The School Board of Miami-Dade County
Bylaws & Policies
Unless a specific policy has been amended and the date the policy was revised is noted at the bottom of that policy, the Bylaws and Policies of the Miami-Dade County Public Schools were adopted on May 11, 2011 and were in effect beginning July 1, 2011.
 

6144 - INVESTMENTS

 

A.

General Investment Policies

     
 

1.

Scope - The investment policies shall apply to the excess funds under the control of the School Board. The policies shall be recommended for approval to the Board after being reviewed by the Treasury Advisory Committee.

   

2.

Objectives - Policies shall provide for the following in order of importance:

   
 

a.

maintain the safety of principal

   

b.

maintain liquidity to pay obligations as they become due

   

c.

maximize return on investments

   

d.

increase cash available for investment

   

e.

reduce costs of cash management activities

     

3.

Prudent and Ethical Standard - The prudent person rule is adopted which states that: "Investments should 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 from the investment."

   

4.

The Treasury Advisory Committee shall review and recommend policies prepared by District staff regarding administration of Board funds. The Committee shall meet as necessary.

 

5.

Delegation of Authority: The Board's Treasurer is responsible for providing oversight and direction of the management of the investment program. The daily management responsibility for all Board funds in the investment program and investment transactions is delegated to the assistant treasurer under supervision of Boardís Treasurer. The Treasurer shall establish written procedures for the operation of the investment portfolio and a system of internal accounting and administrative controls to regulate the activities of employees. The Board may employ an investment manager to assist in managing some of the Board's portfolios who must be registered under the Investment Advisors Act of 1940.

   

6.

Investment Strategy - Credit, Concentration, and Interest Rate Risks

   
 

Credit and concentration risks as well as each separate portfolioís limitations and guidelines for each investment type, are described in this policy.

   
 

Interest rate risk is managed by substantially limiting the weighted-average maturity on all investments to one year or less, except for Guaranteed Investment Contracts for sinking fund payments whose maturities are tied to their respective long-term bond maturities.

   
 

Additional investment strategies as to credit risk, diversification, and maturities will be reviewed by the Treasury Advisory Committee and documented in the Office of Treasury Managementís Procedures Manual.

   
 

Appropriate staff, within limitations and guidelines, shall monitor market conditions and specific cash flow needs of each portfolio when purchasing securities. Purchased securities will be held-to-maturity unless economic conditions favor a sale or an investment swap. Sales and swaps will be reviewed by the Treasury Advisory Committee at its regular meetings.

 

7.

Exceptions

   
 

Exceptions, if any, will be noted via a memorandum to the file that shall state: reason(s) for the exception, condition(s) under which exception is given, dollar amount of the investment and duration of such exception period. Exceptions are determined at the time of purchase (trade date). Since investments are normally available in round lots, for the purpose of computing any exception, amounts exceeding the established guideline by no more than one-half percent (.5%) will be considered immaterial and need not be documented by an exception report. Exception memoranda shall be periodically reviewed by the Treasury Advisory Committee.

   

8.

Reporting and Performance Measurement

   
 

a.

Portfolio Statistics Report is included in the Quarterly Financial Report presented to the Board. The report shall include yield information for a comparable fund not under the Board's authority.

   

b.

Performance Measurement Report is distributed quarterly to all the Board members. The report compares balances, interest rate and earnings for each part of the budget.

   

c.

Both the Portfolio Statistics Report and the Performance Measurement Report are reviewed quarterly by the Treasury Advisory Committee.

   

d.

Portfolio Compliance Review Report is reviewed periodically by appropriate staff including the Chief Financial Officer. The report includes a breakdown of limits pertaining to credit, concentration, and interest rate risks.

 

B.

Safekeeping of Securities

     
   

At least one bank shall be designated as safekeeper. The safekeeper (third-party bank) shall enter into a written custodial agreement with the Board. The Custodial Agreement shall provide, among other items, the following:

     
 

1.

Custodial credit risk policies require that the safekeeper shall hold the securities exclusively in the name of the Board.

   

2.

No withdrawal in whole or in part shall be made, except as instructed by authorized staff.

   

3.

All purchases or sales of securities must be made on a "delivery vs. payment" basis.

     
   

Collateral covering Revolving Repurchase Agreement(s) shall be delivered to a safekeeper who is a third-party bank, or the counterparty bank's trust department, where the assets are separated as required by law.

     
   

Each transaction involving the safekeeper shall be confirmed in writing by it within twenty-four (24) hours of the transaction.

     
 

C.

Authorized Investments, Types (Limitations/Guidelines)

     
   

The investment instruments and conditions regarding their acquisition in general shall be as stipulated in the following sections:

     
 

1.

Time Deposits/Money Market/Savings

   
 

a.

The financial institution must be a School Board and State-approved designated depository. A list of the State Qualified Public Depositories is published quarterly by the Bureau of Collateral Securities in the Florida Administrative Weekly.

   

b.

The lesser of the following shall be the maximum amount invested with any single financial institution for Time Deposits:

   
 

1)

ten percent (10%) of the total investment portfolio on any date.

 

2)

No more than fifty percent (50%) of financial institution shareholders' equity.

     

c.

The financial institution must be "Well Capitalized" as defined by the Federal Deposit Insurance Corporation (FDIC), whereby Total Risk-Based Capital Ratio equal to or greater than ten percent (10%), and Tier 1 Risk-Based Capital Ratio equal to or greater than six percent (6%), and Tier 1 Leverage Capital Ratio equal to or greater than five percent (5%).

     

2.

State Board of Administration (SBA) Florida PRIME

   
 

Up to thirty percent (30%) of total portfolio may be invested in the SBA pursuant to F.S. 218.407.

   

3.

Fully collateralized purchase agreements having a defined termination date, placed through a primary government securities dealer, as defined by the New York Fed, and secured by Government (Treasury or Agency) obligations, pledged with a third- party custodian, and having a market value of not less than the principal amount of the funds disbursed. A signed Master Repurchase Agreement shall govern all repurchase agreement transactions.

   

4.

Revolving Repurchase Agreements or similar investment vehicles for the investment of cafeteria and other receipts awaiting transfer and for payroll and/or vendor funds awaiting clearing with financial institutions which maintain the correlating Demand Accounts. A Master Repurchase Agreement shall be executed with the applicable financial institution.

   

5.

Obligations of the United States Government, obligations insured by the Federal Deposit Insurance Corporation (FDIC) or any instrument of indebtedness fully and unconditionally guaranteed by the United States Government without specific limits for maturities up to 365 days. In addition, up to $50,000,000 may be invested in U. S. Government direct obligations or FDIC-insured obligations with a maturity of up to four (4) years.

 

6.

Up to thirty percent (30%) of total portfolio in obligations of the Federal Farm Credit Banks (FFCB) with a maturity of no more than three (3) years.

   

7.

Up to thirty percent (30%) of total portfolio in obligations of the Federal Home Loan Bank (FHLB) and its district banks with a maturity of no more than three (3) years.

   

8.

Up to thirty percent (30%) of total portfolio in obligations of the Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") including participation certificates with a maturity of no more than three (3) years.

   

9.

Up to thirty percent (30%) of total portfolio in obligations guaranteed by the Government National Mortgage Association (GNMA or "Ginny Mae") with a maturity of no more than three (3) years.

   

10.

Up to thirty percent (30%) of total portfolio in obligations of the Federal National Mortgage Association (FNMA or "Fannie Mae") with a maturity of no more than three (3) years.

   

11.

Securities of any investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. and SEC-registered, no load mutual funds and money market funds, rated AAA or equivalent by at least one nationally-recognized rating agency, having a weighted-average maturity not to exceed two (2) years, and invested exclusively in security types as authorized in this policy.

   

12.

Commercial Paper

   
 

a.

The rating of the Commercial Paper purchased must be of the highest rating: Standard and Poor's (S&P) (A1), Moody's (P1), or Fitch's (F1).

   

b.

Up to seven and one-half percent (7.5%) of the total investment portfolio balance may be invested with any single issuer of commercial paper, as of the date of the investment.

   

c.

Up to sixty percent (60%) of total portfolio balance may be invested in commercial paper with maturities of 180 days or less.

 

d.

FDIC-insured commercial paper, considered to an obligation of the U.S. government and will not be subject to the above commercial paper limitations.

     

13.

Bankers Acceptances

   
 

a.

No Bankers Acceptance shall be purchased which is guaranteed by a bank that does not meet the following discretionary guidelines:

   
 

1)

Shareholders equity shall consist of at least $100 million dollars.

   

2)

The bank shall be among the fifty (50) largest banks in the United States, or among the 100 largest banks in the world, according to the most current Moody's Banking and Financial Manual or American Bankers Publication.

   

3)

Profits must have resulted from the prior fiscal year operations.

     

b.

No more than thirty percent (30%) of the total portfolio balance shall be invested in Bankers Acceptances with maturities up to 180 days at any given time.

     
 

D.

Highly Interest Sensitive Securities

     
   

Notwithstanding any other Section of this policy, no investments shall be made in Collateralized Mortgage Obligations (CMOs) or any security with a coupon rate of interest determined by an index that adjusts opposite to the changes in a market index (inverse floaters). Agency securities with variable or floating rate coupons may be purchased provided that the coupon rate is based on a standard Treasury or LIBOR-based index.

     
   

Investments shall not be purchased under circumstances that could or would produce a loss of principal at the time of sale, that could not be offset through an investment swap, and that a conservative and prudent investment policy is always to be maintained.

 

E.

Pooled Cash

     
   

In order to maximize efficiency and minimize costs in the handling of demand accounts and investments, as approved by Florida statutes, commingling of funds, under the "Pooled Cash Fund" concept shall be in effect. Balances in the "Pooled Cash" for each fund shall be separately maintained, and interest revenue apportioned to each fund based on that fund's balance. The following investment limitations and guidelines in addition to those stated under Sections III and IV address credit, concentration and interest rate risks:

     
 

1.

Up to twenty percent (20%) may be invested in commercial paper with a maturity of sixty (60) days or less with a rating of A1/P1/F1 by S&P, Moodyís, or Fitch respectively.

   

2.

Additionally, up to thirty percent (30%) of the total investment portfolio balance may be invested in commercial paper with maturities of 180 days or less with a rating of A1+ or F1+ by S&P, or Fitch respectively.

   

3.

There is no percentage limit for FDIC-insured commercial paper.

     
 

F.

Debt Issuance Proceeds

     
   

All or any part of the funds derived from the proceeds of any such bond issue that is not immediately needed shall be invested in accordance with F.S. 218.15 including use of the Local Government Investment Pool. Limitations and guidelines for these investments shall be set forth below, unless more restrictive bond/lease purchase covenants are applicable:

     
 

1.

Short-term debt proceeds (Tax Anticipation Notes and Revenue Anticipations Notes) may be invested in Pooled Cash or separately under the limitations and guidelines denoted in Sections IV & V. When matching known and specific cash flows, TAN and RAN investments may be excluded from certain policy maturity restrictions.

 

2.

Long-term debt proceeds (General Obligation Bonds and Certificates of Participation) may be invested separately under the limitations and guidelines denoted in Section IV & V. Guaranteed Investment Contracts or other investments allowed under the bond/lease purchase covenants may also be included as authorized investment types.

   

3.

Weighted-Average Maturities are under two (2) years except for Guaranteed Investment Contracts for sinking fund payments whose maturities are tied to their respective long-term bond maturities.

     
 

G.

Money Market Pool - Investment

     
 

1.

Up to thirty percent (30%) of total portfolio may be invested in Repurchase Agreements.

   

2.

Up to thirty percent (30%) of total portfolio may be invested in Commercial Paper with A1, P1, or F1 ratings.

   

3.

Up to thirty percent (30%) of total portfolio may be invested in Bankers Acceptance with the 100 largest banks in the world or the fifty (50) largest banks in the United States.

   

4.

Time deposits as provided under guidelines and qualifications of financial institutions in place, as previously set forth in this document, in Section V.

   

5.

U.S. Government securities, with less than four (4) year maturity, as deemed advisable for liquidity purposes, without specific limits.

   

6.

U.S. Government agencies with less than three (3) years to maturity as deemed advisable for liquidity purposes, without specific limits.

   

7.

Local Government Investment Pool, without specific limits.

   

8.

Weighted-Average Maturities are under two (2) years.

 

H.

Minority Banks - Money Market Account

     
   

Subject to cash flow requirements of the Board, Money Market Accounts may be established with minority banks according to the criteria below. In order to qualify, the bank must be a State-approved, Board-approved depository, domiciled within the boundaries of Miami-Dade County, Florida, and listed by the U.S. Department of the Treasury as a minority-owned bank.

     
   

The funds to be used for this purpose shall be available monies in the General Fund and subject to the Districtís cash requirements. No more than $2 million shall be deposited with any minority bank.

     
   

The interest rate to be received by the Board shall be no less than sixty-five percent (65%) of the current Prime Rate as published in the Wall Street Journal. This rate shall be subject to change on the first business day of each month.

     
 

I.

Supplemental Early Retirement Plan

     
   

The Superintendent shall implement the investment of the funds available under the Supplemental Early Retirement Plan (the "Plan").

     
   

The investment objectives are to attain the highest possible return for the Plan using strategies geared to a long term approach, within the general concept of prudence and the safeguarding of the Planís assets. The performance measurement guidelines will be reviewed and recommended by the Treasury Advisory Committee.

     
   

A trustee shall be appointed by the Board to act as custodian of securities and make disbursements to beneficiaries. From time to time the relationship shall be reviewed and request for proposals obtained as deemed necessary by responsible staff.

   

Investment policies related to credit and concentration risks are managed according to the following limitations and guidelines:

     
   

Investment Instrument

 

Limitation

         
   

Corporate and/or Taxable Government Bonds

 

up to seventy percent (70%) of total portfolio
Investment grade (equivalent to "BBB" or "Baa" rating or higher)

         
   

Equities

 

up to fifty percent (50%) of total portfolio
Index funds and/or securities replicating the diverse equity mixes.
Up to thirty percent (30%) of the total portfolio in actively managed mutual funds

         
   

Commercial Paper

 

up to fifty percent (50%) of total portfolio
Minimum A1-P1- or F1 ratings
Maturities 180 days or less

         
   

Bankers Acceptances

 

up to fifty percent(50%) of total portfolio

         
   

Money Market Mutual Fund

 

no limitations

         
   

U.S. Government

 

no limitations

   

Investment Instrument

 

Limitation

         
   

U.S. Government Agencies

 

up to sixty percent(60%) of total portfolio in obligations of the following: Federal Farm Credit Banks, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association

     
   

Prior to selection of bond/equity/money market mutual fund will be reviewed and recommended by the Treasury Advisory Committee. Asset allocation and performance measurements are to be reviewed periodically by the Treasury Advisory Committee. Planís assets are to be rebalanced at least once annually and are allowed to be over or under by five percent (5%) of the equity to fixed investments target mix.

     
   

Upon approval of the Board, an investment manager may be selected and appointed. In the event an investment manager(s) is appointed, the investment manager(s) will have responsibility for investing the portfolio or a part thereof. The Board shall set parameters for the investment manager(s) to follow in the course of discharging these duties.

     
 

J.

Policy Regarding Brokers and Banks Doing Business with the District

     
   

Prior to establishing a relationship with a broker dealer, the following shall be reviewed by appropriate staff:

     
 

1.

annual audited financial statements of firm

   

2.

references from the National Association of Securities Dealers (NASD) or the State Office of Controllers, Division of Securities

   

3.

résumé of salesperson assigned to account

   

Relationships will be monitored based on the following performance criteria:

     
 

1.

competitive bids obtained

   

2.

proficiency in execution of trades

   

3.

ability to provide reliable economic and financial data

     
   

If a broker or bank doing business with the District, whether intentionally or otherwise, provides unsatisfactory services, it may be terminated from doing such business for a period of time, without limitation, to be determined by appropriate staff with the concurrence of the Superintendent. Unsatisfactory services include, but are not limited to, failure to deliver as instructed funds held for the District, failure to properly accept and credit funds received by the District, failure to accept or deliver securities concerning a proper trade with authorized District staff and frequent and/or severe documented breakdowns in transacting business.

     
   

The Board reserves the right to suspend or discontinue transacting business with any party when deemed in the best interest of the District and the public.

     
 

K.

Emergency Lines of Credit

     
   

Lines of credit shall be established with local banks, as approved by the Board, for a total amount determined by the Board. The emergency line of credit shall be activated only after prior written approval is obtained from the Superintendent.

     
 

L.

Policy on Family Relationships and Conflict of Interests

     
   

Members of the same family may not be assigned to any Office, Division or Department charged with responsibility for investing or cash management of Board funds. Applicants shall disclose whether any such relationship exists prior to a potential assignment to investment and/or cash management duties. In the event that such a relationship is subsequently incurred, then the employees shall disclose the relationship and a transfer to a position of equal grade in as similar a function as possible shall be expeditiously arranged by the District.

   

"Members of the same family " for purposes of this section means individuals related as father, mother, son, daughter, brother, sister, uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, half brother, half sister, grandfather, grandmother, grandchild, domestic partner, or any person who resides in the same residence.

     
   

Employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Also, employees involved in the investment process shall disclose to the Board any personal material financial interests in financial institutions that conduct business with the Board, and they shall further disclose any material personal financial/investment positions that could be related to the performance of the Board's investment program.

     
 

M.

Internal Controls

     
   

The Treasurer will establish and maintain a system of internal controls over assets, transfers and the purchase and sale (offers and bids) process, among others, which shall be detailed in the Office of Treasury Management's Procedures Manual.

     
   

The controls shall ensure the safeguarding of assets from waste, fraud, and inefficient use. An independent review of deposit and investment internal controls will be performed annually by the Boardís external auditors.

     
 

N.

Continuing Education

     
   

Staff members responsible for investment activities shall undergo continuing professional education in matters related to investments on an annual basis.

F.S. 218.407, 218.415, 1001.42, 1001.43, 1001.51(11)(j); 1010.53(1), 1011.18
F.A.C. 6A-1.0012, A-1.085