Section 38. With the exception of funds used in connection with a deferred compensation program for state employees, and funds of the state employees’ retirement system or the teachers’ retirement system, all funds over which the commonwealth has exclusive control shall be invested by the state treasurer with the approval of the governor and council as follows:
(a) In the public funds of the United States or of the District of Columbia or of this commonwealth, or in the legally authorized bonds of any other New England state, or of any other state of the United States, other than a territory or dependency thereof, which has not less than seven hundred and fifty thousand inhabitants as established by the last national census, and which has not within the twenty years prior to the making of such investment defaulted in the payment of any part of either principal or interest of any legal debt.
(b) In the bonds or notes of a county, city or town of this commonwealth.
(c) In the bonds or notes of an incorporated district in this commonwealth whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes.
(d) In the bonds or notes of any city of Maine, New Hampshire, Vermont, Rhode Island or Connecticut, whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes; or of any county or town of said states whose net indebtedness does not exceed three per cent of such valuation; or of any incorporated water district of said states which has within its limits more than ten thousand inhabitants, and whose bonds or notes are a direct obligation on all the taxable property of such district, and whose net indebtedness does not exceed three per cent of such valuation; provided, that there is not included within the limits of such water district, either wholly or in part, any city or town the bonds or notes of which are not a legal investment.
(e) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date not less than thirty thousand nor more than one hundred thousand inhabitants, as established by the last national census preceding such date, and that its net indebtedness does not exceed five per cent of the valuation of the taxable property therein, to be ascertained by the last preceding valuation of property therein for the assessment of taxes.
(f) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date more than one hundred thousand inhabitants, established in the same manner as is provided in subdivision (e) of this section, and that its net indebtedness does not exceed seven per cent of the valuation of the taxable property therein, to be ascertained as provided in said subdivision (e).
(g) In subdivisions (d), (e) and (f) of this section the words “net indebtedness” mean the indebtedness of a county, city, town or district, omitting debts created for supplying the inhabitants with water and debts created in anticipation of taxes to be paid within one year, and deducting the amount of sinking funds available for the payment of the indebtedness included.
(h) The state treasurer, with the approval of the attorney general and of the governor and council, may consent to any refunding plan relative to securities held in funds over which the commonwealth has exclusive control and may do such incidental acts as may be necessary in connection with such refunding.
(i) In the promissory notes of an industrial, commercial, finance, banking, railroad or public utility corporation conducting business in this state when such notes mature not later than one year subsequent to their respective dates of issue; provided, however, that, at the time of any such investment, (1) such corporation has capital stock, premium thereon and surplus of at least twenty-five million dollars, (2) the securities of such corporation are eligible for investment by life insurance companies authorized to do business in the commonwealth, and (3) all outstanding debt obligations of such corporation which have any rating from two or more standard rating services are rated within the three highest classifications established by at least two such rating services, or, if none of the outstanding debt obligations of such corporation has any rating from two such rating services, that such outstanding debt obligations are rated at the time of investment within the three highest classifications established by at least two such rating services, or the notes of such corporation at the time of investment are rated prime by the National Credit Office; provided, further, that the commonwealth’s investment in the notes of any one company shall not exceed twenty per cent of the capital and surplus of such company.
(j) In bankers acceptances and bills of exchange eligible for purchase by federal reserve banks and which have been accepted by a bank, a trust company, a private banker or an investment company, or by a banking corporation which is organized under the laws of the United States or of any state thereof and which is a member of the federal reserve system.
(k) In repurchase agreements secured by United States Treasury obligations or United States Treasury obligations bearing a maturity date not later than one year.
(l) In shares of beneficial interest issued by money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, that have received the highest possible rating from at least 1 nationally recognized statistical rating organization. The purchase price of shares of beneficial interest purchased pursuant to this section shall not include a commission charged by the money market funds.
(m) In any other security that qualifies for inclusion in a fund operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, as amended.
(n) In investment agreements or guaranteed investment contracts rated, or with a financial institution whose senior long-term debt obligations are rated, or guaranteed by a financial institution whose senior long-term debt obligations are rated, at the time the agreement or contract is entered into, in 1 of the 2 highest rating classifications by a nationally recognized rating service if the agreements or contracts do not exceed 1 year in duration.
(o) In investment agreements with a corporation whose principal business is to enter into the agreements if: the corporation and the investment agreements of the corporation are each rated in 1 of the 2 highest rating classifications by a nationally-recognized rating service; the commonwealth has an option to terminate each agreement in the event that the rating is downgraded below the 2 highest rating classifications; and the agreements or contracts do not exceed 1 year in duration.
The state treasurer may purchase with a portion of the State Lottery Fund, as established and defined in section thirty-five of chapter ten, from insurance companies lawfully doing business in the commonwealth, annuities payable to the commonwealth to be used for payment of lottery prizes. Such annuities shall not be subject to the provisions of section one hundred and eighteen of chapter one hundred and seventy-five limiting payment of annuities to individuals, and shall, to the extent that such annuities are payable to the commonwealth, be exempt from taxation under section twenty of chapter sixty-three. Contracts for the purchase of such annuities shall be subject to competitive bidding and shall be awarded to the lowest responsible bidder. All such bids and contracts shall be public records.
The state treasurer may also purchase with a portion of the said State Lottery Fund, bonds, notes, shares in combined investment funds or other interest bearing obligations in accordance with the standards set forth in subdivision (3) of section twenty-three of chapter thirty-two.
Funds in connection with a deferred compensation program for state employees may be invested by the treasurer pursuant to section sixty-four; provided, however, that such funds, whether or not invested, shall remain in the sole control of the treasurer, and may be used by the commonwealth at any time and for any purpose.
The treasurer may lend securities purchased from funds authorized by this section, provided that at the time of the execution of the loan at least one hundred per cent of the market value of the security lent shall be secured by cash or securities guaranteed by the United States government or any agency of the United States government. At all times during the term of each such loan the collateral shall be equal to not less than ninety-five per cent of the full market value of the security and said collateral shall not be more than one hundred thousand dollars less than the full market value of the security.
Section 38. With the exception of funds used in connection with a deferred compensation program for state employees, and funds of the state employees’ retirement system or the teachers’ retirement system, all funds over which the commonwealth has exclusive control shall be invested by the state treasurer with the approval of the governor and council as follows:
(a) In the public funds of the United States or of the District of Columbia or of this commonwealth, or in the legally authorized bonds of any other New England state, or of any other state of the United States, other than a territory or dependency thereof, which has not less than seven hundred and fifty thousand inhabitants as established by the last national census, and which has not within the twenty years prior to the making of such investment defaulted in the payment of any part of either principal or interest of any legal debt.
(b) In the bonds or notes of a county, city or town of this commonwealth.
(c) In the bonds or notes of an incorporated district in this commonwealth whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes.
(d) In the bonds or notes of any city of Maine, New Hampshire, Vermont, Rhode Island or Connecticut, whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes; or of any county or town of said states whose net indebtedness does not exceed three per cent of such valuation; or of any incorporated water district of said states which has within its limits more than ten thousand inhabitants, and whose bonds or notes are a direct obligation on all the taxable property of such district, and whose net indebtedness does not exceed three per cent of such valuation; provided, that there is not included within the limits of such water district, either wholly or in part, any city or town the bonds or notes of which are not a legal investment.
(e) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date not less than thirty thousand nor more than one hundred thousand inhabitants, as established by the last national census preceding such date, and that its net indebtedness does not exceed five per cent of the valuation of the taxable property therein, to be ascertained by the last preceding valuation of property therein for the assessment of taxes.
(f) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date more than one hundred thousand inhabitants, established in the same manner as is provided in subdivision (e) of this section, and that its net indebtedness does not exceed seven per cent of the valuation of the taxable property therein, to be ascertained as provided in said subdivision (e).
(g) In subdivisions (d), (e) and (f) of this section the words “net indebtedness” mean the indebtedness of a county, city, town or district, omitting debts created for supplying the inhabitants with water and debts created in anticipation of taxes to be paid within one year, and deducting the amount of sinking funds available for the payment of the indebtedness included.
(h) The state treasurer, with the approval of the attorney general and of the governor and council, may consent to any refunding plan relative to securities held in funds over which the commonwealth has exclusive control and may do such incidental acts as may be necessary in connection with such refunding.
(i) In the promissory notes of an industrial, commercial, finance, banking, railroad or public utility corporation conducting business in this state when such notes mature not later than one year subsequent to their respective dates of issue; provided, however, that, at the time of any such investment, (1) such corporation has capital stock, premium thereon and surplus of at least twenty-five million dollars, (2) the securities of such corporation are eligible for investment by life insurance companies authorized to do business in the commonwealth, and (3) all outstanding debt obligations of such corporation which have any rating from two or more standard rating services are rated within the three highest classifications established by at least two such rating services, or, if none of the outstanding debt obligations of such corporation has any rating from two such rating services, that such outstanding debt obligations are rated at the time of investment within the three highest classifications established by at least two such rating services, or the notes of such corporation at the time of investment are rated prime by the National Credit Office; provided, further, that the commonwealth’s investment in the notes of any one company shall not exceed twenty per cent of the capital and surplus of such company.
(j) In bankers acceptances and bills of exchange eligible for purchase by federal reserve banks and which have been accepted by a bank, a trust company, a private banker or an investment company, or by a banking corporation which is organized under the laws of the United States or of any state thereof and which is a member of the federal reserve system.
(k) In repurchase agreements secured by United States Treasury obligations or United States Treasury obligations bearing a maturity date not later than one year.
(l) In shares of beneficial interest issued by money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, that have received the highest possible rating from at least 1 nationally recognized statistical rating organization. The purchase price of shares of beneficial interest purchased pursuant to this section shall not include a commission charged by the money market funds.
(m) In any other security that qualifies for inclusion in a fund operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, as amended.
(n) In investment agreements or guaranteed investment contracts rated, or with a financial institution whose senior long-term debt obligations are rated, or guaranteed by a financial institution whose senior long-term debt obligations are rated, at the time the agreement or contract is entered into, in 1 of the 2 highest rating classifications by a nationally recognized rating service if the agreements or contracts do not exceed 1 year in duration.
(o) In investment agreements with a corporation whose principal business is to enter into the agreements if: the corporation and the investment agreements of the corporation are each rated in 1 of the 2 highest rating classifications by a nationally-recognized rating service; the commonwealth has an option to terminate each agreement in the event that the rating is downgraded below the 2 highest rating classifications; and the agreements or contracts do not exceed 1 year in duration.
The state treasurer may purchase with a portion of the State Lottery Fund, as established and defined in section thirty-five of chapter ten, from insurance companies lawfully doing business in the commonwealth, annuities payable to the commonwealth to be used for payment of lottery prizes. Such annuities shall not be subject to the provisions of section one hundred and eighteen of chapter one hundred and seventy-five limiting payment of annuities to individuals, and shall, to the extent that such annuities are payable to the commonwealth, be exempt from taxation under section twenty of chapter sixty-three. Contracts for the purchase of such annuities shall be subject to competitive bidding and shall be awarded to the lowest responsible bidder. All such bids and contracts shall be public records.
The state treasurer may also purchase with a portion of the said State Lottery Fund, bonds, notes, shares in combined investment funds or other interest bearing obligations in accordance with the standards set forth in subdivision (3) of section twenty-three of chapter thirty-two.
Funds in connection with a deferred compensation program for state employees may be invested by the treasurer pursuant to section sixty-four; provided, however, that such funds, whether or not invested, shall remain in the sole control of the treasurer, and may be used by the commonwealth at any time and for any purpose.
The treasurer may lend securities purchased from funds authorized by this section, provided that at the time of the execution of the loan at least one hundred per cent of the market value of the security lent shall be secured by cash or securities guaranteed by the United States government or any agency of the United States government. At all times during the term of each such loan the collateral shall be equal to not less than ninety-five per cent of the full market value of the security and said collateral shall not be more than one hundred thousand dollars less than the full market value of the security.
Section 38. With the exception of funds used in connection with a deferred compensation program for state employees, and funds of the state employees’ retirement system or the teachers’ retirement system, all funds over which the commonwealth has exclusive control shall be invested by the state treasurer with the approval of the governor and council as follows:
(a) In the public funds of the United States or of the District of Columbia or of this commonwealth, or in the legally authorized bonds of any other New England state, or of any other state of the United States, other than a territory or dependency thereof, which has not less than seven hundred and fifty thousand inhabitants as established by the last national census, and which has not within the twenty years prior to the making of such investment defaulted in the payment of any part of either principal or interest of any legal debt.
(b) In the bonds or notes of a county, city or town of this commonwealth.
(c) In the bonds or notes of an incorporated district in this commonwealth whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes.
(d) In the bonds or notes of any city of Maine, New Hampshire, Vermont, Rhode Island or Connecticut, whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes; or of any county or town of said states whose net indebtedness does not exceed three per cent of such valuation; or of any incorporated water district of said states which has within its limits more than ten thousand inhabitants, and whose bonds or notes are a direct obligation on all the taxable property of such district, and whose net indebtedness does not exceed three per cent of such valuation; provided, that there is not included within the limits of such water district, either wholly or in part, any city or town the bonds or notes of which are not a legal investment.
(e) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date not less than thirty thousand nor more than one hundred thousand inhabitants, as established by the last national census preceding such date, and that its net indebtedness does not exceed five per cent of the valuation of the taxable property therein, to be ascertained by the last preceding valuation of property therein for the assessment of taxes.
(f) In the legally authorized bonds for municipal purposes of any city of any state of the United States, other than one of the New England states, whose bonds are eligible under subdivision (a) of this section; provided, that such city was incorporated as such at least twenty-five years prior to the date of such investment, and has at such date more than one hundred thousand inhabitants, established in the same manner as is provided in subdivision (e) of this section, and that its net indebtedness does not exceed seven per cent of the valuation of the taxable property therein, to be ascertained as provided in said subdivision (e).
(g) In subdivisions (d), (e) and (f) of this section the words “net indebtedness” mean the indebtedness of a county, city, town or district, omitting debts created for supplying the inhabitants with water and debts created in anticipation of taxes to be paid within one year, and deducting the amount of sinking funds available for the payment of the indebtedness included.
(h) The state treasurer, with the approval of the attorney general and of the governor and council, may consent to any refunding plan relative to securities held in funds over which the commonwealth has exclusive control and may do such incidental acts as may be necessary in connection with such refunding.
(i) In the promissory notes of an industrial, commercial, finance, banking, railroad or public utility corporation conducting business in this state when such notes mature not later than one year subsequent to their respective dates of issue; provided, however, that, at the time of any such investment, (1) such corporation has capital stock, premium thereon and surplus of at least twenty-five million dollars, (2) the securities of such corporation are eligible for investment by life insurance companies authorized to do business in the commonwealth, and (3) all outstanding debt obligations of such corporation which have any rating from two or more standard rating services are rated within the three highest classifications established by at least two such rating services, or, if none of the outstanding debt obligations of such corporation has any rating from two such rating services, that such outstanding debt obligations are rated at the time of investment within the three highest classifications established by at least two such rating services, or the notes of such corporation at the time of investment are rated prime by the National Credit Office; provided, further, that the commonwealth’s investment in the notes of any one company shall not exceed twenty per cent of the capital and surplus of such company.
(j) In bankers acceptances and bills of exchange eligible for purchase by federal reserve banks and which have been accepted by a bank, a trust company, a private banker or an investment company, or by a banking corporation which is organized under the laws of the United States or of any state thereof and which is a member of the federal reserve system.
(k) In repurchase agreements secured by United States Treasury obligations or United States Treasury obligations bearing a maturity date not later than one year.
(l) In shares of beneficial interest issued by money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, that have received the highest possible rating from at least 1 nationally recognized statistical rating organization. The purchase price of shares of beneficial interest purchased pursuant to this section shall not include a commission charged by the money market funds.
(m) In any other security that qualifies for inclusion in a fund operated in accordance with section 270.2a-7 of Title 17 of the Code of Federal Regulations, as amended.
(n) In investment agreements or guaranteed investment contracts rated, or with a financial institution whose senior long-term debt obligations are rated, or guaranteed by a financial institution whose senior long-term debt obligations are rated, at the time the agreement or contract is entered into, in 1 of the 2 highest rating classifications by a nationally recognized rating service if the agreements or contracts do not exceed 1 year in duration.
(o) In investment agreements with a corporation whose principal business is to enter into the agreements if: the corporation and the investment agreements of the corporation are each rated in 1 of the 2 highest rating classifications by a nationally-recognized rating service; the commonwealth has an option to terminate each agreement in the event that the rating is downgraded below the 2 highest rating classifications; and the agreements or contracts do not exceed 1 year in duration.
The state treasurer may purchase with a portion of the State Lottery Fund, as established and defined in section thirty-five of chapter ten, from insurance companies lawfully doing business in the commonwealth, annuities payable to the commonwealth to be used for payment of lottery prizes. Such annuities shall not be subject to the provisions of section one hundred and eighteen of chapter one hundred and seventy-five limiting payment of annuities to individuals, and shall, to the extent that such annuities are payable to the commonwealth, be exempt from taxation under section twenty of chapter sixty-three. Contracts for the purchase of such annuities shall be subject to competitive bidding and shall be awarded to the lowest responsible bidder. All such bids and contracts shall be public records.
The state treasurer may also purchase with a portion of the said State Lottery Fund, bonds, notes, shares in combined investment funds or other interest bearing obligations in accordance with the standards set forth in subdivision (3) of section twenty-three of chapter thirty-two.
Funds in connection with a deferred compensation program for state employees may be invested by the treasurer pursuant to section sixty-four; provided, however, that such funds, whether or not invested, shall remain in the sole control of the treasurer, and may be used by the commonwealth at any time and for any purpose.
The treasurer may lend securities purchased from funds authorized by this section, provided that at the time of the execution of the loan at least one hundred per cent of the market value of the security lent shall be secured by cash or securities guaranteed by the United States government or any agency of the United States government. At all times during the term of each such loan the collateral shall be equal to not less than ninety-five per cent of the full market value of the security and said collateral shall not be more than one hundred thousand dollars less than the full market value of the security.
