Beef Board Investment Policy
For Qualified State Beef Councils

December 15, 2008

Purpose of Policy
This Beef Board policy defines the responsibilities of Qualified State Beef Councils (QSBCs) for investment of beef checkoff funds. It replaces AMS Directive 2210.2, Investment of Public Funds, dated 5/1/1998, as that policy relates to QSBCs. The Beef Board is still required to comply with AMS Directive 2210.2.
Policy
It is the Beef Board’s policy that QSBCs:
1.Exercise prudent cash management of assessments collected under the Beef Promotion and Research Act and Order. This also applies to interest income and late fees collected on overdue accounts.
2.Execute a formal agreement or memorandum of understanding with a financial institution before funds are deposited. This agreement is to state the responsibilities of both the QSBC and the financial institution, and must conform to the policies and guidelines defined in this policy.
3.Ensure the safety of invested funds by banking with a financially sound financial institution and by adhering to the provisions of this policy. Every bank should be able to provide its customers with a rating of the bank which will aide in a QSBC’s assessment of that bank’s financial soundness. If you have trouble interpreting the rating information given to you by a bank, please contact the Beef Board’s Controller.
QSBC Investment Guidelines
As custodians of beef checkoff funds, QSBCs must follow the following deposit and investment guidelines:
1.Bank Deposits and Insurance Coverage – All bank deposits (e.g., checking, savings and certificates of deposit) must be established at financial institutions having FDIC insurance. Bank account balances at individual institutions should total, in the aggregate, less than $ the applicable FDIC-insurance amount to ensure both principal and interest are insured by the FDIC. Bank certificates of deposit (CDs) must have maturity period of 1 year or less. If a QSBC is unable to keep their bank deposits less then the FDIC insurance amount, the QSBC may acquire a bank repurchase agreement to collateralize the funds greater than the FDIC insurance amount. See item 3 below for collateralization requirements for bank repurchase agreements. If a QSBC’s deposits are declared “public funds”, the QSBC has the option to ask the bank to pledge collateral to insure funds in excess of the FDIC insurance limit. A list of the eligible securities for pledged collateral is attached at Exhibit 1.
2.Investments – Checkoff investments must be in short-term, high-quality, interest-bearing instruments, as defined below:
a.Short-Term – All investments must have a maturity period of 1 year or less to ensure availability and rapid conversion of the principal to cash.
b.High-Quality – QSBCs are authorized to invest checkoff funds in one or more of the following instruments:
U.S. Government securities (except declining-balance securities such as mortgage-backed securities), as listed in Exhibit I,
  • U.S. Government-only Money Market Funds (money market funds that are invested primarily in direct obligations of the U.S. Government) with a current rating from Moody’s of Aaa or a Standard & Poor’s rating of AAAm,
or
Bank repurchase agreements executed with a financially sound bank.
3.Collateralization of Bank Repurchase Agreements – Bank repurchase agreements must be collateralized by securities issued, fully insured or guaranteed by the U.S. Treasury, a U.S. Government Agency or U.S. Government-sponsored corporation. A list of eligible securities is attached at Exhibit I.
4.Record Retention - QSBCs should retain all banking and investment records for 6 years plus the current fiscal year.
In the event a QSBC is required to comply with a state government policy for investments, the compliance to that policy and the exception describing the noncompliance to the Beef Board investment policy should be disclosed in the notes of the QSBC’s financial statements.
Any questions regarding compliance with this policy should be directed to the Controller of the Beef Board at (303) 220-9890.
Approved by Beef Board Executive Committee on December 15, 2008
Exhibit I
Securities Approved by the Beef Board
For Investment and Pledged Collateral by QSBCs
Securities issued, fully insured or guaranteed by the following agencies/corporations are acceptable investments for Qualified State Beef Councils (QSBCs) provided the security has a maturity date of one year or less at the time of purchase. Declining-balance securities, such as mortgage-backed securities, are not acceptable investments.
U.S. Treasury
Federal Farm Credit Bank (FFCB)
Federal Home Loan Bank (FHLB)
Federal National Mortgage Association (FNMA)
Federal Home Loan Mortgage Corporation (FHLMC)
Student Loan Marketing Association (SLMA)
Securities Approved by the Beef Board
As Acceptable Collateral for Repurchase Agreements
Purchased by QSBCs
The securities listed above and Government National Mortgage Association (GNMA) mortgage-backed securities are acceptable collateral for repurchase agreements purchased by QSBCs, regardless of the length of maturity of the instrument, provided the market value of the collateral is at all times at least 102% of the amount invested in the repurchase agreement.
© 2008 Cattlemen's Beef Board