NOTE: §3803 eff. until July 1, 2026, if the const. amend. proposed by Acts 2025, No. 222,
is ratified.
§3803. Investment authority; treasurer
A.Findings and determinations. The state of Louisiana is entitled to receive certain
revenues, hereinafter referred to as the "offshore revenues", from the federal government
pursuant to 43 U.S.C. 1337(g) which offshore revenues are attributable to mineral production
activity or leasing activity on the Outer Continental Shelf, and said offshore revenues will
be deposited into certain dedicated funds established pursuant to the constitution and laws
of the state. It is found and determined that existing laws of the state governing the
investment of public funds do not provide sufficient flexibility to the state or the opportunity
to maximize its retu Free access — add to your briefcase to read the full text and ask questions with AI
NOTE: §3803 eff. until July 1, 2026, if the const. amend. proposed by Acts 2025, No. 222,
is ratified.
§3803. Investment authority; treasurer
A. Findings and determinations. The state of Louisiana is entitled to receive certain
revenues, hereinafter referred to as the "offshore revenues", from the federal government
pursuant to 43 U.S.C. 1337(g) which offshore revenues are attributable to mineral production
activity or leasing activity on the Outer Continental Shelf, and said offshore revenues will
be deposited into certain dedicated funds established pursuant to the constitution and laws
of the state. It is found and determined that existing laws of the state governing the
investment of public funds do not provide sufficient flexibility to the state or the opportunity
to maximize its return on investment of the offshore revenues to be received from the federal
government. It is the desire of the legislature to grant additional authority to the state
treasurer with respect to the investment of offshore revenues so as to permit the investment
of such moneys in certificates of deposit and certain obligations of the United States
government and its agencies as will generate a favorable return to the state and will allow
moneys to be available for use at the time needed.
B. Grant of authority. (1) The state treasurer is hereby authorized and directed to
invest offshore revenues which are deposited into any fund created pursuant to the
constitution or statutes of the state which are determined by the state treasurer to be available
for investment in the following permitted investments:
(a) Time certificates of deposit of state banks organized under the laws of Louisiana,
national banks having their principal offices in the state of Louisiana, savings accounts or
shares of savings and loan associations and savings banks, as defined by R.S. 6:703, or share
accounts and share certificate accounts of federally or state-chartered credit unions. The
funds so invested shall not exceed at any time the amount insured by the Federal Savings and
Loan Insurance Corporation in any one savings and loan association and shall not exceed at
any time the amount insured by the National Credit Union Administration, or other deposit
insurance corporation, in any one credit union, unless the uninsured portion is collateralized
by the pledge of securities in the manner provided by R.S. 49:321.
(b) Direct obligations of the United States government, a United States government
agency, a United States government instrumentality, or a United States government-sponsored enterprise, the timely payment of the principal and interest of which is fully and
explicitly guaranteed by the full faith and credit of the government of the United States of
America, and contained in a list promulgated by the state treasurer.
(c) Direct obligations of a United States government agency, United States
government instrumentality, or United States government-sponsored enterprise, the timely
payment of principal and interest of which is fully guaranteed by the issuing entity, but are
not explicitly guaranteed by the full faith and credit of the government of the United States,
and contained in a list promulgated by the state treasurer.
(d) Stocks of any corporation listed on the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers Automated Quotations
System, or other such stock exchange domiciled in the United States and registered with the
United States Securities and Exchange Commission, provided that the total investment in
such stocks at any one time shall not exceed thirty-five percent of the market value of all
funds held by the treasurer in the Kevin P. Reilly, Sr. Louisiana Education Quality Trust
Fund.
(e)(i) Investment grade commercial paper issued in the United States, traded in the
United States markets, denominated in United States dollars, with a short-term rating of at
least A-1 by Standard & Poor's Financial Services LLC or P-1 by Moody's Investor Service,
Inc. or the equivalent rating by a nationally recognized statistical rating organization.
(ii) Investment grade corporate notes and bonds issued in the United States, traded
in United States markets, denominated in United States dollars, rated Baa or better by
Moody's Investor Service, Inc. or BBB or better by Standard & Poor's Financial Services
LLC, and the trades of which are settled through The Depository Trust & Clearing
Corporation, a national clearinghouse in the United States for the settlement of securities
trades.
(f) Money market funds consisting solely of securities otherwise eligible for
investment by the treasurer pursuant to this Section.
(g) Open end mutual funds, closed end mutual funds, and unit investment trusts
consisting solely of securities otherwise eligible for investment by the state treasurer.
(h) Tax exempt bonds and other taxable governmental bonds. In addition to all other
investment authority related to the Kevin P. Reilly, Sr. Louisiana Education Quality Trust
Fund, the state treasurer may invest in tax exempt bonds as defined in R.S. 49:342(C), and
in taxable bonds issued by any state or a political subdivision or public corporation of any
state, provided that such taxable bonds are rated at the time the investment is made by a
nationally recognized rating agency in one of the three highest rating categories of that rating
agency.
(i) Bonds, debentures, notes, or other similar obligations issued in the United States
market, denominated in United States dollars and are the direct legal obligations of a foreign
nation which the International Monetary Fund lists as an industrial country, for which
investments in and/or business transactions with are not prohibited or restricted by any law,
regulation, or rule of the United States or the state of Louisiana, and for which the full faith
and credit of such nation has been pledged for the payment of principal and interest; provided
that any such security shall be rated at least A- or better by Standard & Poor's Corporation
or A3 or better by Moody's, Inc., or an equivalent investment grade by a securities ratings
organization accepted by the National Association of Insurance Commissioners; and,
provided further that the total investment in such foreign securities at any one time shall not
exceed five percent of the market value of all investments held by the treasurer in the Kevin
P. Reilly, Sr. Louisiana Education Quality Trust Fund, or any other fund or investment of
funds subject to this investment authority.
(j) Any investment managers hired on a contract basis to advise the treasurer
regarding such investments shall be selected by the treasurer, subject to the approval of the
State Bond Commission, in accordance with a request for proposal process using strict
selection criteria based on sound industry principles. The contract, as approved by the State
Bond Commission, shall be on a fee, together with minimum exchange fee, basis or on a
commission basis only. The state treasurer shall adopt and promulgate rules and regulations
for such investments and for the selection of outside investment managers.
(k) Open-end mutual funds, closed-end mutual funds, exchange traded funds, and
unit investment trusts consisting solely of international securities constructed to match or
track the components of a market index provided by globally recognized index providers,
including but not limited to MSCI, FTSE, Dow Jones, Standard & Poor's, Barclays,
Citigroup, or any of their affiliates or successors and assigns; however, the total investment
in any and all such index funds at any one time shall not exceed ten percent of the market
value of all funds held by the treasurer in the Louisiana Education Quality Trust Fund.
Nothing in this Subparagraph shall be construed to allow the state treasurer to invest directly
in the common stock of foreign companies known to do business with nations that support
terrorism.
(2) Investments made under authority of this Section shall mature on such date or
dates determined by the state treasurer in the exercise of prudent judgment as will generate
a favorable return to the state and will allow the monies to be available for use at the time
needed. The state treasurer shall prepare and submit for approval a plan for such investments
to the Board of Regents and the State Board of Elementary and Secondary Education and the
State Bond Commission. The state treasurer shall report annually to the Joint Legislative
Committee on the Budget, the House Committee on Education, and the Senate Committee
on Education on the activity of such investments.
(3) Banks issuing time certificates of deposit under authority of this Section shall pay
interest at a rate not less than the rate determined by the United States Treasury to have been
the average interest rate plus one percent per annum on the last previous sale of treasury bills
with the same length of maturity; provided that if at any time the interest rate so determined
is in excess of the maximum rate banks are permitted to pay on time certificates of deposit
for the same period of time by regulations of the Federal Reserve System or the Federal
Deposit Insurance Corporation, the interest rate shall be the maximum established by those
regulations.
C. Annual report. On or before November first of each year, the state treasurer shall
prepare and submit to the Board of Regents and the Board of Elementary and Secondary
Education for their review a report on the performance of the fund. The state treasurer shall
also submit a copy of the report to the Joint Legislative Committee on the Budget, the House
Committee on Education, and the Senate Committee on Education.
D. Powers. Nothing contained in this Section is or shall be construed as a restriction
or a limitation upon any other powers had and possessed by the state and this Section is
cumulative and in addition to any such powers.
E. Repurchase agreements. (1) In addition to all other investment authority related
to the Kevin P. Reilly, Sr. Louisiana Education Quality Trust Fund, the state treasurer may
enter into direct security repurchase agreements, reverse security repurchase agreements, and
securities lending contracts in order to generate passive income.
(2) For the purposes of this Subsection:
(a) "Direct security repurchase agreement" means an agreement and transaction in
which:
(i) Securities are purchased by the state from a registered securities broker or dealer
for a rate and a guarantee to buy them back from the state.
(ii) The state holds the securities for a specified time.
(iii) The state sells those securities back to the broker or dealer at an agreed upon
price.
(b) "Reverse security repurchase agreements" means an agreement and transaction
in which securities are sold by the state to a registered securities broker or dealer for a rate
and a guarantee to sell them back to the state, the broker or dealer holds the securities for a
specified time, and then the state buys back the securities from the broker or dealer at an
agreed upon price.
(c) "Securities lending contracts" means an agreement and transaction in which
securities are supplied to a registered securities broker or dealer for a rate and secured by a
pledge of collateral with a value equal to or greater than the securities supplied.
NOTE: §3803 eff. July 1, 2026, if the const. amend. proposed by Acts 2025, No. 222, is
ratified.
§3803. Repealed by Acts 2025, No. 385, §5, eff. July 1, 2026.