Finance Committee Report
                                                   December 8, 1970

                                                   FCR r7
                                                                     /D
          Members, Board of Trustees:

                     COLLATERALIZATION OF BANK ACCOUNTS


          Recommendation: That the regular bank accounts in Lexington,
          Kentucky of the University of Kentucky be collateralized by
          securities having a market value equal to the average monthly
          balance in such accounts and that bank accounts for the Community
          Colleges and the Agricultural substations be collateralized by
          securities having a market value up to the total amount of the
          balance in such accounts in excess oi $Z0, 000,

          The securities pledged as collateral shall be limited to direct
          obligations of the federal government, obligations of agencies of
          the federal government, general obligations of the Commonwealth
          of Kentucky and obligations of the University of Kentucky,

               ground: The proposed policy change would provide the Uni-
          versity an interest in certain pledged obligations as security for
          its deposits. The differential in treatment accorded those
          accounts relating to the Community Colleges and Agricultural
          substations is due to the substantial fluctuation in these accounts.
          During most of the year these accounts are adequately secured
          by the F.D.I.C. guarantee of $Z0, 000. At other times, (i. e.
          immediately after the collection of tuition) additional security is
          desirable.













Action: Approved      X      Disapproved        _    Other



Date:     December 8



, 1970