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Cash Management Practices
Cash & Investments

A cash and investment pool is maintained that is available for use by all funds.  The deposits and investments of the trust funds are held separately from those of other funds.  Massachusetts General Laws authorize the investment in obligations of the U.S. Treasury, certificates of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer’s Investment Pool. 

Investment Policy

The Town’s investment policy is for preservation of capital which is achieved by overall portfolio diversification and is based on three objectives:  safety of principal, liquidity to meet operational needs, and maximizing yield within the demands of the first two objectives and the prudent investor standard based in law.

Minimizing Custodial Credit and Interest Rate Risk

The custodial credit risk is the risk that, in the event of bank failure, the Town’s deposits may not be recovered.  Unlike other states, Massachusetts does not require banks to fully collateralize municipal deposits.  Currently, more than 50% of the deposits are insured by Federal Deposit Insurance Corp. coverage.  The remaining deposits are invested in banks that are highly rated by independent rating agencies.  The Town’s investment policy requires the due diligence necessary to affirm the financial strength, capital adequacy, and reputation for any financial institution in which the town places investments.  The Town minimizes the concentration of credit risk by diversifying the investment portfolio among financial institutions, maturity of investment instruments, and avoidance of exposure in foreign currency.  The policy prohibits the investment of more than ten percent (10%) of cash in any single financial institution that is not fully collateralized and mandates that the Town may not at any one time have on deposit in a bank an amount exceeding sixty percent (60%) of the capital and surplus of that financial institution.  The Town, as a matter of practice, does not invest any more than five percent (5%) in any single firm.  The investment policy requires investment of operating funds to have maturity of one year or less from the date of purchase. 

 



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Town of Wayland    41 Cochituate Road, Wayland, MA 01778-2614    Tel: (508) 358-7701    FAX: (508) 358-3627
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