7.5 Fund Management
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 性视界APP (USG) Business Procedures Manual.
7.5.1 Banking
All banking services for the Board of Regents are subject to the review and approval of the USG chief fiscal officer in accordance with the State of Georgia Depository Board and the Office of the State Treasurer Bank Policy. Banking includes establishing bank accounts, domestic and international; bank services provided; and bank fees. Merchant card services or stored value cards are not included in banking services. Service providers are subject to the State Depository Board鈥檚 published Banking Guidelines, the State of Georgia Banking Agreement, and related statutory requirements for banking. All new bank accounts and expansion of services using a Board of Regents FEI# must be approved by the USG chief fiscal officer. The USG chief fiscal officer shall notify the Office of the State Treasurer (OST) of all approved banking providers for review and recommendation to the State Depository Board for inclusion in the State Bank Registry.
All depositories where funds of the Board of Regents are held in time and demand deposits shall be collateralized in accordance with OCGA 搂搂 45-8-12 and 45-8-13 with either a dedicated or pooled methodology as prescribed by the OST.
For domestic bank accounts, the President of each USG institution shall determine the recommended bank or banks where funds are deposited through a best value competitive contract bid process to be undertaken every five years. This competitive bid process should include a pro forma analysis by the OST. Based on competitive bid results, the President shall request banking approval from the USG chief fiscal officer for the selected bank or banks.
For foreign bank accounts, institutions must verify and provide documentation that foreign banks: 1) are financially strong and stable, 2) offer security of deposits, 3) are convenient to the institution鈥檚 foreign location, and 4) have fees and compensation terms that are rational to their marketplace. When possible, it may be prudent to consider competitive bids if multiple bank options that meet these criteria are available. Establishment of all foreign bank accounts should include a pro forma review by the OST. Once determined, the President shall request banking approval from the USG chief fiscal officer for the selected bank or banks. All foreign bank accounts of a USG institution must be in the name of the state entity (institution). A cap of $100,000 is set on consolidated foreign bank accounts of a USG institution鈥檚 depositories in a particular foreign bank and, in any event, shall not exceed the lower of the State Depository Board鈥檚 prescribed limit or the limit of the FDIC equivalent organization that applies to the specific USG institution in that particular country. If a foreign country does not have a deposit insurance program, lower balances may be appropriate. When necessary, just in time funding or international wire transfers may be required for processing deposits.
Once established, bank providers are required to report and document activities as defined in the OST Bank Policy and State of Georgia Banking Agreement, which may be found at OCGA 搂 50-17-51.
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.
The chief business officer of each USG institution and any other officer or employee who participates in the selection of the institution鈥檚 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.
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 years after the termination of the President as a member of the board.
7.5.1.1 Electronic Transfer of Funds
Payments to vendors for goods and services should be electronic to avoid the associated costs of issuing paper checks when practical in accordance with Statewide Accounting Policy and Procedures 鈥 Vendor Management issued by the State Accounting Office.
When possible, USG institutions may participate in the statewide electronic payment agreement using one of the approved providers for merchant services. If not, the institution President may submit justification to and request approval to obtain another provider from the USG chief fiscal officer. The USG chief fiscal officer shall determine whether to submit the proposed card service agreement and fee schedule to the OST for an exemption approval by the State Depository Board. Institutions not participating in the statewide agreement must provide an annual report of transaction activities as required by OST.
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 鈥渦n-bankable鈥 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 University System Office may review and authorize appropriate alternative method of benefits premium payment.
7.5.2 Investments
7.5.2.1 General
The Board of Regents requires that each USG institution develop and maintain 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 donor intent, Board of Regents鈥 policies and procedures, and applicable law.
Each institution is 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 years. The defined investment policy must contain, at a minimum, the following items:
- Investment objectives;
- Investment type;
- Asset allocation;
- Diversification, including interest rate risk, custodial credit risk, credit quality risk, concentration of credit risk, and foreign currency risk;
- Spending policy;
- Monitoring; and,
- Utilization of investment manager.
Each USG institution shall submit an annual report on its investment performance for all investment outside of the Board of Regents鈥 Pooled Investment Program to the USG chief fiscal officer that asserts that investments have been made in accordance with the institution鈥檚 written investment policy.
7.5.2.2 Board of Regents鈥 Pooled Investment Program
The USG serves as fiscal agent for various units of the USG and its affiliated organizations. The USG pools the monies of these units and affiliated organizations for investment purposes. The investment pool is not registered with the SEC as an investment company and does not issue shares. The fair value of the investments is determined daily. Each participant is allocated a pro rata share of each pooled investment fund balance at fair value along with a pro rata share of the pooled fund鈥檚 investment returns.
The USG will maintain investment guidelines on file with the USG chief fiscal officer for each pooled investment fund that is offered to qualified University System participants. These guidelines are intended to foster sound and prudent responsibility that each institution has to the citizens of Georgia and which conforms to the Board of Regents鈥 investment policy. All investments must be consistent with donor intent, Board of Regents鈥 policies and procedures, and applicable laws. Units of the USG and their affiliated organizations may participate in the Pooled Investment Program. The overall character of the pooled fund portfolio should be one of above-average quality, possessing at most an average degree of investment risk.
Investments in the Board of Regents鈥 Pooled Investment Program shall be undertaken in a manner that seeks to ensure the preservation of capital in each pooled investment fund in line with the investment objectives outlined in investment guidelines for each fund. This will be accomplished through mitigating interest rate risk, credit quality risk, custodial quality risk, concentration of credit risk, and foreign currency risk, as set forth below.
Interest Rate Risk: The USG will minimize interest rate risk by:
- Structuring the investment portfolio so that security maturities match cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity.
- Investing funds necessary for operating needs primarily in shorter-term securities, money market mutual funds, or similar investment pools and limiting individual security maturity as well as the average maturity of the portfolio.
Credit Quality Risk: The USG will minimize credit risk by:
- Limiting investments to the types of securities listed in the investment guidelines for each pooled investment fund.
- Pre-qualifying and conducting ongoing due diligence of the financial institutions, brokers, dealers, intermediaries, and advisers with which the USG will do business in accordance with Board Policy 7.5.1.
- Diversifying the investment portfolio so that the impact of potential losses from any one type of security or any one individual issuer will be minimized.
Custodial Credit Risk: The USG will minimize custodial credit risk by:
- Appointing a federally-regulated banking institution as custodian. The custodian must perform its duties to the standards of professional custodian and should be liable to the USG for claims, losses, liabilities, and expenses arising from its failure to exercise ordinary care, its willful misconduct, or its failure to otherwise act in accordance with the contract. The custodian shall annually provide a copy of his, her, or their most recent report on internal controls, i.e., Statement on Standards for Attestation Engagements No. 16 or equivalent report.
- All securities transactions should be settled on a delivery versus payment basis through an approved depository institution such as the Depository Trust Company or the Federal Reserve.
- Repurchase agreements should be collateralized by United States Treasury securities at 102 percent of the market value of the investment at all times.
Concentration of Credit Risk: The USG鈥檚 investment guidelines should establish diversification of investments to reduce overall portfolio risk while maintaining market rates of return.
Foreign Currency Risk: Exposure to foreign currency credit risk should be limited to funds maintained in foreign accounts for the study abroad program.
Ethics and Conflicts of Interest: Officers and employees involved in the Board of Regents鈥 Pooled Investment Program shall refrain from personal business activity that could conflict with the proper execution and management of the investment program or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business in accordance with applicable law, as well as any personal financial or investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the USG.
7.5.3 Loan Funds for Matching Purposes
USG institutions are authorized to administer student loan funds in accordance with federal, state, and private regulations or gift documents. USG institutions are 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. USG institutions are not authorized to establish loan funds utilizing institutional resources.
7.5.4 Georgia Eminent Scholars Endowment Trust Fund
The Board of Regents shall serve as trustees of the Georgia Eminent Scholars Endowment Trust Fund, which shall, as provided by law (OCGA 搂 20-3-82), 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 75 percent of such amount ($750,000) and the fund shall contribute not less than 25 percent 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 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.
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