The Treasurer serves as the County’s chief banker and investment officer, charged with the responsibility of investing funds that are not needed for immediate expenditures. The following is the investment policy of the Beaufort County Treasurer’s Office.
SCOPE
This investment policy applies to all moneys and other financial resources available for deposit and investment by the Beaufort County Treasurer’s Office on behalf of Beaufort County and on behalf of any other agency.
OBJECTIVES
The primary objectives of the Treasurer’s Office investment activities are, in priority order:
To conform with all applicable federal, State, and other legal requirements (legality);
To adequately safeguard principal (safety);
To provide sufficient liquidity to meet all operating requirements (liquidity) and;
To obtain a reasonable rate of return (yield).
To appropriately meet these objectives, the Treasurer’s Office will make investment decisions based on current and ongoing cash flow needs.
PRUDENCE
All participants in the investment process shall seek to act responsibly as custodians of the public trust and shall avoid any transaction that might impair public confidence. Investments shall be made with prudence, diligence, skill, judgment and care, under circumstances then prevailing, which knowledgeable and prudent persons acting in like capacity would use, not for speculation, but for investment, considering the safety of the principal as well as the probable income to be derived.
All participants involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or which could impair their ability to make impartial investment decisions.
DIVERSIFICATION
It is the policy of the Treasurer’s Office to diversify its deposits and investments by financial institution, by investment instrument, and by maturity schedule. Diversification of deposit and investment assets should be determined with the utmost care, with safety and liquidity being the primary objectives. As portfolios may range in size by account and purpose, depositories and investment managers should seek to invest as prudently as possible, with no investment representing more than 5% of the total portfolio value, including all accounts.
As some accounts may be smaller is size, 5% of the total portfolio value may not be prudent from a diversification standpoint. With these types of accounts special care must be taken to ensure liquidity and safety. Under no circumstance should any investment in smaller accounts represent more than 20% of its portfolio value.
INTERNAL CONTROLS AND MAINTAINING OF FUNDS
It is the policy of the Treasurer’s Office for all moneys collected by any officer or employee of Beaufort County, with the exception of certain special revenues and funds maintained by certain countywide elected officials, to transfer those funds to the Treasurer’s Office, or the financial institution designated by the Treasurer’s Office, within two (2) business days of deposit, or within the time period specified in law, whichever is shorter.
The Treasurer is responsible for establishing and maintaining internal control procedures to provide reasonable, but not absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management’s authorization, properly recorded, and managed in compliance with applicable laws and regulations.
Except as may otherwise be provided in a contract with bondholders or noteholders, any moneys invested may be commingled for investment purposes, provided that any investment of commingled moneys shall be payable or redeemable at the time the proceeds are needed to meet expenditures for which such moneys were obtained. The separate identity of the sources of these funds shall be maintained at all times through the general ledger and any income received shall be credited on a pro rata basis to the general ledger fund or account from which the moneys were invested.
DESIGNATION OF DEPOSITARIES
The Treasurer may utilize the services of any bank, trust company, or savings and loan association authorized to do business within the State of South Carolina.
SECURING DEPOSITS AND INVESTMENTS
All deposits and investments at a bank, trust company, or savings and loan association (hereinafter, collectively referred to as “depository”), including all demand deposits, certificates of deposit and special time deposits (hereinafter, collectively referred to as “deposits”) made by the Treasurer’s Office that are in excess of the amount insured under the provisions of the Federal Deposit Insurance Act, including pursuant to a Deposit Placement Program in accordance with law, shall be secured by the depository in accordance with South Carolina State Statute 6-5-15, which dictates the securing and collateralization of public funds.
PERMITTED INVESTMENTS
As provided by the State of South Carolina Code of Laws Section 6, the Treasurer will invest moneys not required for immediate expenditure, for terms not to exceed its projected cash flow needs, in investments that adhere with South Carolina State Statutes 6-5-10 and 12-45-220.
The Beaufort County Treasurer may also deposit public moneys in excess of current needs into the South Carolina State Treasurer’s Local Government Investment Pool.
Repurchase agreements (referred to as REPOs) are complex transactions that can expose the investing local government to significant risks. If utilized, the Treasurer must submit the agreement to Beaufort County’s legal counsel for review and approval, have the resources to negotiate the agreement with trading partners and custodial banks or trust companies, and monitor the investment daily. At a minimum, any repurchase agreement must comply with the requirements listed in Appendix A.
AUTHORIZED FINANCIAL INSTITUTIONS AND DEALERS
All financial institutions and dealers with which the Treasurer’s Office transacts business shall be creditworthy, and have an appropriate level of experience, capitalization, size, and other factors that make the financial institution or the dealer capable and qualified to transact business with and hold public funds. The Treasurer shall evaluate the financial position and maintain a listing of proposed depositaries, trading partners, and custodians.
If the Treasurer elects to utilize the services of a financial advisor, that advisor should have at least ten (10) years of experience managing public funds, five (5) of which should be experience in managing funds within the State of South Carolina, and, at a minimum, should be a registered investment advisor. At least annually, the advisor must provide to the Treasurer their ADV form, parts I and II, filed with the Securities and Exchange Commission.
The Treasurer shall maintain a list of financial institutions and dealers approved for investment purposes. To maximize safety, the Treasurer’s Office could purchase through, deliver to, and hold in custody of a bank or trust company all obligations, unless registered or inscribed in the name of the applicable government agency.
POLICY REVIEW AND AMENDMENTS
The Treasurer shall review this investment policy annually, and shall have the power to amend this policy at any time.
Investment performance should be evaluated at least semi-annually and be taken into consideration when reviewing the investment policy.
ASSISTANCE OF STATE TREASURER
The State Treasurer is authorized to assist the Treasurer’s Office in investing funds that are temporarily in excess of operating. This can be accomplished by explaining investment opportunities through publication and other appropriate means; acquainting the Treasurer’s Office with the State's practice and experience in investing short-term funds; and providing technical assistance in investment of idle funds when such assistance is requested.
APPENDIX A – REPURCHASE AGREEMENTS
At a minimum, a repurchase agreement must comply with the following:
Trading partners should be limited to creditworthy banks or trust companies located and authorized to do business in the State of South Carolina or to registered primary dealers.
Unless the obligations that are purchased pursuant to the repurchase agreement are registered or inscribed in the name of the local government, obligations must be purchased through, delivered to, and held in the custody of a bank or trust company located and authorized to do business in the State of South Carolina. The custodial bank or trust company may not be the seller of the obligations that are the subject of the repurchase agreement.
A master repurchase agreement must be entered into, outlining basic responsibilities and liabilities of the buyer and seller and a written agreement with the custodial bank or trust company, outlining the basic responsibilities and liabilities of the buyer, seller, and custodian.
The custodial agreement should provide that the custodian takes possession and maintains custody of the obligations exclusively for the local government, that the obligations are free of any claims against the trading partner, and that any claims by the custodian are subordinate to the local government’s claims or rights to those obligations.
The obligations must be credited to Beaufort County, or the applicable agency, on the records of the custodial bank or trust company, and the transaction must be confirmed in writing to the local government by the custodial bank or trust company.
The obligations purchased may only be sold or presented for redemption or payment by the custodian upon written instructions of the Treasurer.
A perfected security interest must be obtained in the obligation.
Agreements must specify whether to include margin requirements.
No substitution of obligations is permitted.
Payment for the purchased obligations should not be made by the custodial bank or trust company until the obligations are actually received, preferably done simultaneously.
Obligations that are purchased pursuant to a repurchase agreement are deemed to be payable or redeemable, for purposes of the GML, on the date on which the purchased obligations are scheduled to be repurchased by the seller.