Laserfiche WebLink
Financial Management Policies Page 15 <br />demand, free of exchange or any other charges, the collateral pledged. Interest earned on assigned collateral <br />will be remitted to the financial institution so long as it is not in default. The city may sell the collateral to <br />recover the amount due. Any surplus from the sale of collateral shall be payable to the financial institution, its <br />assigns, or both. Investments may be held in safekeeping with: <br />1. Any Federal Reserve Bank; <br />2. Any bank authorized under the laws of the United States or any state to exercise corporate trust <br />powers, including, but not limited to, the bank from which the investment is purchased; <br />3. A primary reporting dealer in United States government securities to the Federal Reserve Bank of <br />New York; or <br />4. A securities broker/dealer having its principal executive office in Minnesota, licensed and registered <br />pursuant to chapter 80A, or an affiliate of it, regulated by the Securities and Exchange Commission; <br />provided that the government entity’s ownership of all securities is evidenced by written <br />acknowledgments identifying the securities by the names of the issuers, maturity dates, interest rates, <br />CUSIP number, or other distinguishing marks. <br />The city will minimize investment custodial credit risk by permitting brokers that obtained investments for <br />the city to hold them only to the extent there is SIPC and excess SIPC coverage available. Securities <br />purchased that exceed available SIPC coverage shall be transferred to the city’s custodian. <br />The city will diversify its investments by security type and institution. In establishing specific diversification <br />strategies, the following general policies and constraints shall apply: <br />A. Portfolio maturities shall be staggered to avoid undue concentration of assets at a specific maturity <br />sector, with one broker-dealer or financial institution, or any one type of instrument. The maturities <br />selected shall provide for stability of income and reasonable liquidity. <br />B. The Finance Manager shall establish an annual process of independent review by an external <br />auditor. This review will provide internal control by assuring compliance with policies and <br />procedures. <br />C. The investment portfolio will be designed to obtain a market average rate of return during <br />budgetary and economic cycles, taking into account the City of Elk River’s investment risk <br />constraints and cash flow needs. <br />D. The Finance Manager shall prepare an investment report directed to the City Council on a quarterly <br />basis including: <br />1. Listing of individual securities held at the end of the reporting period. <br />2. Listing of investments by maturity date. <br />3. Percentage of the total portfolio which each type of investment represents. <br />4. Market to market analysis. <br />5. Rate of return for the quarter. <br />Fund Balance <br />Fund balance reserves are an important component in ensuring the overall financial health of a community, <br />by giving the city sufficient funds to meet contingency and cash-flow timing needs. In establishing an <br />appropriate fund balance, the city needs to consider the demands of cash flow, need for emergency reserves, <br />ability to manage fluctuations of major revenue sources, credit rating and long-term fiscal health. <br />A. Classification of Fund Balance/Procedures <br />1.Nonspendable <br />Amounts that are not in a spendable form or are required to be maintained intact. Examples are <br />inventory or prepaid items. <br />Page 59 of 294