|Monroe County Intermediate School District|
|Bylaws & Policies|
6144 - INVESTMENT INCOME
The purpose of this Policy is to set forth the investment objectives and parameters for the management of the public funds of Monroe County ISD. This investment policy is designed to safeguard funds on behalf of the District, to assure the availability of operating and capital funds when needed, and provide an investment return competitive with comparable funds and financial market indices.
ScopeIn accordance with the Revised School Code of Michigan, Act 451 380.622, 380.1221, and 380.1223, this investment policy applies to all cash and investments held or controlled by the Board on behalf of the District. This policy does not apply to funds related to the issuance of debt where there are other indentures in effect for such funds. Additionally, and future revenues, which have statutory investment requirements conflicting with this Investment Policy and funds held or controlled by Federal or State agencies (e.g., Department of Revenue), are not subject to the provisions of this policy.
The primary objectives, in priority order, or investment activities shall be safety, liquidity and yield.
|A.||Safety of Principal|
|The foremost objective of this investment program is the safety of the principals of funds. Investment transactions shall be undertaken in a manner to ensure the preservation of capital in the overall portfolio. The objective will be to minimize credit risk and interest rate risk.|
|1.||Credit Risk (Custodial Credit Risk and Concentration Credit Risk)|
|The District will minimize Custodial Credit Risk, which is the risk of loss due to the failure of the security issuer or backer, by; limiting investments to the types of securities listed in Section 9 of this Investment Policy; and pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the District will do business in accordance with Section 7 of this Investment Policy.|
|2.||Investment Rate Risk|
|The District will minimize Interest Rate Risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by; structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities in the open market; and, investing operating funds primarily in shorter-term securities, liquid asset funds, money market mutual funds, or similar investment pools and limiting the average maturity in accordance with the Districtís cash requirements.|
|3.||Foreign Currency Risk|
|The District is not authorized to invest in investments which have this type of risk.|
|B.||Maintenance of Liquidity|
|The funds shall be managed such that they are available to meet reasonable anticipated cash flow requirements.|
|C.||Yield/Return of Investment|
|Investment portfolios shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. It is understood that return on investment is of secondary importance when compared to the safety and liquidity objectives describes above.|
|The District will minimize Concentration of Credit risk, which is the risk of loss attributed to the magnitude of the District's investment in a single issuer, by diversifying the investment portfolio so that the impact of potential losses from any one (1) type of security or issuer will be minimized.|
Management of Investments
The Board designates the Assistant Superintendent of Business and Administrative Services as the Investment Officer to oversee the day-to-day management of District Investments. The Investment Officer shall be responsible for the transferring of appropriate funds to affect investment transactions, for the investment of operating funds, operating reserves funds, and bond proceeds, consistent with this policy and actions of the Board. Should the Board elect to select an outside investment advisor, such advisor or firm must be registered under the Investment Advisorís Act of 1940.
Standards of Prudence
The standard of prudence to be used by the Investment Officer shall be the "Prudent Person" standard and shall be applied in the contest of managing the overall investment program. The Prudent Person standard states:
"Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived from the investment."
Ethics and Conflicts of Interest
The Investment Officer shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair oneís ability to make impartial investment decisions. Also, the Investment Officer shall disclose to the Board any material financial interests in Qualified Institutions that conduct business with the Board or the District, and they shall further disclose any material personal financial/investment positions that could be related to the performance of the Districtís investment program.
Authorized Investment Institutions and Dealers
Only firms meeting one (1) of the following requirements shall be eligible to serve as Authorized institutions:
|A.||The firm must comply with all of the following requirements:|
|1.||Primary and regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule);|
|2.||Capital of no less than $10,000,000;|
|3.||Registered as a dealer under the Securities Exchange Act of 1934;|
|4.||A member of the National Association of Securities Dealers (NASD);|
|5.||Registered to sell securities in Michigan; and|
|6.||The firm and assigned broker have been engaged in the business of effecting transactions in U.S. government and agency obligations for at least five (5) consecutive years; or|
|B.||Public Depositories qualified in accordance with M.C.L.A. 380.1221, The Revised School Code of Michigan.|
|All brokers, dealers and other financial institutions deemed to be Authorized institutions shall be provided with current copies of this investment policy and shall provide in return to the Board, certification of having read, understood and agreement to comply with this investment policy.|
Competitive Selection of Investment Instruments
The Investment Officer shall obtain bids from at least two (2) brokers or financial institutions on all purchases of investment instruments on the secondary market. Overnight sweep investment instruments shall not be subject to this section.
Authorized Investments and Portfolio Composition
The Board of Education authorizes the Assistant Superintendent of Business and Administrative Services to make investments of available monies from the Several funds of the District. Investments and Depositories are restricted to those complying with M.C.L.A. 380.622, 380.1221 and 380.1223. These include:
|A.||United States Government Securities.|
|B.||United States Government Agencies.|
|C.||Federal Instrumentalities (United States Government-Sponsored Enterprises).|
|D.||Certificates of Deposit.|
|H.||Registered Investment Companies (Money Market Mutual Funds).|
|I.||Investment pools, as authorized by the surplus funds investment pool act, 1982 PA 367, M.C.L.A. 129.111 to 129. 118, composed entirely of instruments that are legal for direct investment by an intermediate school district.|
Any investment held at the time of the implementation of this policy that meets the requirements of M.C.L.A. 380.622, 380.1221, and M.C.L.A. 380.1223 but does not meet the guidelines of this policy, shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.
All investments must mature or be redeemable within two (2) years of the date of purchase.
The assistant superintendent of business is authorized to contract with a depository for the operation of a cash management system under the following conditions:
|A.||the contract is in writing and is reviewed by the legal counsel prior to signing, and|
|B.||the contract provides for the investment of funds by the depository with the written approval of the Superintendent, and|
|C.||the investments are made in accordance with State law with maturities not to exceed two (2) years, and|
|D.||the contract is awarded using the District's bidding procedure|
An obligation purchased in accordance with Section 380.1223(2), when received by the MCISD, shall be deposited with the bank or trust company having the deposit of the money of the particular fund from which the obligation was purchased.
Money in the several funds of the School District shall not be commingled for the purpose of making an investment authorized by Section 380.1223. The Board, however, may establish and maintain one common debt retirement fund for bond issues of like character.
Earnings on an investment shall become a part of the fund from which the investment was made.
Funds of the Board may be withdrawn from approved public depositories or negotiable instruments owned by the Board and sold before maturity at the sole discretion of the Superintendent and the Board secretary acting within the law.
The assistant superintendent of business may request, no more often than four (4) times per year, that each public depository report the amount of monies deposited by him/her and the total value of the pool of securities pledged to secure the monies of this District held by the depository.
The assistant superintendent of business shall include in the monthly report to the Board all cash in all accounts on deposit as well as the investment assets of the Board.
The Board also requires the assistant superintendent of business to report to the Board monthly:
|A.||the types and amounts of each investment and the interest earned on each;|
|B.||the transactions occurring since the last report.|
M.C.L.A. 380.622, 380.1221, 380.1223