Sec. 7-400. Investment of funds. - Connecticut Statutes

      Sec. 7-400. Investment of funds. The treasurer of any municipality, as defined in section 7-359, upon approval by the budget-making authority, as defined in said section, of any metropolitan district, of any regional school district, of any district as defined in section 7-324, and of any other municipal corporation or authority authorized to issue bonds, notes or other obligations under the provisions of the general statutes or any special act may invest the proceeds received from the sale of bonds, notes or other obligations, or other funds, including the general fund, as hereinafter provided:

      (1) In (A) the obligations of the United States of America, including the joint and several obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Savings and Loan Insurance Corporation, obligations of the United States Postal Service, all the federal home loan banks, all the federal land banks, all the federal intermediate credit banks, the Central Bank for Cooperatives, The Tennessee Valley Authority, or any other agency of the United States government, or (B) shares or other interests in any custodial arrangement, pool or no-load, open-end management-type investment company or investment trust registered or exempt under the Investment Company Act of 1940, 15 USC Section 80a-1 et seq. as from time to time amended, provided (i) the portfolio of such custodial arrangement, pool, investment company or investment trust is limited to obligations described in subparagraph (A) of this subdivision and repurchase agreements fully collateralized by any such obligations; (ii) such custodial arrangement, pool, investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; (iii) such custodial arrangement or pool is managed to maintain its shares at a constant net asset value or such investment company or investment trust is rated within one of the top two credit rating categories and, for any investment company or investment trust not managed to maintain its shares at a constant net asset value, within one of the top two risk rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner; and (iv) the municipal corporation or authority only purchases and redeems shares or other interests in such investment company or investment trust through the use of, or the custodian of such custodial arrangement or pool is, a bank, as defined in section 36a-2, or an out-of-state bank, as defined in said section, having one or more branches in this state.

      (2) In the obligations of any state of the United States or of any political subdivision, authority or agency thereof, provided that at the time of investment such obligations are rated within one of the top two rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner.

      (3) In the obligations of the state of Connecticut, or any regional school district, town, city, borough or metropolitan district in the state of Connecticut, provided that at the time of investment the obligations of such government entity are rated within one of the top three rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner.

      (1949, 1951, S. 368d; P.A. 83-442; P.A. 86-350, S. 12, 28; P.A. 87-9, S. 2, 3; P.A. 89-211, S. 11; P.A. 90-317, S. 5, 8; P.A. 93-255; 93-435, S. 60, 95; P.A. 94-190, S. 1; P.A. 95-282, S. 10, 11; P.A. 96-244, S. 38, 63; P.A. 01-195, S. 108, 181; P.A. 03-84, S. 6.)

      History: P.A. 83-442 allowed for investment in indirect federal government obligations; P.A. 86-350 made a variety of changes for purposes of clarification, updating the statutes to conform to current financial practices and to conform to anticipated changes in federal tax policy; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 89-211 clarified references to the Internal Revenue Code of 1986; P.A. 90-317 amended Subdivs. (2) and (3) to remove the requirement that fund be invested in only those governmental obligations which are exempt from federal taxation; P.A. 93-255 amended Subdiv. (1) by adding Subpara. (B) providing for investment in shares or other interests in any custodial arrangement, pool or no-load, open-end management-type investment company or investment trust and designated existing provision of Subdiv. (1) as Subpara. (A); P.A. 93-435 made technical changes in Subdiv. (1), effective June 28, 1993; P.A. 94-190 deleted "investment company or investment trust" after pool in Subdiv. (1)(B)(iii) and inserted language re the requirement of a nationally recognized top rating for investment companies or investment trusts; P.A. 95-282 amended Subdiv. (1)(B)(iii) to require that the investment company or investment trust is rated within one of the top two "credit" rating categories "and, for any investment company or investment trust not managed to maintain its shares at a constant net asset value, within one of the top two risk rating categories" and made technical changes to Subdiv. (1)(B)(iv), effective July 1, 1995; P.A. 96-244 revised effective date section of P.A. 95-282 but without affecting this section; P.A. 01-195 made a technical change in Subdiv. (2), effective July 11, 2001; P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner", effective June 3, 2003.