NEWPORT BEACH/COSTA MESA : School District Adopts New Investment Policy

The Newport-Mesa Unified School District, which stands to lose as much as $9.2 million from the collapse of Orange County’s investment pool, has written a new policy for investing district funds.

The most notable element is a prohibition on borrowing money to invest for interest income. The district had borrowed $47 million of the $80 million it had invested in the pool when it collapsed in December.

“That is the only item, along with the establishing the committee, that has not been done in the past,” district Finance Director Michael Fine said at Tuesday’s board meeting.

The board also approved formation of a permanent Financial Advisory Committee, an extension of the citizen panel.

The panel will conduct quarterly reviews of the district’s cash management, investments and audits, and generally enforce the new policy.

California school districts are bound by state law to invest their operating funds in a county pool. Special funds, primarily those for certain capital improvements, may be invested elsewhere.

Newport-Mesa’s first codified investment policy, written by a citizen panel, specifies the types of non-mandated investments the district may make:

* Any portion may be invested in the county pool.

* Any portion up to $20 million may be invested with the state pool, the Local Agency Investment Fund.

* Those agencies will be required to invest district funds in U.S. Treasury notes, bonds or bills or government-backed securities.