Ohio Admin. Code 3362-1-05 - Investment policy
(A) Purpose
(1) The Shawnee state university board of
trustees has title to university investments and these funds are held in trust.
The investments are to be made consistent with this investment policy as set
forth in this rule.
(2) All
fiduciaries implementing this investment policy are required to discharge their
duties 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 like character and
with like aims.
(B)
Membership and duties
(1) The membership of
the investment committee shall be as follows:
(a) The university's chief financial officer
or his/her delegate shall serve as a permanent member of the
committee.
(b) The university
controller or his/her delegate shall serve as a permanent member of the
committee.
(c) The chair of the
board of trustees shall appoint a chair of the investment committee from among
the members of the board's finance and
administration committee
board. The chair
of the investment committee shall serve in that role for a term of one fiscal
year, which is renewable at the discretion of the chair of the board.
(d) In addition to the members discussed in
paragraphs (B)(1)(a) to (B)(1)(c) of this rule, there shall be three additional
members. Each such additional member shall be appointed in staggered three-year
terms, which are renewable as set forth in paragraph (B)(1)(f) of this rule.
Existing members at the time of this amendment shall serve out the remainder of
their terms, and are eligible for renewal.
(e) The chair of the investment committee
shall make recommendations on replacing a member at the end of a term, renewing
a member's term, and appointing a member to fill a vacancy during a term. All
such renewal recommendations and nominees recommended by the investment
committee chair are subject to approval by the board of trustees.
(2) The investment committee shall
meet at least quarterly. If the chair is unavailable, the chief financial
officer will conduct the meeting as acting chair.
(3) The investment committee shall review and
recommend revision to this investment rule and advise the Shawnee state
university board of trustees through its finance and administration committee
on its investments.
(4) The
investment committee is authorized to retain an investment advisor that meets
the credential criteria as outlined in law.
(5) Upon appointment, each investment
committee member will sign an agreement indicating that they will avoid
conflicts of interest in performing their duties as committee
members.
(C) Investment
objective The primary objectives of the university's investment activities are:
(1) Safety: Assets of the university shall be
handled in a manner that diversifies investments so as to mitigate the
magnitude of potential capital loss inherent in investment risk.
(2) Return on investment: to have, over time,
return net-of-fees that at least equals common indexes in capital markets in
which the university's assets are invested.
(D) Investment allocation
(1) A minimum of twenty-five per cent of the
prior fiscal year's average investment portfolio will be invested in securities
of the United States government or of its agencies or instrumentalities, the
treasurer of state's pooled investment program, obligations of this state or
any political subdivision of this state, certificates of deposit of any
national bank located in this state, written repurchase agreements with any
eligible Ohio financial institution that is a member of the federal reserve
system or federal home loan bank, money market funds, or bankers acceptances
maturing in two hundred seventy days or less which are eligible for purchase by
the federal reserve system, as a reserve. The actual percentage may be higher
than this figure dependent upon anticipated cash flow needs with some buffer
for unanticipated needs as determined by paragraph (D)(4) of this
rule.
(2) Investments shall be made
in a liquid pool and a diversified investment pool.
(a) The administration of the liquid
investment pool is to remain with the Shawnee state university finance office
as an agent of the investment committee. Returns will be reported quarterly to
the investment committee and the board of trustees.
(b) The diversified investment pool will be
invested in publicly traded securities with the following ranges of asset
allocation within that pool:
|
Target allocation |
Range |
||
|
Total Equity |
60% |
50% to 70% |
|
|
Large Cap |
40% |
||
|
Mid and Small Cap |
10% |
||
|
International |
10% |
||
|
Total Fixed Income |
38% |
30% to 50% |
|
|
Cash |
2% |
1% to 30% |
|
|
Alternative Assets |
0% |
0% to 5% |
|
(c)
The chief financial officer or delegate has authority to allocate funds between
these pools.
(d) Asset target
allocations will be reviewed with the investment committee not less than on an
annual basis for critical changes that will recognize the university's long
term financial needs and be responsive to investment market
conditions.
(3) The
university may transfer a portion of the diversified investment pool to the
liquid investment pool as follows:
(a) The
university may transfer up to two point five per cent times the diversified
investment pool's previous twelve quarter moving average of market value from
the diversified investment pool to the liquid investment pool.
(b) This calculation will be applied to the
twelve quarters ending on December thirty-one of the current fiscal year so the
level of additional funding will be available during the subsequent year's
budgeting process.
(c) The amount
eligible to be transferred may be moved as a lump sum or periodically during
the fiscal year but the total of the transfer(s) may not exceed the original
calculated amount (other than for exceptions noted in other sections of the
investment rule).
(d) The chief
financial officer will recommend the amount (and the related investment
accounts from which the funds will be withdrawn) of eligible funds to be
transferred from the diversified investment pool to the liquid investment pool
based on the university's anticipated cash needs and consultation with the
university's investment consultant. The transfer will require the approval of
the university president and will subsequently be reported to the investment
committee and the board of trustees at their respective meetings following the
transfer.
(4) The chief
financial officer may request a transfer to or from the diversified investment
pool to either the liquid investment pool or the university's main operating
checking account outside of the formula restrictions noted in paragraph (D)(3)
of this rule based on unanticipated cash needs of the university. Based upon
the amount of the request, the recommendation will require approval as follows:
(a) Requested transfer amount: Requires
approval from:
|
$1 to $1,000,000 |
Chief financial officer |
|
$1,000,001 to $2,500,000 |
University president |
|
$2,500,001 to $5,000,000 |
Chair, Shawnee state university board of trustees |
(b)
The transfer will also be reported to the investment committee and the board of
trustees at their respective meetings following any transfer.
(E) Investment
securities diversification and quality
(1) No
more than five per cent of the diversified investment pool portfolio shall be
invested in any single issue except u. s. government securities.
(2) Investment in fixed income securities
shall be limited
restricted (not less than ninety-five per cent of portfolio
value) to government and agency issues and other issues in the top four
quality ratings of recognized credit services. Prohibited investments include bonds rated below investment
grade and investment
Investment funds in
which derivatives comprise a substantial part are
prohibited.
(F)
Alternative investments
Inclusion of alternative investments is at the discretion of the investment committee. Alternative investment categories may include: gold and other commodities.
(G)
Market benchmarks
(1) Given short-term market
fluctuations, it is intended that investment manager(s) will achieve the
performance objectives over a five-year moving period, net of investment fees,
set forth in paragraph (G)(2) of this rule. It is understood that performance
evaluation will occur in shorter intervals, the results of which may cause the
investment committee to make an investment manager change.
(2) Policy benchmarks will be established by
the investment committee as needed but no less than on an annual basis and
subsequently communicated to the board of trustees upon adoption.
(3) In evaluating the investment manager's
performance, relative to the established benchmarks, any university requested
revisions of the asset allocations will be taken into consideration.
(H) Evaluation of investment
managers
Investment managers will be reviewed quarterly based upon the following criteria:
(1) Ability to
exceed the performance objectives stated in this policy.
(2) Adherence to the philosophy and style
that were articulated to the investment committee at, or subsequent to, the
time an investment manager was retained.
(3) Ability to exceed the investment
performance (net of fees) of other investment managers who adhere to the same
or similar style.
(4) Continuity of
personnel and practices at the firm.
Notes
Promulgated Under: 111.15
Statutory Authority: 3362.03
Rule Amplifies: 3362.03
Prior Effective Dates: 05/10/2006, 10/09/2008, 12/01/2011, 05/23/2013, 05/12/2014, 10/27/2016, 04/22/2019, 05/15/2021,12/15/2023, 02/28/2025
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(A) Purpose
(1) The Shawnee state university board of trustees has title to university investments and these funds are held in trust. The investments are to be made consistent with this investment policy as set forth in this rule.
(2) All fiduciaries implementing this investment policy are required to discharge their duties 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 like character and with like aims.
(B) Membership and duties
(1) The membership of the investment committee shall be as follows:
(a) The university's chief financial officer or his/her delegate shall serve as a permanent member of the committee.
(b) The university controller or his/her delegate shall serve as a permanent member of the committee.
(c) The chair of the board of trustees shall appoint a chair of the investment committee from among the members of the board's finance and administration committee. The chair of the investment committee shall serve in that role for a term of one fiscal year, which is renewable at the discretion of the chair of the board.
(d) In addition to the members discussed in paragraphs (B)(1)(a) to (B)(1)(c) of this rule, there shall be three additional members. Each such additional member shall be appointed in staggered three-year terms, which are renewable as set forth in paragraph (B)(1)(f) of this rule. Existing members at the time of this amendment shall serve out the remainder of their terms, and are eligible for renewal.
(e) The chair of the investment committee shall make recommendations on replacing a member at the end of a term, renewing a member's term, and appointing a member to fill a vacancy during a term. All such renewal recommendations and nominees recommended by the investment committee chair are subject to approval by the board of trustees.
(2) The investment committee shall meet at least quarterly. If the chair is unavailable, the chief financial officer will conduct the meeting as acting chair.
(3) The investment committee shall review and recommend revision to this investment rule and advise the Shawnee state university board of trustees through its finance and administration committee on its investments.
(4) The investment committee is authorized to retain an investment advisor that meets the credential criteria as outlined in law.
(5) Upon appointment, each investment committee member will sign an agreement indicating that they will avoid conflicts of interest in performing their duties as committee members.
(C) Investment objective
The primary objectives of the university's investment activities are:
(1) Safety: Assets of the university shall be handled in a manner that diversifies investments so as to mitigate the magnitude of potential capital loss inherent in investment risk.
(2) Return on investment: to have, over time, return net-of-fees that at least equals common indexes in capital markets in which the university's assets are invested.
(D) Investment allocation
(1) A minimum of twenty-five per cent of the prior fiscal year's average investment portfolio will be invested in securities of the United States government or of its agencies or instrumentalities, the treasurer of state's pooled investment program, obligations of this state or any political subdivision of this state, certificates of deposit of any national bank located in this state, written repurchase agreements with any eligible Ohio financial institution that is a member of the federal reserve system or federal home loan bank, money market funds, or bankers acceptances maturing in two hundred seventy days or less which are eligible for purchase by the federal reserve system, as a reserve. The actual percentage may be higher than this figure dependent upon anticipated cash flow needs with some buffer for unanticipated needs as determined by paragraph (D)(4) of this rule.
(2) Investments shall be made in a liquid pool and a diversified investment pool.
(a) The administration of the liquid investment pool is to remain with the Shawnee state university finance office as an agent of the investment committee. Returns will be reported quarterly to the investment committee and the board of trustees.
(b) The diversified investment pool will be invested in publicly traded securities with the following ranges of asset allocation within that pool:
| Target allocation | Range | ||
| Total Equity |
|
| |
| Large Cap |
| ||
| Mid and Small Cap | 10% | ||
| International |
| ||
| Total Fixed Income |
|
| |
| Cash | 2% | 1% to 30% | |
| Alternative Assets | 0% | 0% to 5% | |
(c) The chief financial officer or delegate has authority to allocate funds between these pools.
(d) Asset target allocations will be reviewed with the investment committee not less than on an annual basis for critical changes that will recognize the university's long term financial needs and be responsive to investment market conditions.
(3) The university may transfer a portion of the diversified investment pool to the liquid investment pool as follows:
(a) The university may transfer up to two point five per cent times the diversified investment pool's previous twelve quarter moving average of market value from the diversified investment pool to the liquid investment pool.
(b) This calculation will be applied to the twelve quarters ending on December thirty-one of the current fiscal year so the level of additional funding will be available during the subsequent year's budgeting process.
(c) The amount eligible to be transferred may be moved as a lump sum or periodically during the fiscal year but the total of the transfer(s) may not exceed the original calculated amount (other than for exceptions noted in other sections of the investment rule).
(d) The chief financial officer will recommend the amount (and the related investment accounts from which the funds will be withdrawn) of eligible funds to be transferred from the diversified investment pool to the liquid investment pool based on the university's anticipated cash needs and consultation with the university's investment consultant. The transfer will require the approval of the university president and will subsequently be reported to the investment committee and the board of trustees at their respective meetings following the transfer.
(4) The chief financial officer may request a transfer to or from the diversified investment pool to either the liquid investment pool or the university's main operating checking account outside of the formula restrictions noted in paragraph (D)(3) of this rule based on unanticipated cash needs of the university. Based upon the amount of the request, the recommendation will require approval as follows:
(a) Requested transfer amount: Requires approval from:
| $1 to $1,000,000 | Chief financial officer |
| $1,000,001 to $2,500,000 | University president |
| $2,500,001 to $5,000,000 | Chair, Shawnee state university board of trustees |
(b) The transfer will also be reported to the investment committee and the board of trustees at their respective meetings following any transfer.
(E) Investment securities diversification and quality
(1) No more than five per cent of the diversified investment pool portfolio shall be invested in any single issue except u.s. government securities.
(2) Investment in fixed income securities shall be limited to government and agency issues and other issues in the top four quality ratings of recognized credit services. Prohibited investments include bonds rated below investment grade and investment funds in which derivatives comprise a substantial part.
(F) Alternative investments
Inclusion of alternative investments is at the discretion of the investment committee. Alternative investment categories may include: gold and other commodities.
(G) Market benchmarks
(1) Given short-term market fluctuations, it is intended that investment manager(s) will achieve the performance objectives over a five-year moving period, net of investment fees, set forth in paragraph (G)(2) of this rule. It is understood that performance evaluation will occur in shorter intervals, the results of which may cause the investment committee to make an investment manager change.
(2) Policy benchmarks will be established by the investment committee as needed but no less than on an annual basis and subsequently communicated to the board of trustees upon adoption.
(3) In evaluating the investment manager's performance, relative to the established benchmarks, any university requested revisions of the asset allocations will be taken into consideration.
(H) Evaluation of investment managers
Investment managers will be reviewed quarterly based upon the following criteria:
(1) Ability to exceed the performance objectives stated in this policy.
(2) Adherence to the philosophy and style that were articulated to the investment committee at, or subsequent to, the time an investment manager was retained.
(3) Ability to exceed the investment performance (net of fees) of other investment managers who adhere to the same or similar style.
(4) Continuity of personnel and practices at the firm.
Notes
Promulgated Under: 111.15
Statutory Authority: 3362.03
Rule Amplifies: 3362.03
Prior Effective Dates: 05/10/2006, 10/09/2008, 12/01/2011, 05/23/2013, 05/12/2014, 10/27/2016, 04/22/2019, 05/15/2021, 12/15/2023