MD
Maryland Senate Bill SB153

Maryland 2023 Regular Session

Maryland Senate Bill SB153 Compare Versions

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1- WES MOORE, Governor Ch. 116
21
3-– 1 –
4-Chapter 116
5-(Senate Bill 153)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb0153*
89
9-State Investment Portfolio – Investment Thresholds – Alterations
10+SENATE BILL 153
11+P1 3lr1031
12+ CF HB 397
13+By: Senator Augustine (Chair, Joint Committee on the Management of Public
14+Funds)
15+Introduced and read first time: January 16, 2023
16+Assigned to: Budget and Taxation
17+Committee Report: Favorable
18+Senate action: Adopted
19+Read second time: February 14, 2023
1020
11-FOR the purpose of repealing the limitations on investment in certain commercial paper in
12-which the Treasurer may invest or reinvest certain unexpended or surplus funds;
13-requiring the Treasurer to adopt regulations to establish a State investment policy
14-with certain thresholds; requiring the Treasurer to notify certain officials and
15-governing bodies of certain local government units about the provisions of this Act;
16-and generally relating to the investment portfolio of the State.
21+CHAPTER ______
1722
18-BY repealing and reenacting, with amendments,
19- Article – State Finance and Procurement
20-Section 6–222
21- Annotated Code of Maryland
22- (2021 Replacement Volume and 2022 Supplement)
23+AN ACT concerning 1
2324
24- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
25-That the Laws of Maryland read as follows:
25+State Investment Portfolio – Investment Thresholds – Alterations 2
2626
27-Article – State Finance and Procurement
27+FOR the purpose of repealing the limitations on investment in certain commercial paper in 3
28+which the Treasurer may invest or reinvest certain unexpended or surplus funds; 4
29+requiring the Treasurer to adopt regulations to establish a State investment policy 5
30+with certain thresholds; requiring the Treasurer to notify certain officials and 6
31+governing bodies of certain local government units about the provisions of this Act; 7
32+and generally relating to the investment portfolio of the State. 8
2833
29-6–222.
34+BY repealing and reenacting, with amendments, 9
35+ Article – State Finance and Procurement 10
36+Section 6–222 11
37+ Annotated Code of Maryland 12
38+ (2021 Replacement Volume and 2022 Supplement) 13
3039
31- (a) (1) In this section, “supranational issuer” means an international
32-development institution that:
40+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14
41+That the Laws of Maryland read as follows: 15
3342
34- (i) provides financing, advisory services, or other financial services
35-to the institution’s member countries to achieve the overall goal of improving living
36-standards through sustainable economic growth; and
43+Article – State Finance and Procurement 16
3744
38- (ii) is rated in the highest credit rating category by a nationally
39-recognized statistical rating organization.
45+6–222. 17
4046
41- (2) “Supranational issuer” includes:
47+ (a) (1) In this section, “supranational issuer” means an international 18
48+development institution that: 19 2 SENATE BILL 153
4249
43- (i) the World Bank;
4450
45- (ii) the International Finance Corporation;
4651
47- (iii) the Inter–American Development Bank;
52+ (i) provides financing, advisory services, or other financial services 1
53+to the institution’s member countries to achieve the overall goal of improving living 2
54+standards through sustainable economic growth; and 3
4855
49- (iv) the African Development Bank; and Ch. 116 2023 LAWS OF MARYLAND
56+ (ii) is rated in the highest credit rating category by a nationally 4
57+recognized statistical rating organization. 5
5058
51-– 2 –
59+ (2) “Supranational issuer” includes: 6
5260
53- (v) the Asian Development Bank.
61+ (i) the World Bank; 7
5462
55- (b) (1) [The] SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE
56-Treasurer may invest or reinvest unexpended or surplus money over which the Treasurer
57-has custody in:
63+ (ii) the International Finance Corporation; 8
5864
59- [(1)] (I) an obligation for which the United States has pledged its faith
60-and credit for the payment of the principal and interest;
65+ (iii) the Inter–American Development Bank; 9
6166
62- [(2)] (II) an obligation that a federal agency or a federal instrumentality
63-has issued in accordance with an act of Congress;
67+ (iv) the African Development Bank; and 10
6468
65- [(3)] (III) an obligation issued and unconditionally guaranteed by a
66-supranational issuer denominated in United States dollars and eligible to be sold in the
67-United States;
69+ (v) the Asian Development Bank. 11
6870
69- [(4)] (IV) a repurchase agreement collateralized in an amount not less
70-than 102% of the principal amount by an obligation of the United States, its agencies or
71-instrumentalities, provided the collateral is held by a custodian other than the seller
72-designated by the buyer;
71+ (b) (1) [The] SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE 12
72+Treasurer may invest or reinvest unexpended or surplus money over which the Treasurer 13
73+has custody in: 14
7374
74- [(5)] (V) bankers’ acceptances guaranteed by a financial institution with
75-a short–term debt rating in the highest letter and numerical rating by at least one
76-nationally recognized statistical rating organization as designated by either the United
77-States Securities and Exchange Commission or the Treasurer;
75+ [(1)] (I) an obligation for which the United States has pledged its faith 15
76+and credit for the payment of the principal and interest; 16
7877
79- [(6)] (VI) with respect to amounts treated by the Internal Revenue Service
80-as bond sale proceeds only, bonds, notes, or other obligations of investment grade in the
81-highest quality letter and numerical rating by at least one nationally recognized statistical
82-rating organization as designated by the United States Securities and Exchange
83-Commission issued by or on behalf of this or any other state or any agency, department,
84-county, municipal or public corporation, special district, authority, or political subdivision
85-thereof, or in any fund or trust that invests only in securities of the type described in this
86-item;
78+ [(2)] (II) an obligation that a federal agency or a federal instrumentality 17
79+has issued in accordance with an act of Congress; 18
8780
88- [(7)] (VII) commercial paper that has received the highest letter and
89-numerical rating by at least two nationally recognized statistical rating organizations as
90-designated by the United States Securities and Exchange Commission[, provided that such
91-commercial paper may not exceed 10% of the total investments made by the Treasurer
92-under this subsection];
81+ [(3)] (III) an obligation issued and unconditionally guaranteed by a 19
82+supranational issuer denominated in United States dollars and eligible to be sold in the 20
83+United States; 21
9384
94- [(8)] (VIII) money market mutual funds that:
95- WES MOORE, Governor Ch. 116
85+ [(4)] (IV) a repurchase agreement collateralized in an amount not less 22
86+than 102% of the principal amount by an obligation of the United States, its agencies or 23
87+instrumentalities, provided the collateral is held by a custodian other than the seller 24
88+designated by the buyer; 25
9689
97-– 3 –
98- [(i)] 1. are registered with the Securities and Exchange
99-Commission under the Investment Company Act of 1940, 15 U.S.C. § 80a–1 et seq., as
100-amended;
90+ [(5)] (V) bankers’ acceptances guaranteed by a financial institution with 26
91+a short–term debt rating in the highest letter and numerical rating by at least one 27
92+nationally recognized statistical rating organization as designated by either the United 28
93+States Securities and Exchange Commission or the Treasurer; 29
10194
102- [(ii)] 2. are operated in accordance with Rule 2A –7 of the
103-Investment Company Act of 1940, 17 C.F.R. § 270.2A–7, as amended; and
95+ [(6)] (VI) with respect to amounts treated by the Internal Revenue Service 30
96+as bond sale proceeds only, bonds, notes, or other obligations of investment grade in the 31 SENATE BILL 153 3
10497
105- [(iii)] 3. have received the highest possible rating from at least one
106-nationally recognized statistical rating organization as designated by the United States
107-Securities and Exchange Commission; and
10898
109- [(9)] (IX) any investment portfolio created under the Maryland Local
110-Government Investment Pool defined under §§ 17–301 through 17–309 of the Local
111-Government Article of the Code that is administered by the Office of the State Treasurer.
99+highest quality letter and numerical rating by at least one nationally recognized statistical 1
100+rating organization as designated by the United States Securities and Exchange 2
101+Commission issued by or on behalf of this or any other state or any agency, department, 3
102+county, municipal or public corporation, special district, authority, or political subdivision 4
103+thereof, or in any fund or trust that invests only in securities of the type described in this 5
104+item; 6
112105
113- (2) INVESTMENTS MADE UNDE R PARAGRAPH (1) OF THIS
114-SUBSECTION SHALL BE IN ACCORDAN CE WITH THE THRESHOLDS ESTAB LISHED IN
115-REGULATIONS ADOPTED UNDER SUBSECTION (G) OF THIS SECTION.
106+ [(7)] (VII) commercial paper that has received the highest letter and 7
107+numerical rating by at least two nationally recognized statistical rating organizations as 8
108+designated by the United States Securities and Exchange Commission[, provided that such 9
109+commercial paper may not exceed 10% of the total investments made by the Treasurer 10
110+under this subsection]; 11
116111
117- (c) The Treasurer may sell, redeem, or exchange an investment or reinvestment
118-made under this section in accordance with the limitations of this section.
112+ [(8)] (VIII) money market mutual funds that: 12
119113
120- (d) Subject to § 2–1257 of the State Government Article, the Treasurer shall
121-report by January 3 of each year to the General Assembly on investment activities for
122-unexpended or surplus money over which the Treasurer has custody which have been
123-conducted during the previous fiscal year. At a minimum, the report shall specify for
124-General Fund investments and all other investments:
114+ [(i)] 1. are registered with the Securities and Exchange 13
115+Commission under the Investment Company Act of 1940, 15 U.S.C. § 80a–1 et seq., as 14
116+amended; 15
125117
126- (1) the inventory of investments with maturity dates and the book and
127-market value as of June 30;
118+ [(ii)] 2. are operated in accordance with Rule 2A –7 of the 16
119+Investment Company Act of 1940, 17 C.F.R. § 270.2A–7, as amended; and 17
128120
129- (2) the net income earned;
121+ [(iii)] 3. have received the highest possible rating from at least one 18
122+nationally recognized statistical rating organization as designated by the United States 19
123+Securities and Exchange Commission; and 20
130124
131- (3) the percentage share of each category of investment in the portfolio; and
125+ [(9)] (IX) any investment portfolio created under the Maryland Local 21
126+Government Investment Pool defined under §§ 17–301 through 17–309 of the Local 22
127+Government Article of the Code that is administered by the Office of the State Treasurer. 23
132128
133- (4) any sale of investments prior to the maturity date.
129+ (2) INVESTMENTS MADE UNDE R PARAGRAPH (1) OF THIS 24
130+SUBSECTION SHALL BE IN ACCORDAN CE WITH THE THRESHOLDS ESTAB LISHED IN 25
131+REGULATIONS ADOPTED UNDER SUBSECTION (G) OF THIS SECTION. 26
134132
135- (e) An investment made pursuant to this section shall be made:
133+ (c) The Treasurer may sell, redeem, or exchange an investment or reinvestment 27
134+made under this section in accordance with the limitations of this section. 28
136135
137- (1) with the care, skill, prudence, and diligence under the circumstances
138-then prevailing that a prudent person acting in a like capacity and familiar with such
139-matters would use in the conduct of an enterprise of a like character and with like aims;
136+ (d) Subject to § 2–1257 of the State Government Article, the Treasurer shall 29
137+report by January 3 of each year to the General Assembly on investment activities for 30
138+unexpended or surplus money over which the Treasurer has custody which have been 31
139+conducted during the previous fiscal year. At a minimum, the report shall specify for 32
140+General Fund investments and all other investments: 33
140141
141- (2) in a manner designed to reasonably match the anticipated cash flow of
142-the State so that sufficient funds are available to pay obligations upon proper presentation
143-for payment; Ch. 116 2023 LAWS OF MARYLAND
142+ (1) the inventory of investments with maturity dates and the book and 34
143+market value as of June 30; 35
144+ 4 SENATE BILL 153
144145
145-– 4 –
146146
147- (3) so that a reasonable amount of cash or cash equivalents is available for
148-unanticipated cash needs;
147+ (2) the net income earned; 1
149148
150- (4) with due regard for minimizing risk while maximizing return;
149+ (3) the percentage share of each category of investment in the portfolio; and 2
151150
152- (5) using competitive purchasing practices except when impractical;
151+ (4) any sale of investments prior to the maturity date. 3
153152
154- (6) in accordance with a written investment policy;
153+ (e) An investment made pursuant to this section shall be made: 4
155154
156- (7) so that the securities and collateral may continue to be priced on a
157-market to market basis; and
155+ (1) with the care, skill, prudence, and diligence under the circumstances 5
156+then prevailing that a prudent person acting in a like capacity and familiar with such 6
157+matters would use in the conduct of an enterprise of a like character and with like aims; 7
158158
159- (8) to avoid the enhancement of the personal financial position of the
160-Treasurer or any employee of the Treasurer who has responsibilities for such investments.
159+ (2) in a manner designed to reasonably match the anticipated cash flow of 8
160+the State so that sufficient funds are available to pay obligations upon proper presentation 9
161+for payment; 10
161162
162- (f) (1) (i) Consistent with minority business purchasing standards
163-applicable to units of State government under this article and consistent with the fiduciary
164-duties of the Treasurer, the Treasurer shall attempt to use to the greatest extent feasible
165-minority business enterprises for brokerage and investment management services under
166-this section.
163+ (3) so that a reasonable amount of cash or cash equivalents is available for 11
164+unanticipated cash needs; 12
167165
168- (ii) For purposes of this subsection, brokerage and investment
169-management services shall include services relating to all allocated asset classes as
170-described in subsection (b) of this section.
166+ (4) with due regard for minimizing risk while maximizing return; 13
171167
172- (2) (i) To assist the Treasurer in achieving the goal described under
173-paragraph (1) of this subsection, the Treasurer shall undertake measures to remove any
174-barriers that limit full participation by minority business enterprises in brokerage and
175-investment management services opportunities afforded under this section.
168+ (5) using competitive purchasing practices except when impractical; 14
176169
177- (ii) The measures undertaken by the Treasurer shall include the use
178-of a wide variety of media, including the Treasurer’s website, to provide notice to a broad
179-and varied range of potential providers about the brokerage and investment management
180-services opportunities afforded by the Treasurer.
170+ (6) in accordance with a written investment policy; 15
181171
182- (3) In conjunction with the Governor’s Office of Small, Minority, and
183-Women Business Affairs, the Treasurer shall develop guidelines to assist in identifying and
184-evaluating qualified minority business enterprises in order to help the Treasurer achieve
185-the objective for greater use of minority business enterprises for brokerage and investment
186-management services under this section.
172+ (7) so that the securities and collateral may continue to be priced on a 16
173+market to market basis; and 17
187174
188- (4) On or before September 1 each year, the Treasurer shall submit a report
189-to the Governor’s Office of Small, Minority, and Women Business Affairs and, subject to §
190-2–1257 of the State Government Article, the General Assembly on:
191- WES MOORE, Governor Ch. 116
175+ (8) to avoid the enhancement of the personal financial position of the 18
176+Treasurer or any employee of the Treasurer who has responsibilities for such investments. 19
192177
193-– 5 –
194- (i) the identity of the minority business enterprise brokerage and
195-investment management services firms used by the Treasurer in the immediately
196-preceding fiscal year;
178+ (f) (1) (i) Consistent with minority business purchasing standards 20
179+applicable to units of State government under this article and consistent with the fiduciary 21
180+duties of the Treasurer, the Treasurer shall attempt to use to the greatest extent feasible 22
181+minority business enterprises for brokerage and investment management services under 23
182+this section. 24
197183
198- (ii) the percentage and dollar value of the assets under the custody
199-of the Treasurer that are under the investment control of minority business enterprise
200-brokerage and investment management services firms for each allocated asset class; and
184+ (ii) For purposes of this subsection, brokerage and investment 25
185+management services shall include services relating to all allocated asset classes as 26
186+described in subsection (b) of this section. 27
201187
202- (iii) the measures the Treasurer undertook in the immediately
203-preceding fiscal year in accordance with paragraph (2)(ii) of this subsection.
188+ (2) (i) To assist the Treasurer in achieving the goal described under 28
189+paragraph (1) of this subsection, the Treasurer shall undertake measures to remove any 29
190+barriers that limit full participation by minority business enterprises in brokerage and 30
191+investment management services opportunities afforded under this section. 31
192+ SENATE BILL 153 5
204193
205- (G) (1) THE TREASURER SHALL ADOPT REGULATIONS THAT EST ABLISH A
206-STATE INVESTMENT POLI CY.
207194
208- (2) THE STATE INVESTMENT POLICY SH ALL SPECIFY THRESHOL DS
209-FOR THE MAXIMUM INVE STMENT IN EACH ASSET CLASS AUTHORIZED UND ER THIS
210-SECTION.
195+ (ii) The measures undertaken by the Treasurer shall include the use 1
196+of a wide variety of media, including the Treasurer’s website, to provide notice to a broad 2
197+and varied range of potential providers about the brokerage and investment management 3
198+services opportunities afforded by the Treasurer. 4
211199
212- SECTION 2. AND BE IT FURTHER ENACTED, That prior to the effective date of
213-this Act, the Treasurer shall:
200+ (3) In conjunction with the Governor’s Office of Small, Minority, and 5
201+Women Business Affairs, the Treasurer shall develop guidelines to assist in identifying and 6
202+evaluating qualified minority business enterprises in order to help the Treasurer achieve 7
203+the objective for greater use of minority business enterprises for brokerage and investment 8
204+management services under this section. 9
214205
215- (1) notify in writing the chief executive and governing body of each local
216-governmental unit required to have a local investment policy under § 17–205 of the Local
217-Government Article of the changes contained in this Act; and
206+ (4) On or before September 1 each year, the Treasurer shall submit a report 10
207+to the Governor’s Office of Small, Minority, and Women Business Affairs and, subject to § 11
208+2–1257 of the State Government Article, the General Assembly on: 12
218209
219- (2) provide the local government with an opportunity to review, revise, and
220-report any changes in the local investment policies to the Treasurer, as appropriate.
210+ (i) the identity of the minority business enterprise brokerage and 13
211+investment management services firms used by the Treasurer in the immediately 14
212+preceding fiscal year; 15
221213
222- SECTION 3. AND BE IT FURTHER ENACTED, That the Treasurer shall adopt the
223-regulations required under Section 1 of this Act on or before December 1, 2023.
214+ (ii) the percentage and dollar value of the assets under the custody 16
215+of the Treasurer that are under the investment control of minority business enterprise 17
216+brokerage and investment management services firms for each allocated asset class; and 18
224217
225- SECTION 4. AND BE IT FURTHER ENACTED, That this Act shall take effect June
226-1, 2023.
218+ (iii) the measures the Treasurer undertook in the immediately 19
219+preceding fiscal year in accordance with paragraph (2)(ii) of this subsection. 20
227220
228-Approved by the Governor, April 24, 2023.
221+ (G) (1) THE TREASURER SHALL ADOPT REGULATIONS THAT EST ABLISH A 21
222+STATE INVESTMENT POLI CY. 22
223+
224+ (2) THE STATE INVESTMENT POLI CY SHALL SPECIFY THR ESHOLDS 23
225+FOR THE MAXIMUM INVE STMENT IN EACH ASSET CLASS AUTHORIZED UND ER THIS 24
226+SECTION. 25
227+
228+ SECTION 2. AND BE IT FURTHER ENACTED, That prior to the effective date of 26
229+this Act, the Treasurer shall: 27
230+
231+ (1) notify in writing the chief executive and governing body of each local 28
232+governmental unit required to have a local investment policy under § 17–205 of the Local 29
233+Government Article of the changes contained in this Act; and 30
234+
235+ (2) provide the local government with an opportunity to review, revise, and 31
236+report any changes in the local investment policies to the Treasurer, as appropriate. 32
237+
238+ SECTION 3. AND BE IT FURTHER ENACTED, That the Treasurer shall adopt the 33
239+regulations required under Section 1 of this Act on or before December 1, 2023. 34
240+ 6 SENATE BILL 153
241+
242+
243+ SECTION 4. AND BE IT FURTHER ENACTED, That this Act shall take effect June 1
244+1, 2023. 2