Section 4:30 Addendum

Northbrook School District 27 Header
February 2014

Northfield Township School Treasurer: INVESTMENT of DISTRICT FUNDS

In accordance with the Illinois Public Funds Investment Act, 30 ILCS 235/0/01 et seq. (the "Act"), the Northfield Township School Treasurer and/or the Assistant Treasurers (the "Treasurer") shall maintain a set of procedures for the investment of school district funds that includes the following elements:

  1. A listing of authorized investments.
  2. The standard of care that must be maintained by the persons investing the public funds.
  3. Investment and diversification guidelines that are appropriate to the nature of the funds, the purpose for the funds, and the amount of the public funds within the investment portfolio.
  4. Guidelines regarding collateral requirements, if any, for the deposit of public funds in a financial institution made pursuant to the Act, and, if applicable, guidelines for contractual arrangements for the custody and safekeeping of that collateral.
  5. A system of internal controls and written operational procedures designed to prevent losses of funds that might arise from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the district.
  6. Performance measures that are appropriate to the nature of the funds, the purpose for the funds, and the amount of the public funds within the school district's investment portfolio.
  7. Appropriate periodic review of the investment portfolio, its effectiveness in meeting the school district's needs for safety, liquidity, rate of return, and diversification, and its general performance.
  8. At least quarterly written reports of investment activities by the Treasurer for submission to the Board of Education and the superintendent, including information regarding securities in the portfolio by class or type, book value, income earned, and market value as of the report date.
  9. A procedure for the selection of investment advisors, money managers, and financial institutions.
  10. A policy regarding ethics and conflicts of interest

The treasurer of the school district shall establish and submit such procedures for the School Trustee's approval and shall periodically review and propose needed amendments thereto. Such procedures and this policy shall be kept available at all times for public review at the school district's administrative offices.

Selection of Depositories, Investment Managers, Dealers, and Brokers

The Chief Investment Officer shall establish a list of authorized depositories, investment managers, dealers and brokers based upon the creditworthiness, reputation, minimum capital requirements, qualifications under State law, as well as a long history of dealing with public fund entities. The Board will review and approve the list at least annually.

In order to be an authorized depository, each institution must submit copies of the last 2 sworn statements of resources and liabilities or reports of examination that the institution is required to furnish to the appropriate State or federal agency. Each institution designated as a depository shall, while acting as such depository, furnish the District with a copy of all statements of resources and liabilities or all reports of examination that it is required to furnish to the appropriate State or federal agency.

The above eligibility requirements of a bank to receive or hold public deposits do not apply to investments in an interest-bearing savings account, interest-bearing certificate of deposit, or interestbearing time deposit if: (1) the District initiates the investment at or through a bank located in Illinois, and (2) the invested public funds are at all times fully insured by an agency or instrumentality of the federal government.

The District may consider a financial institution’s record and current level of financial commitment to its local community when deciding whether to deposit funds in that financial institution. The District may consider factors including:

  1. For financial institutions subject to the federal Community Reinvestment Act of 1977, the current and historical ratings that the financial institution has received, to the extent that those ratings are publicly available, under the federal Community Reinvestment Act of 1977;
  2. Any changes in ownership, management, policies, or practices of the financial institution that may affect the level of the financial institution’s commitment to its community;
  3. The financial impact that the withdrawal or denial of District deposits might have on the financial institution;
  4. The financial impact to the District as a result of withdrawing public funds or refusing to deposit additional public funds in the financial institution; and
  5. Any additional burden on the District’s resources that might result from ceasing to maintain deposits of public funds at the financial institution under consideration.

Collateral Requirements

All amounts deposited or invested with financial institutions in excess of any insurance limit shall be collateralized in accordance with the Public Funds Investment Act, 30 ILCS 235/. The Superintendent or designee shall keep the Board informed of collateral agreements.

Safekeeping and Custody Arrangements

The preferred method for safekeeping is to have securities registered in the District’s name and held by a third-party custodian. Safekeeping practices should qualify for the Governmental Accounting Standards Board Statement No. 3 Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, Category I, the highest recognized safekeeping procedures. Controls and Report The Chief Investment Officer shall establish a system of internal controls and written operational procedures to prevent losses arising from fraud, employee error, misrepresentation by third parties, or imprudent employee action.

The Chief Investment Officer shall provide a quarterly investment report to the Board. The report will: (1) assess whether the investment portfolio is meeting the District’s investment objectives, (2) identify each security by class or type, book value, income earned, and market value, (3) identify those institutions providing investment services to the District, and (4) include any other relevant information. The investment portfolio’s performance shall be measured by appropriate and creditable industry standards for the investment type.

The Board will determine, after receiving the Superintendent’s recommendation, which fund is in most need of interest income and the Superintendent shall execute a transfer. This provision does not apply when the use of interest earned on a particular fund is restricted.

Ethics and Conflicts of Interest

The Board and District officials will avoid any investment transaction or practice that in appearance or fact might impair public confidence. Board members are bound by the Board policy 2:100, Board Member Conflict of Interest. No District employee having influence on the District’s investment decisions shall:

  1. Have any interest, directly or indirectly, in any investments in which the District is authorized to invest,
  2. Have any interest, directly or indirectly, in the sellers, sponsors, or managers of those investments, or
  3. Receive, in any manner, compensation of any kind from any investments in that the agency is authorized to invest.
Revenue from Federal and State Sources
To the extent deemed appropriate, the Board shall seek funding for budget items from applicable Federal and State sources.