35-313

35-313. Investment of trust and treasury
monies; loan of securities

A. The state treasurer shall invest and reinvest trust and treasury monies in any
of the following items:

1. Obligations issued or guaranteed by the United States or any of its agencies,
sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. Collateralized repurchase agreements purchased from securities dealers that make
markets in those securities listed in paragraph 1 of this subsection.

3. Bonds or other evidences of indebtedness of this state or any of the counties or
incorporated cities, towns or duly organized school districts.

4. Commercial paper whose issuer is rated in one of the two highest rating
categories for short-term obligations by any two nationally recognized statistical rating
organizations.

5. Bills of exchange or time drafts known as bankers acceptances that are drawn on
and accepted by a commercial bank.

6. Negotiable certificates of deposit issued by a nationally or state chartered
bank or savings and loan association.

7. Bonds, debentures, notes or other evidences of indebtedness that are issued by
entities organized and doing business in the United States and that carry as a minimum
one of the Baa ratings of Moody's investors service or one of the BBB ratings of Standard
and Poor's rating service or their successors.

8. Securities of or any other interests in any open-end or closed-end management
type investment company or investment trust, including exchange traded funds whose
underlying investments are invested in securities allowed by state law, registered under
the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a-1
through 80a-64), as amended. For any treasurer investment pool that seeks to maintain a
constant share price, both of the following apply:

(a) The investment company or investment trust takes delivery of the collateral for
any repurchase agreement either directly or through an authorized custodian.

(b) The investment policy of the investment company or investment trust includes
seeking to maintain a constant share price.

9. Certificates of deferred property taxes as provided by section 42-17309.

10. Treasurer's warrant notes issued pursuant to section 35-185.01 or registered
warrants of a county issued pursuant to section 11-605, if the yield is equal to or
greater than yields on eligible investment instruments of comparable maturities.

11. Shares in the treasurer's local government investment pools pursuant to section
35-326 provided that investment policies of the pool seek to maintain a constant share
price.

12. Shares in the treasurer's long-term local government investment pools, which
terms are determined by the state board of investment, pursuant to section 35-326.01.

13. Subject to subsection D of this section, state transportation board funding
obligations delivered pursuant to section 28-7678.

14. Certificates of deposit purchased in accordance with the procedures prescribed
in section 35-323.01.

B. In case of default or failure to honor a county treasurer's warrant, the state
treasurer may withhold the first state shared revenues that would otherwise be
distributed to the defaulting county in the amount necessary to honor the note including
accrued interest to and beyond the date of default.

C. The state treasurer may contract to loan securities owned by the trust funds and
operating monies deposited in the investment pools pursuant to section 35-316, subsection
B to the financial or dealer community through one or more of the entities listed in
section 35-317, subsection A, or authorized by the board of investment pursuant to
section 35-311, subsection E, if the borrower transfers collateral to the state treasurer
or acting agent of the state in the form of cash or securities specified in subsection A
of this section. Collateral posted in the form of cash shall be in an amount equal to at
least one hundred per cent of the market value of the loaned securities as
agreed. Collateral posted in the form of securities shall be in an amount of no more
than one hundred ten per cent of the market value of the loaned securities as established
from time to time by the board of investment. The loaned securities shall be valued as
to market value daily, and, if necessary, the borrower shall post additional collateral,
as agreed, to ensure that the required margin is maintained. The state treasurer may
collect from the borrower all dividends, interest, premiums, rights and other
distributions to which the lender of securities would otherwise be entitled. The state
treasurer may terminate the contract on not less than five business days' notice, as
agreed, and the borrower may terminate the contract on not less than two business days'
notice, as agreed.

D. The state treasurer shall invest operating monies in state transportation board
funding obligations delivered pursuant to section 28-7678 pursuant to the following:

1. The state treasurer shall liquidate investments of operating monies if necessary
in order to invest in state transportation board funding obligations, except that if
operating monies in the state general fund fall below an eight hundred million dollar
average over the previous twelve consecutive months, the state treasurer is not required
to purchase state transportation board funding obligations pursuant to this subsection.

2. Each series of state transportation board funding obligations shall bear
interest at a fixed interest rate equal to the mean bid-ask price of the United States
treasury obligation with a maturity date closest to the maturity date of the state
transportation board funding obligation as published most recently in the Wall Street
Journal before the date the state treasurer receives a certificate from the state
transportation board that states the board's determination to deliver an obligation to
the state treasurer and the anticipated delivery date of the obligation. The delivery
date shall be between fifteen and sixty days after the day the state treasurer receives
the certificate.

3. The state treasurer shall provide written notice to the state transportation
board and the director of the department of transportation when the operating monies fall
below four hundred million dollars. If operating monies fall below two hundred million
dollars, the state treasurer may call the investment in the state transportation board
funding obligations in twenty-five million dollar increments up to the amount that the
operating monies are below two hundred million dollars. The state treasurer shall give
the state transportation board and the director of the department of transportation at
least fifteen days' notice of the call.