Newark Public Library Investment Policy
The members of the Newark Public Library Board of Trustees are the fiscal body of the Library.
The members serve without compensation.
I) Policy Statement and Scope
This document will govern the investment activities of the Newark Public Library. It is the policy of the Library to invest funds in a manner that will maximize the security of the principal while satisfying cash flow demands using approved methods that will provide the highest possible return. All investments will conform to applicable laws and regulations of New York State.
II) Investment Objective
· The primary objectives of the library’s financial investments are:
à Preservation of Capital – The preservation of capital is the foremost objective of the investment program. At no time should the safety of the portfolio’s principal investment be impaired or jeopardized. All investments shall be undertaken in a manner that first seeks to preserve capital and secondly attempts to fulfill other investment objectives.
à Liquidity – The Library’s investment portfolio is to remain sufficiently liquid to enable the Library to meet those operating requirements that might be reasonably anticipated.
à Yield – The Library’s investments should generate the highest available return without sacrificing the first two objectives.
· Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence might exercise in the management of their own affairs.
III) Delegation of authority
Management responsibility for the Library’s investment program is hereby delegated to the Treasurer, who is the Library’s chief fiscal officer. The Treasurer shall be responsible for the implementation of the investment program and the establishment of investment procedures consistent with this policy. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Treasurer.
IV) Authorized and Suitable Investments
The following investments are deemed to be suitable for inclusion in the Library’s investment program. The Treasurer is authorized to invest library funds only in those investments specifically delineated below:
· U. S. Treasury Bills and Notes, for which the full faith and credit of the United States Government is pledged for the repayment of principal and interest;
· Bonds, notes and other obligations issued by any federal government agency or instrumentality;
· Bonds or other obligations of the State of New York;
· Demand deposit accounts (such as checking accounts) established with local financial institutions, and properly insured through the Federal Deposit Insurance Corporation (FDIC) or suitable collateralization;
· Certificates of Deposit (CD) issued by local financial institutions, and properly insured through the FDIC or suitable collateralization.
V) Prohibited Investments
The fiscal officer may not purchase securities on margin or open a securities margin account for the investment of Library funds.
VI) Internal Control
The Treasurer is responsible for establishing and maintaining internal control to insure that the assets of the Library are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The internal controls shall address the following points:
· Separation of transaction records from accounting data;
· Custodial safekeeping;
· Written confirmation of telephone transactions for investments and wire transfers.
VII) Maturity of investments
No investment shall have a maturity date of more than five years from its date of purchase by the Library, unless an investment is matched to a specific obligation of the Library.
VIII) Diversification of Investments
· The Library shall diversify its investments to the best of its ability based on the type of funds invested and the cash flow needs of those funds. Diversification can be achieved by the type of investment, number of institutions, and length of maturity.
· The Treasurer will use the following guidelines in administering the Library’s investment policy:
à The Library’s total (100%) portfolio may be invested in securities guaranteed by the United States, or those securities for which the full faith of the United States is pledged for the payment of principal and interest.
à The Library’s total (100%) portfolio may be invested in certificates of deposit, savings, or deposit accounts that have been fully collateralized.
à No more than 50% of the total portfolio may be invested in bonds and other obligations of the State of New York.
à No more than 50% of the total portfolio may be invested in securities issued by any federal government agency or instrumentality.
· The Library’s portfolio shall be deposited with more than one financial institution. Not more than 66% shall be deposited in any one financial institution.
IX) Deposit Requirements
The Library’s Board of Trustees shall designate its public depositories. Any eligible financial institution that has offices with the State of New York may become a public depository of the Library.
X) Delegation of Authority
· Management responsibility for the Library’s investment program is delegated to the Treasurer who is considered the Library’s chief financial officer. In the absence of the Treasurer, the Board President is authorized by the Board of Trustees to act in his/her stead.
· The Treasurer shall be responsible for the implementation of the investment program and the establishment of investment procedures consistent with this policy. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Treasurer.
XI) Electronic Transfer of Library Funds
The fiscal officer will maintain appropriate documentation of the transactions so these may be audited as required by statute. The Treasurer’s signature will be on the letter of authorization for transfers which will be forwarded to the bank.
XI) Library Funds
The Newark Public Library Board may establish funds for money and securities of the Library. All monies from whatever source derived will be receipted into funds established by the Library Board under authority of law. The authorized funds are as follows:
· Library Operating Fund
à All money collected from tax levies, interest on investments of Library Operating Fund monies, fees, fines, rentals, and other revenues shall be deposited into the “Library Operating Fund,” and must be budgeted and expended in the manner required by law
· Petty Cash Fund
à This fund has been established for the purpose of paying small or emergency items of operating expense as designated by resolution of the Library Board.
· Library Improvement Reserve Fund
à Money or securities may be accumulated in the Library Improvement Reserve Fund for the purpose of anticipating necessary future capital expenditures such as the purchase of land, the purchase and construction o buildings or structures, the construction of additions or improvements to existing structures, the purchase of equipment, and all repairs or replacements of buildings or equipment. The Fund is intended to meet future capital expenditures of repairs for which taxes cannot reasonably be levied in any one year.
à Gift Funds Money or securities accepted and secured by the Library Board as a grant, gift, donation, endowment, bequest or trust may be set aside in a separate fund or funds. Such expenditures shall be in compliance with the Purchasing Policy.
XIII) Gifts of Stock
· The fiscal officer may not purchase securities for the investment of Library funds.
· When the Library receives gifts of stock certificates:
à When gift stock is transferred from the donor’s broker to the Library’s broker, the Library will automatically at transfer become the owner of record.
à The fiscal officer will determine when the stock will be sold for cash.
XIV) Ethics and Conflicts of Interest
Those involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the Library investment program, or that could impair their ability to make impartial decisions.
When investments are made in accordance with this policy, no Library Trustee with investment authority shall be held liable for a loss resulting from default or insolvency of a depository of Library funds.
XVI) Investment Advisors, Qualified Brokers and Dealers and Financial Institutions
All brokers, dealers and other financial institutions that transact investment business with the Newark Public Library or give advice regarding its investments, must receive, read and comprehend the policy and agree to comply with it before providing any services or transacting any business with the library. This is to be evidenced by a signed statement of receipt of the policy by those identified above.
The Treasurer shall provide the Board of Trustees with monthly reports which clearly provide an understanding of how the library’s fiscal status related to the current budget by providing information on our revenue, expense and overall fiscal status. The Library’s Board of Trustees will be informed of unusual financial activity when it becomes a concern.
XVIII) Investment Policy Adoption
The Library’s investment policy shall be adopted by resolution of the Library’s Board of Trustees any any modification made to it must be approved by the Board of Trustees of the Newark Public Library.
From the Trustee Handbook:
Because trustees act as custodians of public funds, they are subject to very tight restrictions on eligible investments. As the State Comptroller recommends:
"The primary objectives of the library's investment activities should be, in priority order, 1) to conform to all applicable federal, state and other legal requirements (legal), 2) to adequately safeguard principal (safety), 3) to provide sufficient liquidity to meet all operating requirements (liquidity) and 4) to obtain a reasonable rate of return (yield.)"
Under General Municipal Law and subsequent court rulings, all funds (including privately raised moneys) under the control of a municipal, school district, or special district library must be invested in the following limited number of financial vehicles:
· Time deposit accounts or certificates of deposit in commercial banks and trust companies located and authorized to do business in New York State;
· Obligations made by the United States of America or guaranteed by the United States of America, and obligations of the State of New York;
· Under very limited circumstances, obligations of municipalities and other municipal corporations.
Except for gifts given to the library as a true trust, even privately acquired funds are subject to these investment limitations. Under certain circumstances, and with the express permission of the State Comptroller, gifts of stock may be held until a fiscally appropriate time for sale.
Association libraries are not subject to General Municipal Law and therefore have more flexibility and discretion in their investments. However, it is strongly recommended that public funds under the management of an association library board be invested only as described above. Private funds should be subject to a sound investment policy. The board must always understand its accountability to all those who support the library, in whatever fashion.