South Plains College Investment Policy
The South Plains College Board of Regents sets the
Investment Policy of the South Plains College District and reviews
the policy on an annual basis.
The Board shall adopt a specific
investment policy and strategy guidelines for South Plains
College. The Investment Policy will be designed to achieve
the goals of safety, liquidity, and yield in all the
College’s investment activities. The Investment Policy shall
incorporate the statutory provisions of the Public Funds Investment
Act, Article 342A-2V.T.C.S., as amended in Chapter 2256 by the
Texas Legislature (HB2459, 73rd Legislature).
The Investment Policy shall apply to all financial assets and funds in use by the college as well as any future funds created by the college unless specifically exempted by the Board of Regents and/or its adopted policy. These types of funds include, but are not limited to:
Special Reserve Funds
Debt Service Funds
Capital Projects Funds
Auxiliary Activities Funds
OVERALL OBJECTIVES AND PRIORITIES
The objectives and priorities of the Investment Policy of South Plains College, in order of importance, are as follows:
To comply with the provisions of the Public Funds Investment Act.
To provide for the safety of principal of all SPC funds.
To insure that adequate cash is available to meet operating requirements.
To earn the highest possible rates on return on investments consistent with the foregoing objectives and guidelines.
To allow for diversification in the types, issues, and maturities of investments so as to avoid incurring unreasonable and avoidable risks.
To maintain the highest professional and ethical standards as custodians of the public trust.
ACTIVE PORTFOLIO MANAGEMENT
South Plains College shall a pursue an active versus passive portfolio management philosophy. That is securities may be sold before they mature if market conditions present an opportunity for the College to benefit from the trade. The investment officer of the College will routinely monitor the contents of the portfolio, the available markets, and the relative value of competing instruments, and will adjust the portfolio accordingly.
RESPONSIBILITY AND CONTROL
The President of South Plains College or, at the President's discretion, the Vice President for Finance and Administration will be designated as the Investment Officer for the College. The Investment Officer shall operate the investment program in a manner consistent with the College Investment Policy. The Investment Officer shall attend at least one investment training session relating to the Officer's responsibility under the Public Funds Investment Act within twelve months of after assuming duties.
The Investment Officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the College are protected from loss, theft, and misuse specifically, the internal controls will address the following:
b. Separation of duties.
c. Custodial safekeeping.
d. Avoidance of Bearer-form securities.
e. Clear delegation of authority.
f. Confirmation of telephone transactions for investments and wire transfers.
g. Instruct the College's external auditors (e.g. Pate and Downs) to review investment activity to determine if it is in compliance with policies and procedures.
PRUDENCE AND ETHICS
The standard of prudence to be applied by the investment officer shall be the "Prudent Investor Rule" which states, ".......Investments shall be make 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."
Officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration:
a. The investment of all funds or funds under the College's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investme
b. Whether the investment decision was consistent with the written investment policy of the College.
The Investment Officer, acting in accordance with written procedures and exercising due diligence shall not be held personally responsible for a specific securities credit risk or market price changes, provided that these deviations are reported immediately and appropriated action is taken to control adverse developments.
The Investment Officer and members of his/her staff, who are involved in the investment process, shall refrain from personal business activity that could conflict with the operation of the investment program and policy, or could impair the ability to make impartial investment decision. Also, the aforementioned personnel shall disclose to the President of the College any material financial interests that they hold in financial institutions that conduct investment business with the College. Additionally, the Investment Officer and his investment staff shall disclose any personal investment positions that could be related to the performance of the College's portfolio. The Investment Officer and his/her investment staff shall subordinate their personal investment transactions to those of the College, particularly with regard to timing of purchases and sales.
Should the investment officer have a personal business relationship with an organization seeking to sell an investment instrument to the College, he/she shall file a statement disclosing that relationship. An Investment Officer who is related within the second degree by affinity or consanguinity to an individual seeking to sell an investment instrument to the College shall file a statement disclosing that relationship. All disclosure statements must be filed with the Board of Regents and the Texas Ethics Commission.
The Investment Officer shall prepare and submit to the Board of Regents a signed quarterly investment report for all funds. This report will be prepared on a quarterly basis. The report shall list the following information:
A detailed investment position statement as of the date of the report.
A summary statement of the investment activity of each fund to include the beginning market value, changes to that market value, and the ending market value for the period.
A detailed statement of the book value and market value of each separate investment asset at the beginning and end of the reporting period as well as maturity dates(if applicable)
A statement that the College's investment operations and portfolio are in compliance with the College's Investment Policy.
Within the guidelines provided in the Public Funds Investment Act, the Board of Regents of South Plains College has hereby adjudged and decreed that the following investments are allowed for South Plains College Funds. The Board of Regents, may, at any time, disallow any of the following:
1. Obligations of, or Guaranteed by, Governmental Agencies.
Authorization Public Funds Investment Act, 2256.009:
a. obligations of the United States or its agencies and instrumentality's.
b. direct obligations of this state or its agencies and instrumentality's;
c. collateralized mortgage obligations directly issued by a federal agency instrumentality of the United States, the underlying security for which is guaranteed or insured by an agency or instrumentality of the United States.
d. other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, this state or the United States and their respective agencies and instrumentality's.
e. obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less that A or its equivalent.
2. Certificates of Deposit
Authorization: Public Funds Investment Act, Section 2256.010
A certificate of deposit is an authorized investment under this subchapter if the certificate of deposit is issued by a state or national bank domiciled in this state or a savings and loan association domiciled in this state and is:
a. guaranteed or insured by the Federal Deposit Insurance Corporation or its successor;
b. secured by obligations that are described by section 2256.009, including mortgage backed securities directly issued by a federal agency or instrumentality that have a market value of not less than the principal amount of the certificates, but excluding those mortgage backed securities of the nature described by Section 2256.009(b); or
c. secured in any other manner and amount provided by law for deposits of the investing entity.
3. Repurchase Agreements
Authorization: Public Funds Investment Act, section 2256.011:
A fully collateralized repurchase agreement is an authorized investment if the repurchase agreement:
a. has a defined termination date;
b. is secured by obligations described by Section 2256.009;
c. requires the securities being purchased by the district to be pledged to the district, held in the district's name, and deposited at the time the investment is made with the district or with a third party selected and approved by the district; and
d. is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state.
In this section, "repurchase agreement" means a simultaneous agreement to buy, hold for a specified time, and sell back at a future date obligations described by Section 2256.009 at a market value at the time the funds are disbursed of not less than the principal amount disbursed. The term includes a direct security repurchase agreement and a reverse security repurchase agreement.
The term of any reverse security repurchase agreement may not exceed 90 days after the date the reverse repurchase agreement is delivered.
4. Banker's Acceptances
Authorization: Public Funds Investment Act, section 2256.012;
A banker's acceptance is an authorized investment under this subchapter if the banker's acceptance:
a. has a stated maturity of 270 days or fewer from the date of its issuance;
b. will be, in accordance with its terms, liquidated in full at maturity;
c. is eligible for collateral for borrowing from a Federal Reserve Bank; and
d. is accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the largest subsidiary, and rated not less than A-1 or P-1 or an equivalent rating by at least one nationally credit rating agency.
5. Commercial Paper
Authorization: Public Funds Investment Act, 2256.013:
Commercial paper is an authorized investment under this subchapter if the commercial paper:
a. has a stated maturity of 270 days or fewer from the date of its issuance; and
b. is rated not less than A-1 or P-1 or an equivalent rating by at least:
(1) two nationally recognized credit rating agencies; or
(2) one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under that laws of the United States or any state.
6. Mutual Funds
Authorization: Public Funds Investment Act, 2256.014
A no-load money market mutual fund is an authorized investment under this subchapter if the mutual fund:
(1) is regulated with the Securities and Exchange Commission;
(2) has a dollar-weighted average stated maturity of 90 days or fewer;
(3) includes in its investment objectives the maintenance of a stable net asset value of $1 for each share.
A no-load mutual fund is an authorized investment under this subchapter if the mutual fund:
(1) is registered with the Securities and Exchange Commission;
(2) has an average weighted maturity of less than two years;
(3) is invested exclusively in obligations approved by this subchapter;
(4) is continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less that AAA or its equivalent;
(5) conforms to the requirements set forth in Sections 2256.0016 b) and c) relating to the eligibility of investment pools to receive and invest funds of investing entities.
7. Public Funds Pools
Authorization: Public Funds Investment Act. Section 2256.016:
The District may invest its funds through an eligible investment pool only if the particular pool is approved by resolution of The South Plains Board of Regents.
The following are not authorized investments under this investment policy:
a. Obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; i.e. Interest Only Derivative
b. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest; i.e. Principal Only Derivatives
c. Collateralized mortgage obligations that have a stated final maturity date of greater than 10 years.
d. Collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index, i.e. Inverse Floater Derivatives
AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
All investments made by the College will be
made through either the depository bank, a primary dealer, or the
College's Investment Advisor should one be engaged. All investment
firms should furnish proof of certification by the National
Association of Securities Dealers, and proof of current
registration with the State Securities Commission. A copy of the
College Investment Policy will be presented to any firm or
individuals seeking to sell the College an investment instrument.
The registered principal of that firm must submit to the Investment
Officer a written acknowledgment that the firm has implemented
reasonable procedures that will preclude imprudent investing
activities i.e. the purchase of unauthorized investment
instruments. The College cannot buy from any vendor that does not
submit this written acknowledgment.