The following policies will assist the County with attaining the objectives stated in Section 180.2
In accordance with and subject to restrictions imposed by current statutes applicable to both the operating fund and proceeds of bonds or temporary notes, the following list represents the entire range of investments that Johnson County will consider and which shall be authorized for the investments of aforementioned funds by the County. Cited maturities represent maximum durations, which may be reduced depending upon applicable statutory authority:
Investment Instrument Guidelines
The Cash Manager will consider the composition of the current investments and determine whether the securities being considered will maintain the investments within procedural guidelines.
The following maximum limits, by instrument, are established for the County's total investments:
* These limits are adjusted during tax collection periods which run from ten days prior to the due date for taxes to be remitted through the distribution dates set by Kansas Statute. The Discount Obligation percent increases to 65%, Money Market Funds and Instruments percent increases to 50% and the limit on the MIP may be increased to 50%
To allow efficient and effective placement of proceeds from bond sales, the limit on either repurchase agreements or the MIP may be exceeded for up to five consecutive days, per bond issue, following the receipt of bond proceeds.
All investments of County funds shall be managed through the Treasury and Financial Management department consistent with this policy and in compliance with all applicable state and federal laws and regulations. The Treasury Division shall establish operating procedures to coordinate all financial transactions with the Cash Manager. The Cash Manager shall provide to the Treasury Division complete written records of all investment information.
As provided by statute, this policy shall be submitted to the State’s Pooled Money Investment Board (PMIB) for their review and approval annually, or at such time as the policy may be amended, and upon approval, investments may include those authorized through the PMIB. Investments made utilizing the “Expanded Powers” available through the PMIB shall be managed in accordance with the provisions of K.S.A. 12-1675, as amended, and the requirements of the PMIB.
The County shall follow the most aggressive investment guidelines allowed by State law. County funds shall be managed as multiple portfolios in order to meet liquidity needs of the organization while enhancing total yield of the portfolio.
Cash Management & Investment Practices
It is the policy of the County that its cash management practices shall ensure that funds held by, and belonging to, the County are managed in a manner that complies with all State and Federal Laws, and the policies and strategies of the Board, and that provides for adequate funds to be available to timely meet all disbursement requirements and obligations of the County.
It is in the interest of the County to solicit competitive rate quotations for all investment purchases and for the deposit of public funds. Therefore, the investment and/or deposit of County funds will be made on the basis of competitive investment rates that support the County’s investment strategies and objectives, as identified in Section 180.2. In addition, it is in the interest of the County to establish and use business relationships with financial institutions located in Johnson County for the investment and deposit of public funds, consistent with the requirements of K.S.A. 12-1675 and 12-1676. Therefore, investment and/or deposit of the County's public funds will be offered first, on a competitive basis to qualified financial institutions located within the County. The County Treasurer and the County’s Cash Manager shall establish and implement procedures for posting notice on a County website when funds are available for deposit or investment; for notifying local financial institutions of this website and the process for submitting bids; and for ensuring that, on days that funds are available, local financial institutions have a fair opportunity, until a designated time, as posted on the website, to respond with an offered rate for maturities matching the County’s cash flow needs. Financial institutions unable to access the website shall be given the opportunity to contact the Cash Manager by phone or email.
In the event that the County does not receive any qualified or responsive offerings to the posting or the offered rates do not equal or exceed the "investment rate" as defined by the State Treasurer, then the County may solicit offers for investments of those available funds in the State's investment pool or through brokers and dealers. At least three quotes must be obtained for all types of investments. All quotations received must be documented and filed for auditing purposes. In the case of tie bids, all bidders will be asked if they wish to break the tie. The first bidder who breaks the tie will win the bid. If no bidder breaks the tie then the Cash Manager will decide which broker wins the bid.
All trading accounts will be held in the name of “Johnson County, Kansas”. The Board shall have all trading authority for the investment of County funds, and that trading authority shall be exercised by the Cash Manager and the County Treasurer.
The Cash Manager shall be responsible for ensuring that the County’s investment practices comply with state and federal laws and regulations. The Cash Manager shall prepare and file such documents, applications, and other information as may be necessary or is required to comply with state statutes, including the information required by the provisions of K.S.A. 12-1675 (c).
US Treasury Bonds - 1 Year or Less = 101%, 1 Year to 5 Years = 102%, Over 5 Years = 103%
US Agencies Securities - 1 Year or Less = 101%, 1 Year to 5 Years = 102%, Over 5 Years = 104%
Investment Diversification - In order to enhance total yield and fulfill the objectives of these procedures, the investment management style will be directed toward an active rather than passive investment role. Market risk shall be minimized by diversification of investment types. The County shall diversify its investments so that reliance on any one issuer or financial institution will not place an undue financial burden on the County.
Master Repurchase Agreement - The County shall require each issuer of repurchase agreements to sign a copy of the County's Master Repurchase Agreement. An executed copy of this agreement must be on file before the County will enter into any repurchase agreements with an issuer.
Maturities for All Investments - Subject to the collateral and authorization statutory requirements, as now adopted or hereafter amended, the maximum maturity length shall strictly follow the Kansas Statutes.
Security Marketability - Only U.S. government and agency obligations with active secondary markets will be purchased. Marketability shall be determined by the Cash Manager, the Finance Director or the County Treasurer.
General County Funds - As outlined in section 180.5 of the Investment Policy, the General County funds shall be managed as multiple separate portfolios. An operating portfolio shall be managed with sufficient liquidity to meet all operating needs. The weighted average duration of the operating portfolio must be less than one and one half (1.5) years. A long-term portfolio shall be established and managed on a total return basis. The long-term portfolio may be at least 45% of the County’s total portfolio from the previous rolling two-year period but shall not exceed 65% of the total portfolio. The weighted average duration of the long-term portfolio must be less than three (3) years. If the long-term portfolio falls below 45% of the County’s average total portfolio, it should be reported to the IRG. The IRG will monitor the maturity level and recommend changes as appropriate.
County Building Funds - No investment shall have a maturity exceeding the next lease payment date, unless the account is fully funded. If fully funded, investments can be made to the next unfunded date.
Investment Returns - Johnson County shall seek to optimize return on investments within the constraints of safety and liquidity. The objective of the County investment practices shall be to exceed the average rate of return on U.S. Treasury securities with similar maturities to the average weighted maturity of the County's portfolio or another appropriate performance measure as defined by the Investment Review Group. Progress on this objective will be reported to the Investment Review Group on a quarterly basis at a minimum.
Investments Maturity Management - When structuring the maturity composition of the investments, the Cash Manager shall evaluate current and expected interest rate yields. The longer the time remaining to maturity for a security, the greater the price fluctuation that will occur given a change in interest rate levels.
Current and Expected Yield Curve Analysis - The Cash Manager will monitor the current and expected yield curves. When interest rates are expected to decline, consideration will be given to extending maturity dates within investment and procedural constraints. When interest rates are expected to rise, consideration will be given to shortening maturity dates.
Portfolio Management - As outlined in section 180.5 of the Investment Policy, all investments of County funds shall be managed through Treasury and Financial Management. The office of the County Treasurer shall establish operating procedures to coordinate all financial transactions with Treasury and Financial Management. Treasury and Financial Management shall provide to the Office of the County Treasurer complete written records of all investment information.
a. Disbursement Scheduling
i. In order that all necessary disbursements may be met:
1) The County Treasurer shall submit to the Cash Manager a "Schedule of Anticipated Tax Disbursements". The Schedule should be updated and provided to the Cash Manager on an as needed basis.
2) The Operations Manager shall submit a schedule of accounts payables and payroll information.
3) The Accounting Department shall submit the appropriate debt schedules.
ii. In the interim, if changes are found to be necessary in such Schedules, written notice must be provided to the Cash Manager immediately, and if possible, in less than five business days prior to the anticipated disbursement date, so that funds may be made available with which to make such disbursement.
iii. The following information is to be provided in the Schedule of Anticipated Tax Disbursements: the date of the anticipated disbursement, the amount of the anticipated disbursement, how the disbursement is to be made (by check, ACH, wire transfer, etc.), and if by check, whether the check will be hand delivered or sent by mail.
b. Disbursement Funding
Based upon the County Treasurer’s Schedule of Anticipated Tax Disbursements and the responsibilities of the Cash Manager under this Section (180.5), the Cash Manager will be responsible for managing the County's investment portfolio in such a manner as to timely meet all necessary disbursements and all such other statutory and regulatory responsibilities.
Compliance Reporting - The Cash Manager shall be responsible for ensuring that the County’s investment practices comply with state and federal laws and regulations. The Cash manager shall prepare and file such documents, applications, and other information as may be necessary or is required to comply with state statutes, including the information required by the provisions of K.S.A. 12-1675 (c). In addition, the Cash Manager shall submit the County’s investment Policy to the PMIB at least annually or at such time as the County makes changes to the Investment Policy, and will include a certification from the investment management staff that the above procedures were followed and in compliance with all applicable statutes, including the information required by the provisions of K.S.A. 12-1675 (c).
The investment and/or deposit of County funds will be made on the basis of competitive investment rates that support the County’s investment strategies and objectives, as identified in Section 180.2 of the Investment Policy. In addition, it is in the interest of the County to establish and use business relationships with financial institutions located in Johnson County for the investment and deposit of public funds, consistent with the requirements of K.S.A. 12-1675 and 12-1676. Therefore, investment and/or deposit of the County's public funds will be offered first, on a competitive basis to qualified financial institutions located within the County. To inform the local financial institutions of the County’s requirements, the County will maintain the following information on the County website: (1) Qualifications of financial institutions that are eligible to respond to the County’s requests, (2) Contact information of County staff, and (3) Procedures that the financial institution will need to follow. Local financial institutions will be notified of this website and the procedures, via e-mail and a letter, and will be reminded at least quarterly of this information. Financial institutions unable to access the website may contact the investment manager by phone or email which will be provided in the letter sent to the financial institutions. When funds are available to the County for investment or deposit, the County will post a notice on the County website which provides the information necessary for local financial institutions to respond to the County’s request. Such information shall include (1) the deadline for responding to the County’s request, (2) the County’s cash flow needs, (3) process for submitting bids, and (4) any other information that the County deems necessary in order for the financial institution to submit a response to the County’s financial needs
If the offered rate does not equal or exceed the "investment rate" as defined by the State Treasurer, the County may solicit offers for investments in the State's investment pool or through brokers and dealers. It is in the interest of the County to solicit competitive rate quotations for all investment purchases. At least three quotes must be obtained for all types of investments. All quotations received must be documented and filed for auditing purposes. In the case of tie bids, all bidders will be asked if they wish to break the tie. The first bidder who breaks the tie will win the bid. If no bidder breaks the tie then the Cash Manager will decide which broker wins the bid.
Investment performance is continually monitored and evaluated by the Cash Manager and the County Treasurer. Investment performance statistics and activity reports are generated by the Cash Manager. The Cash Manager will provide summary reports quarterly for the IRG.
A. Monthly Performance Analysis
The following reports will be produced monthly and be included in the monthly report to the Board of County Commissioners, Finance Director, and County Manager.
Other reports may include the following statistics:
A quarterly report will be prepared for the IRG, relating actual performance to policy and procedural objectives. This report may include:
C. Annual Review Procedures
Due to the constantly changing nature of types of investments, legislative changes, etc., an annual review will be made of the procedures. Every year at the beginning of the County's fiscal year, a review of the Investment Procedures will be made by the IRG. The Cash Manager will provide a summary report of recommended procedural changes to the Investment Review Group for review and deliberation.