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<br /> <br /> <br />Cash Management <br /> <br /> <br />It is the policy of the city to pool cash balances from all funds to maximize investment <br />earnings. Exceptions include legal and specific practical requirements that demand <br />segregation of funds. <br /> <br /> <br />Funds received are to be deposited into an interest bearing account with the city’s currently <br />designated official depository by the next business day. <br /> <br /> <br />Cash on hand is to be kept to the minimum required to meet daily operational needs. <br /> <br />Investments <br />It is the policy of the City of Elk River to invest public funds in a manner which will provide the <br />highest investment return with the maximum security while meeting the daily cash flow demands of <br />the entity while conforming to all state and local statutes governing the investment of public funds. <br />The investment policy applies to all financial assets of the municipality. These funds are accounted <br />for in the city’s Annual Financial Report and include all city funds with the exception of the Water <br />and Electric funds which fall under the investment policy adopted by the Elk River Utilities <br />Commission. <br /> <br />Investments shall be made with judgment and care under circumstances then prevailing which <br />persons of prudence, discretion, and intelligence exercise in the management of their own affairs, <br />not for speculation, but for investment, considering the probable safety of their capital as well as the <br />probable income to be derived. <br /> <br />The standard of prudence to be used by investment officials shall be the “prudent person” standard, <br />as defined by Minnesota Statute §356A.04, Subd. 2, and shall be applied in the context of managing <br />an overall portfolio. Investment officers acting in accordance with written procedures and the <br />investment policy and exercising due diligence shall be relieved of personal responsibility for an <br />individual security’s credit risk or market price changes, provided deviations from expectations are <br />reported in a timely fashion and appropriate action is taken to control adverse developments. <br />All investments shall be limited to those permitted by Minnesota Statute §118A. The primary <br />objectives, in priority order, of the City of Elk River’s investment activities shall be: <br /> <br /> <br />1.Safety <br />Investments shall be undertaken in a manner that seeks to ensure the preservation of <br />capital in the overall portfolio. To attain this objective, diversification is required in order <br />that losses on individual securities do not exceed the income generated from the remainder <br />of the portfolio. <br /> <br /> <br />2.Liquidity <br />The investment portfolio will remain sufficiently liquid to enable the city to meet all <br />operating requirements which might be reasonably anticipated. <br /> <br /> <br />3.Return on Investment <br />The investment portfolio shall be designed with the objective of attaining a market rate of <br />return throughout budgetary and economic cycles. The investment strategy will take into <br />account the constraints on risk and cash flow characteristics of the investment portfolio. <br /> <br /> <br />Financial Management Policies Page 3 <br /> <br />