An Act To
Maine Legislature, Session 123, LD 2226
Committee Amendment CA_A_S683 (Senate)
Amends: 5 MRSA §135

Majority 
COMMITTEE AMENDMENT "It " to S.P. 858, L.D. 2226, Bill, "An Act To 
Amend the Laws Governing the State's Cash Investment Policies" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 5 MRS A §135, first ~, as amended by PL 2005, c. 386, Pt. CC, §2, is 
further amended to read: 
The Treasurer of State may deposit the money, including trust funds of the State, in 
any national bank or in any banking institution, trust company, state or federal savings 
and loan association Sf, mutual savings bank or state-chartered or federally chartered 
credit union organized under the laws of this State or having a location in the State except 
as provided in chapter 161. 
Before making a deposit, the Treasurer of State must 
consider the state presence of the institution and, if applicable, the rating of the banking 
institution, trust company, state or federal savings and loan association or mutual savings 
bank on its most recent assessment conducted pursuant to the federal Community 
Reinvestment Act, 12 United States Code, Section 2901. The Treasurer of State may 
transfer funds into and out of the respective funds in the cash pool as circumstances may 
require to meet current obligations and shall request the State Controller to effect such 
transfers by journal entry as set forth in section 131-B. WHen tHere is excess money in 
the State Treasl:lF)' tHat is not needed to meet 61:lrrent obligations, tHe The Treasurer of 
State may invest, witH the 60n61:lrrenCe of the State Controller or the Commissioner of 
Administrative and Financial Services and 'Nith the consent of the Go','ernor, those 
amOl:IAts cash pool funds in bonds, notes, certificates of indebtedness or other obligations 
of the United States and its agencies and instrumentalities that mature not more than :3-6 
months from the date of investment or in repurchase agreements that mature within the 
succeeding 12 months that are secured by obligations of the United States and its 
agencies and instrumentalities, prime commercial paper, tax-exempt obligations and 
corporate bonds rated "AAA" that mature not more than J.6 24 months from the date of 
investment, banker's acceptances or so-called "no-load" shares of any investment 
company registered under the federal Investment Company Act of 1940, as amended, that 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,1\ " 
to S.P. 858, L.D. 2226 
complies with Rule 2a-7 guidelines and maintains a constant share price. The Treasurer 
of State may participate in the securities loan market by loaning state-owned bonds, notes 
or certificates of indebtedness of the Federal Government, only if loans are fully 
collateralized by treasury bills or cash. The Treasurer of State shall seek competitive bids 
for investments except when, after a reasonable investigation, it appears that an 
investment of the desired maturity is procurable by the State from only one source. 
Interest earned on those investments of money must be credited to the respective funds, 
except that interest earned on investments of special revenue funds must be credited to 
the General Fund of the State. Effective July 1, 1995, interest earned on investments of 
the Highway Fund must be credited to the Highway Fund. Interest earned on funds of the 
Department of Inland Fisheries and Wildlife must be credited to the General Fund. 
Interest earned on funds of the Baxter State Park Authority must be credited to the Baxter 
State Park Fund. This section does not prevent the deposit for safekeeping or custodial 
care of the securities of the several funds of the State in banks or safe deposit companies 
in this State or any other state, nor the deposit of state funds required by the terms of 
custodial contracts or agreements negotiated in accordance with the laws of this State. 
All custod ial contracts and agreements are subject to the approval of the Governor. 
Sec. 2. 5 MRSA §135, 4th ~,as amended by PL 2003, c. 20, Pt. T, §3, is further 
amended to read: 
No sum exceeding an amount equal to 25% of the capital, surplus and undivided 
profits of any trust company or national bank or a sum exceeding an amount equal to 25% 
of the reserve fund and undivided profit account of a mutual savings bank or state or 
federal savings and loan associations may be on deposit therein at anyone time. The 
restriction does not apply to deposits subject to immediate withdrawal available to meet 
the payment of any bonded debts or interest or to pay current bills or expenses of the 
State. The restriction does not apply to deposits that are secured by the pledge of certain 
securities as collateral, nor to deposits fully covered by insurance. Such collateral must 
be in an amount equal to or greater than such deposit. The Treasurer of State may require, 
in the discretion of the Treasurer of State, collateralization or insurance for the full 
amount or more of any deposit of public funds, whether held by an institution permitted 
under this section or by a vendor contracted to collect or disburse public funds. The value 
of the securities so pledged must be determined by the Treasurer of State on the basis of 
market value. The Treasurer of State shall review the value of securities pledged on 
January 2nd and July 2nd of each year. The collateral must consist of securities or 
obligations issued or fully insured or guaranteed by the United States, an agency or 
instrumentality thereof or a United States government sponsored corporation. The 
securities must be held in a depository institution approved by the Treasurer of State and 
pledged to indemnify the State of Maine against any loss. Notice of such hypothecation at 
the time of deposit must be given to the Treasurer of State by the depository institution 
and a copy of said notice mailed to the State Department of Audit. 
Sec. 3. Treasurer of State to adopt policy. The Treasurer State shall adopt a 
policy regarding the investment of cash pool funds in accordance with this section. 
1. The coequal primary investment objectives of cash pool management are: 
A. The preservation of capital through quality and diversification; and 
COMMITTEE AMENDMENT 
.~oy:&· 
COMMITTEE AMENDMENT "A" to S.P. 858, L.D. 2226 
B. The maintenance of sufficient liquidity for meeting anticipated state cash flow 
needs. 
2. The secondary investment objectives of cash pool management are, in order of 
priority: 
A. The attainment of the competitive rate of return; and 
B. The enhancement of capital available to state financial institutions. 
3. Prior to making a deposit of cash pool funds into a state-chartered or federally 
chartered credit union, the Treasurer of State shall require a credit union to report 
annually the percentage of its loan portfolio outstanding to residents of the State, along 
with such further information as it may publish regarding its actions benefiting residents 
of the State. 
4. Prime commercial paper purchases for the cash pool, if any, may not exceed 
$10,000,000 par value per issuer, and with no more than 5% of the cash pool funds 
placed in such investments. 
5. The Treasurer of State shall establish appropriate investment performance 
benchmarks for the cash pool and shall revisit and replace those benchmarks from time to 
time as appropriate with actual cash pool holdings and investment policy.' 
SUMMARY 
This amendment makes the following changes to the laws governing investments 
made by the Treasurer of State. 
1. It authorizes the Treasurer of State to deposit state funds in a state-chartered or 
federally chartered credit union. 
2. Current law provides that, when there is excess money in the State Treasury that is 
not needed to meet current obligations, the Treasurer of State may invest those amounts, 
with the concurrence of the State Controller and the Commissioner of Administrative and 
Financial Services and the consent of the Governor, in certain investments that mature no 
more than 36 months from the date of investment. This amendment removes the language 
requiring that there be excess funds in the State Treasury, removes language requiring the 
concurrence of the State Controller and the Commissioner of Administrative and 
Financial Services and the consent of the Governor, and reduces the time for maturity 
from 36 to 24 months. 
3. It requires the Treasurer of State to adopt a policy regarding the investment of 
cash pool funds that sets forth the primary and secondary investment objectives of cash 
pool management, requires reporting by credit union regarding the percentage of its loan 
portfolio outstanding to Maine residents, establishes limits on prime commercial paper 
purchases for the cash pool and requires appropriate investment performance benchmarks 
for the cash pool. 
FISCAL ~on: H.EQLlRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 04/15108 Mac 
LD 2226 
LR 3400(02) 
An Act To Amend the Laws Governing the State's Cash Investment Policies 
Net Cost (Savings) 
General Fund 
Highway Fund 
Revenue 
General Fund 
Highway Fund 
Fiscal Detail and Notes 
Fiscal Note for Bill as Amended by Committee Amendment ''14:. " 
Committee: Appropriations and Financial Affairs 
Fiscal Note Required: Yes 
Fiscal Note 
2007-08 
$0 
$0 
$0 
$0 
2008-09 
$724 
$6,552 
($724) 
($6,552) 
Projections 
2009-10 
$724 
$6,552 
($724) 
($6,552) 
Projections 
2010-11 
$724 
$6,552 
($724) 
($6,552) 
Changing the laws governing the State's Cash Investment Policies will result in a reduction of revenue to the General 
Fund of $724 annually beginning in fiscal year 2008-09 and a reduction of Highway Fund revenue of $6,552 annually 
begi n ning in fiscal year 2008-09. 
LR3400(02) - Fiscal Note - Page I of I