Articles of Interest

A LOCAL GOVERNMENT COMPLIANCE CHECKLIST
for the
TEXAS PUBLIC FUNDS INVESTMENT ACT
Linda T. Patterson
email: linda@patterson.net
Patterson & Associates, Austin, Texas

The following is a condensed checklist of those requirements. Each government should review its investment program to assure compliance.

Investment policy must include the maximum allowable maturity on any investment
Investment policy must a list authorized investments from those authorized by the Act
Investment policy may list investments unauthorized by the Entity
(The Act includes a list of "unauthorized" securities)
If security drops to unacceptable rating, entity will take prudent steps to liquidate it
Entity not required to liquidate unauthorized securities authorized at time of purchase

Governing body must designate an "investment officer(s)"
Investment Officer must invest in accordance with the Prudent Person Rule and its policy
Personal business relationships with businesses offering to engage in investment transactions must be disclosed to Texas Ethics Commission and filed with the governing body of the entity
All relations within the 2nd degree of affinity or consanguinity must be disclosed
Training required for Treasurer or CFO (if not Treasurer) and investment officers
Training to include controls; market, security and strategy risks; and compliance to PFIA
Officers must attend a training session on responsibilities within 12 months of taking office
Officers must attend at least ten hours of training every two years
Training must be from an independent source (not the investing entity itself)
Officers prudence judged on compliance to policy and on all funds not a single investment
State agency training:
- Governing Board and officers must attend training within 6 months of taking office
- Governors Office to provide the training
- Coordinating Board to provide training for higher education entities

Written quarterly reports to the governing body and CFO are required on all funds

Reports to be submitted within a reasonable time after end of quarter

Quarterly reporting must:

detail the investment position of the entity
be prepared and signed by all investment officers
contain summary statement of GAAP compliance for each pooled fund group
- including beginning and ending market value for period
- including additions and changes to market value during period
- including fully accrued interest for period
state book and market for each security/holding (beginning and end) by type and group
include the stated maturity date of each asset
state the pooled fund group for each asset/security

Reporting must state compliance to local strategies, investment policy, and PFIA

If invested in securities, the auditor must review the quarterly reports annually

Investments must be by Prudent Person Rule and governed by objectives of safety, liquidity and yield in that priority order