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A Resolution Adopting the Investment Policy and the Improper Payment Policy
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Introduction
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This is a resolution to adopt two financial policies governing the investment of Village funds and the prevention, identification, and correction of improper payments involving HUD funds.
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Recommended Action
Adopt the resolution, approving the attached Investment Policy and Improper Payment Policy.
Prior Board Action
The Village Board has discussed updating its Investment Policy in the past to reflect Village Values, and most recently the Finance Committee has considered the following items, with the most recent listed first:
• August 20, 2026, MOT 26-207: The Finance Committee discussed the Investment Policy and Improper Payment Policy as part of a broader review of financial policies and the associated Investment Operations Standard Operating Procedure. The revised Investment Policy reflected feedback from the August 6 and August 20 discussions, including a section on Village Values.
• August 6, 2026, MOT 26-203: The Finance Committee discussed the proposed Investment Policy, provided feedback on sustainability, Village values, transparency, and implementation, and considered forwarding a revised policy for Village Board consideration.
Background
The Investment Policy was discussed on several occasions in prior years, but the Village Board never formally adopted an updated Investment Policy. Finance Staff developed the proposed policy to establish a consistent framework for legal authority, investment objectives, authorized investments, custody, diversification, and public reporting. The policy covers Village funds but excludes the legally independent Police and Fire Pension Fund Boards. Its objectives are legality, safety, liquidity, and yield, in that order.
After the Finance Committee discussed the policy on August 6, 2026, under MOT 26-203 and received public comment, staff revised it to include Section VII.C, Village Values. The values address racial and economic justice, human rights and inclusion, public health and safety, peace, environmental sustainability, and ethical governance. The policy provides that those values are considered when material, relevant, supported by reliable information, and consistent with law and the Village’s primary investment objectives. The revised Investment Policy returned to the Finance Committee on August 20, 2026, under MOT 26-207.
The Improper Payment Policy was also discussed at the August 20, 2026, Finance Committee meeting under MOT 26-207. It establishes procedures for staff administering HUD funds to prevent, identify, report, and address incorrect, duplicate, ineligible, or otherwise improper payments. It assigns responsibilities to programmatic staff and the financial management team and addresses authorization, vendor verification, documentation, review, corrective actions, and training. Together, the policies strengthen the Finance Department’s core financial stewardship responsibilities.
Timing Considerations
There is no statutory adoption deadline identified for these policies. Adoption will allow staff to implement the written controls and reporting expectations and to incorporate them into applicable administrative procedures.
Financial Impact
There is no immediate budget amendment or direct expenditure associated with adopting the policies. Investment decisions will continue to depend on available funds, cash needs, market conditions, and authorized investment options. Implementation of the Improper Payment Controls will use existing staff and financial management processes; any recoveries or future resource needs would be addressed separately.
Operations Impact
Finance will administer the investment framework, maintain controls, and prepare a cash balance and investment report monthly when practicable and at least quarterly. Staff working with HUD funds will follow the Improper Payment Policy’s authorization, documentation, review, reporting, and corrective action procedures. These duties align with existing Finance and program administration functions.
DEI Impact
The Investment Policy directs staff to consider Village Values, including racial and economic justice, equitable access to capital, human rights, inclusion, and community well-being, when those factors are material to a prudent, legally authorized investment decision. It does not authorize an investment that fails the policy’s legality, safety, liquidity, or yield requirements. The Improper Payment Policy applies procedural controls consistently to the administration of HUD funds; it does not itself change program eligibility or funding allocations.
Community Input
Several members of the public commented in support of the Investment Policy during the August 6 and August 20, 2026, Finance Committee meetings. No public comments were received on the Improper Payment Policy, which concerns internal procedures for administering HUD funds. The Finance Committee also provided feedback on Village Values and the Investment Policy’s implementation and transparency provisions.
Staff Recommendation
Staff recommends adoption of both attached policies to provide Board-approved direction for investment management and improper payment controls.
Advantages:
• Formalizes investment objectives, permitted activities, safeguards, and public reporting, while incorporating Village Values within legal and fiduciary limits.
• Establishes a written process for preventing and addressing improper payments involving HUD funds.
Disadvantages:
• Implementation will require staff time for reporting, periodic review, training, and documentation.
• The Investment Policy may require additional assessment of reliable information and comparable investment alternatives when Village Values are relevant.
Alternatives
Alternative 1:
Adopt the Investment Policy and defer action on the Improper Payment Policy for additional revisions.
Advantages:
• Allows the Board to establish investment direction now while requesting targeted changes to the payment procedures.
Disadvantages:
• Delays formal adoption of a consistent improper payment policy for HUD fund administration.
Alternative 2:
Defer adoption of both policies and direct staff to return with revisions.
Advantages:
• Provides additional time to address specific Board questions or proposed changes before adoption.
Disadvantages:
• Delays Board-approved investment guidance, public reporting expectations, and Improper Payment procedures.
Anticipated Future Actions
Following adoption, staff will implement the policies, provide periodic investment reports, and incorporate the payment procedures into staff guidance and training. Specific to the Investment Policy, Finance Staff will work with current service providers to report back to the Board with a Standard Operating Procedure and, as needed, an investment or divestment plan within a 180-day period. In general, the policies call for periodic Board review and formal approval of any revisions.
Prepared By: Louis Hall-Makarewicz, Deputy Chief Financial Officer
Reviewed By: Kevin Bueso, Chief Financial Officer
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Investment Policy Draft
2. Improper Payments Policy Draft
3. Resolution