commissioners on [Month xx, 20221 Oakland County, Michigan Investment Policy I January 2022 versus -payment (DVP) basis. Securities will be held by a third -party custodian, as designated by the County Treasurer, and shall be evidenced by a safekeeping receipt. Non -collateral, non-negotiable certificates of deposits, as is allowed under State ofMichigan law, shall be evidenced by a safekeeping receipt from the issuing bank. 7.1 Safekeepino and Custodv 7.1.1 Delivery vs. Pavment: All trades of marketable securities will be executed (cleared and settled) on a delivery vs. payment (DVP) basis to ensure that securities are deposited in the County's safekeeping institution prior to the release of funds. 7.1.2 Safekeepino,: Securities will be held by a centralized independent third -party custodian selected by the County as evidenced by safekeeping receipts in the County's name. 7.1.3 Internal Controls: The County Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the County are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. 8.0 MAXIMUM MATURITIES To the extent possible, the County shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a particular cash flow need,the County will not directly invest in securities that mature more than [5 years was 3 years] from the date of purchase. Funds with longer -term horizons may be invested in securities exceeding the [5- year was 3-year] limitation provided that maturity dates coincide, as near as possible, with theexpected use of the funds. 9.0 INTERNAL CONTROL The investment officer is responsible for establishing a system of internal control that will ensure that the investment assets, of the County, are protected from loss,theft or misuse. The internal control structure shall be designed in such away to provide reasonable assurance that these objectives are being met. The cost of control should not away the benefits received. The internal control system shall be reviewed annually by an external audit group toensure compliance with policies and procedures. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I January 2022 The investment portfolio will be managed in accordance with the standards established within this Investment Policy and should obtain a market rate of return during an economic and budgetary environment of stable interest rates or yield. Accordingly, the benchmark used to measure portfolio performance shall be the 30 day US Treasury bill. Performance measurement shall occur at least every quarter. 11.0 REPORTING The [County Treasurer] or Investment Officer shall provide a quarterly report to the Board of Commissioners. The annual report should provide a listing of investments, their maturity dates, types of investments, cost basis, market value, rating, and other information to provide a clear picture of the status and types of investments of the current investment portfolio. This report shall be prepared in such a way that will allow the County to ascertain whether investment activities during the reporting period have conformed to the Investment Policy. 12.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS Using a request for information or request for proposals, the County Treasurer shall maintain a list of financial institutions authorized to provide investment services. In addition, and using the same process, a list shall also be maintained of approved broker/dealers who based on credit worthiness and authorization to conduct business in the State of Michigan. These may include "primary" dealers or regional dealers that qualify under the Security & Exchange Commission Rule 15c3-1 (uniform net capital rule). Regional dealers must meet two times the uniform capitalrule to be authorized for County business. All financial institutions and broker/dealers with which the County conducts business with shall annually or upon adoption updates certify that they have received the County's Investment Policy, read the Investment Policy, and will comply with said terms of the Investment Policy. All financial institutions or broker/dealers wishing to become qualified bidders for investment transactions must supply, at a minimum, the County Treasurer with their audited financial statements for the past three fiscal years, proof of their NASD certification, proof of their Michigan registration and a signed investment policy certification. An annual review of the financial condition and registrations of qualified bidders will be conducted by the County Treasurer including review of publicly available audited financial statements for each financial institution in which the County invests with. 13.0 AMENDMENT TO AND AFFIRMATION OF INVESTMENT POLICY The County's investment policy shall be adopted by a resolution of the Board of Commissioners. The policy shall be reviewed annually by the County Treasurer. Adopted by the Board of Commissioners on [Month xx, 20221 Oakland County, Michigan Investment Policy I January 2022 Any revision to the policy shall be brought to the Board of Commissioners for adoption. The Investment Policy should be affirmed by the Board of Commissioners not less than every five years. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I April 2022 1.0 PURPOSE In conformance with Michigan Public Act 20 of 1943, as amended, ("PA 20") (MCL 129.91 to 129.97a) the Investment of Surplus Funds of Political Subdivisions, it is the policy of Oakland County to invest public funds in a manner which will ensure the preservation of principal while providing the highest investment return with maximum security, meeting the daily cash flow requirements of the County and conforming to all state statutes governing the investment of public funds. 2.0 SCOPE This Investment Policy applies to all financial assets of the County, except for retirement and pension funds, under the control of the County Treasurer. 3.0 OBJECTIVES The primary objectives, in priority order, of the County Treasurer's investment activities shall be: 3.1 Safety: Safety of principal is the foremost objective in the investment of County funds. Investments shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 3.2 Diversification: The investments will be diversified by security type, as allowed by regulation, financial institution, and maturity of securities in order to reduce portfolio and market risks. Except for U.S. Treasury securities, authorized investment pools, and certificates of deposits insured by the Federal Deposit Insurance Corporation, no more than 25% of the total investment portfolio will be invested in a single security issuer. With the exception of U.S. Treasury securities and authorized investment pools, no more than 60% of the total investment portfolio will be invested in a single security type. 3.3 Liquidity: The investment portfolio shall remain sufficiently liquid to enable the County Treasurer to meet all operating requirements that might be reasonably anticipated. 3.4 Return on Investments: The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow characteristics of the portfolio. Return on investment shall be of secondary importance compared to the safety and liquidity objectives above. 3.5 Local Investment. Lendina and Environmental Social and Governance E( SG): Final consideration will be given to institutions prioritizing investment Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I April 2022 and lending in Oakland County as well as evaluating their ESG standards and Community Reinvestment Act rating. 4.0 AUTHORIZED INVESTMENTS Subject to the prior authorization of the Board of Commissioners, the County Treasurer is authorized to invest in one or more of the following types of securities as defined in Michigan Public Act 20 of 1943, as amended, ("PA 20") (MCL 129.91 to 129.97a) 4.1 Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. 4.2 Certificates of deposit, savings accounts, or depository receipts of a qualified financial institution as defined in PA 20; certificates of deposit obtained through a qualified financial institution as provided in PA 20; or deposit accounts of a qualified financial institution as provided in PA 20. 4.3 Commercial paper rated at the time of purchase at the highest classification established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase. 4.4 Repurchase agreements consisting of instruments in subdivision 4.1. The PSA Master Repurchase Agreement prototype agreement shall be employed with appropriate supplemental provisions regarding security delivery, security substitutions, and governing law. A signed Repurchase agreement must be on file before entering into a repurchase transaction. 4.5 Bankers' acceptances of United States banks. 4.6 Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service. 4.7 Mutual funds registered under the Investment Company Act of 1940 (15 USC 80a-1 to 80a-64) with authority to only purchase investment vehicles that are legal for direct investment bya public corporation as defined in PA 20. [Investment is limited to mutual funds that maintain a net asset value of $1.00 per share.] 4.8 Obligations described in subdivisions 4.1 through 4.7 if purchased through an inter -local agreement under the Urban Cooperation Act of 1967. Act 7 of 1967 (Ex. Sess.), as amended (MCL 124.501 to 124.5120. 4.9 Investment pools organized under the Surplus Funds Investment Pool Act, Act 367 of 1982. as amended (MCL 129.111 to 129.118). 4.10 Investment pools organized under the Local Government Investment Pool Act. Act 121 of 1985. as amended, (MCL 129.141 to 129.150). 4.11 Or other eligible investments permitted by and subject to PA 20, as amended. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I April 2022 5.0 INVESTMENT POOLS / MUTUAL FUNDS A thorough investigation of each investment pool or mutual fund shall be required before investing, and on an annual basis after investing. A questionnaire shall be developed to perform due diligence and secure written responses to a set of questions. The questions shall, at minimum, include the following: 1. Does the investment pool or mutual fund have a written statement of investment policy and objectives? How are changes to the investment policy and objective statement communicated to participants? 2. Does the investment policy describe eligible investment securities? 3. A detailed description of interest calculations covering items such as: a. Howis interest distributed? b. What is the frequency of interest payments? c. How are gains and losses treated? 4. How are securities safeguarded? How often are the securities priced to market? What audit steps are employed in this process? 5. Who can invest in the investment pool or mutual fund? How often? Any deposit/withdrawal size limitations? How many deposits or withdrawals can be made in a monthly period? What is the cutoff time for deposits and withdrawals? Does the investment pool or mutual fund allow for multiple accounts and sub -accounts? Do we get a confirmation after each transaction? 6. What is the schedule for receiving account statements and portfolio listings? 7. What is the fee schedule? Describe in detail how and when these fees are assessed. 8. Does the investment pool or mutual fund retain any reserves? If so, describe in detail the reserve retention. 9. Will the investment pool or mutual fund accept bond proceeds subject to arbitrage rebate? Will the investment poolaccounting and record keeping system be suitable for arbitrage rebate? Is the investment pool's yield calculation acceptable to the IRS or will it need to be restated? Can a separate account be established for each purpose/project of a bond offering? 4.0 STANDARDS OF CARE 4.1 Prudence: Investments shall be made with judgement and care, under prevailing circumstances, 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 principal and probable income to be derived. Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I April 2022 The standard of prudence to be used by the County Treasurer, officers, employees, and investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Acting in accordance with written procedures, this Investment Policy, and exercising due diligence, the County Treasurer, officers, employees and investment officials shall be relieved of personal responsibility for an individual security's credit risk or market price change provided deviations from expectations are reported in a timely fashion and appropriate action is taken. 4.2Ethics and Conflicts of Interest: The County Treasurer, officers, employees, and investment officials involved in the investment process shall refrain from personal business activity that could conflict with proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. The County Treasurer, officers, employees, and investment officials shall disclose not less than annually if any material financial interest in financial institutions that conduct business with the County, and they shall further disclose any large personal financial or investment positions that could be related to the performance of the County's investment portfolio. The County Treasurer, officers, employees, and investment officials shall refrain from undertaking personal investment transactions with any individuals with whom business is conducted on behalf of the County. 5.0 DELEGATION OF AUTHORITY Authority and management responsibility for the investment program is hereby delegated to the County Treasurer as required by state statute (MCL 48.40). The County Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls and written procedures to regulate the activities of subordinate officials. 6.0 WRITTEN PROCEDURES The County Treasurer shall establish written investment procedures for the operation of the investment program consistent with this Investment Policy. The written procedures should include, at a minimum, references to: 1) safekeeping; 2) delivery vs payment; 3) investment accounting; 4) repurchase agreements; 5) wire transfer agreements; 6) collateral/depository agreements; and, 7) banking service contracts. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the written procedures established by the County Treasurer. 7.0 SAFEKEEPING AND CUSTODY All securities transactions (including collateral for repurchase agreements), except certificates of deposits as described below, shall be conducted on a delivery - Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy ( April 2022 versus -payment (DVP) basis. Securities will be held by a third -party custodian, as designated by the County Treasurer, and shall be evidenced by a safekeeping receipt. Non -collateral, non-negotiable certificates of deposits, as is allowed under State of Michigan law, shall be evidenced by a safekeeping receipt from the issuing bank. 7.1 Safekeenino and Custodv 7.1.1 Delivery vs. Pavment: All trades of marketable securities will be executed (cleared and settled) on a delivery vs. payment (DVP) basis to ensure that securities are deposited in the County's safekeeping institution prior to the release of funds. 7.1.2 Safekeeoina,: Securities will be held by a centralized independent third -party custodian selected by the County as evidenced by safekeeping receipts in the County's name. 7.1.3 Internal Controls: The County Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the County are protected from loss, theft, or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. 8.0 MAXIMUM MATURITIES To the extent possible, the County shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a particular cash flow need,the County will not directly invest in securities that mature more than 5 years from the date of purchase. Funds with longer -term horizons may be invested in securities exceeding the 5- year limitation provided that maturity dates coincide, as near as possible, with the expected use of the funds. 9.0 INTERNAL CONTROL The investment officer is responsible for establishing a system of internal control that will ensure that the investment assets, of the County, are protected from loss,theft or misuse. The internal control structure shall be designed in such a way to provide reasonable assurance that these objectives are being met. The cost of control should not outweigh the benefits received. The internal control system shall be reviewed annually by an external audit group toensure compliance with policies and procedures. 10.0 PERFORMANCE STANDARD The investment portfolio will be managed in accordance with the standards Adopted by the Board of Commissioners on [Month xx, 2022] Oakland County, Michigan Investment Policy I April 2022 established within this Investment Policy and should obtain a market rate of return during an economic and budgetary environment of stable interest rates or yield. Accordingly, the benchmark used to measure portfolio performance shall be the 30-day US Treasury bill. Performance measurement shall occur at least every quarter. 11.0 REPORTING The County Treasurer or Investment Officer shall provide a quarterly report to the Board of Commissioners. The annual report should provide a listing of investments, their maturity dates, types of investments, cost basis, market value, rating, and other information to provide a clear picture of the status and types of investments of the current investment portfolio. This report shall be prepared in such a way that will allow the County to ascertain whether investment activities during the reporting period have conformed to the Investment Policy. 12.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS Using a request for information or request for proposals, the County Treasurer shall maintain a list of financial institutions authorized to provide investment services. In addition, and using the same process, a list shall also be maintained of approved broker/dealers based on credit worthiness and authorization to conduct business in the State of Michigan. These may include "primary" dealers or regional dealers that qualify under the Security & Exchange Commission Rule 15c3-1 (uniform net capital rule). Regional dealers must meet two times the uniform capital rule to be authorized for County business. All financial institutions and broker/dealers that the County conducts business with shall annually or upon adoption updates certify that they have received the County's Investment Policy, read the Investment Policy,and will comply with said terms of the Investment Policy. All financial institutions or broker/dealers wishing to become qualified bidders for investment transactions must supply, at a minimum, the County Treasurer with their audited financial statements for the past three fiscal years, proof of their NASD certification, proof of their Michigan registration and a signed investment policy certification acknowledgment. An annual review of the financial condition and registrations of qualified bidders will be conducted by the County Treasurer including review of publicly available audited financial statements for each financial institution in which the County invests with. 13.0 AMENDMENT TO AND AFFIRMATION OF INVESTMENT POLICY The County's investment policy shall be adopted by a resolution of the Board of Commissioners. The policy shall be reviewed annually by the County Treasurer. Any revision to the policy shall be brought to the Board of Commissioners for Adopted by the Board of Commissioners on [Month xx, 20221 Oakland County, Michigan Investment Policy I April 2022 adoption. The Investment Policy should be affirmed by the Board of Commissioners not less than every five years. Adopted by the Board of Commissioners on [Month xx, 2022] INVESTMENT OF SURPLUS FUNDS OF POLITICAL SUBDIVISIONS Act 20 of 1943 AN ACT relative to the investment of funds of public corporations of the state; and to validate certain investments. History: 1943, Act 20, had. Eff. Mar. 13, 1943;—Am. 1988, Act 285, Imd, Eff, Aug, 1, 1988; Am. 1997, Act 196, Imd. Eff. Dec. 30, 1997, The People of the State of Michigan enact: 129.91 Investment of funds of public corporation; eligible depository; secured deposits; funds limitation on acceptable assets; pooling or coordinating funds; written agreements; investment in certificate of deposit; conditions; "financial institution" defined; additional definitions. Sec. 1. (1) Except as provided in section 5, the governing body by resolution may authorize its investment officer to invest the funds of that public corporation in 1 or more of the following: (a) Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. (b) Certificates of deposit, savings accounts, or depository receipts of a financial institution, but only if the financial institution complies with subsection (2); certificates of deposit obtained through a financial institution as provided in subsection (5); or deposit accounts of a financial institution as provided in subsection (6). (c) Commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase. (d) Repurchase agreements consisting of instruments listed in subdivision (a). (e) Bankers' acceptances of United States banks. (f) Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than I standard rating service. (g) Mutual funds registered under the investment company act of 1940, 15 USC 80a-1 to 80a-64, with authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of any of the following: (i) The purchase of securities on a when -issued or delayed delivery basis. (it) The ability to lend portfolio securities as long as the mutual fiend receives collateral at all times equal to at least 100% of the value of the securities loaned. (W) The limited ability to borrow and pledge a like portion of the portfolio's assets for temporary or emergency purposes. (h) Obligations described in subdivisions (a) through (g) if purchased through an interlocal agreement under the urban cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124,501 to 124,512. (i) Investment pools organized under the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118. 0) The investment pools organized under the local government investment pool act, 1985 PA 121, MCL 129.141 to 129.150, (2) Except as provided in subsection (5), a public corporation that invests its funds under subsection (1) shall not deposit or invest the funds in a financial institution that is not eligible to be a depository of funds belonging to this state under a law or rule of this state or the United States. (3) Assets acceptable for pledging to secure deposits of public funds are limited to assets authorized for direct investment under subsection (1), (4) The governing body by resolution may authorize its investment officer to enter into written agreements with other public corporations to pool or coordinate the fiends to be invested tinder this section with the funds of other public corporations. Agreements allowed under this subsection shall include all of the following: (a) The types of investments permitted to be purchased with pooled funds. (b) The rights of members of the pool to withdraw funds from the pooled investments without penalty. (c) The duration of the agreement and the requirement that the agreement shall not commence until at least 60 days after the public corporations entering the agreement give written notice to an existing local government investment pool which is organized under the local government investment pool act, 1985 PA 121, MCL 129,141 to 129.150, in those counties where such a pool is operating and accepting deposits on or before September 29, 2006. Rendered Thursday, March 17, 2022 Page 1 Michigan Compiled Laws Complete Through PA 34 of 2022 © Courtesy of wwwlegislature.rni.gov (d) The method by which the pool will be administered. (e) The manner by which the public corporations will respond to liabilities incurred in conjunction with the administration of the pool. (f) The manner in which strict accountability for all funds will be provided for, including an annual statement of all receipts and disbursements. (g) The manner by which the public corporations will adhere to the requirements of section 5. (5) In addition to the investments authorized under subsection (1), the governing body by resolution may authorize its investment officer to invest the funds of the public corporation in certificates of deposit in accordance with all of the following conditions: (a) The funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146. (b) The financial institution arranges for the investment of the funds in certificates of deposit in 1 or more insured depository institutions, as defined in 12 USC 1813, or 1 or more insured credit unions, as defined in 12 USC 1752, for the account of the public corporation. (c) The full amount of the principal and any accrued interest of each certificate of deposit is insured by an agency of the United States. (d) The financial institution acts as custodian for the public corporation with respect to each certificate of deposit. (e) At the same time that the funds of the public corporation are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially invested by the public corporation through the financial institution. (6) In addition to the investments authorized under subsection (1), the governing body by resolution may authorize its investment officer to invest the funds of the public corporation in deposit accounts that meet all of the following conditions: (a) The funds are initially deposited in a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146. (b) The financial institution arranges for the deposit of the funds in deposit accounts in 1 or more insured depository institutions, as defined in 12 USC 1813, or 1 or more insured credit unions, as defined in 12 USC 1752, for the account of the public corporation. (c) The full amount of the principal and any accrued interest of each deposit account is insured by an agency of the United States. (d) The financial institution acts as custodian for the public corporation with respect to each deposit account. (e) On the same date that the funds of the public corporation are deposited under subdivision (b), the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially deposited by the public corporation in the financial institution. (7) A public corporation that initially invests its funds through a financial institution that maintains an office located in this state may invest the funds in certificates of deposit as provided under subsection (5). (8) As used in this section, "financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and that maintains a principal office or branch office located in this state under the laws of this state or the United States. (9) As used in this act: (a) "Governing body" means the legislative body, council, commission, board, or other body having legislative powers of a public corporation. (b) "Funds" means the money of a public corporation, the investment of which is not otherwise subject to a public act of this state or bond authorizing ordinance or resolution of a public corporation that permits investment in fewer than all of the investment options listed in subsection (1) or imposes 1 or more conditions upon an investment in an option listed in subsection (I). (c) "Investment officer" means the treasurer or other person designated by statute or charter of a public corporation to act as the investment officer. In the absence of a statutory or charter designation, the governing body of a public corporation shall designate the investment officer. (d) "Public corporation" means a county, city, village, township, port district, drainage district, special assessment district, or metropolitan district of this state, or a board, commission, or another authority or agency created by or under an act of the legislature of this state. Rendered Thursday, March 17, 2022 Page 2 Michigan Compiled Laws Complete Through PA 34 of 2022 © Courtesy of www.legislature.ml.gov History; 1943, Act 20, land. Eff. Mar, 13, 1943;--- CL 1948, 129.91;-Am, 1964, Act 126, Eff. Aug. 28, 1964;-Ant. 1977, Act 66, Imd, Eff. July 20, 1977; fun 1978, Act 500, Imd. E£f, Dec. 11, 1978,-Arn. 1979, Act 79, Imd. Eff, Aug. 1, 1979,--Am. 1982, Act 217, load. Eff. July 8, 1982;--Am. 1988, Act 239, Irnd. Eff. July 11, 1988;-Am. 1997, Act 44, Imd. Eff. June 30, 1997;--Am. 1997, Act 196, laid. Eff. Dec. 30, 1997; Am. 2006, Act 400, Imd, Eff. Sept. 29, 2006;--Am. 2008, Act 308, Imd, Eff. Dec, 18, 2008'-Am. 2009, Act 21, find. Eff. May 5, 2009;--Am. 2012, Act 152, Imd. Eff. May 30, 2012. 129.92 Repealed. 1997, Act 196, Imd. Eff. Dec. 30, 1997. Compiler's note: The repealed section pertained to investment of sinking funds and insurance moneys by school districts. 129.93 Existing investments ratified and validated. Sec. 3. Investments made before the effective date of the amendatory act that repealed section 2 of the surplus funds, sinking funds, or insurance funds of a political subdivision of this state in bonds and other obligations of the United States or its instrumentalities or certificates of deposit or depository receipts of a bank that is a member of the federal deposit insurance corporation as provided under section 1 and former section 2 of this act are hereby ratified and validated, History: 1943, Act 20, load. Eff. Mar. 13, 1943;-CL 1948, 129.93;-Am. 1964, Act 126, Eff. Aug. 28, 1964;-Am. 1997, Act 196, find. Eff. Dec. 30, 1997, 129.94 Funds accumulated under eligible deferred compensation plan; deposit; investment; existing investments ratified and validated. Sec. 4. (1) As used in this section: (a) "Eligible deferred compensation plan" means a deferred compensation plan established and maintained by a governing body, which plan meets the requirements of section 457 of the internal revenue code. (b) "Financial institution" means a state or nationally chartered bank, a state or federally chartered savings bank, a state or federally chartered savings and loan association, or a state or federally chartered credit union, which financial institution is insured by an agency or instrumentality of the federal government. (c) "Governing body" means the legislative or governing body of a county, city, village, township, or special assessment district, or an agency, board, or commission of a county, city, village, or township. (2) The governing body, by resolution, may authorize its treasurer or chief fiscal officer to deposit funds received under an eligible deferred compensation plan in a financial institution authorized by law to do business in this state or with an authorized deferred compensation agent appointed by the governing body. Notwithstanding any other provision of this act, the treasurer or chief fiscal officer, as authorized by resolution of the governing body, may place funds accumulated under an eligible deferred compensation plan with a financial institution authorized to do business in this state, a state or federally licensed investment company or insurance company authorized to do business in this state, or trust established by public employers for the commingled investment of the amounts held under deferred compensation and retirement plans, which funds shall be invested by the financial institution, insurance company, investment company, or trust as directed by the governing body, The investment of eligible deferred compensation plan funds shall be in the manner and for the purposes described in section 457 of the internal revenue code. (3) The investment of funds accumulated under an eligible deferred compensation plan of a governing body prior to the effective date of the amendatory act that added this section, which investments otherwise meet the requirements of this section, are ratified and validated. History: Add. 1988, Act 285, Imd. Eff. Aug. 1, 1998. 129.95 Investment policy; adoption by governing body. Sec. 5. (1) Not more than 180 days after the end of a public corporation's first fiscal year that ends after the effective date of the amendatory act that repealed section 2, a governing body, in consultation with the investment officer, shall adopt an investment policy that, at a minimum, includes all of the following: (a) A statement of the purpose, scope, and objectives of the policy, including safety, diversification, liquidity, and return on investment. (b) A delegation of authority to make investments, (c) A list of authorized investment instruments. If the policy authorizes an investment in mutual funds, it shall indicate whether the authorization is limited to securities whose intention is to maintain a net asset value of $1.00 per share or also includes securities whose net asset value per share may fluctuate on a periodic basis. (d) A statement concerning safekeeping, custody, and prudence. (2) A governing body that as of the effective date of the amendatory act that repealed section 2 has adopted an investment policy that substantially complies with the minimum requirements under subsection (1) is not in violation of this section as long as that policy remains in effect. Rendered Thursday, March 17, 2022 Page 3 Michigan Compiled Laws Complete Through PA 34 of 2022 © Courtesy of www.legislature. m4gov History: Add. 1997, Act 196, fund. Eff. Dec. 30, 1997. 129.96 Execution of order to purchase or trade funds of public corporation; providing copy of investment policy; public corporation subject to subsection (1); report. Sec. 6. (1) Subject to subsection (2), before executing an order to purchase or trade the funds of a public corporation, a financial intermediary, broker, or dealer shall be provided with a copy of the public corporation's investment policy and shall do both of the following: (a) Acknowledge receipt of the investment policy. (b) Agree to comply with the terms of the investment policy regarding the buying or selling of securities. (2) A public corporation is subject to subsection (1) beginning on the date that the investment policy of a public corporation takes effect or 180 days after the end of the public corporation's first fiscal year ending after the effective date of the amendatory act that repealed section 2, whichever is earlier, (3) The investment officer shall provide quarterly a written report to the governing body concerning the investment of the funds. History: Add. 1997, Act 196, Imd. Eff, Dec. 30, 1997,—Am. 2007, Act 213, had. Eff. Dec. 27, 2007. 129.97 Long-term or perpetual trust fund; investment of assets; resolution authorizing investment officer same authority as investment fiduciary under MCL 38.1132 to 38.1140m; conditions. Sec. 7. Notwithstanding any law or charter provision to the contrary, if a public corporation has a long-term or perpetual trust fund consisting of money and royalties or money derived from oil and gas exploration on property or mineral rights owned by the public corporation, the governing body of the public corporation may by resolution provide its investment officer with the same authority to invest the assets of the long-term or perpetual trust fund as is granted an investment fiduciary under the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140m. History: Add, 2008, Act 220, find. Eff. July 16, 2008. 129.97a Investment of assets of special revenue fund by investment officer; resolution granting authority; annual special revenue fund report. Sec. 7a. (1) Notwithstanding any law or charter to the contrary, if a public corporation has a special revenue fund consisting of payments for park operations and maintenance, the governing body of the public corporation may by resolution provide its investment officer with the same authority to invest the assets of the special revenue fund as is granted an investment fiduciary under the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140m. (2) The investment officer shall prepare and issue an annual special revenue fiord report. The investment officer shall make the annual special revenue fund report available to the citizens of the public corporation. The annual special revenue fund report shall include all of the following: (a) The name of the special revenue fund. (b) The special revenue fund's investment fiduciaries, (c) The special revenue fund's assets and liabilities. (d) The special revenue fund's funded ratio. (e) The special revenue fund's investment performance. (f) The special revenue fimd's expenses. History: Add. 2008, Act 404, had, Eff. Jan, 6, 2009. Rendered Thursday, March 17, 2022 Page 4 Michigan Compiled Laws Complete Through PA 34 of 2022 © Courtesy of wwwlegislature. mi.gov MISCELLANEOUS RESOLUTION 198040 March 19, 1998 BY: FINANCE COMMITTEE, SUE ANN DOUGLAS, CHAIRPERSON IN RE: TREASURER - APPROVAL OF COUNTY INVESTMENT POLICY TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS CHAIRPERSON, LADIES AND GENTLEMEN: WHEREAS, Public Act 20 of 1943, as amended, requires that the Board of Commissioners approves an Investment Policy for Oakland County; and WHEREAS, the County Treasurer has submitted an Investment Policy for Oakland County which conforms to the requirements of Public Act 20 of 1943, as amended for approval. NOW THEREFORE BE IT RESOLVED, that the Oakland County Board of Commissioners hereby approves the attached Investment Policy for Oakland County, as submitted by the County Treasurer; and BE IT FURTHER RESOLVED, that this policy shall remain in effect until amended or replaced. Chairperson, on behalf of the Finance Committee, I move the adoption of the foregoing resolution. FINANCE COMMITTEE r 0 INVESTMENT POLICY.FOR THE COUNTY OF OAKLAND As Required by Public Act 20 of 1943, as amended It is the policy of Oakland County to invest public funds in a manner which will ensure the preservation of principal while providing the highest investment return with maximum security, meeting the daily cash flow requirements of the county and conforming to all state statutes governing the investment of public funds. 2.0 SCOPE This investment policy applies to all financial assets of the county held by the county treasurer. These funds are accounted for in the county treasurer's Annual Financial Report. 3.0 OBJECTIVE The primary objectives, in priority order, of the county treasurer's investment activities shall be: 3.1 Safety: Safety of principal is the foremost objective in the investment of County funds. Investments shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 3.2 Liquidity: The investment portfolio shall remain sufficiently liquid to enable the county treasurer to meet all operating requirements which might be reasonably anticipated. 3.3 Return on investments: The investment portfolio shall be designed with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow characteristics of the portfolio. 4.0 DIVERSIFICATION The county treasurer shall diversify his/her investments by security type and institution. With the exception of U.S. Treasury securities and authorized investment pools, no more than 60°; of the total investment portfolio will be invested in a single security type or with a single financial institution. 5.0 DELEGATION OF AUTHORITY Management responsibility for the investment policy is hereby delegated to the county treasurer as required by state statute. 6.0 AUTHORIZED INVESTMENTTSS The county treasurer is authorized to invest in the following types of securities authorized by Public Act 20 of 1943, as amended: 6.1 Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. 6.2 Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution. 6.3 Commercial paper rated at the time of purchase at the highest classification established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase. 6.4 Repurchase agreements consisting of instruments in subdivision 6.1. 6.5 Bankers' acceptances of United States banks. 6.6 Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service. 6.7 Obligations described in subdivisions 6.1 through 6.6 if purchased through an interlocal agreement under the urban cooperation act of 1967. 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512. 6.8 Investment pools organized under the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118. 6.9 Investment pools organized under the local government investment pool act, 1985 PA 121, MCL 129.141 to 129.150. 7.0 SAFEKEEPING AND CUSTODY It shall be the responsibility of the county treasurer to determine which securities will be held by a third party custodian. Securities held in safekeeping by a third party custodian shall be evidenced by a safekeeping receipt. 8.0 PRUDENCE The standard of prudence to be used by the county treasurer shall be the brudent person standard and shall be applied in the context of managing an overall portfolio. 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. MM The county treasurer shall provide at least an annual report to the Board of Commissioners which provides a clear picture of the status and types of investments of the current investment portfolio, This report shall be prepared in a manner which will allow the Board of Commissioners to ascertain whether investment activities during the reporting period have conformed to the investment policy. Resolution #98040 March 19, 1998 Moved by Douglas supported by Holbert the resolution be adopted. AYES: Coleman, Devine, Dingeldey, Douglas, Garfield, Gregory, Holbert, Huntoon, Jacobs, Jensen, Johnson, Kaczmar, Kingzett, Law, McCulloch, McPherson, Millard, Obrecht, Palmer, Powers, Schmid, Wolf, Amos. (23) NAYS: None. (0) A sufficient majority having voted therefor, the resolution was adopted. I HEREBY HE FOREGOINS RrQOI.UT'')Pa L. Brook%-I�atteraon. County Executive Date STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lynn D. Allen, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on March 19, 1998 with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 19th da f�Marc `799 Lynn D. Allen, County Clerk MISCELLANEOUS RESOLUTION#01177 July 19, 2001 BY: Finance Committee, Sue Ann Douglas, Chairperson IN RE: COUNTY TREASURER - APPROVAL OF REVISED COUNTY INVESTMENT POLICY To the Oakland County board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS the Board of Commissioners, by Misc. Resolution #98040 dated March 19, 1998, adopted an Investment Policy for Oakland County, which conforms to the requirements of Public Act 20 of 1943, as amended: and WHEREAS the aforementioned Resolution further resolved that the policy shall remain in effect until amended or replaced; and WHEREAS experience with the policy has resulted in recommended improvements, including additional requirements for financial institutions doing business with the County, such as submitting audited financial statements and certifications, as well as a comprehensive list of authorized investment vehicles; and WHEREAS the Municipal Treasurers Association of the United States and Canada has reviewed the revised Investment Policy and issued its coveted Investment Policy Certification. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners adopts the revised County Investment Policy for Oakland County (copy on file with the County Clerk), as submitted by the County Treasurer. BE IT FURTHER RESOLVED that this policy shall remain in effect until amended or replaced by action of the Board of Commissioners. Chairperson, on behalf of the Finance Committee, I move adoption of the foregoing resolution.//Iy - 41 J 0 'FINANCE COMMITTEE FINANCE COMMITTEE Motion carried unanimously on a roll call vote with Moss absent. Q April, 2001 1.0 PURPOSE In conformance with Michigan Public Act 20 of 1943, as amended, it is the policy of Oakland County to invest public funds in a manner which will ensure the preservation of principal while providing the highest investment return with maximum security, meeting the daily cash flow requirements of the county and conforming to all state statutes governing the investment of public funds. 2.0 SCOPE This investment policy applies to all financial assets of the County, except for retirement and pension funds, under the control of the County Treasurer. These funds are accounted for in the County Treasurer's Annual Financial Report. 3.0 STANDARDS OF CARE 3.1 Prudence: Investments shall be made with judgement and care, under prevailing circumstances, which persons of prudence, discretion and intelligence exercise in the management of their own fairs, not for speculation, but for investment considering the probable safety of their principal and probable income to be derived. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officials acting's in accordance with written procedures, this investment policy, and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price change provided deviations from expectations are reported in a timely fashion and appropriate action is taken. 3.2 Ethics and Conflicts of Interest: Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose any material financial interest in financial institutions that conduct business within the county, and they shall further disclose any large personal financial or investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the county. 4.0 OBJECTIVE The primary objectives, in priority order, of the County Treasurer's investment activities shall be: 4.1 Safety: Safety of principal is the foremost objective in the investment of County funds. Investments shall be undertaken In a manner that seeks to ensure the preservation of principal in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The investment portfolio shall remain sufficiently liquid to enable the County Treasurer to meet all operating requirements that might be reasonably anticipated. 4.3 Return on investments: The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow characteristics of the portfolio. Return on investment shall be of secondary importance compared to the safety and liquidity objectives above. 5.0 DELEGATION OF AUTHORITY Authority and management responsibility for the investment program is hereby delegated to the County Treasurer as required by state statute (MCL 48.40). The County Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. 5.1 Investment Procedures: The County Treasurer shall establish written investment procedures for the operation of the investment program consistent with this policy. Procedures should include references to: safekeeping, delivery vs. payment, depository agreements, repurchase agreements, wire transfer agreements, and banking service agreements. Said procedures shall include explicit delegation of authority to those engaged in the investment transactions. No person shall engage in an investment transaction except as provided under the terms of this policy and the procedures established by the County Treasurer. 6.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS A list will be maintained of financial institutions authorized to provide investment services. In addition, a list shall also be maintained of approved broker/dealers who have been selected based on credit worthiness and authorization to conduct business in the State of Michigan. These may include "primary" dealers or regional dealers that qualify under the Security & Exchange Commission Rule 15c3-1 (uniform net capital rule). Regional dealers must meet two times the uniform capital rule to be authorized for County business. All financial institutions with which the County conducts business with shall certify that they have 1). Received the County's investment policy, 2). Have read the policy, and 3). Will comply with said terms of the policy. All financial institutions wishing to become qualified bidders for investment transactions must supply the County Treasurer with the following documents: audited financial statements, proof of NASD certification, proof of Michigan registration and a signed investment policy certification. An annual review of the financial condition and registrations of qualified bidders will be conducted by the County Treasurer. A current audited financial statement is required to be on file for each financial institution and broker/dealer in which the County invests with. 7.0 AUTHORIZED INVESTMENTS The county treasurer is authorized to invest in the following types of securities authorized by Public Act 20 of 1943, as amended: 7.1 Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. 7.2 Certificates of deposit, savings accounts, deposit accounts, or depository receipts of Michigan financial institutions. 7.3 Commercial paper rated at the time of purchase at the highest classification established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase. 7.4 Repurchase agreements consisting of instruments in subdivision 7.1. The PSA Master Repurchase Agreement prototype agreement shall be employed with appropriate supplemental provisions regarding security delivery, security substitutions, and governing law. A signed Repurchase agreement must be on file before entering into a repurchase transaction. 7.5 Bankers' acceptances of United States banks. 7.6 Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service 7.7 Obligations described in subdivisions 7.1 through 7.6 if purchased through an inter -local agreement under the urban cooperation act of 1967. 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512. 7.8 Investment pools organized under the surplus funds investment pool act, PA 367 of 1982, MCL 129.111 to 129.118. 7.9 Investment pools organized under the local government investment pool act, PA 121 of 1985, MCL 129.141 to 129,150. 7.10 Mutual funds registered under the investment company act of 1940 with authority to only purchase investment vehicles that are legal for direct investment by a Michigan public corporation. Investment is limited to mutual funds that maintain a net asset value of $1.00 per share. 8.0 INVESTMENT POOLS/MUTUAL FUNDS A thorough investigation of each pool shall be required 1). Before investing, and 2). On a continual basis after investing. A questionnaire shall be developed to secure responses to a set of due diligence questions. Those questions shall, at minimum, include the following: 1. Does the pool have a written statement of investment policy and objectives? How are changes to the policy and objective statement communicated to participants? 2. Does the policy describe eligible investment securities? 3. A detailed description of interest calculations covering items such as: How are they distributed? What is the frequency of interest payments? How are gains and losses treated? 4. How are securities safeguarded? How often are the securities priced to market? What audit steps are employed in this process? 5. Who can invest in the pool? How often? Any deposit/withdrawal size limitations? How many deposits or withdrawals can be made in a monthly period? What is the cutoff time for deposits and withdrawals? Does the pool allow for multiple accounts and sub -accounts? Do we get a confirmation after each transaction? 6. What is the schedule for receiving account statements and portfolio listings? 7. Please attach a fee schedule and describe in great detail how and when these fees are assessed. 8. Does the pool retain any reserves? Please describe 9. Will the pool accept bond proceeds subject to arbitrage rebate? Will the pools accounting and record keeping system be suitable for arbitrage rebate? Is the pool's yield calculation acceptable to the IRS or will it need to be restated? Can a separate account be established for each bond offering? 9.0 SAFEKEEPING AND CUSTODY All securities transactions (including collateral for repurchase agreements), except certificates of deposits as described below, shall be conducted on a delivery -versus - payment (DVP) basis. Securities will be held by a third party custodian, as designated by the County Treasurer, and shall be evidenced by a safekeeping receipt. Non -collateral, non-negotiable certificates of deposits, as is allowed under State of Michigan law, shall be evidenced by a safekeeping receipt from the issuing bank. 10.0 DIVERSIFICATION The County Treasurer shall diversify investments by security type and institution. With the exception of U.S. Treasury securities and authorized investment pools, no more than 60% of the total investment portfolio will be invested in a single security type and no more than 15% with a single financial institution. 11.0 MAXIMUM MATURITIES To the extent possible, the County shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a particular cash flow need, the County will not directly invest in securities that mature more than 3 years from the date of purchase. Funds with longer -term horizons may be invested in securities exceeding the 3-year limitation provided that maturity dates coincide, as near as possible, with the expected use of the funds. 12.0 INTERNAL CONTROL The investment officer is responsible for establishing a system of internal control that will ensure that the investment assets, of the County, are protected from loss, theft or misuse. The internal control structure shall be designed in such away to provide reasonable assurance that these objectives are being met. The cost of control should not away the benefits received. The internal control system shall be reviewed annually by an external audit group to ensure compliance with policies and procedures. 13.0 PERFORMANCE STANDARD The investment portfolio will be managed in accordance with the standards established within this policy and should obtain a market rate of return during an economic and budgetary environment of stable rates. According the benchmark used to measure portfolio performance shall be the 30 and 90 day US Treasury bill, Performance measurement shall occur at least every quarter. 14.0 REPORTING The County Treasurer shall provide at least an annual report to the Board of Commissioners, which provides a clear picture of the status and types of investments of the current investment portfolio. This report shall be prepared in such a way that will allow the County to ascertain whether investment activities during the reporting period have conformed to the investment policy. 15.0 Adoption The County's investment policy shall be adopted by a resolution of the Board of Commissioners. The policy shall be reviewed annually by the County Treasurer. Any revision to the policy shall be brought to the Board of Commissioners for adoption. $data/MS Word/ainvpol.doc ACKNOWLEDGMENT OF RECEIPT OF INVESTMENT POLICY AND AGREEMENT TO COMPLY I have read and fully understand Act 20 PA 1943, as amended, and the Investment Policy of the County of Oakland. Any investment advice or recommendation on investments given by , representing to the Oakland County Treasurer or his designate shall comply with the requirements of Act 20 PA 1943, as amended, and the Investment Policy of the County of Oakland. I further acknowledge receipt of the Investment Policy for the County of Oakland and agree to comply with the terms contained herein. Any existing investment not conforming with state statute or the County's policy will be disclosed promptly to the Oakland County Treasurer, M Title: Date: Please execute this agreement and return to: C. Hugh Dohany, Treasurer County of Oakland 1200 N. Telegraph Rd., Dept. 479 Pontiac, MI48341-0479 Resolution #01177 July 19, 2001 Moved by Moss supported by Dingeldey the resolutions on the Consent Agenda be adopted (with accompanying reports being accepted). AYES: Appel, Brian, Buckley, Causey-Mitchell, Coleman, Crawford, Dingeldey, Douglas, Galloway, Garfield, Gregory, Law, McPherson, Melton, Millard, Moffitt, Moss, Obrecht, Palmer, Patterson, Suarez, Taub, Webster, Amos. (24) NAYS: None. (0) A sufficient majority having voted therefore, the resolutions on the Consent Agenda were adopted, with the accompanying reports being accepted. r- s P roonCounty E ve .r Date STATE OF MICHIGAN) COUNTY OF OAKLAND) I, G. William Caddell, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on July 19, 2001 with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 19Ch ayy Juul-y, 2001. G. William Caddell, County Clerk