EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
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SENATE BILL 776
P1 EMERGENCY BILL 4lr3379
CF HB 846
By: The President (By Request – State Treasurer)
Introduced and read first time: February 1, 2024
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
State Investment Portfolio – Investment Standards 2
FOR the purpose of repealing the limitations on investment in certain assets in which the 3
Treasurer may invest or reinvest certain unexpended or surplus funds; requiring the 4
Treasurer to adopt regulations that specify asset classes in which the Treasurer may 5
invest; requiring the Treasurer to notify governing bodies of certain local 6
governmental units about certain updates to certain investment standards; and 7
generally relating to the Treasurer and investment standards. 8
BY repealing and reenacting, with amendments, 9
Article – State Finance and Procurement 10
Section 6–222 11
Annotated Code of Maryland 12
(2021 Replacement Volume and 2023 Supplement) 13
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14
That the Laws of Maryland read as follows: 15
Article – State Finance and Procurement 16
6–222. 17
(a) [(1) In this section, “supranational issuer” means an international 18
development institution that: 19
(i) provides financing, advisory services, or other financial services 20
to the institution’s member countries to achieve the overall goal of improving living 21
standards through sustainable economic growth; and 22
2 SENATE BILL 776
(ii) is rated in the highest credit rating category by a nationally 1
recognized statistical rating organization. 2
(2) “Supranational issuer” includes: 3
(i) the World Bank; 4
(ii) the International Finance Corporation; 5
(iii) the Inter–American Development Bank; 6
(iv) the African Development Bank; and 7
(v) the Asian Development Bank. 8
(b)] (1) Subject to paragraph (2) of this subsection, the Treasurer may invest or 9
reinvest unexpended or surplus money over which the Treasurer has custody [in: 10
(i) an obligation for which the United States has pledged its faith 11
and credit for the payment of the principal and interest; 12
(ii) an obligation that a federal agency or a federal instrumentality 13
has issued in accordance with an act of Congress; 14
(iii) an obligation issued and unconditionally guaranteed by a 15
supranational issuer denominated in United States dollars and eligible to be sold in the 16
United States; 17
(iv) a repurchase agreement collateralized in an amount not less 18
than 102% of the principal amount by an obligation of the United States, its agencies or 19
instrumentalities, provided the collateral is held by a custodian other than the seller 20
designated by the buyer; 21
(v) bankers’ acceptances guaranteed by a financial institution with 22
a short–term debt rating in the highest letter and numerical rating by at least one 23
nationally recognized statistical rating organization as designated by either the United 24
States Securities and Exchange Commission or the Treasurer; 25
(vi) with respect to amounts treated by the Internal Revenue Service 26
as bond sale proceeds only, bonds, notes, or other obligations of investment grade in the 27
highest quality letter and numerical rating by at least one nationally recognized statistical 28
rating organization as designated by the United States Securities and Exchange 29
Commission issued by or on behalf of this or any other state or any agency, department, 30
county, municipal or public corporation, special district, authority, or political subdivision 31
thereof, or in any fund or trust that invests only in securities of the type described in this 32
item; 33
SENATE BILL 776 3
(vii) commercial paper that has received the highest letter and 1
numerical rating by at least two nationally recognized statistical rating organizations as 2
designated by the United States Securities and Exchange Commission; 3
(viii) money market mutual funds that: 4
1. are registered with the Securities and Exchange 5
Commission under the Investment Company Act of 1940, 15 U.S.C. § 80a–1 et seq., as 6
amended; 7
2. are operated in accordance with Rule 2A–7 of the 8
Investment Company Act of 1940, 17 C.F.R. § 270.2A–7, as amended; and 9
3. have received the highest possible rating from at least one 10
nationally recognized statistical rating organization as designated by the United States 11
Securities and Exchange Commission; and 12
(ix) any investment portfolio created under the Maryland Local 13
Government Investment Pool defined under §§ 17–301 through 17–309 of the Local 14
Government Article of the Code that is administered by the Office of the State Treasurer]. 15
(2) Investments made under paragraph (1) of this subsection shall be in 16
accordance with the LIMITATIONS FOR THE ASSET CLASSES AND thresholds established 17
in regulations adopted under subsection [(g)] (F) of this section. 18
[(c)] (B) The Treasurer may sell, redeem, or exchange an investment or 19
reinvestment made under this section in accordance with the limitations of this section. 20
[(d)] (C) Subject to § 2–1257 of the State Government Article, the Treasurer 21
shall report by January 3 of each year to the General Assembly on investment activities for 22
unexpended or surplus money over which the Treasurer has custody which have been 23
conducted during the previous fiscal year. At a minimum, the report shall specify for 24
General Fund investments and all other investments: 25
(1) the inventory of investments with maturity dates and the book and 26
market value as of June 30; 27
(2) the net income earned; 28
(3) the percentage share of each category of investment in the portfolio; and 29
(4) any sale of investments prior to the maturity date. 30
[(e)] (D) An investment made pursuant to this section shall be made: 31
4 SENATE BILL 776
(1) with the care, skill, prudence, and diligence under the circumstances 1
then prevailing that a prudent person acting in a like capacity and familiar with such 2
matters would use in the conduct of an enterprise of a like character and with like aims; 3
(2) in a manner designed to reasonably match the anticipated cash flow of 4
the State so that sufficient funds are available to pay obligations upon proper presentation 5
for payment; 6
(3) so that a reasonable amount of cash or cash equivalents is available for 7
unanticipated cash needs; 8
(4) with due regard for minimizing risk while maximizing return; 9
(5) using competitive purchasing practices except when impractical; 10
(6) in accordance with a written investment policy; 11
(7) so that the securities and collateral may continue to be priced on a 12
market to market basis; and 13
(8) to avoid the enhancement of the personal financial position of the 14
Treasurer or any employee of the Treasurer who has responsibilities for such investments. 15
[(f)] (E) (1) (i) Consistent with minority business purchasing standards 16
applicable to units of State government under this article and consistent with the fiduciary 17
duties of the Treasurer, the Treasurer shall attempt to use to the greatest extent feasible 18
minority business enterprises for brokerage and investment management services under 19
this section. 20
(ii) For purposes of this subsection, brokerage and investment 21
management services shall include services relating to all allocated asset classes [as 22
described in] AUTHORIZED IN THE RE GULATIONS ADOPTED UN DER subsection [(b)] (F) 23
of this section. 24
(2) (i) To assist the Treasurer in achieving the goal described under 25
paragraph (1) of this subsection, the Treasurer shall undertake measures to remove any 26
barriers that limit full participation by minority business enterprises in brokerage and 27
investment management services opportunities afforded under this section. 28
(ii) The measures undertaken by the Treasurer shall include the use 29
of a wide variety of media, including the Treasurer’s website, to provide notice to a broad 30
and varied range of potential providers about the brokerage and investment management 31
services opportunities afforded by the Treasurer. 32
(3) In conjunction with the Governor’s Office of Small, Minority, and 33
Women Business Affairs, the Treasurer shall develop guidelines to assist in identifying and 34
evaluating qualified minority business enterprises in order to help the Treasurer achieve 35 SENATE BILL 776 5
the objective for greater use of minority business enterprises for brokerage and investment 1
management services under this section. 2
(4) On or before September 1 each year, the Treasurer shall submit a report 3
to the Governor’s Office of Small, Minority, and Women Business Affairs and, subject to § 4
2–1257 of the State Government Article, the General Assembly on: 5
(i) the identity of the minority business enterprise brokerage and 6
investment management services firms used by the Treasurer in the immediately 7
preceding fiscal year; 8
(ii) the percentage and dollar value of the assets under the custody 9
of the Treasurer that are under the investment control of minority business enterprise 10
brokerage and investment management services firms for each allocated asset class; and 11
(iii) the measures the Treasurer undertook in the immediately 12
preceding fiscal year in accordance with paragraph (2)(ii) of this subsection. 13
[(g)] (F) (1) The Treasurer shall adopt regulations that establish a State 14
investment policy. 15
(2) The State investment policy shall specify: 16
(I) ASSET CLASSES IN WHI CH THE TREASURER MAY INVEST OR 17
REINVEST CERTAIN UNE XPENDED OR SURPLUS F UNDS; AND 18
(II) thresholds for the maximum investment in each asset class 19
authorized under [this section] ITEM (I) OF THIS PARAGRAPH . 20
SECTION 2. AND BE IT FURTHER ENACTED, That the Treasurer shall: 21
(1) on or before December 1, 2024, adopt the regulations required under 22
Section 1 of this Act; and 23
(2) following the adoption of regulations as required under Section 1 of this 24
Act: 25
(i) notify in writing the governing body of each local governmental 26
unit required to have a local investment policy under § 17–205 of the Local Government 27
Article of the updated State investment policy; and 28
(ii) provide the local government with an opportunity to review, 29
revise, and report any changes in the local investment policies to the Treasurer, as 30
appropriate. 31
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SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency 1
measure, is necessary for the immediate preservation of the public health or safety, has 2
been passed by a yea and nay vote supported by three–fifths of all the members elected to 3
each of the two Houses of the General Assembly, and shall take effect from the date it is 4
enacted. 5