HomeMy WebLinkAboutBack-Up from Law DeptStatutes & Constitution :View Statutes : Online Sunshine
Page 1 of 5
Select Year:
The 2014 Florida Statutes
Title XIV Chapter 218 View Entire
TAXATION AND FINANCIAL MATTERS PERTAINING TO POLITICAL Chapter
FINANCE SUBDIVISIONS
218.415 Local government investment policies.— Investment activity by a unit of local
government must be consistent with a written investment plan adopted by the governing body, or in the
absence of the existence of a governing body, the respective principal officer of the unit of local
government and maintained by the unit of local government or, in the alternative, such activity must be
conducted in accordance with subsection (17). Any such unit of Local government shall have an
investment policy for any public funds in excess of the amounts needed to meet current expenses as
provided in subsections (1)-(16), or shall meet the alternative investment guidelines contained in
subsection (17). Such policies shall be structured to place the highest priority on the safety of principal
and liquidity of funds. The optimization of investment returns shall be secondary to the requirements
for safety and liquidity. Each unit of local government shall adopt policies that are commensurate with
the nature and size of the public funds within its custody.
(1) SCOPE. —The investment policy shall apply to funds under the control of the unit of local
government in excess of those required to meet current expenses. The investment policy shall not apply
to pension funds, including those funds in chapters 175 and 185, or funds related to the issuance of debt
where there are other existing policies or indentures in effect for such funds.
(2) INVESTMENT OBJECTIVES. —The investment policy shall describe the investment objectives of the
unit of local government. Investment objectives shall include safety of capital, liquidity of funds, and
investment income, in that order.
(3) PERFORMANCE MEASUREMENT. —The investment policy shall specify performance measures as are
appropriate for the nature and size of the public funds within the custody of the unit of local
government.
(4) PRUDENCE AND ETHICAL STANDARDS. —The investment policy shall describe the level of prudence
and ethical standards to be followed by the unit of local government in carrying out its investment
activities with respect to funds described in this section. The unit of local government shall adopt the
Prudent Person Rule, which states that: "Investments should be made with judgment and care, under
circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering the probable
safety of their capital as well as the probable income to be derived from the investment."
(5) LISTING OF AUTHORIZED INVESTMENTS. —The investment policy shall list investments authorized
by the governing body of the unit of local government, subject to the provisions of subsection (16).
Investments not listed in the investment policy are prohibited. If the policy authorizes investments in
derivative products, the policy must require that the unit of local government's officials responsible for
http://www.leg.state.fl.us/statutes/index.cfm?App_mode—Display_Statute&Search String=... 2/4/2015
Statutes & Constitution :View Statutes : Online Sunshine Page 2 of 5
making investment decisions or chief financial officer have developed sufficient understanding of the
derivative products and have the expertise to manage them. For purposes of this subsection, a
"derivative" is defined as a financial instrument the value of which depends on, or is derived from, the
value of one or more underlying assets or index or asset values. If the policy authorizes investments in
reverse repurchase agreements or other forms of leverage, the policy must limit the investments to
transactions in which the proceeds are intended to provide liquidity and for which the unit of local
government has sufficient resources and expertise.
(6) MATURITY AND LIQUIDITY REQUIREMENTS. —The investment policy shall require that the
investment portfolio is structured in such manner as to provide sufficient liquidity to pay obligations as
they come due. To that end, the investment policy should direct that, to the extent possible, an
attempt will be made to match investment maturities with known cash needs and anticipated cash -flow
requirements.
(7) PORTFOLIO COMPOSITION. —The investment policy shall establish guidelines for investments and
limits on security issues, issuers, and maturities. Such guidelines shall be commensurate with the nature
and size of the public funds within the custody of the unit of local government.
(8) RISK AND DIVERSIFICATION. —The investment policy shall provide for appropriate diversification
of the investment portfolio. Investments held should be diversified to the extent practicable to control
the risk of Loss resulting from overconcentration of assets in a specific maturity, issuer, instrument,
dealer, or bank through which financial instruments are bought and sold. Diversification strategies
within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the
appropriate management staff.
(9) AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS. —The investment policy should specify the
authorized securities dealers, issuers, and banks from whom the unit of local government may purchase
securities.
(10) THIRD -PARTY CUSTODIAL AGREEMENTS. —The investment policy shall provide appropriate
arrangements for the holding of assets of the unit of local government. Securities should be held with a
third party; and all securities purchased by, and all collateral obtained by, the unit of local government
should be properly designated as an asset of the unit of local government, No withdrawal of securities,
in whole or in part, shall be made from safekeeping, except by an authorized staff member of the unit
of local government. Securities transactions between a broker -dealer and the custodian involving
purchase or sale of securities by transfer of money or securities must be made on a "delivery vs.
payment" basis, if applicable, to ensure that the custodian will have the security or money, as
appropriate, in hand at the conclusion of the transaction.
(11) MASTER REPURCHASE AGREEMENT. —The investment policy shall require all approved institutions
and dealers transacting repurchase agreements to execute and perform as stated in the Master
Repurchase Agreement, Alt repurchase agreement transactions shall adhere to the requirements of the
Master Repurchase Agreement.
(12) BID REQUIREMENT. —The investment policy shalt require that the unit of local government's
staff determine the approximate maturity date based on cash -flow needs and market conditions,
analyze and select one or more optimal types of investment, and competitively bid the security in
question when feasible and appropriate. Except as otherwise required by law, the bid deemed to best
meet the investment objectives specified in subsection (2) must be selected.
(13) INTERNAL CONTROLS. —The investment policy shalt provide for a system of internal controls and
operational procedures. The unit of local government's officials responsible for making investment
decisions or chief financial officer shall establish a system of internal controls which shall be in writing
http: //www.leg.state.fl.us/statutes/index.cfin?App_mode=Display_Statute& Search_String=... 2/4/2015
Statutes & Constitution :View Statutes : Online Sunshine Page 3 of 5
and made a part of the governmental entity's operational procedures. The investment policy shall
provide for review of such controls by independent auditors as part of any financial audit periodically
required of the unit of local government. The internal controls should be designed to prevent losses of
funds which might arise from fraud, employee error, misrepresentation by third parties, or imprudent
actions by employees of the unit of local government.
(14) CONTINUING EDUCATION. —The investment policy shall provide for the continuing education of
the unit of local government's officials responsible for making investment decisions or chief financial
officer. Such officials must annually complete 8 hours of continuing education in subjects or courses of
study related to investment practices and products.
(15) REPORTING. —The investment policy shall provide for appropriate annual or more frequent
reporting of investment activities. To that end, the governmental entity's officials responsible for
making investment decisions or chief financial officer shall prepare periodic reports for submission to
the legislative and governing body of the unit of local government, which shall include securities in the
portfolio by class or type, book value, income earned, and market value as of the report date. Such
reports shall be available to the public.
(16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES. —Those units of local government
electing to adopt a written investment policy as provided in subsections (1)-(15) may by resolution
invest and reinvest any surplus public funds in their control or possession in:
(a) The Local. Government Surplus Funds Trust Fund or any intergovernmental investment pool
authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit
quality rating from a nationally recognized rating agency.
(c) Interest -bearing time deposits or savings accounts in qualified public depositories as defined in s.
280.02.
(d) Direct obligations of the United States Treasury.
(e) Federal agencies and instrumentalities.
(f) Rated or unrated bonds, notes, or instruments backed by the full faith and credit of the
government of Israel.
(g) Securities of, or other interests in, any open-end or closed -end management -type investment
company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1
et seq., as amended from time to time, provided that the portfolio of such investment company or
investment trust is limited to obligations of the United States Government or any agency or
instrumentality thereof and to repurchase agreements fully collateralized by such United States
Government obligations, and provided that such investment company or investment trust takes delivery
of such collateral either directly or through an authorized custodian.
(h) Other investments authorized by law or by ordinance for a county or a municipality.
(i) Other investments authorized by law or by resolution for a school district or a special district.
(17) AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT POLICY. --Those units of local government
electing not to adopt a written investment policy in accordance with investment policies developed as
provided in subsections (1)-(15) may invest or reinvest any surplus public funds in their control or
possession in:
(a) The Local Government Surplus Funds Trust Fund, or any intergovernmental investment pool
authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit
quality rating from a nationally recognized rating agency.
http:/iwww.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search String=,.. 2/4/2015
Statutes & Constitution :View Statutes : Online Sunshine Page 4 of 5
(c) Interest -bearing time deposits or savings accounts in qualified public depositories, as defined in
s. 280.02.
(d) Direct obligations of the U.S. Treasury.
The securities listed in paragraphs (c) and (d) shall be invested to provide sufficient liquidity to pay
obligations as they come due.
(18) SECURITIES; DISPOSITION. —
(a) Every security purchased under this section on behalf of the governing body of a unit of local
government must be properly earmarked and:
1. If registered with the issuer or its agents, must be immediately placed for safekeeping in a
location that protects the governing body's interest in the security;
2. if in book entry form, must be held for the credit of the governing body by a depository chartered
by the Federal Government, the state, or any other state or territory of the United States which has a
branch or principal place of business in this state as defined in s. 658.12, or by a national association
organized and existing under the laws of the United States which is authorized to accept and execute
trusts and which is doing business in this state, and must be kept by the depository in an account
separate and apart from the assets of the financial institution; or
3. If physically issued to the holder but not registered with the issuer or its agents, must be
immediately placed for safekeeping in a secured vault.
(b) The unit of local government's governing body may also receive bank trust receipts in return for
investment of surplus funds in securities. Any trust receipts received must enumerate the various
securities held, together with the specific number of each security held. The actual securities on which
the trust receipts are issued may be held by any bank depository chartered by the Federal Government,
this state, or any other state or territory of the United States which has a branch or principal place of
business in this state as defined in s. 658,12, or by a national association organized and existing under
the taws of the United States which is authorized to accept and execute trusts and which is doing
business in this state.
(19) SALE OF SECURITIES. —When the invested funds are needed in whole or in part for the purposes
originally intended or for more optimal investments, the unit of local government's governing body may
sell such investments at the then -prevailing market price and place the proceeds into the proper
account or fund of the unit of local government.
(20) PREEXISTING CONTRACT. —Any public funds subject to a contract or agreement existing on
October 1, 2000, may not be invested contrary to such contract or agreement.
(21) PREEMPTION. —Any provision of any special act, municipal charter, or other law which prohibits
or restricts a local governmental entity from complying with this section or any rules adopted under this
section is void to the extent of the conflict.
(22) AUDITS. --Certified public accountants conducting audits of units of local government pursuant
to s. 218.39 shall report, as part of the audit, whether or not the unit of local government has complied
with this section.
(23) AUTHORIZED DEPOSITS. --in addition to the investments authorized for local governments in
subsections (16) and (17) and notwithstanding any other provisions of law, a unit of local government
may deposit any portion of surplus public funds in its control or possession in accordance with the
following conditions:
(a) The funds are initially deposited in a qualified public depository, as defined in s. 280.02,
selected by the unit of local government.
http.//www.leg,state.fl.us/statutes/index.cfin?App_mode=Display_Statute&Search String=... 2/4/2015
Statutes & Constitution :View Statutes : Online Sunshine Page 5 of 5
(b) The selected depository arranges for depositing the funds in financial deposit instruments
insured by the Federal Deposit insurance Corporation in one or more federally insured banks or savings
and loan associations, wherever located, for the account of the unit of local government.
(c) The full amount of the principal and accrued interest of each financial deposit instrument is
insured by the Federal Deposit Insurance Corporation.
(d) The selected depository acts as custodian for the unit of local government with respect to each
financial deposit instrument issued for its account.
History.—s. 1, ch. 95-194; s. 2, ch. 97-9; s. 3, ch. 2000-264; ss. 66, 141, ch. 2001-266; s. 2, ch. 2005-126; s. 1, ch. 2007-89;
s. 42, ch. 2008-4; s. 2, ch. 2009-140.
Copyright 0 1995-2015 The Florida Legislature • Privacy Statement • Contact Us
help://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search String=... 2/4/2015