EXECUTIVE MANAGEMENT and AUDIT COMMITTEE

JANUARY 17, 2002

SUBJECT:       INVESTMENT POLICY

ACTION:        ADOPT UPDATED INVESTMENT POLICY AND RENEW DELEGATION OF INVESTMENT AUTHORITY

RECOMMENDATION

1. Adopt the updated Metro Investment Policy, Attachment I
2. Delegate to the Metro Treasurer or his/her designees, the authority to invest Metro funds for a one-year period, pursuant to California Government Code (the Code) Section 53607.  See the excerpts of the Code in Attachment II.

ISSUE

Section 53646 of the Code requires that the Board, on an annual basis and at a public meeting, review and approve the Investment Policy.  Section 53607 of the Code requires that the Board delegate investment authority to the Metro Treasurer on an annual basis.

POLICY IMPLICATION

The Board approves the objectives and guidelines that direct the investment of Metro’s operating funds.  The key changes to the Metro Investment Policy provide the Metro with greater flexibility in business relations with broker dealers and conform to changes in the Code.  A summary of changes to the current Metro Investment Policy is provided in Attachment III.  County Counsel has reviewed and concurred with the revised changes to the policy.

ALTERNATIVES CONSIDERED

The Metro Investment Policy and the Code require an annual review and adoption of the Investment Policy and the delegation of investment authority.  Should the Board elect not to delegate the investment authority annually, the Board would assume daily responsibility for the investment of Metro working capital funds.

FINANCIAL IMPACT

This action has no impact on the FY 02 Metro Operating budget.  Investment management fees and related expenses are funded from interest income.