An Act To Amend the Laws Governing the State's Cash Investment Policies (AFTER DEADLINE)
Maine Legislature, Session 123, LD 2226
Committee: Appropriations and Financial Affairs
Sponsors: ROSEN, MILLETT, TURNER, WESTON
Amends: 5 MRSA §135

Legislative Document 
No. 2226 
S.P.858 
February 26, 2008 
An Act To Amend the Laws Governing the State's Cash Investment 
Policies 
(AFTER DEADLINE) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
205. 
Reference to the Committee on Appropriations and Financial Affairs suggested and ordered 
printed. 
Presented by Senator ROSEN of Hancock. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Representative MILLETT of Waterford and Senators: TURNER of 
Cumberland, WESTON of Waldo. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 MRSA §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 or mutual savings bank 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 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 Treasury that is 
not needed to meet current obligations, the Treasurer of State may invest, with the 
concurrence of the State Controller or the Commissioner of Administrative and Financial 
Services and with the consent of the Governor, those amounts in bonds, notes, certificates 
of indebtedness or other obligations of the United States and its ageneies and 
instrumentalities that mature not more than 36 months from the date of investment or in 
repurehase agreements that mature within the sl:leeeeding 12 months that are seeured by 
obligations of the United States and its ageneies and instrumentalities, prime eommereial 
paper, tax exempt obligations and eorporate bonds rated "AAA" that mature not more 
than 36 months from the date of investment, banker's aeeeptanees or so ealled "no load" 
shares of any investment eompany registered under the federal Investment Company Aet 
of 1940, as amended, that eomplies with Rule 2a 7 guidelines and maintains a eonstant 
share priee. The primary purposes of investments made by the Treasurer of State are the 
preservation of capital and the maintenance of maximum liquidity. At least 95% of 
investments made by the Treasurer of State must be in instruments with maturities of 9 
months or less and may not be subject to a call option. Not more than 5% of investments 
made by the Treasurer of State may be in instruments with maturities that exceed 9 
months and may be subject to a call option. Investment decisions may be made by an 
employee of the Treasurer of State or by a person pursuant to a contract with the 
Treasurer of State, subject to oversight by the Treasurer of State, but such an employee or 
person shall demonstrate to the satisfaction of the Treasurer of State sufficient investment 
experience and professional skills and qualifications suitable to make such decisions. 
The Treasurer of State and a person who makes investment decisions shall identify an 
appropriate index to track and compare investment performance. 
A contract for 
investment advisory services entered into by the Treasurer of State may not exceed a term 
of 3 years and is subject to termination at the discretion of the Treasurer of State. 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 
Page J - 123LR3400(OI)-1 
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 custodial contracts and agreements are subject to the approval 
ofthe Governor. 
Sec. 2. 5 MRSA §135, 3rd~, as enacted by PL 1985, c. 757, is repealed. 
SUMMARY 
This bill makes the following changes to the laws governing investments made by the 
Treasurer of State. 
1. It limits the Treasurer of State to investing money in the cash pool in bonds, notes, 
certificates of indebtedness or other obligations of the United States. 
2. It provides that the primary purposes of investments made by the Treasurer of 
State are the preservation of capital and the maintenance of maximum liquidity. 
3. It provides that at least 95% of investments made by the Treasurer of State must 
be in instruments with maturities of 9 months or less and may not be subject to a call 
option. Not more than 5% of investments made by the Treasurer of State may be in 
instruments with maturities that exceed 9 months and may be subject to a call option. 
4. 
It provides that investment decisions may be made by an employee of the 
Treasurer of State or by a person pursuant to a contract with the Treasurer of State, 
subject to oversight by the Treasurer of State, but such an employee or person shall 
demonstrate to the satisfaction of the Treasurer of State sufficient investment experience 
and professional skills and qualifications suitable to make such decisions. 
5. 
It provides that the Treasurer of State and a person who makes investment 
decisions shall identify an appropriate index to track and compare investment 
I 
performance. 
6. It provides that a contract for investment advisory services entered into by the 
Treasurer of State may not exceed a term of 3 years and is subject to termination at the 
discretion of the Treasurer of State.