140.012 Investment Policy for General Pool

Bd. Min. 12-6-91; Amended Bd. Min. 12-9-93; Amended Bd. Min. 11-14-94; Amended Bd. Min. 12-13-96; Amended Bd. Min. 9-26-97; 1-21-98; Revised 2-01-00; Amended Bd. Min. 9-27-02; Amended Bd. Min. 11-22-02; Revised 1-5-04; Amended Bd. Min. 9-9-04; Amended Bd. Min. 1-26-07; Amended Bd. Min.2-6-09; Amended Bd. Min.6-5-09; Amended Bd. Min.6-17-11; Revised in entirety, Bd. Min. 6-26-12. (Note: Board approval on 6-26-12 replaced previous rules 140.010, 140.011, 140.012 and 140.013 with new language and reissued new rules 140.010 through 140.016.) Amended Bd. Min. 1-31-13.

1. Introduction – The General Pool represents the University’s cash and reserves, both restricted and unrestricted, including, but not limited to, operating funds, auxiliary funds, service operations funds, self-insurance funds, debt service funds, and plant funds.
2. Responsibilities and Authorities – See CRR 140.010 “Policy for Management and Oversight of Selected University Investment Pools”
3. Investment Objectives – The General Pool shall be managed in a way that both recognizes and balances the underlying needs of the pool, including, but not limited to, accommodation of University cash flow cyclicality, satisfaction of various ongoing liquidity needs, maximization of risk-adjusted investment returns, diversification and preservation of capital.
4. Authorized Investments – The General Pool shall be invested both internally and externally, utilizing the following asset sectors:
   

   Sector	Management	Limitations
   Cash and Cash Equivalents	Treasurer’s Office	Minimum allocation should be determined by the University’s overall liquidity needs, including specific self-liquidity needs (if any) of the debt portfolio.  No maximum limitation.
   U.S. Government Securities	Treasurer’s Office	Minimum allocation should be determined by the University’s overall liquidity needs, including specific self-liquidity needs (if any) of the debt portfolio.  No maximum limitation.
   Fixed Income	External Managers	Fixed income allocations should be sufficiently diversified across underlying fixed income sectors; overall risk exposure of fixed income strategies should be consistent with Investment Objectives outlined in 140.012.C.; separate accounts must be utilized; and, fixed income strategies must offer daily liquidity access. Maximum allocation shall be 50% of the total General Pool; with respect to the cash and cash equivalents sector of the total General Pool, a 12 month average balance shall be used.  For all other sectors, actual ending balances shall be used.
   Absolute Return / Risk Parity	External Managers	Maximum allocation shall be 25% of the total General Pool; with respect to the cash and cash equivalents sector of the total General Pool, a 12 month average balance shall be used.  For all other sectors, actual ending balances shall be used.

   
   Utilization of external managers shall be consistent with the guidelines established in CRR 140.011 “Policy for Investment Manager Selection, Monitoring and Retention.”
5. Authorized Instruments for Internally Managed Funds – The University is authorized to use any or all of the following investment instruments for General Pool funds managed internally by the Treasurer’s office:
   1. Cash and Cash Equivalents
      1. Repurchase agreements collateralized by U.S. Government and U.S. Government Agency securities.
      2. Money market funds which are SEC 2a-7 compliant and have received the highest possible rating by at least two Nationally Recognized Statistical Ratings Organizations.
      3. Commercial paper which has received a rating of at least A1 / P1 / F1 by two Nationally Recognized Statistical Ratings Organizations.
      4. Other similar short-term investment instruments of like or better quality.
   2. U.S. Government Securities
      1. U.S. Treasury securities, U.S. Government Agency securities and U.S. Government guaranteed securities, including but not limited to: all direct obligations of the U.S. Government, Federal Farm Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation.
6. Risk Management
   1. The Treasurer shall establish and implement procedures to:
      1. Monitor the ongoing risk exposure of the General Pool, which should be consistent with the Investment Objectives outlined in 140.012.C.  To the extent risk exposure begins to exceed expectations, given Investment Objectives outlined in 140.012.C, the Treasurer shall take steps to reduce risk exposure to tolerable levels.
      2. Maintain appropriate reserves within the General Pool to adequately manage through periods of market volatility.
      3. Regularly monitor and forecast the University’s cash flows.
   2. The Treasurer shall establish contingency plans for unanticipated market / liquidity events.
7. Excluded Instruments – The General Pool shall not be deemed to include, and the limitations contained herein shall not be deemed applicable to, any program-related funds, instruments, and assets not held primarily for investment such as interests governed by CRR 70.070, “Entrepreneurial Activity.”