Item Description:
title
Authorize Investment Officer to use additional statutory investment authority relating to repurchase agreements and reverse repurchase agreements through 2027 within statutory and board-authorized limits
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Resolution:
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BE IT RESOLVED, that the Investment Officer of Hennepin County be authorized to utilize the additional investment authority set forth in Minnesota Statute 118A.07, relating to repurchase agreements and reverse repurchase agreements, through December 31, 2027, within statutory limits and in conformance with the written policies and procedures of the Office of Budget and Finance, and that the Investment Officer submit a report to the Board in 2027 on the findings of the oversight process; and
BE IT FURTHER RESOLVED, that the limit on the amount of investments owned, with maturity dates greater than 12 months, is set at 120 percent of the prior year’s average daily invested assets.
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Background:
This Board Action Request asks for the continuation of the additional investment authority described in Minnesota Statute 118A.07 which the Investment Officer uses in the safekeeping, management and investment of county deposits and funds. It requires annual authorization by the local governing body as well as the maintenance of policies and procedures and an oversight process which are documented below and in the attachments.
The county's treasury practices incorporate the use of Treasury bonds, government agency bonds, municipal bonds, collateralized deposits, repurchase agreements and reverse repurchase agreements, and high-quality bank commercial paper, when useful and appropriate, to safely manage county funds.
The request specifically authorizes the Investment Officer to apply the additional statutory authority granted under MN Statute 118A.07 Subd. 5, which permits entering into reverse repurchase agreements for any term through December 31, 2027. This authority supersedes the 90-day restriction outlined in MN Statute 118A.05, Subd. 2, which otherwise limits their use to a maximum of 90 days.
Consistent with prior year’s, the requested authority follows an internal limit on amount of investments owned at 120% of the prior year's average invested assets; this is 10% below the statutory limit of 130%. This limit restricts the size of the county’s investment portfolio. It recognizes that OBF also uses the board-authorized Hennepin County commercial paper issuance program as an added cash management tool. Finally, the limit signals to financial markets that OBF manages use of available financing conservatively.
The Office of Budget and Finance (OBF) maintains comprehensive investment policies and procedures that define the management of county deposits and investments. These policies address: (1) collateralization requirements for bank deposits; (2) maturity and duration limits for individual securities; (3) use of authorized investments including repurchase and reverse repurchase agreements, floating rate and callable securities; (4) weighted duration of the portfolio; and (5) ongoing monitoring of the credit quality of counterparties with whom OBF conducts investment transactions.
OBF staff reviews market conditions and investment strategies with the Investment Policy Advisory Committee, a group of volunteer members from the public and private sectors who provide expertise on financial markets, risks, and opportunities. The committee offers guidance consistent with the county’s investment objectives and policy framework. At its September 21, 2026, meeting, after staff presentation and discussion, the committee approved continuation of the county’s investment strategies, as presented.
Documentation of policies and procedures is maintained by the Office of Budget and Finance. Oversight of investment activity includes internal and external audits, credit rating agency reviews, committee reviews, internal controls over transaction execution and recording of them, and monthly reporting by accounting staff on compliance with investment limits.
The attachments comprise the oversight report referenced in the prior year’s resolution (25-0436). They provide details regarding the use of the additional investment authority. Exhibit I documents the proposed usage of the additional authority. Exhibit II is a report of oversight practices. Further, the Investment Officer shall report to the board in 2027 on the findings of the oversight process. Exhibit III is a summary of the current investment portfolio as of September 30, 2026, with comparisons to the prior year.
In addition to its own funds, the county’s investment portfolio includes funds of the Regional Rail Authority, Housing and Redevelopment Authority, Hennepin Healthcare System, Hennepin Health, Three Rivers Park District, and Minnesota Ballpark Authority.
recommendation
Recommendation from County Administrator: No Recommendation