Pennsylvania Act 1929-315 — INVESTMENT OF STATE FUNDS

Act text

INVESTMENT OF STATE FUNDS
                 Act of Apr. 25, 1929, P.L. 723, No. 315              Cl. 72
                                  AN ACT

     Regulating the investment of funds by administrative
        departments, boards, commissions, and officers of the State
        Government.

        Section 1.  Be it enacted, &c., That any administrative
     department, board, commission, or officer of the State
     Government, authorized by law to make investments of funds in
     the custody or under the control of such department, board,
     commission, or officer, excepting only the moneys in the State
     Sinking Fund, may lawfully invest such funds in any of the
     following securities:
        (1)  United States obligations of the United States or the
     United States treasury or those for the payment of which the
     faith and credit of the United States is pledged, including
     obligations of the District of Columbia;
        (2)  Pennsylvania obligations of the Commonwealth of
     Pennsylvania or those for the payment of which the faith and
     credit of the Commonwealth is pledged;
        (3)  State and local government obligations of any
     commonwealth or state of the United States or any county, city,
     borough, town, township, school district, institution district,
     or other political subdivision having the power to levy taxes of
     any such commonwealth or state: Provided, That the faith and
     credit of such commonwealth, state or political subdivision
     thereof is pledged for the payment of said obligations: And
     provided further, That at the date of the investment in such
     obligations, such commonwealth, state or political subdivision
     is not in default in the payment of any part of the principal or
     interest owing by it upon any part of its funded indebtedness;
        (4)  National housing administration obligations issued
     pursuant to any housing act of the United States heretofore or
     hereafter enacted, but only if fully and unconditionally
     guaranteed as to principal and interest by the United States;
        (5)  General State Authority and other State Authorities.
     Obligations issued by the General State Authority and other
     authorities created by the General Assembly of the Commonwealth
     of Pennsylvania for the payment of which the faith and credit of
     the authority is pledged;
        (6)  Housing Authorities. Obligations of any Pennsylvania
     housing authority issued pursuant to the laws of the
     Commonwealth relating to the creation or operation of housing
     authorities;
        (7)  Redevelopment Authorities. Obligations of any
     redevelopment authority issued pursuant to the laws of the
     Commonwealth relating to the creation or operation of
     redevelopment authorities;
        (8)  Municipality Authorities.
        (i)  Obligations of any Pennsylvania municipality authority
     other than obligations issued for school purposes, as
     hereinafter provided, issued pursuant to the laws of the
     Commonwealth relating to the creation or operation of
     municipality authorities, if the obligations are not in default
     in the payment of the principal or interest owning by it upon
     any part of its funded debt, and if, for the period of five
     fiscal years next preceding the date of acquisition, the income
     of such authority available for fixed charges has averaged not
     less than one and one-fifth times its average annual fixed
     charges of such obligations over the life of such obligations.
     As used in this clause, the term "income available for fixed
     charges" shall mean income after deducting operating and
     maintenance expenses, and, unless the obligations are payable in
     serial annual maturities or are supported by annual sinking fund
     payments, depreciation, but excluding extraordinary non-
     recurring items of income or expenses, and the term "fixed
     charges" shall include principal, both maturity and sinking
     fund, and interest on bonded debt. In computing such income
     available for fixed charges for the purposes of this section,
     the income so available of any corporation acquired by any
     municipality authority may be included, such income to be
     calculated as though such corporation had been operated by a
     municipality authority and an equivalent amount of bonded debt
     were outstanding. The eligibility for investment purposes of
     obligations of each project of a municipality authority shall be
     separately considered hereunder; and
        (ii)  Obligations of any Pennsylvania municipality authority
     issued pursuant to the laws of the Commonwealth relating to the
     creation or operation of municipality authorities for the
     purposes of acquiring, holding, constructing, improving or
     operating public school buildings and other school projects
     acquired, constructed or improved for public school purposes, if
     the obligations are not in default, and if the said school
     buildings or school project has been leased to a school district
     or school districts under an agreement of lease by the terms of
     which the lessee school district or districts is or are
     obligated to pay to the authority regular annual net rentals
     available for fixed charges in an amount that will average not
     less than one and one-fifth times the authority's average annual
     fixed charges of such obligations over the life of such
     obligation. The term "fixed charges" shall include principal and
     interest on bonded debt;
        (9)  Delaware River Joint Commission. Obligations of the
     Delaware River Joint Commission issued pursuant to the act,
     approved the twelfth day of June, one thousand nine hundred
     thirty-one (Pamphlet Laws 575), and its amendments and
     supplements heretofore or hereafter enacted;
        (10)  Delaware River Joint Toll Bridge Commission.
     Obligations of the Delaware River Joint Toll Bridge Commission
     issued pursuant to the act, approved the twenty-fifth day of
     June, one thousand nine hundred thirty-one (Pamphlet Laws 1352),
     and its amendments and supplements heretofore or hereafter
     enacted;
        (11)  Delaware Tunnel Board. Obligations issued by or with
     the approval of the Delaware Tunnel Board pursuant to the act,
     approved the eighth day of July, one thousand nine hundred
     forty-seven (Pamphlet Laws 1452), and its amendments and
     supplements heretofore or hereafter enacted;
        (12)  Pennsylvania Turnpike Commission. All revenue bonds,
     notes or other obligations of the Commonwealth payable solely
     from revenues or other funds of the Pennsylvania Turnpike
     Commission and issued by the Pennsylvania Turnpike Commission
     pursuant to the laws of the Commonwealth;
        (13)  Corporate Bonds. Any fixed interest-bearing obligation,
     including bonds, notes, debentures and equipment obligations,
     including equipment trust certificates, conditional sale
     agreements or assignments of conditional sale agreements and
     participations therein issued, guaranteed or assumed by a
     corporation organized under the laws of the United States or any
     commonwealth or state thereof, or the District of Columbia,
     shall be an authorized investment, if--
        (i)  Purchased in the exercise of that degree of judgment and
     care under the circumstances then prevailing which men of
     prudence, discretion and intelligence exercise in the management
     of their own affairs, not in regard to speculation but in regard
     to the permanent disposition of their funds, considering the
     probable income to be derived therefrom as well as the probable
     safety of their capital;
        (ii)  Either the issuing corporation or a guaranteeing or
     assuming corporation has earned a net profit in eight of the
     preceding ten fiscal years, as reflected in its statements; and
        (iii)  Either the issuing corporation or an assuming
     corporation has not defaulted in the payment of principal or
     interest on any of its outstanding funded indebtedness during
     the preceding ten fiscal years.
        When a corporation has acquired a substantial part of its
     property within ten years immediately preceding such investment
     by consolidation or merger or by the purchase of a substantial
     part of the property of any other corporation or corporations,
     the earnings of the predecessor or constituent corporations
     shall be consolidated so as to ascertain whether the
     requirements of this section have been satisfied.
        "Corporation," as used in this clause, shall include a
     voluntary association, a joint-stock association or company, a
     business trust, a Massachusetts trust, a common-law trust, and
     any other organization organized and existing for any lawful
     purpose and which, like a corporation, continues to exist
     notwithstanding changes in the personnel of its members or
     participants, and conducts its affairs through a committee, a
     board, or some other group acting in a representative capacity;
     and
        ((13) amended Aug. 28, 1959, P.L.766, No.272)
        (14)  Other First Mortgages and Bonds or Other Obligations.
     Mortgages on or bonds of individuals secured by mortgages on
     Pennsylvania real estate and also mortgages or bonds of
     individuals or corporations secured by insurance of the Veterans
     Administration under the provisions of the Servicemen's
     Readjustment Act of one thousand nine hundred forty-four, as
     amended, and the Federal Housing Administration under the
     provisions of the Housing Administration Act, approved the
     twenty-seventh day of June, one thousand nine hundred thirty-
     four, as amended, and also bonds or other obligations in
     connection with which the obligor gives one or more mortgages on
     Pennsylvania real estate to indemnify the Farmers Home
     Administration, United States Department of Agriculture, the
     insurer of the obligations pursuant to the Bankhead-Jones Farm
     Tenant Act of July twenty-second, one thousand nine hundred
     thirty-seven (50 Stat. 522), and its amendments and supplements
     heretofore or hereafter enacted, or pursuant to the act of
     August twenty-eight, one thousand nine hundred thirty-seven (50
     Stat. 869), and its amendments and supplements heretofore or
     hereafter enacted. ((14) amended Sept. 17, 1959, P.L.917,
     No.364)
        (15)  Bonds, notes or other obligations issued, assumed or
     guaranteed by the International Bank for Reconstruction and
     Development, which contain an unconditional promise to pay by
     the International Bank for Reconstruction and Development or an
     unconditional guarantee by the International Bank for
     Reconstruction and Development of the payment of the interest
     thereon regularly, and the principal thereof on or before a
     specified date, in lawful currency of the United States. Not
     more than two per cent of the funds in the custody or under the
     control of the department, board, commission, or officer, shall
     be invested in such bonds, notes or obligations. The principal
     office of the obligor shall be located within the United States
     at the time the investment is made. ((15) added Dec. 22, 1955,
     P.L.892, No.73)
        (16)  Any fixed interest bearing obligation, including bonds,
     notes and debentures, secured by mortgages or deeds of trust on
     improved real estate, which shall constitute a first lien on
     such real estate in fee simple, located within the United
     States, its territories or possessions, and further secured by
     the perfected assignment of all rentals and other moneys due
     under leases to, or guaranteed by, corporations that satisfy the
     requirements for corporations established by clause 13 hereof,
     or to the United States: Provided further, That such
     corporations or the United States have accepted occupancy under
     the terms of such leases and the rentals and other moneys
     payable thereunder by such corporations or by the United States
     are equal to or exceed the sums payable under such fixed
     interest bearing obligation and are adequate to service the
     obligation and to pay the principal obligation in full by its
     maturity. ((16) added June 14, 1961, P.L.347, No.190)
        (17)  Bonds, notes or other obligations issued, assumed or
     guaranteed by the Inter-American Development Bank which contain
     an unconditional promise to pay by the Inter-American
     Development Bank or an unconditional guarantee by the Inter-
     American Development Bank of the payment of the interest thereon
     regularly and the principal thereof on or before a specified
     date in lawful currency of the United States. Not more than two
     percent of the funds in the custody or under the control of the
     department, board, commission, or officer shall be invested in
     such bonds, notes or obligations. The principal office of the
     obligor shall be located within the United States at the time
     the investment is made. ((17) added Nov. 30, 1967, P.L.642,
     No.297)
        (18)  Short term discount notes of the Federal National
     Mortgage Association. ((18) added Nov. 30, 1967, P.L.642,
     No.297)
        (1 amended Aug. 26, 1953, P.L.1459, No.426)
        Section 2.  The Board of Finance and Revenue may invest the
     moneys in the State Sinking Fund in and only in bonds of the
     United States or of this State.