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Section:400
Section Title:Administration and Finance
Policy Number:403
Policy Name:Cash and Investment Policy
Approval Authority:Board of Trustees
College Policy Executive:Chief Planning Officer
Responsible Executive:Vice President for Administration and Finance
Responsible Unit:Administration and Finance
Date Adopted:June 3, 1987
Date Revised:May 22, 1995, April 20, 2005, December 12, 2016

Policy

Policy

Ramapo College will have an Investment Policy. 

Reason for Policy

This policy establishes guidelines and a prudent framework for achieving reasonable returns on Ramapo College of New Jersey (the College) investment accounts while safeguarding principal. These investment accounts are for cash not needed for immediate operations.

To Whom Does the Policy Apply 

Finance Committee of the Board of Trustees, Vice President for Administration and Finance, Controller, Investment Manager(s)

Related Documents

None

Contacts

Vice President for Administration and Finance 

Procedure

The purpose  of this Investment  Policy is to establish  policies  and guidelines  related to the investment  objectives  for the Ramapo College  of New Jersey (the College) investment  accounts.  These investment accounts are for cash not needed for immediate operations.  Cash balances of the College accumulate during periods of the year due to the cyclical business cycle inherent to higher education and this policy is intended to create a prudent framework for achieving reasonable returns on its assets while safeguarding principal.

Authority

New Jersey Statute 18A:3B-6 Powers, duties of governing boards of institutions of higher education.

This policy does not cover the endowment funds.

Responsibilities and Roles

  1. Finance Committee of the Board of Trustees
  2. Approve the Investment Policy and any revisions thereto, and review the policy annually.
  3. Receive and review investment reports, at least annually, and provide feedback to administration.
  4. Approve the selection of the investment manager(s) as recommended by the Vice President for Administration and Finance.

Vice President for Administration and Finance

  1. Recommend revisions to the Investment Policy, and present for review annually to the Finance Committee.
  2. Approve the investment plan for each fiscal year.
  3. Assess on an annual basis, or as dictated by the market, the request of the Finance Committee, or changed College requirements, the need to rebalance the investment mix.
  4. Recommend for approval the investment manager(s) of the portfolio for the Finance Committee approval, if determined necessary.
  5. Provide oversight for investments, review the results of the portfolio against the benchmarks established and relevant market indexes, and ensure the assets are invested according to this
  6. Provide summary performance results and status of the investment portfolio to the Finance Committee as requested, or at least

Controller

  1. Maintain the cash flow analyses that assess cash flow needs for each level of investment segment on a monthly basis.
  2. Monitor the portfolio for compliance with this policy.
  3. Ensure that investment manager(s) meet the deliverable responsibilities.
  4. Reconcile reports of investment manager(s) and the general ledger, and generate monthly reports regarding portfolio performance and compliance.

Investment Manager(s)

  1. Invest assets according to the goals and outcomes presented and approved at time of investment.
  2. Optimize investment return and growth of the College’s assets within the guidelines of this policy.
  3. Meet with the Vice President for Administration and Finance or a designee no less than quarterly and be available for regular telephone contact.
  4. Monthly, provide statements of transactions along with historical cost and market valuation of portfolio assets, as well as any other information requested by the Vice President for Administration and Finance or Controller.
  5. Quarterly, provide (a) a review of performance, net of fees, relative to an appropriate index agreed to by the Vice President for Administration and Finance; and (b) the performance results as compared to established benchmarks.

Competitive Selection of Investment Manager(s)

The College may choose to hire an investment manager(s) through a competitive bidding process.  The offer that most closely mirrors the guidelines established within this policy will have highest priority.  The investment manager(s) selected will provide the highest rate of return, net of fees, within the required time to maturity, while creating economic stability. Consideration will be given to historical performance and fee structure during the selection process. The Vice President for Administration and Finance will have authority to select the investment manager(s), with the approval of the Finance Committee.

Investment Objectives and Portfolio Descriptions

The overall investment objective is to maintain appropriate liquidity for day-to-day operational and capital disbursements, and conservatively optimize earnings on excess cash.

Diversification as to liquidity, maturity, market, and risk will be achieved by structuring the portfolio in three segments: operating cash – short-term, intermediate-term and long-term investments, with the following parameters specified for each segment:

Operating Cash – Short-term

Operating cash represents the College’s operating needs to cover payroll and vendor obligations on a daily and weekly basis.  This will be invested in highly liquid interest bearing accounts to cover checks drawn, and the focus will be only on maintaining principal. This segment shall have a minimum balance of $10 million, and target 10-50% of the portfolio.

  1. Average maturity: No longer than one year
  2. Benchmark: To be defined for each individual investment or fund
  3. Investment objective: Liquidity and safety

Intermediate-term Investments

The intermediate-term investments represent the College’s less urgent cash needs, which could represent the scheduled debt service payments, capital needs, and strategic funding. There are no minimum balances for this segment, and the target is up to 40% of the portfolio.

  1. Average maturity: For fixed income portion, no longer than five years
  2. Benchmark: To be defined for each individual investment or fund
  3. Investment objective: Maximize total return without undue exposure to capital risk
  4. Credit/quality ratings: Investment grade or better for fixed income

Long-term Investments

The long-term investments represent the College’s reserves. The primary objective of this segment is to increase and enhance the College’s overall investment return in a prudent, conservative manner utilizing a diverse array of investment vehicles. There are no minimum balances for this segment, and the target is up to 40% of the portfolio.

  1. Average maturity: For fixed income portion, no longer than ten years
  2. Benchmark: To be defined for each individual investment or fund
  3. Investment objective: Seek higher returns in the five to ten year markets, and maximize returns
  4. Credit/quality ratings: Investment grade or better for fixed income

Investment Guidelines

Approved Instruments

  1. The following fixed income instruments are considered appropriate for the investment portfolio, and a review of the rating will be made at the time of purchase and reviewed at least annually to be consistent with the College’s investment objectives:
  • Obligations of the U.S. government and its agencies
  • Money market instruments, repurchase agreements, commercial paper, bankers’ acceptance, certificates of deposit, and approved money market funds
  • State and corporate bonds
  • Floating rate securities without interest rate caps
  • U.S./international indexed equity funds

Diversification

The College will diversify its investment portfolio as a way to limit certain types of risk. Investments shall be diversified as to maturities and as to the type of investment to limit the risk of loss which might result from over-concentration of assets in a specific maturity, in a specific kind of security or from an individual issuer. Any deviation from the guidelines established herein shall be allowed only with the express approval of the Vice President for Administration and Finance.

  • The portfolio will not consist of more than 25 percent of total assets in the securities of issuers in any particular industry, other than United States government securities, or government agency securities. No more than 10 percent of the investments will be invested in securities (other than United States Government) of any one issuer.
  • For purposes of this policy, securities of a parent company and its subsidiaries will always be combined to determine diversification levels.  Securities issued by the U.S. Treasury and U.S. government agencies are specifically exempted from these restrictions.

Restricted Investments

The portfolio shall not contain derivative instruments, the use of derivatives is prohibited within this policy.

All cash and investments must be denominated in US dollars, and no amounts can be held in foreign currency, or be subjected to currency risk.