Administrative Policies

INVESTMENTS

Subject to the direction of the President, the Vice President for financial and Administrative Services shall be responsible for the management of the cash assets of the University of Central Arkansas. The Vice President, or in his absence the Controller, is authorized and directed to invest all funds not needed to meet current cash flow requirements.

In investing University funds, the University shall seek to obtain the highest possible rate of return, with due consideration given to the dollar yield after taking into account the date of maturity , date the funds will be needed, the interest rate quoted, and the default risk factor of the investment.

I.The University may invest in certificates of deposit with a depository institution that is a member of the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, provided that all invested monies in excess of the FDIC/FSLIC limit be collateralized according to the requirements of the University's collateralization policy.

Before investing in certificates of deposit, a formal bid shall be required from depository institutions. The institution submitting the highest stated rate of interest and complying with the collateralization and other investment requirements will be awarded the bid. In the event the highest rate offered results in a tie, the bid will be awarded at the discretion of the Vice President for Financial and Administrative Services based on which institution currently holds the investment and/or other objective methods which are in the best interest of the University.

II.The University may invest in Treasury Bills or other direct and fully guaranteed obligations of the United States and its agencies. However, funds may be also invested to enhance the investment productivity of endowment, donated, and other funds as follows:

A. The University may invest endowment and other funds with an investment management service, such as the Common Fund, that provides asset allocation assistance for colleges and universities. Under this service the funds chosen for investment will be limited to obligations of the United States; Federal agency obligations; domestic and foreign bank certificates of deposit; commercial paper; high quality stocks and bonds; Euro-dollar obligations of U.S. banks; and repurchase agreements.

B. The University may invest cash or other gifts donated to the University directly in fully guaranteed obligations of the United States or its agencies; in high quality stocks and bonds; or in other equities and interests.

In order to facilitate in the management of University investments, the President is authorized to enter into the appropriate agreements with investment management services or brokers. In all investment transactions, the University's priority will be in the safety, liquidity , and control of its invested cash.

COLLATERALIZATIONS

In order to assure the security of the University of Central
Arkansas' demand deposit accounts and its investments, the
University's monies shall be fully, and continuously, collateralized
whenever such investments/deposits exceed the limits of Federal
Deposit Insurance Corporation/Federal Savings and Loan
Insurance Corporation or other insurance. Pledged collateral for the
University's deposits/investments must meet the following
minimum requirements:

1.The Vice President for Financial and Administrative Services will have authority to enter into a collateral agreement with depository institutions and custodian banks which conforms to the collateral requirements stated in this resolution.

2.Pledged security shall be placed in a custodian bank's trust department and a safekeeping receipt shall be issued to the University or if an irrevocable standby letter of credit is chosen, then the letter shall be sent to the University Vice President for Financial and Administrative Services. The receipts or letter shall be imprinted with the notice that the security is pledged to the University of Central Arkansas.

3.The custodian shall deliver the pledged security to the University upon the sole order of the University's Vice President for Financial and Administrative Services when supported by a verified certificate of the FDIC/FSLIC certifying under seal that the depository institution has failed or refused to pay all or a portion of the deposit due the University by the depository institution and that under the terms of the pledge agreement executed by the depository institution the University is entitled to delivery of the security described in the receipt(s) or the proceeds thereof. Otherwise the security shall be delivered only upon the written order and instructions of the University Vice President for Financial and Administrative Services and depository institution.

4.Eligible security for deposits must consist of the following: direct obligations of the United States Government; obligations of agencies and instrumentalities created by act of the United States Congress and authorized thereby to issue securities or evidences of indebtedness; bonds of the University of Central Arkansas and; general obligations of the State of Arkansas and Arkansas municipalities and political subdivisions with a Standard & Poor's and/or Moody's rating of at least "A"; an irrevocable standby letter of credit issued by a Federal Home Loan Bank.

5.All pledged security shall be valued at market (not par) value, and the aggregate must be equal to at least 110% of the deposits/investments. However, in instances where the President deems it to be in the best interest of the University , he is authorized to require the security be not less than 100% of the deposits/investments. The collateral is to be adjusted immediately by the depository institution when its market value falls below the minimum percentage requirements.

6.Failure to maintain the minimum collateral requirements may jeopardize the future banking relationship between the University and the depository institution.

7.The Vice President for Financial and Administrative Services, or in his absence the Controller, has the right to accept or disallow specific security offered by the depository institution as pledged collateral. In no event shall the acceptance conflict with the University's minimum collateral standards as stated herein.

8.The depository institution shall provide a monthly pledge report detailing the pledged security, their respective market value, and ratings (Standard & Poor's and/or Moody's). This report shall be furnished by the 10th working day of the following month.

9.Responsibility for the University's adherence to this policy rests with the Vice President for Financial and Administrative Services with the assistance of the Controller. The Internal Auditor has the responsibility to monitor compliance.

The collateral requirements as stated above shall not apply to: (a) investments with investment management services such as the Common Fund; or (b) equity investments representing funds donated to the University from private sources.

Comments and suggestions about Administrative Policies are appreciated.
Administrative Policy contents comments to: Susan Lilly, SusanL@uca.edu