Investment Policy

B. Objectives

The primary objectives of the Kingston Library’s investment activities are, in order of priority:

• To conform with all applicable federal, state and other legal requirements (legal)
• To adequately safeguard principal (safety)
• To provide sufficient liquidity to meet all operating requirements (liquidity)
• To obtain a reasonable rate of return (yield)

C. Delegation of Authority

The Board of Trustees’ responsibility for administration of the investment policy is delegated to the Treasurer, Director and one other Board member who, together, shall establish written procedures for the operation of the investment program consistent with these investment guidelines. The other Board member shall be nominated by the Board President and approved by the full Board annually. Such procedures shall include an adequate internal control structure to provide a satisfactory level of accountability based on records incorporating description and amounts of investments, transaction dates, and other relevant information, and regulate the activities of subordinate employees.

D. 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 in the Kingston Library effectively.

Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudent discretion and intelligence exercise in the management of their own affairs, 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.

E. Diversification

It is the policy of the Kingston Library to diversify its deposits and investments by maturity scheduling. Diversification may also be accomplished through seeking competitive bids on investments from at least three of the designate financial institutions.

F. Internal Controls

The Treasurer is responsible for establishing and maintaining an internal control structure to provide reasonable, but no absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with the Board of Trustees’ authorization and recorded properly, and managed in accordance with applicable laws and regulations. Investing of funds will require the authorization of the Treasurer and one Board member, including execution of wire transfers of funds to effect such investments.

G. Internal Controls

The banks and trust companies (including any successors) authorized for the deposit of monies up to the following amounts are:

H. Collateralizing of Deposits

In accordance with the provisions of General Municipal Law §10, all deposits of Kingston Library, including certificates of deposit and special time deposits, in excess of the amount insured under the provisions of the Federal Deposit Insurance Act ($250,000 currently) shall be secured:

1. By a pledge of “eligible securities” with an aggregate “market value”, or provided by General Municipal Law §10, equal to the aggregate amount of deposits from the categories designated in Appendix A to the policy, or
2. By an eligible “irrevocable letter of credit” issued by a qualified bank other than the bank with the deposits in favor of the library for a term not to exceed 90 days with an aggregate value equal to 140% of the aggregate amount of deposits and the agreed upon interest, if any. A qualified bank is one whose commercial paper and other unsecured short-term debt obligations are rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization or by a bank that is in compliance with applicable federal minimum risk-based capital requirements, or
3. By an eligible surety bond payable to the library for an amount at least equal to 100% of the aggregate amount of deposits and the agreed upon interest, if any, executed by an insurance company authorized to do business in New York State, whose claims paying ability is rated in the highest rating category by at least two nationally recognized statistical rating organizations.
4. Safekeeping and Collateralization
   Eligible securities used for collateralizing deposits shall be held by a third party bank or trust company subject to security and custodial agreements.The security agreement shall provide that eligible securities are being pledged to secure library deposits together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposits upon default. It shall also provide the conditions under which the securities may be sold, presented for payment, substituted or released and the events which will enable the library to exercise its rights against the pledged securities. In the event that the securities are not registered or inscribed in the name of the library, such securities shall be delivered in a form suitable for transfer or with an assignment in blank to the Kingston Library or its custodial bank.The custodial agreement shall provide that securities held by the bank or trust company, or agent of and custodian for the library, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement should also describe that the custodian shall confirm the receipt, substitution or release of securities. The agreement shall provide for the frequency of revaluation of eligible securities and for the substitution of securities when a change in the rating of a security may cause ineligibility. Such agreement shall include all provisions necessary to provide the library a perfected interest in the securities.
5. Permitted Investments
   As authorized by General Municipal Law §11, the Kingston Library authorizes the Treasurer and one other Board member to invest moneys not required for immediate expenditure for terms not to exceed its projected cash flow needs in the following types of investments:

• • • • Special time deposit;
      • Certificates of deposit;
      • Obligations of the United States of America;
      • Obligations guaranteed by agencies of the United States of America where the payment or principal and interest are guaranteed by the United States of America;
      • Obligations of the State of New York;
      • Obligations issued pursuant to LFL §24.00 or 25.00 (with approval of the State Comptroller) by any municipality, school district or district corporation other than the Kingston Library.

6. Authorized Financial Institutions
   The Kingston Library shall maintain a list of financial institutions approved for investment purposes and establish appropriate limits to the amount of investments which can be made with each financial institution. All financial institutions with which the library conducts business must be credit worthy. Banks shall provide their most recent Consolidated Report of Condition (Call Report) at the request of the Kingston Library. The Treasurer and one Board member are responsible for evaluating the financial position and maintaining a listing of proposed depositaries and custodians. Such listing shall be evaluated at least annually.
7. Purchase of Investments
   The Treasurer and one Board member are authorized to contract for the purchase of investments directly.
   All purchased obligations, unless registered or inscribed in the name of the Kingston Library, shall be purchases through, delivered to and held in the custody of a bank or trust company.  Such obligations shall be purchased, sold or presented for redemption or payment by such bank or trust company only in accordance with prior written authorization from the persons authorized to make the investment.  All such transactions shall be confirmed in writing to the Kingston Library by the bank or trust company. Any obligation held in the custody of a bank or trust company shall be held pursuant to a written custodial agreement as described in General Municipal Law §10.The custodial agreement shall provide that securities held by the bank or trust company, as agent of and custodian for, the Kingston Library, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities.  The agreement shall describe how the custodian shall confirm the receipt and release of securities. Such agreement shall include all provisions necessary to provide the Kingston Library a perfected interest in the securities.
8. Review of Adopted Policy
   In accordance with General Municipal Law §39, this policy shall be reviewed at least annually.  It should be reviewed more frequently as circumstances and/or laws change, and amended as appropriate by resolution of the Board of Trustees.