7.5 Fund Management
(Last Modified on January 25, 2012)
Regulations on banking and investments will be published and distributed periodically to the various operating units in Section 9.0, Banking and Investments, of the Business Procedures Manual.
(Last Modified on September 16, 2011)
All depositories, where funds of the Board of Regents of the University System of Georgia are held in time and demand deposits, shall either give a depository bond in some acceptable security company qualified to do business in Georgia or, in lieu thereof, may deposit with some other depository satisfactory to the Treasurer of the Board of Regents securities of the following classes, the current market value of which shall be not less than 110% of the amount after the deduction of the amount of the deposit insurance (BoR Minutes, October 2010):
- Direct obligations of the United States Government;
- Obligations unconditionally guaranteed by the United States Government;
- Direct obligations of the State of Georgia;
- Direct obligations of any political subdivision of the State of Georgia; and/or,
- Georgia municipal, county, or State of Georgia Authority Bonds acceptable to the Treasurer of the Board of Regents.
(BoR Minutes, 1970-71, p. 691)
The president of each USG institution shall determine the bank or banks where funds are deposited through a best value competitive contract bid process to be undertaken every five (5) years (BoR Minutes, April 2005). The president shall inform the USG chief fiscal officer of the bank or banks where funds are deposited. It shall be the duty of the Treasurer of the Board to handle all details relative to the bank or banks furnishing the required depository protection (BoR Minutes, 1949-50, p. 251; February 1996).
The USG chief fiscal officer shall appoint a person or persons at each USG institution with authority to sign checks drawn on banks where funds of the respective institutions are deposited. Persons so appointed shall be authorized to sign any documents that may be required by the banks concerned (BoR Minutes, 1952-53, p. 365).
The chief business officer of each USG institution and any other officer or employee who participates in the selection of the institution’s depository (bank) are prohibited from serving on the governing boards of banks and other financial institutions if such banks or other financial institutions have or seek a commercial relationship with that institution (BoR Minutes, 1996).
A president of an institution may serve on the governing board of a bank or financial institution that does not have a commercial relationship with the institution. However, such a bank or financial institution will not be considered by the institution for establishment of a commercial relationship with that USG institution for not less than two (2) years after the termination of the president as a member of the board.
Electronic funds transfer is the required method for payroll payments to employees, making funds available to the employee by the authorized pay date, unless the employee can provide documentation of having an “un-bankable” status; i.e., the employee is unable to obtain a bank account. Direct deposit is defined as the electronic transfer of funds from the employer to a depository institution designated by the employee, which makes the funds available to the employee by the authorized pay date.
Electronic withdrawal of funds (auto-debit) is the required method of payment from retirees for benefit premiums; i.e., the payment is electronically withdrawn from an account at a depository institution that is designated by the retiree to the employer, occurring on a specified date each month. Where auto-debit is not possible, the institution can determine the appropriate alternative method of employee share of premiums collection.
Requiring an auto-debit for all retirees participating in the health insurance plan will streamline the process, eliminate invoicing and greatly reduce premium collection and reconciliation efforts. (BoR Minutes, May 2011)
(Last Modified on August 11, 2009)
It is the intent of the Board that each institution develop an investment policy that fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and that conforms with Board of Regents investment policy. Each institution shall be required to have a written investment policy statement on file with the USG chief fiscal officer. The policy should be reviewed and updated at least once every two (2) years. Each institution shall submit an annual report on its investment performance to the USG chief fiscal officer that asserts that investments have been made in accordance with the institution’s written investment policy.
The investment policy should specify overall investment objectives. There may be several different investment objectives depending on the type of funds to be invested and period of investment to be considered. These may include objectives that attempt to preserve the purchasing power of income and principal, maximize current income, or maximize capital values. Each investment objective should clearly state the time horizon for achieving investment objectives.
The investment policy should identify the general type of investments permitted under each investment objective. Investment must be consistent with donor intent, Board of Regents’ policy, and applicable federal and state laws (BoR Minutes, April 2005).
The investment policy should include asset allocation guidelines that outline the asset classes and subclasses that will constitute permissible areas for investment of funds. The guidelines should indicate the maximum and normal distribution of funds among the different asset classes or subclasses and the rationale for selecting these criteria. Asset allocation guidelines should also be tied to the investment objective and consider the potential risks associated with different asset allocations. The investment policy should outline the factors to be considered when an institution proposes a change in asset allocation, such as during times of significant rate shift affecting the investment portfolio and instability in inflationary trends
Diversification is fundamental to the management of risk and is therefore a pervasive consideration in prudent investment management. The investment policy should include a diversification plan that considers the asset classes and investment products to be utilized in an attempt to achieve desired return with an acceptable level of risk.
The investment policy should include spending rules and relate these to investment objectives. Variables to be considered include the percentage of return allocated to prevent principal erosion by inflation versus the percentage to be expended currently.
The investment policy should provide for appropriate collateralization of invested funds, which, by law, require the pledge of collateral.
Management’s plan for authorization of investment activity, periodic reporting of investment activity, and monitoring of investment results should be outlined in detail in the investment policy.
Criteria to be used in the selection of investment managers and the evaluation of their performance should be described if the institution chooses to use outside investment managers. These criteria should address the investment manager’s:
- Professional background and experience;
- Investment philosophy relative to the institution’s stated investment objectives;
- Organizational structure and overall product line;
- Control with respect to ensuring that individual managers adhere to policy objectives and guidelines;
- Total size of managed assets;
- Record of performance measured against appropriate benchmarks; and,
- Ability to communicate results effectively and in timely fashion.
7.5.3 Loan Funds for Matching Purposes
(Last Modified on August 11, 2009)
USG institutions shall be authorized to use money in student loan funds of the respective institutions for the purpose of matching funds available under federal loan programs for loans to students when terms of the gift to the institution permit such use for matching purposes (BoR Minutes, 1958-59, pp. 209-10).
7.5.4 Sale of Securities
(Last Modified on August 11, 2009)
The USG chief fiscal officer, with the approval of the Chair or Vice Chair of the Board, is authorized and empowered to sell and assign, or request payment or re-issue of any and all United States securities of any description registered on the books of the Treasury Department, or registered securities with respect to which the Treasury Department acts as the transfer agency, now or hereafter held by the Board of Regents of the University System of Georgia as executor, administrator, guardian, trustee, or in any fiduciary capacity whatsoever, and also to sell and assign any such securities which the Board of Regents is, or shall be, authorized or empowered to sell and assign as attorney for, or other representative of, the owner thereof.
The USG chief fiscal officer, with the approval of the Chair or Vice Chair of the Board, is authorized and empowered to receive payment for any matured security and to reinvest the principal or the sum total in a like or similar security. The USG chief fiscal officer shall make reports of such transactions to the Board as information.
7.5.5 Georgia Eminent Scholars Endowment Trust Fund
(Last Modified on August 11, 2009)
The Board of Regents shall serve as trustees of the Georgia Eminent Scholars Endowment Trust fund, which shall, as provided by law, be a budget unit for the purpose of appropriation of state funds.
The funds appropriated to the Board of Regents under this program shall be used exclusively to endow academic chairs in an effort to attract eminent scholars to join the faculties of USG institutions. The criteria for persons selected to hold such chairs shall be established by the president of the institution concerned.
A total sum of not less than $1,000,000 shall be required to endow a chair under this program. The respective foundations of the institutions concerned shall be required to contribute not more than seventy-five percent (75%) of such amount ($750,000) and the fund shall contribute not less than twenty-five percent (25%) of such amount ($250,000). No funds shall be granted to a foundation except upon the express written condition that the funds and the earnings therefrom shall be used to endow an academic chair as provided herein.
Approved grants may be made to foundations previously established to enhance the educational purposes of the USG institution concerned. The income from the grant funds and the foundation funds contributed shall be used to endow academic chairs that shall be known as the Eminent Scholars Chair.
The funds received by a foundation for this purpose, together with the funds contributed by the foundation, shall be managed and invested by the governing board of directors of the foundation of the institution concerned and kept separate from other funds of the foundation.
Funds raised by the respective foundations to qualify for the grants may come from more than one donor, but the gifts of not more than ten (10) donors shall be aggregated to raise the minimum sum required ($750,000). All donations must be accompanied by a statement from the donor acknowledging that the funds donated will be used to endow a chair authorized under this program. USG institutions having chairs endowed by the fund may petition the Board to add the name of the donor or benefactor to the name of the chair (BoR Minutes, 1984-85, pp. 324-25).