KRS § 42.500 — KY Code / Title VI / Chapter 42 / Section 42.500
42.500 State Investment Commission -- Powers
Status: in_force

42.500 State Investment Commission -- Powers.

(1) There shall be a State Investment Commission composed of:

(a) The State Treasurer who shall be chairman;

(b) The secretary of the Finance and Administration Cabinet;

(c) The state controller; and

(d) Two (2) persons appointed by the Governor.

(2) The individuals appointed by the Governor shall be selected as follows: one (1) to

be selected from a list of five (5) submitted to the Governor by the Kentucky

Bankers Association, and one (1) to be selected from a list of five (5) submitted to

the Governor by the Independent Community Bankers Association.

(3) The State Investment Commission shall meet at least quarterly to review investment

performance and conduct other business. This provision shall not prohibit the

commission from meeting more frequently as the need arises.

(4) The State Treasurer and secretary of the Finance and Administration Cabinet shall

each have the authority to designate, by an instrument in writing over his or her

signature and filed with the secretary of the commission as a public record of the

commission, an alternate with full authority to:

(a) Attend in the member's absence, for any reason, any properly convened

meeting of the commission; and

(b) Participate in the consideration of, and vote upon, business and transactions of

the commission.

Each alternate shall be a person on the staff of the appointing member or in the

employ of the appointing member's state agency or department.

(5) Any designation of an alternate may, at the appointing member's direction:

(a) Be limited upon the face of the appointing instrument to be effective for only

a specific meeting or specified business;

(b) Be shown on the face of the appointing instrument to be a continuing

designation, for a period of no more than four (4) years, whenever the

appointing member is unable to attend; or

(c) Be revoked at any time by the appointing member in an instrument in writing,

over his or her signature, filed with the secretary of the commission as a

public record of the commission.

(6) Any person transacting business with, or materially affected by, the business of the

commission may accept and rely upon a joint certificate of the secretary of the

commission and any member of the commission concerning the designation of any

alternate, the time and scope of the designation, and, if it is of a continuing nature,

whether and when the designation has been revoked. The joint certificate shall be

made and delivered to the person requesting it within a reasonable time after it has

been requested in writing, with acceptable identification of the business or

transaction to which it refers and the requesting person's interest in the business or

transaction.

(7) Any three (3) persons who are members of the commission or alternates authorized

under subsections (4) and (5) of this section shall constitute a quorum and may, by

majority vote, transact any business of the commission. Any three (3) members of

the commission may call a meeting.

(8) The provisions of KRS 61.070 shall not apply to members of the commission.

(9) The commission shall have authority and may, if in its opinion the cash in the State

Treasury is in excess of the amount required to meet current expenditures, invest

any and all of the excess cash in:

(a) Obligations and contracts for future delivery of obligations backed by the full

faith and credit of the United States or a United States government agency,

including but not limited to:

1. United States Treasury;

2. Export-Import Bank of the United States;

3. Farmers Home Administration;

4. Government National Mortgage Corporation; and

5. Merchant Marine bonds;

(b) Obligations of any corporation of the United States government or

government-sponsored enterprise, including but not limited to:

1. Federal Home Loan Mortgage Corporation;

2. Federal Farm Credit Banks:

a. Bank for Cooperatives;

b. Federal Intermediate Credit Banks; and

c. Federal Land Banks;

3. Federal Home Loan Banks;

4. Federal National Mortgage Association; and

5. Tennessee Valley Authority obligations;

(c) Collateralized or uncollateralized certificates of deposit, issued by banks rated

in one (1) of the three (3) highest categories by a nationally recognized

statistical rating organization or other interest-bearing accounts in depository

institutions chartered by this state or by the United States, except for shares in

mutual savings banks;

(d) Bankers acceptances for banks rated in the highest short-term category by a

nationally recognized statistical rating organization;

(e) Commercial paper rated in the highest short-term category by a nationally

recognized statistical rating organization;

(f) Securities issued by a state or local government, or any instrumentality or

agency thereof, in the United States, and rated in one (1) of the three (3)

highest long-term categories by a nationally recognized statistical rating

organization;

(g) United States denominated corporate, Yankee, and Eurodollar securities,

excluding corporate stocks, issued by foreign and domestic issuers, including

sovereign and supranational governments, rated in one (1) of the three (3)

highest long-term categories by a nationally recognized statistical rating

organization;

(h) Asset-backed securities rated in the highest category by a nationally

recognized statistical rating organization;

(i) Shares of mutual funds, each of which shall have the following characteristics:

1. The mutual fund shall be an open-end diversified investment company

registered under Federal Investment Company Act of 1940, as amended;

2. The management company of the investment company shall have been

in operation for at least five (5) years;

3. The mutual fund shall be rated in the highest category by a nationally

recognized statistical rating organization;

4. All of the securities in the mutual fund shall be eligible investments

pursuant to this section; and

(j) State and local delinquent property tax claims which upon purchase shall

become certificates of delinquency secured by interests in real property not to

exceed twenty-five million dollars ($25,000,000) in the aggregate. For any

certificates of delinquency that have been exonerated pursuant to KRS

132.220(5), the Department of Revenue shall offset the loss suffered by the

Finance and Administration Cabinet against subsequent local distributions to

the affected taxing districts as shown on the certificate of delinquency.

(10) The State Investment Commission shall promulgate administrative regulations for

the investment and reinvestment of state funds in shares of mutual funds, and the

regulations shall specify:

(a) The long and short term goals of any investment;

(b) The specification of moneys to be invested;

(c) The amount of funds which may be invested per instrument;

(d) The qualifications of instruments; and

(e) The acceptable maturity of investments.

(11) Any investment in obligations and securities pursuant to subsection (9) of this

section shall satisfy this section if these obligations are subject to repurchase

agreements, provided that delivery of these obligations is taken either directly or

through an authorized custodian.

(12) (a) Income earned from investments made pursuant to this section shall accrue to

the credit of the investment income account of the general fund, except that

interest from investments of excess cash in the road fund shall be credited to

the surplus account of the road fund and interest from investments of excess

cash in the game and fish fund shall be credited to the game and fish fund,

interest earned from investments of imprest cash funds and funds in the trust

and revolving fund for each state public university shall be credited to the

appropriate institutional account, and interest earned from the investment of

funds accumulated solely by means of contributions and gifts shall not be

diverted to any purpose other than that stipulated by the donor, when the

donor shall have designated the use to which the interest shall be placed.

(b) Except as otherwise provided by law, or by the obligations and covenants

contained in resolutions and trust indentures adopted or entered into for state

bond issues, interest earned from the investment of moneys appropriated to

the capital construction accounts, trust and agency accounts, and trust and

agency revolving accounts shall accrue to the capital construction investment

income account.

(c) If there is a revenue shortfall, as defined in KRS 48.010, of five percent (5%)

or less, the secretary of the Finance and Administration Cabinet, upon the

recommendation of the state budget director, may direct the transfer of excess

unappropriated capital construction investment income to the general fund

investment income account. The amount of the transfer shall not exceed the

amount of the shortfall in general fund revenues.

(d) If the capital construction investment income is less than that amount

appropriated by the General Assembly, the secretary of the Finance and

Administration Cabinet may, upon recommendation of the state budget

director, direct the transfer of excess unappropriated general fund investment

income to the capital construction investment income account. The transfer of

general fund investment income revenues to the capital construction

investment income account shall be made only when the actual general fund

revenues are in excess of the enacted estimates under KRS 48.120 and shall be

limited to the amount of the excess general fund revenues. The amount of the

transfer shall not exceed the amount of the shortfall in the capital construction

fund revenues.

(13) The authority granted by this section to the State Investment Commission shall not

extend to any funds that are specifically provided by law to be invested by some

other officer or agency of the state government.

(14) The authority granted by this section to the State Investment Commission shall only

be exercised pursuant to the administrative regulations mandated by KRS 42.525.

(15) Each member of the State Investment Commission shall post bond for his or her

acts or omissions as a member thereof identical in amount and kind to that posted

by the State Treasurer.