Policy 1010: Investment of Local Funds General Policies Responsible Office: President's Office

Policy 1010

INVESTMENT OF LOCAL FUNDS

               
I.    PURPOSE
 

The majority of revenue collected by Longwood University is submitted to the State Treasury Department.  The limited amount that is not remitted is considered to be local funds by the University and is therefore available for investment.  It is proposed that the following policy be adopted to govern the investment of these types of funds retained by the University as permitted under Chapter 15 of Title 55-268.4 (Investment Authority) of the Code of Virginia.

II.    OBJECTIVES

Investment objectives for Longwood University local funds include preservation of capital, investment liquidity, and maximum income return.

III.   POLICY

        A.     Investment Instruments and Quality Guidelines

        The investment instruments and the quality of the investment instruments employed

        by Longwood University operating funds will comply with Chapter 15 of Title

        55-268.6 (Standard of Conduct) of the Code of Virginia.  All investments should be

        set up with sufficient transparency satisfactory to the Board. Investments deemed to be

        acceptable for the purposes of the University are as follows:

• U.S. Treasury Issues
• U.S. Government Agencies
• Certificate of Deposit, Bankers Acceptances, and Commercial Paper of banks asset-ranked in the top 100 domestically and in addition must be quality ranked in the upper half of Keefe Bruyette & Woods’ bank credit analysis service.
• Eurodollar CDs and time deposits of a select group of 29 bank asset-ranked in the top 50 domestically and quality ranked in the upper half of Keefe Bruyette & Woods’ bank credit analysis service. 
• Commercial Paper rated A-1/P-1
• Repurchase Agreements with reputable dealers which are backed by securities otherwise eligible for investment under these guidelines and where physical possession of collateral is taken.
• Money Market Funds meeting the previously stated guidelines.
• Corporate Bonds rated A or better or whose commercial paper is rated A-1/P-1.
• Marketable common stocks.
• Preferred stocks convertible into common stock
• Fixed income securities convertible to common stock.

         B.     Liquidity

         Liquidity of the portfolio is monitored by the Controller and is based on specific cash

         needs of the University.  In order to achieve the required liquidity, amounts not subject to

         immediate needs will be invested in instruments having a maturity rating from overnight to

         90 days, or in long term investments as deemed appropriate.  The balance of local funds

         will be invested in overnight instruments.

         C.     Diversification Guidelines

         No more than 10% of the portfolio may be invested in the obligations of any one issuer

         other than money market funds, U.S. Government issues, U.S. Government Agency

         issues and repurchase agreements.  No more than 25% of the portfolio may be invested in

         any one industry other than the banking industry.

         D.     Management

         An investment committee will be appointed by the Longwood University Board of

         Visitors.  The committee shall include, but not be limited to, the University’s Controller,

         Vice President for Administration and Finance, and two other members of Longwood

         staff to be determined by the Vice President for Administration and Finance. The

         objectives of the Investment Committee are as follows:

• Invest portfolio assets in order to earn a return net of fees in excess of the rate of anticipated inflation, rate of spending, and a cushion to provide for a shortfall and ensure the growth of assets.
• Diversify the portfolio among various asset classes to reduce the volatility of return, and among various issuers of securities to reduce principal risk.
• Divide assets between short-term and long-term investments so as to insure that funds will be available to meet short term obligations as well as grow investments assets over the long term.
• All significant cash flows will be reported to the Controller within 10 business days as to not create a liquidity problem.  The term “significant” will be defined by the Controller.

         The Investment Committee shall meet on call of its Chairman and maintain appropriate

         records of its activities.  The Committee will report to the Board of Visitors, at the

         Board’s quarterly meetings, on the composition of portfolio assets, performance of all

         portfolios, and performance of individual members of the Investment Committee.

Approved by the Board of Visitors, March 24, 2007.

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