FILE:  DFL

Cf:  DG

 

CASH MANAGEMENT AND INVESTMENT

 

 

In the investment of surplus monies, the Vernon Parish School Board shall operate under the "Prudent Person" rule, exercising judgment and care, under the circumstances prevailing, which people of ordinary prudence would employ in the management of their own affairs - not in speculation, but as to the permanent disposition of their funds, considering both income and safety of capital.

 

The assets of the Vernon Parish School Board shall be held in trust by the fiduciaries designated by the Vernon Parish School Board.

 

This policy is not intended to remain static.  Normally, the Vernon Parish School Board will review this policy at least annually and, if deemed advisable, recommend changes.  Recommendations from outside professionals leading to improvements in policies, procedures, and operations are always welcome.

 

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 prudent, 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.

 

OBJECTIVES

 

The primary investment objective of the Vernon Parish School Board is to ensure that the current and future obligations are adequately funded in a cost effective manner.  The goals of this investment policy shall be (1) safety of principal, (2) liquidity, and (3) yield.

 

Preservation of capital and the realization of sufficient total return to ensure the ongoing financial integrity of the funds are essential.  Preservation of capital encompasses two (2) goals:

 

  1. Managing the risk of loss of principal for the fund as a whole.

  2. Managing the erosion of principal value through inflation.

 

RESPONSIBILITY

 

The investment of funds shall be managed by the Director of Finance, and may be accomplished by the selection of an investment manager(s).

 

GUIDELINES

 

The assets of the Vernon Parish School Board shall be invested, as provided in La. Rev. Stat. §33:2955(A)(1), as amended in the following:

 

  1. Direct U.S. Treasury obligations, the principal and interest of which are fully guaranteed by the U.S. Government.

  2. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by federal agencies and provided such obligations are backed by the full faith and credit of the U.S., including U.S. Export Import Bank, Farmers Home Administration, Federal Financing Bank, Federal Housing Administration Debentures, General Services Administration, Government National Mortgage Association (guaranteed Title XI financing), and U.S. Department of Housing and Urban Development.

  3. Bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by U.S. government instrumentalities, which are federally sponsored, including Federal Home Loan Bank System, Federal Home Loan Marketing Association, and Resolution Funding Corporation.

  4. Bonds, debentures, notes or other evidence of indebtedness issued by the state of Louisiana or any other state of the United States, 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.

  5. Direct security repurchase agreements of any federal bank entry only securities enumerated in paragraphs (1) through (3) above.  "Direct security repurchase agreement" means an agreement under which the political subdivision buys, holds for a specified time, and then sells back those securities and obligations enumerated in paragraphs (1) through (3).

  6. Time certificates of deposit of any bank domiciled or having a branch office in Louisiana, savings accounts or shares of savings and loan associations and savings banks, or share accounts and share certificates accounts of federally or state chartered credit unions issuing time certificates of deposit; provided that the rate of interest paid for time certificates of deposit shall not be less than fifty basis points below the prevailing market interest rate on direct obligations of the U.S. Treasury with a similar length of maturity.  Funds invested in accordance with this paragraph shall not exceed at any time the amount insured by the Federal Deposit Insurance Corporation in any one bank, or in any savings and loan association, or by the National Credit Union Administration in any one credit union, unless the uninsured portion is collateralized by the pledge of securities in the manner provided in La. Rev. Stat. Ann. §39:1221.

  7. Mutual trust fund institutions which are registered with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the U.S. Government or its agencies.

 

          Notes

 

    1. Investment of funds in such mutual or trust fund institutions shall be limited to 25% of the monies considered available for investment as provided by La. Rev. Stat. Ann. §33:2955.

    2. The Attorney General has determined that only mutual funds created as a Massachusetts business trust are acceptable investments (Op. Atty. Gen. 88-546(A)).

 

Cash and cash equivalents are comprised of daily cash balances above the day-to-day needs and funds set aside for portfolio strategy reasons.  Short term investments of cash and cash equivalents may be placed in:

 

  1. Obligations of the U.S. Treasury, federal agencies, or U.S. government instrumentalities (as provided herein) with maturities of less than 2 years.

  2. Time certificates of deposit, as provided herein.

  3. Money market mutual funds, as provided herein.

  4. The Louisiana Asset Management Pool, Inc. as provided in Op. Atty. Gen. 88-546(A).

 

PROHIBITED TRANSACTIONS

 

The following transactions are expressly prohibited:

 

  1. Any transaction not authorized by this policy.

  2. The purchase of securities on margin.

  3. Director of purchases of single family or commercial mortgages.

  4. Purchase of foreign bonds.

  5. The short sale of securities.

  6. Investment in obligations issued or guaranteed by federal agencies or U.S. Government instrumentalities which are collateralized mortgage obligations that have been stripped into interest only or principal only obligations, inverse floaters, or structured notes.  "Structured note" means securities of U.S. Government agencies, instrumentalities, or government-sponsored enterprises which have been restructured, modified, and/or reissued by private entities.

 

Revised:  July, 1996 Revised:  November, 2010
Revised:  November, 1997 Revised:  November, 2014
Revised:  December, 2009  

 

 

 Ref:     La. Rev. Stat. Ann. §§6:703, 17:99, 33:2955, 39:1211, 39:1212, 39:1219, 39:1221, 39:1222, 39:1223, 39:1225, 39:1226

Board minutes, 6-4-96, 1-12-10, 12-2-10, 1-13-15

 

Vernon Parish School Board