| Chippewa Valley Schools |
| Bylaws & Policies |
6144 - INVESTMENT INCOME
The Board of Education authorizes the Superintendent or designee 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; |
| D. | securities issued or guaranteed by agencies or instrumentalities of the United States government; | |
| E. | United States government or Federal agency obligation repurchase agreements; | |
| F. | bankers' acceptances issued by a bank that is a member of the Federal deposit insurance corporation; | |
| G. | mutual funds composed entirely of investment vehicles that are legal for direct investment by a school district; | |
| H. | 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. |
The objectives of this investment policy are:
| A. | Safety of Principal | |
| The foremost objective of this investment program is the safety of the principal of funds. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, investments will be diversified to the extent practicable to control the risk of loss resulting from over concentration of assets in a specific maturity, issuer, instrument, dealer, or financial institution in order that the potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The objective will be to minimize credit risk and interest rate risk. |
| 1. | Credit Risk (Custodial Credit Risk and Concentration Credit Risk) | ||
| The District will minimize Custodial Credit Risk, which is the risk of loss due to the failure of the security issuer or backer, by limited investments to the types of securities listed in this investment policy. The District will minimize Concentration of Credit Risk which is the risk of loss attributed to the magnitude of the District’s investment in a single issuer, by diversifying the investment portfolio so that the impact of potential losses from any one type of security or issuer will be minimize. |
2. Interest Rate Risk
The District will minimize Interest Rate Risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by; structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities in the open market; and, investing operating funds primarily in shorter-term securities, liquid asset funds, money market mutual funds, or similar investment pools and limiting the average maturity in accordance with the District’s cash requirements.
3. Foreign Currency Risk
The District is not authorized to invest in investments, which have this type of risk.
From time-to-time, securities may be traded for other similar securities to improve yields, adjust maturity or reduce risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security:
| 1. | the net projected yield has been increased; | ||
| 2. | maturity has been favorably adjusted; | ||
| 3. | quality of the investment has been improved. |
| B. | Maintenance of Liquidity | |
| The funds shall be managed such that they are available to meet reasonably anticipated cash flow requirements. Periodic cash flow analyses shall be completed in order to ensure that the funds are positioned to provide sufficient liquidity. | ||
| C. | Return on Investment | |
| Investment portfolios shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. It is understood that return on investment is of least importance when compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. |
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.
The Superintendent or designee 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 or designee | |
| 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 |
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.A. 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 or designee acting within the law.
The Superintendent or designee 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.
M.C.L.A. 380.1223
Revised 6/20/05