6144 - INVESTMENTS

Cedar Springs Public School District

Bylaws & Policies

6144 - INVESTMENTS

The District’s policy is to use investments to maximize the returns on the District’s excess cash balances, while reasonably controlling the risk of loss and maintaining an acceptable level of liquidity in those investments to meet the District’s operating needs.

To this end, the District will track, through its financial reports and investment authorizations, the credit risk, concentration of credit risk, interest rate risk and foreign currency risks related to its investments.

The Board of Education authorizes the Superintendent to make investments of available monies from the several funds of the District in:

A.	bonds, bills, or notes of the United States; obligations, the principal and interest of which are fully guaranteed by the United States; or obligations of the State;

B.	certificates of deposit issued by a state or nationally-chartered bank or a state or Federally-chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal office or branch office in Michigan under Michigan and Federal laws;

C.	certificates of deposit of a public corporation(s) (CDs) in insured depository institutions in accordance with the following conditions:

	1.	the funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this State under M.C.L. 21.146 (discriminatory lending practices)


	2.	the financial institution arranges for the investment of the funds in certificates of deposit in one (1) or more insured depository institutions, as defined in 12 U.S.C. 1813, or one or more insured credit unions, as defined in 12 U.S.C. 1752, for the account of the school district

	3.	the financial institution acting as custodian for the school district is insured by an agency of the United States

	4.	the financial institution acts as custodian for the school district with respect to each certificate of deposit

	5.	at the same time that the funds are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions equal to or greater than the amount of the funds initially invested by the school district through the financial institution

D.	commercial paper rated prime 1 or prime 2 at the time of purchase and maturing not more than 270 days after the date of purchase;

E.	securities issued or guaranteed by agencies or instrumentalities of the United States government;

F.	United States government or Federal agency obligation repurchase agreements;

G.	bankers' acceptances issued by a bank that is a member of the Federal deposit insurance corporation;

H.	mutual funds composed entirely of investment vehicles that are legal for direct investment by a school district;


	I.	investment pools, as authorized by the surplus funds investment pool act, Act. No. 367 of the Public Acts of 1982, being sections 129.11 to 129.118 of the Michigan Compiled Laws, composed entirely of instruments that are legal for direct investment by a school district.

When there is a possibility that interest changes could adversely affect the fair value of a District’s investment, as determined under the Generally Accepted Accounting Principles (GAAP) standards, the following method(s) will be used to assess and control such risks:

	A.	segmented timed distribution

	B.	specific identification

	C.	weighted average maturity

	D.	duration

	E.	simulation model

These methods shall be implemented as defined by the Government Accountability Standards Board. The Board may apply different methods to different investments.

Investments in U.S. Treasury securities and those other securities completely guaranteed by the Treasury as to payment of principal and interest may be purchased in any dollar amount or up to 100% of the available reserves.

Investments in securities shall be with authorized investment institutions and dealers that must establish eligibility by meeting all of the following requirements:

	A.	primary and regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule)

	B.	capital of no less than $10,000,000

	C.	registered as a dealer under the Securities and Exchange Act of 1934


	D.	a member of the National Association of Securities Dealers (NASD)

	E.	registered to sell securities in Michigan

	F.	the firm and assigned broker have been engaged in the business of effecting transactions in United States government and agency obligations for at least five (5) years

The Superintendent 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

	B.	the contract provides for the investment of funds by the depository with the written approval of the Superintendent

	C.	the investments are made in accordance with State law with maturities not to exceed two (2) years

	D.	the contract is awarded using the District's bidding procedure

An obligation purchased in accordance with M.C.L. 380.1223(2), when received by the Superintendent, 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 M.C.L. 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 acting within the law.

The Superintendent 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. This report shall disclose credit risk, concentration of credit risk, investment risk and foreign currency risks to Board investments in accordance with Generally Accepted Accounting Principles.

The Board also requires the Superintendent to report to the Board periodically:

	A.	the types and amounts of each investment and the interest earned on each;

	B.	the transactions occurring since the last report.

The Board may adopt a resolution at its annual organizational meeting, authorizing electronic fund transfers and the Treasurer or the Electronic Transfer Officer (ETO) as authorized agent(s) to complete such transactions on behalf of the Board. The Automatic Clearing House (ACH) authorizing resolution shall include all of the following:

	A.	That an officer or employee designated by the Treasurer or ETO is responsible for the local unit’s ACH agreements, including payment approval, accounting, reporting, and generally for overseeing compliance with the ACH policy.

	B.	That the officer or employee responsible for disbursement of funds shall submit to the local unit documentation detailing the goods or services purchased, the cost of the goods or services, the date of the payment, and the department levels serviced by payment. This report can be contained in the electronic general ledger software system of the local unit or in a separate report to the governing body of the local unit.

	C.	A system of internal accounting controls to monitor the use of ACH transactions made by the local unit.


	D.	The approval of ACH invoices before payment.

	E.	Any other matters the Treasurer or ETO considers necessary.

(NOTE: Investment professionals utilized by the District should be advised of and consulted on this policy.)

M.C.L. 124.301 et seq., 129.11 to 129.118, 380.1221, 380.1223(2), 380.622
P.A. 22 of 2009