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HCPSS / POLICIES

Policy 4100 Implementation Procedures - Investment

Policy Document

Implementation Procedures

I. Investment Instruments

While the Howard County Public School System (HCPSS) has the authority to invest its funds in those instruments permissible under state law, the HCPSS will limit its allowable investments to those instruments listed below:

  1. Bonds, notes, certificates of indebtedness, treasury bills or other securities now or hereafter issued by the United States of America, its agencies and allowable instrumentalities.

  2. Interest bearing savings accounts, interest bearing certificates of deposit or interest bearing time deposits, or any other investments constituting direct obligations of any federally insured credit union, bank, savings bank, trust company, or savings and loan association that is authorized to transact business in the state of Maryland.

  3. Certificates of deposit that are insured by an insurer having a claims paying rating which is in the highest or second highest rating category assigned by a nationally recognized rating agency.

  4. Commercial paper meeting the following requirements:

    1. The corporation is organized in the United States.

    2. The obligation at the time of purchase is rated within the highest classifications by at least two of the three standard rating services (Standard and Poor’s, Moody’s, and Fitch Investors Service).

  5. The State of Maryland Local Government Investment Pool (MLGIP).

  6. Savings banks or savings and loan associations, the shares or investment certificates of which are insured by the Federal Deposit Insurance Corporation (FDIC).

II. Collateralization

  1. Time deposits in excess of FDIC insurable limits must be secured by collateral or private insurance to protect public deposits in a single financial institution if it were to default.

  2. Eligible insurers will have a claims paying rate in the highest or second highest rating category assigned by a nationally recognized rating agency.

III. Qualified Financial Institutions and Intermediaries

  1. Depositories – Demand Deposits

    1. Any financial institution selected by the HCPSS will provide normal banking services, including, but not limited to, checking accounts, wire transfers, and safekeeping services.

    2. The HCPSS will not maintain funds in any financial institution that is not a member of the FDIC system. In addition, the school system will not maintain funds in any institution that does not first agree to post required collateral for funds or purchase private insurance in excess of FDIC insurable limits and in amounts acceptable to the school system.

    3. To qualify as a depository, a financial institution must furnish the Superintendent/designee with copies of the latest two statements of condition which it is required to furnish to the Maryland Comptroller of Currency. While acting as a depository, a financial institution must continue to furnish such statements to the Superintendent/designee within 45 calendar days of the end of each year.

    4. Fees for banking services will be mutually agreed to by an authorized representative of the depository bank and the Superintendent/designee on an annual basis. Fees for services will be substantiated by a monthly account analysis.

    5. Each financial institution acting as a depository for the HCPSS will enter into a depository agreement with an authorized school district official that incorporates this policy and these procedures.

  2. Banks and Savings and Loans – Certificates of Deposit

    Any financial institution eligible to be selected for the HCPSS’s competitive certificate of deposit purchase program will:

    1. Provide wire transfer and certificate of deposit safekeeping services;

    2. Be a member of FDIC system and be willing and capable of posting required collateral or private insurance for funds in excess of FDIC insurable limits and in amounts required by the HCPSS; and

    3. Meet at all times the financial criteria as established in the investment procedures of the school system.

  3. Intermediaries

    Any financial intermediary eligible to be selected for the school system’s competitive investment program must:

    1. Provide wire transfer and deposit safekeeping services;

    2. Maintain appropriate federal and state registrations for the type of business in which it is engaged;

    3. Provide an annual audit upon request;

    4. Be licensed to conduct business in Maryland; and

    5. Be familiar with this policy and these procedures and accept financial responsibility for any investment not appropriate according to the policy and procedures.

IV. Management of Program

  1. The Superintendent/designee will be responsible for all transactions undertaken and will establish a system of controls to regulate the activities of subordinates.

  2. The Superintendent/designee may use financial intermediaries, brokers, and/or financial institutions to solicit bids for securities and certificates of deposit. These intermediaries must meet the criteria set forth in Section III.C. above and must be approved by the Board.

V. Performance

The Superintendent/designee will seek to earn a rate of return appropriate for the type of investments being managed, given the portfolio objectives defined in the policy. In general, the Superintendent/designee will strive to earn an average rate of return equal to or greater than the U.S. Treasury Bill rate for a given period of time for the average weighted maturity of the HCPSS’s investments.

VI. Monitoring

Policy 4100 implementation procedures will be overseen by the Division of Administration.

VII. History

ADOPTED: April 10, 2008

REVIEWED: December 19, 2019

MODIFIED: May 7, 2015

REVISED: January 13, 2022

EFFECTIVE: July 1, 2022

Policy History Key

  • Adopted-Original date the Board took action to approve a policy
  • Reviewed-The date the status of a policy was assessed by the Superintendent’s Standing Policy Group
  • Modified-The date the Board took action to alter a policy that based on the recommendation of the Superintendent/designee did not require a comprehensive examination
  • Revised-The date the Board took action on a that policy based on the recommendation of the Superintendent/designee needed a comprehensive examination
  • Effective-The date a policy is implemented throughout the HCPSS, typically July 1 following Board action.