706 Policy: Investments - Other Post-Employment Benefits (OPEB) Fund

I.      Scope and Purpose

This policy applies to investments of the school district with regard to investing the financial assets of the Other Post-Employment Benefits (OPEB) Trust.  Investments will be made based on statutory constraints and subject to available designated staffing capabilities.

II.    General Statement of Policy

Funds of the Other Post-Employment Benefits (OPEB) Trust will be deposited or invested in accordance with this policy, Minnesota Statutes chapter 118A and 356A and any other applicable laws governing public pension fiduciary responsibility and written administrative procedures. The primary criteria for the investment of the Trust of the school district, in priority order, are as follows:

A.    Custodial Credit Risk. Investments of the school district shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio.   OPEB Trust assets should be invested within the framework of a long-term investment horizon.  Risks taken will be consistent with long-term asset classes with a goal of maintaining purchasing power relative to inflation over economic cycles and providing asset value and cash flow to fund OPEB liabilities. To attain this objective only appropriate investment instruments will be purchased, and insurance or collateral may be required to ensure the return of principal.

B.    Liquidity. The school district’s OPEB investment portfolio will be structured in such manner as to provide sufficient liquidity to pay obligations as they come due.                                                                   

C.    Interest Rate Risk. The investment portfolio will be designed to attain a market-average rate of return throughout budgetary and economic cycles and maintain purchasing power relative to inflation, taking into account the risk constraints, the cash flow characteristics of the portfolio and legal restrictions for return on investments.

D.    Maintaining the Public’s Trust. All officials and employees that are a part of the investment process shall act professionally and responsibly as custodians of the public trust and shall refrain from personal business activity that could conflict with the investment program, or which could reasonably cause others to question the process and integrity of the investment program.  The investment officer shall avoid any transaction that could impair public confidence in the school district.

Legal References
M.S. Ch. 118A 
M.S. Ch. 356A