Austin ISD
227901

OTHER REVENUES:
INVESTMENTS


CDA
(LOCAL)


PURPOSE The policy of the District is to invest public funds in a manner that will provide the highest reasonable market return with the maximum security while meeting the daily cash flow demands of the District and conforming to all state law and local requirements governing the investment of public funds.
SCOPE This investment policy covers all financial assets under the direct authority of the District. These funds include the General, Special Revenue, Debt Service, Internal Service, and Trust and Agency funds. The policy does not cover student activity funds or funds used for other school-related clubs and associations. [See CFD (LOCAL)]
INVESTMENT STRATEGY STATEMENTS Investments of the following fund categories shall be consistent with this policy and in accordance with the strategy defined below.
  1. Operating Funds (General, Special Revenue, Internal Service, and Trust and Agency Funds): Investment strategies for operating funds and pooled funds containing operating funds shall have as the primary objectives safety, investment liquidity, and maturity sufficient to meet anticipated cash flow requirements.
    The secondary objective shall be to create a diversified portfolio structure that will experience minimal volatility during economic cycles. This may be accomplished by purchasing high-quality, short-term to medium-term securities that will complement each other in a laddered or liability-matching portfolio structure. The maximum weighted average maturity of the funds shall be one year.
    1. Debt Service Funds: Investment strategies for debt service funds shall have as the primary objective the assurance of investment liquidity adequate to cover the debt service obligation on the required payment date. This may be accomplished by purchasing high-quality, short-term to medium-term securities that may be used to target each successive payment date. The use of a liability-matching portfolio structure shall help to accomplish this goal. Each successive debt service payment date shall be fully funded before longer securities are purchased. The maximum weighted average maturity for these funds shall be one year.
    2. Capital Project Funds: Investment strategies for bond proceeds shall have as the primary objective the ability to generate a dependable revenue stream from securities with a low degree of volatility, and be able to meet the liquidity requirements of the capital project. Except as may be required by the bond ordinance specific to an individual issue, securities shall be of high-quality, with short-term to medium-term maturities. Projected cash flow needs shall be matched with investment liquidity. The use of a laddered or liability-matching portfolio structure shall help to accomplish this goal. All expected liabilities shall be matched and the maturity of any investment shall not extend past the last expected expenditure scheduled date. Based on expenditure schedules, the maximum weighted average maturity for the funds shall not exceed one and one-half years.
AUTHORIZED INVESTMENTS From those investments authorized by law and described in CDA(LEGAL), the Board shall permit investment of District funds in the following investment types only, consistent with the strategies and maturities defined in this policy:
  1. Obligations of the United States or state of Texas or its agencies and instrumentalities and political subdivisions, not to exceed two years to stated maturity, including collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States as permitted by Government Code 2256.009, but excluding mortgage-backed securities listed in Government Code 2256.009 (b).
  2. Two types of mutual funds as defined by Government Code 2256.014: money market mutual funds and no-load mutual funds.
  3. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of the state of Texas or the United States or their respective agencies and instrumentalities, not to exceed one year to stated maturity.
  4. Fully collateralized certificates of deposit from banks doing business in Texas, with a stated maturity not to exceed six months.
  5. Fully collateralized repurchase agreements permitted by Government Code 2256.011 not to exceed two years unless matched in a flex repurchase agreement to a set expenditure schedule for bond funds.
  6. Banker's acceptances as permitted by Government Code 2256.012 not to exceed 270 days to maturity.
  7. Commercial paper as permitted by Government Code 2256.013 not to exceed 270 days to stated maturity.
  8. Public funds investment pools as defined by Government Code 2256.016-2256.019.
DIVERSIFICATION The investment portfolio shall be diversified to eliminate the risk of loss resulting from overconcentration of assets in a specific maturity, a specific issue, a specific class of securities, or a specific institution.
SELECTION OF AUTHORIZED BROKERS Prior to transacting any business with the District, brokers, dealers, banks and pools must submit District-required written documents and annually audited financial statements to the District and be in good standing with the National Association of Securities Dealers. Representatives of brokers/dealers shall be registered with the Texas State Securities Board. [See CDA(LEGAL) at SELLERS OF INVESTMENTS]
BOARD APPROVAL
Based on an annual evaluation, all business organizations that want to conduct business with the District shall be reviewed and their names submitted for Board approval.
Approval shall be based on the following criteria:
  1. The number of transactions competitively won.
  2. Prompt and accurate confirmation of transactions.
  3. Efficient delivery of securities.
  4. Accurate market information.
  5. Account servicing.
Before doing business with the District, all firms, that is, brokers, dealers, banks, funds, and pools, shall provide written certification that the District's policy has been reviewed and all transactions with the District shall follow that policy. [See CDA(LEGAL)]
SOLICITING BIDS In order to get the best return on its investments, the District may solicit bids in writing, by telephone, or electronically.
Market quotations shall be accepted as needed by District investment officers to monitor market conditions and for investment decisions.
COLLATERAL Collateral shall be required on all time and demand deposits and repurchase agreements. The level of collateral shall be at least equal to 102 percent of the aggregate market value of the deposit or investment, including accrued interest, less any amount insured by the Federal Deposit Insurance Corporation (FDIC) or its successor. Evidence of the pledged collateral shall be documented by original safekeeping receipts showing a pledge or ownership by the District. All transactions shall take place under an executed tri-party custodial agreement or a PSA master repurchase agreement with the terms for the pledged collateral clearly referenced in the agreement. Collateral shall be reviewed monthly for time and demand deposits and daily for repurchase agreements to assure that the market value of the securities pledged equals or exceeds the related deposit or investment balance. Liability for monitoring collateral market value and maintaining margins shall fall to the District's counterparty.
Collateral requirements shall be in accordance with Government Code Chapters 2256 and 2257. Collateral underlying repurchase agreements shall be limited to direct obligations of the United States or its agencies or instrumentalities. The District shall not accept collateralized mortgage obligations as collateral on repurchase agreements. All collateral approved by the Public Funds Collateral Act, found in Government Code Chapter 2257, shall be authorized for time and demand deposits. Collateralized mortgage obligations so pledged shall require 105 percent collateralization.
SAFEKEEPING All assets, including cash, collateral, and securities of the District shall be held by an independent third party approved by the District. The District shall retain clearly marked original safekeeping receipts providing proof of the District's ownership or pledging. The District may delegate to an investment pool or mutual fund the authority to hold legal title as custodian of investments purchased with District funds.

All investment transactions, except investment pool funds and mutual funds, shall be conducted on a delivery vs. payment (DVP) basis.

METHODS OF MONITORING MARKET PRICE The methods and sources to be used to monitor the price of investments that have been acquired with public funds shall be the following:
  1. Primary broker/dealers.
  2. Regional broker/dealers.
  3. From the approved broker/dealer list.
  4. Austin area banks.
  5. Computer pricing software.
INVESTMENT OFFICERS The Superintendent or other person(s) designated by Board resolution shall serve as the investment officers of the District and shall be responsible for the investment of District funds consistent with the District's investment policy. Each person designated shall receive the training required for investment officers under the Public Funds Investment Act. [See CDA(LEGAL)]
REPORTING The investment officers shall prepare and submit to the Board at least quarterly a written report of investment transactions for all funds covered by this policy for the preceding period in accordance with the Public Funds Investment Act.


DATE ISSUED: 02/14/2000
NEWLPM
CDA(L)-X

This online presentation of your district's policy is an electronic representation of TASB's record of the district's currently adopted policy manual. It does not reflect updating activities in progress. The official, authoritative manual is available for inspection in the office of the Superintendent. [See BF (LOCAL) for further information.]