Policy No. 4:01:01:10
CLEVELAND STATE COMMUNITY COLLEGE Cleveland, Tennessee
SUBJECT: Deposit and Investment of Funds
- Cleveland State Community College shall maintain one general operating account and one payroll account at an authorized bank for the regular operating and payroll functions of the institution. No additional active (checking) accounts may be opened or maintained.
- All checks, drafts, or other methods of withdrawing funds from an account must be cosigned by the president and the dean of financial affairs of the institution; provided that facsimile signatures may be used on such instruments of withdrawal; and provided further that any authorization or request for withdrawal form shall bear the original signature of the president or the dean of financial affairs in all cases where withdrawals exceed one percent of the state appropriation to Cleveland State Community College for the year or $10,000.00, whichever is greater.
- The president of Cleveland State Community College delegates to the dean of financial affairs the authority to perform routine activities related to bank accounts.
- No accounts shall be authorized or established which are complimentary non-interest bearing accounts.
- The amount of funds allowed to remain in any active (checking) account should be reasonably related to the number of checks to be processed through the account during any month, and other servicing costs, if any.
- A bank must provide collateral security for deposits in all accounts, whether active or savings, and securities which may be accepted as collateral for deposits shall be limited to those specified in T.C.A. Section 9-4-103.
- The face value of collateral accepted as security for deposits shall be an amount five percent (5%) in excess of the deposit to be secured, less so much of any such amount which is protected by the Federal Deposit Insurance Corporation. In the case of active (checking) accounts, the face value of the collateral accepted as security for deposits shall be the amount hereinabove specified based upon the average daily balance in the account for the preceding month, which amount must be determined on or before the fifth day of the month in question.
- The collateral security shall be liable for the principal of the deposit in the account in question, all accrued interest through date of default and additional interest at the rate the institution deposit was earning on the principal and accrued interest through the day of payment to the institution by a liquidator or other third party or through the date of sale by the treasurer or his agent, for the payment of interest in savings accounts, and for the payment of attorneys’ fees in the case of default as provided in T.C.A Section 9-4-104. In addition, any collateral security for funds placed in accounts other than active accounts at a bank shall also be liable for repayment of funds in active accounts at that bank, but the liability shall be secondary specifically provided.
- Cleveland State Community College must either be provided the actual bonds or other securities provided as collateral security for deposits, or trust receipts for the collateral in lieu of the actual delivery of the obligations. Trustee custodians of collateral to be held as security may be any federal reserve bank in this State or any other banking institution designated by the State Treasurer, provided it is not an affiliate by stock ownership or otherwise with the bank in which funds are deposited. Any collateral deposited with a trustee custodian shall be subject to the claims and rights of Cleveland State Community College to the same extent as though such collateral had been physically deposited with the institution.
- Subject to the other requirements of this policy, accounts may be authorized and established at banks which are either under the supervision of the banking department of the State of Tennessee or the United States Comptroller of the Treasury, or the Federal Home Loan Bank Board; and which has been designated by the State Treasurer, Governor, and/or the Commissioner of Finance and Administration as a state depository, if the capital stock of the bank is fully paid in and unimpaired.
- The deposits of funds in any one bank may not at any time exceed one-fourth of the paid-in capital stock and surplus of the bank, except where the bank provides at its own cost a surety bond or collateral security sufficient to cover the entire deposit of Cleveland State Community College funds in the bank.
- Before a bank may be used by an institution for the deposit of funds in an active account, it must provide documentation verifying the following: (1) that the bank is supervised by the banking department of the State of Tennessee or the United State Comptroller of the Treasury; or the Federal Home Loan Bank Board; and which has been designated by the State Treasurer, Governor, and/or the Commissioner of Finance and Administration as a state depository. (2) that the capital stock of the bank is fully paid in; (3) the amount of the paid-in capital and surplus of the bank as of the date of the last audited financial statements of the bank; (4) that the bank can comply with the collateral security requirements of all accounts; (5) the names of the members of the board of directors and officers of the bank; (6) the name of the holding company of the bank, if applicable; and (7) the names of the owners of 10 percent or more of the stock of the bank.
- No agreements or resolutions between a banking institution and Cleveland State Community College shall be entered into without the approval of the Chancellor or his designee.
Each institution receiving demand deposit funds of Cleveland State Community College shall be required to provide services including but not limited to:
(1) the provision of standard services for processing checks and deposits in accounts; (2) the provision of the required collateral security for all deposits; (3) the provision of a branch office of the bank within a specified distance from the campus; (4) the provision of interest on savings accounts at a rate equal to the maximum rate offered by other banking institutions in the county, with the ability to transfer funds between active and savings account upon a twenty-four hour notice; (5) the provision of investment services; (6) the provision of account reconciliation services; and (7) the provision of safe deposit box services. All of these services should be provided without charges to Cleveland State Community College.
- Cleveland State Community College shall solicit proposals from all qualified depositories with offices within a reasonable distance from the campus, and shall determine those banking institutions which can provide the nature and level of services for accounts as required by the institution on a competitive basis.
- All funds which are received by Cleveland State Community College and which are available for sufficient period of time for investment in any interest generating medium shall be invested by Cleveland State Community College as soon as possible, but in any event shall be invested within three days after receipt of such funds.
- Funds of Cleveland State Community College may be invested in a savings account or certificate of deposit of any depositories which are either under the supervision of the Department of Financial Institutions, the U.S. Comptroller of the Currency, or the Federal Home Loan Bank Board, or in bonds, notes or treasury bills of the United States, bonds or obligations of any agency of the United States which are backed by the full faith and credit of the United States, or bonds or obligations guaranteed as to principal and interests by the United States or any of its agencies and State of Tennessee Local Government Investment Pool (LGIP).
- Funds may be invested in savings accounts or certificates of deposit of banks provided the banks meet the requirements of banking institutions of this policy, and the collateral security requirements of bank accounts (subsections 1.6, 1.7, 1.8, and 1.9) of this policy. Funds may be invested in savings accounts of savings and loan associations provided the collateral security requirements of bank accounts (subsections 1.6, 1.7, 1.8, and 1.9) of this policy are met, and provided further that the savings and loan association provides: (1) an opinion of legal counsel that the association has the authority to collateralize public funds; (2) a resolution adopted by the board of directors authorizing such investments; and (3) appropriate written instructions for the transfer of funds.
- Cleveland State Community College shall maintain information on the interest rates payable on all authorized mediums of investment; and funds shall be invested in those mediums paying the highest rate for the period of time for which the funds are available for investment.
- All investments of funds in any authorized medium of investment (exclusive of LGIP) where the period of investment will exceed 30 days shall be determined on the basis of telephones bids, with appropriate records maintained for audit purposes, including the period obtaining the bids, the institutions which submitted bids, the amount and rate of return of each bid, and the person who approved the investment. Where more than one bid provides the highest rate of return available, investments should be made in such a manner that no one institution making one of the high bids receives a disproportionate amount of the investment on the basis of two or more equal bids over a reasonable period of time.
- This policy shall be effective July 1, 1979.
- All banking institutions and other financial institutions which provide deposit or investment services shall agree to comply with the terms of this policy, and with the requirements of Chapters 4 and 5 of Title 9 of Tennessee Code Annotated as amended, and the latter provisions shall control in the event of conflict.
Source: Letter - TBR dated June 26, 1979
Related: TBR Policy 4:01:01:10
Revised: December 1, 1992; March 11, 1994