EXHIBIT 5-A
MONTEREY PENINSULA
WATER MANAGEMENT DISTRICT
INVESTMENT POLICY
(Adopted September 20, 1997)
Introduction
This policy governs the investment
of District funds. The purpose of the policy is to provide guidance to the
District Treasurer to invest funds in a manner that provides for the protection
of principal (safety), meets the cash flow (liquidity) demands of the District
and earns a reasonable yield. It shall be the policy of the District to invest
all funds in strict conformance with all state statutes governing the
investment of public monies. Moreover, it shall be the policy to manage
investments under the prudent investor rule. This rule affords the District a
broad spectrum of investment opportunities so long as the investment is deemed
prudent and is allowable under State of
Prudence
The District Treasurer is a trustee and therefore a fiduciary subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, the treasurer shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of investments of a like character and with like aims to safeguard the principal and maintain the liquidity needs of the District. Within the limitation of this policy and considering individual investments as part of an overall investment strategy, a trustee is authorized to acquire investments as authorized by law.
Investment and Risk
The objectives of the District’s investment program in order of priority are:
1) Safety of invested funds – The Treasurer shall ensure the safety of the District's invested funds by limiting, as much as possible, credit and interest rate risk. Credit risk is the risk of loss due to failure of the security issuer or backer. Interest rate risk is the risk that the market value of investments will fall due to an increase in the general level of interest rates.
2) Maintenance of sufficient liquidity to meet cash flow requirements – Attainment of a market average rate of return during budgetary and economic cycles, taking into account the District's investment risk constraints and cash requirements. The Treasurer, acting in accordance with District procedures and this policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price change, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
Types of Investments
District funds may be placed in
any instrument or medium approved by the State of
Prohibited Investments
The District shall not be authorized to invest in any security that has the possibility of returning a zero or negative yield if held to maturity except that investment in U. S. Treasury Certificates of indebtedness ("SLUGS") issued by the U. S. Bureau of Public debt is authorized. Prohibited investments shall include inverse floaters, range notes and interests only strips derived from a pool of mortgages.
Access to Funds
The premise underlying the District’s investment policy is to ensure that money is available when needed. To this end, the District will maintain funds on deposit in a local bank or other federal or state regulated depository sufficient to meet expenditure requirements for the following six months as represented in the most recent budget adopted by the Board of Directors.
Authority
The Treasurer of the Board of Directors of the Monterey Peninsula Water Management District is responsible for the custody and management of District investments. Management activity will adhere to applicable state law, provisions of the District’s enabling legislation and this policy. The Treasurer may delegate ministerial duties related to the investment program to other District staff, but shall retain responsibility for all transactions undertaken and shall establish a system of internal control to regulate activity of subordinate personnel.
Reports
Pursuant to Government Code Section 53646 the Treasurer shall provide quarterly investment reports to the Board of Directors. Each report shall include a listing of all securities held in the portfolio. It shall list investments by type, issuer, maturity, par value, market value, and dollar amount invested. The report shall contain a citation of compliance with this policy, an explanation for any non-compliance and a statement as to the ability or inability to meet expenditure requirements for the following six months. District monies over which the Treasurer does not exercise control or safekeeping e.g., does not determine how the funds are to be invested or banked, need not be included in the report. Agency contributions to the Public Employees Retirement System need not be included. Deferred compensation funds (Section 457) held by third-party administrators and invested at the direction of program participants need not be included pursuant to PL 104-188.
Audits
The District's portfolio, quarterly reports, policy, internal control procedures and investment practices shall be the subject of scrutiny in the course of annual audits performed by external independent auditors selected by the Board of Directors and approved by the Monterey County Auditor-Controller.
Policy Review
The Board of Directors shall review this policy at least annually.
ELIGIBLE SECURITIES
* Securities of the U.S. Government and its agencies
* Obligations of the State of
* Certificates of Deposit (or Time Deposits) placed with commercial banks, savings banks, and/or savings and loan companies
* Negotiable certificates of deposit
* Credit Union Certificates of Deposit
* Certificates of Deposit of domestic branches of foreign banks
* Bankers Acceptances
* Commercial Paper
* Medium Term Corporate Notes
* Mortgage backed securities
* Mutual Funds
* Local Agency Investment Fund
*
* Repurchase Agreements
* Reverse Repurchase Agreements
* Financial futures and options
* Other investment instruments that become eligible for investment as approved by the State of California