4.15 Investment of Funds Policy
Funds not needed for immediate expenses of the College will be invested in a manner which will provide maximum security and investment returns while meeting the daily cash flow demands of the College and conforming to all state statutes governing the investment of public funds.
Procedures: (Revised 8-25-2008)
4.15.1 Investment Types
In accordance with and subject to restrictions imposed by current statutes and the investment policy of the State of Missouri, the following list represents the entire range of investments that the College will consider and which shall be authorized for the investments of funds.
a. Collateralized Public Deposits (Certificates of Deposit). Instruments issued by financial institutions which state that specified sums have been deposited for specified periods of time and at specified rates of interest. The certificates of deposit are required to be backed by acceptable collateral securities as dictated by State statute.
b. United States Treasury Securities. Obligations of the United States government for which the full faith and credit of the United States are pledged for the payment of principal and interest.
c. United States Agency Securities. Obligations issued or guaranteed by any agency of the United States Government.
4.15.2 Security Selection
The following list represents the entire range of United States Agency Securities that the College will consider and which shall be authorized for the investment of funds by the College. Additionally, the following definitions and guidelines should be used in purchasing the instruments:
a. U.S. Govt. Agency Coupon and Zero Coupon Securities. Bullet coupon bonds with no embedded options.
b. U.S. Govt. Agency Discount Notes. Purchased at a discount with maximum maturities of one (1) year.
c. U.S. Govt. Agency Callable Securities. Restricted to securities callable at par only with final maturities of five (5) years.
d. U.S. Govt. Agency Step-Up Securities. The coupon rate is fixed for an initial term. At coupon date, the coupon rate rises to a new, higher fixed term. Restricted to securities with final maturities of five (5) years.
e. U.S. Govt. Agency Floating Rate Securities. The coupon rate floats off one index. Restricted to coupons with no interim caps that reset at least quarterly.
The market value of collateral must total to an amount equal to 100 percent or greater of the amount of College time deposits plus demand deposits with the depositors, less the amount, if any, which is an insured deposit pursuant to the Federal Insurance Act of 1950 (64 Stat. 873) as heretofore or hereafter amended.
All securities pledged as collateral by the depository shall, at the option of the depository banking institution, either be delivered to the fiscal officer or be deposited with a disinterested banking institution or safe depository as trustee satisfactory to both parties to the depository agreement. No security pledged as collateral shall be released by the depository banking institution without the written permission of the Chief Financial Officer or designee.
The College shall have a depositary contract and pledge agreement with each safekeeping bank that will comply with the Financial Institutions, Reform, Recovery, and Enforcement Act of 1989 (FIRREA). This will ensure that the College’s security interest in collateral pledged to secure deposits is enforceable against the receiver of a failed financial institution.
4.15.4 Demand Deposits
Demand deposits shall be maintained in a financial banking institution(s) designated by the Board of Trustees. The Board may seek bids and re-designate depositories at any time.
Demand deposits shall be collateralized, secured and deposited according to the same criteria applicable to College investments as described and noted herein above.
4.15.5 Investment Reports
The Board shall approve College investments in a monthly report supported by the appropriate Pledged Securities Schedule and submitted by the Chief Financial Officer or designee.
4.15.6 Authorized Financial Dealers and Institutions
A list will be maintained of financial institutions authorized to provide investment transactions. In addition, a list will be maintained of approved security broker/dealers selected by creditworthiness as determined by the investment officer and approved by the governing body. These may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule).
All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:
Audited financial statements.
Proof of National Association of Securities Dealers (NASD) certification.
Proof of state registration.
Completed broker/dealer questionnaire.
Certification of having read and understood and agreeing to comply with the College’s investment policy.
An annual review of the financial condition and registration of qualified financial institutions and broker/dealers will be conducted by the investment officer.
4.15.7 Investment Guidelines
College staff shall at all times exercise prudent financial judgment when investing funds and shall adhere to investment guidelines as outlined and implemented by the State of Missouri in its current investment policy.
(Adopted 2-1-1988; Revised 8-25-2008)