{"data":{"id":"us-ky/krs-66.480","jurisdiction":"us-ky","citation":"KRS 66.480","heading":"Investment of public funds -- Limitations -- Written investment policy --","body":"Duties of state local debt officer -- Investment pool -- Rating agency.\n(1) The governing body of a city, county, urban -county, charter county, school district\n(provided that its general procedure for action is approved by the Kentucky Board\nof Education), or other local governmental unit or political subdivision, may invest\nand reinvest money subject to its control and jurisdiction in:\n(a) Obligations of the United  States and of its agencies and instrumentalities,\nincluding obligations subject to repurchase agreements, if delivery of these\nobligations subject to repurchase agreements is taken either directly or through\nan authorized custodian. These investments may be accomplished through\nrepurchase agreements reached with sources including but not limited to\nnational or state banks chartered in Kentucky;\n(b) Obligations and contracts for future delivery or purchase of obligations backed\nby the full faith and credit of the United States or a United States government\nagency, including but not limited to:\n1. United States Treasury;\n2. Export-Import Bank of the United States;\n3. Farmers Home Administration;\n4. Government National Mortgage Corporation; and\n5. Merchant Marine bonds;\n(c) Obligations of any corporation of the United States government, including but\nnot limited to:\n1. Federal Home Loan Mortgage Corporation;\n2. Federal Farm Credit Banks;\n3. Bank for Cooperatives;\n4. Federal Intermediate Credit Banks;\n5. Federal Land Banks;\n6. Federal Home Loan Banks;\n7. Federal National Mortgage Association; and\n8. Tennessee Valley Authority;\n(d) Certificates of deposit or other interest-bearing accounts issued through a bank\nor savings and loan institution having a physi cal presence in Kentucky which\nare insured by the Federal Deposit Insurance Corporation or similar entity or\nwhich are collateralized, to the extent uninsured, by any obligations, including\nsurety bonds, permitted by KRS 41.240(4);\n(e) Uncollateralized certificates of deposit issued by any bank or savings and loan\ninstitution having a physical presence in Kentucky rated in one (1) of the three\n(3) highest categories by a competent rating agency;\n(f) Bankers' acceptances for banks rated in one (1) of the thr ee (3) highest\ncategories by a competent rating agency;\n(g) Commercial paper rated in the highest category by a competent rating agency;\n(h) Bonds or certificates of indebtedness of this state and of its agencies and\ninstrumentalities;\n(i) Securities issue d by a state or local government, or any instrumentality of\nagency thereof, in the United States, and rated in one (1) of the three (3)\nhighest categories by a competent rating agency;\n(j) Shares of mutual funds and exchange traded funds, each of which sha ll have\nthe following characteristics:\n1. The mutual fund shall be an open -end diversified investment company\nregistered under the Federal Investment Company Act of 1940, as\namended;\n2. The management company of the investment company shall have been\nin operation for at least five (5) years; and\n3. All of the securities in the mutual fund shall be eligible investments\npursuant to this section;\n(k) Individual equity securities if the funds being invested are managed by a\nprofessional investment manager regul ated by a federal regulatory agency.\nThe individual equity securities shall be included within the Standard and\nPoor's 500 Index, and a single sector shall not exceed twenty -five percent\n(25%) of the equity allocation; and\n(l) Individual high -quality corpo rate bonds that are managed by a professional\ninvestment manager that:\n1. Are issued, assumed, or guaranteed by a solvent institution created and\nexisting under the laws of the United States;\n2. Have a standard maturity of no more than ten (10) years; and\n3. Are rated in the three (3) highest rating categories by at least two (2)\ncompetent credit rating agencies.\n(2) The investment authority provided by subsection (1) of this section shall be subject\nto the following limitations:\n(a) The amount of money inv ested at any time by a local government or political\nsubdivision in any one (1) of the categories of investments authorized by\nsubsection (1)(e), (f), (g), (k), and (l) of this section shall not exceed twenty\npercent (20%) of the total amount of money invested by the local government;\n(b) The amount of money invested at any one (1) time by a local government or a\npolitical subdivision in the categories of investments authorized in subsection\n(1)(j), (k), and (l) of this section shall not, aggregately, excee d forty percent\n(40%) of the total money invested unless the investment is in a mutual fund\nconsisting solely of the investments authorized under subsection (1)(a), (b),\n(c), (h), or (i) of this section, or any combination thereof;\n(c) No local government or political subdivision shall purchase any investment\nauthorized by subsection (1) of this section on a margin basis or through the\nuse of any similar leveraging technique; and\n(d) At the time the investment is made, no more than five percent (5%) of the\ntotal amount of money invested by the local governments or political\nsubdivisions shall be invested in any one (1) issuer unless:\n1. The issuer is the United States government or an agency or\ninstrumentality of the United States government, or an entity wh ich has\nits obligations guaranteed by either the United States government or an\nentity, agency, or instrumentality of the United States government;\n2. The money is invested in a certificate of deposit or other interest-bearing\naccounts as authorized by subsection (1)(d) and (e) of this section;\n3. The money is invested in bonds or certificates of indebtedness of this\nstate and its agencies and instrumentalities as authorized in subsection\n(1)(h) of this section; or\n4. The money is invested in securities issued by a state or local\ngovernment, or any instrumentality or agency thereof, in the United\nStates as authorized in subsection (1)(i) of this section.\n(3) The governing body of every local government or political subd ivision that invests\nor reinvests money subject to its control or jurisdiction according to the provisions\nof subsection (1) of this section shall by January 1, 1995, adopt a written investment\npolicy that shall govern the investment of funds by the local government or political\nsubdivision. The written investment policy shall include but shall not be limited to\nthe following:\n(a) A designation of the officer or officers of the local government or political\nsubdivision who are authorized to invest and oversee the investment of funds;\n(b) A list of the permitted types of investments;\n(c) Procedures designed to secure the local government's or political subdivision's\nfinancial interest in the investments;\n(d) Standards for written agreements pursuant to which investments are to be\nmade;\n(e) Procedures for monitoring, control, deposit, and retention of investments and\ncollateral;\n(f) Standards for the diversification of investments, including diversification with\nrespect to the types of investments and firms with whom the local government\nor political subdivision transacts business;\n(g) Standards for the qualification of investment agents which transact business\nwith the local government, such as criteria covering creditworthiness,\nexperience, capitalization, size, and any other factors that make a firm capable\nand qualified to transact business with the local government or political\nsubdivision; and\n(h) Requirements for periodic reporting to the governing body on the status of\ninvested funds.\n(4) Sheriffs, county clerks, county attorneys, and jailers, who for the purposes of this\nsection shall be known as county officials, may invest and reinvest money subject to\ntheir control and jurisdiction, including tax dollars subject to the provisions of KRS\nChapter 134 and 160.510, as permitted by this section.\n(5) The provisions of this section are not intended to impair the power of a county\nofficial, city, county, urban -county, charter county, school district, or other local\ngovernmental unit or political subdivision to hold funds in deposit accounts with\nbanking institutions as otherwise authorized by law.\n(6) The governing body or county official may delegate the investment authority\nprovided by this section to the treasurer or other financial officer or officers charged\nwith custody of the funds of the local government, and the officer or officers shall\nthereafter assume full responsibility for all investment transactions until the\ndelegation of authority terminates or is revoked.\n(7) All county officials shall report t he earnings of any investments at the time of their\nannual reports and settlements with the fiscal courts for excess income of their\noffices.\n(8) The state local debt officer is authorized and directed to assist county officials and\nlocal governments, except school districts, in investing funds that are temporarily in\nexcess of operating needs by:\n(a) Explaining investment opportunities to county officials and local governments\nthrough publication and other appropriate means; and\n(b) Providing technical ass istance in investment of idle funds to county officials\nand local governments that request that assistance.\n(9) (a) The state local debt officer may create an investment pool for local\ngovernments, except school districts, and county officials; and countie s and\ncounty officials and cities may associate to create an investment pool. If\ncounties and county officials and cities create a pool, each group may select a\nmanager to administer their pool and invest the assets. Each county and each\ncounty official an d each city may invest in a pool created pursuant to this\nsubsection. Investments shall be limited to those investment instruments\npermitted by this section. The funds of each local government and county\nofficial shall be properly accounted for, and earnin gs and charges shall be\nassigned to each participant in a uniform manner according to the amount\ninvested. Charges to any local government or county official shall not exceed\none percent (1%) annually on the principal amount invested, and charges on\ninvestments of less than a year's duration shall be prorated. Any investment\npool created pursuant to this subsection shall be audited each year by an\nindependent certified public accountant, or by the Auditor of Public Accounts.\nA copy of the audit report shall  be provided to each local government or\ncounty official participating in the pool. In the case of an audit by an\nindependent certified public accountant, a copy of the audit report shall be\nprovided to the Auditor of Public Accounts, and to the state loca l debt officer.\nThe Auditor of Public Accounts may review the report of the independent\ncertified public accountant. After preliminary review, should discrepancies be\nfound, the Auditor of Public Accounts may make his or her own investigative\nreport or aud it to verify the findings of the independent certified public\naccountant's report.\n(b) If the state local debt officer creates an investment pool, he or she shall\nestablish an account in the Treasury for the pool. He or she shall also establish\na separate trust and agency account for the purpose of covering management\ncosts, and he or she shall deposit management charges in this account. The\nstate local debt officer may promulgate administrative regulations, pursuant to\nKRS Chapter 13A, governing the operat ion of the investment pool, including\nbut not limited to provisions on minimum allowable investments and\ninvestment periods, and method and timing of investments, withdrawals,\npayment of earnings, and assignment of charges.\n(c) Before investing in an inves tment pool created pursuant to this subsection, a\nlocal government or county official shall allow any savings and loan\nassociation or bank in the county, as described in subsection (1)(d) of this\nsection, to bid for the deposits, but the local government o r county official\nshall not be required to seek bids more often than once in each six (6) month\nperiod.\n(10) (a) With the approval of the Kentucky Board of Education, local boards of\neducation, or any of them that desire to do so, may associate to create a n\ninvestment pool. Each local school board which associates itself with other\nlocal school boards for the purpose of creating the investment pool may invest\nits funds in the pool so created and so managed. Investments shall be limited\nto those investment i nstruments permitted by this section. The funds of each\nlocal school board shall be properly accounted for, and earnings and charges\nshall be assigned to each participant in a uniform manner according to the\namount invested. Charges to any local school boa rd shall not exceed one\npercent (1%) annually on the principal amount invested, and charges on\ninvestments of less than a year's duration shall be prorated. Any investment\npool created pursuant to this subsection shall be audited each year by an\nindependent certified public accountant, or by the Auditor of Public Accounts.\nA copy of the audit report shall be provided to each local school board\nparticipating in the pool. In the case of an audit by an independent certified\npublic accountant, a copy of the aud it report shall be provided to the Auditor\nof Public Accounts, and to the Kentucky Board of Education. The Auditor of\nPublic Accounts may review the report of the independent certified public\naccountant. After preliminary review, should discrepancies be fo und, the\nAuditor of Public Accounts may make his or her own investigative report or\naudit to verify the findings of the independent certified public accountant's\nreport.\n(b) The Kentucky Board of Education may promulgate administrative regulations\ngoverning the operation of the investment pool including but not limited to\nprovisions on minimum allowable investments and investment periods, and\nmethods and timing of investments, withdrawals, payment of earnings, and\nassignment of charges.\n(11) As used in this  section, \"competent rating agency\" means a rating agency certified\nor approved by a national entity that engages in such a process. The certification or\napproval process shall include but not necessarily be limited to the following\nelements the subject rating agency must possess:\n(a) A requirement for the rating agency to register and provide an annual updated\nfiling;\n(b) Record retention requirements;\n(c) Financial reporting requirements;\n(d) Policies for the prevention of misuse of material nonpublic information;\n(e) Policies addressing management of conflicts of interest, including prohibited\nconflicts;\n(f) Prohibited acts practices;\n(g) Disclosure requirements;\n(h) Any policies, practices, a nd internal controls required by the national entity;\nand\n(i) Standards of training, experience, and competence for credit analysts.","path":["KRS Chapter 66"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53011","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:24Z","sha256":"2aa8c891012965e1a38255223e8e5a97e2ed3814160af482260d9760b6273b34","source_id":"us-ky","stale":false,"prev":"us-ky/krs-66.470","next":"us-ky/krs-66.510"},"notice":"GroundRules: Original legal text. Not legal advice."}