City of Erlanger, Kentucky
Investment Policy
I. Purpose
The purpose of this Investment Policy is to establish guidelines for the investment of City funds in a manner that provides safety of principal, adequate liquidity, and a reasonable rate of return while complying with Kentucky Revised Statutes and City ordinances.
II. Scope
This policy applies to all financial assets of the City of Erlanger, excluding employee retirement funds administered separately.
The City may pool cash balances for investment purposes when permitted by law. Investment income shall be allocated proportionately, except where restricted by law or settlement requirements.
III. Investment Objectives
The City’s investment objectives, in order of priority, are:
A. Safety
Preservation of principal is the primary objective. Investments shall be made to minimize credit risk and interest rate risk.
B. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all reasonably anticipated operational needs.
C. Return on Investment
The City shall seek a reasonable market rate of return while maintaining safety and liquidity.
IV. Delegation of Authority
Responsibility for the City’s investment program is delegated to the Finance Director, under the administrative oversight of the City Administrator. The Finance Director may establish and maintain written procedures and internal controls necessary to administer the investment program in accordance with this policy and applicable law.
V. Standards of Care
A. Prudence
Investments shall be managed with the care, skill, prudence, and diligence that a prudent person would exercise.
B. Ethics
Employees and officials involved in investment activities shall avoid conflicts of interest and comply with all applicable ethics laws and City policies.
VI. Authorized Financial Institutions
The Finance Director shall maintain a list of approved financial institutions, broker/dealers, and investment advisors authorized to conduct investment transactions with the City.
Approved institutions may include:
- Nationally or state-chartered banks
- SEC-registered investment advisors
- Kentucky local government investment pools
- Nationally registered broker-dealers that are in good standing with the Financial Industry Regulatory Authority (FINRA)
- Other institutions authorized by Kentucky law
VII. Authorized Investments
Investments shall be limited to those permitted by KRS 66.480, including:
- U.S. Treasury obligations backed by the full faith of the United States
- U.S. Government agency securities
- Certificates of deposit
- Interest-bearing bank deposits
- Commercial paper permitted by law
- Repurchase agreements
- Money market mutual funds whose underlying assets consist solely of investments permitted under this policy
- Local government investment pools
All deposits shall be collateralized in accordance with Kentucky law.
VIII. Safekeeping and Internal Controls
All securities transactions shall be conducted on a delivery-versus-payment basis.
Securities shall be held by an independent third-party custodian in the name of the City.
The Finance Director shall maintain written internal controls to safeguard public funds.
IX. Diversification and Maturity
Investments shall be diversified by institution, maturity, and investment type to reduce risk.
Unless otherwise authorized by law or matched to a specific obligation, investments shall not exceed five (5) years to maturity.
X. Reporting
The Finance Director shall provide investment reports to the City Administrator and City Council annually
- Listing of investments
- Book and market values
- Maturity dates
- Portfolio yield
- Compliance with this policy
XI. Policy Review and Adoption
This policy shall be reviewed annually and may be amended by approval of the Erlanger City Council.
The City’s investments shall be made in accordance with KRS 66.480 and other applicable Kentucky laws.
Adopted by the City of Erlanger, Kentucky
Date: ______________________