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Investing Bond Proceeds

Investing bond proceeds is not as trouble-free and straightforward as it may seem. Even the most seasoned school finance officials rely on the advice and counsel of those who have the experience and expertise to obtain the maximum return and who have a clear understanding of Internal Revenue Service arbitrage rules and regulations.

MASA, MOASBO and MSBA jointly sponsor the Missouri Securities Investment Program (MOSIP) and the funds are managed by PFM Asset Management, LLC. The investment professionals at PFM can provide valuable assistance to school districts that have successfully passed bond issues. The MOSIP program does not use a "cookie-cutter" approach to managing bond proceeds. Rather, an investment strategy is carefully developed and implemented for each school district and for each issue. The professionals will work to:

1. Consider client investment objectives (safety, liquidity, and return)

2. Consider any current or pending yield restrictions

3. Consider absolute and relative level of interest rates

4. Ensure sufficient liquidity to meet expected and unforeseen draws

5. Evaluate yield relative to current market rates

6. Ensure compliance with bond resolutions and elections

7. Consider applicable rebate rules and possible exceptions

8. Comply with all applicable Missouri investment statutes

MOSIP rates are very competitive and based on the average assets invested in the managed portfolio. Clients may select investment options that best meet the needs of the school district.

Another critical feature of the MOSIP program is the evaluation of the bond issue arbitrage rebate requirements that are considered in the design of the investment strategy. The professionals at PFM will monitor arbitrage rebate liabilities and provide the school district with required annual financial statements.

Investing bond proceeds can generate significant additional dollars for a school district. Taking advantage of the expertise, experience and resources of the MOSIP program will ensure that your investments are done right, comply with all state and federal regulations and provide the maximum return. For more information or assistance please contact Maria Altomare at 800-891-7910.