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10 Key Steps For Managing School District Investments: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | Glossary |

3. Adopt administrative procedures and controls.

In the investment process, the Board of Trustees and administrators of a school district are called upon to analyze the issues and make decisions on the direction the district will take. They are responsible for policies, strategies and reporting to the public. To support the board’s policy and intent requires written procedures that will implement those directives and control risk. Administrative controls must be in place to ensure that all policies, rules and laws are being followed.

Many mistakenly believe that policy is procedure, but nothing could be further from the truth. Policy sets broad objectives and guidelines to define the board’s intentions and procedures establish the steps necessary to fulfill those intentions. Procedures also create a system of internal controls to ensure that no one deviates from that plan of action. Given the large amounts of public money involved in investing, a district cannot allow the stipulated policy to go unheeded. Reports of misappropriated funds and financial problems in districts are usually accompanied by reports of someone who was allowed to circumvent the system. Even trusted individuals have been known to make bad mistakes in judgement when millions of dollars are at stake.

Sound procedures are explicitly tied back to board policy, and they give step-by-step instructions for employees to follow through each phase of the operation. Not only do these step-by-step instructions serve as a guide for current employees, but also in the event of employee turnover, the institutional knowledge of the person who may have done the job for years is passed on.

Written procedures also give board members, auditors and managers the ability to examine processes to identify control weaknesses and suggest changes to protect the district’s assets. Administrative controls traditionally include protection against fraud and collusion and ensure separation of responsibilities, audits and disclosure.

Ensuring that controls are in place and that policy is carried out as intended will decrease the risk of loss, protect both the employee and the district from criticism, ensure that the district achieves the highest rate of return on invested dollars and enhance public trust in the district.

Additional Resources:

Below is a list of additional resources you may find helpful. Information in the documents and URLs listed below are not endorsed by this agency, but only provided as resource material. For more information on these resources, consult the bibliography.

Investment Controls
(University of North Texas)
The elements of investment controls, the purpose of the school district investment policy, the role of ethics and disclosure in controlling risk, relationships with investment providers and reporting requirements.

Accounting for Investments
(Texas Education Agency)
The procedures for accounting for investments that are allowable under the Public Funds Investment Act.

Cash Budgeting and Investing Program
(North East ISD)
For illustration purposes only, North East ISD’s cash budgeting and investing procedures and controls.

IMPORTANT NOTICE: The information in this document is presented solely as technical assistance and as a resource available to school districts. The information does not serve as a substitute for legal advice nor replace the independent judgement of a district's governing body concerning its investments. A district should consult its attorney or other appropriate counsel such as its investment adviser to resolve questions about its investment transactions.