New Jersey § 18a:20-37

§ 18a:20-37.

a. When authorized by resolution adopted by a majority vote of all its members the

board of education of any school district may use moneys, which may be in hand, for

the purchase of the following types of securities which, if suitable for registry,

may be registered in the name of the school district: (1) Bonds or other obligations of the United States of America or obligations guaranteed

by the United States of America; (2) Government money market mutual funds; (3) Any obligation that a federal agency or a federal instrumentality has issued in

accordance with an act of Congress, which security has a maturity date not greater

than 397 days from the date of purchase, provided that such obligations bear a fixed

rate of interest not dependent on any index or other external factor; (4) Bonds or other obligations of the school district or bonds or other obligations

of the local unit or units within which the school district is located; (5) Bonds or other obligations, having a maturity date of not more than 397 days from

the date of purchase, issued by New Jersey school districts, municipalities, counties,

and entities subject to the “Local Authorities Fiscal Control Law,” P.L.1983, c. 313

( C.40A:5A-1 et seq. ). Other bonds or obligations having a maturity date not more than 397 days from the

date of purchase may be approved by the Division of Investment in the Department of

the Treasury for investment by school districts; (6) Local government investment pools; (7) Deposits with the State of New Jersey Cash Management Fund established pursuant

to section 1 of P.L.1977, c. 281 ( C.52:18A-90.4 ); (8) Agreements for the repurchase of fully collateralized securities, if: (a) the underlying securities are permitted investments pursuant to paragraphs (1)

and (3) of this subsection a. or are bonds or other obligations, having a maturity

date of not more than 397 days from the date of purchase, issued by New Jersey school

districts, municipalities, counties, and entities subject to the requirements of the

“Local Authorities Fiscal Control Law,” P.L.1983, c. 313 ( C.40A:5A-1 et seq. ); (b) the custody of collateral is transferred to a third party; (c) the maturity of the agreement is not more than 30 days; (d) the underlying securities are purchased through a public depository as defined

in section 1 of P.L.1970, c. 236 ( C.17:9-41 ) and for which a master repurchase agreement providing for the custody and security

of collateral is executed ; or (9) Deposit of funds in accordance with the following conditions: (a) the funds are initially invested through a public depository as defined in section

1 of P.L.1970, c. 236 ( C.17:9-41 ) designated by the school district; (b) the designated public depository arranges for the deposit of the funds in deposit

accounts in one or more federally insured banks, savings banks, savings and loan associations,

or credit unions for the account of the school district; (c) 100 percent of the principal and accrued interest of each deposit is insured by

the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance

Fund; (d) the designated public depository acts as custodian for the school district with

respect to those deposits; and (e) on the same date that the school district's funds are deposited pursuant to subparagraph

(b) of this paragraph, the designated public depository receives an amount of deposits

from customers of other financial institutions, wherever located, equal to the amount

of funds initially invested by the school district through the designated public depository . b. Any investment instruments in which the security is not physically held by the

school district shall be covered by a third party custodial agreement which shall

provide for the designation of such investments in the name of the school board and

prevent unauthorized use of such investments. c. Purchase of investment securities shall be executed by the “delivery versus payment”

method to ensure that securities are either received by the school district or a third

party custodian prior to or upon the release of the school district's funds. d. Any investments not purchased and redeemed directly from the issuer, government

money market mutual fund, local government investment pool, or the State of New Jersey

Cash Management Fund, shall be purchased and redeemed through the use of a national

or State bank located within this State or through a broker-dealer which, at the time

of purchase or redemption, has been registered continuously for a period of at least

two years pursuant to section 9 of P.L.1967, c. 93 ( C.49:3-56 ) and has at least $25 million in capital stock (or equivalent capitalization if not

a corporation), surplus reserves for contingencies and undivided profits, or through

a securities dealer who makes primary markets in U.S. Government securities and reports

daily to the Federal Reserve Bank of New York its position in and borrowing on such

U.S. Government securities. e. For the purposes of this section: (1) a “ government money market mutual fund ” means an investment company or investment trust: (a) which is registered with the Securities and Exchange Commission under the “Investment

Company Act of 1940,” 15 U.S.C. s.80a-1 et seq., and operated in accordance with 17 C.F.R. s.270.2a-7 , except that a government money market mutual fund may not impose liquidity fees

or redemption gates regardless of whether permitted to do so under 17 C.F.R. s.270.2a-7 ; (b) the portfolio of which is limited to U.S. Government securities that meet the

definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7 , securities that have been issued by New Jersey school districts, municipalities,

counties, and entities subject to the requirements of the “Local Authorities Fiscal

Control Law,” P.L.1983, c. 313 ( C.40A:5A-1 et seq. ) that meet the definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7 and repurchase agreements that are collateralized by such securities in which direct

investment may be made pursuant to paragraphs (1), (3), and (5) of subsection a. of

this section; and (c) which is rated by a nationally recognized statistical rating organization. (2) a “ local government investment pool ” means an investment pool: (a) which is managed in accordance with generally accepted accounting and financial

reporting principles for local government investment pools established by the Governmental

Accounting Standards Board; (b) which is rated in the highest category by a nationally recognized statistical

rating organization; (c) the portfolio of which is limited to U.S. Government securities that meet the

definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7 , securities that have been issued by New Jersey school districts, municipalities,

counties, and entities subject to the requirements of the “Local Authorities Fiscal

Control Law,” P.L.1983, c. 313 ( C.40A:5A-1 et seq. ) that meet the definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7 and repurchase agreements that are collateralized by such securities in which direct

investment may be made pursuant to paragraphs (1), (3), and (5) of subsection a. of

this section; (d) which is in compliance with such rules as may be adopted pursuant to the “Administrative

Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ) by the Local Finance Board of the Division of Local Government Services in the Department

of Community Affairs, which may promulgate rules providing for disclosure and reporting

requirements, and other provisions deemed necessary by the board to provide for the

safety, liquidity and yield of the investments; (e) which does not permit investments in instruments that: are subject to high price

volatility with changing market conditions; cannot reasonably be expected, at the

time of interest rate adjustment, to have a market value that approximates their par

value; or utilize an index that does not support a stable net asset value; (f) which purchases and redeems investments directly from the issuer, a government

money market mutual fund, or the State of New Jersey Cash Management Fund, or through

the use of a national or State bank located within this State, or through a broker-dealer

which, at the time of purchase or redemption, has been registered continuously for

a period of at least two years pursuant to section 9 of P.L.1967, c. 93 ( C.49:3-56 ) and has at least $25 million in capital stock (or equivalent capitalization if not

a corporation), surplus reserves for contingencies and undivided profits, or through

a securities dealer who makes primary markets in U.S. Government securities and reports

daily to the Federal Reserve Bank of New York its position in and borrowing on such

U.S. Government securities; and (g) which does not impose liquidity fees or redemption gates. f. Investments in, or deposits or purchases of financial instruments made pursuant

to this section shall not be subject to the requirements of the “Public School Contracts

Law,” N.J.S.18A:18A-1 et seq.