ITEM 15 ATTACHMENT 1 - Laserfiche WebLink

Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cash flow purposes. The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk: • The City will maintain a minimum of six (6) months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements. • The maximum stated final maturity of individual securities in the portfolio will be five (5) years, except as otherwise stated in this policy. TRUSTAGREEMENTS The City shall direct the investment activities of trustees. Such direction shall be in keeping with the terms and conditions of its bond agreements, applicable law and policies set forth in this document. REVIEW OF THE INVESTMENT PORTFOLIO The Director of Finance shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council. MAXIMUM MATURITIES To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds. Where this policy does not specify a maximum remaining maturity at the time of the investment, no investment shall be made in any security that at the time of the investment has a term remaining to maturity in excess of five (5) years from the date of trade settlement. The City will not invest in securities maturing more than five (5) years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment either specifically or as a part of an investment program approved by the City Council no less than three months prior to the investment. The City may invest proceeds of bond issuances or certificates of participation for a term exceeding five years, provided the City Council authorizes such investments as part of the legal documents. INTERNAL CONTROLS The Director of Finance shall establish an annual process of independent review by an external auditor to prevent loss of funds arising from fraud, theft, staff errors and irregularities, misrepresentations by third parties, misuse, or imprudent actions by staff. This review will provide internal control by assuring compliance with policies and procedures. PERFORMANCE STANDARDS 251