2011 budget summary - St. Louis County

Liquidity:St. Louis County's investment portfolio will remain sufficiently liquid to enableSt. Louis County to meet all operating requirements which might be reasonablyanticipated. This is accomplished by structuring the portfolio so that securitiesmature concurrent with cash needs to meet anticipated demands (static liquidity).Furthermore, since all possible cash demands cannot be anticipated, the portfolioshould consist largely of securities with active secondary or resale markets(dynamic liquidity). A portion of the portfolio also may be placed in repurchaseagreements that offer same-day liquid funds.Yield:The St. Louis County investment portfolio shall be designed with theobjective of attaining a market rate of return throughout budgetary and economiccycles, taking into account St. Louis County's investment risk constraints and thecash flow characteristics of the portfolio. Return on investment is of secondaryimportance compared to the safety and liquidity objectives described above. Thecore of investments are limited to relatively low risk securities in anticipation ofearning a fair return relative to the risk being assumed. Securities shall not besold prior to maturity with the following exceptions:‣ A security with declining credit may be sold early to minimize loss ofprincipal.‣ A security swap which would improve the quality, yield, or target duration inthe portfolio.‣ Liquidity needs of the portfolio require that the security be sold.DELEGATION OF AUTHORITYAuthority to manage the St. Louis County's investment program is derived from St. Louis CountyOrdinances 303.030 and 303.110. Management responsibility for the investment program is delegated tothe St. Louis County Treasurer. The St. Louis County Fund Investment Advisory Committee shall advisethe Treasurer and the County Council relative to the amounts which should be invested, the time at whichinvestments should be made, the terms of such investments, the kinds of bonds or certificates in whichfunds should be invested, and such other matters as the Fund Advisory Committee determines are for thegood of the County's financial affairs.The Treasurer shall establish written procedures for the operation of the investment program consistentwith this investment policy. Such procedures shall include explicit delegation of authority to personsresponsible for the investment transactions. The Treasurer shall be responsible for all transactionsundertaken and shall establish a system of controls to regulate the activities of subordinate personnel.PRUDENCEThe standard of care to be used by the Treasurer and delegated investment personnel shall be the "PrudentPerson Standard" and shall be applied in the context of managing an overall portfolio. The Treasurer anddelegated investment personnel acting in accordance with written procedures and this investment policyand exercising due diligence shall be relieved of personal liability for an individual security's credit riskor market price changes, provided deviations from expectations are reported in a timely fashion and thesale of securities are carried out in accordance with the terms of this policy.- 298 -