35-324. Investment of trust funds; loan of
securities; sale of permanent endowment securities
A. The treasurer shall invest and reinvest monies of trust funds in:
1. Any and all of those securities permitted for the investment of public monies.
2. Fixed income securities of corporations organized and doing business in any
state of the United States or the District of Columbia which carry one of the two highest
ratings of Moody's investors service and Standard and Poor's rating service or their
successors. If only one of the above mentioned services rates the security, it must
carry the highest rating of that service. If a rating change occurs after purchase, it
is not mandatory to sell the security.
B. Securities owned by the permanent endowment funds may be loaned to the financial
or dealer community if securities which qualify under subsection A, paragraph 1 are
transferred to the state treasurer as collateral with market value from one hundred two
per cent to one hundred ten per cent as established from time to time by the board of
deposit of the par value of the securities loaned. The securities used as collateral
shall be "valued as to market value" weekly, and if necessary the borrower shall post
additional collateral to insure that the excess margin is maintained.
C. Permanent endowment securities may be sold at a price below par or cost if the
proceeds of the sale are reinvested in securities whose incremental yield will recover
the dollar loss on the old securities. The recovery period is from the time of sale
until the shorter of the maturities of the sold securities or purchased securities.
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