Policies and Procedures for Board of Regents

2.11

Subject: INVESTMENT POLICIES AND PROCEDURES

Date Adopted: November 13, 1982

Reference: Minute Book: 28 Page: 129

The investment policies and procedures for the investment of monies and securities owned by or under the custodial care of the Murray State University Foundation are established by a joint Investments Committee. The joint Investments Committee is comprised of two members of the MSU Foundation Board of Trustees and two members of the Murray State University Board of Regents.

The joint Investments Committee meets twice a year just prior to the regular Board meetings of the MSU Foundation, and at such other times deemed necessary. A report of invested funds is prepared by the MSU Foundation staff and distributed to members of the joint Investments Committee, the Vice President for Administrative Services, and the Vice President for University Services at quarterly intervals, and to the full Board of trustees at semi-annual meetings. Periodic reports are made to the Board of Regents by the President. In addition, quarterly earnings reports are given to the Alumni Office and other entities having substantial scholarship investments in the Foundation.

The investment policies and procedures currently followed by the MSU Foundation have evolved gradually since the formation of the Foundation in 1946. Primary attention, however, was commenced in 1974 upon the receipt of several substantial gifts from estate bequests.

The investment policies currently followed are stated below:

1. Cash funds available for investment shall, whenever possible, be pooled into amounts of $100,000 or more.

2. Cash funds shall be invested generally in non-speculative financial institutions through a process of competitive bidding, and for periods of three months to four years. In some cases, when deemed advantageous to the Foundation, investments may be negotiated.

3. Above the $100,000 insured by FDIC or FSLIC, investments in financial institutions must be secured (collateralized) with appropriate government securities.

4. A maximum investment of $250,000 - $300,000 shall be held in any one institution at a given time. (Exception: A local negotiated arrangement for 14-day investment of checking account funds, as permitted by cash flow requirements.)

5. All scholarship funds matched with the Hurley bequest funds shall be held in and invested by the MSU Foundation.

6. Pooled investment earnings shall be pro-rated to the individual investment accounts in accordance with the amount of funds invested.

7. No investment shall be placed with any institution on the basis of political favor, friendship, or influence by any official, alumnus or friend of the University. Competitive, safe, and best bids shall be sought for all funds invested by MSU Foundation officials.

8. Mo charges for administrative expenses shall be assessed against any permanent scholarship fund account.

9. Funds in checking accounts will be invested in negotiated short-term (14-30 days) certificates of deposit, as cash flow needs and legal requirements permit.

10. The purchase and sale of investment securities (stocks and bonds) and investment real estate shall be authorized by the Investments Committee.

The funds in the MSU Foundation are of two types: Restricted and unrestricted. Restricted funds are limited to the restricted purpose for which the funds were placed in the custody of the Foundation. Unrestricted funds are the property of the MSU Foundation and may be used in accordance with the Articles of Incorporation and the stipulations of the governing Board of Trustees.

2.11.1

Subject: MURRAY STATE UNIVERSITY INVESTMENT POLICIES AND

PROCEDURES

Date Adopted: November 14, 1992 Reference: Minute Book: 53 Page: 25

The majority of funds available for investment by Murray State University are included in the Commonwealth of Kentucky's investment pool. The only state held funds allowed by Kentucky state law to be invested by the University are the current funds contained in the Consolidated Educational fund and the Housing and Dining fund. These funds may only be invested in the state investment pool.

A designated staff person of the University reviews the cash needs and determines the amount to be invested from each of the aforementioned funds. The staff also determines the length of time the monies are to be invested. The Director of Financial Management and Planning approves the recommended investments. The state investment office in Frankfort, Kentucky, then chooses the best type of security and purchases the security in the name of the Commonwealth of Kentucky for the University.

When the security has been purchased, a confirmation is mailed to the University. The purchase is recorded in the University's accounting system per the confirmation. When the security matures, a pay-in-voucher increases the cash balance in the appropriate fund from which the investment was made for the amount of the investment and the interest earned.

The investment earnings of the Consolidated Educational fund are transferred at the end of the fiscal year to Consolidated Educational Renewal and Replacement. These earnings are used on projects approved by the Board of Regents of Murray State University. The investment earnings of the Housing and Dining fund are pro-rated to the applicable auxiliary accounts in accordance with the percentage contribution to the overall net income of the auxiliary departments. The percentage is updated each fiscal year based on the previous year's contribution to net income.

The endowment funds held by the University are invested totally at the discretion of the University. These funds are invested following the policies stated below:

1. Cash funds available for investment shall, whenever possible, be pooled into amounts of $100,000 or more.

2. Cash funds shall be invested generally in non-speculative financial institutions or government securities.

3. Above the $100,000 insured by FDIC and FSLIC, investments in financial institutions must be secured (collateral!zed) with appropriate government securities.

4. A maximum investment of $250,000 - $300,000 shall be held in any institution at a given time.

5. No investment shall be placed with any institution on the basis of political favor, friendship, or influence by any official, alumnus or friend of the University.

6. The purchase of investments shall be authorized by the Director of Financial Management and Planning who reports directly to the Treasurer of Murray State University. -•