ORD 2011-17 - Amend FY 2010-11 Budget Amends 2010-46, EXH D 01-04-2011 ORDINANCE NO. 2011-17
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AN ORDINANCE OF THE CITY OF HUNTSVILLE,TEXAS,AMENDING THE FISCAL YEAR
2010 — 2011 ANNUAL BUDGET, ORDINANCE NO. 2010-46 TO AMEND EXHIBIT "D"
ATTACHED TO THE ANNUAL BUDGET; AND DECLARING AN EFFECTIVE DATE.
WHEREAS,the 2010-2011 Annual Budget was adopted by Ordinance 2010-46 on September 14,2010;
WHEREAS,Exhibit"D"to the Annual Budget contained the City of Huntsville Investment Policy;
WHEREAS,an Investment Policy has been established for the PEB Trust identified in Exhibit"D";
WHEREAS, the City Council considered the circumstances independently, deliberating appropriately on
and the overall impact on the general financial status of the City;
WHEREAS, pursuant to the laws of the State of Texas and the City Charter of the City of Huntsville,
Texas, the City Council has determined that it will be beneficial and advantageous to the citizens of the
City of Huntsville to amend the 2010—2011 budget as set forth herein; and
WHEREAS, this ordinance combines the independent Council actions into one budget amendment
document;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
HUNTSVILLE,TEXAS,that:
Section 1. The findings set forth above are incorporated into the body of this ordinance.
Section 2. The annual budget for fiscal year 2010 — 2011 is hereby amended by attaching the PEB
Investment Policy attached hereto as Exhibit 1, to Exhibit "D" of the 2010-2011 budget and is made a
part of this ordinance as if set out verbatim herein.
Section 3. All ordinances of the City in conflict with the provisions of this ordinance are hereby repealed,
and all other ordinances of the City not in conflict with the provisions of this ordinance shall remain in
full force and effect.
Section 4. Should any section, portion, sentence, clause or phrase of this ordinance be declared
unconstitutional or invalid for any reason, it shall not invalidate or impair the force or effect of any other
section or portion of this ordinance.
Section 5. The necessity for amending the budget for the fiscal year, as required by the laws of the State
from and after its passage, as the law
of Texas, requires that this ordinance shall take effect immediatelyp g ,
in such cases provides.
Section 6.This ordinance shall take effect immediately after its passage.
PASSED AND APPROVED on this the 4 h day of January,2011.
?Je
HUNTSVILLE,TEXAS
r,Mayor
T ST: :;) RD AS TO FORM:
Lee oodward,Ct 'ecretary Leoand SNider, City Attorney
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City Council Meeting Agenda Item
Item Title: Date: Ag da Item No.:
Cooperative Purchasing Interlocal Agree...
1/4/2011
Requested By: Project Manager: Dept./Div: Dept. Approval:
Billie F. Smith 210 WD
Issue/Item Description:
A cooperative Purchasing Interlocal Agreement between Walker County, TX and the City of
Huntsville, TX.
Background:
Walker County, TX has requested permission to utilize the City of Huntsville's contract for tires
and tubes. The City of Huntsville solicited bids for tires and tubes under the State of Texas and
the City of Huntsville's Purchasing Policy. The inter-local is not exclusive to tires and tubes, thus
this will allow access to sharing of all contracts between Walker County, TX and the City of
Huntsville, TX.
Facts to Consider:
• Walker County has agreed to the contract language as written in the inter-local agreement;
• No costs are associated with the agreement;
• Both entities will be able to use contracts in hopes of gaining greater pricing discount
structure;
• The Local Government Code Section 271.102 allows the participation of purchasing
contracts with other governmental entities.
• Each entity purchases directly from approved vendors.
Fiscal Impact/Funding Source(s):
There will be no funding required
Attachment(s):
• Inter-local agreement
Recommendation(s):
• Authorize the City Manager to approve an Interlocal Agreement between Walker County, TX
and the City of Huntsville, TX for cooperative purchasing of tubes and tires.
MOTION: r SECOND: r VOTE:
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MOTION: 1� SECOND: F VOTE:
F PRESENTED r APPROVED DECLINED ACTION
C- TABLED
r OTHER
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City Council Meeting Agenda Item
Item Title: Date: Ag da Item No.:
Investment Policy 1/4/2011
Requested By: Project Manager: Dept./Div: Dept.Approval:
City Council / Finance Committee 210 WD
Issue/Item Description:
The City of Huntsville Post Employment Benefit Plan Investment Policy statement for investing
Retiree Medical Trust funds. The policy addition amends Section 8 of Ordinance 2010-46
(adoption of Fiscal year 2010-2011 budget), Exhibit D (review and approve investment policies
and strategies).
Background:
The City has implemented a trust document under the laws of the State of Texas and under IRS
code. The City has chosen the trust administered by PEB Trust.
Facts to Consider:
• The City has a trust contractual agreement with PEB Trust, First Southwest as trust advisor.
The trust has hired an audit firm and legal advisors.
• The City has signed an agreement with.Milliman & Associates for money management
consulting reporting, and the selection of investment advisor, Charles Hodge.
• Charles Hodge from Milliman's Dallas office has assisted the City in the draft of the Trust
investment policy.
• The policy permits trust investments in equity and bond mutual funds and establishes
targets and benchmarks.
• i required before trust investments can be made in equities and longer term
Policy s q q 9
instruments.
Fiscal Impact/Funding Source(s):
Initial impact is $1,500,000 investment in trust funds.
Policy is included as part of the service.
Attachment(s):
• Investment Policy Statement
• Ordinance 2010-46, approved Sept. 14, 2010
• Proposed Ordinance 2011-17
Recommendation(s):
• Approve Ordinance 2011-17, amending Ord. 2010-46 by adding the City of Huntsville Post
Employment Plan Investment Policy statement for the investment of retiree medical trust
funds to Exhibit D.
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SECTION 12: The City Manager may, within the policies adopted within this budget, authorize
transfers between budget line items; City Council may transfer any unencumbered
appropriated balance or portion of it from one office, department, or agency to another
at any time, or any appropriation balance from one expenditure account to another
within a single office, department, or agency of the City. [Huntsville City Charter §
11.06.]
SECTION 13: City Council expressly repeals all previous budget ordinances and appropriations if in
conflict with the provisions of this ordinance. If a court of competent jurisdiction
declares any part, portion, or section of this ordinance invalid, inoperative, or void for
any reason, such decision, opinion, or judgment shall in no way affect the remaining
portions,parts,or sections, or parts of a section of this ordinance, which provisions shall
be,remain,and continue to be in full force and effect.
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SECTION 14: This ordinance shall take effect immediately after its passage.
PASSED AND APPROVED on this the 14''day of September 2010.
HUNTSVILLE,TEXAS
I
i
J.Turner, ayor
i
ATTEST:
bea-Woodwwd,City Secretary
VV
I
AP Ahneid�ereCity
S TO FORM:
i
• I
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L n r Attorney
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NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
HUNTSVILLE,TEXAS, that:
SECTION 1: City Council adopts the budget for the City of Huntsville, Texas, now before the City
Council for consideration and attached, as the budget for the City for the period of
October 1,2010,through September 30,2011.
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SECTION 2: The appropriation for the ensuing fiscal year for operating expenses, debt service and
capital outlay budgets shall be fixed and determined as shown on Exhibit"A".
SECTION 3: Projects described for fiscal year 2010-2011 in the Capital Improvements budget
portion of the 2010-2011 budget are approved at the cost level indicated, subject to the
availability of funding of project costs(see Exhibit"A'�.
SECTION 4: City Council approves a decrease in the monthly payment for a full-time employee to
the City's Medical Insurance Internal Service Fund from the current$687.00 per month
to$600.00 per month($7,200.00),per budgeted position.
SECTION 5: City Council approves a reduction in the budgeted TMRS rate from 22.55% to 18.55%
and a payment to TMRS of the savings difference from actual to budget to be applied
toward the City's unfunded liability.
SECTION 6: City Council approves a transfer of an amount equal to three and one half (3.5%)
percent of the gross revenues received during Fiscal Year 2010-2011 from all water,
and wastewater customers a transfer equal to three and one half(3.5%)percent of gross
revenues received during Fiscal Year 2010-2011 from all solid waste collection and j
disposal customers, to the Street Special Revenue Fund to compensate the City for the
use of streets and rights-of-way b the Water,Wastewater, and Solid Waste Funds.
Y
TION 7: Ci Council hereby has reviewed and approves the Fiscal and Budgetary Policies
SEC City Y
(Exhibit C).
SECTION 8: City Council has reviewed and approves the investment policies, strategies, and the
Investment and Banking Policies. (Exhibit D).
SECTION 9: City Council approves fees, rates, and charges per Exhibit B and their associated
revenue, which is incorporated into the budget. Council authorizes the City Manager to
make such adjustments in fees, rates and charges from time to time as are in the City
Manager's discretion reasonable and necessary based upon facts then existing,
including the implementation of new fees, rates and charges or elimination of current
ones; provided, however, that a change of more than 25% or the implementation or
elimination of any fee, rate or charge shall be reported to the next regular Finance
Committee meeting.
SECTION 10: The City Secretary is directed to maintain a copy of the adopted budget,to file a copy
of it with the City Library and the County Clerk, and to publish a notice saying the
budget is available for public inspection [Texas Local Government Code §§ 102.008
and 102.009(d)].
SECTION 11: Council may amend this budget from time to time as provided by law for the purposes
of authorizing emergency expenditures or for municipal purposes, provided, however,
no obligation shall be incurred or any expenditure made except in conformity with the
budget. [Texas Local Government Code §§ 102.009-102.011; Huntsville City Charter
§§ 11.06-11.07.]
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ORDINANCE NO. 2010-46
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS,
FINDING THAT ALL THINGS REQUISITE AND NECESSARY HAVE BEEN DONE IN
PREPARATION AND PRESENTMENT OF AN ANNUAL BUDGET; APPROVING AND
ADOPTING THE OPERATING AND CAPITAL IMPROVEMENTS BUDGET FOR THE
CITY OF HUNTSVILLE, TEXAS, FOR THE PERIOD OCTOBER 1, 2010, THROUGH
SEPTEMBER 30, 2011; RATIFYING AND APPROVING FISCAL AND BUDGETARY
POLICIES; RATIFYING AND APPROVING THE INVESTMENT AND BANKING
POLICIES; RATIFYING AND APPROVING VARIOUS FEES,RATES AND CHARGES;AND
PROVIDING FOR AN EFFECTIVE DATE HEREOF.
WHEREAS More than thirty days before the end of the City's fiscal year and more than thirty days
before the adoption of this ordinance, the City Manager of the City Huntsville, Texas,
submitted a proposed budget for the ensuing fiscal year according to Section 11.05 of
the Charter of the City of Huntsville,Texas, and Texas Local Government Code Section
102.005;
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WHEREAS the City Manager filed a copy of the proposed budget with the City Secretary and the
budget was available for public inspection at least fifteen days before the budget
hearing and tax levy for the fiscal year 2010-2011 (Texas Local Government Code §
102.006);
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WHEREAS the itemized budget shows a comparison of expenditures between the proposed budget
and the actual expenditures for the same or similar purposes for the preceding year and
projects for which expenditures and the estimated amount of money carried for each
[Texas Local Government Code § 102.103(a)];
WHEREAS the budget contains financial information of the municipality that shows the outstanding
obligations of the City, the available funds on hand to the credit of each fund, the funds
received from all sources during the preceding year;the funds available from all sources
during the ensuing year; the estimated revenue available to cover the proposed budget;
and the estimated tax rate required to cover the proposed budget [Texas Local
Government Code § 102.103(b)];
WHEREAS on August 25th and September 0' , the City Secretary published notice in the City's
official newspaper of a public hearing relating to the budget, which include one
publication not earlier than the 30th day or later than the tenth day before the date of the
hearing [Texas Local Government Code § 102.0065];
WHEREAS on September 7`h, the City Council of the City of Huntsville held a public hearing
relating to the budget;
WHEREAS the budget for the year October 1, 2010, through September 30, 2011, has been
presented to the City Council, and the City Council has held a public hearing with all
notice as required by law, and all comments and objections have been considered; and
WHEREAS the fees, rates and charges set out herein are reasonable and necessary and are
established and set in the best interests of the City,
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A Equity Options—Non U.S.
Asset Class Objective Benchmark Universe
International The investment objective of the The Morgan Stanley/Capital The investment option
Stock International Stock Option is to International(MSCI)Europe, selected will be compared to a
provide long-term growth of Australia and Far East universe of International
capital primarily using (EAFE)Stock Index is the Stock mutual funds.
securities of companies located benchmark. The investment
outside of the United States. option will be compared to the
return and the risk of the
benchmark.
Emerging Markets The investment objective of the The Morgan Stanley/Capital The investment option
Stock Emerging Markets Stock International(MSCI) selected will be compared to a
Option is to provide long-term Emerging Markets Stock universe of Emerging Market
growth of capital primarily Index is the benchmark. The Stock mutual funds.
using securities of companies investment option will be
located in emerging countries. compared to the return and the
risk of the benchmark.
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Asset Class Objective Benchmark Universe
Mid Capitalization The investment objective of the The Russell Mid-cap Value The investment option
Value Style Mid Capitalization Value Index is the benchmark. The selected will be compared to a
Option is to provide long-term investment option will be universe of Mid-capitalization
! growth of capital primarily compared to the return and the Value mutual funds.
using domestic mid risk of the benchmark.
capitalization securities with a
value-oriented style of
management.
Mid Capitalization The investment objective of the The Russell Mid-cap Index is The investment option
Blend Style Mid Capitalization Blend the benchmark. The selected will be compared to a
Option is to provide long-term investment option will be universe of Mid Capitalization
growth of capital primarily compared to the return and the Blend mutual funds.
using domestic mid risk of the benchmark.
! capitalization securities with a
blend of value and growth
oriented styles of management.
Mid Capitalization The investment objective of the The Russell Mid-cap Growth The investment option
Growth Style Mid Capitalization Growth Index is the benchmark. The selected will be compared to a
Option is to provide long-term investment option will be universe of Mid Capitalization
growth of capital primarily compared to the return and the Growth mutual funds.
using domestic mid risk of the benchmark.
capitalization securities with a
growth-oriented style of
management.
Small The investment objective of the The Russell 2000 Value Stock The investment option
Capitalization Small Capitalization Value Index is the benchmark. The selected will be compared to a
Value Style Option is to provide long-term investment option will be universe of Small
growth of capital primarily compared to the return and the Capitalization Value mutual
!
using domestic small-cap risk of the benchmark. funds.
! securities with a value oriented
style of management.
Small The investment objective of the The Russell 2000 Stock Index The investment option
! Capitalization Small Capitalization Blend is the benchmark. The selected will be compared to a
Blend Style Option is to provide long-term investment option will be universe of Small
growth of capital primarily compared to the return and the Capitalization Blend mutual
using domestic small-cap risk of the benchmark. funds.
securities with a blend of value
and growth oriented styles of
management.
Small The investment objective of the The Russell 2000 Growth The investment option will be
Capitalization Small Capitalization Growth Stock Index is the benchmark. compared to a universe of
Growth Style Option is to provide long-term The investment option Small Capitalization Growth
growth of capital primarily selected will be compared to mutual funds.
using domestic small-cap the return and the risk of the
securities with a growth benchmark.
oriented style of management.
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Attachment A
A. Fixed Income Options
Asset Class Objective Benchmark Universe
Cash/Cash The investment objective of the The 3-Month Treasury Bill is N/A
Equivalents Cash Option is to provide the benchmark.
capital preservation.
Intermediate Bond The investment objective of the The Barclays Capital The Bond Option selected will
Bond Option is to provide Aggregate Bond Index is the be compared to a universe of
income with a minor focus on benchmark. Intermediate-Term Bond
capital growth. mutual funds.
B. High Yield Bond Fund
Asset Class Objective Benchmark Universe
High Yield Bond The investment objective of the The Barclays Capital High The High Yield Bond Option
High Yield Bond Fund is to Yield Bond Index is the will be compared to a
seek high current income, benchmark. universe of High Yield Bond
assuming greater risks mutual funds.
including:Credit Risk,Default
Risk,Interest Rate Risk,
Liquidity Risk,Economic Risk,
and Company Risk.
C. Equity Options -Domestic
Asset Class Objective Benchmark Universe
Large The investment objective of The S&P 500 Index is the The investment option
Capitalization the Stock Index option is to benchmark. The investment selected will be compared to
Blend track the performance and risk options will be compared to a universe of Large
of the Standard&Poor's 500 the return and the risk of the Capitalization Blend mutual
index. benchmark. funds.
Large The investment objective of The Russell 1000 Value Index The Large Capitalization
Capitalization the Large Capitalization is the benchmark. The Value Option will be
Value Style Value Option is to provide investment option selected compared to a universe of
long-term growth of capital will be compared to the return Large Capitalization Value
primarily using domestic large and the risk of the benchmark. mutual funds.
capitalization securities with a
value oriented style of
management.
Large The investment objective of the The Russell 1000 Growth The investment option
Capitalization Large Capitalization Growth Index is the benchmark. The selected will be compared to a
Growth Style Option is to provide long-term investment option will be universe of Large
growth of capital primarily compared to the return and the Capitalization Growth mutual
using domestic large risk of the benchmark,net of funds,net of investment
capitalization securities with a investment management fees. management fees.
growth oriented style of
management.
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Section 7 DEFINITIONS
The following terms will have the following meanings:
Investment Manager
"Investment manager"means the asset manager or managers expressly
authorized and empowered to cause its portion of the trust to be invested
and reinvested in its sole discretion(but governed by the provisions of
this Investment Policy Statement) within the asset class or classes for
which it is employed to manage.
Investment Return
"Investment return"means investment income and realized and
unrealized gains and losses,all net of investment fees and expenses.
Market Cycle
For purposes of this Investment Policy Statement a"market cycle"will
be defined as a market peak-to-trough-to-peak(or a trough-to-peak-to-
trough).
Rate of Return
"Rate of return"means the annual rate of investment return.
Investment Officer
"Investment Officer"refers to the council or charter designated officials
with the responsibility of investing City funds. Investment officers are
required to meet educational requirements under the Public funds
Investment Act.
This Statement of Investment Policy approved by the City Council of the City of Huntsville.
Date: Approved by:
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Section 6 INVESTMENT MANAGER SELECTION
The assets of the Plan are invested under the supervision of the Finance
Committee. The Finance Committee has chosen to select investment
managers from the following asset classes. In addition the Finance
Committee has established an investment objective for each asset class
and established appropriate benchmarks and universes to be used to
evaluate the investment options.
The Finance Committee understands that the indexes selected have no
fees associated with their returns and the universe average is net of the
fees of the underlying funds. The investment options are not required
to exceed their benchmarks and universes every quarter, but are used as
a basis for judging the appropriateness of the investment option
selected over a full market cycle.
The asset class, objective, benchmark and comparative universe are
outlined in Attachment A.
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Termination of Investment Options
Reasons for considering replacing an investment and/or investment
manager may include,but are not limited to:
A. Significant under-performance relative to the appropriate benchmark.
B. Significant under-performance relative to the appropriate universe
average.
C. Significant change in risk(increase or decrease).
D. Change or loss of key personnel,relative to the significance of the
particular investment.
E. Significant increase or decrease in assets under management.
F. A change in business practices.
G. A change in investment style or discipline.
H. Failure to alert the Finance Committee to pertinent changes,lawsuits or
regulatory violations.
I. Investing in non-approved securities.
J. Identification by the Finance Committee of a more suitable investment
option.
Other Review
The Investment Policy Statement will be reviewed at least annually to
determine the continued appropriateness of the Investment Policy
Statement in achieving the stated purpose. However, it is not expected
that the Investment Policy Statement will change frequently. In
particular, short-term changes in the financial markets will not require
adjustments to the Investment Policy Statement.
A review of the program concerning the diversity of options,the use of
the options,the growth of the program, and any strategic planning
concerning demographics will also be conducted periodically.The
Finance Committee will receive a report on investment performance
quarterly. Investment performance and results will be presented
annually to the Council.
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Section S PERFORMANCE EVALUATION
The investment performance of the individual investments and/or
investment managers will be monitored quarterly and reviewed at least
annually relative to the objectives and guidelines described herein. The
investment performance evaluations may include performance analyses
and comparisons with the appropriate indices and investment fund
universes.
The Finance Committee does not expect to respond to short-term
investment developments,recognizing that the accumulation of value
for eventual retirement benefit payout is generally a long-term
objective and that investment competence must be measured over a
complete market cycle. The Finance Committee,nevertheless, may act
on interim qualitative judgments. Qualitative factors which will be
reviewed on an ongoing basis include any fundamental changes in a
manager's investment philosophy, organizational structure, financial
condition(including any significant changes in total assets under
management),personnel and fee structure.
The Finance Committee has established as one of its investment fund
and/or investment manager selection criteria that, as a general
proposition,over a complete market cycle, each of the Plans'
investment funds and/or investment managers should typically rank in
the upper half of the universe of all active investment funds and/or
active managers in the same asset class with similar investment
objectives.
Performance Review
The investment options will be reviewed at least annually. Among
other things, the performance review of the investment options may
include the following:
A. The measurement of investment returns.
B. A comparison of investment returns to their appropriate benchmarks.
C. A ranking of investment returns within their appropriate universes.
D. The measurement of risk.
E. An assessment of each investment's adherence to the stated policies
and objectives.
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C. Each investment manager will diversify each asset class
appropriately and will seek to moderate volatility and risk as is
appropriate for the asset class. The investment manager will not
invest in commodities, private placements, or letter stock. The
investment manager will not engage in non-covered short sales or
margin trading. Transactions consisting of the purchase or sale of
futures or options contracts may be permitted to the extent that they
are used to diversify or equitize the portfolio and not used as
speculative investments. Speculative investment in these
derivatives is not permitted without the previous written approval of
the Finance Committee.
D. The investment manager must ensure, to the extent practicable, that
all equity transactions(whether agency or principal) are executed at
competitive rates and all fixed income transactions are
competitively bid and must explain in writing to the Finance
Committee the reasons for any unusually high transaction costs.
E. The investment manager, when practicable,will disclose to the
Finance Committee any significant change in the investment
manager's personnel, organization, ownership, or asset
management policy or method.
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The Finance Committee recognizes that the trust's long-term
investment performance will be greatly affected by the mix of the asset
classes in which it is invested; accordingly,because of the policy and
objectives stated in Section 3,the trust's asset allocation will favor
equity investments.
Specifically, the Finance Committee has identified the following asset
classes to be appropriate for investment by the trust. In addition,the
Finance Committee has defined the following ranges to be used as
parameters of investment percentages the Plans'assets:
RANGE
MINIMUM MAXIMUM TARGET
Fixed Income Assets: 20% 30% 25%
Large cap 33% 43% 38%
Mid cap
3/0 13/0 8%
o 0
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Small cap 3% 13% 8%
International 16% 26% 21%
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0 0
Cash/Money Market Assets 0% 5/0 0%
Total 100%
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Managers that manage a separate account for the trust shall have full
discretion over portfolio investment decisions, subject to the following
guidelines and restrictions. To the extent that commingled or mutual
fund vehicles are utilized, the investment policies of those vehicles are
the operative documents established herein:
A. Investment managers will be delegated full discretion to exercise all
voting rights including,but not limited to, voting proxies.
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B. For purposes of the foregoing,real estate, and securities convertible
to common stock shall be classified as equity assets; money held by
an insurance company in its general account shall be classified as
fixed income assets
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Section 4 INVESTMENT GUIDELINES FOR ASSET
MANAGEMENT
The assets of the Plans will be invested in a manner consistent with
generally accepted standards of fiduciary responsibility. The Finance
Committee will act with the care, skill,prudence and diligence under
the prevailing circumstances that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
p ty
enterprise of a like character and with like aims. The Finance
Committee will discharge its duties with respect to the investment of
the trust solely in the interest of the participants and beneficiaries of the
Plan.
The Finance Committee will select appropriate ro riate investment alternatives
using the following criteria:
A. The Finance Committee may select investment managers from one
or more of the following:
1) Mutual fund management companies;
2) Banks;
3) Registered investment advisory firms; and
4) Insurance companies.
B. Each investment manager must clearly articulate for the Finance
Committee the investment strategy that will be followed and
document that the strategy has been successfully adhered to over
time.
C. Each investment manager must be able to provide for the Finance
Committee historical quarterly performance numbers calculated on
a time-weighted basis and reported net of all fees.
D. Each investment manager must provide for the Finance Committee
volatility measurements so that an appropriate risk/return profile
can be evaluated.
E. Each investment manager must be able to provide for the Finance
Committee information on its history,key personnel, fee schedules
and expenses, and current investment exposure.
F. A City of Huntsville designated Investment Officer may change the
Target Allocation and ranges and shall report any change to the
Finance Committee
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Section 3 INVESTMENT OBJECTIVES
It is the intention of the Finance Committee to build and maintain the
Plans trust through employer contributions that satisfy legal
requirements and investment returns. The Finance Committee expects
that the amount of investment income plus capital appreciation from
the Plans'trust combined with contributions to the trust will exceed the
amount of pension payments. Over shorter periods,the Finance
Committee understands that at times investment into
melus capital
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appreciation plus contributions to the trust may, in total,be less than the
amount of pension payments.
Because of the long-term nature of the Plans'obligations, the Finance
Committee's intent is to consider the following goals in managing the
trust:
d more performance objectives;
A. Long-term (i.e., five years an )p � ,
B. Maintenance of cash reserves sufficient to pay benefits under the
Plan; and
C. Achievement of the highest long-term rate of return practicable
without taking excessive risk that could jeopardize the Plans'
funding policy or subject the Plans' sponsors to undue funding
volatility.
The specific investment performance objective is for the trust to
achieve a rate of investment return over any five-year period that both:
A. Meets or exceeds the Plans' actuarial interest rate assumption,
B. Exceeds by 2%the rate of inflation(as measured by the Consumer
Price Index for all Urban Consumers),
C. Exceeds the return of the following custom market index: 0% cash,
38% S&P 500, 8%Russell 2000 index, 8%Russell Midcap index,
21%EAFE index, and 25%Barclays Capital Aggregate Bond
index.
In carrying out the foregoing policy and objectives,the trust will be
invested in accordance with the guidelines set forth in Section 4.
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Section 2 PURPOSE
This Investment Policy Statement contains guidelines regarding the
investment of the assets held in trust for the Plan to assist the members
of the Finance Committee in effectively selecting,monitoring and
evaluating the investments and/or investment managers for the Plan.
The purposes of this Investment Policy Statement are to:
A. Set forth the investment objectives,policies and guidelines, which
the Finance Committee judges to be appropriate and prudent, in
consideration of the needs of the Plan.
B. Establish the criteria against which the investments and/or the
investment management organizations selected by the Finance
Committee are to be measured.
C. Set forth the target asset mix for the investment of the Plans' assets.
D. Serve as a review document to guide the Finance Committee's
ongoing oversight of the investment of the Plans' assets.
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Section I INTRODUCTION
The City of Huntsville Post Employment Benefit Plan (the"Plan"), a
retirement plan qualified under Internal Revenue Code Section 115,
provides retirement benefits to eligible employees of City of
Huntsville.
The assets of the Plan are held in a tax-exempt trust for the benefit of
the Plans'participants and beneficiaries. The objective of the Plan is to
provide employees with a source of retirement income from
accumulated contributions and investment returns.
The Pension Plan Finance Committee(the"Finance Committee") is
responsible for overseeing and monitoring the investment of the Plans'
assets. It will generally be responsible for:
A. Promulgating the Plans'Investment Policy Statement.
B. Selecting the investment funds in which the Plans' assets will be
invested and/or the investment managers who will be responsible for
investing the Plans'assets.
C. Reviewing and making changes in the investment funds and/or
investment managers for compliance with the Investment Policy
Statement.
D. Making revisions to the Investment Policy Statement to reflect
changing conditions within the Plans or the investment environment or
to make it more effective.
The Finance Committee is authorized to retain professional investment
advisory services to provide advice with respect to the investment and
monitoring of the Plans' assets under the guidance of the Finance
Committee.
This Investment Policy Statement is intended to set forth the general
policies that the Finance Committee will apply in selecting,monitoring
and modifying the investments and/or investment managers for the
Plans. While the Finance Committee intends for this Investment Policy
Statement to assist the Finance Committee in satisfying its fiduciary
duties and in making prudent investment decisions, no investment
results or performance is, or can be, guaranteed; and no such guarantee
is intended.
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Table of Contents
Section I — INTRODUCTION
Section 2 — PURPOSE
Section 3 — INVESTMENT POLICY AND SELECTION
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SECTION 4 — INVESTMENT GUIDELINES FOR ASSET MANAGEMENT
Section S — INVESTMENT OPTIONS
Section 7 — PERFORMANCE EVALUATION
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Section 8 — DEFINITIONS
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P41
City of Huntsville Post Employment
Benefit Plan
INVESTMENT POLICY
STATEMENT
DECEMBER 2010