2013 Kentucky Revised Statutes CHAPTER 66 - ISSUANCE OF BONDS AND CONTROL OF FUNDS 66.480 Investment of public funds -- Limitations -- Written investment policy -- Duties of state local debt officer -- Investment pool.
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66.480 Investment of public funds -- Limitations -- Written investment policy
-- Duties of state local debt officer -- Investment pool.
(1)
The governing body of a city, county, urban-county, charter county, school
district (provided that its general procedure for action is approved by the
Kentucky Board of Education), or other local governmental unit or political
subdivision, may invest and reinvest money subject to its control and
jurisdiction in:
(a) Obligations of the United States and of its agencies and instrumentalities,
including obligations subject to repurchase agreements, if delivery of
these obligations subject to repurchase agreements is taken either
directly or through an authorized custodian. These investments may be
accomplished through repurchase agreements reached with sources
including but not limited to national or state banks chartered in Kentucky;
(b) Obligations and contracts for future delivery or purchase of obligations
backed by the full faith and credit of the United States or a United States
government agency, including but not limited to:
1.
United States Treasury;
2.
Export-Import Bank of the United States;
3.
Farmers Home Administration;
4.
Government National Mortgage Corporation; and
5.
Merchant Marine bonds;
(c) Obligations of any corporation of the United States government, including
but not limited to:
1.
Federal Home Loan Mortgage Corporation;
2.
Federal Farm Credit Banks;
3.
Bank for Cooperatives;
4.
Federal Intermediate Credit Banks;
5.
Federal Land Banks;
6.
Federal Home Loan Banks;
7.
Federal National Mortgage Association; and
8.
Tennessee Valley Authority;
(d) Certificates of deposit issued by or other interest-bearing accounts of any
bank or savings and loan institution which are insured by the Federal
Deposit Insurance Corporation or similar entity or which are collateralized,
to the extent uninsured, by any obligations, including surety bonds,
permitted by KRS 41.240(4);
(e) Uncollateralized certificates of deposit issued by any bank or savings and
loan institution rated in one (1) of the three (3) highest categories by a
nationally recognized rating agency;
(f) Bankers' acceptances for banks rated in one (1) of the three (3) highest
categories by a nationally recognized rating agency;
(g) Commercial paper rated in the highest category by a nationally
recognized rating agency;
(h)
(2)
(3)
Bonds or certificates of indebtedness of this state and of its agencies and
instrumentalities;
(i) Securities issued by a state or local government, or any instrumentality of
agency thereof, in the United States, and rated in one (1) of the three (3)
highest categories by a nationally recognized rating agency; and
(j) Shares of mutual funds, each of which shall have the following
characteristics:
1.
The mutual fund shall be an open-end diversified investment
company registered under the Federal Investment Company Act of
1940, as amended;
2.
The management company of the investment company shall have
been in operation for at least five (5) years; and
3.
All of the securities in the mutual fund shall be eligible investments
pursuant to this section.
The investment authority provided by subsection (1) of this section shall be
subject to the following limitations:
(a) The amount of money invested at any time by a local government or
political subdivision in one (1) or more of the categories of investments
authorized by subsection (1)(e), (f), (g), and (i) of this section shall not
exceed twenty percent (20%) of the total amount of money invested by
the local government; and
(b) No local government or political subdivision shall purchase any
investment authorized by subsection (1) on a margin basis or through the
use of any similar leveraging technique.
The governing body of every local government or political subdivision that
invests or reinvests money subject to its control or jurisdiction according to the
provisions of subsection (1) of this section shall by January 1, 1995, adopt a
written investment policy that shall govern the investment of funds by the local
government or political subdivision. The written investment policy shall include
but shall not be limited to the following:
(a) A designation of the officer or officers of the local government or political
subdivision who are authorized to invest and oversee the investment of
funds;
(b) A list of the permitted types of investments;
(c) Procedures designed to secure the local government's or political
subdivision's financial interest in the investments;
(d) Standards for written agreements pursuant to which investments are to
be made;
(e) Procedures for monitoring, control, deposit, and retention of investments
and collateral;
(f) Standards for the diversification of investments, including diversification
with respect to the types of investments and firms with whom the local
government or political subdivision transacts business;
(g) Standards for the qualification of investment agents which transact
business with the local government, such as criteria covering
(4)
(5)
(6)
(7)
(8)
(9)
creditworthiness, experience, capitalization, size, and any other factors
that make a firm capable and qualified to transact business with the local
government or political subdivision; and
(h) Requirements for periodic reporting to the governing body on the status
of invested funds.
Sheriffs, county clerks, and jailers, who for the purposes of this section shall be
known as county officials, may invest and reinvest money subject to their
control and jurisdiction, including tax dollars subject to the provisions of KRS
Chapter 134 and 160.510, as permitted by this section.
The provisions of this section are not intended to impair the power of a county
official, city, county, urban-county, charter county, school district, or other local
governmental unit or political subdivision to hold funds in deposit accounts with
banking institutions as otherwise authorized by law.
The governing body or county official may delegate the investment authority
provided by this section to the treasurer or other financial officer or officers
charged with custody of the funds of the local government, and the officer or
officers shall thereafter assume full responsibility for all investment transactions
until the delegation of authority terminates or is revoked.
All county officials shall report the earnings of any investments at the time of
their annual reports and settlements with the fiscal courts for excess income of
their offices.
The state local debt officer is authorized and directed to assist county officials
and local governments, except school districts, in investing funds that are
temporarily in excess of operating needs by:
(a) Explaining investment opportunities to county officials and local
governments through publication and other appropriate means; and
(b) Providing technical assistance in investment of idle funds to county
officials and local governments that request that assistance.
(a) The state local debt officer may create an investment pool for local
governments, except school districts, and county officials; and counties
and county officials and cities may associate to create an investment
pool. If counties and county officials and cities create a pool, each group
may select a manager to administer their pool and invest the assets. Each
county and each county official and each city may invest in a pool created
pursuant to this subsection. Investments shall be limited to those
investment instruments permitted by this section. The funds of each local
government and county official shall be properly accounted for, and
earnings and charges shall be assigned to each participant in a uniform
manner according to the amount invested. Charges to any local
government or county official shall not exceed one percent (1%) annually
on the principal amount invested, and charges on investments of less
than a year's duration shall be prorated. Any investment pool created
pursuant to this subsection shall be audited each year by an independent
certified public accountant, or by the Auditor of Public Accounts. A copy of
the audit report shall be provided to each local government or county
official participating in the pool. In the case of an audit by an independent
certified public accountant, a copy of the audit report shall be provided to
(b)
(c)
(10) (a)
(b)
the Auditor of Public Accounts, and to the state local debt officer. The
Auditor of Public Accounts may review the report of the independent
certified public accountant. After preliminary review, should discrepancies
be found, the Auditor of Public Accounts may make his or her own
investigative report or audit to verify the findings of the independent
certified public accountant's report.
If the state local debt officer creates an investment pool, he or she shall
establish an account in the Treasury for the pool. He or she shall also
establish a separate trust and agency account for the purpose of covering
management costs, and he or she shall deposit management charges in
this account. The state local debt officer may promulgate administrative
regulations, pursuant to KRS Chapter 13A, governing the operation of the
investment pool, including but not limited to provisions on minimum
allowable investments and investment periods, and method and timing of
investments, withdrawals, payment of earnings, and assignment of
charges.
Before investing in an investment pool created pursuant to this
subsection, a local government or county official shall allow any savings
and loan association or bank in the county, as described in subsection
(1)(d) of this section, to bid for the deposits, but the local government or
county official shall not be required to seek bids more often than once in
each six (6) month period.
With the approval of the Kentucky Board of Education, local boards of
education, or any of them that desire to do so, may associate to create an
investment pool. Each local school board which associates itself with
other local school boards for the purpose of creating the investment pool
may invest its funds in the pool so created and so managed. Investments
shall be limited to those investment instruments permitted by this section.
The funds of each local school board shall be properly accounted for, and
earnings and charges shall be assigned to each participant in a uniform
manner according to the amount invested. Charges to any local school
board shall not exceed one percent (1%) annually on the principal amount
invested, and charges on investments of less than a year's duration shall
be prorated. Any investment pool created pursuant to this subsection
shall be audited each year by an independent certified public accountant,
or by the Auditor of Public Accounts. A copy of the audit report shall be
provided to each local school board participating in the pool. In the case
of an audit by an independent certified public accountant, a copy of the
audit report shall be provided to the Auditor of Public Accounts, and to the
Kentucky Board of Education. The Auditor of Public Accounts may review
the report of the independent certified public accountant. After preliminary
review, should discrepancies be found, the Auditor of Public Accounts
may make his or her own investigative report or audit to verify the findings
of the independent certified public accountant's report.
The Kentucky Board of Education may promulgate administrative
regulations governing the operation of the investment pool including but
not limited to provisions on minimum allowable investments and
investment periods, and methods and timing of investments, withdrawals,
payment of earnings, and assignment of charges.
Effective:January 1, 2010
History: Amended 2009 Ky. Acts ch. 10, sec. 58, effective January 1, 2010. -Amended 1998 Ky. Acts ch. 554, sec. 3, effective July 15, 1998. -- Amended
1996 Ky. Acts ch. 362, sec. 6, effective July 15, 1996. -- Amended 1994 Ky.
Acts ch. 275, sec. 1, effective July 15, 1994; and ch. 508, sec. 39, effective July
15, 1994. -- Amended 1990 Ky. Acts ch. 291, sec. 2, effective July 13, 1990;
and ch. 476, Pt. V, sec. 298, effective July 13, 1990. -- Amended 1988 Ky. Acts
ch. 393, sec. 3, effective July 15, 1988. -- Amended 1986 Ky. Acts ch. 261,
sec. 1, effective July 1, 1986. -- Amended 1982 Ky. Acts ch. 57, sec. 1, effective
March 9, 1982. -- Created 1966 Ky. Acts ch. 205, sec. 1.
Legislative Research Commission Note (7/15/94). This section was amended by
1994 Ky. Acts chs. 275 and 508. Where these Acts are not in conflict, they have
been codified together. In cases where stylistic changes made in Acts ch. 508
conflict with substantive changes in Acts ch. 275, the provisions of Acts ch. 275
have prevailed. Cf. KRS 7.123(1).
Legislative Research Commission Note (7/13/90). The Act amending this section
prevails over the repeal and reenactment in House Bill 940, Acts ch. 476,
pursuant to section 653(1) of Acts ch. 476.
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