UNIFORM PROCEDURE. Intermediate District 287, 1820 Xenium Lane North, Plymouth, MN

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Sheryl Banks
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1 UNIFORM PROCEDURE SUBJECT: Cash & Investments RELATES TO POLICY SERIES: Financial Planning & Operations SUPPORTS POLICY#: FPO 180 DATE CABINET APPROVED: ACTIVITY: Finance Funds Management FPO 1800 Cash & Investments 1. OBJECTIVES Funds of the District will be invested/deposited in accordance with Minnesota statutes. The District s portfolio shall be managed in a manner to attain a market rate of return throughout budgetary and economic cycles while preserving and protecting capital in the overall portfolio. The primary investment criteria in priority sequence are safety, liquidity and yield. 2. DELEGATION OF AUTHORITY The Director of Finance, or designee, is designated as the investment officer of the District and is responsible for investment decisions and activities. 3. PRUDENCE The standard of prudence to be applied by the investment officer shall be the prudent investor rule, which is as follows: 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. The prudent investor rule shall be applied in the context of managing the overall portfolio. The investment officer, acting in accordance with this policy and exercising due diligence, shall be relieved of personal responsibility for an individual specific security s credit risk or market price changes. Such deviations from expectation are to be reported in a timely fashion and appropriate action taken to control adverse developments. 4. QUALIFIED INSTITUTIONS The District shall maintain a listing of financial institutions and securities dealers which are Board approved for depository/investment purposes. Prior to completing an initial transaction with a broker, the District shall provide to the broker a written

2 statement of investment restrictions which shall include a provision that all future investments are to be made in accordance with Minnesota statutes governing the investment of public funds. 5. SAFEKEEPING AND COLLATERALIZATION All investment securities purchased by the District shall be held in third-party safekeeping by an institution designated as custodial agent. The custodial agent may be any federal reserve bank, any bank authorized under the laws of the United States or any state to exercise corporate trust powers, a primary reporting dealer in United States Government securities to the Federal Reserve Bank of New York, or a securities broker-dealer defined in Minn. Stat. 118A.06. The institution or dealer shall issue a safekeeping receipt to the District listing the specific instrument, the name of the issuer, the name in which the security is held, the rate, the maturity, serial numbers and other distinguishing marks, and other pertinent information. 6. REPORTING REQUIREMENTS The investment officer shall generate monthly reports for management purposes. In addition, the Board is to be provided a monthly report which will include data on investment instruments purchased, sold or being held. 7. ETHICS The investment officer and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and the investment officer shall disclose to the Executive Director of Administrative Services any material interest in any financial institution or broker that conducts business with the District.

3 INVESTMENT PRACTICES These practices are designed to prevent loss of public funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions. QUALIFIED INSTITUTIONS Prior to completing an initial transaction with a broker/bank, the District shall provide to the broker a written statement of investment restrictions which shall include a provision that all future investments are to be made in accordance with Minnesota statutes governing the investment of public funds. The broker must annually acknowledge receipt of the statement of investment restrictions and agree to handle the District's account in accordance with these restrictions. The District may not enter into a transaction with a broker until the broker has provided this annual written agreement to the District. The notification form to be used shall be that prepared by the State Auditor. A copy of the District s investment policy, including any amendments thereto, shall be provided to each such broker. INVESTMENT SELECTION AND PURCHASE PROCESS The Director of Finance and the Finance Manager shall meet monthly to discuss cash flow and potential investment options. If the opportunity to invest funds either in the short term or long term exists, the Finance Manager shall solicit a minimum of two quotes for each investment from the list of Board approved Qualified Institutions. Investment maturities shall be scheduled to coincide with projected cash flow needs, taking into account large routine expenditures (payroll, loan payments, etc.) as well as considering sizeable blocks of anticipated revenue (tuition, state aid, pre-bills, etc.). The final investment choice will be made by the investment officer or designee using the policy criteria of 1) Safety, 2) Liquidity and 3) Yield. The District will accept the quote/bid which provides the highest rate of return within the maturity timeline required and within the parameters of the Investment policy. Generally, all quotes/bids will be on the basis of a 360-day or 365-day base yield. MONITORING AND ADJUSTING THE PORTFOLIO The investment officer or designee will routinely monitor the contents of the portfolio, the available markets and the relative values of competing instruments. INVESTMENT CLASSIFICATION AND DIVERSIFICATION Short-term/Long-term Portfolio: limitations on instruments, diversification and maturity scheduling shall depend upon whether the funds being invested are considered short-term or long-term funds. All funds shall normally be considered short-term except for those reserved for building construction projects (i.e., bond sale proceeds) and any unreserved funds used to provide financial related managerial flexibility for a future fiscal year. Short-term & Long Term Portfolio Diversification: the District will diversify use of investments to avoid incurring unreasonable risks (e.g., issuer default or market price change) inherent in over-investing in specific instruments, individual financial institutions or maturities.

4 Diversification by Instrument with Maximum Percent of Portfolio: investments in the various authorized instruments shall not exceed the following guideline percentages of total funds. up to 100% of Bonds, notes, certificates of indebtedness, treasury bills or other securities now or hereafter issued by the United States of America, its agencies and allowable instrumentalities; but not less than 10%. Up to 90% of interest bearing savings accounts, interest bearing certificates of deposit or interest bearing time deposits, or any other investments constituting direct obligations of any bank; and certificates of deposit with federally insured institutions that are collateralized or insured in excess of the $250,000 provided by the Federal Deposit Insurance Corporation coverage limit. Up to 50% of collateralized repurchase agreements that conform to the requirements stated in 118A.05 sub. 2 of the statutes and commercial paper meeting the district requirements. SAFEKEEPING AND COLLATERALIZATION All investment securities purchased by the District shall be held in third-party safekeeping by an institution designated as custodial agent. The custodial agent may be any federal reserve bank, any bank authorized under the laws of the United States or any state to exercise corporate trust powers, a primary reporting dealer in United States Government securities to the Federal Reserve Bank of New York, or a securities broker-dealer defined in Minn. Stat. 118A.06. The institution or dealer shall issue a safekeeping receipt to the District listing the specific instrument, the name of the issuer, the name in which the security is held, the rate, the maturity, serial numbers and other distinguishing marks, and other pertinent information. Deposit-type securities shall be collateralized as required by Minn. Stat. 118A.03 for any amount exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage. Repurchase agreements shall be secured by the physical delivery or transfer against payment of the collateral securities to a third party or custodial agent for safekeeping. The District may accept a safekeeping receipt instead of requiring physical delivery or third-party safekeeping of collateral on overnight repurchase agreements of less than $1,000,000. RECORDING, PROCESSING AND RECONCILING Investments are recorded by the Accounts Receivable Clerk with approval by the Finance Manager or Director of Finance. Transactions are monitored as part of the monthly reconciliation process. Cash and Investment statements are reconciled to the general ledger monthly by the Account Specialist and approved by the Finance Manager. A monthly investment report is prepared for the Board including the type of investment, institution, maturity date and yield rate. This monthly report is analyzed and approved by the Director of Finance. A Monthly Cash report is also prepared for the Board.

5 Interest receivable is a calculated at year-end and accrued. This annual transaction is approved by either the Finance Manager or the Director of Finance. Investments are audited as part of the district s annual third party financial audit.

Adopted: MSBA/MASA Model Policy 705 Orig Revised: Rev [Note: The provisions of this policy substantially reflect legal requirements.

Adopted: MSBA/MASA Model Policy 705 Orig. 1995 Revised: Rev. 2011 705 INVESTMENTS [Note: The provisions of this policy substantially reflect legal requirements.] I. PURPOSE The purpose of this policy is