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Regular Session, 2010
SENATE BILL NO. 306
BY SENATOR MARTINY
LOCAL FINANCE. Provides with respect to investments by political subdivisions.
(8/15/10)
AN ACT1
To enact R.S. 33:2955(A)(1)(k), relative to investments by political subdivisions; to provide2
for investment in debt instruments issued by any state other than Louisiana; to3
provide for investment in debt instruments issued by political subdivisions of any4
state other than Louisiana; to provide restrictions on such types of investments; to5
provide requirements relative to political subdivisions purchasing such debt6
instruments; and to provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 33:2955(A)(1)(k) is hereby enacted to read as follows: 9
ยง2955. Investments by political subdivisions10
A.(1) All municipalities, parishes, school boards, and any other political11
subdivisions of the state are hereby authorized and directed to invest such monies in12
any general fund or special fund of the political subdivision, and any other funds13
under the control of the political subdivision which they, in their discretion, may14
determine to be available for investment in any of the following obligations:15
* * *16
(k) Bonds, debentures, notes, or other indebtedness issued by a state of17 SB NO. 306
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the United States of America other than Louisiana or any such state's political1
subdivisions provided that all of the following conditions are met:2
(i) The indebtedness has a minimum rating of A3 or higher by Moody's3
Investors Service or a rating of A- or higher by the Standard and Poor4
Corporation or a rating of A- or higher by Fitch, Inc.5
(ii) The indebtedness has a final maturity of no more than three years,6
except that such three-year limitation shall not apply to funds held by a trustee,7
escrow agent, paying agent, or other third-party custodian in connection with8
a bond issue nor to investment of funds held by either a hospital service district,9
a governmental 501(c)(3) organization, or a public trust authority.10
(iii) Prior to purchase of any such indebtedness and at all times during11
which such indebtedness is owned, the purchasing Louisiana political12
subdivision retains the services of an investment advisor registered with the13
United States Securities and Exchange Commission.14
* * *15
The original instrument was prepared by James Benton. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Nancy Vicknair.
DIGEST
Martiny (SB 306)
Present law authorizes municipalities, parishes, school boards, and other political
subdivisions to invest available monies in certain types of investment vehicles. Subject to
certain restrictions, these authorized investments include but are not limited to:
(1)U.S. Treasury obligations.
(2)Bonds, notes, etc., backed by the full faith and credit of the U.S.
(3)Bonds, notes, etc., issued or guaranteed by U.S. government instrumentalities.
(4)Direct security repurchase agreements.
(5)Certificates of deposit.
(6)Mutual or trust fund institutions.
(7)Debt instruments issued by the state of Louisiana or any of its political subdivisions.
Proposed law retains present law and further authorizes political subdivisions to invest in
debt instruments issued by other states or their political subdivisions. SB NO. 306
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Proposed law requires that the investments meet a certain minimum national investment
grade rating. Proposed law further requires the Louisiana political subdivision purchasing
such debt instruments to retain and maintain the services of an investment advisor registered
with the U.S. Securities and Exchange Commission for the entirety of the time the political
subdivision owns said debt instruments.
Effective August 15, 2010.
(Adds R.S. 33:2955(A)(1)(k))
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill.
1. Makes technical changes.