Reserve and Investment Policy

RESERVE AND INVESTMENT POLICY

Adopted by the South Central Region Teachers Association, Inc. Board of Directors

June 2011

RESERVE FUND

Reserves, or “net assets”, are important in the operation of a business for the stability and flexibility they can provide.  Adequate reserve levels will sustain South Central Region Teachers Association (SCRTA) through potential economic downturns as well as provide adequate funding for expected major expenditures.

In order to ensure its financial viability, SCRTA shall seek to maintain in unrestricted reserves the following designated fund that will be evaluated and re-balanced on an annual basis in conjunction with the preparation of year-end financial statements.

The purpose of the Reserve Fund is to enable SCRTA to withstand the impact of economic downturns, both internally and/or externally generated.  To achieve this stability, SCRTA shall seek to maintain an amount equal to 3 months, or 25% of planned annual operating expenses.  This amount will be calculated at the end of each fiscal year, based upon the budget for the upcoming year.  Amounts needed to increase the Reserve Fund will come from undesignated net assets.  Excess amounts, in any, will be returned to undesignated net assets.

 

INVESTMENTS

The operating and reserve funds of South Central Region Teachers Association shall be invested with the goals of:

  • Insuring the safety of investment principle
  • Providing for adequate liquidity for operations
  • Maximizing the total return within the guidelines above

The operating and reserve funds shall be invested in:

  • Interest bearing bank accounts
  • Money Market funds
  • Certificates of Deposit (6-12 months)
  • US Treasury Bills and Notes (6-12 months)

Prior to the end of each fiscal year, the treasurer shall recommend to the Board of Directors the amount of funds and where they are to be invested in each classification for the next year.  Upon Board approval the appropriate investments shall be made.  At each meeting, the treasurer will provide a status report on all investments to the Board.