https://minnesotalawyer.com/statutes/chapter-118a/Recent content in Chapter 118A — Depositories; Investing: Sales, Proceeds, Immunity on MinnesotaLawyer.comHugoen-ushttps://minnesotalawyer.com/statutes/chapter-118a/118a.01/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.01/This section defines key terms for the law governing how local governments invest their public funds. ‘Government entity’ includes counties, cities, towns, school districts, and other political subdivisions but not entities governed by chapter 11A or 356A investment rules. ‘Financial institution’ includes banks, credit unions, savings associations, and industrial loan companies. These definitions determine which governmental bodies must follow the investment rules in sections 118A.01 to 118A.06.https://minnesotalawyer.com/statutes/chapter-118a/118a.02/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.02/Each local government must designate one or more financial institutions as official depositories for its funds. The governing body may delegate this authority and investment decisions to the treasurer or chief financial officer. Investments can be sold at any time and any gains or losses go back to the fund from which the money came. Officials who act in good faith within the law are not personally liable for investment losses.https://minnesotalawyer.com/statutes/chapter-118a/118a.03/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.03/When a local government’s bank deposits exceed the amount covered by federal deposit insurance (currently $250,000), the bank must provide collateral security or a surety bond to protect the excess funds. Acceptable collateral includes U.S. Treasury securities, U.S. agency bonds, highly-rated state and local government bonds, and certain other instruments. Collateral must equal at least 110 percent of the uninsured deposits.https://minnesotalawyer.com/statutes/chapter-118a/118a.04/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.04/Local governments may invest idle public funds in a variety of approved instruments: U.S. Treasury and agency securities, investment-grade state and local government bonds, certificates of deposit in insured institutions, certain money market mutual funds, and bankers acceptances. High-risk mortgage-backed securities are excluded. The law is designed to balance safety, liquidity, and reasonable returns on public money.https://minnesotalawyer.com/statutes/chapter-118a/118a.05/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.05/Local governments may enter into repurchase agreements and reverse repurchase agreements using the same types of securities that are eligible for direct investment under section 118A.04. These agreements must be with approved financial institutions, Federal Reserve member banks, primary federal securities dealers, or licensed securities broker-dealers. Repurchase agreements are short-term arrangements where the government buys securities with a promise to sell them back at a set price and date.https://minnesotalawyer.com/statutes/chapter-118a/118a.06/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.06/Local government investments may be held in safekeeping with a Federal Reserve bank, an authorized bank trust department, a primary federal securities dealer, or a qualifying securities broker-dealer with SIPC insurance. The government entity’s ownership of all securities must be confirmed by written acknowledgments that identify each security by issuer, maturity date, interest rate, CUSIP number, or other identifying marks.https://minnesotalawyer.com/statutes/chapter-118a/118a.07/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.07/Cities with more than 200,000 residents, their counties, and the Metropolitan Council may exercise expanded investment authority beyond the standard rules, if they first adopt written investment policies covering use of derivatives, maturity limits, and portfolio management. These larger government entities may invest in a broader range of instruments including qualified mortgage-backed securities, foreign currency instruments, and certain derivatives when following strict written policies.https://minnesotalawyer.com/statutes/chapter-118a/118a.08/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.08/The general investment rules in sections 118A.01 through 118A.06 do not override other specific state laws that govern public fund deposits and investments. Special laws that apply to particular types of public entities or funds remain in effect. This provision prevents the general investment chapter from accidentally undermining more specific deposit and investment requirements elsewhere in state law.https://minnesotalawyer.com/statutes/chapter-118a/118a.09/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.09/Counties and cities with a population over 100,000, or those with an AA or higher bond rating, may invest limited amounts in broad-market U.S. equity index mutual funds as a long-term investment strategy. This authority is capped at a percentage of assets and requires formal policy adoption. The provision allows larger local governments to participate in stock market growth for long-term funds.https://minnesotalawyer.com/statutes/chapter-118a/118a.10/Mon, 01 Jan 0001 00:00:00 +0000https://minnesotalawyer.com/statutes/chapter-118a/118a.10/Governmental self-insurance pools listed in section 471.982 may invest in the broader range of securities authorized for the State Board of Investment under section 11A.24, providing access to a wider investment universe than standard local government investment rules allow. Before using this authority, the governing body must adopt a formal investment policy by resolution affirming that it has the capability and expertise to manage these investments prudently.