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Regular Session, 2012
HOUSE BILL NO. 998
BY REPRESENTATIVE GIROD JACKSON
LOCAL FINANCE: Provides relative to investments by political subdivisions
AN ACT1
To amend and reenact R.S. 33:2955(A)(1)(j) and (k), relative to investments by political2
subdivisions; to provide relative to the power of municipalities, parishes, school3
boards, and other political subdivisions to invest their monies; to provide4
requirements relative to the investment of such monies; and to provide for related5
matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 33:2955(A)(1)(j) and (k) are hereby amended and reenacted to read8
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
(j) Bonds, debentures, notes, or other evidence of indebtedness issued by the17
state of Louisiana or any of its political subdivisions; however provided that all of18
the following conditions are met:19
(i) No political subdivision may purchase its own indebtedness.20 HLS 12RS-1452 ENGROSSED
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(ii) The indebtedness shall have a minimum long-term investment grade1
rating of Baa3 or higher by Moody's Investor Service, a long-term rating of BBB-2
or higher by the Standard and Poor Poor's Corporation or a long-term rating of BBB-3
or higher by Fitch, Inc.and or a short-term rating of M1G1 or VM1G1 by Moody's4
Investment Service, a short-term rating of A-1 or A-1+ by Standard and Poor's, or5
a short-term rating of F1 or F1+ by Fitch, Inc.6
have (iii) The indebtedness has a final maturity, mandatory tender, or7
optional tender of no more than three years, except that such three year three-year8
limitation shall not apply to (aa) funds held by a trustee, escrow agent, paying agent,9
or other third party custodian in connection with a bond issue or (bb) investment of10
funds held by either a hospital service district, a governmental 501(c)(3), or a public11
trust authority.12
(k) Bonds, debentures, notes, or other indebtedness issued by a state of the13
United States of America other than Louisiana or any such state's political14
subdivisions provided that all of the following conditions are met:15
(i) The indebtedness has shall have a long-term minimum rating of A3 or16
higher by Moody's Investors Service, or a long-term rating of A- or higher by the17
Standard and Poor Poor's Corporation or a long-term rating of A- or higher by Fitch,18
Inc. or a short-term rating of M1G1 or VM1G1 by Moody's Investor Service, a short-19
term rating of A-1 or A-1+ by Standard and Poor's, or a short-term rating of F1 or20
F1+ by Fitch, Inc.21
(ii) The indebtedness has a final maturity, mandatory tender, or optional22
tender of no more than three years, except that such three-year limitation shall not23
apply to funds held by a trustee, escrow agent, paying agent, or other third-party24
custodian in connection with a bond issue nor to investment of funds held by either25
a hospital service district, a governmental 501(c)(3) organization, or a public trust26
authority.27
(iii) Prior to purchase of any such indebtedness and at all times during which28
such indebtedness is owned, the purchasing Louisiana political subdivision retains29 HLS 12RS-1452 ENGROSSED
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the services of an investment advisor registered with the United States Securities and1
Exchange Commission.2
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Girod Jackson HB No. 998
Abstract: Provides relative to investments by political subdivisions.
Present law provides that all municipalities, school boards, and any other political
subdivisions of the state are authorized and directed to invest monies in any general fund or
special fund of the political subdivision. Provides that the political subdivisions may invest
in bonds, debentures, notes, or other evidence of indebtedness issued by the state of La. or
any of its political subdivisions or of another state or any of its political subdivisions
provided that several conditions are met. Such conditions include the following:
Conditions on such investments include the investment ratings of such debt. Present law
requires that any such debt have a rating of at least: Baa3 by Moody's Investor Service,
BBB- by Standard and Poor's, or BBB- by Fitch, Inc. Proposed law retains these standards
as applicable to long-term debt and additionally requires the following short-term ratings:
M1G1 or VM1G1 by Moody's Investor Service, A-1 or A-1+ by Standard and Poor's, F1 or
F1+ by Fitch, Inc.
Present law provides as another condition on such investments that the indebtedness has a
final maturity of no more than three years but provides exceptions from this requirement.
Proposed law authorizes investments if the indebtedness has a final maturity, mandatory
tender, or optional tender of no more than three years; retains the exceptions to this
requirement.
(Amends R.S. 33:2955(A)(1)(j) and (k))