§ 2-70.6. Cash management.

(a)

Fund balance and net position management.

(1)

A cash management reserve is to be maintained in the general fund, the fire fund, the recreation fund, and the stormwater fund. Since this policy is approved by county council ordinance, the council authorizes the cash management reserve which is not categorized as restricted to be classified as "committed" fund balance. The cash management reserve shall be sufficient to allow the county to avoid short-term borrowing at all times in the fiscal year. Use of the cash management reserve shall require approval by a super-majority of seventy-five (75) percent of county council through ordinance.

The cash management reserve should be maintained at eighteen (18) percent of the fund's next year budgeted expenditures and transfers out, excluding those amounts that are funded by one-time funding sources.

In the event that the cash management reserve is spent, the reserve shall be reestablished within three (3) fiscal years.

(2)

A revenue stabilization fund is to be maintained in the general fund, the fire fund, recreation fund, and the stormwater fund. Since this policy is approved by county council ordinance, the council authorizes the revenue stabilization reserve which is not categorized as restricted to be classified as "committed" fund balance. The revenue stabilization reserve can be spent in the event that actual revenues collected have a negative variance greater than two (2) percent of the budget revenue estimate. Use of the revenue stabilization reserve requires approval by council resolution, but may not be used to balance a subsequent year's budget.

In the event that the fiscal stabilization reserve is spent, the following must be followed to replenish the reserve balance:

a.

Withdrawals up to twenty-five (25) percent of the reserve shall be restored within one (1) fiscal year;

b.

Withdrawals of twenty-five (25) percent of the reserve up to fifty (50) percent of the reserve shall be restored within two (2) fiscal years;

c.

Withdrawals of fifty (50) percent of the reserve up to seventy-five (75) percent of the reserve shall be restored within three (3) fiscal years;

d.

Withdrawals of seventy-five (75) percent of the reserve up to one hundred (100) percent of the reserve shall be restored within four (4) fiscal years.

Upon establishment of the cash management reserve, the county shall work to establish a revenue stabilization reserve of two (2) percent of the fund's next year budgeted expenditures and transfers out, excluding those amounts that are funded by one-time funding sources.

(3)

A disaster reserve is to be maintained in the general fund, the fire fund, the recreation fund, and the stormwater fund. Since this policy is approved by county council ordinance, the council authorizes the revenue stabilization reserve which is not categorized as restricted to be classified as "committed" fund balance. The disaster reserve can be spent under extreme exigent circumstances when unexpected expenditures are required in excess of the budgeted expenditures in order to provide for the health, safety and/or welfare of the county. Use of the disaster reserve is most likely to occur in the event of a natural disaster such as a hurricane, earthquake, terrorism, or other extraordinary event. Use of the disaster reserve requires approval by council resolution.

In the event that the disaster reserve is spent, the following must be followed to replenish the reserve balance:

a.

Withdrawals up to twenty-five (25) percent of the reserve shall be restored within two (2) fiscal years;

b.

Withdrawals of twenty-five (25) percent of the reserve up to fifty (50) percent of the reserve shall be restored within four (4) fiscal years;

c.

Withdrawals of fifty (50) percent of the reserve up to seventy-five (75) percent of the reserve shall be restored within six (6) fiscal years;

d.

Withdrawals of seventy-five (75) percent of the reserve up to one hundred (100) percent of the reserve shall be restored within eight (8) fiscal years.

Upon establishment of the cash management reserve and the revenue stabilization reserve, the county shall work to establish a disaster reserve of five (5) percent of the fund's next year budgeted expenditures and transfers out, excluding those amounts that are funded by one-time funding sources.

(4)

Upon full funding of the cash management reserve, the revenue stabilization reserve, and the disaster reserve; and after assigned fund balance determinations by the county administrator, the county administrator shall recommend, as part of the annual budget, a plan to the county council to utilize unassigned fund balance. Unassigned fund balance shall be used as follows:

a.

To fund unfunded liabilities of the county's post-employment benefits.

b.

To call outstanding debt of the county.

c.

To fund expenditures to replace or extend the usable life of the county's infrastructure, facilities, and equipment.

d.

To fund expenditures with a demonstrable return on investment to improve the efficiency or effectiveness of county services.

e.

To fund expenditures to support economic development initiatives with a demonstrable return on investment.

f.

To fund new infrastructure, facilities, and equipment that could only be funded through a revenue increase or the issuance of long-term indebtedness.

(5)

All governmental funds responsible for the payment of debt service must maintain within fund balance an amount equal to at least fifty (50) percent of the next year's debt service amount and this policy, approved by county council ordinance, authorizes this amount which is not categorized as restricted to be classified as "committed" fund balance.

(6)

The airport enterprise fund will maintain reserves at levels that comply with the applicable regulatory requirements such as bond covenants and requirements of various funding sources.

(b)

General fund emergency contingency. Administration understands that in order to avoid financial instability, continuing requirements cannot increase faster than continuing revenues and therefore an emergency contingency account in the general fund shall be established each fiscal year during the budget process. The account will be funded at a level consistent with prior year trends and based on current year needs.

The finance department shall on an annual basis report to the county administrator and council all expenditures spent from this general fund contingency account.

Expenditures from the general fund contingency account shall be limited to the following:

(1)

"One-time only" allocations.

(2)

Emergency situations which, if left unattended, will jeopardize the health and safety of the community.

(3)

Unanticipated expenditures that are necessary to keep previous public commitments or fulfill a legislative or contractual mandate or can be demonstrated to result in significant administrative or programmatic efficiencies that cannot be covered by existing appropriations.

(c)

Cash handling policy.

(1)

The finance department shall be empowered to establish or amend a policy and procedures for the depositing and handling of all cash for all departments of Horry County. Departments subject to court administration oversight shall follow published guidelines for cash handling. Larger departments utilizing computerized point of sale or receipting functionality may be authorized by the finance department and treasurer to receive payments by merchant card programs. ACH wire E-checks or other available electronic processes.

(2)

The treasurer shall provide to the finance department a listing of all departments that participate in the courier service, make deposits directly with the treasurer, or make deposits to a separate bank account. An updated copy of these rosters shall be provided to the finance department not less than quarterly by the tenth of the month following the end of the quarter.

(3)

The treasurer shall develop the deposit summary forms that shall be utilized by all departments that make deposits to the treasurer's office. All deposit slips shall be prepared using three-part deposit slips. The original copy of the deposit ticket (white copy) will be placed in the sealed deposit pouch by departments, other than the treasurer's office, who are preparing deposits. The yellow copy shall be retained by the treasurer's office. The pink copy will be retained by the department for audit purposes. Electronic depositing processes including check 21 and other similar programs may be implemented with approval of the treasurer

(4)

The treasurer shall be responsible for arranging a courier service. For those departments that participate in the courier service, the treasurer shall establish deposit pick-up schedules. Those departments that do not participate in the courier service shall be responsible for delivering their deposits to the treasurer, or directly to the bank. The treasurer shall design and maintain a daily checklist of all deposits due each day. He shall be responsible for advising the county administrator of the failure of any department to make timely deposits in a monthly report.

(5)

The treasurer shall maintain adequate records of all deposits that are made by those departments that deposit into separate county bank accounts. The treasurer shall include, in a monthly consolidated report any department which fails to make timely deposits.

(6)

The deposit frequency for all departments shall be daily except where the treasurer has authorized, by written approval, an exception or when the receipts for any given day and the combined total of cash, coin, and checks on hand are less than five hundred dollars ($500.00) and the department has adequate secure storage facilities. A department may refrain from making a deposit for any and all days until the proceeds from its receipts equal or exceed five hundred dollars ($500.00), except that a deposit shall be made on the final workday of each week and each month regardless of the dollar amount. The department head shall assume financial liability for funds not deposited in accordance with this policy.

(7)

This policy shall be applicable to all departments that handle money for Horry County. Any department with extenuating circumstances, which prohibit compliance with this policy shall request permission to address their cash handling situation in a different manner. With sufficient justification, the finance department and treasurer mutually may grant an exception.

(8)

It shall be deemed a violation of the employment guidelines and any other relevant regulations or policies for any employee to remove money that has been received on behalf of Horry County off the premises without the expressed written approval of the county administrator, for any purpose other than making a deposit to the appropriate county bank account or treasurer. Petty cash transactions are exempt with appropriate documentation. In addition, there shall be no co-mingling of county and employee funds (i.e.: using county funds to cash personal checks).

(9)

All monies shall be safeguarded in the facilities as provided by the county. Additionally, departmental procedures must assure accountability of county funds at all times. Funds (checks and cash) kept on hand which are accessible by multiple staff at any given time does not assure accountability and is considered a violation of this policy. Those departments not having adequate protection for overnight storage, where authorized, shall deposit their receipts in an approved account as provided for in subsection (4) above.

(10)

A sequentially numbered receipt shall be provided to the payer for any and all monies received. All departments shall utilize pre-numbered bound receipt books except where a computerized receipt system is employed or the finance department has approved an alternate method.

(11)

The receipt numbers included in each deposit shall be documented. Any receipt that is voided shall be defaced and retained in its original place in the receipt book with all copies being accounted for. Voided receipt numbers shall also be documented.

(12)

All employees receiving money away from the office shall provide a receipt and shall remit this money to the appropriate custodian of such funds by the end of the first workday after receipt of such money. Each department having employees collect money away from the office shall keep a log of those employees. Each employee shall be issued a sequentially numbered book of receipts that shall be audited by the department on a monthly or more frequently prescribed basis.

(13)

Each department shall provide a list of the locations at which county funds are collected and each employee who is responsible for the accounting and safekeeping of those funds. Each department with employees collecting funds shall provide a roster to the finance department and shall keep said roster current on a weekly basis. The department shall keep on hand and current, the disposition of all receipt books in a form ready for audit at any time.

(d)

Petty cash. The finance department shall be empowered to establish or amend the procedures for the authorization and handling of petty cash funds.

(e)

Banking services. The treasurer, in accordance with the Horry County Procurement Code, shall designate the county financial institutions to be used that are the most advantageous to the county based on request for proposals for banking services. County council shall be provided sufficient notice in advance of changing county checking accounts. Accounts shall remain in the same bank for the current fiscal year.

(f)

Bank collateralization requirement. Before depositing any funds of the county in any bank or banks, the bank or banks, shall secure the safe deposit of such funds by depositing with the treasurer a trust receipt certifying that securities necessary to support the deposits have been duly set aside in some bank or trust company and are being held in trust for Horry County to secure such deposits and in compliance with S.C. Code § 12-45-220 and any amendment thereto. Provided, further, that securities shall be bonds or obligations issued by the United States of America, the State of South Carolina or some political governmental subdivision thereof, either or both, or federal land banks, or homeowner's land banks, or homeowner's land bonds; provided, further that the deposit so made and secured shall remain with the bank or banks receiving it until used for the purpose for which it was borrowed.

(g)

Investments. It is the purpose of this statement of investment policies to establish and provide guidelines for the safe and efficient management of county funds. The goal is to manage all public funds and purchase and sell investment instruments in such a manner as to ensure the maximum security of the principal, provide for the daily cash flow demands, generate revenue from the use of funds which might otherwise remain idle, and conform to state statues governing the investment of public funds.

The safety of principal is the foremost objective of the investment program. Investing shall be undertaken in a manner that seeks to ensure the preservation of capital in the portfolio. The portfolio shall remain sufficiently liquid to enable the county to meet all operating requirements which might be reasonable anticipated.

The portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account investment risk, constraints, and the cash flow characteristics of the portfolio.

(h)

Scope and accountability. These policies apply to all cash-assets which are included within the scope of the county's CAFR. Other funds held and invested under the management of the treasurer's office may be included under these policies and all are subject to the regulations established by the State of South Carolina. Applicable funds include, but are not limited to:

(1)

County, school, solid waste authority general funds;

(2)

Special revenue funds;

(3)

Debt service funds;

(4)

Capital project funds;

(5)

Enterprise funds; and

(6)

Trust funds and agency funds.

(i)

Responsibility. Delegation of authority: The authority for investing funds is vested with the treasurer, who, in turn, may designate a representative to manage the day-to-day operations of the county's investment portfolio, request bids with financial institutions, and prepare reports as required.

(j)

Internal control. This investment portfolio will be reviewed through the county's annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures.

(k)

Investment options and reporting. The treasurer is hereby directed to invest all available public funds with the financial institutions in the manner most advantageous to the county. The treasurer shall report to the finance department, or his/her designee, on a monthly basis his/her investments of public funds. That report shall include the amount invested, the date of the investment, the institution where the funds are invested, the interest rate of the investment, the maturity date of the investment, and the type of investment, and the type of security for these funds. The council may direct under the provision of S.C. Code § 12-45-220B) that all funds of the county shall be deposited in a cash management account which is most advantageous to the county.

State law (S.C. Code § 6-5-10) permits the following investment instruments and account type for investment of county funds:

(1)

Obligations of the United States and its agencies, the principal and interest of which is fully guaranteed by the United States.

(2)

Obligations issued by the following if at the time of investment, the obligor has a long-term, unenhanced, unsecured debt rating in one (1) of the top two (2) ratings categories, without regard to a refinement or gradation of rating category by numerical modifier or otherwise, issued by at least two (2) nationally recognized credit rating organizations.

a.

Federal Financing Bank;

b.

Federal Farm Credit Bank (FFCB);

c.

Bank of Cooperatives;

d.

Federal Intermediate Credit Bank;

e.

Federal Land Banks;

f.

Federal Home Loan Banks (FHLB);

g.

Federal Home Loan Mortgage Corporation (FHLMC);

h.

Federal National Mortgage Association (FNMA);

i.

Government National Mortgage Association (GMNA);

j.

Federal Housing Administration;

k.

Farmers Home Administration.

(3)

General obligations of the State of South Carolina or any of its political units; or revenue obligations of the State of South Carolina or its political units, if at the time of investment, the obligor has a long-term, unenhanced, unsecured debt rating in one of the top two (2) ratings categories, without regard to a refinement or gradation of rating category by numerical modifier or otherwise, issued by at least two (2) nationally recognized credit rating organizations.

(4)

Savings and loan associations to the extent that the same are insured by an agency of the federal government.

(5)

Certificates of deposit where the certificates are collaterally secured by securities of the type described in (1) and (2) above held by a third party as escrow agent or custodian, of a market value not less than the amount of the certificates of deposit so secured, including interest; provided, however, such collateral shall not be required to the extent the same are insured by an agency of the federal government.

(6)

Repurchase agreements when collateralized by securities as set forth in this section.

(7)

Money market funds-state law requires the following conditions when investing in money market funds:

a.

Only no load funds are allowed;

b.

Must be used only for bond proceeds or debt reserve funds;

c.

Must be purchased through a financial institution acting as agent or trustee;

d.

Underlying securities in the fund must only be U.S. treasuries or agencies;

e.

Fund must maintain a NAV of one dollar ($1.00); and

f.

Fund must value assets by the amortized cost method (portfolio must be "marked to market" daily with realized and unrealized gains and losses reflected in the daily dividends).

(l)

Collateralization. Collateralization shall be required on certificates of deposits and repurchase agreements. Collateral will be limited to that specified in the S.C. Code §§ 6-5-10 and 12-45-220. A clearly marked evidence of ownership must be supplied and retained.

(m)

Diversification. The investments in this portfolio will be diversified by security type and institution.

(n)

Investment of tax-exempt financings. All proceeds of tax-exempt financings shall be invested in accordance with applicable Internal Revenue Code provisions, rules, regulations and certifications, representations and warranties made in connection with the tax-increment financing. A rebate calculation shall be made by a rebate analyst in accordance with the tax agreement related to such tax-exempt financing

(o)

Investment credit risk. Horry County's investment activities are further restricted in the following manner:

(1)

As stated in subsection (m), it is the policy of Horry County to diversify its investment portfolio. Assets held shall be diversified to eliminate the risk of loss resulting from the over concentration of assets in a specific maturity, a specific issuer or a specific class of securities. Diversification shall be determined and revised periodically by the treasurer. Portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Maturities selected shall provide for stability of income and reasonable liquidity.

(2)

Horry County recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to minimize default risk. No individual investment transaction shall be undertaken that jeopardizes the capital position of the overall portfolio. In the event of a default by a specific issuer, the county treasurer shall review and, if appropriate, proceed to liquidate securities having comparable credit risks.

(3)

No investments in repurchase agreements shall be made unless the underlying collateral shall be placed in safekeeping in the trust department of a third-party designated by the county.

(4)

As a means of limiting exposure to fair value losses arising from changing interest rates, this investment policy limits at least half of the investment portfolio to maturities of less than one (1) year. Investments of restricted funds with maturities matched to projected cash flow needs (i.e., capital project sales tax) are exempt from this one (1) year maturities limit. No investment shall be made in any security with a maturity greater than three (3) years from the date of purchase.

(Ord. No. 126-17, § 1, 1-9-18)