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III. CASH AND INVESTMENTS <br />Effective cash management is essential to good fiscal management. Investment returns on <br />funds not immediately required can provide a significant source of revenue for the City. <br />Investment policies must be well founded and uncompromisingly applied in their legal and <br />administrative aspects in order to protect the City funds being invested. <br />Legal Aspects: <br />Minnesota Statutes authorize and define an investment program for municipal governments. <br />A. Investment Instruments Authorization <br />The City of St Anthony shall invest in the following instruments as allowed by Minnesota <br />Statutes: <br />a. United States Treasury obligations <br />b. Federal Agency issues <br />c. Repurchase agreements (repo's) <br />d. Certificates of deposit <br />e. Commercial paper - prime <br />f. Bankers acceptances - prime <br />g. Money Market funds investing exclusively in U. S. government agency issues <br />B. Supplemental Depositories <br />Administrative Process: <br />Investing the City funds shall be undertaken in a manner, which seeks to insure the <br />preservation of capital in the overall portfolio. Safety of principal is the foremost objective; <br />additionally, liquidity and yield are also important considerations. It is essential that money is <br />always available when needed; therefore, the investment goal is to maximize yield while <br />providing cash flow to meet expenditure needs. <br />The City shall seek to conduct its investment transactions with several reputable investment <br />security dealers and qualifying banks. The qualifying bank or dealer must have demonstrated, <br />over a significant period of time, a successful, profitable, and reliable operation. Special care <br />should be exercised when considering new services. <br />The City will analyze market conditions and investment securities to determine what yield can <br />be obtained and attempt to secure the best possible return on all investments consistent with <br />security and liquidity requirements. Portfolio diversification must also be considered so that <br />investments are not concentrated in one institution, in one type of investment, or purchased <br />from one dealer. <br />The investment portfolio of the City shall be designed to attain an average rate of return <br />regularly exceeding the average return on three month U.S. Treasury bills, while seeking to <br />augment returns above this threshold consistent with budgetary cycles, economic conditions, <br />risk limitations, and prudent investment principles. <br />