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Office of Origin: Financial Services
Date Adopted: 05-22-01
Date Reviewed: 01-15-12
Last Date Modified & Approved: 01-15-12

Policy Statement:
It is the policy of the Lake Michigan College (the College) Board of Trustees (the Board) to invest College funds in a manner that will provide the highest investment return with maximum security while meeting the daily cash flow needs of the College and while complying with all state statutes governing the investment of public funds.

This policy applies to all financial assets of the College but excludes assets of the Lake Michigan College Foundation.

The financial assets of the College are accounted for in various funds of the College, including the general fund, debt service fund, building and site fund, trust and agency fund, and any other funds established by the College.

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 of College banking and investment activities, in order of priority, are:

1. Safety – Investments will be undertaken in a manner that seeks to first and foremost ensure the safety of the principal and the preservation of capital in the overall portfolio.

2. Diversification – Investments will be diversified by security type, financial institution, and maturity in order to reduce portfolio and market risks.

3. Liquidity – The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.

4. Return on Investment – The investment portfolio will be designed with the objective of obtaining a rate of return throughout the budgetary and business cycles, taking into account risk constraints and cash flow characteristics of the portfolio.

Daily management responsibility for the investment program is delegated to the Vice President of Financial Services and his/her designees.

Permissible Investments
Per section 142 of the Michigan Community College Act No. 331, as amended, the treasurer of a community college district, if authorized by resolution of the board of trustees, may invest debt retirement funds, building and site funds, building and site sinking funds, or general funds of the district, but investment is restricted to the following:

(a) Bonds, bills, or notes of the United States, or of an agency or instrumentality of the United States, or obligations of the state of Michigan.

(b) Negotiable certificates of deposit, saving accounts, or other interest-earning deposit accounts of a financial institution. "Financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and that maintains a principal office or branch office located in this state under the laws of this state or the United States.

(c) Bankers' acceptances that are issued by a bank that is a member of the Federal Deposit Insurance Corporation (FDIC.)

(d) Commercial paper that is supported by an irrevocable letter of credit issued by a bank that is a member of the FDIC.

(e) Commercial paper of corporations rated prime by at least one of the standard rating services.

(f) Mutual funds, trusts, or investment pools composed entirely of instruments that are eligible collateral. "Eligible collateral" means any securities that otherwise would qualify for outright purchase under this act.

(g) Repurchase agreements against eligible collateral, the market value of which must be maintained during the life of the agreements at levels equal to or greater than the amounts advanced. An undivided interest in the instruments pledged for these agreements must be granted to the community college.

(h) Investment pools, as authorized by the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118, composed entirely of instruments that are legal for direct investment by a community college.

(i) Certificates of deposit issued in accordance with the following conditions:

i. Funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
ii. The financial institution arranges for investment of funds in certificates of deposit in one or more insured depository institutions, as defined in 12 USC 1813, or one or more insured credit unions, as defined in 12 USC 1752, for the account of the community college district.
iii. The full amount of the principal and any accrued interest of each certificate of deposit is insured by an agency of the United States.
iv. The financial institution acts as custodian for the community college district with respect to each certificate of deposit.
v. At the same time that funds of the community college district are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially invested by the community college district through the financial institution.

The College will comply with the Divestment from Terror Act of 2008 in making investments or depositing funds, which prohibits the investment of certain state money or other assets in companies with certain types of business operations in countries designated as state sponsors of terror; to require divestment of any current investments in those companies; and to provide for the powers and duties of certain state and local governmental officers and entities.

The College will not commingle money for the purpose of making an investment authorized by this section. All earnings on an investment will become a part of the fund for which the investment was made.

The College will not invest or deposit any funds in any financial institution that is not eligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.

Responsibility: Vice President, Financial Services

References: Michigan Community College Act No. 331, as amended Divestment from Terror Act of 2008