Scope

This  Deposits  and  Investments  Regulation  applies  to  all  District  funds  and  other  financial resources available to the District for deposit and/or investment for the benefit of the District or other individuals or entities ("district funds" or "funds").

 

Objectives

The District's deposit and investment objectives are, in priority order, as follows:

 

1)         To conform to all applicable federal, state, and other legal requirements (legality);

2)         To adequately safeguard principal (safety);

 

3)         To provide sufficient liquidity to provide for timely payment of all operating, capital and other expenditures (liquidity); and

 

4)         To obtain a reasonable rate of return dependent on market conditions (yield).

 

Delegation of Authority

Pursuant to the Board's policy regarding District investments, responsibility for administration of the investment program is delegated to the School Business Official and/or Treasurer.

 

Prudence  

All participants in the District's deposit and investment process shall act responsibly as custodians of the public trust and shall avoid any transaction that might impair public confidence in the District to govern effectively.

 

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 safety of the principal as well as the probable income to be derived.

All participants involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

 

Diversification

The District will strive to diversify its deposits and investments by financial institution, by investment instrument, and by maturity scheduling.

 

Internal Controls

It is the policy of the District for all moneys collected by any officer or employee of the District to transfer those funds to the School Business Official or Treasurer, as appropriate, within five (5) working days of deposit, or within the time period specified in law, whichever is shorter.

 

The School Business Official is responsible for establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly, and are managed in compliance with applicable laws and regulations.

  

Designation of Depositories

The Board of Education of the District shall by resolution designated one or more commercial banks and/or trust companies (as defined in General Municipal Law section 10) (a "bank") for the deposit, in the name of the District, of District funds, the disposition of which is not otherwise provided for by law. Such resolution shall specify the maximum amount which may be kept from deposit at any time in each bank. Such designations and amounts may be changed at any time by further resolution.

 

These Depositories may vary from year to year and are reestablished yearly at the Reorganization Meeting.

 

Securing Deposits and Investments

 

All deposits and investments at a bank or trust company, including all demand deposits, certificates of deposits, and special time deposits (hereinafter, collectively, "deposits") made by officers of the District that are in excess of the amount insured under the provisions of the Federal Deposit Insurance Act, including pursuant to a Deposit Placement Program in accordance with law, shall be secured by:

 

1)      A pledge of "eligible securities" with an aggregate "market value" (as provided by Section 10 of the General Municipal Law) that is as least equal to the aggregate amount of deposits by the officers.

 

2)      A pledge of a pro rata portion of a pool of eligible securities, having in the aggregate a market value at least equal to the aggregate amount of deposits from all such officers within the state at the bank or trust company.

 

3)      An "eligible surety bond" payable to the District for an amount at least equal to one hundred percent (100%) of the aggregate amount of deposits and the agreed-upon interest, if any, executed by an insurance company authorized to do business in New York State, whose claims-paying ability is rated in the highest rating category by at least two (2) nationally recognized statistical rating organizations. The governing board shall approve the terms and conditions of the surety bond.

 

4)      An "eligible letter of credit," payable to the District as security for the payment of one hundred forty percent (140%) of the aggregate amount of deposits and the agreed-upon interest, if any. An "eligible letter of credit" shall be an irrevocable letter of credit issued in favor of the (unit of government), for a term not to exceed ninety (90) days, by a qualified bank (other than the bank where the secured money is deposited). A qualified bank is either one whose commercial paper and other unsecured short-term debt obligations (or, in the case of a bank which is the principal subsidiary of a holding company, whose holding company's commercial paper and other unsecured short-term debt obligations) are rated in one of the three (3) highest rating categories by at least one (1) nationally organized statistical rating organization, or one that is in compliance with applicable federal minimum risk-based capital requirements.

 

5)      An "irrevocable letter of credit" issued in favor of the District by a federal home loan bank whose commercial paper and other unsecured short-term debt obligations are rated in the highest rating category by at least one (1) nationally recognized statistical rating organization, as security for the payment of one hundred percent (100%) of the aggregate amount of deposits and the agreed-upon interest, if any.

 

Safekeeping and Collateralization

Eligible securities used for collateralizing deposits shall be held by the depository and/or a third party bank or trust company subject to security and custodial agreements.

The security agreement shall provide that eligible securities are being pledged to secure District deposits together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposits upon default. It shall also provide the conditions under which the securities may be sold, presented for payment, substituted, or released, and the events which will enable the local government to exercise its rights against the pledged securities.

 

In the event that the securities are not registered or inscribed in the name of the District, such securities shall be delivered in a form suitable for transfer or with an assignment in blank to the District or its custodial bank. Whenever eligible securities delivered to the custodial bank or trust company are transferred by entries on the books of a federal reserve bank or other book-entry system operated by a federally regulated entity without physical delivery of the evidence of the obligations, then the records of the custodial bank or trust company shall be required to show, at all times, the interest of the District in the securities (or the pro rata portion of a pool of eligible securities) as set forth in the security agreement.

 

The custodial agreement shall provide that securities held by the bank or trust company, or agent of and custodian for, the District, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement should also describe that the custodian shall confirm the receipt, substitution, or release of the securities. The agreement shall provide for the frequency of revaluation of eligible securities and for the substitution of securities when a change in the rating of a security may cause ineligibility. Such agreement shall include all provisions necessary to provide the District a perfected interest in the securities and to otherwise secure the District's interest in the collateral, and may contain other provisions the District deems necessary.

 

Permitted Investments

The School Business Official is authorized to invest moneys not required for immediate expenditure for terms not to exceed its projected cash flow needs in the following types of investments:

 

1)      Special time deposit accounts;

 

2)      Certificates of deposit;

 

3)      Deposit placement programs, as authorized by law;

 

 

4)      Obligations of the United States of America;

Obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America;

 

6)      Obligations of the State of New York;

 

7)      Obligations issued pursuant to Local Finance Law Section 24.00 or 25.00 (with approval of the State Comptroller) by any municipality, school district, or district corporation other than the District;

 

8)      Obligations of this District, but only with any moneys in a reserve fund established pursuant to General Municipal Law, Sections 6-d, 6-j, 6-l, 6-m, or 6-n.

 

All investment obligations shall be payable or redeemable at the option of the District within such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable at the option of the District within two (2) years of the date of purchase. Time deposit accounts and certificates of deposit shall be payable within such times as the proceeds will be needed to meet expenditures for which the moneys were obtained, and shall be secured as provided in this administrative regulation.

 

Except as may otherwise be provided in a contract with bondholders or noteholders, any moneys of the District authorized to be invested may be commingled for investment purposes, provided that any investment of commingled moneys shall be payable or redeemable at the option of the District within such time as the proceeds shall be needed to meet expenditures for which such moneys were obtained, or as otherwise specifically provided in General Municipal Law Section 11. The separate identity of the sources of these funds shall be maintained at all times and income received shall be credited on a pro rata basis to the fund or account from which the moneys were invested.

 

Any obligation that provides for the adjustment of its interest rate on set dates is deemed to be payable or redeemable on the date on which the principal amount can be recovered through demand by the holder.

 

Authorized Financial Institutions and Dealers

 

The District shall maintain a list of financial institutions and dealers approved for investment purposes and establish appropriate limits to the amount of investments which can be made with each financial institution or dealer. All financial institutions with which the District conducts business must be credit worthy. Banks shall provide their most recent Consolidated Report of Condition (Call Report) at the request of the District. Security dealers not affiliated with a bank shall be required to be classified as reporting dealers affiliated with the New York Federal Reserve Bank, as primary dealers. The School Business Official is responsible for evaluating the financial position and maintaining a listing of proposed depositories, trading partners and custodians. Such listing shall be evaluated at least annually.

 

Purchase of Investments

The School Business Official is authorized to contract for the purchase of investments:

 

1)      Directly, including through a repurchase agreement, from an authorized trading partner.

 

2)      By participation in a cooperative investment program with another authorized governmental entities pursuant to Article 5-G3-A of the General Municipal Law.

 

All purchased obligations, unless registered or inscribed in the name of the District, shall be purchased through, delivered to, and held in the custody of a bank or trust company. Such obligations shall be purchased, sold, or presented for redemption or payment by such bank or trust company only in accordance with prior written authorization from the officer authorized to make the investment. All such transactions shall be confirmed in writing to the District by the bank or trust company. Any obligation held in the custody of a bank or trust company shall be held pursuant to a written custodial agreement as described in General Municipal Law, Section 10.

 

The custodial agreement shall provide that securities held by the bank or trust company, as agent of and custodian for the District, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement shall describe how the custodian shall confirm the receipt and release of the securities. Such agreement shall include all provisions necessary to provide the District a perfected interest in the securities.

 

Repurchase Agreements

The District may, in its discretion, enter into repurchase agreements in accordance with law and sound fiscal practice.