EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. NRS 353B.160 is hereby amended to read as follows:

1-2 353B.160 1. The board shall create a comprehensive plan that

1-15 income investments of the trust fund.

2-1 (c) Commercial paper of a corporation created by or existing under the

2-2 laws of the United States or of a state, district or territory of the United

2-3 States or of a wholly owned subsidiary of such a corporation with a rating

2-4 not lower than A-3 or P-3 by a nationally recognized rating service.

2-5 (d) A bond, note, debenture or other valid obligation that is issued by

2-6 the Treasury of the United States.

2-7 (e) A bond, note, debenture or other security that is issued by an agency

2-8 or instrumentality of the United States or that is fully guaranteed by the

2-9 United States in:

2-10 (1) The Federal Farm Credit Bank;

2-11 (2) The Federal National Mortgage Association;

2-12 (3) The Federal Home Loan Bank; [or]

2-13 (4) The Federal Home Loan Mortgage Corporation [.] ; or

2-14 (5) The Government National Mortgage Association.

2-15 (f) A bond, note, debenture or other security in the Student Loan

2-16 Marketing Association, regardless of whether it is guaranteed by the United

2-17 States.

2-18 (g) Collateralized mortgage obligations that are rated "AAA" or its

2-19 equivalent by a nationally recognized rating service.

2-20 (h) Asset-backed securities that are rated "AAA" or its equivalent by a

2-21 nationally recognized rating service.

2-22 (i) Money market mutual funds that:

2-23 (1) Are registered with the Securities and Exchange Commission;

2-24 (2) Are rated by a nationally recognized rating service as "A" or its

2-25 equivalent, or better; and

2-26 (3) Invest only in securities issued by the Federal Government or

2-27 agencies of the Federal Government or in repurchase agreements fully

2-28 collateralized by such securities.

2-29 The total dollar amount invested in such mutual funds must not exceed 20

2-30 percent of the total dollar amount of the trust fund that is invested.

2-31 [(h)] (j) Common or preferred stock of a corporation created by or

2-32 existing under the laws of the United States or of a state, district or territory

2-33 of the United States, if:

2-34 (1) The stock of the corporation is:

2-35 (I) Listed on a national stock exchange; or

2-36 (II) Traded in the over-the-counter market, if the price quotations

2-37 for the over-the-counter stock are quoted by the National Association of

2-38 Securities Dealers Automated Quotations System (NASDAQ);

2-39 (2) The outstanding shares of the corporation have a total market

2-40 value of not less than $50,000,000;

3-1 (3) The maximum investment in stock is not greater than 60 percent

3-2 of the book value of the total investments of the trust fund;

3-3 (4) [The] Except for investments made pursuant to paragraph (m),

3-4 the amount of an investment in a single corporation is not greater than 3

3-5 percent of the book value of the assets of the trust fund; and

3-6 (5) [The] Except for investments made pursuant to paragraph (m),

3-7 the total amount of shares owned by the trust fund is not greater than 5

3-8 percent of the outstanding stock of a single corporation.

3-9 [(i)] (k) A covered call or put option on securities that are traded on one

3-10 or more of the regulated exchanges in the United States.

3-11 [(j)] (l) A pooled or commingled real estate fund or a real estate

3-12 security that is managed by a corporate trustee or by an investment advisory

3-13 firm that is registered with the Securities and Exchange Commission, either

3-14 of which may be retained by the board as an investment manager. The

3-15 shares and the pooled or commingled fund must be held in trust. The total

3-16 book value of an investment made under this paragraph must not at any

3-17 time be greater than 5 percent of the total book value of all investments of

3-18 the trust fund.

3-19 (m) Mutual funds or common trust funds that consist of any

3-20 combination of the investments listed in paragraphs (a) to (l), inclusive.

3-21 3. The state treasurer shall exercise the standard of care in investing the

3-22 property of the fund that a person of prudence, discretion and intelligence

3-23 would exercise in the management of his own affairs, given the prevailing

3-24 circumstances, not in regard to speculation but rather to the permanent

3-25 disposition of the property, considering the potential income from and the

3-26 probable safety of his capital.

3-27 4. Subject to the terms, conditions, limitations and restrictions set forth

3-28 in this section, the state treasurer may sell, assign, transfer or dispose of the

3-29 property and investments of the trust fund upon the approval of a majority

3-30 of the board.

3-31 5. The assets of the trust fund:

3-32 (a) Must be maintained, invested and expended solely for the purposes

3-33 of this chapter; and

3-34 (b) Must not be loaned, transferred or otherwise used for a purpose

3-35 other than the purposes of this chapter.

3-36 6. The state treasurer shall credit any income derived from an

3-37 investment or a gain from a sale or exchange of an investment to the trust

3-38 fund.

3-39 7. The state treasurer shall acquire each investment for the trust fund at

3-40 a price not to exceed the prevailing market value for such an investment.

4-1 8. Each investment in the trust fund must be clearly marked to indicate

4-2 ownership by the trust fund.

4-3 9. The state treasurer, an employee of the state treasurer, or a member

4-4 or employee of the board shall not:

4-5 (a) Have a direct or indirect interest in the income, gain or profit of an

4-6 investment that the state treasurer makes;

4-7 (b) Receive pay or emolument for his services in connection with an

4-8 investment that the state treasurer makes; or

4-9 (c) Become an endorser, surety or obligor for money that is borrowed

4-10 from the trust fund.

4-11 10. If the annual actuarial study performed pursuant to NRS 353B.190

4-12 reveals that there is insufficient money to ensure the actuarial soundness of

4-13 the trust fund, the board shall modify the terms of subsequent prepaid

4-14 tuition contracts.

4-15 11. The terms, conditions, limitations and restrictions regarding

4-16 investments of the trust fund listed in this section apply only at the time an

4-17 investment is originally acquired and must not be construed to require the

4-18 liquidation of an investment at any time.

4-19 Sec. 2. NRS 355.140 is hereby amended to read as follows:

4-20 355.140 1. In addition to other investments provided for by a specific

4-42 other obligations of the districts;

5-1 (h) Bonds of school districts within this state;

5-2 (i) Bonds of any general improvement district whose population is

5-3 200,000 or more and which is situated in two or more counties of this state

5-4 or of any other state, if:

5-5 (1) The bonds are general obligation bonds and constitute a lien upon

5-6 the property within the district which is subject to taxation; and

5-7 (2) That property is of an assessed valuation of not less than five

5-8 times the amount of the bonded indebtedness of the district;

5-9 (j) Medium-term obligations for counties, cities and school districts

5-10 authorized pursuant to chapter 350 of NRS;

5-11 (k) Loans bearing interest at a rate determined by the state board of

5-12 finance when secured by first mortgages on agricultural lands in this state

5-13 of not less than three times the value of the amount loaned, exclusive of

5-14 perishable improvements, and of unexceptional title and free from all

5-15 encumbrances;

5-16 (l) Farm loan bonds, consolidated farm loan bonds, debentures,

5-17 consolidated debentures and other obligations issued by federal land banks

5-18 and federal intermediate credit banks under the authority of the Federal

5-19 Farm Loan Act, formerly 12 U.S.C. §§ 636 to 1012, inclusive, and §§ 1021

5-20 to 1129, inclusive, and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to

5-21 2259, inclusive, and bonds, debentures, consolidated debentures and other

5-22 obligations issued by banks for cooperatives under the authority of the

5-23 Farm Credit Act of 1933, formerly 12 U.S.C. §§ 1131 to 1138e, inclusive,

5-24 and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to 2259, inclusive,

5-25 excluding such money thereof as has been received or which may be

5-26 received hereafter from the Federal Government or received pursuant to

5-27 some federal law which governs the investment thereof;

5-28 (m) Negotiable certificates of deposit issued by commercial banks or

5-29 insured savings and loan associations;

5-30 (n) Bankers’ acceptances of the kind and maturities made eligible by law

5-31 for rediscount with Federal Reserve banks or trust companies which are

5-32 members of the Federal Reserve System, except that acceptances may not

5-33 exceed 180 days’ maturity, and may not, in aggregate value, exceed 20

5-34 percent of the total par value of the portfolio as determined on the date of

5-35 purchase;

5-36 (o) Commercial paper issued by a corporation organized and operating

5-37 in the United States or by a depository institution licensed by the United

5-38 States or any state and operating in the United States that:

5-39 (1) At the time of purchase has a remaining term to maturity of no

5-40 more than 270 days; and

5-41 (2) Is rated by a nationally recognized rating service as "A-1," "P-1"

5-42 or its equivalent, or better,

6-1 except that investments pursuant to this paragraph may not, in aggregate

6-2 value, exceed 20 percent of the total par value of the portfolio as

6-3 determined on the date of purchase, and if the rating of an obligation is

6-4 reduced to a level that does not meet the requirements of this paragraph, it

6-5 must be sold as soon as possible;

6-6 (p) Notes, bonds and other unconditional obligations for the payment of

6-7 money, except certificates of deposit that do not qualify pursuant to

6-8 paragraph (m), issued by corporations organized and operating in the

6-9 United States or by depository institutions licensed by the United States or

6-10 any state and operating in the United States that:

6-11 (1) Are purchased from a registered broker-dealer;

6-12 (2) At the time of purchase have a remaining term to maturity of no

6-13 more than [3] 5 years; and

6-14 (3) Are rated by a nationally recognized rating service as "A" or its

6-15 equivalent, or better,

6-16 except that investments pursuant to this paragraph may not, in aggregate

6-17 value, exceed 20 percent of the total par value of the portfolio, and if the

6-18 rating of an obligation is reduced to a level that does not meet the

6-19 requirements of this paragraph, it must be sold as soon as possible;

6-20 (q) Money market mutual funds which:

6-21 (1) Are registered with the Securities and Exchange Commission;

6-22 (2) Are rated by a nationally recognized rating service as "AAA" or

6-23 its equivalent; and

6-24 (3) Invest only in securities issued by the Federal Government or

6-25 agencies of the Federal Government or in repurchase agreements fully

6-26 collateralized by such securities; [and]

6-27 (r) Collateralized mortgage obligations that are rated by a nationally

6-28 recognized rating service as "AAA" or its equivalent [.] ; and

6-29 (s) Asset-backed securities that are rated by a nationally recognized

6-30 rating service as "AAA" or its equivalent.

6-31 2. Repurchase agreements are proper and lawful investments of money

6-32 of the state and the state insurance fund for the purchase or sale of

6-33 securities which are negotiable and of the types listed in subsection 1 if

6-34 made in accordance with the following conditions:

6-35 (a) The state treasurer shall designate in advance and thereafter maintain

6-36 a list of qualified counterparties which:

6-37 (1) Regularly provide audited and, if available, unaudited financial

6-38 statements to the state treasurer;

6-39 (2) The state treasurer has determined to have adequate capitalization

6-40 and earnings and appropriate assets to be highly credit worthy; and

6-41 (3) Have executed a written master repurchase agreement in a form

6-42 satisfactory to the state treasurer and the state board of finance pursuant to

6-43 which all repurchase agreements are entered into. The master repurchase

7-1 agreement must require the prompt delivery to the state treasurer and the

7-2 appointed custodian of written confirmations of all transactions conducted

7-3 thereunder, and must be developed giving consideration to the Federal

7-4 Bankruptcy Act.

7-5 (b) In all repurchase agreements:

7-6 (1) At or before the time money to pay the purchase price is

7-7 transferred, title to the purchased securities must be recorded in the name of

7-8 the appointed custodian, or the purchased securities must be delivered with

7-9 all appropriate, executed transfer instruments by physical delivery to the

7-10 custodian;

7-11 (2) The state must enter into a written contract with the custodian

7-12 appointed pursuant to subparagraph (1) which requires the custodian to:

7-13 (I) Disburse cash for repurchase agreements only upon receipt of

7-14 the underlying securities;

7-15 (II) Notify the state when the securities are marked to the market if

7-16 the required margin on the agreement is not maintained;

7-17 (III) Hold the securities separate from the assets of the custodian;

7-18 and

7-19 (IV) Report periodically to the state concerning the market value of

7-20 the securities;

7-21 (3) The market value of the purchased securities must exceed 102

7-22 percent of the repurchase price to be paid by the counterparty and the value

7-23 of the purchased securities must be marked to the market weekly;

7-24 (4) The date on which the securities are to be repurchased must not be

7-25 more than 90 days after the date of purchase; and

7-26 (5) The purchased securities must not have a term to maturity at the

7-27 time of purchase in excess of 10 years.

7-28 3. As used in subsection 2:

7-29 (a) "Counterparty" means a bank organized and operating or licensed to

7-30 operate in the United States pursuant to federal or state law or a securities

7-31 dealer which is:

7-32 (1) A registered broker-dealer;

7-33 (2) Designated by the Federal Reserve Bank of New York as a

7-34 "primary" dealer in United States government securities; and

7-35 (3) In full compliance with all applicable capital requirements.

7-36 (b) "Repurchase agreement" means a purchase of securities by the state

7-37 or state insurance fund from a counterparty which commits to repurchase

7-38 those securities or securities of the same issuer, description, issue date and

7-39 maturity on or before a specified date for a specified price.

7-40 4. No money of this state may be invested pursuant to a reverse-

7-41 repurchase agreement, except money invested pursuant to chapter 286 or

7-42 chapters 616A to 616D, inclusive, of NRS.

8-1 Sec. 3. NRS 226.110 is hereby amended to read as follows:

8-2 226.110 The state treasurer:

8-43 543 and 555 of NRS.

9-1 Sec. 4. Section 3 of Assembly Bill No. 128 of this session is hereby

9-2 amended to read as follows:

9-3 Sec. 3. NRS 226.110 is hereby amended to read as follows:

9-4 226.110 The state treasurer:

9-5 1. Shall receive and keep all money of the state which is not

9-6 expressly required by law to be received and kept by some other

9-7 person.

9-8 2. Shall receipt to the state controller for all money received,

9-9 from whatever source, at the time of receiving it.

9-10 3. Shall establish the policies to be followed in the investment

9-11 of money of the state, subject to the periodic review and approval or

9-12 disapproval of those policies by the state board of finance.

9-13 4. May employ any necessary investment and financial advisers

9-14 to render advice and other services in connection with the

9-15 investment of money of the state.

9-16 5. Shall disburse the public money upon warrants drawn upon

9-17 the treasury by the state controller, and not otherwise. The warrants

9-18 must be registered and paid in the order of their registry. The state

9-19 treasurer may use any sampling or post-audit technique, or both,

9-20 which he considers reasonable to verify the proper distribution of

9-21 warrants.

9-22 6. Shall keep a just, true and comprehensive account of all

9-23 money received and disbursed.

9-24 7. Shall deliver in good order to his successor in office all

9-25 money, records, books, papers and other things belonging to his

9-26 office.

9-27 8. Shall fix, charge and collect reasonable fees for:

9-28 (a) Investing the money in any fund or account which is credited

9-29 for interest earned on money deposited in it; and

9-30 (b) Special services rendered to other state agencies or to

9-31 members of the public which increase the cost of operating his

9-32 office.

9-33 9. Serves as the primary representative of the state in matters

9-34 concerning any nationally recognized bond credit rating agency for

9-35 the purposes of the issuance of any obligation authorized on the

9-36 behalf and in the name of the state, except as otherwise provided in

9-37 NRS 538.206 and except for those obligations issued pursuant to

9-38 chapter 319 of NRS and NRS 349.400 to 349.987, inclusive.

9-39 10. Is directly responsible for the issuance of any obligation

9-40 authorized on the behalf and in the name of the state, except as

9-41 otherwise provided in NRS 538.206 and except for those

9-42 obligations issued pursuant to chapter 319 of NRS and NRS

9-43 349.400 to 349.987, inclusive. The state treasurer [shall] :

10-1 (a) Shall issue such an obligation as soon as practicable after

10-2 receiving a request from a state agency for the issuance of the

10-3 obligation.

10-4 (b) May, except as otherwise provided in NRS 538.206, employ

10-5 necessary legal, financial or other professional services in

10-6 connection with the authorization, sale or issuance of such an

10-7 obligation.

10-8 11. May organize and facilitate statewide pooled financing

10-9 programs, including lease purchases, for the benefit of the state and

10-10 any political subdivision, including districts organized pursuant to

10-11 NRS 450.550 to 450.750, inclusive, and chapters 244A, 309, 318,

10-12 379, 474, 541, 543 and 555 of NRS.

10-13 Sec. 5. 1. This act becomes effective upon passage and approval.

10-14 2. The amendatory provisions of section 1 of this act expire by

10-15 limitation when the board notifies the governor pursuant to subsection 1 of

10-16 section 24 of chapter 687, Statutes of Nevada 1997, that it has performed

10-17 all duties and obligations pursuant to any prepaid tuition contract entered

10-18 into before July 1, 2001.