Current through all regulations passed and filed through March 18, 2024
(A) Policy
statement. This policy ensures sufficient liquidity to meet the university's
cash flow needs and further ensures compliance with the Revised Code and all
other applicable laws and regulations while optimizing opportunities for growth
in invested assets in a responsible and prudent manner. The president and the
vice president for finance and business operations, or designee, is authorized
to invest university funds in compliance with this policy, provisions of
section 3345.05 of the Revised Code and
all other applicable laws and regulations.
(1)
For the purpose of this policy on the investment of the university's
non-endowment and endowment funds (policy), the nonendowment and
endowment portfolios shall include:
(a) All
tuition and mandatory fees, registration, non-resident tuition fees, academic
fees for the support of on- and off-campus instruction, laboratory and course
fees when so assessed and collected, all other fees, deposits, charges,
receipts, and income from all or part of the students, all subsidy or other
payments from state appropriations, and all other fees, deposits, charges,
receipts, and income received. These funds shall be held and administered by
the board of trustees.
(b)
Notwithstanding any provision of the revised code to the contrary, the title to
investments made by the board of trustees with funds derived from revenues
described above shall not be vested in the state but shall be held in trust by
the board. Such investments shall be made pursuant to this investment policy
adopted by the board in public session. Such investments shall be made with the
care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims.
(c) It is the intention of
the board of trustees that actions taken pursuant to this policy shall be in
compliance with all applicable laws as they may be amended from time to time.
No university representative, employee, or agent shall take any action
prohibited by or fail to take any action required by all applicable laws in
carrying out this policy.
(d)
Members of the board of trustees will annually provide to the chair of the
board of trustees a statement disclosing the nature, if at all, of any
relationship with the financial institutions involved with the university's
non-endowment and endowment funds. Any member having a relationship that
creates a conflict prohibited by the ethics laws with any investment entity
will withdraw from participating in the selection of, or authorizing the
contracts of, those investment managers and/or consultants.
(e) External investment managers, consultants
and advisors retained by the university shall immediately notify the chair of
the investment
committee and the vice president for finance and
business operations, or designee, of any potential conflicts of interest which
may develop from time to time. In any such situation, the external investment
manager, consultant and/or advisor shall identify the nature of the conflict of
interest and its potential impact, if any, on the university.
(f) The university's non-endowment portfolio
will remain sufficiently liquid to enable the university to meet all operating
requirements. Portfolio liquidity is defined as the maturity or ability to sell
a security on short notice near the purchase price of the security. To help
retain the desired liquidity, no security shall be purchased that is likely to
have few market makers or poor market bids. Additionally, liquidity shall be
assured by keeping an adequate amount of short-term investments to accommodate
the cash needs of the university.
(g) The university's non-endowment and
endowment portfolios shall be structured with the objective of attaining the
highest possible total return for the investment portfolio while adhering to a
prudent level of risk.
(2) Specific responsibilities of the
investment committee of the board of trustees (hereafter referred to
as the
committee) in the investment process include:
(a) The application of a total return
philosophy of asset management;
(b)
Developing sound and consistent investment policy guidelines;
(c) Setting forth an investment structure for
managing the university's assets. This structure includes identification of
asset classes, strategic asset allocation, and acceptable asset ranges above
and below the strategic asset allocation;
(d) Providing guidelines that control the
level of overall risk and liquidity assumed for the investment portfolio so
that all assets are managed in accordance with stated objectives;
(e) Complying with all applicable fiduciary,
prudence, due diligence requirements, and with all applicable laws, rules and
regulations from various local, state, federal, and international political
entities that may impact fund assets;
(f)
Monitoring and approving the
selection of investment managers;
(g) Selecting and
monitoring an investment consulting organization;
(h) Communicating clearly the major duties
and responsibilities of those accountable for achieving investment
results;
(i)
Evaluating results to assure that the guidelines
are being adhered to and the objectives are being met;
(j) To
review costs
of administering and managing the funds and take action
as necessary; and
(k) Undertaking such
work and studies as may be necessary to keep the board of trustees of the
university adequately informed as to the status of the investment of the
balance sheet assets (the assets).
(3) This policy shall be reviewed every five
years by the
committee or upon the advisement of investment
advisors or management. All material changes to the policy will be approved by
the
committee and submitted to the university's board of
trustees for final approval.
(B) UPMIFA considerations. In accordance with
the state of Ohio's adoption of the Uniform Prudent Management of Institutional
Funds Act (UPMIFA), effective June 1, 2009, the
committee will take the following into consideration
when making investment decisions:
(1) General
economic conditions.
(2) The
possible effect of inflation or deflation.
(3) Expected tax consequences.
(4) The role that each investment plays
within the overall portfolio.
(5)
Expected total return from income and appreciation.
(6) Other resources of the
institution.
(7) Need of the
institution to make distributions and preserve capital.
(8) Assets special relationship or special
value to the charitable purpose.
(C) Purpose. Investments shall be managed for
the use and benefit of the university in a diversified portfolio that focuses,
over time, on the preservation of capital, minimization of cost and risk,
maintenance of required levels of liquidity in the overall portfolio to meet
cash flow requirements, and compliance with state statute. The non-endowment
and endowment portfolios are intended to achieve a reasonable yield balanced
with a component invested for longer-term appreciation.
(1) The purpose of this policy is to assist
the university in more effectively supervising and monitoring the investment
activities of its assets. This policy is designed to assist university staff
and the investment
committee with regard to its fiduciary
responsibility by:
(a) Defining the
responsibilities of university staff, its investment managers, and its
investment consultant;
(b) Stating
in writing the university's attitudes, expectations, and goals for the
investment of the assets;
(c)
Providing a basis for reviewing investment management organizations in the
selection process;
(d) Encouraging
effective communication between the investment managers, investment consultant,
the committee, and Youngstown
state university; and
(e) Setting
objectives against which the performance results of the investment managers,
operating within the constraints imposed by the university's policy guidelines,
can be measured.
(2) A
primary expectation for university assets is to support the university by
providing current income to the university from both non-endowed and endowed
funds, managed on behalf of the university by outside investment professionals,
while concurrently growing principal. The asset base is dedicated to providing
a reliable source of funds for current and future enhancements at the
university.
(D)
Parameters.
(1) Investment assets are to be
held by a reputable custodian/trust company. Investment assets are to be held
in safe-keeping in the name of the university. Evaluation, selection, and
monitoring of the university's custodian will include, but not be limited to,
the following factors:
(a) Size and
scalability of the underlying financial institution;
(b) Delivery of competitive safe-keeping and
trust services as measured by attributes such as systems functionality,
statement delivery, client service, audit controls and reporting capabilities;
and
(c) Safe-keeping and trust
service pricing and fees.
(2) The management of the non-endowment and
endowment funds involves a tradeoff between two competing goals. On the one
hand, the funds must preserve capital and maintain liquidity sufficient to
distribute cash to fund immediate operating needs and prior spending
commitments. To accommodate these objectives, the university will establish the
operating and short-term pool. On the other hand, the funds must accumulate
capital sufficient to support nominal growth in expenses for existing programs
and to establish new quasi-endowment funds. To accommodate these objectives,
the university will establish the long-term/reserve pool. The goal of the funds
is to accommodate these competing needs by providing adequate short-term
liquidity along with long-term capital appreciation.
(3) The
committee recognizes that risk and volatility are
present to some degree with all types of investments. However, high levels of
risk are to be avoided at the total asset level. This is to be accomplished
through diversification by asset class, style of investment manager, and sector
and industry limits.
(4)
Selection of investment managers has been delegated to
the investment consultant, within the framework of the policies and guidelines
approved by the board of trustees.
(5) A written
"Investment Guideline Statement" or prospectus clearly outlining objectives and
responsibilities will be in place with each investment manager. For the
non-endowment funds, the managers shall have discretion to invest assets in
cash reserves as they deem appropriate but will be expected under normal
circumstances to be fully invested in their assigned asset class. A manager's
performance will be evaluated against their fully invested passive benchmark
and against similar portfolio results. Passive benchmarks will be used for
comparative purposes which most closely approximate the investment mandate's
duration, credit quality, security composition, capitalization, style, asset
class, etc.
(6) To the extent
bequests are made to the university via shares of marketable equity securities,
the following provisions apply:
(a) The
policy on bequests as defined by rule
3356-5-07 of the Administrative
Code will supersede all provisions within this policy.
(b) If the bequest is a non-endowed gift, the
securities will be sold as soon as prudently possible.
(c) If the bequest is an endowed gift, the
securities will be invested as specified by the donor and agreed to by the
board of trustees.
(E) Procedures.
(1) The vice president for finance and
business operations, or designee, shall be accountable to the board of trustees
for implementing this policy.
(2)
The vice president for finance and business operations, or designee, will
report to the investment
committee at least quarterly on the status of the
non-endowment and endowment portfolios.
(3) It shall be permissible for the vice
president for finance and business operations, or designee, to realize gains
and losses if such an action is consistent with the university's investment
goals. Losses and gains realized on the non-endowment portfolio shall be
charged against current income unless otherwise approved by the investment
committee.
(4) Between meetings of the board of
trustees, if deemed advisable, other investments not specifically authorized by
this policy may be made if approved by the investment
committee. Any such actions shall be taken to the
board of trustees for review at its next meeting.
(F) Spending policy. The board has
established a spending policy for certain funds. This policy reflects the
tradeoffs between short-term liquidity and long-term capital appreciation
needs, as described in paragraphs C and D of this policy.
(1) Non-endowment assets. Non-endowment
assets are comprised of operating and non-operating funds and include cash,
cash equivalents, and investment assets.
(2) Operating funds comprised of cash, cash
equivalents, and certain investment assets make up the university's general
funds. The use of cash, cash equivalents, and investment assets in these
general funds is not subject to any board-approved spending policy as the
university's annual operating budget establishes parameters for the use of
these funds.
(3) The university's
remaining non-endowed investment assets are primarily in reserve for
project-related funds. Spending within these funds is subject to rule
3356-3-11.1 of the
Administrative Code, project-specific spending plans, and various other
university operating and financial policies and procedures. If deemed necessary
for university operations, university management, working with the investment
consultant, has authority to raise an appropriate level of cash from
non-operating investments.
(4)
Income earned on non-endowed investment assets is primarily used to support
university operations; thus, it is the policy of the board not to limit annual
distributions of realized investment income. The annual operating budget
establishes parameters for the use of this income, and the disposition of total
annual net operating inflows over outflows requires board approval. Unrealized
investment income from non-endowment assets shall always be
non-spendable.
(5) Endowment
assets. It is the policy of the board to set annual distributions each fiscal
year to five per cent of the twelve-quarter average of the market value for the
preceding twelve calendar quarters ending September
thirtieth. Any distribution greater than this would require written
justification and approval by the board of trustees. For all other managed
funds, distributions are project-specific and, thus, are limited only to the
extent needed to sustain appropriate cash flow for the expenditure cycle of the
corresponding project.