AB 34 — Revises provisions governing the investment of money held by the State or certain political subdivisions of the State. (BDR 31-476)

in repurchase  The total dollar amount invested in such mutual funds must not exceed 20 percent of the total dollar amount of the Trust Fund that is invested.

percent of the total dollar amount of the Trust Fund that is [(j)] (l) Common or preferred stock of a corporation created by or existing under the laws of the United States or of a state, district or territory of the United States, if:

(2)market Thevalue outstandingof sharesnot ofless thethan corporation$50,000,000;orporation have a total market(3) valueThe ofmaximum investment in stock is not lessgreater than $50,000,000;60 percent of the book value of the total investments of the Trust Fund;

(3) The maximum investment in stock is not greater than 60 percent of the book value of the total investments of the Trust Fund;

and - *AB34_R1* – 5 – (5) Except for investments made pursuant to paragraph [(m),] (o), the total amount of shares owned by the Trust Fund is not greater than 5 percent of the outstanding stock of a single corporation.

[(l)]- (n)80th ASession pooled(2019) or– commingled5 real– estate fund or a real estate security that is managed by a corporate trustee or by an investment advisory firm that is registered with the Securities and Exchange Commission, either of which may be retained by the Board as an investment manager.

The State Treasurer shall exercise the standard of care in investing the property of the Trust Fund that a person of prudence, discretion and intelligence would exercise in the management of his or her own affairs, given the prevailing circumstances, not in regard property,to consideringspeculation thebut potentialrather incometo fromthe andpermanent thedisposition probableof the safety of his or her capital.capital.ential income from and the probable 4.

Subject to the terms, conditions, limitations and restrictions set forth in this section, the State Treasurer may sell, assign, transfer or dispose of the property and investments of the Trust Fund upon the approval of a majority of the Board.

The State Treasurer shall acquire each investment for the Trustsuch Fundan atinvestment.ce a price not to exceed the prevailing market value for such8. an investment.

8.

- *AB34_R1* – 6 – 9.

or (c)- Become80th anSession endorser,(2019) surety– 6 – borrowed from the Trust Fund.rety or obligor for money that is borrowed10. from the Trust Fund.

10.

(b) A bond, note or other obligation issued or unconditionally guaranteed by the International Bank for Reconstruction and AmericanDevelopment, Developmentthe BankInternational that:FinanceFinance Corporation or the Inter- (1)American IsDevelopment denominatedBank inthat: United States dollars;

(1) Is denominated in United States dollars;

(c) A bond, note or other obligation publicly issued in the United States by a foreign financial institution, corporation or governmentgovern(1) that:Is denominated in United States dollars;

(1) Is denominated in United States dollars;

- *AB34_R1* – 7 – (4) Is publicly traded;

and (7)- Is80th ratedSession by(2019) a– nationally7 recognized– rating service as “AA” or its equivalent, or better,better,y recognized rating service as  except that investments pursuant to this paragraph may not, in aggregate value, exceed 10 percent of the total par value of the portfolio as determined at the time of purchase.

[(g)] (i) Loans at a rate of interest of not less than 6 percent per annum, secured by mortgage on agricultural lands in this state of not less than three times the value of the amount loaned, exclusive ofofnot encumbrances.provements,perishable improvements, of unexceptional title and free from all [(h)]encumbrances. (j) Money market mutual funds that:

Commission;re[(h)] registered(j) withMoney themarket Securitiesmutual andfunds Exchangethat: (2) Are rated by a nationally recognized rating service as “AAA” or its equivalent;

(1) Are registered with the Securities and Exchange Commission;

(2) Are rated by a nationally recognized rating service as “AAA” or its equivalent;

(1)(1)(I) TheListed stockon ofa thenational corporationstock is:exchange;

(I) Listed on a national stock exchange;

- *AB34_R1*80th Session (2019) – 8 – (3) The maximum investment in stock is not greater than 50 percent of the book value of the total investments of the State Permanent School Fund;

(4) Except for investments made pursuant to paragraph [(k),] (m), the amount of an investment in a single corporation is not greater than 3 percent of the book value of the assets of the State Permanent School Fund;

described[(l)] in(n) NRSThe 355.280.partnershipslimited partnerships or limited-liability companies 3.described in NRS 355.280.

The3. State Treasurer shall not invest any money in the State (m) of subsection 2 unless the State Treasurer obtains a judiciall) or determination that the proposed investment or category of investments will not violate the provisions of Section 9 of Article 8 of the Constitution of the State of Nevada.

The State Treasurer shall not invest any money in the State Permanent School Fund pursuant to paragraph [(i), (j) or] (k) , (l) or determination that the proposed investment or category ofjudicial investments will not violate the provisions of Section 9 of Article 8 of the Constitution of the State of Nevada.

- *AB34_R1*80th Session (2019) – 9 – Sec.

In addition to other investments provided for by a specific statute, the following bonds and other securities are proper and lawful investments of any of the money of this state, of its variousInsurance departments,Fund:ents, institutions and agencies, and of the State Insurance(a) Fund:Bonds and certificates of the United States;

(a) Bonds and certificates of the United States;

(g) General obligation bonds of irrigation districts and drainage districts in this state which are liens upon the property within those districts, if the value of the property is found by the board or those commission making the investments to render the bonds financially soun(h)sound Bondsover ofall schoolother districtsobligations withinof thisthe state;districts;

(l)- Farm80th loanSession bonds,(2019) consolidated– farm10 loan– bonds, debentures, consolidated debentures and other obligations issued by federal land - *AB34_R1* – 10 – banks and federal intermediate credit banks under the authority of the Federal Farm Loan Act, formerly 12 U.S.C.

(n) Bankers’ acceptances of the kind and maturities made eligible by law for rediscount with Federal Reserve banks or trust companies which are members of the Federal Reserve System,System,or trust except that acceptances may not exceed 180 days’ maturity, and may not, in aggregate value, exceed 20 percent of the total par value of the portfolio as determined [on] at the [date] time of purchase;

and “A-1,”(2) “P-1”Is orrated itsby equivalent,a ornationally better,zedrecognized rating service as “A-1,” “P-1” or its equivalent, or better,  except that investments pursuant to this paragraph may not, in aggregate value, exceed [20] 25 percent of the total par value of the portfolio as determined [on] at the [date] time of purchase .

[, and if] If the rating of an obligation is reduced to a level that does not meet the requirements of this paragraph, [it must be sold as soon asasnot meet possible;] the State Treasurer shall take such action as he or she deems appropriate to preserve the principal value and integrity of the portfolio as a whole and report to the State Board of Finance any action taken by the State Treasurer pursuant to this paragraph;

(p) Notes, bonds and other unconditional obligations for the payment of money, except certificates of deposit that do not qualify pursuant to paragraph (m), issued by corporations organized and operating- in80th theSession United(2019) States– or11 by– depository institutions licensed by the United States or any state and operating in the United StatesStatesd that:

- *AB34_R1* – 11 – (2) At the time of purchase have a remaining term to maturity of not more than 5 years;

If the rating of an obligation is reduced to a level that does not meet the requirements of this paragraph, [it must be sold as soon as possible;] the State Treasurer shall take such action as he or she deems appropriate to preserve the principal value and integrity of the portfolio as a whole and report to the State Board of Finance any action taken by the State Treasurer pursuant to this paragraph;par(q) A bond, note or other obligation issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, the International Finance Corporation or the Inter- American Development Bank that:

(q) A bond, note or other obligation issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, the International Finance Corporation or the Inter- American Development Bank that:

and (4) Is rated by a nationally recognized rating service as “AA” or its equivalent, or better,  except that investments pursuant to this paragraph may not, in aggregate value, exceed 15 percent of the total par value of the por(r)portfolio Aas bond,determined noteat or other obligation publicly issued in the Unitedtime Statesof bypurchase; a foreign financial institution, corporation or government that:

(1)(r) A bond, note or other obligation publicly issued in the United States by a foreign financial institution, corporation or govern(1) Is denominated in United States dollars;

and (7)- Is80th ratedSession by(2019) a– nationally12 recognized– rating service as “AA” or its equivalent, or better,better,y recognized rating service as  except that investment pursuant to this paragraph may not, in aggregate value, exceed 10 percent of the total par value of the portfolio as determined at the time of purchase;

- *AB34_R1* – 12 – (1) Are registered with the Securities and Exchange Commission;

2.money of the State and the State Insurance Fund for the purchase or sale of securities which are negotiable and of the types listed in subsection 1 if made in accordance with the following conditions:

Repurchase agreements are proper and lawful investments of money of the State and the State Insurance Fund for the purchase or sale of securities which are negotiable and of the types listed in subsection 1 if made in accordance with the following conditions:

and (3) Have executed a written master repurchase agreement in a form satisfactory to the State Treasurer and the State Board of Finance pursuant to which all repurchase agreements are enteredofentered into.

The master repurchase agreement must require the prompt writtendelivery confirmationsto ofthe allState transactionsTreasurer conductedand thereunder,the andappointed custodian of must be developed giving consideration to the Federal BankruptcyBankruptcyand Act, 11 U.S.C.

- 80th Session (2019) – 13 – (2) The State must enter into a written contract with the custodian appointed pursuant to subparagraph (1) which requires the custodian to:

(I) Disburse cash for repurchase agreements only upon receipt ofof(II) Notify the underlyingState securities;when the securities are marked to the market if the required margin on the agreement is not maintained;

(II) Notify the State when the securities are marked to the market if the required margin on the agreement is not maintained;

and - *AB34_R1* – 13 – (IV) Report periodically to the State concerning the market value of the securities;

(3) The market value of the purchased securities must exceed 102 percent of the repurchase price to be paid by the counterparty and the value of the purchased securities must be marked to the market weekly;

and (3) In full compliance with all applicable capital requirements.req(b) “Repurchase agreement” means a purchase of securities by the State or State Insurance Fund from a counterparty which commits to repurchase those securities or securities of the same issuer, description, issue date and maturity on or before a specified date for a specified price.

(b)4. “Repurchase agreement” means a purchase of securities by the State or State Insurance Fund from a counterparty which commits to repurchase those securities or securities of the same issuer, description, issue date and maturity on or before a specified dat4.forNo money of this state may be invested pursuant to a reverse-repurchase agreement, except money invested pursuant to chaSec.

4.6No oNRSmoney 355.170of isthis herebystate amendedmay be invested pursuant to reada asreverse-repurchase follows:agreement, except money invested pursuant to chapter 286 of NRS.

Sec.

4.

NRS 355.170 is hereby amended to read as follows:

(a)- Bonds80th andSession debentures(2019) of– the14 United– States, the maturity dates of which do not extend more than 10 years after the date of purchase.

and - *AB34_R1* – 14 – (4) Is rated by a nationally recognized rating service as “AA” or its equivalent, or better,  except that investments pursuant to this paragraph may not, in aggregate value, exceed 15 percent of the total par value of the portfolio as determined at the time of purchase.

(c) A bond, note or other obligation publicly issued in the United States by a foreign financial institution, corporation or government that:

a foreign financial institution, corporation or (1) Is denominated in United States dollars;

(d)consolidated Farmdebentures loanand bonds,other consolidatedobligations farmissued loanby bonds,federal debentures,land banks and federal intermediate credit banks under the authority ofndof the Federal Farm Loan Act, formerly 12 U.S.C.

§§ 636 to 1012, inclusive, and §§ 1021 to 1129, inclusive, and the Farm Credit Act of 1971, 12 U.S.C.

§§ 2001 to 2259, inclusive, and bonds,reditbonds, Act debentures, consolidated debentures and other obligations issued by banks for cooperatives under the authority of the Farm Credit Act of 1933, formerly 12 U.S.C.

[(c)]- (e)80th BillsSession and(2019) notes– of15 the– United States Treasury, the maturity date of which is not more than 10 years after the date of purchase.

- *AB34_R1* – 15 – [(g)] (i) Nonnegotiable certificates of deposit issued by insured commercial banks, insured credit unions, insured savings and loan associations or insured savings banks, except certificates that are not within the limits of insurance provided by an instrumentality of the United States, unless those certificates are collateralized in the same manner as is required for uninsured deposits by a county treasurer same pursuant to NRS 356.133.

Purchases of bankers’ acceptances may not exceed 20 percent of the money available to a local government for investment as determined [on] at the [date] time of purchase.

[(j(1)[(j)] If:Obligations(l) Obligations of state and local governments:

(I)(1) TheIf: interest on the obligation is exempt from gross income fo(II) The obligation has been rated “A” or higher by one or more nationally recognized bond credit rating agencies;

or(I) (2)The Ifinterest on the obligation is securedexempt byfrom thegross proceedsincome thatfor arefederal paidincome into the tax incrementpurposes; account of a tax increment area created by a municipality pursuant to NRS 278C.220.

and (II) The obligation has been rated “A” or higher by one or more nationally recognized bond credit rating agencies;

or - 80th Session (2019) – 16 – into the tax increment account of a tax increment area created by ad municipality pursuant to NRS 278C.220.

and [(3)] (2) Is rated by a nationally recognized rating service as “A-1,” “P-1” or its equivalent, or better,  except that investments pursuant to this paragraph may not, in aggregate value, exceed [20] 25 percent of the total par value of the portfolio as determined [on] at the [date] time of purchase, and [if] not more than 5 percent of the total par value of the portfolio may - *AB34_R1* – 16 – be invested in commercial paper issued by any one corporation or depositorylevel institution.that does not meet the requirements of this paragraph, [it musta be sold as soon as possible.

If the rating of an obligation is reduced to a level that does not meet the requirements of this paragraph, [it must be sold as soon as possible.

(1) Are registered with the Securities and Exchange Commission;Commis(2) Are rated by a nationally recognized rating service as “AAA” or its equivalent;

(2) Are rated by a nationally recognized rating service as “AAA” or its equivalent;

(II) Master notes, bank notes or other short-term commercial paper rated by a nationally recognized rating service as “A-1,” “P-1” or its equivalent, or better, issued by a corporation institutionorganized licensedand byoperating in the United States or anyby statea anddepository operating- in80th Session (2019) – 17 – the United States;

orby the United States or any state and operating in (III) Repurchase agreements that are fully collateralized by the obligations described in sub-subparagraphs (I) and (II).

(2) The governing body of the local government has determined to have adequate capitalization and earnings and appropriateapprop(3) assetsHave executed a written master repurchase agreement in a form satisfactory to bethe highlygoverning creditworthy;body of the local government pursuant to which all repurchase agreements are entered into.

and - *AB34_R1* – 17 – (3) Have executed a written master repurchase agreement in a form satisfactory to the governing body of the local government pursuant to which all repurchase agreements are entered into.

(2) The governing body of the local government must enter a writtensubparagraph contract(1) withwhich requires the custodian appointedto:suant pursuant to subparagraph(I) (1)Disburse whichcash requiresfor repurchase agreements only upon receipt of the custodianunderlying to:securities;

(I) Disburse cash for repurchase agreements only upon receipt of the underlying securities;

(III) Hold the securities separate from the assets of the custodian(IV)custodian; Report periodically to the governing body of the local government concerning the market value of the securities;

102and percent- of80th theSession repurchase(2019) price– to18 be– paidlocal bygovernment theconcerning counterparty and the market value of the purchasedsecurities; securities must be marked to the market weekly;

(3) The market value of the purchased securities must exceed percent of the repurchase price to be paid by the counterparty and the value of the purchased securities must be marked to the market weekly;

4.determined that there is available money in any fund or funds for the purchase of bonds as set out in subsection 1 or 2, those purchases may be made and the bonds paid for out of any one or more of the funds, but the bonds must be credited to the funds in the amounts purchased, and the money received from the redemption of the bonds, as and when redeemed, must go back into the fund or funds from which the purchase money was taken originally.

When the governing body of the local government has determined that there is available money in any fund or funds for the purchase of bonds as set out in subsection 1 or 2, those purchases may be made and the bonds paid for out of any one or more of the - *AB34_R1* – 18 – funds, but the bonds must be credited to the funds in the amounts purchased, and the money received from the redemption of the bonds, as and when redeemed, must go back into the fund or funds from which the purchase money was taken originally.

The governing body of a local government may invest any money apportioned into funds and not invested pursuant to subsection 3 and any money not apportioned into funds in bills and notes of the United States Treasury, the maturity date of which is notmust morebe thanconsidered 1as yearcash afterfor accounting purposes, and all thements interest earned on them must be credited to the dategeneral fund of investment.the local government.

These investments must be considered as cash for accounting purposes, and all the interest earned on them must be credited to the general fund of the local government.

- 80th Session (2019) – 19 – (a) “Counterparty” means a bank organized and operating or licensed to operate in the United States pursuant to federal or state law or(1)or Aa registeredsecurities broker-dealer;dealer which is:

(2)(1) DesignatedA byregistered thebroker-dealer; Federal Reserve Bank of New York as a “pri(3) Indeafullincomplianceatewithverallntapplicables;capital requirements.

a “primary” dealer in United States government securities;

ands (3) In full compliance with all applicable capital requirements.

- *AB34_R1* – 19 – (a) Notes, bonds and other unconditional obligations for the payment of money issued by corporations organized and operating in the United States that:

(2) At the time of purchase have a remaining term to maturitymaturi(3) ofAre norated moreby thana 5nationally years;recognized rating service as “A” or its equivalent, or better.

and (3) Are rated by a nationally recognized rating service as “A” or its equivalent, or better.

(a) Such investments must not, in aggregate value, exceed [20] 25 percent of the total par value of the portfolio as determined [on] at the [date] time of purchase;

and - 80th Session (2019) – 20 – (c) If the rating of an obligation is reduced to a level that does not meet the requirements of that paragraph, the [obligation] investment adviser must , [be sold] as soon as possible [.] , report governmentthe thatreduction purchasedin the investment.ingrating to the governing body of the local 3.government that purchased the investment.

3.

(a)(1)(a) BoardApply ofto countya: commissioners of a county whose population is less than 100,000;

(1) Board of county commissioners of a county whose population is less than 100,000;

[or] (3)is Governingless bodythan of150,000 [,] ;of an incorporated city whose population (4) Governing body of a local government not specified in subparagraph (1), (2) or (3) if the population subject to the jurisdiction of the governing body or served by the governing body is less than 150,000100,000; [,] ;

(4) Governing body of a local government not specified in subparagraph (1), (2) or (3) if the population subject to the jurisdiction of the governing body or served by the governing body is less than 100,000;

- *AB34_R1* – 20 – (b) Authorize the investment of money administered pursuant to a contract, debenture agreement or grant in a manner not authorized by the terms of the contract, agreement or grant.

As used in this section, “local government” has the meaSec.meaning ascribed to it in NRS 354.474.

6.criNRSSec. 355.176 is hereby amended to read as follows:

6.

NRS 355.176 is hereby amended to read as follows:

H~~~~~ 19 - *AB34_R1*80th Session (2019)