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A Motion to Discuss the Proposed Investment Policy, Provide Feedback, and Recommend that the Policy Be Forwarded to the Village Board for Consideration
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Introduction
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The Finance Committee is asked to review the proposed Investment Policy and provide direction on a comprehensive framework that incorporates sustainability and community-value considerations while maintaining compliance with Illinois law and the Village's obligations to protect principal, preserve liquidity, and prudently manage public funds. The Committee is also asked to recommend whether a revised policy should be forwarded to the Village Board for consideration.
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Recommended Action
Discuss the proposed Investment Policy, provide direction to staff on an integrated approach to sustainability, transparency, and implementation, and recommend that staff bring a revised policy forward to the Village Board for consideration.
Prior Board Action
There is no prior Board action associated with adoption of a formal Village Investment Policy. Staff began developing an investment policy in 2025. During that process, Board members and residents expressed interest in strengthening the policy's treatment of sustainability, community values, and transparency, which is included in the current Finance Committee review.
Background
The Village invests public funds to meet ongoing operating, capital, and liquidity needs. A formally adopted policy establishes the governance, controls, authorized instruments, and reporting expectations for those activities. The proposed policy applies to all Village funds except the legally independent Police and Fire Pension Fund Boards and establishes the primary objectives of Legality, Safety, Liquidity, and Yield, in that order.
As the policy was being developed, Board and resident input called for the Village to favor investments aligned with racial justice, economic justice, human rights, LGBTQ rights, public health and safety, peace, and environmental sustainability; reduce or avoid investments that undermine those values over time; and publish Village investments in the Chief Financial Officer/Treasurer's quarterly balance and investment report. Trustee Eder's June 17, 2026 request formally brought these considerations forward for Finance Committee discussion.
Material submitted by an Oak Park resident identifies concerns regarding the Village's Northern Institutional Treasury Portfolio (NITXX) and Huntington Bank deposit sweep arrangements, including potential indirect exposure through counterparties or participating banks. The material provides context for the policy discussion; the specific characterizations and underlying exposures would require validation with the relevant financial institutions and investment providers before any transaction-level action is recommended.
The proposed policy uses a blended approach, developed through Finance and Village Attorney review, that relies on the Illinois Public Funds Investment Act and the Illinois Sustainable Investing Act as the legal and administrative foundation for advancing these objectives. The policy directs the Village to consider material, relevant, and decision-useful sustainability factors, including corporate governance and leadership, environmental factors, social capital, human capital, and business model and innovation factors. Within this framework, community values can inform investment selection, ongoing review, and any movement away from an investment, while Legality, Safety, Liquidity, Yield, and financial and fiduciary prudence remain governing requirements.
The proposed policy also establishes standards of prudence and ethics, delegation of authority to the Chief Financial Officer/Treasurer, requirements for financial institutions and broker-dealers, safekeeping and internal controls, authorized investments, collateralization, diversification and maturity constraints, quarterly reporting, and annual policy review. The quarterly report would identify the institution holding each deposit or investment, its fair market value or cash balance, and its allocation by Village fund.
The principal policy question is how to make this integrated framework clear and actionable. The policy can combine statutory sustainability factors, quarterly disclosure, recurring review of current providers and investment vehicles, and a process for reducing or avoiding exposures inconsistent with Village values when supported by reliable information and legally permissible, financially prudent alternatives. Any categorical restrictions should be based on objective criteria, authoritative information sources, a defined review frequency, clear decision authority, reasonable implementation timing, and documentation requirements.
Timing Considerations
Finance Committee feedback on August 6, 2026, will allow staff to refine the policy's level of specificity, remove the explanatory drafting comments, and prepare a final version for Village Board consideration later in 2026. If the Committee directs staff to include provider-level screening or phased divestment standards, additional due diligence with financial institutions, investment pools, and other providers may be needed before the policy is finalized.
Financial Impact
There is no immediate budget impact associated with this discussion or with adoption of the proposed policy. The recommended framework is designed to advance sustainability objectives without subordinating legality, safety, liquidity, diversification, or financial prudence. The financial effect of moving funds or excluding an investment option would depend on the specific criteria, available alternatives, transaction timing, fees, interest earnings, and information provided by the Village's financial institutions and investment providers.
Operations Impact
The Chief Financial Officer/Treasurer would implement the policy through investment procedures, internal controls, collateral monitoring, financial-institution review, quarterly reporting, and annual policy review. This work is expected to be incorporated into existing Finance Department responsibilities, and no additional staff positions are requested. Recurring review of indirect holdings in investment pools or bank sweep programs would require provider data, staff analysis, and, in some cases, outside investment or legal advice.
DEI Impact
The proposed sustainability framework allows the Village to consider factors related to human rights, community reinvestment, access and affordability, labor practices, employee health and safety, diversity and inclusion, and environmental impacts when those factors are material, relevant, decision-useful, and consistent with financial and fiduciary prudence. The policy creates a structured path for the stewardship of public funds to reflect Village values, while recognizing that the policy itself does not create a direct programmatic equity impact.
Community Input
Board and resident interest have informed the sustainability and community-value provisions under consideration. Trustee Eder requested Finance Committee review after working with President Scaman and several Oak Park residents, and Oak Park resident Dean Christ submitted research identifying investment and banking arrangements for further review. A formal Village-wide engagement process has not occurred. The draft policy was shared with the Finance Committee on July 24, 2026, and the August 6, 2026 meeting will provide an opportunity for public comment and Committee discussion before any recommendation is forwarded to the Village Board.
Staff Recommendation
Staff recommends that the Finance Committee support a blended policy framework that treats sustainability and community values, Illinois statutory standards, and the Village's fiduciary responsibilities as complementary components of a single investment policy. The policy should retain Legality, Safety, Liquidity, and Yield as governing priorities; require consideration of material sustainability factors; require quarterly investment reporting; and direct ongoing review of current investment relationships and available alternatives. Where reliable data and suitable alternatives exist, staff should be authorized to reduce or avoid exposure inconsistent with the policy. Any categorical exclusions or formal divestment requirements should use objective criteria, authoritative information sources, a defined review cycle, clear decision authority, and reasonable implementation parameters so the policy remains legally compliant, financially responsible, consistently administered, and sustainable over time.
Advantages:
• Creates the Village's first formally adopted investment policy and establishes clear governance, internal-control, collateral, diversification, reporting, and annual-review requirements.
• Blends the Board's values-based objectives with the sustainability framework authorized by Illinois law and reviewed by the Village Attorney's Office.
• Creates a transparent and administratively sustainable path to review, avoid, or move investments when reliable criteria and prudent alternatives support action.
• Preserves the Village's ability to protect principal, maintain liquidity, diversify holdings, and obtain a competitive return while incorporating sustainability considerations.
Disadvantages:
• A balanced framework may produce gradual rather than immediate changes because each action must be supported by verified information, legal authority, and suitable financial alternatives.
Evaluating indirect exposures through investment pools and bank sweep programs requires provider data and professional judgment, and some determinations may not produce a simple yes-or-no conclusion.
Alternatives
Alternative 1:
Forward the current draft using the statutory sustainability factors and quarterly reporting requirements, without additional direction for recurring review or phased movement away from investments that may be inconsistent with Village values.
Advantages:
• Allows the Village to adopt the core governance, internal-control, and reporting improvements without first developing additional implementation standards.
• Minimizes administrative complexity and preserves maximum flexibility in the selection of legally authorized investment options.
Disadvantages:
• Provides a less explicit connection between the Village's stated values and the ongoing review of existing investment relationships.
• Does not establish a clear process for evaluating concerning exposures or moving funds when suitable alternatives are available.
Alternative 2:
Defer a recommendation and direct staff to develop a detailed, list-based exclusion and divestment framework before bringing the Investment Policy forward to the Village Board.
Advantages:
• Provides additional time to validate direct and indirect exposures and establish specific, measurable screening and divestment standards.
• Allows the Finance Committee to review the complete criteria, decision process, implementation schedule, and projected financial effects before recommending a policy.
Disadvantages:
• Delays adoption of the core governance, internal-control, and reporting improvements contained in the current draft.
• A list-based framework may reduce eligible banks, investment pools, counterparties, or securities and could affect liquidity, diversification, interest earnings, fees, or transaction timing.
Anticipated Future Actions
Staff will incorporate Finance Committee feedback into the draft and prepare a final policy and resolution for Village Board consideration. If the Committee supports the integrated approach, staff will refine the policy language and administrative procedures for recurring review of current investment relationships and available alternatives. Where direct or indirect exposures raise concerns, staff will validate the information, identify alternatives, assess legal, liquidity, and financial impacts, and report the results through the quarterly reporting process. Any Board-directed categorical exclusions or formal divestment requirements will be incorporated using the objective and sustainable implementation standards established through this review.
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. Draft Investment Policy