OVERALL OBJECTIVES AND PRIORITIES

The objectives and priorities of the Investment Policy of South Plains College, in order of importance, are as follows:

1. To provide for the safety of principal of all SPC funds.

2. To insure that adequate cash is available to meet operating requirements.

3. To earn the highest possible rates on return on investments consistent with the foregoing objectives and guidelines.

4. To allow for diversification in the types, issues, and maturities of investments so as to avoid incurring unreasonable and avoidable risks.

5. To maintain the highest professional and ethical standards as custodians of the public trust.

INVESTMENT STRATEGY

Investment of the following fund categories shall be consistent with this policy and in accordance with the applicable strategy defined below. All strategies described below for the investment of fund types should be based on an understanding of the suitability of an investment to the financial requirements of the College and consider preservation and safety of principal, marketability of an investment if the need arises to liquidate before maturity, diversification of the investment portfolio, and yield.

Operating Funds

Investment strategies for operating funds shall have as their primary objectives the preservation and safety of principal, investment liquidity, and maturity to meet anticipated cash flow requirements.

Debt Service Funds and Reserve Funds

Investment strategies for debt service funds shall have as the primary objective the assurance of investment liquidity adequate to cover the obligation of required due date. Investments purchased shall not have a stated final maturity date that exceeds the payment due date.

Capital Projects Funds

Investment strategies for capital project funds shall have as their primary objective sufficient investment liquidity to timely meet capital project obligations. The maturity dates of investments shall not exceed the estimated project completion date.

ACTIVE PORTFOLIO MANAGEMENT

South Plains College shall a pursue an active versus passive portfolio management philosophy. That is securities may be sold before they mature if market conditions present an opportunity for the College to benefit from the trade. The investment officer of the College will routinely monitor the contents of the portfolio, the available markets, and the relative value of competing instruments, and will adjust the portfolio accordingly.

RESPONSIBILITY AND CONTROL

The President of South Plains College, or at the President's discretion, the Vice President for Business Affairs will be designated as the Investment Officer for the College. The Investment Officer shall operate the investment program in a manner consistent with the College Investment Policy. The Investment Officer shall attend at least one investment training session containing at least five hours of instruction relating to the Officer's responsibility under the Public Funds Investment Act within six months after assuming duties. Thereafter, the Investment Officer must attend training session of not less than once in a two-year period that begins on the first day of the College's fiscal year and consists of the two consecutive fiscal years after than date, and receive not less than five hours of instruction relating to investment responsibilities. The Center for Public Management at the University of North Texas and the PFM Asset Management, LLC are approved by the Board of Regents as providers of continuing investment training.

The Investment Officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the College are protected from loss, theft, and misuse specifically, the internal controls will address the following:

a. Collusion

b. Separation of duties

c. Custodial safekeeping

d. Avoidance of Bearer-form securities

e. Clear delegation of authority

f. Confirmation of telephone transactions for investments and wire transfers

g. Instruct the College's external auditors to review investment activity to determine if the College complies with the Public Funds Investment Act. The Act requires an annual audit of investment practices.

PRUDENCE AND ETHICS

The standard of prudence to be applied by the investment officer shall be the "Prudent Investor Rule" which states, ".......Investments shall be make 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."

Officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration:

a. The investment of all funds or funds under the College's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investme

b. Whether the investment decision complies with the Public Funds Investment Act and the written investment policy of the College.

The Investment Officer, acting in accordance with written procedures and exercising due diligence shall not be held personally responsible for a specific securities credit risk or market price changes, provided that these deviations are reported immediately and appropriated action is taken to control adverse developments.

The Investment Officer and members of his/her staff, who are involved in the investment process, shall refrain from personal business activity that could conflict with the operation of the investment program and policy, or could impair the ability to make impartial investment decision. Also, the aforementioned personnel shall disclose to the President of the College any material financial interests that they hold in financial institutions that conduct investment business with the College. Additionally, the Investment Officer and his investment staff shall disclose any personal investment positions that could be related to the performance of the College's portfolio. The Investment Officer and his/her investment staff shall subordinate their personal investment transactions to those of the College, particularly with regard to timing of purchases and sales.

Should the Investment Officer have a personal business relationship with an organization seeking to sell an investment instrument to the College, he/she shall file a statement disclosing that relationship. An Investment Officer who is related within the second degree by affinity or consanguinity to an individual seeking to sell an investment instrument to the College shall file a statement disclosing that relationship. All disclosure statements must be filed with the Board of Regents and the Texas Ethics Commission.

QUARTERLY REPORTING

The Investment Officer shall prepare and submit to the Board of Regents a signed quarterly investment report for all funds. This report will be prepared on a quarterly basis. The report shall list the following information:

1. A detailed investment position statement as of the date of the report.

2. A summary statement of the investment activity of each fund group to include the beginning market value, changes to that market value, and the ending market value for the period.

3. A detailed statement of the book value and market value of each separate investment asset at the beginning and end of the reporting period as well as maturity dates and accrued interest (if applicable)

4. A statement that the College's investment operations and portfolio are in compliance with the College's Investment Policy.

AUTHORIZED INVESTMENTS

Within the guidelines provided in the Public Funds Investment Act, the Board of Regents of South Plains College has hereby adjudged and decreed that the following investments are allowed for South Plains College Funds. The Board of Regents, may, at any time, disallow any of the following:

1. Obligations of, or Guaranteed by, Governmental Entities. 
Authorization: Public Funds Investment Act, Section 2256.009; except as provided in Subsection (b) of Section 2256.009 of the Public Funds Act. The following are authorized under this policy.

a. obligations of the United States or its agencies and instrumentalities;

b.  direct obligations of this state or its agencies and instrumentalities;

c. collateralized mortgage obligations directly issued by a federal agency instrumentality of the United States, the underlying security for which is guaranteed or insured by an agency or instrumentality of the United States;

d. other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, this state or the United States and their respective agencies and instrumentalities;

e. obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less that A or its equivalent.

2. Certificates of Deposit
Authorization: Public Funds Action, Section 2256.010

A certificate of deposit is an authorized investment under this subchapter if the certificate of deposit is issued by a state or national bank domiciled in this state or a savings and loan association domiciled in this state and is:

a. guaranteed or insured by the Federal Deposit Insurance Corporation or its successor;

b. secured by obligations that are described by Section 2256.009, including mortgage backed securities directly issued by a federal agency or instrumentality that have a market value of not less than the principal amount of the certificates, but excluding those mortgage backed securities of the nature described by Section 2256.009(b); or

c. secured in any other manner and amount provided by law for deposits of the investing entity.

3. Repurchase Agreements
Authorization: Public Funds Investment Act, Section 2256.011

A fully collateralized repurchase agreement is an authorized investment if the repurchase agreement:

a. has a defined termination date;

b. is secured by obligations described by Section 2256.009;

c. requires the securities being purchased by the district to be pledged to the district, held in the district's name, and deposited at the time the investment is made with the district or with a third party selected and approved by the district; and

d. is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state.

In this section, "repurchase agreement" means a simultaneous agreement to buy, hold for a specified time, and sell back at a future date obligations described by Section 2256.009 at a market value at the time the funds are disbursed of not less than the principal amount disbursed. The term includes a direct security repurchase agreement and a reverse security repurchase agreement.

The term of any reverse security repurchase agreement may not exceed 90 days after the date the reverse repurchase agreement is delivered.

4. Banker's Acceptances
Authorization: Public Funds Investment Act, Section 2256.012

A banker's acceptance is an authorized investment under this subchapter if the banker's acceptance:

a. has a stated maturity of 270 days or fewer from the date of its issuance;

b. will be, in accordance with its terms, liquidated in full at maturity;

c. is eligible for collateral for borrowing from a Federal Reserve Bank; and

d. is accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the largest subsidiary, and rated not less than A-1 or P-1 or an equivalent rating by at least one nationally credit rating agency.

5. Commercial Paper
Authorization: Public Funds Investment Action, Section 2256.013

Commercial paper is an authorized investment under this subchapter if the commercial paper:

a. has a stated maturity of 270 days or fewer from the date of its issuance; and

b. is rated not less than A-1 or P-1 or an equivalent rating by at least:

(1) two nationally recognized credit rating agencies; or

(2) one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under that laws of the United States or any state.

6. Mutual Funds
Authorization: Public Funds Investment Act, Section 2256.014

A no-load money market mutual fund is an authorized investment under this subchapter if the mutual fund:

a. is registered and regulated by the Securities and Exchange Commission;

b. has a dollar-weighted average stated maturity of 90 days or fewer;

c. includes in its investment objectives the maintenance of a stable net asset value of $1 for each share.

d. must provide the District with a prospectus or other information required by the Securities Exchange Act of 1934 or the Investment Company Act of 1940

A no-load mutual fund is an authorized investment under this subchapter if the mutual fund:

a. is registered with the Securities and Exchange Commission;

b. has an average weighted maturity of less than two years;

c. is invested exclusively in obligations approved by this subchapter;

d. is continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less that AAA or its equivalent;

e. conforms to the requirements set forth in Sections 2256.0016 b) and c) relating to the eligibility of investment pools to receive and invest funds of investing entities.

7. Public Funds Pools
Authorization: Public Funds Investment Act, Section 2256.016

The District may invest its funds through an eligible investment pool as set forth in the qualifications of the Public Funds Investment Act. The District may invest its funds through an eligible investment pool only if the pool is approved by resolution of the South Plains Board of Regents.

UNAUTHORIZED INVESTMENTS

The following are not authorized investments under this investment policy as provided by Subsection (b) of Section 2256.009 of the Public Funds Investment Act:

a. Obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; i.e. Interest Only Derivative;

b. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest; i.e. Principal Only Derivatives;

c. Collateralized mortgage obligations that have a stated final maturity date of greater than 10 years;

d. Collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index, i.e. Inverse Floater Derivatives

AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS

All investments made by the College will be made through either the depository bank, a primary dealer, or the College's Investment Advisor should one be engaged. All investment firms should furnish proof of certification by the National Association of Securities Dealers, and proof of current registration with the State Securities Commission. A copy of the College Investment Policy will be presented to any firm or individuals seeking to sell the College an investment instrument. The registered principal of that firm must submit to the Investment Officer a written acknowledgment that the firm has implemented reasonable procedures that will preclude imprudent investing activities i.e. the purchase of unauthorized investment instruments. The College cannot buy from any vendor that does not submit this written acknowledgment.