2006 Kentucky Revised Statutes - .130   Payment and redemption fund -- Operating fund.

293.130 Payment and redemption fund -- Operating fund. (1) Savings bonds shall be secured by and paid or redeemed from moneys or investments held by the authority in a payment and redemption fund. Each savings bond shall state on its face that it is payable solely and only from said payment and redemption fund, and that it does not constitute a debt of the Commonwealth, or a pledge of the faith and credit of the Commonwealth. The Commonwealth shall pledge to and agree with the holders of the savings bonds issued under this chapter, that it will not limit or restrict the rights hereby vested in the authority to purchase, acquire, hold, sell, or dispose of bonds deemed by the authority to be convenient or necessary to produce sufficient revenues to meet the expenses of operation of the authority, or to fulfill the terms of any agreement made with the holders of its savings bonds, and it further pledges not to impair in any way the rights or remedies of the holders of those savings bonds until the obligations set out therein are fully met, paid and discharged. (2) All money received for the issuance of savings bonds shall be paid into the payment and redemption fund and shall be invested in bonds or notes as soon as practicable. If no bonds or notes are available for investment, moneys in said fund may be invested for temporary periods in other tax-exempt municipal bonds upon the advice of an investment counsellor retained as herein provided. Deposits made in banks shall not draw interest, and it is the intent of this chapter to avoid any possible arbitrage profits which could jeopardize the federal tax exemption of savings bonds. In order to facilitate investment by the authority in large blocks of bonds and notes whenever they are available for purchase, the authority is authorized to borrow, in anticipation of future sales of savings bonds, any amount not exceeding two (2) months' average receipts from the sale of savings bonds. Any money so borrowed shall be deposited in or invested for the credit of the payment and redemption fund and the next forthcoming receipts from the sales of savings bonds shall be held and applied to the repayment of the money borrowed, notwithstanding any other provisions of this chapter. Notes of the authority evidencing such borrowing shall be eligible for investment as provided hereinafter in KRS 293.170. (3) Principal of all investments of moneys in the payment and redemption fund shall be deemed to constitute trust funds to be held and applied solely for the payment or redemption of savings bonds. All income derived from said investments, however, shall, as of the last day of each calendar year, be allocated by the authority to the payment and redemption fund or to an operating fund, in its discretion, but subject to the policy of this chapter that sufficient funds be provided to the payment and redemption fund to insure the payment and redemption of all savings bonds at such times as they mature or are presented for redemption. Effective: July 1, 1972 History: Created 1972 Ky. Acts ch. 368, sec. 13, effective July 1, 1972.