- Legality—All investments shall be made in accordance with applicable laws of the Commonwealth of Pennsylvania, including but not limited to, the Pennsylvania Second Class County Code, as amended, and applicable federal laws. 16 P.S. § 4964 (at the end of this document).
- Safety—Safety of principal shall be of highest priority. Preservation of capital in the portfolio of investments shall be insured 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 projection shall be developed so that investments can be made as early as possible, with maturities concurrent with anticipated cash demands. This projection shall be maintained, analyzed and updated at least quarterly for purposes of planning investments.
- 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 investment risk constraints and liquidity needs. Return on investments shall be of secondary importance compared to the safety and liquidity objectives described above.
- Diversification—Investments must be diversified to avoid incurring unreasonable risks associated with specific securities or financial institutions.
- If the investment amount is less than $1,000,001, with the approval of the Investment Committee, one committee member may execute the necessary requirements for the investment(s).
- If the investment amount is more than $1,000,001, but less than $2,000,001, then with the approval of the Investment Committee, two committee members may execute the necessary requirements for the investment(s).
- For any investments over the amount of $2,000,001 the Finance Committee of the Board of Trustees shall have the authority to determine and approve the investments with recommendations by the Investment Committee.
- As it deems appropriate, the Investment Committee may take any investment to the Finance Committee of the Board of Trustees for discussion or approval, or both.
- Names and locations of the institutions where investments and related collateral are placed.
- Type, amount, date of maturity and interest rate of each investment.
- Amount of funds invested.
- Interest earned and received to date.
- Anticipated interest earnings.
- Current market value of funds invested.
- Short Term—a period with a date to maturity of twelve (12) months or less, or 397 days or less.
- Mid-Term—a period between short and long term, not exceeding forty-eight (48) months’ duration.
- Long-Term—a period exceeding forty-eight (48) months’ duration.
- Interest Rate Risk—the risk that the market value of securities will fall due to the changes and general interest rates.
- Credit Risk—the risk of loss of principal due to the failure of the security issuer or backer.
- Investment Program—the specifically enumerated and Board-approved policy, including the investment strategy and legally permitted investments.
- Permitted investments
Investments permitted by this policy are those defined in Pennsylvania Second Class County Code, 16 P.S. § 4964, as amended, which are collateralized in accordance with applicable laws, and comply with other applicable statutes, and any rules and regulations adopted by the Board.
The College may participate in investment pools that have been organized in accordance with the provisions of Section 3 of the Pennsylvania Intergovernmental Cooperation Act No. 180 of the 1972 General Assembly and the Second Class County Code, 16 P.S. § 4969 (e).
All securities shall be purchased in the name of the Community College, with the exception of all permissible pooled investments, and custody of the securities shall be specified within the investment agreements of the Community College. Combined funds shall be accounted for separately in all respects and the earnings from the investments separately and individually computed and recorded and credited to the accounts from which the investment was purchased. Any pool invested in must furnish a disclosure instrument, instrument transaction confirmation, a monthly report, and audited financials. Safekeeping receipts must be received for each investment.
The Community College must require that investment advisers, investment service providers and/or investment entities guard against making investments with banks and companies that may have hidden terrorist links.
All investment advisors, investment service providers and/or investing entities shall verify in writing that they have received a copy of this policy. Such written statement shall indicate that they have read and understand this policy and all applicable statutes related to Community College investments, along with their intent to comply fully with these requirements.
All investment advisors, investment service providers and/or investing entities shall be required to submit annually any or all of the following, as appropriate.
- Audited financial statements on a quarterly, semi-annual and annual basis.
- Proof of National Association of Securities Dealers (NASD) certification.
- Proof of SEC and/or Pennsylvania Securities Commission registration.
- Proof of Commonwealth registration.
- Signed affidavit stating the funds are invested in accordance with the Board’s approved investment program.
Additionally, all investment advisors, investment service providers and investing entities shall be required to disclose to the Community College all situations where they have a material interest in the investment instrument recommended to the Community College.
- Disclosure
- Designated board officers and employees involved in the investment process of the Community College 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.
- An investment advisor, broker/dealer, depository institution or underwriter engaged to provide a service to the Community College may not own or receive compensation from an entity who is providing an instrument to the Community College unless such relationship has been disclosed in writing to the Community College.
- Audit
The Board of Trustees requires that all investment records be subject to annual audit by the independent auditors of the Community College. In addition, the Community College shall perform an audit of the established investment policy of the Community College and its compliance with the laws relevant to investments.
The audit shall include, but not be limited to, independent verification of all investments and corresponding collateral, and of amounts and records of all transactions as deemed necessary by the independent auditors.
It shall be the responsibility of the investment advisor, investment service provider and/or investing entity to maintain necessary documents to permit independent audit of the investments of the Community College.
- Bond Proceeds
Bond proceeds shall be invested in accordance with § 4964 of the Pennsylvania Second Class Code and where applicable, the Local Government Unit Debt Act, federal and state laws, all subject to approval by the solicitor, and/or bond counsel, and the Board of Trustees.
Investment transactions arising from bond proceeds shall be reported monthly to the Board, in accordance with this policy. 53 Pa. C.S.A. § 8001 et seq.; 53 Pa. C.S.A. § 8224.
- Investment Agreements
All investment agreements must be approved by the Community College solicitor and Board of Trustees prior to investment of funds.
All new investment options and/or advisors must be approved by the Community College solicitor and Board of Trustees.
All investment agreements must be signed by the Board President/Vice President of Administration and Finance and Board Secretary.
- The county treasurer shall have the power, subject to subsection (b) and the hereinafter stated conditions and limitations, to invest and reinvest the moneys of the general fund and special funds as shall have accumulated beyond the ordinary needs of said various funds, and which are not authorized by law to be invested by any board, commission or county officer, consistent with sound business practice, subject, however, to the exercise of that degree of judgment, skill and care under the circumstances then prevailing which persons of prudence, discretion and intelligence, who are familiar with such matters, exercise in the management of their own affairs not in regard to speculation, but in regard to the permanent disposition of the funds, considering the probable income to be derived there from as well as the probable safety of their capital.
- A Board of Investment is hereby created. Said board shall be composed of three members, to wit: the treasurer, who shall act as a chairman of the board; the chairman of the county commissioners; and the controller. The board shall provide for an investment program, including temporary investments, subject to restrictions contained in this act, and in any other applicable statute and any rules and regulations adopted by the board. County boards, commissions or other county officers authorized to make investments under subsection (a) shall make investments in conformity with the board's investment program.
- Authorized types of investments for county funds shall be
- United States Treasury bills.
- Short-term obligations of the United States Government or its agencies or instrumentalities.
- Deposits in savings accounts or time deposits, other than certificates of deposit, or share accounts of institutions having their principal place of business in the Commonwealth and insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund or the Pennsylvania Deposit Insurance Corporation or the Pennsylvania Savings Association Insurance Corporation to the extent that such accounts are so insured, and, for any amounts above the insured maximum, provided that approved collateral as provided by law therefore shall be pledged by the depository.
- Obligations of the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth, or of any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision.
- Shares of an investment company registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, provided that the only investments of that company are in the authorized investments for county funds listed in clauses (1) through (4).
- Certificates of deposit purchased from institutions having their principal place of business in the Commonwealth and insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund or the Pennsylvania Deposit Insurance Corporation or the Pennsylvania Savings Association Insurance Corporation to the extent that such accounts are so insured. However, for any amounts above the insured maximum, such certificates of deposit shall be collateralized by a pledge or assignment of assets of the institution, and such collateral may include loans (including interest in pools of loans) secured by first mortgage liens on real property. Certificates of deposit purchased from commercial banks shall be limited to an amount equal to twenty per centum (20%) of a bank's total capital and surplus. Certificates of deposit purchased from savings and loan associations or savings banks shall be limited to an amount equal to twenty per centum (20%) of an institution's assets minus liabilities.
- Certificates of deposit purchased from institutions having their principal place of business outside the Commonwealth and insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund to the extent that such accounts are so insured, and, for any amounts above the insured maximum, provided that approved collateral as provided by law therefore shall be pledged by the depository. Certificates of deposit purchased from commercial banks shall be limited to an amount equal to twenty per centum (20%) of a bank's total capital and surplus. Certificates of deposit purchased from savings and loan associations or savings banks shall be limited to an amount equal to twenty per centum (20%) of an institution's assets minus liabilities.
- Any investment authorized by 20 Pa.C.S. Chapter 73 (relating to fiduciaries investments) shall be an authorized investment for any pension or retirement fund.
- "Commercial paper" and "prime commercial paper" as provided for in subsection (d).
- As used herein "commercial paper" shall mean unsecured promissory notes issued at a discount from par by any industrial, common carrier, public utility or finance company and "prime commercial paper" shall mean notes issued by corporations whose credit has been approved by the National Credit Office, Incorporated, New York, or its successor. The treasurer shall have obtained the following prior to any commitment to purchase commercial paper.
- A certification or other evidence that such commercial paper is rated prime by the National Credit Office, Incorporated.
- A certification or other evidence that the paper proposed to be delivered is not subordinate to any other debt of the issuer.
- A certificate or other evidence that there is no litigation pending or threatened affecting said paper.
- A certificate or other evidence that the issuer is not in default as to the payment of principal and interest upon any of its outstanding obligations.
- A certificate or other evidence that the issuer was incorporated within the United States, is transacting business within the United States, and has assets of one billion dollars ($1,000,000,000) or more, or is a wholly owned subsidiary of a Pennsylvania corporation having assets of one billion dollars ($1,000,000,000) or more.
- The treasurer shall not, at any time, have invested in prime commercial paper more than an aggregate of such total sum as the board shall have prescribed.
- In making investments of county funds, the county treasurer (or other elected officials when authorized as provided in subsection (a) ) shall have authority
- To permit assets pledged as collateral under subsection (c)(3), to be pooled in accordance with the act of August 6, 1971 (P.L. 281, No. 72), entitled "An act standardizing the procedures for pledges of assets to secure deposits of public funds with banking institutions pursuant to other laws; establishing a standard rule for the types, amounts and valuations of assets eligible to be used as collateral for deposits of public funds; permitting assets to be pledged against deposits on a pooled basis; and authorizing the appointment of custodians to act as pledgees of assets," relating to pledges of assets to secure deposits of public funds.
- To combine moneys from more than one fund under county control for the purchase of a single investment, provided that each of the funds combined for the purpose shall be accounted for separately in all respects and that the earnings from the investment are separately and individually computed and recorded, and credited to the accounts from which the investment was purchased.
- To join with one or more other political subdivisions and municipal authorities in accordance with the act of July 12, 1972 (P.L. 762, No. 180), entitled "An act relating to intergovernmental cooperation," in the purchase of a single investment, provided that the requirements of clause (2) on separate accounting of individual funds and separate computation, recording and crediting of the earnings therefrom are adhered to.
- All income earned on any of the aforesaid investments shall inure to the benefit of the county and shall be placed in the general fund.
Board Operations
Board of Trustees Policy
SUBJECT: Investment of Funds |
NUMBER: 2.7 |
| DATE: September
19, 2005 |
|
| SUPERSEDES: December
2002 |
Purpose
It shall be the policy of the Montgomery County Community College to optimize its return through investments of its cash balances in such a way as to minimize non-invested balances and to maximize return on investments.
Policy
The primary objectives of investment activities shall be:
Authority
Subject to the Community College Investment Program, the Community College Investment Committee, comprised of the President, the Vice President of Administration and Finance, and the Director of Accounting (“Investment Committee”), shall meet to determine and recommend investments for the Community College. The Investment Committee may use the resources of an Investment Advisor, as needed. The Investment Committee may invest and reinvest the moneys of the general fund and special funds that have accumulated beyond the ordinary needs of the various funds, and which are not authorized by law to be invested by any board, commission or other officer, consistent with sound business practice, subject to the exercise of the degree of judgment, skill and care under the circumstances then prevailing which persons of prudence, discretion and intelligence, who are familiar with such matters, exercise in the management of their own affairs not in regard to speculation, but in regard to the permanent disposition of the funds, considering the probable income to be derived there from as well as the probable safety of their capital. As permitted, the investments must be made in legal instruments and securities provided in this Policy, and must be made pursuant to the following guidelines.
Delegation of Responsibility
All purchases and sales of investments of the Montgomery County Community College shall be made by the Investment Committee of the Community College and/or on a resolution adopted by the Board of Trustees. 16 P.S. § 4964 (a) and (f). The members of the Investment Committee shall receive ongoing training in investment finance.
After meeting the objectives of the investment of funds, the Investment Committee shall authorize the financial entity to invest for the specific fund in the name of the Montgomery County Community College. Perpetual investment records shall be maintained on all investments including placement of the investment, investment date, the cost and rate of interest.
A disclosure of the investments of the Community College shall be incorporated in the monthly Treasurer’s Report to the Board of Trustees. The report shall include the following.
An annual review of the investment program of the Community College shall be prepared by the Vice President of Administration and Finance, reviewed by the Investment Committee, and Board of Trustee’s Finance Committee, then submitted for Board approval no later than ninety (90) days after adoption of the annual budget.
Definitions
Guidelines
