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R-93-03-11-9B - 3/11/1993RS03113B RESOLUTION NO. /C' 93- 9 WHEREAS, by Resolution No. 1462R the City Council has previously adopted a written policy for the investment of City funds, and WHEREAS, changing economic conditions have resulted in decreased investment income for the City, and WHEREAS, the Council deems it fiscally prudent to amend the investment policy to allow investment in instruments whose maturities exceed two years, Now Therefore, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That paragraph VI of the written investment policy is hereby amended to read as follows: VI. INVESTMENT STRATEGY The City shall maintain a comprehensive cash management program which includes collection of accounts receivable on a timely basis, vendor payment in accordance with invoice terms and State law, and prudent investments of its available cash. Effective cash management is recognized as essential to good fiscal management. An active cash management and investment policy will be pursued by the City in order to maximize investment interest as a viable and material revenue source to all operating and capital project funds. Earnings from investments will be used in a manner that will best serve the interest of the City of Round Rock. To maximize the effective investment of assets, this policy allows for the pooling of funds into one account for investment purposes with income earned allocated to each of the various funds participating at the time of purchase. The Investment Officer will develop and maintain cash flow analysis for all public funds for the purpose of determining the availability of investment funds. RESOLVED this llth day of March, 1993. ATTEST: E LAND, City Secretary 2. MIKE ROBINSON, Mayor City of Round Rock, Texas RS031131 RESOLUTION NO. WHEREAS, by Resolution No. 1462R the City Council has previously adopted a written policy for the investment of City funds, and WHEREAS, changing economic conditions have resulted in decreased investment income for the City, and WHEREAS, the Council deems it fiscally prudent to amend the investment policy to allow investment in instruments whose maturities exceed two years, Now Therefore, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That paragraph VI of the written investment policy is hereby amended to read as follows: VI. INVESTMENT STRATEGY The City shall maintain a comprehensive cash management program which includes collection of accounts receivable on a timely basis, vendor payment in accordance with invoice terms and State law, and prudent investments of its available cash. Effective cash management is recognized as essential to good fiscal management. An active cash management and investment policy will be pursued by the City in order to maximize investment interest as a viable and material revenue source to all operating and capital project funds. Earnings from investments will be used in a manner that will best serve the interest of the City of Round Rock. To maximize the effective investment of assets, this policy allows for the pooling of funds into one account for investment purposes with income earned allocated to each of the various funds participating at the time of purchase. The Investment Officer will develop and maintain cash flow analysis for all public funds for the purpose of determining the availability of investment funds. Assct3 of thc City Shall be invcatcd in inotrumcnt3 who3c maturitie3 do not cxcccd two ycar3 form thc timc of purcha3c. ATTEST: RESOLVED this 11th day of March, 1993. JOANNE LAND, City Secretary RS031131 MIKE ROBINSON, Mayor City of Round Rock, Texas DATE: March 9, 1993 SUBJECT: City Council Meeting, March 11, 1993 ITEM: 9.B. Consider a resolution amending the City's Investment Policy STAFF RESOURCE PERSON: David Kautz STAFF RECOMMENDATION: The City Finance Department manages an average cash balance of $30 Million. The investment of these funds is governed by the City Investment Policy, adopted by the City Council. The policy utilizes the elements of appicable law, business principles and common sense to establish an investment guide for achieving appropriate safety, liquidity and yield. The Investment Policy is a "living" document and must be amended from time to time to allow for better, prudent management of the City's funds. Staff is recommending an amendment to the policy which would allow investment in securities with maturities exceeding two years. The purpose for this amendment is necessitated by the current low investment yields from securities which mature in less than two years. For certain funds which have no short term usage (example: Revenue Bond Reserve Funds) and which also have federal arbitrage yield restrictions, the current investment market options allowed by the City's policy offer no suitable yields. With the ability to invest these funds for a longer period of time, the City could improve yield substantially.