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R-95-99 Amending Village of Lemont Statement of Financial Policy to Incorporate an Investment PolicyRESOLUTION 5 -- 9 RESOLUTION AMENDING VILLAGE OF LEMONT STATEMENT OF FINANCIAL POLICY TO INCORPORATE AN INVESTMENT POLICY WHEREAS, in 1998 the State of Illinois amended the Public Funds Investment Act to require units of government to adopt a written Investment Policy by January 1, 2000; and WHEREAS, on April 25, 1994, the Village of Lemont adopted Resolution 313 Approving a Village of Lemont Statement of Financial Policy; and WHEREAS, the Village of Lemont desires to amend the Statement of Financial Policy to incorporate a Village Investment Policy. NOW, THEREFORE, BE IT RESOLVED by the President and Board of Trustees that the Amended Village of Lemont Statement of Financial Policy attached hereto as Exhibit A is hereby adopted. PASSED AND APPROVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF LEMONT, COUNTIES OF COOK, WILL, AND DU PAGE, ILLINOIS, on this 22nd. day of November , 1999. AYES NAYS PASSED ABSENT John Benik Debby Blatzer Keith Latz Connie Markiewicz Richard Rimbo Mary Studebaker Approved by me this 22nd day of Village Clerk RI ASNESKI, Villa President '! 0 GUI n+aI pproved ,a<to form: Village Clerk VILLAGE OF LEMONY STATEMENT OF FINANCIAL POLICY Adopted 4/94 Revised 11/99 Jean M. Nona, Treasurer VILLAGE OF LEMONT STATEMENT OF FINANCIAL POLICY TABLE OF CONTENTS ARTICLE I - BUDGETARY POLICY 1.1 Revenue and Expenditure Estimates 1 1.2 Funding Expenses 1 1.3 Use of Carryover Funds 1 1.4 Fund Reserves 1 1.5 Balanced Budget 1 ARTICLE II - FINANCIAL MANAGEMENT 2.1 Debt Policy 1 2.2 Bond Payback Period 1 2.3 Use of the Working Cash Fund 2 2.4 Disposal of Village Policy 2 2.5 Accounting Manipulations 2 2.6 Labor Contract Financial Analysis 2 2.7 Maintenance of Muncipal Assets 2 2.8 User Fees 2 2.9 Insurance Analysis 2 2.10 Deposit of Funds 2 2.11 Required Signators 2 2.12 Internal Financial Controls 3 2.13 Procedures Manual 3 2.14 Purchasing Manual 3 2.15 Village Board Approval of Accounts 3 ARTICLE III - INVESTMENT POLICY 3.1 Policy and Scope 3 3.2 Prudence 3 3.3 Objective 3 3.4 Delegation of Authority 3 3.5 Ethics and Conflict of Interest 4 3.6 Authorized and Suitable Investments 4 3.7 Authorized Local Investment Institutions 4 3.8 Collateralization 4 3.9 Diversification 4 3.10 Maximum Maturities 4 3.11 Reporting 5 ARTICLE IV - CAPITAL IMPROVEMENT FINANCING 4.1 Capital Improvement Program 5 4.2 Capital Planning Grants 5 4.3 Utility Extension 5 4.4 Special Assessment Consideration 5 ARTICLE 1 — BUDGETARY POLICY 1.1 REVENUE AND EXPENDITURE ESTIMATES In preparing the budget, all revenues shall be projected conservatively, and all expenditures shall be projected liberally. 1.2 FUNDING EXPENSES Any proposed spending program must also be accompanied by a revenue plan to fully meet the expenditure. As an alternative, new spending programs may be presented with an offsetting reduction of expenses in another program. 1.3 USE OF CARRYOVER FUNDS A previous year's carryover may be considered as revenue in a subsequent year, however, only to fund specific items which were budgeted but not purchased in the previous fiscal year. 1.4 FUND RESERVES Accumulated fund reserves may be used as revenues to fund projects, provided that they are either capital items, or an unforeseen expense specifically approved by the Village Board. 1.5 BALANCED BUDGET Unless a true emergency occurs, the Village Board shall not pass a budget in which the proposed revenues are less than the proposed expenditures. if such an emergency occurs, the Board must understand the cash balance for the fund will be reduced, borrowing may have to occur, or revenues may have to be increased. ARTICLE II — FINANCIAL MANAGEMENT 2.1 DEBT POLICY The Village will not borrow money to meet current expenses. 2.2 BOND PAYBACK PERIOD When the Village finances capital projects by issuing bonds, it will pay back the bonds within a period not to exceed the expected useful live of the project. 2.3 USE OF THE WORKING CASH FUND The Village will use its Working Cash Fund only to avoid short term borrowing expenses and will not use it to fund programs. The Working Cash Fund will be paid back immediately when property taxes become available. 2.4 DISPOSAL OF VILLAGE PROPERTY The money from the sale of property or equipment will normally not be used to meet current operating expenses, but rather for the purchase and replacement of other equipment or other assets. 2.5 ACCOUNTING MANIPULATIONS The Village will avoid accounting manipulations, which postpone current expenses to future periods or accrue revenues from a future year to the current fiscal year to make current revenues appear higher. 2.6 LABOR CONTRACT FINANCIAL ANALYSIS The Village will avoid entering into Tong -term labor contracts without carefully costing out fringe benefits. Such costs include health insurance, vacation /holiday leave, sick leave, education provisions, etc. 2.7 MAINTENANCE OF MUNICIPAL ASSETS The Village will maintain its utilities, streets, buildings and other assets at a level adequate to protect the Village's capital investment and to minimize future maintenance and replacement costs. 2.8 USER FEES The Village will periodically recalculate the full costs of activities supported by user charges to identify the impact of inflation and other cost increases. User charges will be adjusted accordingly. 2.9 INSURANCE ANALYSIS The Village shall periodically investigate if insurance pools will save money as compared to alternative insurance coverage. The Village will also periodically investigate levels of coverage. 2.10 DEPOSIT OF FUNDS The Village and any persons representing the Village will remit to the Finance Department all monies received to be deposited in designated financial institutions in a timely manner. 2.11 REQUIRED SIGNATORS The Village will require all disbursements to be signed by two of the three authorized signators who have been approved via Village Board resolution. 2 2.12 INTERNAL FINANCIAL CONTROLS The Village will establish internal controls within the Finance Department, which will physically separate the functions of collection, deposition and reporting of monies received as much as possible. 2.13 PROCEDURES MANUAL The Finance Department shall maintain a Procedure Manual outlining procedures for the receiving of Village funds. 2.14 PURCHASING MANUAL The Finance Department shall monitor purchasing activity to insure it complies with requirements of the Purchasing Manual. 2.15 VILLAGE BOARD APPROVAL OF ACCOUNTS No accounts shall be opened or closed without Village Board approval via a resolution. ARTICLE 3 — INVESTMENT POLICY 3.1 POLICY AND SCOPE The Village shall invest available financial assets in a manner that will provide the highest return with the maximum security while conforming to all state and local statutes governing the investment of public funds. 3.2 PRUDENCE Investments shall be made with judgement and care considering the probable safety of capital as well as the probable income to be derived. The standard of prudence to be used shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. 3.3 OBJECTIVE The primary objectives, in priority order, of the Village shall be: a. Safety — Investments of the Village shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. b. Liquidity — The portfolio shall remain sufficiently liquid to enable the Village to meet all reasonable operating requirements. c. Return on investments — The portfolio shall be designed to attain a rate of return throughout the budgetary and economic cycles of the Village while meeting investment risk constraints and cash flow requirements of the Village. 3.4 DELEGATION OF AUTHORITY Management responsibility for the investment program is delegated to the Village Treasurer. 3 3.5 ETHICS AND CONFLICT OF INTEREST The Treasurer shall refrain from personal business activity that could conflict with proper execution of the investment program. 3.6 AUTHORIZED AND SUITABLE INVESTMENTS The Village is empowered by statute to invest in the following types of securities: a. U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value; b. Canadian government obligations (payable in local currency); c. Certificates of deposit and other evidences of deposit at financial institutions: d. Investment -grade obligations of state, provincial and local governments and public authorities; e. Repurchase agreements whose underlying purchased securities consist of the foregoing; f. Money markets and NOW accounts; g. Local government investment pools, either state- administered or through joint powers statutes and other intergovernmental agreement legislation. 3.7 AUTHORIZED LOCAL INVESTMENT INSTITUTIONS The Village, when seeking investment opportunities not in a pool, (see 3.6g), may seek proposals from the banks and /or financial institutions located within its corporate limits. Any bank or institution wishing to provide the Village with an investment vehicle shall submit their most recent audited financial statement to the Treasurer. 3.8 COLLATERALIZATION Collateralization in the amount of 102% and held by an independent third party, shall be required on: a. Certificates of Deposit in an amount over the F.D.I.C. insured amount; and b. Repurchase (and reverse) agreements. 3.9 DIVERSIFICATION The Village will diversify its investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, no more than 50% of the Village's total investment portfolio will be invested in a single security type or with a single financial institution. 3.10 MAXIMUM MATURITIES The Village will attempt to match its investments with anticipated cash flow requirements. Reserve funds may be invested for more than two years if 4 the maturity of such investments are made to coincide as nearly as practicable with the expected use of the funds. 3.11 REPORTING The Treasurer shall provide to the Village Board semi - annually, investment reports which provide a clear picture of the status of the current investment portfolio. The report should include changes in the portfolio structure. ARTICLE IV — CAPITAL IMPROVEMENT FINANCING 4.1 CAPITAL IMPROVEMENT PROGRAM The Village shall maintain a five -year capital improvement plan and update it annually. It will acquire and replace all equipment and undertake all construction projects only in accordance with the plan. The Village will not propose any equipment purchase or project in the budget unless it has been anticipated in the capital improvement program. 4.2 CAPITAL PLANNING GRANTS Because state and federal grants tend to have local match requirements and may result in long -term financial commitments, the Village will seek grants to finance only those capital improvements that are consistent with the capital improvement plan. 4.3 UTILITY EXTENSION The developers or benefiting residents rather than the general public will pay the cost of extending utilities and improvements in new subdivisions, unless oversizing or some engineering issue warrants Village participation. 4.4 SPECIAL ASSESSMENT CONSIDERATION Special assessments or special service areas will be considered to make improvements in existing subdivisions.