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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
SENATE BILL 1705 By: Jett
AS INTRODUCED
An Act relating to investments; amending 62 O.S .
2021, Section 89.2, which relates to in vestment of
public funds; prohibiting investment o f public funds
in certain instruments of communist governments or
corporations; clarifying statutory language; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 89.2, is
amended to read as follows:
Section 89.2. A. The State Treasurer is directed to invest the
maximum amount of funds under control of the State Treasurer
consistent with good business practices. Except as otherwise
provided for by law, the invest ments shall earn not less than the
rate for comparable maturities on United States Treasury
obligations. Except as otherwise provided for by law, the State
Treasurer may purchase and invest only in:
1. Obligations of the United St ates Government, its age ncies
and instrumentalities, or other obligations fully insured or
unconditionally guaranteed as to the payment of principal and
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interest by the United States government or an y of its agencies and
instrumentalities;
2. Collateralized or insured certificat es of deposit and other
evidences of deposit at banks, savings banks, savings and loan
associations and credit unions located in this state;
3. Negotiable certificates of dep osit issued by a nationally or
state-chartered bank, a sa vings bank, a savings an d loan association
or a state-licensed branch of a foreign bank. Purchases of
negotiable certificates of deposit shall not exceed ten percent
(10%) of the cash available for investment which may be invested
pursuant to this section . Not more than one -half (1/2) of the ten
percent (10%) limit shall be invested in any one financial
institution specified in this paragraph;
4. Prime banker’s acceptances which are eligible for pu rchase
by the Federal Reserve System and which do not exc eed two hundred
seventy (270) days’ maturity. Purchases of prime banker ’s
acceptances shall not exceed ten percent (10%) of the cash available
for investment which may be invested pursuant to this s ection. Not
more than three-fourths (3/4) of the ten per cent (10%) limit shall
be invested in any one commercial bank pursuant to this paragraph;
5. Prime commercial paper which shall not have a maturity that
exceeds one hundred eighty (180) days nor rep resent more than ten
percent (10%) of the outstanding pap er of an issuing corpora tion.
Purchases of prime commercial paper shall not exceed seven and one -
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half percent (7 1/2%) of the cash available for investment which may
be invested pursuant to this sec tion. No commercial paper shall be
purchased from an issuing corporation or their subsidiary that is
headquartered in a communist country;
6. Investment grade obligations of state and local governments ,
including obligations of Oklahoma state public trus ts which possess
the highest rating from at least one nat ionally recognized rating
agency acceptable to the State Treasurer. Purchases of investment
grade obligations of state and local governments shall not exceed
ten percent (10%) of the cash available for investment which may be
invested pursuant to this sec tion;
7. Repurchase agreements, provided that such agreements are
included within the writte n investment policy required by subsection
D of this section that have underlying collateral consisting of
those items and those restrictions specified in paragrap hs 1 through
6 of this subsection;
8. Money market funds and short term bond funds regulated by
the Securities and Exchange Commission and which investments consist
of those items and those restrict ions specified in paragraphs 1
through 7 of this subsecti on; and
9. Bonds, notes, debentures or other similar obligations of a
foreign government whi ch the International Monetary Fund lists as an
industrialized country and for which the full faith and cre dit of
such nation has been pledged for the payment of pr incipal and
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interest; provided, that any such security shall be rated at least
A- or better by Standard & Poor’s Corporation or A3 or better by
Moody’s Investors Service, or an equivalent investment grade by a
securities ratings organization accepted by th e National Association
of Insurance Commissioners; and provided further, that the total
investment in such foreign securities at any one time shall not
exceed five percent (5%) of the cash available for investment which
may be invested pursuant to this sec tion. In no circumstance shall
investments be made in bonds, notes, debentures or any simila r
obligations of a foreign government that:
a. is identified as a state sponsor of terrorism by the
United States Department of State, or
b. any is an authoritarian or totalitarian government the
sovereign powers of which are exercised through a
single person or group of persons who are not elected
by any form of legitimate p opular voting, or
c. is a communist government.
B. Investments shall be made with judgment and care, under
circumstances then prevailing, which persons of prudence, discretion
and intelligence exercise in the management of their own affairs,
not for speculation, but for investment, consi dering the probable
safety of their capital as well as the probable income to be
derived.
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C. The State Treasurer shall appoint an investment officer who
shall perform duties related to the investment of state funds in the
Office of the State Treasurer. T he investment officer shall not
perform or supervise any ac counting functions, data processing
functions or duties related to the documentation or settlement o f
investment transactions.
D. Investments of public funds by the State Treasurer shall be
made in accordance with written policies developed by the State
Treasurer. The written investment policies shall address:
1. Liquidity;
2. Diversification;
3. Safety of principal;
4. Yield;
5. Maturity and quality; and
6. Capability of investment manageme nt.
The State Treasurer shall place primary emphasis on saf ety and
liquidity in the investment of public funds. To the extent
practicable taking into account the need to use sound investment
judgment, the written investment policies shall include provisio n
for utilization of a system of competitive bidding in the investment
of state funds. The written investment policies shall be designed
to maximize yield wit hin each class of investment instrument,
consistent with the safety of the funds invested.
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E. The State Treasurer shall select one custodial bank to
settle transactions involving the investment of state funds under
the control of the State Treasurer. The State Treasurer shall
review the performance of the custodial bank at least once every
year. The State Treasurer shall require a written competitive bid
every five (5) years. The custodial bank shall have a minimum of
Five Hundred Million Dollars ($500, 000,000.00) in assets to be
eligible for selection. Any out -of-state custodial bank shall have
a service agent in the State of Oklahoma so that service of summons
or legal notice may be had on such designated agent as is now or may
hereafter be provided b y law. In order to be eligible for
selection, the custodial bank shall allow electronic access t o all
transaction and portfolio reports maintained by the c ustodial bank
involving the investment of state funds under control of the State
Treasurer. The access shall be given to both the State Treasurer
and to the Cash Management and Investment Oversigh t Commission. The
requirement for electronic access shall be incorporated into any
contract between the State Treasurer and the custodial bank.
Neither the State Treasurer nor the custodial bank shall permit any
of the funds under the control of the Stat e Treasurer or any of the
documents, instruments, securitie s or other evidence of a right to
be paid money to be located in any place other than within a
jurisdiction or territory under the control or regulatory power of
the United States Government.
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F. The investment policy shall specify the general philosophy,
policies and procedures to be followed in the investment of state
monies by the State Treasurer. Th e investment policy shall include,
but not be limited to, the following:
1. Policy objectives;
2. Performance measure objectives;
3. Authority for invest ment program;
4. Possible use of an investment advisory committee;
5. Reporting and documentation of investments;
6. Authorized investment instruments;
7. Diversification of investment risk;
8. Maturity limitations;
9. Selections of financial institu tions;
10. Interest controls;
11. Safekeeping of investments;
12. Investment ethics; and
13. Formal adoption of policy.
G. The State Treasurer shall provide weekly reports of all
investments made by the State Treasurer if requested by the Cash
Management and Investment Oversight Commission, and list any
commissions, fees or payments made for service s regarding such
investments. The reports required by this subsection shall be
delivered to the Commission within three (3) business days of the
end of the applicable week.
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H. Not later than July 1 of each year, the State Treasurer
shall forward a copy o f the written investment policy to the
Governor, the Speaker of the House of Representatives, the President
Pro Tempore of the Senate, the Attorney General, the Bank
Commissioner, and the Director of the Office of Management and
Enterprise Services. In addition, the State Treasurer shall
maintain one copy of the investment policy in the office of the
State Treasurer for public inspection during regular busin ess hours.
Copies of any modifications to the investment policy shall be
forwarded to the Governor, Speaker of the House of Representatives,
President Pro Tempore of the Senate, and each member of the Cash
Management and Investment Oversight Commission.
SECTION 2. This act shall become effective November 1, 2022.
58-2-3448 QD 1/20/2022 5:46:38 PM