1. Township Investment and Depository Designation Resolution
Comprehensive Version

The following sample resolution is intended for townships that prefer a comprehensive investment policy allowing for a broad range of investment instruments and substantial delegation of discretion and responsibility to the township treasurer.

Township boards should not adopt any sample investment resolution, including those provided by MTA, without careful consideration of investment public policy options and potential consequences. The provisions provided here are intended to illustrate the subjects areas that an investment and depository designation resolution might address, as well as sample resolution language. MTA does not intend to indicate that the provisions provided are appropriate for all townships. In consultation with the township treasurer, the board should carefully develop its goals for safety, diversification, liquidity and return on investment, as well as the degree of oversight the board believes it should exercise over investments. The policy adopted by a township board should reflect its specific investment goals and governance style.

In drafting a township policy, please consult your local attorney or certified public accountant.
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WHEREAS, the Board of __________ Township, __________ County, in exercising its fiduciary responsibilities desires to safeguard the funds of the Township that may be invested from time to time, and

WHEREAS, Public Act 77 of 1989, MCL 41.77 requires that the Township Board designate the banks or depositories for the money belonging to the Township, including the time for which the deposits shall be made and all details for carrying into effect the authority given in this act, and

WHEREAS, Public Act 196 of 1997, MCL 129.91, et seq., requires township boards, in consultation with the Township Treasurer, to adopt an investment policy, now

THEREFORE BE IT RESOLVED, That this policy is applicable to all public funds belonging to _________ Township and in the custody of the Township Treasurer.

BE IT FURTHER RESOLVED, That the ________ Township Treasurer is authorized to manage funds belonging to the township, including depositing funds in approved financial institutions and administration of investments in conformance with MCL 41.77 and policies as set forth in this resolution.

BE IT FURTHER RESOLVED, That the Board approves the following financial institutions as depositories of township funds: (insert list of approved financial institutions).

BE IT FURTHER RESOLVED, That the Treasurer shall recommend financial institutions for approval for the safekeeping of Township funds based on an evaluation of the performance and solvency of the institution, as well as past performance in exercising due care and prudence in managing the custody of Township funds held in trust, if applicable. The Treasurer shall periodically evaluate approved and potential financial depositories and shall make recommendations as to appropriate changes in approved depositories when warranted.

In determining safekeeping and custody qualifications, financial institutions document a minimum capital requirement of at least $10,000,000 and at least five years of operation. All financial institutions and brokers/dealers shall be pre-qualified by supplying the following:

Audited financial statements

Proof of NASD certification or FDIC insurance

Proof of state registration

Certification of having read, understood and agreement to comply with the ___________ Township investment policy.

The Treasurer shall annually examine the financial condition and registrations of qualified financial institutions and brokers/dealers by obtaining annual updates of the information listed above.

BE IT FURTHER RESOLVED, That when the Treasurer's analysis of the Township's cash flow requirements reveal that surplus funds will not be required to meet current expenditures for a specific length of time, the Treasurer is authorized to make prudent investments for a length of time that will provide a reasonable return on investment yet ensure that such funds will be available when needed and will not be exposed to undue risk. The Treasurer is authorized to invest township funds in the following instruments: (select from among the list of lawful investments authorized under MCL 129.91)

(a) Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States.
(b) Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, but only if the financial institution is eligible to be a depository of funds belonging to the state under a law or rule of this state or the United States.
(c) Commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase.
(d) Repurchase agreements consisting of instruments listed in subdivision (a).
(e) Bankers' acceptances of United States banks.
(f) Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service.
(g) Mutual funds registered under the investment company act of 1940, title I of chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to 80a-64, with authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of either of the following:
(i) The purchase of securities on a when-issued or delayed delivery basis.
(ii) The ability to lend portfolio securities as long as the mutual fund receives collateral at all times equal to at least 100% of the value of the securities loaned.
(iii) The limited ability to borrow and pledge a like portion of the portfolio's assets for temporary or emergency purposes.
(h) Obligations described in subdivisions (a) through (g) if purchased through an interlocal agreement under the Urban Cooperation Act of 1967, Public Act 7 of 1967, (Ex Sess), MCL 124.501, et seq.
(i) Investment pools organized under the Surplus Funds Investment Pool Act, Public Act 367 of 1982, MCL 129.111, et seq.
(j) The investment pools organized under the Local Government Investment Pool Act, Public Act 121 of 1985, MCL 129.141, et seq.
*(if the policy authorizes investments in mutual funds, include the following): Investments in mutual funds (select either a or b) (a) shall be limited to securities whose intention is to maintain a net asset value of $1.00 per share. or (b) shall include securities whose net asset value per share may fluctuate on a periodic basis.

The following paragraph is optional. A provision similar to the following may be desired by the township board if it wishes to require the Treasurer to obtain specific prior approval from the Township Board of certain investment instruments prior to making the investment.

BE IT FURTHER RESOLVED, the Township Board may, at its discretion and upon the recommendation of the Township Treasurer, authorize the Township Treasurer to invest in the following investment instruments. However, the Township Treasurer is required to obtain approval from the Township Board prior to acquiring or increasing the amount of Township funds in the following investment instruments:(list lawful investment instruments that require prior board approval prior to the initial purchase and or to increase the amount of Township funds invested in such instruments)

BE IT FURTHER RESOLVED, That the objectives of this policy are to:

maintain safety of principal of township funds;

maintain a diversified investment portfolio;

maintain adequate liquidity; and

achieve a market rate of return on relatively safe investment instruments.

To accomplish these objectives, decisions and actions involving the Township's investment portfolio shall meet the following criteria:

Safety: Safety of principal is the foremost objective of _________Township's investment practices. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall investment portfolio. The Treasurer shall minimize credit risk by investing only in the safer types of securities, pre-qualifying financial institutions, brokers/dealers, intermediaries, and advisers with whom the township will do business; and diversifying the investment portfolio so that the impact on the investment portfolio resulting from losses on individual securities will be minimized.

Diversification: The investments shall be diversified by avoiding over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities). Investments shall have varying maturities. Investment instrument selection shall avoid high credit risks and shall include use of readily available funds such as local government investment pools or mutual funds to maintain sufficient liquidity.

Liquidity: The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. Securities shall have maturity dates concurrent with cash flow needs. Securities with active secondary or resale markets, as well as money market mutual funds offering same-day liquidity for short-term funds shall also be used to ensure liquidity. The Treasurer shall minimize interest rate risk by avoiding the need to sell securities prior to maturity and investing operating funds primarily in short term-securities, money market mutual funds or similar public investment pools. Securities shall not normally be sold prior to maturity except to minimize loss of principal; to improve the quality, yield or target duration in the portfolio; or to meet liquidity needs.

Return on Investment: The investment portfolio shall be designed to attain a market average rate of return during budgetary and economic cycles while taking into account investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to safety and liquidity objectives. The core of investments is limited to relatively low risk securities, and a fair rate of return relative to risk is assumed.

BE IT FURTHER RESOLVED, That the Treasurer shall make such investments and only such investments as a prudent person would make in dealing with the property of another, having in view the preservation of the principal and the amount and regularity of the income to be derived.

The standard of prudence to be used shall be the "fiduciary" standard and shall be applied in context of managing an overall portfolio.

BE IT FURTHER RESOLVED, The Treasurer may elect to have certificates and other evidence of investments held by a financial institution, provided that the financial institution presents to the Township Treasurer on a quarterly basis, sufficient documentation and acknowledgment of the investment instruments held on behalf of the Township. (PA 213 of 2007 updated)

BE IT FURTHER RESOLVED, That the Treasurer shall refrain from personal business activity that could conflict with the proper execution and management of township investments, or that could impair the Treasurer's ability to make impartial investment decisions.

BE IT FURTHER RESOLVED, That the Treasurer shall annually provide a written report to the Township Board concerning the investment of Township funds.

BE IT FURTHER RESOLVED, That the Township shall comply with all applicable statutory standards for investment of public funds as they now exist or as they may be subsequently amended. Any provision of this resolution that conflicts with applicable statutory requirements and standards is void.

Updated April 1, 1998

Adapted from GFOA Sample Investment Policy, revised 8/97, copyright 1997 Government Finance Officers Association. Used with permission.

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2. Township Investment and Depository Designation Resolution
Simplified Version

The following sample resolution is intended for townships that prefer a very basic investment policy consisting primarily of certificates of deposit. The policies provide minimal delegation of discretion and responsibility to the township treasurer.

Township boards should not adopt any sample investment resolution, including those provided by MTA, without careful consideration of investment public policy options and potential consequences. The provisions provided here are intended to illustrate the basic subjects areas that an investment and depository designation resolution might address, as well as sample resolution language. MTA does not intend to indicate that the provisions provided are appropriate for all townships. In consultation with the township treasurer, the board should carefully develop its goals for safety, diversification, liquidity and return on investment, as well as the degree of oversight the board believes it should exercise over investments. The policy adopted by a township board should reflect its specific investment goals and governance style.

In drafting a township policy, please consult your local attorney or certified public accountant.

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WHEREAS, the Board of __________ Township, ___________ County, in exercising its fiduciary responsibilities desires to safeguard the funds of the Township that may be invested from time to time, and

WHEREAS, Public Act 77 of 1989, MCL 41.77, requires that the Township Board designate the banks or depositories for the money belonging to the Township, including the time for which the deposits shall be made and all details for carrying into effect the authority given in this act, and

WHEREAS, Public Act 196 of 1997, MCL 129.91, et seq., requires Townships Boards, in consultation with the Township Treasurer, to adopt an investment policy, now

THEREFORE BE IT RESOLVED, That this policy is applicable to all public funds belonging to ___________ Township and in the custody of the Township Treasurer.

BE IT RESOLVED, That the Board approves the following financial institutions as depositories of township funds: (insert list of approved financial institutions).

BE IT FURTHER RESOLVED, That the Treasurer may invest Township funds in certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank but only if the bank, savings and loan association, or credit union meeting all criteria as a depository of public funds contained in state law. The standard of prudence to be used shall be the "fiduciary" standard and shall be applied in context of managing an overall portfolio.

BE IT FURTHER RESOLVED, That the prior approval of the Township Board, shall be required for the Treasurer to invest in any other lawful investment instruments. The Township Board's standard of prudence shall be the "fiduciary" standard, which shall be applied in context of managing an overall portfolio. The Township Board may authorize the Treasurer to invest in the following:

(a) Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States.
Commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase.
(b)Repurchase agreements consisting of instruments listed in subdivision (a).
(c)Bankers' acceptances of United States banks.
(d) Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service.
(e) Mutual funds registered under the Investment Company Act of 1940, Title I of chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to 80a-64, with authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of either of the following:
(i) The purchase of securities on a when-issued or delayed delivery basis.
(ii) The ability to lend portfolio securities as long as the mutual fund receives collateral at all times equal to at least 100% of the value of the securities loaned.
(iii) The limited ability to borrow and pledge a like portion of the portfolio?s assets for temporary or emergency purposes.
(f) Obligations described in subdivisions (a) through (g) if purchased through an interlocal agreement under the Urban Cooperation Act of 1967, Public Act 7 of 1967 (Ex Sess), MCL 124.501, et seq.
(g) Investment pools organized under the Surplus Funds Investment Pool Act, Public Act 367 of 1982, MCL 129.111, et seq.
(h) The investment pools organized under the Local Government Investment Pool Act, Public Act 121 of 1985, MCL 129.141, et seq.

BE IT FURTHER RESOLVED, That decisions and actions involving the Township's investment portfolio shall be meet the following criteria:

Safety: Safety of principle is the foremost objective of _________Township's investment practices.
Diversification: The investments shall be diversified by avoiding over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities and insured certificates of deposits).

Liquidity: The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.

Return on Investment: Return of investment is of secondary importance compared to safety and liquidity objectives. Investments shall be selected to obtain a market average rate of return. The core of investments is limited to relatively low risk securities.

BE IT FURTHER RESOLVED, That the Treasurer may elect to have certificates and other evidence of investments held by a financial institution, provided that the financial institution presents to the Township Treasurer on a quarterly basis, sufficient documentation and acknowledgment of the investment instruments held on behalf of the Township. (PA 213 of 2007 updated)

BE IT FURTHER RESOLVED, That the Township will comply with all applicable statutes related to public fund investments. Any provisions of this resolution in conflict with applicable statutes is void.

Updated April, 1998

updated January 2007 (as noted in bold text)