The town council will review a resolution to adopt a new Investment and Portfolio Policy and to establish an Investment Oversight Committee during its 7 p.m. work session tonight at the Herndon Police Department Community Room, at 397 Herndon Parkway. If adopted, the change would be the first for the town’s policy since it was adopted in 2004.
The town’s staff lists three primary objectives of the policy, beginning with the general safety of the town’s financial position to ensure capital losses are avoided. Additionally, the policy would seek to readily establish liquidity with one day’s notice to meet the town’s needs in order to ensure proper coverage of expenses in order to protect against potential losses.
The final objective of the policy is aimed at designing the town’s portfolio to regularly exceed the higher total of either the average return on three-month U.S. Treasury bills or the average rate on federal funds, and “optimize returns on investment while adhering to all applicable federal, Virginia State Laws, and Local Statutes governing the investments of public funds,” according to a staff report.
All investment activity of public funds for the town are applied to the proposed investment policy and included in the Town of Herndon’s Comprehensive Financial Report. Those funds include the General Fund, Water and Sewer Fund, Chestnut Grove Cemetery Fund, Golf Course Fund, Downtown Parking Enterprise Fund, Capital Projects Fund, the American Rescue Recovery Act Fund, and others that may be created.
In addition to the potential adoption of the investment and portfolio policy, the town will consider establishing an Investment Oversight Committee to “review general investment strategies, monitor results; discuss internal controls, and economic updates,” according to staff documents.
The members of the committee would be composed of one member of the town council, a member of the town attorney’s office, the town manager, director of finance for the town, and one member of the public.
The scope and investment objectives would also include maintaining roles, responsibilities and standard of financial care, and establish suitable and authorized investments while creating investment diversification.
Also, the policy objectives would include risk and performance standards, as well as maintaining a list of authorized financial institutions that may provide investment services and a list of approved security brokers or dealers also authorized to provide investment services in the state.
Additional objectives include securing the town’s assets through third-party custody and safekeeping procedures to protect against potential fraud and embezzlement, and establishing reporting and disclosure standards for reports to be delivered to the town manager and Investment Oversight Committee.
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