LA Rev Stat § 33:2955 (2021)
2021 Louisiana Laws|Revised Statutes|Title 33 - Municipalities and Parishes|§2955. Investments by political subdivisions

RS 2955 - Investments by political subdivisions  A.(1) All municipalities, parishes, school boards, and any other political subdivisions of the state are hereby authorized and directed to invest such monies in any general fund or special fund of the political subdivision, and any other funds under the control of the political subdivision which they, in their discretion, may determine to be available for investment in any of the following obligations:  (a) Direct United States Treasury obligations, the principal and interest of which are fully guaranteed by the government of the United States.  (b)(i) Bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by federal agencies and provided such obligations are backed by the full faith and credit of the United States of America, which obligations include but are not limited to:  (aa) U.S. Export-Import Bank.  (bb) Farmers Home Administration.  (cc) Federal Financing Bank.  (dd) Federal Housing Administration Debentures.  (ee) General Services Administration.  (ff) Government National Mortgage Association - guaranteed mortgage-backed bonds and guaranteed pass-through obligations.  (gg) U.S. Maritime Administration - guaranteed Title XI financing.  (hh) U.S. Department of Housing and Urban Development.  (ii) Bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by U.S. government instrumentalities, which are federally sponsored, and such obligations include but are not limited to:  (aa) Federal Home Loan Bank System.  (bb) Federal Home Loan Mortgage Corporation.  (cc) Federal National Mortgage Association.  (dd) Student Loan Marketing Association.  (ee) Resolution Funding Corporation.  (iii) Notwithstanding the foregoing list of investments, in no instance shall a political subdivision invest in obligations described in Items (i) and (ii) of this Subparagraph which are collateralized mortgage obligations that have been stripped into interest only or principal only obligations, inverse floaters, or structured notes. For the purposes of this Item "structured notes" shall mean securities of U.S. government agencies, instrumentalities, or government-sponsored enterprises which have been restructured, modified, and/or reissued by private entities.  (c) Direct security repurchase agreements of any federal book entry only securities enumerated in Subparagraphs (a) and (b). "Direct security repurchase agreement" means an agreement under which the political subdivision buys, holds for a specified time, and then sells back those securities and obligations enumerated in Subparagraphs (a) and (b).  (d)(i) Time certificates of deposit of any bank domiciled or having a branch office in the state of Louisiana, savings accounts or shares of savings and loan associations and savings banks, as defined by R.S. 6:703(16) or (17), or share accounts and share certificate accounts of federally or state-chartered credit unions issuing time certificates of deposit. For those funds made available for investment in time certificates of deposit, the rate of interest paid by the banks shall be established by contract between the bank and the political subdivision; however, the interest rate at the time of investment shall be a rate not less than fifty basis points below the prevailing market interest rate on direct obligations of the United States Treasury with a similar length of maturity.  (ii) Notwithstanding any other provision of law to the contrary, the Southeast Water District Number Two of Vermilion Parish shall be entitled to a rate of interest on funds made available for investment in time certificates of deposits at a rate of not less than fifty basis points below the prevailing market interest rate on direct obligations of the United States Treasury with a similar length of maturity or the prevailing rate of interest on time certificates of deposit that is offered by the bank to its other customers, whichever is greater.  (e) Mutual or trust fund institutions which are registered with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the United States government or its agencies.  (f) Funds invested in accordance with the provisions of R.S. 33:2955(A)(1)(d) shall not exceed at any time the amount insured by the Federal Deposit Insurance Corporation in any one banking institution, or in any one savings and loan association, or National Credit Union Administration, unless the uninsured portion is collateralized by the pledge of securities in the manner provided in R.S. 39:1221.  (g) Guaranteed investment contracts issued by a bank, financial institution, insurance company, or other entity having one of the two highest short-term rating categories of either Standard & Poor's Corporation or Moody's Investors Service, provided that no such investment may be made except in connection with a financing program for political subdivisions which financing program is approved by the State Bond Commission and offered by a public trust having the state as its beneficiary, provided further that no such investment shall be for a term longer than eighteen months, and provided further that any such guaranteed investment contract shall contain a provision providing that in the event the issuer of the guaranteed investment contract is at any time no longer rated in either of the two highest short-term rating categories of Standard & Poor's Corporation or Moody's Investors Service, the investing unit of local government may either be released from the guaranteed investment contract without penalty, or be entitled to require that the guaranteed investment provider collateralize the guaranteed investment contract with any bonds or other obligations which as to principal and interest constitute direct general obligations of, or are unconditionally guaranteed by, the United States of America, including obligations set forth in Subparagraphs (a) and (b) to the extent unconditionally guaranteed by the United States of America.  (h) Investment grade commercial paper issued in the United States, traded in the United States markets, denominated in United States dollars, with a short-term rating of at least A-1 by Standard & Poor's Financial Services LLC or P-1 by Moody's Investor Service, Inc. or the equivalent rating by a Nationally Recognized Statistical Rating Organization (NRSRO).  (i) In a BIDCO, as authorized by R.S. 51:2395.1.  (j) Bonds, debentures, notes, or other evidence of indebtedness issued by the state of Louisiana or any of its political subdivisions provided that all of the following conditions are met:  (i) No political subdivision may purchase its own indebtedness.  (ii) The indebtedness shall have a long-term rating of Baa3 or higher by Moody's Investors Service, a long-term rating of BBB- or higher by Standard & Poor's or a long-term rating of BBB- or higher by Fitch, Inc. or a short-term rating of M1G1 or VM1G1 by Moody's Investors Service, a short-term rating of A-1 or A-1+ by Standard & Poor's, or a short-term rating of F1 or F1+ by Fitch, Inc.  (iii) The indebtedness has a final maturity, mandatory tender, or a continuing optional tender of no more than five years, except that such five-year limitation shall not apply to either of the following:  (aa) Funds held by a trustee, escrow agent, paying agent, or other third party custodian in connection with a bond issue.  (bb) Investment of funds held by either a hospital service district, a governmental 501(c)(3), or a public trust authority.  (k) Bonds, debentures, notes, or other indebtedness issued by a state of the United States of America other than Louisiana or any such state's political subdivisions provided that all of the following conditions are met:  (i) The indebtedness shall have a long-term rating of A3 or higher by Moody's Investors Service, a long-term rating of A- or higher by Standard & Poor's or a long-term rating of A- or higher by Fitch, Inc., or a short-term rating of M1G1 or VM1G1 by Moody's Investors Service, a short-term rating of A-1 or A-1+ by Standard & Poor's, or a short-term rating of F1 or F1+ by Fitch, Inc.  (ii) The indebtedness has a final maturity, mandatory tender, or a continuing optional tender of no more than five years, except that such five-year limitation shall not apply to funds held by a trustee, escrow agent, paying agent, or other third-party custodian in connection with a bond issue nor to investment of funds held by either a hospital service district, a governmental 501(c)(3) organization, or a public trust authority.  (iii) Prior to purchase of any such indebtedness and at all times during which such indebtedness is owned, the purchasing Louisiana political subdivision retains the services of an investment advisor registered with the United States Securities and Exchange Commission; a trust department of an institution that is insured by the Federal Deposit Insurance Corporation, that exercises trust powers in Louisiana, and that has a main office or a bank branch in Louisiana; or a trust company that has offices in Louisiana, that is regulated by the Office of Financial Institutions or the applicable federal agency, and that owes a fiduciary duty to act solely in the best interest of the political subdivision.  (l) Bonds, debentures, notes, or other indebtedness issued by domestic United States corporations provided that all of the following conditions are met:  (i) The indebtedness shall have a long-term rating of Aa3 or higher by Moody's Investors Service, a long-term rating of AA- or higher by Standard & Poor's, or a long-term rating of AA- or higher by Fitch Ratings, Inc.  (ii) The indebtedness has a final maturity, mandatory tender, or a continuing optional tender of no more than five years.  (iii) Prior to purchase of any such indebtedness and at all times during which such indebtedness is owned, the purchasing Louisiana political subdivision retains the services of an investment advisor registered with the United States Securities and Exchange Commission; a trust department of an institution that is insured by the Federal Deposit Insurance Corporation, that exercises trust powers in Louisiana, and that has a main office or a bank branch in Louisiana; or a trust company that has offices in Louisiana, that is regulated by the Office of Financial Institutions or the applicable federal agency, and that owes a fiduciary duty to act solely in the best interest of the political subdivision.  (2) Investment of funds in such mutual or trust fund institutions shall be limited to twenty-five percent of the monies considered available for investment as provided by this Section. In no event shall monies be considered available for investment under the authority of this Section unless and until such funds are determined by the treasurer or chief financial officer of said subdivisions, in the exercise of prudent judgment, to be in excess of the immediate cash requirements of the fund to which the monies are credited. As a criteria in making such a determination, any amount of money exceeding ten thousand dollars which is on demand deposit to the credit of a subdivision, or to the credit of any fund and which is not required to meet an obligation for at least forty-five days, or any amount of money exceeding one hundred thousand dollars which is on demand to the credit of a subdivision or to the credit of any fund and which is not required to meet an obligation for at least fifteen days shall be construed available for investment.  (3) Nothing in this Section shall be construed as to abrogate, impair, or supersede the ability of a subdivision from combining monies from several funds in order to invest such monies at a better rate of return.  B. The interest earned on bonds, notes or certificates, time certificates of deposit, or mutual or trust fund investments, so purchased shall be credited by the respective subdivision to the fund from which the bonds, notes or certificates, time certificates of deposit, or mutual or trust fund investments, were acquired, or it may be applied to the payment of the principal and interest of the outstanding bonded indebtedness of the respective subdivision.  C. At any time that may be deemed advisable the subdivision may cash and liquidate any of the investments authorized herein which are purchased for any particular fund. The proceeds of any such liquidation shall be credited to the fund from which the authorized investments were originally purchased.  D. All political subdivisions of the state, as that term is defined in Article VI, Section 44 of the Constitution of Louisiana, shall develop and adopt an investment policy that details and clarifies investment objectives and the procedures and constraints necessary to reach those objectives. All such investment policies should:  (1) Reflect the mandate to manage public funds prudently.  (2) Place appropriate emphasis on the goals of safety of principal first, liquidity second, and yield third.  (3) Establish internal controls for any derivatives in use to ensure that the risks inherent in derivatives are adequately managed. For the purposes of this Section, the term "derivative" shall be defined to mean any financial instrument created from or whose value depends on the value of one or more underlying assets or indexes of asset value.  E. After August 15, 1995, the investment of monies by a municipality, parish, school board, or other political subdivision of the state in violation of the provision of this Section shall constitute an intentional performance of a duty in an unlawful manner and may be prosecuted pursuant to R.S. 14:134.  Amended by Acts 1968, No. 249, §2; Acts 1982, No. 371, §1; Acts 1987, No. 317, §1; Acts 1988, No. 895, §1, eff. July 21, 1988; Acts 1989, No. 772, §1; Acts 1991, No. 1008, §1; Acts 1992, No. 291, §1, eff. June 12, 1992; Acts 1995, No. 374, §1; Acts 1995, No. 1126, §1, eff. June 29, 1995; Acts 1997, No. 453, §1; Acts 2001, No. 701, §1; Acts 2001, No. 1223, §1; Acts 2007, No. 159, §1; Acts 2009, No. 424, §1; Acts 2010, No. 642, §1; Acts 2012, No. 282, §1; Acts 2014, No. 465, §1; Acts 2015, No. 300, §1; Acts 2015, No. 463, §2; Acts 2018, No. 301, §1, eff. May 15, 2018.