Pennsylvania Adopts Legislation to Expand Investment Options for Local Governments
New legislation in Pennsylvania expands the permissible financial products in which municipalities, school districts and municipal authorities may invest.
Recently approved Pennsylvania legislation (Act No. 10 of 2016, the “Act”) will allow municipalities, school districts and municipal authorities in Pennsylvania to invest public funds in certain financial products that were not available to many local governments under prior law. Prior to passage of the Act, Pennsylvania statutes restricted the investments available to most schools and local governments to financial products such as United States Treasury obligations and federally insured demand deposits. The Act, which becomes effective on May 24, 2016, expands the types of financial products available to municipalities, school districts and municipal authorities to include items such as negotiable certificates of deposit and commercial paper.
The Act also requires each local government investment trust or local government investment pool that invests public funds to file, within 120 days of completion of its fiscal year, with the Department of Community and Economic Development an annual investment report that covers the previous fiscal year. The report is required to include a list of each investment authorized by the Act that was purchased, including the issuer, date of purchase, maturity date, par-amount, cost, yield to maturity at the time of purchase, broker/dealer from which the investment was purchased and any separately stated fees.
Local governments looking to take advantage of the liberalizing changes made by the Act and investing bond proceeds or other general fund monies in the new types of permitted investments should check the relevant provisions of their bond documents and their other investment policies to ensure that the new financial products are permitted pursuant to the terms of outstanding agreements and/or policies.
For more information on the changes made by the Act, please contact George T. Magnatta (215-972-7126, email@example.com), Chair of the Public Finance Practice or Joshua S. Pasker (215-972-7783, firstname.lastname@example.org), a partner in the Public Finance Practice.