ORDER iVO. ":, l~~
flF~F'ROVAL Of= REVISED INVESTMENT F~OLICY
On this the 9+,h day of December 1996, ~..ipon motion made by
J~_~dge Robert ~. Denson, seconded by Gommissi.ol~er~ Lackey, the
Gn~_~r~t ~~nanimo~~sly approved by a vote of S-Q~-@, the revised
investment policy and install an rovestment committee to
consist of the Co~_~nty J~_~dge, Ga~_inty ~~_~ditor and tt-~e Ga~_tnty
Tre~~s~.-r~er.
REVISED INVESTMENT POLICY
FOR THE
COUNTY OF KERR
KERRVILLE, TEXAS
DECEMBER 09, 1996
TABLE OF CONTENTS
I. INVESTMENT SCOPE .............................. 1
II. INVESTMENT OBJECTIVE .......................... 2
III. REJSPONSIBILITY AND CONTROL ................... 4
IV. INVESTMENT REPORTING .......................... 6
V. INVESTMENT INSTITUTIONS ....................... 7
VI. COLLATERAL AND SAFEKEEPING .................... 8
VII. INVESTMENT TYPES .............................. 9
VIII. TEXAS PUBLIC FUNDS INVESTMENT CERTIFICATION...12
I. INVESTMENT SCOPE
GENERAL STATEMENT
This investment policy applies to the investment activities of the
County of Kerr, Kerrville, Texas. This policy serves to satisfy the
statutory requirements of Texas Government Code Sections 2256.004 and
2256.052, to define and adopt a formal investment policy.
FUNDS INCLUDED
All financial assets of all funds of the County of Kerr, Kerrville,
Texas, at the present time and any funds to be created in the future
and any other funds held in custody by the County Treasurer shall be
administered in accordance with the provisions of these policies,
unless expressly prohibited by law or unless it is in contravention of
any depository contract between Kerr County and any depository bank.
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II. INVESTMENT OBJECTIVES
SAFETY
Kerr County is concerned about
therefore, safety of principal
investment transaction.
the return of its principal;
is a primary objective in any
LIAUIDITY
The countys' investment portfolio must be structured in a manner which
will provide the liquidity necessary to pay obligations as they became
due.
DIVERSIFICATION
The portfolio of the county shall be diversified to eliminate the risk
of loss resulting from one concentration of assets in a specific
maturity, a specific issuer or a specific class of investments.
Investments of the county shall always be selected that provide for
stability of income and reasonable liquidity.
YIELD
It is the objective of county to earn the maximum rate of return
allowed on its investments within the policies imposed by its safety
and liquidity objectives and state and federal law governing
investment of public funds.
MATURITY
Portfolio maturities will be staggered in a way to achieve the highest
return of interest but at the same time provide for the necessary
liquidity to meet the cash needs of the county.
ACTIVE PORTFOLIO MANAGEMENT
The county intends to pursue an active versus a passive portfolio
management philosophy. Securities may be sold or exchanged before
they mature if market conditions present an opportunity for the county
to benefit from the trade. Under this investment policy, all
investments will be made with the intent of pursuing, at the time of
purchase, the best rate of return on securities held until maturity,
and not with intent of speculative trading.
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QUALITY AND CAPABILITY OF INVESTMENT MANAGEMENT
It is the policy of the county to provide periodic training in
investments for the County Treasurer through courses and seminars
offered by professional organizations and associations in order to
insure the quality and capability for the County Treasurer in making
investment decisions and in order to comply with Chapter 2256.008 of
the Government Code.
INVESTMENT STRATEGIES
In accordance with the Public Funds Investment Act, Section 2256.005.
a separate written investment strategy will be developed for Kerr
Countys' control.
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III. INVESTMENT RESPONSIBILITY AHD CONTROL
INVESTMENT DELEGATE OF THE COUNTY
Pursuant to Texas Local Government Code Section 116.112, the County
Treasurer, under the direction of the Kerr County Commissioners'
Court, is authorized to withdraw any funds deposited in a county
depository that are not immediately required to pay obligations of the
county and invest those funds as provided by this order unless such an
investment is contrary to the terms of the depository contract.
INVESTMENT COMMITTEE
The Commissioners' Court may appoint a committee to advise the Court
and the Treasurer on investment policy. The County Treasurer will
serve as the Chairperson of the Kerr County Investment Committee. The
Committee, or the Treasurer in the event that no committee is
appointed, will adhere to the following procedures:
On a quarterly basis, a member of the committee will inform the
Commissioners' Court on the countys' investment posture.
Annually, the investment policy will be re-affirmed or updated for the
Court.
1. In making such reports and recommendations to the Court, the
Committee shall be governed by the following guidelines:
2. Investing by the County Treasurer is not to be viewed as a profit
center, but rather, as the timely return of capital;
3. The County Treasurer will purchase securities only from brokers
who meet the following requirements:
a. Approval by the Committee or by the Commissioners Court in the
event that no committee is appointed.
b. Those who have had a background check conducted by the
National Association of Securities Dealer, which has been
provided to, and approved by, the Committee or the Court in
the event a committee is not appointed.
c. Those who have signed the Texas Public Funds Investment
Certification.
PRUDENCE
County investments shall be made not for speculation, but rather with
the exercise of due care, caution, and good judgement, considering the
safety of capital, liquidity, as well as the probable income to be
earned.
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LIABILITY OF TREASURER
In accordance with Section 113.005, Local Government Code, the County
Treasurer is not responsible for any loss of the county funds through
the failure or negligence of a depository. This section does not
release the treasurer from responsibility for a loss resulting from
the official misconduct or negligence of the Treasurer, including a
misappropriation of the funds, or from responsibility for funds until
a depository•is selected and the funds are deposited.
STATEMENT OF DISCLOSURE
If the County Treasurer or any member of the Committee has a personal
business relationship with any entity or is related within the second
degree by affinity or consanguinity to an individual seeking to sell
an investment to the county, such person shall file a statement
disclosing that personal business interest or relationship with the
Texas Ethics Commission and the Commissioners Court in accordance with
Government Code 2256.005 (i).
AUDIT CONTROL
The Kerr County Treasurer will establish liaison with the Kerr County
Auditor in preparing investment forms to assist the County Auditor for
accounting and auditing control.
SUBJECT TO AUDIT
The Kerr County Treasurer is subject to audit by the
Auditor. In addition, it is the policy of Kerr County
Court, at a minimum, to have an audit of all county
independent auditing firm as required by law. The
Treasurer and the countys' investment procedures shall
the audit and any special audits as required.
Kerr County
Commissioners'
funds by an
Kerr County
be subject to
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IV. INVESTMENT REPORTING
AUARTERLY REPORTING
The Kerr County Treasurer, in its quarterly reporting of the cash fund
balances of •the county to the Commissioners' Court and to the County
Auditor, will report the amount and type of investments for each
county fund.
ANNUAL REPORT
The Kerr County Treasurer will conform to Government Code Title 10,
Chapter 2256 and prepare a written yearly report concerning the
countys' local funds investment transactions for the preceding year
and describing in detail the investment position of the county as of
the date of the report.
NOTIFICATION OF INVESTMENT CHANGES
It shall be the duty of the Treasurer of Kerr County, Texas and the
Investment Committee, to notify the Kerr County Commissioners' Court
of any significant changes in current investment methods and
procedures prior to their implementation.
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V. INVESTMENT INSTITUTIONS
INVESTMENT INSTITUTIONS DEFINED
The Kerr County Treasurer shall invest county funds with any or all of
the following institutions or groups consistent with federal and state
law and the ourrent depository bank contract:
1.	Depository bank;		
2.	Other state or national banks domiciled in Texas	that are	insured
	by the Federal Deposit Insurance Corporation;		
3.	Brokers or dealers of United State government securities, l	icensed
	under the Texas Securities Act and approved	by the	County
	Investment Committee or the Court in the event a	Committee	is not
	appointed;		
4.	Savings and loan associations domiciled in Texas	that are	insured
	by FSLIC (or its successor);		
5.	Public funds investment pool.		
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VI. INVESTMENT COLLATERAL AND SAFEKEEPING
COLLATERAL OR INSURANCE
The Kerr County Treasurer shall insure that all county funds are fully
collateralized or insured consistent with federal and state law and
the current Bank Depository Contract in one or more of the following
manners:
1. FDIC insurance coverage;
2. Obligations of the United States or its agencies and
instrumentalities;
3. Direct obligations of the State of Texas or its agencies;
4. Other obligations, the principal of and interest on which are
unconditionally guaranteed or insured by the State of Texas or its
agencies and instrumentalities
5. Obligations of states, agencies, counties, cities and other
political subdivisions of any state having been rated as to
investment quality by a nationally recognized investment rating
firm and having received a rating of not less than A or its
equivalent; or
6. Any other manner allowed by law.
SAFEKEEPING
All purchased securities shall be held in safekeeping by the county,
or a county account in a third party financial institution, or with a
Federal Reserve Bank.
All certificates of deposit, insured by FDIC, purchased outside the
Depository Bank shall be held in safekeeping by either the county or
county account in a third party financial institution.
All pledged securities by the Depository Bank shall be held in
safekeeping by the county, or a county account in a third party
financial institution, or with a Federal Reserve Bank.
DELIVERY VS. PAYMENT
It is the policy of the county that all Treasury Bills, Notes, Bonds,
and Government Agencies' securities shall be purchased using the
"delivery vs. payment" (DVP) method through the Federal Reserve
System. By so doing, county funds are not to be released until the
county has received, through the Federal Reserve wire, the securities
purchased.
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VII. INVESTMENT TYPES
AUTHORIZED
The Kerr County Treasurer shall use any or all of the following
authorized investment instruments consistent with governing law.
1. Obligations of the United States or its agencies and
instrumentalities.
2. Direct obligations of this state or its agencies and
instrumentalities.
3. Other obligations, the principal and interest of which are
unconditionally guaranteed or insured by, or backed by the full
faith and credit of, this state or the United States or their
respective agencies and instrumentalities.
4. Obligations of states, agencies, counties, cities, and other
political subdivisions of any state rated as to investment quality
by a nationally recognized investment rating firm not less than A
or its equivalent.
5. Certificates of deposit if issued by a state or national bank
domiciled in this state or a savings and loan association
domiciled in this state and is:
a. guaranteed or insured by the Federal Deposit Insurance
Corporation or its successor;
b. secured by obligations that are described by Section 2256.009
(a) of the Public Funds Investment Act; and
c. secured in any other manner and amount provided by law for
deposits of the county.
6. A fully collateralized repurchase agreement, as defined in the
Public Funds Investment Act, if it:
a. has a defined termination date;
b. is secured by obligations described by Section 2256.009(a)(1)
of the Public Funds Investment Act; and
c. requires the securities being purchased by the county to be
pledged to the county, held in the countys' name, and
deposited at the time the investment is made with the county
or with a third party selected and approved by the county;
and d. is placed through a primary government securities
dealer, as defined by the Federal Reserve, or a financial
institution doing business in this state.
Notwithstanding any law, the term of any reverse security repurchase
agreement may not exceed 90 days after the date the reverse security
repurchase agreement is delivered. Money received by a county under
the terms of a reverse security repurchase agreement shall be used to
acquire additional authorized investments, but the term of the
authorized investments acquired must mature not later than the
expiration date stated in the reverse security repurchase agreement.
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7. Commercial paper is an authorized investment under this chapter if
the commercial paper:
a. has a stated maturity of 270 days or fewer from the date of
its issuance; and
b. is rated not less than A-1 or P-1 or an equivalent rating by
at least, two nationally recognized credit rating agencies or
one nationally recognized credit rating agency and is fully
secured by an irrevocable letter of credit issued by a bank
organized and existing under the laws of the United States or
any state.
8. Mutual funds and money market mutual funds with limitations
described below:
A no-load money market mutual fund is authorized if it:
a. is regulated by the Securities and Exchange Commission;
b. has a dollar-weighted average stated maturity of 90 days or
fewer; and
c. includes in its investment objectives the maintenance of a
stable net asset value of S1 for each share.
A no-load mutual fund is authorized if it:
a. is registered with the Securities and Exchange Commission;
b. has an average weighted maturity of less than two years;
c. is invested exclusively in obligations approved by this
subchapter;
d. is continuously rated as to investment quality by at least one
nationally recognized investment rating firm of not less than
AAA or its equivalent; and
e. conforms to the requirements set forth in Sections 2256.016(b)
and (c) relating to the eligibility of investment pools to
receive and invest funds of investing entities.
Relative to mutual funds and money market mutual funds, the county
may not:
a. invest in the aggregate more than 80 percent of its monthly
average fund balance, excluding bond proceeds and reserves and
other funds held for debt service, in money market mutual
funds or mutual funds, either separately or collectively;
b. invest in the aggregate more than 15 percent of its monthly
average fund balance, excluding bond proceeds and reserves and
other funds held for debt service, in mutual funds;
c. invest any portion of bond proceeds, reserves and funds held
for debt service, in mutual funds; or
d. invest its funds or funds under its control, including bond
proceeds and reserves and other funds held for debt service,
in any one mutual or money market mutual fund in an amount
that exceeds 10 percent of the total assets of the mutual
funds or money market mutual funds.
9. Eligible investment pools if the Commissioners' Court by
resolution authorizes investment in the particular pool. An
investment pool shall invest the funds it receives from entities
in authorized investments permitted by the Public Funds Investment
Act, A county by contract may delegate to an investment pool the
authority to hold legal title as custodian of investments
purchased with its local funds.
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PROHIBITED
~'he Kerr County Treasurer has no authority to use the following
investment instruments which are strictly prohibited by the Public
Funds Investment Act:
1. Obligations whose payments represent the coupon payments on the
outstanding principal balance of the underlying mortgage-backed
security collateral and pays no principal;
2. Obligations whose payment represents the principal stream of cash
flow from the underlying mortgage-backed security collateral and
bears no interest;
3. Collateralized mortgage obligations the interest rate of which is
determined by an index that adjust opposite to the changes in a
market index.
It is the policy of Kerr County not to invest in the following
investment instruments which are likely to cause investment risk:
1. Any and all collateralized mortgage obligations;
2. Bankers' acceptances;
3. Corporate bonds;
4. Eurodollar floating rate/fixed rate notes;
5. Farmers home administration insured notes;
6. Small business administration debentures and pools;
7. Stripped mortgage-backed securities;
8. Strips ( U. S. Treasury) ; and
9. Student loan marketing association discount notes.
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VIII. TEXAS PUBLIC FUNDS INVESTMENT CERTIFICATION
In accordance with Texas Government Code 2256.005(k?, I certify that
all relevant sales personnel dealing with the Kerr County account have
thoroughly reviewed and read the investment policies, strategies and
objectives o~f Kerr County as well as Chapter 2256, Texas Government
Code, and agree to abide by said laws and policies. I further certify
that my organization has implemented reasonable procedures and
controls designed to preclude imprudent investment activities arising
out of transactions conducted between our organization and Kerr
County. We will notify you immediately by telephone and in writing in
the event of a material adverse change in our financial condition. We
pledge to exercise due diligence in informing you of all foreseeable
risks associated with financial transactions conducted with our firm.
Business Organization
Signature
Representative
Signature
Principal
I have provided Kerr Countys'
Texas Public Funds Investment
agreement on file.
Signature
Kerr County Treasurer
policies,
Act to
ands
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Date
Date
strategies and a copy of
pledge to maintain
Date
the
_o f
this
COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND FIVE COPIES OF THIS REQUEST AND DOCUMENTS
TO BE REVIEWED BY THE COURT.
MADE BY: Barbara NemP(`.
MEETING DATE: December 09 ,. 1996
SUBJECT: (PLEASE BE SPECIFIC) _
OFFICE: Treasurer
TIME PREFERRED: A . M .
Consider and discuss revised TnyPStrriPnt Pelic.3i
EXECUITVE SESSION REQUESTED: (PLEASE STATE REASON)
ES'TIlVIATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
NAME OF PERSON ADDRESSING THE COURT:
10 min
Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5.
Chapter 551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:

All Agenda Requests will be screened by the County Judge's Office to determine if adequate information has
been prepared for the Court's formal consideration and action at time of Court Meetings. Your cooperation will
be appreciated and contn~bute towards you request being addressed at the earliest opportunity. See Agenda
5:00 P.M. previous Tuesday.
Request Rules Adopted by Commissioners' Court.
Order No. 23758
approval of Revised
Investment Po]_icv
December 9, 1996
Vol. U pa 835