Investment Policy

This is the Investment Policy of the Coles County Treasurer's Office (revised April, 2005).

I. Investment Policy
It is the policy of the Coles County Treasurer to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of Coles County and conforming to all State statutes governing the investment of public funds.

II. Scope
This investment policy applies to the investment activities of all funds under the jurisdiction of the Coles County Treasurer. This investment policy will also apply to any new funds or temporary funds placed under the jurisdiction of the Coles County Treasurer. The Illinois State Statutes will take precedence except where this policy is more restrictive wherein this policy will take precedence.

III. Standards of Care
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.

The standard of prudence to be used by the Coles County Treasurer and the appointed Chief Deputy shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. The Coles County Treasurer and the appointed Chief Deputy acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.

IV. Investment Objective
The primary objectives, in priority order, of the Coles County Treasurer's investment activities shall be:

  • Safety: Safety of principal is the foremost objective of the investment program. Investments of the Coles County Treasurer shall be undertaken in a manner that seeks to ensure the preservation of capital 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.
  • Liquidity: The Coles County Treasurer's investment portfolio will remain sufficiently liquid to enable Coles County to meet all operating requirements which might be reasonably anticipated.
  • Yield: The Coles County Treasurer's investment portfolio shall be designed with the objective of attaining the highest rate of return throughout budgetary and economic cycles.
  • Timeliness: All funds will be deposited within two working days at prevailing rates or better in accordance with Illinois State Statutes, and will be invested for a period of one day or longer, depending on the requirement for the disbursement of funds.

V. Delegation of Authority
Management responsibility for the investment program is hereby delegated to the Coles County Treasurer who shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the investment activities.

VI. Investment Procedures
The Coles County Treasurer shall establish written investment policy procedures for the operation of the investment program consistent with this policy. The procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Coles County Treasurer.

VII. Ethics and Conflicts of Interest
The Coles County Treasurer and the appointed Chief Deputy shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. They shall disclose any material financial interests in financial institutions that conduct business within their jurisdiction and they shall further disclose any large personal financial/investment positions that could be related to the performance of the Coles County Treasurer's portfolio.

VIII. Financial Institutions
The Coles County Treasurer will have the sole responsibility to select which financial institutions will be depositories for Coles County Treasurer funds. The Coles County Board per annual Resolution will approve these financial institutions. The Coles County Treasurer will take into consideration security, size, location, condition, service, fees, and the community relation's involvement of the financial institution when choosing a financial institution. At no time will the Coles County Treasurer exceed 75% of any financial institution's capital and surplus.

At the request of the Coles County Treasurer, financial institutions providing depository/investment services shall provide their most recent financial statements or report of condition for review. No public deposit shall be made except in a qualified public depository as established by State Statute.

IX. Authorized Investments
The Coles County Treasurer is empowered by State Statute to use only investments approved for governmental units as set forth in the most current issue of the Illinois Revised Statutes (30 ILCS 235/). These investments include the Illinois State Treasurers Illinois Funds Investment Pool (formerly IPTIP) both Money Market and Prime Fund.

X. Collateralization
At all times the Coles County Treasurer will require that deposits in excess of FDIC insurable limits be collateralized. The Coles County Treasurer may request collateral for any part of deposits in financial institutions when the Coles County Treasurer determines it to be in the best interests of safeguarding the funds on deposit. Mortgage-backed collateral will not be accepted.

In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 110% of market value unless specifically noted below. Only the following collateral will be accepted;

  • U.S. Government Securities
  • Obligations of Federal Agencies (110%)
  • Obligations of Federal Instrumentalities (110%)
  • Obligations of Municipalities (Triple A rated) located within Coles County, which is subject to acceptance by the Coles County Treasurer
  • Acceptable collateral as identified in the most current issue of the Illinois Revised Statutes for use by the Treasurer of the State of Illinois

Collateral will always be held by an independent third party with whom the Coles County Treasurer has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the Coles County Treasurer and retained. The right of collateral substitution is granted. Pursuant to 30 ILCS 235/2.5(a)(5), authorizing the Treasurer to establish guidelines for contractual arrangements for the custody and safekeeping of County funds in financial institutions, a Collateral Agreement substantially similar to the attached Collateral Agreement shall be required of all financial institutions holding County funds. To the extent the Collateral Agreement is inconsistent with the terms of this Investment Policy, the more restrictive will prevail and shall be considered as authorized by this Investment Policy.

XI. Diversification
The Coles County Treasurer will diversity its investments by security type, institution, and maturity.

XII. Maximum Maturities
To the extent possible, the Coles County Treasurer will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the Coles County Treasurer will not directly invest in securities maturing more than 2 years from the date of purchase. However, regarding construction funds or bond proceeds, the Coles County Treasurer may invest in securities exceeding 2 years of maturity if such investment is made to coincide as nearly as practicable with the expected use of the funds.

XIII. Reporting
The Coles County Treasurer shall provide the Coles County Finance Committee and thereby the Coles County Board an annual report, which will provide a clear picture of the status of the current investment portfolio. The management report could include comments on market and economic conditions, discussion regarding possible changes in the portfolio, and thoughts on investment strategies.

Schedules in the annual report should include:

  • A listing of individual securities held at the end of the reporting period, by fund, maturity date, bank, interest rate, term, and purchase date
  • Average life of all investments listed
  • Average interest rates
  • Percentage of the portfolio by investment type
  • Total interest earnings for all investments
  • Percentage of investments by term

An annual report listing total earnings along with a review of all investments by fund or instrument shall be submitted at the end of the revenue year. The Coles County Treasurer will provide any additional reports requested by the Coles County Board within 30 days.

XIV. Security Controls
Only the Coles County Treasurer and the appointed Chief Deputy are authorized to purchase and sell investments, release and substitute pledged collateral. The Coles County Treasurer, Chief Deputy, and Investment Clerk have authority to execute wires to and from local banks and Illinois Funds, and to execute any documents required under this policy.

XV. Indemnification
The Coles County Treasurer and the appointed Chief Deputy acting in accordance with this Investment Policy and written procedures as have been or may be established and exercising due diligence shall be relieved of personal liability for any individual security's risk or market changes.

XVI. Performance Standards
The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs.

Market Yield (Benchmark): The Coles County Treasurer's investment strategy is conservative, yet active. Given this strategy, the basis used by the Treasurer to determine whether market yields are being achieved shall be the current three-month U.S. Treasury Bill and/or the average Fed Funds rate. Since these indices are relatively risk-free benchmarks, they comprise a minimum standard for the portfolio's rate of return. The investment program shall seek to augment returns above this threshold, consistent with prudent investment principles and the risk limitations identified herein.