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53	53	STATE OF OKLAHOMA
54	54
55	55	1st Session of the 59th Legislature (2023)
56	56
57	57	SENATE BILL 574 By: Montgomery
58	58
59	59
60	60
61	61
62	62
63	63	AS INTRODUCED
64	64
65	65	An Act relating to fiscal affairs; amendi ng 62 O.S.
66	66	2021, Section 89.2, which rela tes to investments of
67	67	public funds; authorizing the State Treasurer to
68	68	purchase and invest in debt obligations of certain
69	69	retirement systems; limiting maturity; limiting
70	70	interest paid; updating statutory language; and
71	71	providing an effective dat e.
72	72
73	73
74	74
75	75	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAH OMA:
76	76	SECTION 1. AMENDATORY 62 O.S. 2021, Section 89.2, is
77	77	amended to read as follows:
78	78	Section 89.2. A. The State Treasurer is directed to invest the
79	79	maximum amount of funds under control of the State Treasurer
80	80	consistent with good business practices. Except as otherwise
81	81	provided for by law, the invest ments shall earn not less than the
82	82	rate for comparable maturities on United States Treasury
83	83	obligations. Except as othe rwise provided for by law, the State
84	84	Treasurer may purchase a nd invest only in:
85	85	1. Obligations of the United States Government, its age ncies
86	86	and instrumentalities, or other obligations fully insured or
87	87	unconditionally guaranteed as to the payment of princ ipal and
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139	139	interest by the United States government or any of i ts agencies and
140	140	instrumentalities;
141	141	2. Collateralized or insured certificat es of deposit and other
142	142	evidences of deposit at banks, savings banks, savings and loan
143	143	associations, and credit unions located in this state;
144	144	3. Negotiable certificates of deposit issued by a nationally or
145	145	state-chartered bank, a savings bank, a savings an d loan
146	146	association, or a state-licensed branch of a foreign bank.
147	147	Purchases of negotiable certificates of deposit shal l not exceed ten
148	148	percent (10%) of the cash available for inve stment which may be
149	149	invested pursuant to this section. Not more than one -half (1/2) of
150	150	the ten percent (10%) limit shall be invested in any one financial
151	151	institution specified in this paragraph;
152	152	4. Prime banker’s acceptances which are eligible for purcha se
153	153	by the Federal Reserve System and which do not exceed two hundred
154	154	seventy (270) days’ maturity. Purchases of prime banker ’s
155	155	acceptances shall not exceed ten percent (10%) of the cash availabl e
156	156	for investment which may be invested pursuant to this secti on. Not
157	157	more than three-fourths (3/4) of the ten percent (10%) limit shall
158	158	be invested in any one commercial bank pursuant to this paragraph;
159	159	5. Prime commercial paper which shall not have a ma turity that
160	160	exceeds one hundred eighty (180) days nor represe nt more than ten
161	161	percent (10%) of the outstanding paper of an issuing corpora tion.
162	162	Purchases of prime commercial paper shall not exceed seven and one -
163	163
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214	214	half percent (7 1/2%) of the cash available for investment which may
215	215	be invested pursuant to this section ;
216	216	6. Investment grade obligations of state and local governments,
217	217	including obligations of Oklahoma state public trusts which possess
218	218	the highest rating from at least one nationally recognized r ating
219	219	agency acceptable to the State Treasurer. Purchases of investment
220	220	grade obligations of state and local governments shall not exceed
221	221	ten percent (10%) of the cash available for investment which may be
222	222	invested pursuant to this section;
223	223	7. Repurchase agreements, provided that such agreements are
224	224	included within the written investment policy required by subsection
225	225	D of this section that have underlying collateral consisting of
226	226	those items and those restrictions specified in paragraphs 1 through
227	227	6 of this subsection;
228	228	8. Money market funds and short term bond fun ds regulated by
229	229	the Securities and Exchange Commission and which investments consist
230	230	of those items and those restrictions specified in paragraphs 1
231	231	through 7 of this subsection; and
232	232	9. Bonds, notes, debentures, or other similar obligations of a
233	233	foreign government which the International Monetary Fund lists as an
234	234	industrialized country and for which the full faith and credit of
235	235	such nation has been pledged for the payment of principal and
236	236	interest; provided, that any such security shall be rated at least
237	237	A- or better by Standard & Poor’s Corporation S&P Global or A3 or
238	238
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289	289	better by Moody’s Investors Service, or an equivalent investment
290	290	grade by a securities ratings organization accepted by the National
291	291	Association of Insurance Commis sioners; and provided further, that
292	292	the total investment in such foreign securities at any one time
293	293	shall not exceed five percent (5%) of the cash available for
294	294	investment which may be invested pursuant to this section. In no
295	295	circumstance shall investment s be made in bonds, notes, debentures,
296	296	or any similar obligations of a foreign government that:
297	297	a. is identified as a state sponsor of terrorism by the
298	298	United States Department of State, or
299	299	b. any authoritarian or totalitarian gov ernment the
300	300	sovereign powers of which are exercised through a
301	301	single person or group of persons who are not elected
302	302	by any form of legitimate p opular voting; and
303	303	10. Bonds, notes, debentures, or other similar obligations of
304	304	the Teachers’ Retirement System of Oklahoma, Oklahoma Pu blic
305	305	Employees Retirement System, Oklahoma Firefighters Pension and
306	306	Retirement System, Oklahoma Police Pension and Retirement System,
307	307	Oklahoma Law Enforcement Retirement Sy stem, Uniform Retirement
308	308	System for Justices and Judg es, and Retirement Plan for Full-Time
309	309	Employees of the Department of Wildlife Conservation which shall not
310	310	have a maturity that exceeds three (3) years. Interest shall be
311	311	paid on the obligations at an annual rate equal or exceeding three
312	312	(3) percentage points and not exceeding (6) percentage points
313	313
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364	364	greater than the rate of interest paid for a fifty-two-week Treasury
365	365	Bill of the United States government as of the first working day of
366	366	the month in which the obligation is issued.
367	367	B. Investments shall be made with judgment and care, under
368	368	circumstances then prevailing, which persons of prudence,
369	369	discretion, and intelligence exercise in the management of their own
370	370	affairs, not for speculation, but for investment, consi dering the
371	371	probable safety of their capital as well as the probable income to
372	372	be derived.
373	373	C. The State Treasurer shall appoint an investment officer who
374	374	shall perform duties related to the investment of state funds in the
375	375	Office of the State Treasurer. T he investment officer shall not
376	376	perform or supervise any accounting functions, data proces sing
377	377	functions, or duties related to the documentation or settlement of
378	378	investment transactions.
379	379	D. Investments of public funds by the State Treasurer shall be
380	380	made in accordance with written policies develop ed by the State
381	381	Treasurer. The written investm ent policies shall address:
382	382	1. Liquidity;
383	383	2. Diversification;
384	384	3. Safety of principal;
385	385	4. Yield;
386	386	5. Maturity and quality; and
387	387	6. Capability of investment manageme nt.
388	388
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439	439	The State Treasurer shall place primar y emphasis on safety and
440	440	liquidity in the inves tment of public funds. To the extent
441	441	practicable taking into account the need to use sound investment
442	442	judgment, the written investment policies shall include provisio n
443	443	for utilization of a system of competiti ve bidding in the investment
444	444	of state funds. The written investment policies shall be designed
445	445	to maximize yield within each class of investment instrument,
446	446	consistent with the safety of the funds invested.
447	447	E. The State Treasurer shall select one custodi al bank to
448	448	settle transactions involving the in vestment of state funds under
449	449	the control of the State Treasurer. The State Treasurer shall
450	450	review the performance of the custodial bank at least once every
451	451	year. The State Treasurer shall require a written competitive bid
452	452	every five (5) years. The cust odial bank shall have a minimum of
453	453	Five Hundred Million Dollars ($500,000,000.00) in assets to be
454	454	eligible for selection. Any out-of-state custodial bank shall have
455	455	a service agent in the State of Oklahoma so that service of summons
456	456	or legal notice may be had on such designated agent as is now or may
457	457	hereafter be provided by law. In order to be eligible for
458	458	selection, the custodial bank shall allow electronic access t o all
459	459	transaction and portfolio reports ma intained by the custodial bank
460	460	involving the investment of state funds under control of the State
461	461	Treasurer. The access shall be given to both the State Trea surer
462	462	and to the Cash Management and Investment Oversigh t Commission. The
463	463
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514	514	requirement for electro nic access shall be incorporated into any
515	515	contract between the State Treasurer and the custodial bank.
516	516	Neither the State Treasurer nor the custodial bank sha ll permit any
517	517	of the funds under the control of the Stat e Treasurer or any of the
518	518	documents, instruments, securities, or other evidence of a righ t to
519	519	be paid money to be located in any place other than within a
520	520	jurisdiction or territory under the control o r regulatory power of
521	521	the United States Government.
522	522	F. The investment policy shall specify the ge neral philosophy,
523	523	policies, and procedures to be followed in the investment of state
524	524	monies by the State Treasurer. The investment policy shall include,
525	525	but not be limited to, the following:
526	526	1. Policy objectives;
527	527	2. Performance measure objectives;
528	528	3. Authority for investment program;
529	529	4. Possible use of an investment advisory committee;
530	530	5. Reporting and documentation of investments;
531	531	6. Authorized investme nt instruments;
532	532	7. Diversification of investment risk;
533	533	8. Maturity limitations;
534	534	9. Selections of financial institutions;
535	535	10. Interest control s;
536	536	11. Safekeeping of investments;
537	537	12. Investment ethics; and
538	538
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589	589	13. Formal adoption of policy.
590	590	G. The State Treasurer shall provide weekly reports of all
591	591	investments made by the State Treasurer if requested by the Cash
592	592	Management and Investment Oversight Commission, and list any
593	593	commissions, fees, or payments made for services regarding such
594	594	investments. The rep orts required by this subsection shall be
595	595	delivered to the Commission within three (3) business da ys of the
596	596	end of the applicable week.
597	597	H. Not later than July 1 of each year, the State Treasurer
598	598	shall forward a copy of the written investment policy to the
599	599	Governor, the Speaker of the House of Representatives, the President
600	600	Pro Tempore of the Senate, t he Attorney General, the Bank
601	601	Commissioner, and the Director of the Office of Management and
602	602	Enterprise Services. In addition, the State Treasurer shall
603	603	maintain one copy of the investment policy in the office of the
604	604	State Treasurer for public inspection during regular business hours.
605	605	Copies of any modifications to the investment policy shall be
606	606	forwarded to the Governor, Speaker of the House of Representativ es,
607	607	President Pro Tempore of the Senate, and each member of the Cash
608	608	Management and Investment Ove rsight Commission.
609	609	SECTION 2. This act shall become effective November 1, 2023.
610	610
611	611	59-1-11 QD 1/17/2023 6:14:51 PM

Oklahoma 2024 Regular Session

Oklahoma Senate Bill SB574 Compare Versions