DFE, Investments

The purpose of this policy is to set forth the investment objectives and parameters for the management of the funds of the Orleans Parish School Board. This policy is designed to safeguard the School Board’s funds, ensure the availability of operating and capital funds when needed, and provide for an investment return competitive with comparable funds and financial market indices.

In accordance with La. Rev. Stat. Ann. §33:2955, this policy applies to all cash and investments held or controlled by the Orleans Parish School Board with the exception of funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, this policy does not apply to funds not under investment control of the School Board, including funds held in escrow or custodial funds.

Except for cash in certain restricted and special funds, the Orleans Parish School Board may consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing and administration. If investments are pooled, investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

The primary objectives, in priority order, of investment activities shall be safety of principal, maintenance of liquidity, and return on investment:

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 from the investment.

While the standard of prudence to be used by investment officials who are officers or employees is the “Prudent Person” standard, any person or firm hired or retained to invest, monitor, or advise concerning these assets shall be held to the higher standard of “Prudent Expert.” The standard shall be that in investing and reinvesting moneys and in acquiring, retaining, managing, and disposing of investments of these funds, the contractor shall exercise the judgment, care, skill, prudence, and diligence under the circumstances then prevailing, which persons of prudence, discretion, and intelligence, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims by diversifying the investments of the funds, so as to minimize the risk, considering the probable income as well as the probable safety of their capital.

The Chief Financial Officer and any other personnel responsible for overseeing investments or his/her designee shall annually complete 4 hours of continuing education in subjects or courses of study related to investment practices and products.

The investment officer shall only purchase securities from or enter into repurchase agreements with qualified institutions, as defined in this section, or from investment institutions which are designated as primary dealers by the Federal Reserve Bank of New York and meet the following requirements:

Direct United States Treasury obligations which carry the full faith and credit guarantee of the United States government and are considered to be the most secure instruments available;
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by federal agencies and provided such obligations are backed by the full faith and credit of the United States of America and have a liquid market with a readily determinable market value;
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by United States government instrumentalities which are federally sponsored and have a liquid market with a readily determinable market value;
Direct security repurchase agreements of any federal book-entry only securities enumerated in (a) through (c) above;
Time certificates of deposit of any bank domiciled or having a branch office in the state of Louisiana, savings accounts or shares of savings and loan associations and savings banks as defined by La. Rev. Stat. Ann. §6:703, or share accounts and share certificate accounts of federally or state-chartered credit unions issuing time certificates of deposit;
Mutual or trust fund institutions which are registered with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the United States government or its agencies and consist solely of dollar-denominated securities;
Investment grade commercial paper issued in the United States, traded in the United States markets, and denominated in United States dollars;
Bonds, debentures, notes, or other evidence of indebtedness issued by the State of Louisiana or any of its political subdivisions in accordance La. Rev. Stat. Ann. §33:2955;
Bonds, debentures, notes, or other evidence of indebtedness issued by a state of the United States of America other than Louisiana or any such state’s political subdivisions, in accordance with La. Rev. Stat. Ann. §33:2955;
Bonds, debentures, notes or other indebtedness issued by domestic United States corporations. Prior to purchase and at all times during which the indebtedness is owned, the School Board must comply with all restrictions listed in La. Rev. Stat. Ann. §33:2955(A)(1); and
Any local governmental investment pool created pursuant to Louisiana statutes, such as the Louisiana Asset Management Pool (LAMP).

The interest earned on any such investment shall be credited to the fund from which the investment was acquired or it may be applied to the payment of the principal and interest of the outstanding bonded indebtedness of that fund.

At any time that may be advisable, the School Board may cash or liquidate any of the investments authorized herein which are purchased for any particular fund. The proceeds of any such liquidation shall be credited to the fund from which the authorized investments were originally purchased.

Sector	Maximum Sector(%)	Per Issuer Maximum (%)	Minimum Ratings Requirement¹	Maximum Maturity
U.S. Treasury	100%	100%	N/A	5 Years (5 Years avg. life⁴ for GNMA)
GNMA		40%
Other U.S. Government Guaranteed		10%
Federal Instrumentalities/GSE: FNMA, FHLMC, FHLB, FFCB*	80%	40%³	N/A	5 Years
Federal Instrumentalities/GSE other than those above	80%	10%	N/A	5 Years
Corporates	50%²	5%	Two Highest LT Rating Categories (AA-/Aa3 or equivalent)	5 Years
Municipals	25%	5%	Highest ST or Three Highest LT Rating Categories (SP-1/MIG 1, A-/A3, or equivalent)	5 Years
Agency Mortgage-Backed Securities (MBS)	25%	40%³	N/A	5 Years Avg. Life⁴
Non-Negotiable Certificates of Deposit and Savings Accounts	50%²	$250,000 if not fully collateralized	N/A	5 Years
Commercial Paper (CP)	50%²	5%	Highest ST Rating Category (A-1/P-1, or equivalent)	270 Days
Repurchase Agreements (Repo or RP)	40%	20%	Counterparty (or if the counterparty is not rated by an NRSRO, then the counterparty’s parent) must be rated in the Highest ST Rating Category (A-1/P-1, or equivalent) If the counterparty is a Federal Reserve Bank, no rating is required	1 Year
Money Market Funds (MMFs)	25%	25%	Highest Fund Rating by all NRSROs who rate the fund (AAAm/Aaa-mf, or equivalent)	N/A
Local Government Investment Pools (LGIP)	25%	25%	Highest Fund Quality and Volatility Rating Categories by all NRSROs who rate the LGIP, (AAAm/AAAf, S1, or equivalent)	N/A
Notes: ¹ Rating by at least one SEC-registered Nationally Recognized Statistical Rating Organization (“NRSRO”), unless otherwise noted. ST=Short-term; LT=Long-term. ² Maximum allocation to all corporate and bank credit instruments is 50% combined. ³ Maximum exposure to any one Federal agency, including the combined holdings of Agency debt and Agency MBS, is 40%. ⁴ The maturity limit for MBS is based on the expected average life at time of settlement, measured using Bloomberg or other industry standard methods. * Federal National Mortgage Association (FNMA); Federal Home Loan Mortgage Corporation (FHLMC); Federal Home Loan Bank or its District banks (FHLB); Federal Farm Credit Bank (FFCB).