Lewisburg Area School District Policies	Printable version
609 Investments 609. INVESTMENTS It shall be the policy of the Board to optimize its return through investment of cash balances in such a way as to minimize noninvested balances and to maximize return on investments. The primary objectives of investment activities, in priority order, shall be: Legality - All investments shall be made in accordance with applicable laws of Pennsylvania. Safety - Safety of principal shall be of highest priority. Preservation of capital in the portfolio of investments shall be ensured through the mitigation of credit risk and interest rate risk. Liquidity - Investments shall remain sufficiently liquid to meet all operating requirements that are reasonably anticipated. A fiscal year operations anticipated cash flow shall be developed so that investments can be made as early as possible, with maturities concurrent with anticipated cash demands. Yield - Investments shall be made with the objective of attaining a market-average rate of return throughout the budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. All investments of the school district made by the Director of Administrative Services and Superintendent, and shall be made in accordance with this policy. Short-term - any period thirteen (13) months or less. Long-term - any period exceeding forty-eight (48) months' duration. Mid-range - any period between short-term and long-term. Concentration of credit risk - the risk associated with the consolidation of investments in a single pool, institution, or instrument. Credit risk - the risk of loss of principal due to the failure of the security issue or backer of the issue. Custodial credit risk - the risk of loss associated with consolidation of investments with a single institution where the district may rely on the institution to hold investments on behalf of the district or through collateral action when the instruments are not in the district name. Foreign currency risk - the risk associated with investment in foreign currency that is subject to market fluctuation and associated currency conversion. Interest rate risk - the risk that the market value of securities will fall due to changes in general interest rates. Investment program - the specifically enumerated and Board-approved investment strategy. The Board shall delegate to the Director of Administrative Services and Superintendent the responsibility to manage the district's investment program, in accordance with Board policy. An annual review of the investment program shall be prepared by the designated individual, based upon the anticipated cash flow of all district funds, i.e. general, capital reserve, bond, etc. The investment program shall be submitted to the Board at least annually. The designated individual responsible for investments shall report annually to the Board the following: 1. Amount of funds invested. 2. Interest earned and received to date. 3. Types and amounts of each investment and the interest rate on each. 4. Names of the institutions where investments are placed. Investments permitted by this policy are those defined in law, which are collateralized in accordance with applicable laws. All securities shall be purchased in the name of the school district. An exception to purchases in the name of the school district is permitted for the purchase of shares of an investment company that is or conducts business voluntarily in compliance with applicable law. Disclosure Designated officers and employees involved in the district's investment process shall disclose any personal business activity that could conflict with the proper execution and management of the investment program or could impair their ability to make impartial decisions. Audit The Board directs that all investment records be subject to annual audit by the district's independent auditors. The audit shall include but not be limited to independent verification of amounts and records of all transactions, as deemed necessary by the independent auditors. It shall be the responsibility of the investment advisor and/or bidder to maintain necessary documents to permit independent audit of the district's investments. Bond Proceeds Bond proceeds shall be invested in accordance with the Local Government Unit Debt Act and applicable federal and state laws, subject to approval by the solicitor and/or bond counsel and the Board. Compliance With GAAP The following is intended to guide district investments as limited by law: 1. District funds shall not be invested in foreign currency and shall have no related risk that would require disclosure pursuant to GASB Statement 40. 2. District investments shall limit the exposure to loss of principal due to market changes in interest rates. 3. District investments in authorized instruments that are not backed by the “full faith and credit” of the federal or state government shall be limited to those with the highest credit rating available for such instruments issued by a recognized organization. If, after purchase, the rating of any instrument is reduced and no longer in compliance with Board policy, the individual responsible for district investments shall replace the investment immediately upon receipt of notice of the rating change and notify the Board of the rating change, action taken and replacement investment. 4. For purposes of interest rate disclosure in the annual financial report, the method of determining interest rate risk shall be based on weighted average maturity. Protection Of Bank Balances In Excess Of FDIC Limits When district cash is deposited in an authorized depository, if the cash balance exceeds the insurance limits, district funds shall be collateralized pursuant to law. The collateral shall be limited to investments authorized by law. It shall be the responsibility of the Director of Administrative Services to verify with the depository the value of the instrument(s) based on the instrument being “marked to market.” Verification of the value of the collateral instrument(s) shall occur at least annually. Following a review of valuation, the Director of Administrative Services may request an additional review by the district’s investment advisors or financial consultant, and shall require additional collateral if the existing collateral has declined in value and exposes the district to potential loss of principal. The Board shall be advised of the status of the valuation review and any additional collateral at the first meeting following the review. References: School Code – 24 P.S. Sec. 218, 440.1, 621, 622, 623 Local Government Unit Debt Act – 53 Pa. C.S.A. Sec. 8001 et seq. Public Officials and Employee Ethics Act – 65 Pa. C.S.A. Sec. 1101 et seq. Security of Public Deposits – 72 P.S. Sec. 3836 et seq. Investment Companies, Title 17, Code of Federal Regulations – 17 CFR Part 270 Governmental Accounting Standards Board, Statement No. 40 Board Policy – 000, 619