This investment policy applies to the investment activities of any funds which are or may come under the jurisdiction of the College. Anything in this policy notwithstanding, the mandates of the Illinois Compiled Statues shall take precedence over this policy except where this policy is more restrictive. (Legal Ref.:30 ILCS 235/1 (1992); 110 ILCS 805/3-47 (1992)).
This procedure applies to all funds of the College. These funds are accounted for in the College’s annual financial report and include all restricted, operating, capital, auxiliary, revolving trust and any other funds that may be created from time to time. All transactions involving the funds and related activity of any funds shall be administered in accordance with the provisions of this procedure and the canons of the “prudent person rule.”
The purpose of this College’s Investment Policy is to establish cash management and investment guidelines for the stewardship of public funds that are under the jurisdiction of the College. The specific objectives of this policy are:
- Safety – The safety of principal and the security of monies, whether on hand or invested, shall be the primary concern of the Treasurer in selecting depositories or investments.
- Liquidity – The investment portfolio shall remain sufficiently liquid to meet the College’s reasonably anticipated operating requirements.
- Return – To the extent consistent with safety and the restriction imposed by this policy, The Treasurer shall seek to attain a market average or better rate of return throughout budgetary and economic cycles, taking into account risk, constraints, cash flow, and legal restriction on investment.
- Local Considerations – The Treasurer shall use sound federally insured depositories located within the College District provided that the afore described objectives are met, and such investments would be in compliance with all other conditions and limitations of this Investment Policy.
To assist in attaining the stated objectives, the following guidelines shall be observed.
- Investments shall be undertaken in a manner that seek to insure preservation of capital in the overall portfolio. To avoid unreasonable risks, diversification of investments is required. No one institution shall have more than 75% of the College’s invested funds at any one time.
- The portfolio should remain sufficiently liquid to meet operating requirements, which may be reasonably anticipated. Cash flows shall be reviewed quarterly.
- Investments shall be limited to those permitted by law, to the extent this policy is not more restrictive than the law.
- All funds shall be deposited/invested within three working days.
- When appropriate, investments shall be selected on the basis of competitive bids.
Diversification of the investment portfolio shall be consistent with the objectives described in the Objectives above.
Investment of all funds under the control of the College is the direct responsibility of the Treasurer. The Treasurer shall be responsible for all transactions and shall establish a system of controls for all authorized subordinates who are directly involved in the assistance of such investment activities.
The use of U. S. Treasury bills, average Fed Fund rate, Illinois Funds, or other stable markets can be used to determine whether market yields are being achieved.
The Treasurer should establish annual independent review for internal control, which assures compliance within the investment policy. This will be accomplished with the College’s external auditors.
All investment transactions shall be recorded by the Treasurer or the Treasurer’s staff. A report listing all active investments, location of investments, maturity of investments, interest rate and other pertinent information deemed necessary will be submitted at least quarterly to the board.
Except as may be further limited by these policies, the treasurer shall limit investments of College funds to those permitted in Illinois Compiled Statutes 30 ILCS 235/2. A summary of allowable securities follows:
- Notes, bonds, certificates of indebtedness, treasury bills, or other securities, which are guaranteed by the full faith and credit of the United States of America;
- Bonds, notes, debentures, or other similar obligations of the United States of America or its agencies;
- Interest bearing accounts, certificates of deposit or interest bearing time deposits or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act.
- Short-term obligations (corporate paper) of corporations organized in the United States with assets exceeding $500,000,000 if such obligations are rated at the time of purchase within the three highest classifications established by at least two standard rating services and which mature not later than 270 days from the date of purchase, and such purchases do not exceed 10% of the corporation’s outstanding obligations, or in money market mutual funds registered under the Investment Company Act of 1940.
The Board of Trustees, with the advice of the treasurer, shall select which financial institutions will be eligible depositories for the College district. Any financial institution, upon meeting the requirements of the Illinois Compiled Statues and of this Investment Policy, may request to become a depository for the College funds. The
Board of Trustees will take into consideration security, size, location, financial condition, service, fees, competitiveness, and the community relations involvement of the financial institution when choosing depositories.
Collateralization of Deposits
- To meet the objective of safety of capital, the treasurer will always require deposits in excess of the federally insured amount to be appropriately collateralized to the extent of One Hundred and Ten Percent (110%) and such collateralization shall be evidenced by an approved written agreement.
- Eligible collateral instruments and collateral rates (market value divided by deposit) are as follows:
- Negotiable obligations of the United States Government = 110%
- Negotiable obligations of any agency or instrumentality of the United States Government backed by the full faith and credit of the United States Government = 110%
- Negotiable obligations of the State of Illinois which are rated A or better by Moody or Standard and Poor = 110%
- Negotiable obligations of the College which are rated A or better by Moody or Standard and Poor = 110%
- Maturity of acceptable collateral shall not exceed 120 months.
- The ratio of fair market value of collateral to the amount of funds secured shall be reviewed weekly and additional collateral will be requested when the ratio declines below the level required.
- Safekeeping of Collateral: Third party safekeeping is required for all collateral. To accomplish this, the securities will be held at a safekeeping depository as approved from time to time by the treasurer. Safekeeping will be documented by an approved written agreement. Substitution, exchange or release of securities held in safekeeping may be done upon two (2) days prior written notice to the Treasurer.
Safekeeping of Securities
Unless held physically by the treasurer, all securities shall be kept in appropriate third-party safekeeping. The treasurer will have the sole responsibility for selecting safekeeping agents. Safekeeping will be documented by an approved written agreement.
Investments shall 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 possible income to be derived.
In maintaining its investment portfolio, the treasurer shall avoid any transaction that might impair public confidence in the College.
The above standards are established as standards for professional responsibility and shall be applied in the context of managing the portfolio.
Treasurer and employees of the treasurer acting in accordance with the investment policy and procedures as have been or may be established and exercising due diligence shall be relieved of personal liability for an individual security’s credit risk or market changes.
Only the treasurer, with Board of Trustees approval, is authorized to establish financial accounts for the College. The Board of Trustees will designate the necessary signatory requirements when a College account is established. Facsimile signatures may be authorized by the Board of Trustees. Individuals who are authorized as signatories on College accounts will not be permitted to reconcile bank accounts at any time.
The Corrupt Practice Act
The Illinois Compiled Statutes governs ethics.
The treasurer shall be bonded for the benefit of the College for an amount determined to be reasonable. The surety shall be a corporate surety company.
Revised: December 2014