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Investments Procedural Directive

Definitions

For purposes of this procedural directive, “investment advisor” means an independent third party contractor who provides services to the district regarding investments.

For purposes of this procedural directive, “investment officer” means the chief financial officer and any designee the chief financial officer deems appropriate and necessary to implement a sound investment strategy.

For purposes of this procedural directive, “liquidity” refers to the ability of the district to convert portfolio assets to cash on an “as needed” basis.

General Provisions

The objective of this Investment Procedural Directive is to invest all money not immediately needed for the operations of Albuquerque Public Schools and to enhance district revenues.  The superintendent may authorize an investment advisor possessing discretionary investment authority to be responsible for the investment of the district’s funds.

All investments made shall adhere to the following fundamental principles: legality, safety, liquidity and return.

Legality is imperative and shall govern the implementation of the investments in the district and this procedural directive.  New Mexico state statutes, in particular §6-10-1 et. seq. NMSA 1978 and §22-8-37 through §22-8-42 NMSA 1978, shall define the legal investment vehicles for all invested funds.  This procedural directive shall further define the parameters for the different types of funds to be invested investments by the district, as stated in the “Process” subsection of this procedural directive.

Safety of principal, along with legality, shall be considered the most important objective of the investment process.  No investment transaction shall be undertaken that jeopardizes the total principal position of the overall portfolio.

The district’s investment portfolio shall have sufficient liquidity to meet anticipated cash flow requirements as determined and projected by the chief financial officer and/or his/her designee(s).

Process

The superintendent, or his/her designee, shall implement procedures contained in this procedural directive for governance of the investment activities of Albuquerque Public Schools.  These investment procedures shall apply to all financial assets of the district invested by the chief financial officer and include, but are not limited to:

  • Capital improvement funds, including bond proceeds
  • Insurance funds
  • General funds
  • Special revenue funds

The specific strategy implemented for investment of the different funds listed above shall be separated by fund type.  The chief financial officer and the district’s finance staff shall work directly with the investment advisor to formulate appropriate investment strategies for the different fund types.

Reports to the Board of Education

The chief financial officer shall report the status of district investments to the Board of Education at least quarterly.  The report shall, at a minimum, include information regarding the return on investments in the immediately preceding quarter, the stability and success of the overall investment program and the strategic plan for investments in the immediately following quarter.  The Board of Education may take action to approve, amend or deny the strategy for the next quarter.

Investment Officer

Duties of the investment officer shall include:

  • Implementation of the Investment Procedural Directive.
  • The timely deposit and safekeeping of all monies of the district.
  • Interaction with the investment advisor regarding any changes in the investment of the district’s available funds.
  • Developing and maintaining an ongoing cash management program to estimate cash balances available for the purpose of investment.
  • Preparation of monthly investment report, via the investment advisor, which shall include:
    • schedule of investments by type, purchase date, cost, value at par, interest rate, maturity date, yield to maturity, and performance vs. benchmark.
    • current or anticipated issues or topics regarding any investment matters.
  • Review of the investment of funds quarterly with the investment advisor.

Eligible Investment Instruments

Eligible investments shall be those listed in state law and regulation.

The district recognizes that any portfolio of marketable investment securities shall be subject to interest rate risk.  The investment officer, in an attempt to limit the possibility of loss due to interest rate fluctuations, shall provide guidance to the investment advisor to match specific investments with their anticipated cash requirements.

Scheduling of Investment Maturities

Investment maturities for cash balances shall be scheduled to coincide with projected cash flow needs, taking into account expenditures as well as considering anticipated revenue.

Specific restricted funds may be invested for longer time periods not to exceed twenty (20) years, whenever the investment officer approves the investment.  The investment officer recognizes that longer maturities normally produce higher investment returns but may be subject to principal loss if sold prior to maturity in an increased interest rate environment.

Custody of Funds

All investment securities shall be held in third-party custodial accounts.  The custodian shall provide monthly reports to the district listing the specific securities by CUSIP number.

Prudence

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 probable income to be derived.

Ethics and Conflict of Interest

The investment officer shall refrain from personal business activity that could conflict with proper execution of the investment of the district’s funds.

Additional Provisions

Monitoring shall be done at least monthly and more often as economic conditions warrant by using appropriate investment reports provided from the investment advisor.

In addition to the quarterly report required by the New Mexico Public Education Department, a comprehensive report on all investment activities shall be presented annually to the investment officer.  The annual report shall include a review of the activities, portfolio yield, procedure/strategy changes, and improvements to enhance the investment of funds.

Certifications

The investment advisor shall provide a certification in the following form:

Investment advisor hereby certifies that they have read and understand the Investment Procedural Directive and relevant New Mexico Statutes.

Name: ________________________________

Title: _________________________________

Date: ________________________________

Administrative Position: Chief Financial Officer

Department Director: Executive Director of Accounting

References

Legal Cross Ref.:

  • §6-10-1 et. seq. NMSA 1978
  • §22-8-37 through §22-8-42 NMSA 1978

Board Policy Cross Ref.:

Procedural Directive Cross Ref.:

NSBA/NEPN Classification: DA

Introduced: July 19, 2011
Adopted: August 19, 2011

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