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Section VIII, Fiscal Management

8.01. Fiscal Management

Effective Date: 4/14/15

The Central New Mexico (CNM or the College) Governing Board delegates to the CNM President responsibility for general fiscal management of the College. The Board shall adopt specific policies relative to fiscal management as required by state statute and as otherwise deemed appropriate. Any appropriate related procedures will be included in the Source – the procedures online manual at CNM. These policies-which may be included as separate policies in the Governing Board Handbook or related documents shall be on file in the President's Office and shall include, but not be limited to, the following:

  1. Budget. The Board annually shall conduct a public budget review and approve a budget for the College for the next fiscal year. The Board shall approve all budget adjustment requests made to the New Mexico Higher Education Department.
  2. Agreement between Governing Board and CNM Foundation. The Governing Board and the CNM Foundation shall have a memorandum of agreement addressing their relationship, the Foundation's organization and function, and the management and distribution of gifts and donations. See the CNM Foundation Amended and Restated MOU.
  3. Agreement between Governing Board and CNM Ingenuity. The Governing Board and CNM Ingenuity shall have a memorandum of agreement addressing their relationship, Ingenuity’s organization and function, and the management and disbursement of gifts, donations, and other funds. See the CNM Ingenuity MOU.
  4. Audits. The Board shall adopt an Internal Audit Charter to provide guidelines relative to audits and evaluations of the College’s fiscal operation. See the Internal Audit Charter.
  5. Signature Authority, Check Signing and Wire Transfer Authority. The Board authorizes the President to designate persons to sign checks and authorize wire transfers. The Board also authorizes the President to designate persons and/or College roles authorized to legally bind the College by signing financial documents and other agreements. See the Signature Authority Change.
  6. Investments. The Governing Board shall adopt a policy providing guidelines for investment of College assets. See the CNM Investment Policy.
  7. Endowment Funds. The Governing Board shall develop an oversight and investment policy for the CNM endowment funds.
  8. Travel. The Board shall adopt a policy outlining reimbursement and arrangements for College-related travel, including establishing maximum mileage and per diem rates consistent with state statute. See Employee Handbook, 6.03 Payment for Travel and Travel Related Conferences.
  9. Procurement. The Board shall adopt a policy that follows state statute (The Procurement Code) in the procurement of services, tangible personal property, and construction. See Governing Board Handbook, 8.03 Procurement.
  10. Representation and Entertainment Expenses. The Board shall adopt a policy regarding use of appropriated funds and the College’s general activity account (GAA) for representation and entertainment expenses. See GAA Governing Board Policy.
  11. Debt Management. The Board shall adopt a debt management policy to provide a framework to guide decisions regarding the use and management of College debt. Adherence to debt policies will help to ensure that the College maintains a sound debt position and that credit quality is protected. See the Debt Management Policy.
  12. Fund Balance Policy. The Board shall adopt a fund balance policy that assures long term fiscal stability for the College. See the CNM Fund Balance Policy.

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8.02 Master Plan & Capital Outlay Projects

Effective Date: 2/6/16

  1. As part of the annual CNM Master Plan process, the CNM Governing Board shall approve the acquisition and disposition of real property and other capital outlay projects that have an estimated project cost exceeding $100,000 ( including gross receipts tax) and that fall under the following categories:
    1. Any sale or purchase of real property. An independent appraisal of the property shall be obtained.
    2. Any project which results in the additional square footage, whether from construction or long-term lease of a new facility or building addition, or purchase of portable buildings
    3. Any proposal to issue bonds.
    4. Any alterations, site improvements,new building construction or building renovation.
    5. Any demolition of real property.
    6. Any informational technology (IT) project based on total estimated costs exceeding $100,000 (including gross receipts tax).
  2. The Governing Board approval shall occur annually as part of the update to the five-year Master Plan project list provided by administration. Any project not included in the annual Master Plan, with an estimated project costs exceeding $100,000 (including gross receipts tax) project list will be presented to the full Board for project approval as an out-of-cycle master plan project.
  3. Change orders that increase the approved costs of a Master Plan project by up to ten percent (10%) may be approved by the Vice President for Finance and Operations.
  4. Change orders that increase the approved cost of a project by more than ten percent (10%) shall be presented to the Capital Outlay Committee of the Governing Board for approval.
  5. The sale, trade or lease of any CNM owned Real Property, for a period of more than five (5) years or more than $25,000, requires New Mexico Board of Finance Approval per 1.5.23 NMAC.
  6. Master Plan Projects that include any of the following require New Mexico Higher Education Department Approval per 5.3.10.8.C NMAC.
    1. Any purchase of Real Property.
    2. Projects that result in additional square footage (including leases).
    3. Proposals to issue Bonds.
    4. Alterations or site improvements with an estimated project costs in excess of $300,000.
  7. Maintenance projects for facilities and information technology may be considered Master Plan or Capital Outlay projects.
  8. Capital Outlay Projects that are less than the amount to be considered to be a Master Plan Item will require the following College Approvals:
    1. Major Small Project Item: projects that have an estimated project cost greater than the amount allowed under small purchases (including gross receipts taxes) per Section 13-1-125 NMSA 1978 and less than the amount to be considered a Master Plan item, will require approval by the Budget Office and CNM Executive Oversight Committee (EOC). With the latest change to Section, 13-1-125 NMSA 1978 Effective July 1, 2013 this would be any project with projected costs greater than $60,000 (including gross receipts tax) and less than $100,000 (including gross receipts tax).
    2. Minor Small Project Items: projects that have estimated project costs that do not exceed the amount allowed under the small purchase limits (including gross receipts taxes) per Section 13-1-125 NMSA 1978 will require approval of the Budget Office and the division Vice President for the requesting division or the President (or designee) for other direct reports.

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8.03 Procurement

Effective Date:7/12/16

Section 13-1-97-C NMSA1978 requires all procurement for local public bodies shall be performed by a central purchasing office designated by the governing authority of the local public body and Section 13-1-95.2 NMSA1978 requires effective January 1 of each year beginning in 2014 and every time a chief procurement office is hired, the local public body shall provide to the state purchasing agent the name of the local public body’s chief procurement officer and information identifying the local publics body’s central purchasing office.

Section 13-1-30 NMSA 1978 requires that except as otherwise provided in the Procurement Code [Sections 13-1-28 through 13-1-199 NMSA 1978], that code shall apply to every expenditure by state agencies and local public bodies for the procurement of items of tangible personal property, services and construction.

  1. The CNM Director of Purchasing and Materials Management will serve as the CNM Chief Procurement Officer as required by Section 13-1-95.2 NMSA 1978 and the CNM Purchasing Office will be designated as the central purchasing office for all procurement as required by Section 13.1-95-C NMSA 1978.
  2. The CNM Procurement Office will maintain policies and procedures for the procurement of items of tangible personal property, services, and construction that comply with the Procurement Code (Sections 13-1-28 through 13-1-199 NMSA 1978).
  3. The CNM Chief Procurement Officer, with the consent of the Vice President of Finance and Operations, may delegate to subordinates as deemed necessary and appropriate by clearly delineating in writing such delegated authority and the limitations thereto.
  4. Master Plan Project procurement with an actual or potential value of $300,000 or more, inclusive of gross receipts tax, must be approved by the Governing Board Capital Outlay Committee.
  5. Master Plan project procurements with an actual or potential value of $500,000 or more, inclusive of gross receipts tax, must be approved by the Governing Board Capital Outlay Committee and subsequently, by the full Governing Board.
  6. Any non-Master-Plan procurement with an actual or potential value of $500,000 or more, inclusive of gross receipts tax, must first be approved by the Governing Board Finance Committee and, subsequently, by the full Governing Board.
  7. Contracts for legal or external auditing services having a value that meets the New Mexico Procurement Code requirements for small purchases per Section 13-1-125 NMSA 1978; an emergency procurement per Section 13-1-127 NMSA 1978; or sole source procurement per Section 13-1-126 NMSA 1978 may be awarded by the central purchasing office without further review or approval by the Governing Board.
  8. Contracts for legal or external auditing services having a value that exceeds the New Mexico Procurement Code requirements for small purchases, and/or does not meet the requirements for emergency or sole source procurement shall be evaluated and selected in accordance with the following procedures. All applicable general requirements of the Procurement Code shall be followed.
    1. Upon receipt of the proposals, the central purchasing office shall make a determination as to the responsiveness of each proposal and forward all responsive offers to the chairperson of the Governing Board for legal services or the Audit Committee of the Board for auditing services.
    2. Based on the proposals and the evaluation criteria set forth in the request for proposals, the Board (or delegated subcommittee) meeting in closed session shall evaluate statements of qualifications and performance data submitted by the responsive offerors and may conduct private interviews with and may require private presentation by any responsible offeror regarding their qualifications, their approach to the project and their ability to furnish the required services. In conducting its evaluation, the Board (or delegated subcommittee) shall be guided by the criteria set forth in the request for proposals.
    3. In determining which offerors best meet the evaluation criteria, each responsive proposal shall be rated according to the numerical or other quantitative measures assigned to the evaluation criteria approved by the Board.
    4. The Board (or delegated subcommittee) shall privately rank and give evaluation scores for the proposals of all responsible offerors submitted and shall make a selection from among the ranked/recommended offerors, except that all ranked/recommended offerors may be rejected, in total. In the event of a rejection of all ranked/recommended offerors by the Board (or the delegated subcommittee), the Board shall state its reason or reasons for rejection which shall be placed in the minutes of the meetings at which the rejection takes place. Upon rejection, the procurement process shall cease and a new request for proposals may be issued.
    5. Responsible offerors ranked, scored and recommended by the Board (or designated subcommittee) may be afforded an opportunity for discussion and revision of proposals. Revisions may be permitted after submissions of proposals and prior to award for the purpose of obtaining best and final offers. Negotiations may be conducted with responsible offerors who submit proposals found to be reasonably likely to be selected for award.
    6. The Board (or delegated subcommittee) may make its selection on the basis of a study of the proposals submitted by the offerors recommended by the appropriate subcommittee, or by privately interviewing such offerors in a closed meeting, or by a combination of these methods.
    7. The Board’s (or delegated subcommittee) selection shall be effective only upon the affirmative vote of a majority of a quorum of the Board at a public meeting.
    8. Generally, the task of negotiating contract terms with the selected offeror or offerors is delegated to the central purchasing office. If needed, assistance from legal counsel is permitted.
    9. The award shall be made to the responsible offeror or offerors whose proposal is most advantageous to Central New Mexico Community College, taking into consideration the evaluation factors set forth in the request for proposals.
    10. The names of all businesses submitting proposals and the names of businesses, if any, selected for private interview shall be public information. After an award has been made by the Board, final ranking and evaluation scores for all proposals shall become public information. Businesses which have not been selected shall be so notified in writing after an award is made in accordance with New Mexico Procurement Code.

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8.04 Electronic Transactions

Effective Date: 3/10/15

The Board delegates to the President responsibility for developing procedures for CNM electronic transactions. Electronic transactions must comply with the following provisions in accordance with the Uniform Electronic Transactions Act (NMSA 1978, §14-16-1 et seq.):

  1. Electronic transactions shall be conducted exclusively through CNM’s official website or the website of a CNM approved vendor;
  2. A party wishing to express its assent in an electronic transaction with CNM shall provide such assent electronically in the manner and format prescribed by the terms of the particular agreement;
  3. A record of an electronic transaction shall be capable of retention by all parties; and
  4. CNM shall retain a record of all electronic transactions, and such record shall be kept confidential to the extent permitted by law.

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8.05 Inventory and Disposition of CNM Property

Effective Date: 11/10/15

Central New Mexico Community College (“CNM”) will dispose of its real property and tangible personal property in accordance with state law. See NMSA 1978, §§ 13-6-1 and 13-6-2. Pursuant to state law, CNM’s Governing Board designates the Capital Outlay Committee to approve and oversee the disposition of property. Inventory shall be conducted in accordance with state law. See NMSA 1978, § 12-6-10.

A. Physical Inventory of Movable Chattels (Cost greater than $5,000)

CNM shall, at the end of each fiscal year, conduct a physical inventory of movable chattels and equipment costing more than five thousand dollars ($5,000) (Capital Assets) and under the control of the Governing Board. The inventory shall list the chattels and equipment and the date and cost of acquisition. Upon completion, the inventory shall be certified by the Governing Board as to correctness.

B. Disposition of Obsolete, Worn-Out or Unusable Tangible Personal Property (Resale value less than $5,000; Initial cost of $5,000 or more)

CNM’s Capital Outlay Committee, through the authority granted by the Governing Board of CNM, may dispose of any item of tangible personal property, with an initial cost of $5,000 or more, that belongs to CNM and delete the item from CNM’s public inventory if an item:

  • has a resale value of $5,000 or less;
  • is worn-out, unusable or obsolete, to the extent the item is no longer economical or safe for continued use by CNM.

Prior to deletion of tangible personal property, CNM’s Capital Outlay Committee shall give no less than a thirty-day notice to the State Auditor and New Mexico Higher Education Department. Such notice shall include a copy of the official finding and the proposed disposition of the property, duly sworn and subscribed by each member of the Capital Outlay Committee. For digital equipment with storage capabilities, regardless of initial cost, the Capital Outlay Committee must also certify, in writing, the proper erasure or destruction of the hard drive and submit the certification along with the notification of the proposed disposition of property.

A copy of the official finding and proposed disposition of the property sought to be disposed of shall be made a permanent part of the official minutes of the Governing Board and maintained as a public record subject to New Mexico’s Inspection of Public Records Act.

The Governing Board or designee shall attempt to dispose of tangible personal property in one of the following methods:

  • By negotiated sale to any governmental unit of an Indian nation, tribe or pueblo in New Mexico or by negotiated sale or donation to other state agencies, local public bodies, school districts, state educational institutions or municipalities or through the Purchasing Department by means of a competitive sealed bid or public auction.
  • If disposal of the subject property is not possible through one of the methods above, the Governing Board may sell, or if the property has no value, donate the property to any organization described in Section 501(C)(3) of the Internal Revenue Code of 1986.
  • If disposal is not possible by selling or donating the subject property as described above, the Governing Board may order that the subject property be destroyed or disposed of in accordance with any applicable laws.
  • If the Governing Board determines that the subject property is hazardous or contains hazardous materials and may not be used safely, the subject property shall be destroyed and disposed of in accordance with all applicable laws.

Under no circumstances shall CNM’s tangible personal property be donated to an employee or relative of an employee. This does not, however, preclude an employee from participating and bidding for public property at a public auction.

C. Disposition of Obsolete, Worn-Out or Unusable Tangible Personal Property (Initial cost less than $5,000)

The disposal of property with an initial cost of less than $5,000 does not require approval from the Capital Outlay Committee prior to disposal with the exception of digital equipment with storage capabilities. Disposition shall take place according to the methods set forth in Section B of this policy.

D. Disposition of Real Property or Tangible Personal Property (Resale value greater than $5,000)

Upon written determination, CNM may sell or dispose of its real property or tangible personal property in one of the following methods:

  • by negotiated sale or donation to an Indian nation, tribe or pueblo located wholly or partially in New Mexico, or to a governmental unit of an Indian nation, tribe or pueblo in New Mexico, that is authorized to purchase land and control activities on its land by an act of congress or to purchase land on behalf of the Indian nation, tribe or pueblo;
  • by negotiated sale or donation to other state agencies, local public bodies, school districts or state educational institutions; or
  • through the central purchasing office using a competitive sealed bid, public auction or negotiated sale to a private person or to an Indian nation, tribe or pueblo in New Mexico.

The disposition of real property or tangible personal property with a resale value over $5,000 may take place if the disposition has been approved by the New Mexico Higher Education Department.

Any sale, trade or lease of real property belonging to CNM for a consideration of $25,000 or more shall not be valid unless it is approved prior to its effective date by the State Board of Finance.

Prior approval from the New Mexico Higher Education Department is not needed if the tangible personal property is to be used as a trade-in or exchange pursuant to the provisions of New Mexico’s Procurement Code. See NMSA 1978, §§ 13-1-156, as amended.

The New Mexico Higher Education Department may condition the approval of the sale or other disposition of real property or tangible personal property upon the property being offered for sale or donation to a state agency, local public body, school district or state educational institution. In addition, the New Mexico Higher Education Department may credit a payment received from the sale of real property or tangible personal property to CNM. CNM may convey all or any interest in real property or tangible personal property without warranty.

E. Missing or Stolen Property

If a reasonable investigation determines that negligence is not indicated, and every effort has been made to recover lost or stolen items, CNM’s Capital Outlay Committee shall notify the State Auditor of the deletion of the items from its inventory. Copies of Missing/Stolen forms and Incident Reports must be forwarded to CNM’s Internal Auditor.

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8.06 Investment Policy

Effective Date: 11/8/2016

A. Purpose

The purpose of this Investment Policy (“Policy”) is to set forth specific investment policy and strategy guidelines for the College in order to achieve the goals of ensuring safety of principal, maintaining adequate liquidity, maintaining public trust for all investment activities, and achieving the best allowable yield commensurate with the risk criteria of this Policy.

B. Legal Restrictions.

The College will invest funds in conformity with federal and state laws and regulations, including Internal Revenue Services (IRS) regulations pertaining to tax exempt bonds, bond resolutions and indentures, and other pertinent legal restrictions. These laws and regulations include but are not limited to NMSA 1978, § 6-8-1 et seq. and § 6-10-1 et seq., NMSA 1978; Uniform Prudent Investor Act, NMSA 1978, § 45-7-601 et seq.; Uniform Prudent Management of Institutional Funds Act, NMSA 1978 § 46-9A-1 through § 46-9A-10 NMSA 1978; and Internal Revenue Code on Arbitrage, 26 USC § 148.

C. Investment Responsibility and Control

The Governing Board delegates the authority to invest the College funds to the Vice President for Finance and Operations or designee. Therefore, the Vice President for Finance and Operations or designee is designated as the College's Investment Officer and is authorized to deposit, withdraw, invest, transfer or manage in any other manner the funds of the College. No persons may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Vice President of Finance and Operations or designee. The Vice President for Finance and Operations is responsible for ensuring proper internal controls are in place. The system of controls shall be designed to provide reasonable assurance that ensures the assets of the College are protected from loss, theft or misuse.

The Vice President for Finance and Operations or designee may delegate any phase of the investment program to the Comptroller or designee. The Comptroller or designee is responsible for daily investment activities; however, ultimate responsibility for investment decisions will rest with the Vice President of Finance and Operations.

Individuals responsible for investment decisions shall exercise reasonable judgment, care, skill and caution to invest and manage as a prudent investor would by considering the objectives, terms, and distribution requirements while preserving capital.

D. Investment Funds

The Investment Policy shall govern the investment of all financial assets considered to be part of the College entity and includes the following funds or fund types:

  • Operating Funds;
  • Plant Unexpended and Plant Renewal and Replacement Funds;
  • Debt Service Funds and
  • Bond funds are governed by bond ordinances and covenants and are subject to the provisions of the Internal Revenue Code and applicable federal regulations governing the investment of bond proceeds.
  • Any other funds which have been contractually delegated to the College for management purposes, excluding endowed funds.

The College may add or delete funds as may be required by law or for proper accounting procedures.

E. Investment Objectives

The College shall manage and invest its cash with four primary objectives, listed in order of priority: safety, liquidity, yield, and public trust. The safety of the principal invested always remains the primary objective. All investments shall be designed and managed in a manner responsive to public trust and consistent with all applicable New Mexico statutes, this Policy and any other approved, written administrative procedures.

The four objectives of the College's investment activities shall be as follows (in the order of priority):

  • Safety of Principal. Safety of principal invested is the foremost objective in the investment decisions of the College. Each investment transaction shall seek to ensure the preservation of capital in the overall portfolio. The risk of loss shall be controlled by investing only in authorized securities as defined in this Policy, by qualifying the financial institutions with which the College will transact, and by portfolio diversification. Safety is defined as the undiminished return of the principal on the College's investments.
  • Liquidity. The College's investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Because all possible cash demands cannot be anticipated, a “liquidity” portion of the portfolio may also be placed in money market mutual funds or local government investment pools which offer same day or next day liquidity for short-term funds.
  • Market Rate-of-Return (Yield). The College's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objective described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed.
  • Public Trust. All participants in the College's investment program shall seek to act responsibly as custodians of the public trust. Investment officials shall avoid any transaction, which might involve a conflict of interest or otherwise impair public confidence in the College's ability to govern effectively. All officials of the College having either a direct or indirect role in the process of investing idle funds shall act responsibly as custodians of the public trust.

The College shall maintain a comprehensive cash management program, which includes collection of accounts receivable, vendor payments in accordance with invoice terms, and prudent investment of available cash. Cash management is defined as the process of managing monies in order to ensure maximum cash availability and maximum yield on short-term investment of pooled idle cash.

F. Risk Management

As stated previously, safety of principal is the primary objective in investing the College funds and can be accomplished by limiting two types of risk-credit risk and interest rate risk.

  • Credit risk is the risk associated with the failure of a security issuer or backer.
  • Interest rate risk is the risk that the value of a portfolio will decline due to an increase in the general level of interest rates.

In order to provide for safety of principal as the College’s primary objective, only certain investments are authorized as acceptable investments for the College. The College is not required to liquidate investments that were authorized investments at the time of purchase. The following list of authorized investments for the College intentionally excludes some investments authorized by law. These restrictions are placed in order to limit possible risk and provide the maximum measure of safety to the College funds.

The College has a very low tolerance for investment risk, and investment managers will consider this risk tolerance and take appropriate steps to control risk by adhering to the College's desired asset class and sector allocation rates listed in the table below. Investments should have an average duration of three years or less, an average credit quality of A1/A+ or better.

G. Diversification

To the extent practical, assets shall be diversified to reduce the risk of loss resulting from an over-concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. With the exception of U.S. Government securities, as authorized in this Policy, and authorized local government investment pools, no more than fifty percent (50%) of the total investment portfolio will be invested in any one security type or with a single financial institution. Diversification of the portfolio considers diversification by maturity dates and diversification by investment instrument.

H. Permitted Investments/Allowable Assets.

The scope of authority for the types of investments that may be made with College funds is statutorily defined in NMSA 1978, § 6-10-10 and NMSA 1978, § 6-10-10.1. College assets may be invested in any securities permitted by law, subject to the provisions of this investment policy. Allowable assets include the following:

The following diversification limits shall apply to general fund portfolio:

Allowable Securities

Diversification Limits

Further Limitations

US Treasury Obligations

100%

 

US Agency Obligations

100%

Per Issuer: 35%

US Agency Issued Mortgage Securities

25%

 

Federally Insured Deposit Products

50%

Including brokered certificates of deposit, certificate of deposit account registry service and federally insured cash accounts.

Bank New Mexico Demand Deposits

50%

See collateral requirements Section of this policy for 30% per institution limits.

Certificates of Deposit

$10 Million

See collateral requirements Section of this policy.

NM LGIP

100%

 

Municipal Securities

15%

Per Issuer: 5%

Repurchase Agreements

50%

Per Counterparty: 25%

Variable Rate Obligations

25%

 

Callable Securities

25%

 

The following diversification limits shall apply to bond funds:

Allowable Securities

Diversification Limits

Further Limitations

US Treasury Obligations

100%

 

US Agency Obligations

100%

 

US Agency Issued Mortgage Securities

25%

 

Federally Insured Deposit Products

50%

Including brokered certificates of deposit, certificate of deposit account registry service and federally insured cash accounts.

Bank Demand Deposits

50%

See collateral requirements Section of this policy for 40% per institution limits.

Certificates of Deposit

$10 Million

See collateral requirements Section of this policy

NM LGIP

100%

 

Municipal Securities

15%

Per Issuer: 5%

Repurchase Agreements

50%

Per Counterparty: 25%

Variable Rate Obligations

25%

 

Callable Securities

25%

 

 

I. Maturity Restrictions.

1. Maturity limits for the longer term component:

Allowable Securities

Maturity Limits

Further Limitations

All Securities

5 Years

Max Duration: 3 Years

Certificates of Deposit

3 Years

 

Municipal Bonds

3 Years

 

Term Repurchase Agreements

1 Year

Bond Funds: 3 Years

 

Maximum maturity for any single security should closely correlate to the duration/liability schedule. Fixed income managers will maintain the duration of their portfolios to correlate to the duration of the index (market or customer liability index) assigned to their portfolio and to minimize interest rate and market risks. All trades should be competitively bid and well documented.

Operational funds and bond proceeds are primarily invested in high quality, relatively short-term fixed income securities not exposed to significant market risk. Competitive bid for securities means the selection of securities through a solicitation or review and evaluation of online inventory offerings from various broker/dealers. Each trade should have a minimum of three bids.

Investment grade means, for purposes of this policy, a rating within any of the following rating ranges by at least two of the rating agencies:

Rating Agency

Long-Term

Short-term

Standard & Poor’s

AA to AAA

A-1

Fitch

AA to AAA

F1

Moody’s

Aa2 to Aaa

P-1

J. Collateralization

All deposits and investments in commercial financial institutions shall be collateralized as statutorily defined. Public money may be deposited/invested with banks, savings banks and credit unions, which have qualified as public depositories per state statute. All banks and savings banks in which the College funds deposited are in excess of $250,000.00 will be required to enter into a Collateral Security Agreement which shall be mutually agreed upon by the Vice President for Finance and Operations and the financial institution per NMSA 1978, Section 6-11-18A. These bank deposits must be collateralized for any balances above the amount insured by FDIC insurance ($250,000). Collateral requirements are per bank and must have a daily closing price (“mark-to-market”) that is equal to or greater than amounts listed in the chart below:

 

Collateral Required:

Portfolio

Concentration

Bank Criteria

1.

50%

Per the statutory requirements of Sections 6-10-15, 6-10-16 and 6-10-17, NMSA 1978.

Less than or equal to 30% of investable funds of the College.

  1. Qualified depository per 6-10-10(A), NMSA, 1978.
  2. The bank meets all of the risk assessment ratio requirements outlined in NMAC 2.60.4.9 to qualify to collateralize at the 50% level for public funds of the State of New Mexico.

 

2.

102%

Greater than 30% of investable funds of the College.

  1. Qualified depository per 6-10-10(A), NMSA, 1978.

 

K. Controls:

Custody and Safekeeping.

All investment securities purchased by the College, held as collateral on repurchase agreements and bank deposits shall be held in third-party safekeeping at a financial institution qualified to act in this capacity.

All securities held for the College’s portfolio will be held free and clear of any lien and all transactions will be conducted in compliance with NMSA 1978 § 6-10-10 with a goal of contemporaneous transfer and same day settlement.

The custodian will provide monthly reports, which list all transactions that occurred during the month and all securities held for the College at month-end including the book and market value of holdings and performance related to any approved benchmarks.

Representatives of the custodian responsible for, or in any manner involved with, the safekeeping and custody process of the College’s assets shall be bonded in amounts required by the College under a custody agreement to protect from losses, from malfeasance and misfeasance.

All trades to be done Delivery vs. Payment (DVP).

Authorized Broker-Dealers.

Unless there is a registered investment advisor/manager executing trades on behalf of the College, all brokers and dealers will be authorized by the Governing Board and managed by the Investment Officer. The College will maintain a list of broker-dealers authorized to provide investment services to the College. Authorized Broker-Dealers will be limited to those who meet all of the following conditions:

  • Broker-Dealer refers to firm and individual employees of these firms that have direct contact with the College Investment Officer.
  • The Broker-Dealer must be a registered dealer pursuant to the Uniform Securities Act of New Mexicoand,
  • The Broker-Dealer must be registered with the financial industry regulatory authority (FINRA); and,
  • The Broker-Dealer must have a minimum of five (5) years of current and continuous employment history involving fixed income securities; and,
  • All assigned individuals who have direct contact with securities trading between the College and the firm must have a FINRA Series 7 license, or equivalent certification.

L. General Investment Performance

The College's investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio shall be designed with the objective to obtain a market rate of return on investments commensurate with investment risk constraints and cash flow requirements of the College. The Investment Portfolio will be compared to an approved benchmark that appropriately models an expected risk and return profile. The benchmark does not represent a hurdle to beat, but instead it provides a tracking device to monitor the portfolio.

M. Reporting

The Investment Officer or designee shall prepare monthly reports of investment activity and investment balances for review and approval by the Vice President of Finance and Operations. An annual report summarizing the activity and balances for the fiscal year shall be prepared as of June 30 each year and presented to the Governing Board at its October meeting.

N. Specific Reporting Requirements for Any Funds Invested outside of the State Pools.

The report will include, at a minimum, the following:

  • An executive summary that provides an analysis of the status of the current Investment Portfolio and the individual transactions that were executed;
  • An asset listing showing par value, cost, market value, type of investment, issuer, and interest rate of securities held;
  • WAM and effective duration of the Investment Portfolio compared to applicable approved benchmarks;
  • Average portfolio credit quality;
  • Total rate of return for the Investment Portfolio for the one month, three months, and twelve months with applicable approved benchmark returns for the same periods;
  • Any cash flow projections prepared for the portfolio;
  • Sensitivity or Shock analysis;
  • Transaction listing for the reporting period;
  • A report of primary issues purchased and report of secondary issues purchased or sold;
  • Transaction summaries for the reporting period and fiscal-year-to-date that include trade volumes, distributions by type of investment and counterparty;
  • Collateral compliance on deposits; and
  • Investment Compliance Review to include any violations of this Investment Policy.

O. Investment Policy Adoption and Amendment

The College's Investment Policy shall be adopted by resolution of the Governing Board only. It is the College's intent to comply with state laws and regulations. The college's written policies and procedures for investments are subject to review not less than annually to stay current with changing laws, regulations and needs of the College.

P. Governing Board Review.

The Board shall review and approve this investment policy, as necessary, but at a minimum annually.

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8.07 Investment Policy (Endowment Funds)

Effective Date: 11/8/2016

A. Purpose

The purpose of this Investment Policy (“Policy”) is to provide guidance and to delineate responsibility for the management of the CNM Endowment funds and to establish investment goals, objectives, and policies that will provide prudent management of those funds.

B. Legal Restrictions

The College will invest funds in conformity with federal and state laws and regulations, and other pertinent legal restrictions. These laws and regulations include but are not limited to NMSA 1978, § 6-8-1 et seq. and § 6-10-1 et seq., NMSA 1978; Uniform Prudent Investor Act, NMSA 1978, § 45-7-601 et seq.; Uniform Prudent Management of Institutional Funds Act, NMSA 1978 § 46-9A-1 through § 46-9A-10 NMSA 1978 and NMSA 1978, § 21-1-38 et seq.

C. Investment Funds

This Investment Policy shall govern the investment of all financial assets considered to be part of Central New Mexico Community College Endowment Funds.

D. Investment Objectives

Endowment Funds are generally held for long-term growth with which the income can be spent. These funds are to maintain a mixed, balanced portfolio designed to provide a predictable and reliable source of income as well as long-term growth in the value of the funds’ assets while maintaining risk at acceptable levels. The investment objective for these funds is to enhance the long-term growth in value of the funds in “real dollar” terms, and to achieve a targeted rate of growth equal to the Consumer Price Index (CPI) over a 5 year rolling period plus five percent (5%) so that the investment base appreciates in value to meet the needs and goals of the Institute.

E. Diversification

To the extent practical, assets shall be diversified to reduce the risk of loss resulting from an over-concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. Investments will be diversified to minimize risk. No single issuer of debt or equity should make up more than 5% of the Portfolio except for U.S. government obligations.

F. Investment of Endowment Funds

Endowment Funds represent those funds donated or restricted by the donor for specific purposes. The Endowment Funds are set aside for investment purposes, and the uses for the income from those investments have generally been designated by the creation of the endowment or fund. Given the fund purposes and where permitted, the intent is to preserve the Endowment Funds while providing reasonable levels of income for the designated beneficiaries.

The College’s principal investment objectives are to maximize investment income and long-term growth of its portfolio while, at the same time, minimizing investment risk. It is the College’s intent to diversify the invested funds as much as possible. Adequate diversification may better control risk and minimize the impact of normal market fluctuations on the Endowment Funds’ overall value.

The scope of authority for the types of investments that may be made with endowment funds is statutorily defined in Sections 6-10-10, 6-10-10.1, and 21-1-38 New Mexico Statutes Annotated 1978. College assets may be invested in any securities permitted by law, subject to the provisions of this investment policy. Allowable investments include the following:

  • Pooled Investment Funds/Vehicles Maintained by the State Investment Council (SIC)
  • New Mexico Local Government Investment Pool (LGIP)
  • In accordance with Sections 21-1-38. B(1)(b) and 21-1-38. B (2), New Mexico Statutes Annotated 1978, the Central New Mexico Community College Governing Board may designate the Central New Mexico Community College Foundation Finance & Investment Committee to act as the official Advisory Committee to oversee and manage the investment of both the Central New Mexico Community College and the Central New Mexico Community College Foundation, Inc. (the “Foundation”)’s endowment funds. The Central New Mexico Community College Endowment Funds will be separate from The Central New Mexico Community College Foundation Endowment Funds for both accounting and investment purposes.
  • Also in accordance with Sections 21-1-38. B(1)(b) and 21-1-38. B (2), New Mexico Statutes Annotated 1978, the Central New Mexico Community College Governing Board may employ an institutional endowment funds investment manager and delegate to the manger the power to make purchases, sales, exchanges, investment and reinvestments of endowment funds.

G. Performance Standards

The investment objectives for endowment funds are intermediate to long-term in nature, so that the investment base appreciates in value to meet the wishes of the donor and the needs of the College. Consequently, short-term variation in returns is considered normal and thereby acceptable. For purposes of performance appraisal, the investment horizon is defined as one full market cycle, normally three to five years. Performance should be measured on a time-weighted, annualized basis with primary emphasis on results experienced over one (1)-, three (3)- and five (5)-year periods.

H. Asset Allocation

The Central New Mexico Community College Endowment Funds should have an asset allocation strategy which shall protect them against inflation and promote growth. With consideration given to the intermediate and long-term goals of the fund, the following ranges are defined as suitable for portfolio asset allocation:

  • Certificates of deposit are authorized to the extent of FDIC insurance coverage.
  • The Portfolio can contain U.S. Treasury bills and notes and U.S. agency securities.
  • Investment managers may also purchase fixed income securities issued by non-U.S. sovereign governments or corporations The fixed income portion of the portfolio is limited to a 10% allocation to Non U.S bonds.
  • For Equities managers should generally invest in securities whose stock is traded on the New York Stock Exchange, the American Stock Exchange, the NASDAQ, or other U.S. regional exchanges. Managers may purchase stocks of companies domiciled in countries other than the United States. The selection of companies, country and regional biases, and mix between stocks and cash within the Manager’s portfolio will be at the full discretion of the Manager.
  • Short selling, margin transactions, and derivative trading are discouraged. The Portfolio cannot hold unregistered securities.
  • The following table sets out the asset allocation guidelines for the portfolio. Any temporary cash held within the portfolio under an equities or bond asset class will be considered as part of that asset class and not part of the cash position.

ENDOWMENT POOL

Asset Class

Long-term Policy Weight %

Rebalancing Range %

Appropriate benchmark

U.S Large Cap Equities

35

20 - 50

Russell 1000

U.S Small-Mid Equities

15

5 - 20

Russell 2500

International Equities

10

10 - 30

MSCI World Ex. USA

Global Fixed Income

35

25 - 50

Barclays Aggregate Bond Index

Cash

5

0 - 20

3 Month T-Bills

Total

100

Should market movements create asset exposure outside the above ranges, reallocation should be effected within 90 days and such situation will not be considered a violation of this policy.

The college is authorized to invest in shares of pooled investment funds managed by the state investment officer, as provided in Subsection E of Section 6-8-7 NMSA 1978 or with the New Mexico Local Government Investment Pool (LGIP), as provided in 6-10-10.1 NMSA 1978.

I. General Investment Performance

The College's investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio shall be designed with the objective to obtain a market rate of return on investments commensurate with investment risk constraints and cash flow requirements of the College. The Investment Portfolio will be compared to an approved benchmark that appropriately models an expected risk and return profile. The benchmark does not represent a hurdle to beat, but instead it provides a tracking device to monitor the portfolio.

J. Endowment Spending Policy

This spending policy is in concert with the long-term endowment management philosophy of the College, which is to preserve the permanent viability of the endowment. The College’s endowment funds support vital programs from the earnings of its endowment. In the future, student scholarships may also be funded from the investment earnings from endowment funds. The distributions to College programs are in concert with provisions established by donors of the endowment.

Spending from the endowment must be at levels that do not jeopardize the long-term viability of the endowment. This policy is intended to provide a framework for accomplishing that goal.

Spending Provisions

  • In order to accommodate the annual budgeting process for the following year, the endowment return will be allocated and budgeted for expenditures of the succeeding year. The actual distribution of funds will be made on July 1 for the subsequent fiscal year.
  • Spending will be limited to 5% of the average market value of the endowment over the preceding five (5) calendar years ended December 31.
  • Any excess of total return over the spending allowance shall remain in the spendable portion of the endowment fund whether resulting from appreciation or current yield.
  • Amounts not spent by the individual operating accounts supported by the endowment cannot be carried forward for budgetary use in the next fiscal year. Unspent allocated funds will remain in the spendable portion of the endowment fund.
  • Specific instructions of donors and endowed funds will be adhered to at all times.

K. Reporting

The Investment Officer or designee shall prepare monthly reports of investment activity and investment balances for review and approval by the Vice President of Finance and Operations. An annual report summarizing the activity and balances for the fiscal year shall be prepared as of June 30 each year and presented to the Governing Board at its October meeting.

L. Investment Policy Adoption and Amendment

The College's Investment Policy shall be adopted by resolution of the Governing Board and included in the Governing Board Handbook. It is the College's intent to comply with state laws and regulations. The college's written policies and procedures for investments are subject to review not less than annually to stay current with changing laws, regulations and needs of the College

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