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9.6 - Investment/Cash Management

9.6 - Investment/Cash Management

SERIES 9 - FINANCES AND ACCOUNTING

The Board of Directors (BOD) recognizes the importance of prudent and profitable investment of Liberty Common School (School) monies and its responsibility in overseeing this part of the School’s financial program. This policy shall apply to the revenue from investment of all financial assets and all funds of Liberty Common School.

All School funds not currently needed shall be invested by the Director of Finance, or position identified by BOD, as directed by the Financial Advisory Committee (FAC), , under this policy in accordance with state law (including but not limited to the legal references to Colorado Revised Statutes at the end of this policy) and in a manner designed to accomplish the following objectives:
 

  1. Legal Investments - ensure that the funds are deposited and invested in accordance with governing law and the Board’s direction as set forth in this policy. The School shall comply with state statute CRS 24-75-601.
  2. Safety of Funds – ensure the School does not enter into investment transactions which may expose the School financial assets to undue credit risk, adhering to CRS 24-75- 601.1. Generally, funds will be invested in Banks that accept public funds for the purposes of investing them in accordance to state statute CRS 24-75-601 or COLOTRUST, which is a Colorado local government liquid asset trust. The School shall investigate the condition of financial institutions before committing School funds.
  3. Liquidity of Funds – ensure adequate funds are kept available to pay the School’s financial obligations when due. Before entering into any investment transaction, the cash needs of the School shall be determined and taken into account.
  4. Yield - To earn a competitive market rate of return from legally permitted investments on funds available for investment throughout the budget cycle, subject to the School’s investment risk constraints and cash flow needs.
  5. Reporting – ensure the BOD is kept informed of all investments and yields through regular reports. These reports shall be formatted in a manner that allows the BOD to evaluate the success of its investment practices in light of its stated objectives.

School investments shall be sufficiently diverse to protect against the risk of loss resulting from over-concentration of assets in a specific maturity, issue, class or institution.

School investments shall be sufficiently liquid to allow continuity of the School’s fiscal operations without the need for loans when unexpected expenses or other exigent circumstances arise. To assist in this regard, the Director of Finance shall cause the School to maintain up-to-date cash-flow projections that provide guidance as to when cash flow needs to be supplemented with maturing investments.

In order to effectively use the School’s cash resources, all moneys (unless otherwise restricted by law) may be pooled into one investment account and accounted for separately. The investment income derived from such a pooled account shall be distributed to various School funds and accounts in accordance with governing law as determined by the Director of Finance and/or directed by the FAC and approved by the BOD.

Transaction Authorization and Custodial Responsibility

Authorization Thresholds. Investments considered as part of the Operating Fund, Restricted Fund or Endowment Fund are managed directly by the Director of Finance. Any investment transactions under consideration that may represent a departure from current investments, as previously reviewed by the FAC, must be recommended by the FAC and approved by the BOD. The Director of Finance will have authority to roll over any existing securities within the Operating and Restricted Funds assuming reasonable market conditions. In these types of security transactions, no authorization thresholds apply. New money received to the school in the amount of $100,000 or greater, which may represent a short-term or long-term investment opportunity, will require the Director of Finance to seek advice from the FAC as to the most suitable investment instrument to utilize.

No School employee shall make any investment decision or conduct any investment transaction on behalf of the School except as authorized under governing law and the terms of this policy. Employees owe a fiduciary duty to the School in connection with such investment decisions and transactions as provided by Colorado law, which includes exercising the judgment and care under the circumstances then prevailing that persons of prudence, discretion and intelligence exercise in the management of the property of another, not in regard to speculation but in regard to the permanent disposition of funds, considering the probable income as well as the probable safety of capital.

A professional investment manager or advisor may be recommended for engagement by the FAC with final approval from the BOD. The professional manager is to be aware of and follow all the provisions of this policy unless specifically exempted by written notification from the BOD. All compensation rates and terms will be set by the FAC and approved by the BOD, at the time of engagement. Investment managers and advisors shall be subject to periodic, at least annual, performance reviews by the FAC using performance measurements mutually agreed upon.

The School’s investments shall be accounted for in accordance with generally accepted accounting principles (“GAAP”) and the accounting standards promulgated by the Governmental Accounting Standards Board (“GASB”), and shall be included in the annual audit of the School’s financial statements conducted by an outside auditor. In addition, the Director of Finance shall cause monthly performance reports or statements of the School’s investments, including a summary of earnings and rate of return for each investment in the current month and for the term of each investment to date, to be prepared. The BOD shall be kept informed of the School’s investments, earnings and rates of return on no less than a quarterly basis in a form reasonably acceptable to the BOD.

It is expected that the provisions of this policy will be reviewed annually by the FAC to insure timeliness and relevance to current investment goals and environmental conditions.

LEGAL REFS: C.R.S. 11-10.5-101 et seq. (Public Deposit Protection Act), C.R.S. 11-60- 101 et seq. (Financial Institutions, US Agency Obligations), C.R.S. 15-1-304 (Fiduciary Standard for Investments), C.R.S. 24-75-601 et seq. (State Funds, Legal Investments)

Adopted by Board: 11/20/2003
Revised: 3/26/2020


Resources and references used:

Colorado Department of Education Financial Policies and Procedures Handbook Fiscal Year 2016-17 Edition

Poudre School District Fiscal Management: DFA/DFAA – Revenues from Investments/use of Surplus Funds