AN ACT
RELATING TO PUBLIC FINANCE; ALLOWING
COUNTY AND MUNICIPAL TREASURERS TO INVEST IN SECURITIES OF AGENCIES SPONSORED
BY THE UNITED STATES GOVERNMENT.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. Section 6-10-10 NMSA 1978 (being Laws 1933,
Chapter 175, Section 4, as amended) is amended to read:
"6-10-10. DEPOSIT AND INVESTMENT OF FUNDS.--
A. Upon the certification or designation of a
bank, savings and loan association or credit union whose deposits are insured
by an agency of the United States to receive public money on deposit, the state
treasurer and county or municipal treasurers who have on hand any public money
by virtue of their offices shall make deposit of that money in banks and
savings and loan associations, and may make deposit of that money in credit
unions whose deposits are insured by an agency of the United States, designated
by the authority authorized by law to so designate to receive the deposits of
all money thereafter received or collected by the treasurers.
B. County or municipal treasurers may deposit
money in one or more accounts with any such bank, savings and loan association
or credit union located in their respective counties, subject to limitation on
credit union accounts.
C. The state treasurer may deposit money in one
or more accounts with any such bank, savings and loan association or credit
union, subject to the limitation on credit union accounts.
D. Duplicate receipts or deposit slips shall be
taken for each deposit made pursuant to Subsection A, B or C of this
section. When deposits are made by the
state treasurer, one copy of the receipt or deposit slip shall be retained by
the state treasurer and the other copy shall be filed monthly on the first day
of each month with the financial control division of the department of finance
and administration. When deposits are
made by the treasurer or any other authorized person making the deposits for a
board of finance of a public or educational institution, one copy of the
receipt or deposit slip shall be retained by the treasurer or authorized person
so making the deposit and the other copy shall be filed monthly on the first
day of each month with that board of finance.
When deposits are made by a county or municipal treasurer, one of the
duplicate receipts or deposit slips shall be retained by the treasurer so making
the deposit and the other copy shall be filed monthly on the first day of each
month with the secretary of the board of finance of the county or municipality
for which that treasurer is acting.
E. "Deposit", as used in this section,
means either investment or deposit and includes share, share certificate and
share draft.
F. County or municipal treasurers, by and with
the advice and consent of their respective boards of finance charged with the supervision
and control of the respective funds, have the power to invest all sinking funds
or money remaining unexpended from the proceeds of any issue of bonds or other
negotiable securities of any county, municipality or school district that is
entrusted to their care and custody and all money not immediately necessary for
the public uses of the counties, municipalities or school districts not
invested or deposited in banks, savings and loan associations or credit unions
in:
(1) bonds or negotiable securities of the United
States, the state or any county, municipality or school district that has a
taxable valuation of real property for the last preceding year of at least one
million dollars ($1,000,000) and has not defaulted in the payment of any interest
or sinking fund obligation or failed to meet any bonds at maturity at any time
within five years last preceding; or
(2) securities that are issued by the United
States government or by its agencies or instrumentalities and that are either
direct obligations of the United States, the federal home loan mortgage
association, the federal national mortgage association, the federal farm credit
bank or the student loan marketing association or are backed by the full faith
and credit of the United States government.
G. The treasurer of a class A county or the
treasurer of a municipality having a population of more than sixty-five
thousand according to the most recent federal decennial census and located
within a class A county, by and with the advice and consent of the boards of
finance charged with the supervision and control of the funds, has the power to
invest all sinking funds or money remaining unexpended from the proceeds of any
issue of bonds or other negotiable securities of the county or municipality
that is entrusted to his care and custody and all money not immediately
necessary for the public uses of the county or municipality not invested or
deposited in banks, savings and loan associations or credit unions in:
(1) shares of a diversified investment company
registered pursuant to the federal Investment Company Act of 1940 that invests
in fixed-income securities or debt instruments that are listed in a nationally recognized,
broad-market, fixed-income-securities market index; provided that the
investment company or manager has total assets under management of at least one
hundred million dollars ($100,000,000) and provided that the board of finance
of the county or municipality may allow reasonable administrative and
investment expenses to be paid directly from the income or assets of these
investments;
(2) individual, common or collective trust funds
of banks or trust companies that invest in fixed-income securities or debt
instruments that are listed in a nationally recognized, broad-market,
fixed-income-securities market index; provided that the investment company or
manager has total assets under management of at least one hundred million
dollars ($100,000,000) and provided that the board of finance of the county or
municipality may allow reasonable administrative and investment expenses to be
paid directly from the income or assets of these investments; or
(3) shares of pooled investment funds managed by
the state investment officer, as provided in Subsection G of Section 6-8-7 NMSA
1978; provided that the board of finance of the county or municipality may
allow reasonable administrative and investment expenses to be paid directly
from the income or assets of these investments.
H. A local public body, with the advice and
consent of the body charged with the supervision and control of the local
public body's respective funds, has the power to invest all sinking funds or
money remaining unexpended from the proceeds of any issue of bonds or other
negotiable securities of the investor that is entrusted to the local public
body's care and custody and all money not immediately necessary for the public
uses of the investor and not otherwise invested or deposited in banks, savings
and loan associations or credit unions in contracts with banks, savings and
loan associations or credit unions for the present purchase and resale at a
specified time in the future of specific securities at specified prices at a
price differential representing the interest income to be earned by the
investor. The contract shall be fully
secured by obligations of the United States or other securities backed by the
United States having a market value of at least one hundred two percent of the
contract. The collateral required for
investment in the contracts provided for in this subsection shall be shown on
the books of the financial institution as being the property of the investor
and the designation shall be contemporaneous with the investment. As used in this subsection, "local
public body" includes all political subdivisions of the state and
agencies, instrumentalities and institutions thereof; provided that home rule
municipalities that, prior to July 1, 1994, had enacted ordinances authorizing
the investment of repurchase agreements may continue investment in repurchase
agreements pursuant to those ordinances.
I. The state treasurer, with the advice and
consent of the state board of finance, has the power to invest money held in
demand deposits and not immediately needed for the operation of state
government and money held in the short-term investment fund, except as provided
in Section 6-10-10.1 NMSA 1978. The
investments shall be made only in securities that are issued by the United
States government or by its departments or agencies and are either direct
obligations of the United States or are backed by the full faith and credit of
the United States government or agencies sponsored by the United States
government.
J. The state treasurer, with the advice and
consent of the state board of finance, may also invest in contracts for the
present purchase and resale at a specified time in the future, not to exceed
one year or, in the case of bond proceeds, not to exceed three years, of
specific securities at specified prices at a price differential representing
the interest income to be earned by the state.
Such contract shall not be invested in unless the contract is fully
secured by obligations of the United States or other securities backed by the
United States having a market value of at least one hundred two percent of the
amount of the contract.
K. The state treasurer, with the advice and
consent of the state board of finance, may also invest in contracts for the
temporary exchange of state-owned securities for the use of broker-dealers,
banks or other recognized institutional investors in securities, for periods
not to exceed one year for a specified fee rate. Such contract shall not be invested in unless
the contract is fully secured by exchange of an irrevocable letter of credit
running to the state, cash or equivalent collateral of at least one hundred two
percent of the market value of the securities plus accrued interest temporarily
exchanged.
L. The collateral required for either of the
forms of investment in Subsection J or K of this section shall be delivered to
the state fiscal agent or its designee contemporaneously with the transfer of
funds or delivery of the securities at the earliest time industry practice
permits, but in all cases, settlement shall be on a same-day basis.
M. Neither of the contracts in Subsection J or K
of this section shall be invested in unless the contracting bank, brokerage
firm or recognized institutional investor has a net worth in excess of five
hundred million dollars ($500,000,000).
N. The state treasurer, with the advice and
consent of the state board of finance, may also invest in any of the following
investments in an amount not to exceed forty percent of any fund that the state
treasurer invests:
(1) commercial paper rated "prime"
quality by a national rating service, issued by corporations organized and
operating within the United States;
(2) medium-term notes and corporate notes with a
maturity not exceeding five years that are rated A or its equivalent or better
by a nationally recognized rating service and that are issued by a corporation
organized and operating in the United States; or
(3) any asset-backed obligation with a maturity
not exceeding five years that is rated AAA or its equivalent by a nationally
recognized rating service.
O. The state treasurer, with the advice and
consent of the state board of finance, may also invest in:
(1) shares of a diversified investment company
registered pursuant to the federal Investment Company Act of 1940 that invests
in United States fixed income securities or debt instruments authorized
pursuant to Subsections I, J and N of this section, provided that the
investment company has total assets under management of at least one billion
dollars ($1,000,000,000) and the investments made by the state treasurer
pursuant to this paragraph are less than five percent of the assets of the
investment company; or
(2) individual, common or collective trust funds
of banks or trust companies that invest in United States fixed income
securities or debt instruments authorized pursuant to Subsections I, J and N of
this section, provided that the investment manager has assets under management
of at least one billion dollars ($1,000,000,000) and the investments made by
the state treasurer pursuant to this paragraph are less than five percent of
the assets of the individual, common or collective trust fund.
P. Public funds to be invested in negotiable
securities or loans to financial institutions fully secured by negotiable
securities at current market value shall not be paid out unless there is a
contemporaneous transfer of the securities at the earliest time industry
practice permits, but in all cases, settlement shall be on a same-day basis
either by physical delivery or, in the case of uncertificated securities, by
appropriate book entry on the books of the issuer, to the purchaser or to a
reputable third-party safekeeping financial institution acting as agent or
trustee for the purchaser, which agent or trustee shall furnish timely
confirmation to the purchaser."
HB 306
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