FILE: D-3.8
Cf: D-4
CASH MANAGEMENT AND INVESTMENTS
Strategies for proper cash management and investment of available funds shall be reviewed and evaluated on an annual basis to ensure that investment rules and guidelines expressed in this policy are being followed according to current statutory provisions. The monetary assets of the Central Community School Board shall be held in trust by the fiduciary (fiduciaries) designated by the Central Community School Board. Cash management and the investment of funds shall be managed by the Superintendent and/or his/her designee.
CASH MANAGEMENT
All aspects of cash management operations shall be designed to ensure the absolute safety and integrity of the School Board’s financial assets.
Cash management activities shall be conducted in full compliance with prevailing local, state and federal regulations. Furthermore, such activities shall be designed to adhere to guidelines and standards promulgated by applicable professional organizations.
Operating within appropriately-established administrative and procedural parameters, the School Board shall aggressively pursue optimum financial rewards, while simultaneously controlling its related expenditures. Therefore, cash management functions which engender interaction with outside financial intermediaries shall be conducted in the best financial and administrative interests of the school system. In pursuit of these interests, the School Board shall utilize competitive bidding practices whenever practicable, affording no special financial advantage to any individual or corporate member of the financial or investment community.
The School Board shall authorize the Superintendent and staff to design and enforce written administrative regulations, guidelines, and procedures relating to a variety of cash management issues such as the eligibility or selection of various financial intermediaries, documentation and safekeeping requirements, philosophical and operational aspects of the investment function, and such other functional and administrative aspects of the cash management program which necessitate standard setting in pursuit of appropriate prudence, enhanced protection of assets or procedural improvements.
DEPOSITORY BANK
Louisiana statutes require School Boards to select a fiscal agent for purposes of receiving or depositing funds of the School Board. The bank selected as fiscal agent shall be asked to enter into a fiscal agency contract or such other necessary instruments setting forth the duties, responsibilities, and agreements pertaining to said fiscal agency.
The fiscal agency bank, when selected, shall serve for a term as agreed to by the School Board and until its successor shall have been duly selected and qualified, and shall pledge approved securities, as provided for in the fiscal agency contract subject to the regulations under state law.
PLEDGED SECURITIES
Funds on deposit shall be collateralized in an amount at all times equal to 100% by pledged "approved securities" in accordance with state law to adequately protect the funds of the School Board.
The School Board shall periodically monitor the amount of approved securities to assure that an amount not less than 100% on deposit with the depository bank, less any applicable Federal Deposit Insurance Corporation (FDIC) insurance is pledged.
The bank shall have the right and privilege of substituting approved securities only upon obtaining the prior written approval of the School Board. Such approval may be granted by facsimile transmission. The approved securities shall be valued at their market value.
INVESTMENT OPTIONS
The School Board, in accordance with statutory provisions, may invest any funds which are available for investment and are above the immediate cash requirements of the School Board, from whatever source derived, in statutorily sanctioned investments. Types of investments include, but are not limited to, Direct U.S. Treasury obligations, bonds, debentures, notes issued by or guaranteed by federal agencies; bonds, debentures, notes, or other evidence of indebtedness issued by the state of Louisiana or any of its political subdivisions, or any of the political subdivisions of any state, or by any domestic U.S. corporation, with limited exceptions noted in La. Rev. Stat. Ann. §33:2955; or certificates, or time certificates of deposit in any bank domiciled or having a branch office in Louisiana or any other federally insured investment.
The School Board shall authorize the Superintendent, as treasurer, and/or his/her designee, to invest any surplus funds in whatever type deposit that shall offer the School Board the most favorable rates of interest. The School Board shall also adhere to the Fiscal Agent Agreement with local banks. The interest earned on any such investment shall be credited to the fund from which the investment was made.
Investments of the School Board shall be guided by the following:
Cash management and investment activities shall be conducted in a manner consistent with prudent business practices applied by governmental entities and shall be in compliance with applicable statutes.
Funds as determined by the chief financial officer to be in excess of immediate cash requirement shall be invested only in statutorily permitted obligations.
Appropriate emphasis in making any investment shall be in the following order:
To ensure safety of the principal amount.
To ensure liquidity of funds to meet all obligations of the School Board.
The yield of the investments.
In no event shall monies be considered available for investment unless and until such funds are determined by the Superintendent or chief financial officer, in the exercise of prudent judgment, to be in excess of the immediate cash requirements of the fund to which the monies are credited. As a criteria in making such a determination, any amount of money exceeding ten thousand dollars which is on demand deposit to the credit of the School Board, or to the credit of any fund and which is not required to meet an obligation for at least forty-five (45) days, or any amount of money exceeding one hundred thousand dollars which is on demand to the credit of the School Board or to the credit of any fund and which is not required to meet an obligation for at least fifteen (15) days shall be construed available for investment.
Interest Earnings
The interest earned on any such investment shall be credited to the fund from which the investment was acquired or it may be applied to the payment of the principal and interest of the outstanding bonded indebtedness of that fund.
School and Student Activities Funds
The School Board recommends that any surplus funds in the various school activity and organization accounts be invested in savings accounts and/or bank certificates of deposit, whenever possible.
FINANCIAL INTERMEDIARIES
Although the School Board’s policy for the purchase of investment securities is designed to ensure reasonable and prudent safety, accompanied by appropriate liquidity and competitive yields, the “providers” of such securities must also meet specific financial and operational standards.
Deposits in commercial banks and savings and loan associations, whether they be time deposits, demand deposits, or deposits in special interest-bearing accounts (NOW, SUPER-NOW, etc.), shall only be made in banks or savings and loan associations which qualify to accept public-sector deposits which are protected or federally insured under the terms of prevailing laws.
However, certain “sweep” or “automatic repo” accounts, and certain funds held under the terms of a “repurchase agreement” arrangement may not be protected or federally insured under the provisions of federal or state law. Therefore, such balances shall be protected through the appropriate application of securities safekeeping procedures, which will ensure the reasonable safety and integrity of all School Board monies.
Financial intermediaries which conduct business with the School Board shall be subject to the following types of selection criteria:
Commercial Banks:
The creditworthiness, liquidity, and overall financial strength of financial institutions into which the School Board deposits money, as that can be measured through recognized industry rating services, shall be a factor in the School Board’s decision.
Deposits of School Board monies in commercial banks may only be made with institutions which possess the overall financial strength, capitalization, and liquidity to reasonably ensure the safety and availability of such monies. To assess the overall financial strength of potential depositories, the School Board shall utilize third-party rating agencies to perform periodic reviews of various commercial banks, relying upon their reports to determine the appropriateness of the depository.
Fiscal Agent:
Currently, the School Board is provided banking services under a Fiscal Agent Agreement. To become the School Board’s Fiscal Agent, institutions shall be invited to quote rates of interest for the various checking accounts and the charges for demand deposit services. According to their quote, financial strength, and liquidity, the School Board shall determine which institution shall be designated as Fiscal Agent.
Savings And Loan Associations:
Deposits of School Board monies in Louisiana savings and loan associations or savings banks shall be subject to the same rating criteria which are applied to commercial banks. Their acceptability as depositories shall be judged on the third-party ratings. However, deposits shall not exceed the insurance of accounts limits set by the FSLIC or FDIC.
Securities Banks:
The School Board or designated personnel of the School Board shall review and recommend Broker qualified service contracts much like the fiscal agent agreements for banking services for School Board approval.
LIQUIDATION OF INVESTMENTS
At any time that may be advisable, the School Board may cash or liquidate any of the investments authorized herein which are purchased for any particular fund. The proceeds of any such liquidation shall be credited to the fund from which the authorized investments were originally purchased.
PROHIBITED TRANSACTIONS
The following arrangements are expressly prohibited:
Any transactions not specifically authorized by this policy.
The purchase of securities on margin.
Direct purchases of single family or commercial mortgages.
Purchases of foreign bonds.
Collateralized mortgage obligations that have been stripped into interest only or principal only obligations.
Inverse floaters, or structured notes. For purposes of this section, structured notes shall mean securities of U.S. Government agencies, instrumentalities, or government-sponsored enterprises which have been restructured, modified, and/or reissued by private entities.
UTILIZATION OF OUTSIDE PROFESSIONAL SUPPORT SERVICES
The School Board may engage the support services of an Investment Counselor, so long as it can be clearly demonstrated that such engagements produce “net financial advantage” or necessary financial protection of the School Board’s resources.
All such engagements shall require the written authorization of the Superintendent, who shall provide written justification for the engagement to the School Board for approval.
Revised: November, 2014
Ref: La. Rev. Stat. Ann. §§17:99, 33:2955, 39:1211, 39:1212, 39:1219, 39:1221, 39:1222, 39:1223, 39:1225, 39:1226
Board minutes, 1-26-15
Central Community School Board