WES MOORE, Governor Ch. 116
– 1 –
Chapter 116
(Senate Bill 153)
AN ACT concerning
State Investment Portfolio – Investment Thresholds – Alterations
FOR the purpose of repealing the limitations on investment in certain commercial paper in
which the Treasurer may invest or reinvest certain unexpended or surplus funds;
requiring the Treasurer to adopt regulations to establish a State investment policy
with certain thresholds; requiring the Treasurer to notify certain officials and
governing bodies of certain local government units about the provisions of this Act;
and generally relating to the investment portfolio of the State.
BY repealing and reenacting, with amendments,
Article – State Finance and Procurement
Section 6–222
Annotated Code of Maryland
(2021 Replacement Volume and 2022 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – State Finance and Procurement
6–222.
(a) (1) In this section, “supranational issuer” means an international
development institution that:
(i) provides financing, advisory services, or other financial services
to the institution’s member countries to achieve the overall goal of improving living
standards through sustainable economic growth; and
(ii) is rated in the highest credit rating category by a nationally
recognized statistical rating organization.
(2) “Supranational issuer” includes:
(i) the World Bank;
(ii) the International Finance Corporation;
(iii) the Inter–American Development Bank;
(iv) the African Development Bank; and Ch. 116 2023 LAWS OF MARYLAND
– 2 –
(v) the Asian Development Bank.
(b) (1) [The] SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE
Treasurer may invest or reinvest unexpended or surplus money over which the Treasurer
has custody in:
[(1)] (I) an obligation for which the United States has pledged its faith
and credit for the payment of the principal and interest;
[(2)] (II) an obligation that a federal agency or a federal instrumentality
has issued in accordance with an act of Congress;
[(3)] (III) an obligation issued and unconditionally guaranteed by a
supranational issuer denominated in United States dollars and eligible to be sold in the
United States;
[(4)] (IV) a repurchase agreement collateralized in an amount not less
than 102% of the principal amount by an obligation of the United States, its agencies or
instrumentalities, provided the collateral is held by a custodian other than the seller
designated by the buyer;
[(5)] (V) bankers’ acceptances guaranteed by a financial institution with
a short–term debt rating in the highest letter and numerical rating by at least one
nationally recognized statistical rating organization as designated by either the United
States Securities and Exchange Commission or the Treasurer;
[(6)] (VI) with respect to amounts treated by the Internal Revenue Service
as bond sale proceeds only, bonds, notes, or other obligations of investment grade in the
highest quality letter and numerical rating by at least one nationally recognized statistical
rating organization as designated by the United States Securities and Exchange
Commission issued by or on behalf of this or any other state or any agency, department,
county, municipal or public corporation, special district, authority, or political subdivision
thereof, or in any fund or trust that invests only in securities of the type described in this
item;
[(7)] (VII) commercial paper that has received the highest letter and
numerical rating by at least two nationally recognized statistical rating organizations as
designated by the United States Securities and Exchange Commission[, provided that such
commercial paper may not exceed 10% of the total investments made by the Treasurer
under this subsection];
[(8)] (VIII) money market mutual funds that:
WES MOORE, Governor Ch. 116
– 3 –
[(i)] 1. are registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, 15 U.S.C. § 80a–1 et seq., as
amended;
[(ii)] 2. are operated in accordance with Rule 2A –7 of the
Investment Company Act of 1940, 17 C.F.R. § 270.2A–7, as amended; and
[(iii)] 3. have received the highest possible rating from at least one
nationally recognized statistical rating organization as designated by the United States
Securities and Exchange Commission; and
[(9)] (IX) any investment portfolio created under the Maryland Local
Government Investment Pool defined under §§ 17–301 through 17–309 of the Local
Government Article of the Code that is administered by the Office of the State Treasurer.
(2) INVESTMENTS MADE UNDE R PARAGRAPH (1) OF THIS
SUBSECTION SHALL BE IN ACCORDAN CE WITH THE THRESHOLDS ESTAB LISHED IN
REGULATIONS ADOPTED UNDER SUBSECTION (G) OF THIS SECTION.
(c) The Treasurer may sell, redeem, or exchange an investment or reinvestment
made under this section in accordance with the limitations of this section.
(d) Subject to § 2–1257 of the State Government Article, the Treasurer shall
report by January 3 of each year to the General Assembly on investment activities for
unexpended or surplus money over which the Treasurer has custody which have been
conducted during the previous fiscal year. At a minimum, the report shall specify for
General Fund investments and all other investments:
(1) the inventory of investments with maturity dates and the book and
market value as of June 30;
(2) the net income earned;
(3) the percentage share of each category of investment in the portfolio; and
(4) any sale of investments prior to the maturity date.
(e) An investment made pursuant to this section shall be made:
(1) with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with like aims;
(2) in a manner designed to reasonably match the anticipated cash flow of
the State so that sufficient funds are available to pay obligations upon proper presentation
for payment; Ch. 116 2023 LAWS OF MARYLAND
– 4 –
(3) so that a reasonable amount of cash or cash equivalents is available for
unanticipated cash needs;
(4) with due regard for minimizing risk while maximizing return;
(5) using competitive purchasing practices except when impractical;
(6) in accordance with a written investment policy;
(7) so that the securities and collateral may continue to be priced on a
market to market basis; and
(8) to avoid the enhancement of the personal financial position of the
Treasurer or any employee of the Treasurer who has responsibilities for such investments.
(f) (1) (i) Consistent with minority business purchasing standards
applicable to units of State government under this article and consistent with the fiduciary
duties of the Treasurer, the Treasurer shall attempt to use to the greatest extent feasible
minority business enterprises for brokerage and investment management services under
this section.
(ii) For purposes of this subsection, brokerage and investment
management services shall include services relating to all allocated asset classes as
described in subsection (b) of this section.
(2) (i) To assist the Treasurer in achieving the goal described under
paragraph (1) of this subsection, the Treasurer shall undertake measures to remove any
barriers that limit full participation by minority business enterprises in brokerage and
investment management services opportunities afforded under this section.
(ii) The measures undertaken by the Treasurer shall include the use
of a wide variety of media, including the Treasurer’s website, to provide notice to a broad
and varied range of potential providers about the brokerage and investment management
services opportunities afforded by the Treasurer.
(3) In conjunction with the Governor’s Office of Small, Minority, and
Women Business Affairs, the Treasurer shall develop guidelines to assist in identifying and
evaluating qualified minority business enterprises in order to help the Treasurer achieve
the objective for greater use of minority business enterprises for brokerage and investment
management services under this section.
(4) On or before September 1 each year, the Treasurer shall submit a report
to the Governor’s Office of Small, Minority, and Women Business Affairs and, subject to §
2–1257 of the State Government Article, the General Assembly on:
WES MOORE, Governor Ch. 116
– 5 –
(i) the identity of the minority business enterprise brokerage and
investment management services firms used by the Treasurer in the immediately
preceding fiscal year;
(ii) the percentage and dollar value of the assets under the custody
of the Treasurer that are under the investment control of minority business enterprise
brokerage and investment management services firms for each allocated asset class; and
(iii) the measures the Treasurer undertook in the immediately
preceding fiscal year in accordance with paragraph (2)(ii) of this subsection.
(G) (1) THE TREASURER SHALL ADOPT REGULATIONS THAT EST ABLISH A
STATE INVESTMENT POLI CY.
(2) THE STATE INVESTMENT POLICY SH ALL SPECIFY THRESHOL DS
FOR THE MAXIMUM INVE STMENT IN EACH ASSET CLASS AUTHORIZED UND ER THIS
SECTION.
SECTION 2. AND BE IT FURTHER ENACTED, That prior to the effective date of
this Act, the Treasurer shall:
(1) notify in writing the chief executive and governing body of each local
governmental unit required to have a local investment policy under § 17–205 of the Local
Government Article of the changes contained in this Act; and
(2) provide the local government with an opportunity to review, revise, and
report any changes in the local investment policies to the Treasurer, as appropriate.
SECTION 3. AND BE IT FURTHER ENACTED, That the Treasurer shall adopt the
regulations required under Section 1 of this Act on or before December 1, 2023.
SECTION 4. AND BE IT FURTHER ENACTED, That this Act shall take effect June
1, 2023.
Approved by the Governor, April 24, 2023.