HF 3776

as introduced - 89th Legislature (2015 - 2016) Posted on 04/01/2016 08:21am

A bill for an act
relating to deposits and investments of public funds; granting certain cities
and counties additional investment authority; proposing coding for new law
in Minnesota Statutes, chapter 118A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [118A.09] ADDITIONAL LONG-TERM EQUITY INVESTMENT
AUTHORITY.
new text end

new text begin Subdivision 1. new text end

new text begin Definition; qualifying government. new text end

new text begin "Qualifying government"
means a county or city with a population in excess of 100,000, or a county or city with a
rating in the highest category from a national bond rating agency.
new text end

new text begin Subd. 2. new text end

new text begin Additional investment authority. new text end

new text begin Qualifying governments may invest the
amount described in subdivision 3: (1) in index mutual funds based in the United States
and indexed to the Standard & Poors 500 Index or the Dow Jones United States Total
Stock Market Index; or (2) with the Minnesota State Board of Investment. Investments
must be made directly with the main office of the index mutual fund.
new text end

new text begin Subd. 3. new text end

new text begin Funds. new text end

new text begin (a) Qualifying governments may only invest under subdivision
2 according to the limitations in this subdivision. A qualifying government can only
invest its cash and investments held for long-term capital planning, revenue stabilization
reserves, and long-term obligations of the qualifying government. Long-term obligations
of the qualifying government includes long-term capital planning reserves, funds held to
offset long-term environmental exposure, pension liabilities, postemployment benefit
liabilities, and compensated absences.
new text end

new text begin (b) Qualifying governments may only invest up to 15 percent of the sum of the
following: unrestricted cash, cash equivalents, deposits, and investments. This calculation
must be based on the qualifying government's most recent statement of net position, which
must be compliant and audited pursuant to governmental accounting and auditing standards.
new text end

new text begin Subd. 4. new text end

new text begin Approval. new text end

new text begin Before investing pursuant to this section, the governing body of
the qualifying government must adopt a resolution that includes the following assertions:
new text end

new text begin (1) the qualifying government understands that index mutual fund investments have
a greater risk of loss than fixed income investments; and
new text end

new text begin (2) the qualifying government understands the type of funds that are being invested
and the nature of the investment itself.
new text end