2014 Louisiana Laws
Revised Statutes
TITLE 39 - Public Finance
RS 39:98.2 - Investment of Millennium Trust

§98.2. Investment of Millennium Trust

A. The treasurer is authorized and directed to invest monies in the Millennium Trust which are available for investment in the following investments:

(1) Time certificates of deposit of state banks organized under the laws of Louisiana, national banks having their principal offices in the state of Louisiana, savings accounts or shares of savings and loan associations and savings banks, as defined by R.S. 6:703, or share accounts and share certificate accounts of federally or state-chartered credit unions. The funds so invested shall not exceed at any time the amount insured by the Federal Savings and Loan Insurance Corporation in any one savings and loan association and shall not exceed at any time the amount insured by the National Credit Union Administration, or other deposit insurance corporation, in any one credit union, unless the uninsured portion is collateralized by the pledge of securities in the manner provided by R.S. 49:321.

(2) Direct obligations of a United States government agency, United States government instrumentality, or United States government-sponsored enterprise, the timely payment of the principal and interest of which is fully and explicitly guaranteed by the full faith and credit of the government of the United States of America, and contained in a list promulgated by the state treasurer.

(3) Direct obligations of a United States government agency, United States government instrumentality, or United States government-sponsored enterprise, the timely payment of principal and interest of which is fully guaranteed by issuing entity, but are not explicitly guaranteed by the full faith and credit of the government of the United States, and contained in a list promulgated by the state treasurer.

(4) Stocks of any corporation listed on the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Automated Quotations System, or other such stock exchange domiciled in the United States and registered with the United States Securities and Exchange Commission, provided that the total investment in such stocks at any one time shall not exceed thirty-five percent of the market value of all funds held by the treasurer in the Millennium Trust. However, the portion of monies in the Millennium Trust which may be invested in stock may be increased to no more than fifty percent by a specific legislative instrument which receives a favorable vote of two-thirds of the elected members of each house of the legislature.

(5) Investment grade commercial paper and investment grade corporate notes and bonds traded in United States markets, denominated in United States dollars, and issued in the United States by a corporation whose common stock is listed on the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Automated Quotations System, or other such stock exchange domiciled in the United States and registered with the United States Securities and Exchange Commission.

(6) Money market funds consisting solely of securities otherwise eligible for investment by the treasurer pursuant to this Subsection.

(7) Open end mutual funds, closed end mutual funds, and unit investment trusts consisting solely of securities otherwise eligible for investment by the state treasurer.

(8) Tax exempt bonds, as defined in R.S. 49:342(C), and other taxable governmental bonds and in taxable bonds issued by any state or a political subdivision or public corporation of any state, provided that such taxable bonds are rated at the time the investment is made by a nationally recognized rating agency in one of the three highest rating categories of that rating agency.

(9) Any investment managers hired on a contract basis to advise the treasurer regarding such investments shall be selected by the treasurer, subject to the approval of the State Bond Commission, in accordance with a request for proposal process using strict selection criteria based on sound industry principles. The contract, as approved by the State Bond Commission, shall be on a fee, together with minimum exchange fee, basis or on a commission basis only. The state treasurer shall adopt and promulgate rules and regulations for such investments and for the selection of outside investment managers.

B. Investments made under authority of this Section shall mature on such date determined by the treasurer as will generate a favorable return to the state and will allow the monies to be available for use at the time needed.

C. Banks issuing time certificates of deposit under authority of this Section shall pay interest at a rate not less than the rate determined by the United States Treasury to have been the average interest rate plus one percent per annum on the last previous sale of treasury bills with the same length of maturity; provided that if at any time the interest rate so determined is in excess of the maximum rate banks are permitted to pay on time certificates of deposit for the same period of time by regulations of the Federal Reserve System or the Federal Deposit Insurance Corporation, the interest rate shall be the maximum established by those regulations.

D. The treasurer may enter into direct security repurchase agreements, reverse security repurchase agreements, and securities lending contracts in order to generate passive income. For the purposes of this Subsection:

(1) "Direct security repurchase agreement" means an agreement and transaction in which securities are purchased by the state from a registered securities broker or dealer for a rate and a guarantee to buy them back from the state, the state holds the securities for a specified time, and then the state sells those securities back to the broker or dealer at an agreed upon price.

(2) "Reverse security repurchase agreements" means an agreement and transaction in which securities are sold by the state to a registered securities broker or dealer for a rate and a guarantee to sell them back to the state, the broker or dealer holds the securities for a specified time, and then the state buys back the securities from the broker or dealer at an agreed upon price.

(3) "Securities lending contracts" means an agreement and transaction in which securities are supplied to a registered securities broker or dealer for a rate and secured by a pledge of collateral with a value equal to or greater than the securities supplied.

E. On or before December first of each year, the treasurer shall prepare and submit a report on the performance of the Millennium Trust to the Joint Legislative Committee on the Budget and the commissioner of administration for their review. With respect to the Education Excellence Fund, the report shall also be provided to the state superintendent of education.

Acts 1999, No. 1295, §1, eff. July 1, 2000; Acts 2006, No. 289, §2.