Chinook School Division creates new investment policy for surplus funds

The Chinook School Division has created a new administrative policy to guide the investment of school division surplus funds.

Trustees approved Administrative Policy 711 during a regular meeting of the Chinook Board of Education, Feb. 11.

The new policy became necessary after the school division's involvement with the education property tax system changed. Since January 2018 the education property tax collected by municipalities are not submitted to school divisions, but are paid directly to the provincial government's general revenue fund.

“Until last year we were always carrying a pretty big receivable for property taxes and as of December 31, 2017 we were no longer in the business of collecting property tax,” Chinook School Division Chief Financial Officer Rod Quintin said after the meeting. “All the money that we had as a receivable ended up becoming cash for us. Now we have it sitting there in our surplus dollars where in the past they were a receivable. So we have that available to us to invest.”

The school division is now responsible for the investment decisions for the surplus funds and the new policy will provide the necessary guidelines.

“We’re pretty tightly restricted with legislation around what we can and cannot invest in,” he noted. “Really, it’s the low-risk stuff and that’s what the policy says, and that’s what we will do.”

The Chinook Board of Education will be responsible for the oversight of the policy through its finance standing committee. The actual administration of the policy will be done by Quintin in association with the financial controller and the supervisor of accounting.

“The three of us will have to sign off on every one of those decisions,” he said.

The policy makes provision for external advice by financial experts on different investment options for the funds.

“We’re allowed to get agents that will specialize in this,” he said. “It’s not our first line of business, for sure, and it is theirs. So that’s what we will rely on to assist us.”

These funds will generally only be used for short-term investments to ensure that the money will be available to the school division.

“We don’t want to be tying up money for extended periods of time, just in case we need it, and so we’re likely looking at something in months rather than in years as a term for an investment,” he said.

The exact amount available for investment still needs to be determined and it will depend on funds still required for cash flow.

“It’s somewhere between $6-12 million that we might be able to find to invest,” he said. “We have to monitor our cash flow and make sure we have adequate cash flow to finance our operations.”

School division policy determines for what purpose these surplus funds may be used, but the intention will not be to spend all the available funds.

“Some of our surplus is restricted in terms of its use,” he explained. “Some is unrestricted, but we are limited in how we use that, and we’re also very aware that we need to have some funds set aside for the rainy day that may occur.”