Gen. 199] 199

1

 For brevity’s sake, this opinion refers collectively to the Treasurer

and all local officials who may make investments under SFP §6-222 as

“investment officials.”

2

 The Attorney General’s Office takes no position on this policy

question.

STATE TREASURER

AUTHORITY TO INVEST IN MONEY MARKET MUTUAL FUNDS

THAT HOLD COMMERCIAL PAPER

January 12, 1998

The Honorable Richard N. Dixon

State Treasurer

You have requested our opinion on the relationship between

§6-222(a)(6) of the State Finance and Procurement (“SFP”) Article,

Maryland Code, which permits investment in certain commercial

paper up to a specified limit, and SFP §6-222(a)(7), which permits

investment in certain money market mutual funds without any

specified limit. You ask whether the Treasurer and the local

officials to whom SFP §6-222 applies1

 may invest in money market

mutual funds that hold commercial paper.

Our opinion is as follows: SFP §6-222(a)(6) and (7) are

separate and distinct authorizations. Therefore, an investment

official may invest in a mutual fund pursuant to SFP §6-222(a)(7),

even if the mutual fund holds substantial amounts of commercial

paper. If, as your letter suggests, you believe that this investment

alternative poses unacceptable risks, the General Assembly may

wish to consider an amendment to the statute.

2

 

I

Statutory Text

The statute in question, SFP §6-222, authorizes the Treasurer

to “invest or reinvest unexpended or surplus money over which the
200 [83 Op. Att’y

Treasurer has custody in” eight investment categories. Article 95,

§22 of the Code generally authorizes local investment officials to

invest unexpended or surplus local funds “in obligations or

repurchase agreements in accordance with [SFP] §6-222 ....” 

One of the eight permissible investment categories is

“commercial paper that has received the highest letter and numerical

rating by at least one nationally recognized statistical rating

organization as designated by the United States Securities and

Exchange Commission ....” SFP §6-222(a)(6). This investment

alternative is restricted, however: Investments in commercial paper

“may not exceed 5% of the total investments made by the Treasurer

under this subsection.” 

Another investment alternative is “money market mutual funds

registered with the Securities and Exchange Commission under the

Investment Company Act of 1940 ... and operated in accordance

with Rule 2A-7 of the Investment Company Act of 1940 ....” SFP

§6-222(a)(7). Some money market mutual funds within this

description hold substantial amounts of commercial paper; your

letter states that some hold as much as 60% of their investments in

commercial paper. Yet, despite the 5% cap in SFP §6-222(a)(6), this

alternative places no restriction on investment in these funds. 

In construing a statute, “[o]ur search for legislative intent

begins, and usually ends, with the words of the statute at issue.”

Marriott Employees Federal Credit Union v. MVA, 346 Md. 437,

444-45, 697 A.2d 455 (1997). Ordinarily, when the words of the

statute do not set forth a particular restriction, the restriction may not

be invoked through statutory construction. “[W]here the language

of a statute is clear and unambiguous, we will not add words to

reflect an intent not evidenced by that language.” In re Adoption No.

A91-71A, 334 Md. 538, 566, 640 A.2d 1085 (1994). See also, e.g.,

Marriott Employees Federal Credit Union v. MVA, 346 Md. at 445.

To be sure, this general rule has its exceptions. Even

unambiguous text is not to be given effect if the language is patently

a drafting mistake. Kaczorowski v. City of Baltimore, 309 Md. 505,

525 A.2d 628 (1987); 82 Opinions of the Attorney General 165

(1997). Hence, we might find a basis for limiting the apparent scope

of SFP §6-222(a)(7) if there were evidence in the legislative history

that the omission of a restriction about mutual funds holding
Gen. 199] 201

3

 The requirement that a fund “have received the highest possible

rating” from a rating organization was amended in committee to eliminate

(continued...)

commercial paper was a drafting mistake. Our review of the

pertinent legislative history, however, affords no support for the

supposition that the text of SFP §6-222(a)(7) reflects a drafting

error. Rather, the text accurately reflects the General Assembly’s

policy decision.

II

Legislative History

SFP §6-222(a)(6) and (7) were added by Chapter 304 (House

Bill 913) of the Laws of Maryland 1995. When the bill was

originally drafted for the House Chairman of the Joint Committee on

the Management of Public Funds, the bill would have authorized

investment in “money market mutual funds that contain only

securities of the organizations listed in paragraphs (1) and (2) of this

subsection and which are registered under Securities and Exchange

Commission Rule 2A-7 of the Investment Company Act of 1940 as

amended.” The reference to “securities of the organizations listed

in paragraphs (1) and (2) of this subsection” meant obligations of the

United States itself and federal agencies and instrumentalities. This

language would have precluded investment in money market mutual

funds that held commercial paper. 

Apparently at the suggestion of the staff of the Treasurer’s

Office, however, the bill was altered even before introduction, so

that the investment alternative for money market mutual funds was

no longer limited to those holding federal government obligations.

As introduced, the bill provided for investment in “money market

mutual funds registered with the Securities and Exchange

Commission under the Investment Company Act of 1940 ... and

operated in accordance with 17 C.F.R. §270.2A-7 and that have

received the highest possible rating by at least one nationally

recognized statistical rating organization as designated by the United

States Securities and Exchange Commission or as approved by the

Treasurer.” With minor amendments, this provision remained in the

bill as enacted.3 This change in the bill had the effect, which we
202 [83 Op. Att’y

3

 (...continued)

the alternative of the Treasurer’s approval of the rating organization. Two

years later, the requirement itself was deleted. 

4

 When first added by amendment, the cap was 3%. A subsequent

amendment raised the cap to 5%.

must presume was intended, of allowing investment in money

market mutual funds that held commercial paper. There would have

been little point to the change if that were not the objective.

The same legislation authorized direct investment in

commercial paper. As introduced, House Bill 913 authorized

investment in “commercial paper that has received the highest letter

and numerical rating by at least one nationally recognized statistical

rating organization as designated by the United States Securities and

Exchange Commission.” By amendment, the General Assembly

added the 5% cap: “provided that such commercial paper may not

exceed 5% of the total investments made by the Treasurer under this

subsection.”4 The General Assembly made no comparable change

to the provision on money market mutual funds, despite its

broadening of that provision to allow investment in mutual funds

that themselves held commercial paper.

Although the legislative history suggests a desire to

“modernize” investment alternatives, it does not specifically discuss

the reasons for differential treatment of investments in commercial

paper, depending on whether the investment is direct or not.

Presumably, the General Assembly concluded that direct investment

in commercial paper was more risky than indirect investment in

commercial paper through the medium of a money market mutual

fund. The General Assembly might have supposed that a mutual

fund’s decision to hold commercial paper comes only after extensive

analysis of risk by professionals at the mutual fund. Accordingly,

the General Assembly imposed a 5% limitation on direct investments

and no limitation at all on investments via money market mutual

funds. 

We are not commenting on the correctness of this policy

judgment or on related issues, like the degree of risk that

governments ought to tolerate in order to obtain the higher rate of
Gen. 199] 203

5

 SFP §6-222(d)(4) delphically instructs investment officials to

invest “with due regard for minimizing risk while maximizing return.”

All investment decisions are to be made under a “prudent person”

standard. SFP §6-222(d)(1).

return afforded by commercial paper.5 These are matters on which

we defer to your expertise and ultimately the judgment of the

General Assembly. We recite these considerations merely to

underscore our conclusion that there is no evidence of the kind of

drafting error that would allow us to depart from the import of the

statutory text.

III

Conclusion

In summary, it is our opinion that investment officials have

authority under SFP §6-222(a)(7) to invest in money market mutual

funds that hold commercial paper, even if the consequence of this

investment choice is that indirect investments in commercial paper

exceed the 5% cap that would be applicable under SFP §6-222 (a)(6)

to direct investments in commercial paper.

J. Joseph Curran, Jr.

Attorney General

Jack Schwartz

Chief Counsel

 Opinions and Advice