Request By:
Mr. Robert A. Miller
Jefferson County Treasurer
517 Court Place
Suite 501
Louisville, Kentucky 40202
Opinion
Opinion By: FREDERIC J. COWAN, ATTORNEY GENERAL; NATHAN GOLDMAN, ASSISTANT ATTORNEY GENERAL
In your letter to the Attorney General you ask whether a county may invest county funds in one or more mutual funds which invest only in federal securities which are subject to repurchase agreements.
KRS 66.480(1)(a) allows counties to invest in "[o]bligations of the United States and its agencies and instrumentalities. Such investments may be accomplished through repurchase agreements reached with national or state banks chartered in Kentucky."
In OAG 88-52 we opined that this statute allowed counties to invest in mutual funds that invest solely in U.S. government securities. We did not address the issue of repurchase agreements therein.
In OAG 82-29 we opined that the State Investment Commission could invest state funds in "term repurchase agreements involving United States Treasury Bills."
The State Investment Commission has defined repurchase agreement as follows:
"an actual, conditional purchase of securities of the United States Treasury, any agency, instrumentality or corporation of the United States, or any other security receiving a full faith and credit guaranty of the government of the United States, with an agreement to resell those securities to their original owner on a specific date in the future (at least seven [7] days into the future)."
Based on the reasoning contained in OAG 82-29 and 88-52, we believe that KRS 66.480 can be interpreted to allow a county to invest its funds in mutual funds that invest solely in federal securities including such securities subject to repurchase agreements with state banks, natural banks and brokerage firms. The second sentence of KRS 66.480(1)(a) should not be read as restrictive, but rather as permissive. By the use of the term "may" the provision would allow the method set forth therein but would also allow the use of other methods, such as purchase through brokerage firms. KRS 446.010(20).