35-323

35-323. Investing public monies; bidding;
security and other requirements

A. The treasurer shall invest and reinvest public monies in securities and deposits
with a maximum maturity of five years. All public monies shall be invested in eligible
investments. Eligible investments are:

1. Certificates of deposit in eligible depositories.

2. Certificates of deposit in one or more federally insured banks or savings and
loan associations in accordance with the procedures prescribed in section 35-323.01.

3. Interest bearing savings accounts in banks and savings and loan institutions
doing business in this state whose accounts are insured by federal deposit insurance for
their industry, but only if deposits in excess of the insured amount are secured by the
eligible depository to the same extent and in the same manner as required under this
article.

4. Repurchase agreements with a maximum maturity of one hundred eighty days.

5. The pooled investment funds established by the state treasurer pursuant to
section 35-326.

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

7. Bonds or other evidences of indebtedness of this state or any of its counties,
incorporated cities or towns or school districts.

8. Bonds, notes or evidences of indebtedness of any county, municipal district,
municipal utility or special taxing district of any state that are payable from revenues,
earnings or a special tax specifically pledged for the payment of the principal and
interest on the obligations, and for the payment of which a lawful sinking fund or
reserve fund has been established and is being maintained, but only if no default in
payment on principal or interest on the obligations to be purchased has occurred within
five years of the date of investment, or, if such obligations were issued less than five
years before the date of investment, no default in payment of principal or interest has
occurred on the obligations to be purchased nor any other obligations of the issuer
within five years of the investment.

9. Bonds, notes or evidences of indebtedness issued by any county improvement
district or municipal improvement district of any state to finance local improvements
authorized by law, if the principal and interest of the obligations are payable from
assessments on real property within the improvement district. An investment shall not be
made if:

(a) The face value of all such obligations, and similar obligations outstanding,
exceeds fifty per cent of the market value of the real property, and if improvements on
which the bonds or the assessments for the payment of principal and interest on the bonds
are liens inferior only to the liens for general ad valorem taxes.

(b) A default in payment of principal or interest on the obligations to be
purchased has occurred within five years of the date of investment, or, if the
obligations were issued less than five years before the date of investment, a default in
the payment of principal or interest has occurred on the obligations to be purchased or
on any other obligation of the issuer within five years of the investment.

10. Commercial paper of prime quality that is rated within the top two ratings by a
nationally recognized rating agency or its successors. All commercial paper must be
issued by corporations organized and doing business in the United States.

11. Bonds, debentures and notes that are issued by corporations organized and doing
business in the United States and that are rated within the top three ratings by a
nationally recognized rating agency or its successors.

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

B. Certificates of deposit shall be purchased from the eligible depository bidding
the highest permissible rate of interest. No monies over one hundred thousand dollars
may be awarded at any interest rate less than one hundred three per cent of the
equivalent bond yield of the offer side of United States treasury bills having a similar
term. If the eligible depository offering to pay the highest rate of interest has bid
only for a portion of the monies to be awarded, the remainder of the monies shall be
awarded to eligible depositories bidding the next highest rates of interest.

C. An eligible depository is not eligible to receive total aggregate deposits from
this state and all its subdivisions in an amount exceeding twice its capital structure as
outlined in the last call of condition of the superintendent of financial institutions.

D. If two or more eligible depositories submit bids of an identical rate of
interest for all or any portion of the monies to be deposited, the award of the deposit
of the monies shall be made to the eligible depository among those submitting identical
bids having, at the time of the bid opening, the lowest ratio of total public deposits in
relation to its capital structure.

E. Each bid submitted, and not withdrawn prior to the time specified, constitutes
an irrevocable offer to pay interest as specified in the bid on the deposit, or portion
bid for, and the award of a deposit in accordance with this section obligates the
depository to accept the deposit and pay interest as specified in the bid pursuant to
which the deposit is awarded.

F. The treasurer shall maintain a record of all bids received and shall make
available to the board of deposit at its next regularly scheduled meeting a correct list
showing the bidders, the bids received and the amount awarded. These records shall be
available to the public and shall be kept in the possession of the treasurer for not less
than two years from the date of the report.

G. Any eligible depository, before receiving a deposit in excess of the insured
amount under this article, shall deliver collateral for the purposes of this subsection
equal to at least one hundred one per cent of the deposit. The collateral shall be any
of the following:

1. A bond executed by a surety company that is approved by the treasury department
of the United States and authorized to do business in this state. The bond shall be
approved as to form by the legal advisor of the treasurer.

2. Securities or instruments of the following character:

(a) United States government or agency obligations.

(b) State, county, school district and other district municipal bonds.

(c) Registered warrants of this state, a county or other political subdivisions of
this state, when offered as security for monies of the state, county or political
subdivision by which they are issued.

(d) First mortgages and trust deeds on improved, unencumbered real estate located
in this state. No single first mortgages or trust deeds may represent more than ten per
cent of the total collateral. The treasurer may require that the first mortgages or
trust deeds comprising the total collateral security be twice the amount the eligible
depository receives on deposit. First mortgages or trust deeds qualify as collateral
subject to the following limitations:

(i) The promissory note or other evidences of indebtedness secured by such first
mortgage or trust deed shall have been in existence for at least three years and shall
not have been in default during this period.

(ii) An eligible depository shall at its own expense execute, deposit with the
treasurer and record with the appropriate county recorder a complete sale and assignment
with recourse in a form approved by the attorney general, together with an unconditional
assumption of obligation to promptly pay to the entitled parties public monies in its
custody upon lawful demand and tender of resale and assignment.

Eligible depositories may deposit the security described in this subdivision with the
state treasurer, and county, city or town treasurers may accept the security described in
this subdivision at their option.

3. The safekeeping receipt of a federal reserve bank or any bank located in a
reserve city, or any bank authorized to do business in this state, whose combined
capital, surplus and outstanding capital notes and debentures on the date of the
safekeeping receipt are ten million dollars or more, evidencing the deposit therein of
any securities or instruments described in this section. A safekeeping receipt shall not
qualify as security, if issued by a bank to secure its own public deposits, unless issued
directly through its trust department. The safekeeping receipt shall show upon its face
that it is issued for the account of the treasurer and shall be delivered to the
treasurer. The safekeeping receipt may provide for the substitution of securities or
instruments which qualify under this section with the affirmative act of the treasurer.

H. The securities, instruments or safekeeping receipt for the securities,
instruments or warrants shall be accepted at market value if not above par, and, if at
any time their market value becomes less than the deposit liability to that treasurer,
additional securities or instruments required to guarantee deposits shall be deposited
immediately with the treasurer who made the deposit and deposited by the eligible
depository in which the deposit was made.

I. The condition of the surety bond, or the deposit of securities, instruments or a
safekeeping receipt, must be such that the eligible depository will promptly pay to the
parties entitled public monies in its custody, upon lawful demand, and will, when
required by law, pay the monies to the treasurer making the deposit.

J. Notwithstanding the requirements of this section, any institution qualifying as
an eligible depository may accept deposits of public monies to the total then authorized
insurance of accounts, insured by federal deposit insurance, without depositing a surety
bond or securities in lieu of the surety bond.

K. An eligible depository shall report monthly to the treasurer the total deposits
of that treasurer and the par value and the market value of any pledged collateral
securing those deposits.

L. When a security or instrument pledged as collateral matures or is called for
redemption, the cash received for the security or instrument shall be held in place of
the security until the depository has obtained a written release or provided substitute
securities or instruments.

M. The surety bond, securities, instruments or safekeeping receipt of an eligible
depository shall be deposited with the treasurer making the deposit, and the treasurer
shall be the custodian of the bond, securities, instruments or safekeeping receipt. The
treasurer may then deposit with the depository public monies then in the treasurer's
possession in accordance with this article, but not in an amount in excess of the surety
bond, securities, instruments or safekeeping receipt deposited, except for federal
deposit insurance.

N. The following restrictions on investments are applicable:

1. An investment of public operating fund monies shall not be invested for a
maturity of longer than five years.

2. The board of deposit may order the treasurer to sell any of the securities, and
any order shall specifically describe the securities and fix the date upon which they are
to be sold. Securities so ordered to be sold shall be sold for cash by the treasurer on
the date fixed in the order, at the then current market price. The treasurer and the
members of the board are not accountable for any loss occasioned by sales of securities
at prices lower than their cost. Any loss or expense shall be charged against earnings
received from investment of public funds.

O. If the total amount of subdivision monies available for deposit at any time is
less than one hundred thousand dollars, the subdivision board of deposit shall award the
deposit of the funds to an eligible depository in accordance with an ordinance or
resolution of the governing body of the subdivision.