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SCHOOL DISTRICT INVESTING

SCHOOL DISTRICT INVESTING. Questions & Answers PASBO Annual Conference March 7, 2008 Adele Huntzinger, CPA Asst. Director of Business Services Conestoga Valley School District. Adele Huntzinger, CPA Asst. Director of Business Services Conestoga Valley School District

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SCHOOL DISTRICT INVESTING

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  1. SCHOOL DISTRICT INVESTING Questions & Answers PASBO Annual Conference March 7, 2008 Adele Huntzinger, CPA Asst. Director of Business Services Conestoga Valley School District

  2. Adele Huntzinger, CPA Asst. Director of Business Services Conestoga Valley School District (717)397-2421 ext. 1010 adele_huntzinger@cvsd.k12.pa.us

  3. Authorized Investments • Deposits in Financial Institutions • Short-term Obligations of US Government Agencies • Short-term & long-term Obligations of US Government • Short-term & long-term State & Municipal Bonds • Investment Pools

  4. Deposits in Financial Institutions • Must be insured by FDIC • FDIC limit is $100,000 • Must consider all school district funds when calculating the limit • Amounts above FDIC limit must be collateralized • Specific pledged collateral • Pooled collateral per Act 72 of 1971

  5. Pooled Collateral • Pooled collateral must consist only of investments permitted for school districts • Value of pooled collateral must exceed value of secured deposits • Third party custodian must hold pledged collateral • Recommend confirming collateral annually

  6. Certificates of Deposit • CD should be purchased at amount less than $100,000 to account for accrual of interest income • Recommend receiving interest income from CD monthly or quarterly • Caution when purchasing CDs through different investment companies - Do not buy more than $100,000 CDs from same bank

  7. Short-Term Obligations of US Government Agencies • Short-term defined as 397 days or less • Agencies are not direct obligations of US Treasury • Usually slightly higher interest yield • Long-term investment in agencies not permitted unless backed by full faith and credit of the US Government

  8. Short-Term Obligations of US Government Agencies • Examples of permitted short-term agencies: • Federal Home Loan Banks • Federal Home Loan Mortgage Corp. • Government National Mortgage Association • Federal National Mortgage Association • Student Loan Marketing Association • Federal Farm Credit Bank

  9. Government National Mortgage Association • GNMA is only US Government agency backed by full faith and credit of the US Government • GNMA is only US Government agency that can be invested long term

  10. Short-term & Long-term US Government Obligations • Permitted to invest in US Government Obligations short-term and long-term • Examples: • US Treasury Bill • US Treasury Note • US Treasury Bond

  11. Short-term & Long-term State & Municipal Bonds • Obligations of Commonwealth of PA & its agencies must be backed by full faith & credit of Commonwealth • Obligations of political subdivisions of Commonwealth of PA & their agencies must be backed by full faith and credit of political subdivisions • Permitted to invest short-term and long-term if backed by full faith and credit of Commonwealth of PA, political subdivisions • Interest rates usually lower

  12. Investment Pools • PLIGIT (PA Local Government Investment Trust) • PSDLAF (PA School District Liquid Asset Fund) • Designed for Pennsylvania schools and/or municipalities • Invest according to PA School Code section 440.1

  13. Investment Policy • Investment policy should address: • Legality • Safety • Liquidity • Yield • Diversification • Authority to invest/Delegation • Definition of Short-term, Long-term

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