6144 - INVESTMENT POLICY

Trimble Local School District

Bylaws & Policies

6144 - INVESTMENT POLICY
Introduction
The purpose of this investment policy is to establish priorities and guidelines regarding the investment management of the operating funds and other designated funds (hereinafter referred to as the "Portfolio" or "Portfolios") of the Trimble Local School District, Glouster, Ohio (hereinafter referred to as the "District"). Such priorities and guidelines are based upon Chapter 135.14 of the Ohio Revised Code, and prudent money management. This investment policy, dated April 19, 2016, has been approved by the Trimble Local School District Board (hereinafter referred to as the "Board"). Chapter 135.14 of the Ohio Revised Code (totally or partially) may be used to describe eligible investments. In some sections, the policy places further limits upon the use of eligible investments or investment transactions.
Scope

This policy applies to all investment assets of the District. Such funds are accounted for in the District’s Comprehensive Annual Financial Report (CAFR), and include all funds of the reporting entity.

Investment Objectives

The investment objectives of the District, in priority order, include:

	A.	Compliance with all Federal and State laws

	B.	Safety of principal


Safety of principal is the foremost objective of the investment program. The investment of District funds shall be conducted in a manner that seeks to ensure the preservation of capital within the context of the following criteria:

	1.	Market Risk (interest rate risk)

		The market value of securities in the District’s portfolio will increase or decrease based upon changes in the general level of interest rates. The effects of market value fluctuations will be minimized by (1) maintaining adequate liquidity so that current obligations can be met without a sale of securities; (2) by diversifying maturities; and (3) by diversifying eligible assets.

	2.	Credit Risk

		Credit risk is the risk of loss due to the failure of a security issuer to pay principal or interest, or the failure of the issuer to make timely payments of principal or interest. Eligible investments affected by credit risk include certificates of deposit, commercial paper, and bankers acceptances. Credit risk will be minimized by (1) diversifying assets by issuer; (2) ensuring that required, minimum credit quality ratings exist prior to the purchase of commercial paper and bankers acceptances; (3) maintaining adequate collateralization of certificates of deposit in excess of the maximum amount insured by the Federal Deposit Insurance Corporation.

C.	Liquidity

	The portfolio shall remain sufficiently liquid to meet all current obligations of the District. Minimum liquidity levels (as a percentage of average investable funds) may be established in order to meet all current obligations.


	D.	Yield/Return

		The portfolio shall be managed to consistently attain a market rate of return throughout budgetary and economic cycles. Whenever possible, and consistent with risk limitations and prudent investment management, the District will seek to augment returns above the market average rate of return through the implementation of active portfolio management strategies. Specific benchmarks may include comparisons to the average yield of the three (3)-month Constant Maturity Treasury (CMT) and/or other Constant Maturity Treasury averages as calculated by the Federal Reserve Bank of New York and/or the average monthly yield of the State Treasurers Investment Pool (STAROHIO).

Standards of Care
Prudence

Investments shall be made with the exercise of that degree of 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.

The standard of prudence to be used by investments officials shall be the "prudent person" standard and shall be applied within the context of managing an overall portfolio. Investment officers or registered investment advisors, acting in accordance with established procedures and the approved investment policy, and exercising due diligence, shall be relieved of responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.

Authorized Investments (Itemized)

U.S. Treasury Bills, Notes, and Bonds; various Federal agency securities including issues of Federal National Mortgage Assn. (FNMA), Federal Home Loan Mortgage Corp. (FHLMC), Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Government National Mortgage Association (GNMA), and other agencies or instrumentalities of the United States. Eligible investments include securities that may be "called" (by the issuer) prior to the final maturity date. All Federal agency securities shall be direct issuances of Federal government agencies or instrumentalities and not derivatives as defined under O.R.C. 135.14.

Bonds and other obligations of this state, or the political subdivisions of this state, proved that, with respect to bonds or other obligations of political subdivisions, all of the following apply:

	A.	The bonds or other obligations are payable from general revenues of the political subdivision and backed by the full faith and credit of the political subdivision.

	B.	The bonds or other obligations are rated at the time of purchase in the three (3) highest classifications established by at least one (1) nationally recognized standard rating service and purchased through a registered securities broker or dealer.

	C.	The aggregate value of the bonds or other obligations does not exceed twenty percent (20%) of interim moneys available for investment at the time of purchase.

	D.	The District is not the sole purchaser of the bonds or other obligations at original issuance.

No investment shall be made under 135.14 (B)(4) of the ORC unless the District Treasurer has completed additional training for making the investments authorized by 135.14 (B)(4).

Up to forty percent (40%) of interim moneys available for investment in either of the following:

A.	Commercial paper notes issued by an entity that is defined in division (D) of section 1705.01 of the Revised Code and that has assets exceeding five hundred million dollars, to which notes all of the following apply:

	1.	The notes are rated at the time of purchase in the highest classification established by at least two (2) nationally recognized standard rating services.

	2.	The aggregate value of the notes does not exceed ten percent (10%) of the aggregate value of the outstanding commercial paper of the issuing corporation.

	3.	The notes mature not later than two hundred seventy days after purchase.

	4.	The investment in commercial paper notes of a single issuer shall not exceed in the aggregate five percent (5%) of interim moneys available for investment at the time of purchase.

B.	Bankers acceptances of banks that are insured by the Federal deposit insurance corporation and that mature not later than one hundred eighty days after purchase.

	No investment shall be made pursuant to 135.14 (B)(7) ORC unless the District Treasurer has completed additional training for making the investments authorized by 135.14 (B)(7). The type and amount of additional training shall be approved by the treasurer of state and may be conducted by or provided under the supervision of the treasurer of state.

C.	Interim deposits in the eligible institutions applying for interim moneys as provided in section 135.08 ORC.


	D.	No-load money market mutual funds rated in the highest category by at least one nationally recognized rating agency, investing exclusively in the same types of eligible securities as defined (B)(1) or (B)(2) under 135.14 ORC and repurchase agreements secured by such obligations. Eligible money market funds shall comply with 135.01 ORC, regarding limitations and restrictions.

	E.	Repurchase agreements with any eligible institution mentioned in section 135.03 ORC, or any eligible securities dealer pursuant to Section 135.14 (M), except that such eligible securities dealers shall be restricted to primary government securities dealers. Repurchase agreements will settle on a delivery vs payment basis with collateral held in safekeeping by a third party custodian as agreed to by the District. The market value of securities subject to a repurchase agreement must exceed the principal value of the repurchase agreement by at least two percent (2%) and be marked to market daily. The District reserves the right to require an additional percentage of collateral securing such repurchase agreements. Prior to the execution of any repurchase agreement with an eligible dealer, a maser repurchase agreement will be signed by the District and the eligible dealer.

	F.	The state treasurer’s investment pool (STAR OHIO), pursuant to Section 135.45 of the Ohio Revised Code and any other investment option offered by the treasurer of state.

	G.	The final maturity of all eligible investments is five (5) years.

Prohibited Investments:

	A.	The use of derivative securities, as defined in 135.14 (C), is expressly prohibited.

	B.	A repurchase agreement under the terms of which the District agrees to sell securities to a purchaser and agrees with that purchaser to unconditionally repurchase those securities (reverse repurchase agreement).


	C.	The issuance of taxable notes for the purpose of arbitrage.

	D.	The use of leverage, in which the District uses its current investment assets as collateral for the purpose of purchasing other assets.

	E.	Contracting to sell securities, not owned by the District, for the purpose of purchasing such securities at a later date on the speculation that bond prices will decline (short selling).

	F.	An investment into a fund established by another subdivision, treasurer, governing board, or investing authority, if that fund was established for the purpose of investing the public monies of other subdivisions.

Safekeeping and Custody

Securities purchased for the District will be held in safekeeping by a qualified trustee, as defined in Section 135.37 ORC (hereinafter referred to as the "Custodian"). Securities held in safekeeping by the custodian will be evidenced by monthly statement describing such securities. The custodian may safekeep the District’s securities in (1) Federal Reserve Bank book entry form; (2) Depository Trust Company (DTC) book entry form in the account of the custodian or the custodian’s correspondent bank; or (3) Non-book entry (physical) securities held by the custodian or the custodian’s correspondent bank. All securities transactions will settle using standard delivery-vs-payment (DVP) procedures. The records of the custodian shall identify such securities in the name of the District.

Broker/dealer firms used by the District or broker/dealer firms used by the District’s designated investment advisor to purchase or sell investment assets shall not hold any such investment assets in safekeeping. All investment assets of the District will be held in safekeeping by a custodian bank where such custodian bank and the District have entered into a custodian agreement.

Investment Accounting and Portfolio Reporting

The District shall maintain an inventory of all portfolio assets. A description of each security will include security type, issue/issuer, cost (original purchase cost or current book value), par value (maturity value), maturity date, settlement date (delivery versus payment date of purchased or sold securities), and any coupon (interest) rate. The investment report will also include a record of all security purchases and sales. Regularly issued reports will include a monthly portfolio report and a quarterly portfolio report, detailing the current inventory of all securities, all investment transactions, any income received (maturities, interest payments, and sales), and any expenses paid. The report will also include the purchase yield of each security, the average-weighted yield and average-weighted maturity of the portfolio.

Any premium paid over par may be amortized equally during the life of the investment as a deduction from semi-annual or annual interest payment(s) received each year, or such premium paid may be amortized at the final maturity date of the investment. Any discount from par will be recognized at the final maturity date of the investment.

Investment Advisors, Qualified Dealers and Financial Institutions

The District may retain the services of a registered investment advisor. The investment advisor will manage the District’s portfolio and will be responsible for the investment and reinvestment of the District’s investment assets, including the execution of investment transactions. Upon the request of the Treasurer, the investment advisor will attend Board meetings to discuss all aspects of the District’s portfolio, including market conditions affecting the value of the District’s investments.

The investment advisor may transact business (execute the purchase and/or sale of securities) with eligible Ohio financial institutions, primary securities dealers regularly reporting to the New York Federal Reserve Bank, and regional securities firms or broker dealers licensed with the Ohio Department of Commerce, Division of Securities, to transact business in the State of Ohio.

The District’s designated investment advisor may, at any time, add or delete broker/dealers or financial institutions regarding the execution of purchase and sale transactions. All such broker/dealers and financial institutions transacting investment business with the District are required to sign the approved investment policy as an acknowledgment and understanding of the contents of said policy.

Under no circumstances will brokers or broker/dealer firms act as an investment advisor or in a similar capacity as an investment advisor, either directly or indirectly, if such broker/dealers participate in transaction business (purchase and sale of securities) with the District or the District’s designated investment advisor.

Sale of Securities Prior to Maturity

Portfolio assets may be liquidated or sold prior to maturity under the following conditions:

	A.	To meet additional liquidity needs.

	B.	To purchase another security to increase yield or current income.

	C.	To purchase another security to lengthen or shorten the average maturity of the portfolio.

	D.	To realize any capital gains and/or income.

	E.	To change or modify asset allocation.

Such transactions may be referred to as a "sale and purchase" or a "bond swap". For purposes of this section, redeemed shall also mean "called" in the case of a callable security.

Procedures for the Purchase and Sale of Securities

Securities will be purchased or sold through approved Broker/dealers. Investment transactions will be communicated by email transmission to designated District Officials or to designated District Staff. A purchase or sale of securities will be represented by transaction advises issued by the District’s investment advisor which will describe the transaction, including par value, coupon (if any), maturity date, and cost. An electronic advice will also be transmitted to the District’s designated custodian bank and will serve as an authorization to the custodian to receive or deliver securities versus payment. Confirmation advices, representing the purchase or sale of securities, will be issued by the eligible broker/dealer and sent to designated District Officials or to designated District Staff. Copies of such advices will be sent to the District’s investment advisor.

Statements of Compliance

This investment policy has been approved by the Investment Board and filed with the Auditor of State, pursuant to 135.14 (O)(1) ORC.

All brokers, dealers, and financial institutions executing transactions initiated by the District or the District’s investment advisor are required to sign the approved investment policy. Investment policies (signed by such brokers, dealers, and financial institutions) will be filed with the District. The District’s investment advisor is registered with the Securities and Exchange Commission and possesses public funds investment management experience, specifically in the area of state and local government investment portfolios, as provided under Ohio law. The investment advisor will also sign the approved investment policy and the signed policy will be filed with the District.

Any amendments to this policy will be filed with the Auditor of State (Attn: Clerk of the Bureau, P.O. Box 1140, Columbus, OH, 43216-1140) within fifteen (15) days of the effective date of the amendment.

The following person has signed, herein, this approved investment policy of the Trimble Local School District. Having read the policy’s contents, the following representative(s), on behalf of their entities, thereby acknowledge comprehension and receipt:

__________________________________________________

Name of Broker/Dealer Firm

Name of Financial Institution

Name of Registered Investment Advisor Firm

__________________________________________________

Name of Registered Representative (Broker/Dealer)

Officer of Financial Institution Representative

Officer of Registered Investment Advisor

__________________________________________________ ____________________

Signature of Registered Representative Date

Signature of Financial Institution Officer

Signature of Registered Investment Advisor

Revised 10/9/14
Revised 1/7/16