New Mexico Administrative Code
Title 2 - PUBLIC FINANCE
Chapter 60 - INVESTMENT AND DEPOSIT OF PUBLIC FUNDS
Part 21 - ADMINISTRATIVE PROCEDURES FOR NEW MEXICO FINANCIAL INSTITUTIONS APPLYING FOR DEPOSITS OF SEVERENCE TAX PERMANENT FUND
Section 2.60.21.9 - INVESTMENT MANAGEMENT POLICY

(1) The applicant and the custodian or custodians designated by the state treasurer will have executed the form depository and custodial agreements for the severance tax permanent fund. The forms will then be approved and accepted by the state investment officer.

(2) The application shall comply with the fund limitations promulgated by statute and by the regulations of the council. In addition, the total deposits of state funds in a class C or class D institution shall not exceed 100 percent of net worth or primary capital.

(3) The rate of interest on all certificates of deposit shall be set at a market rate or 50 basis points over the bond equivalent yield of U.S. treasury securities of comparable maturity, whichever is greater. The treasury bonds, notes and bills section in the Wall Street Journal on the day the rate is set will be used as the reference. The state investment council will continuously monitor the interest rate and amend it as necessary.

(4) The exact maturity will be set by the state investment officer based on the cash management needs of the fund and on an analysis of risk versus maturity.

(5) The size of the certificate or certificates of deposit in each financial institution will be determined by the state investment officer in accordance with Section VI of these regulations [now Section 2.60.21.10 NMAC].

(6) If the terms of the deposit are not acceptable to the financial institution, then the institution retains the right to reject the deposit.

(7) The investment officer shall not invest in any certificate or certificates of deposit which contain early withdrawal penalties in excess of the minimum penalty required by federal laws.

(8) When deposits are cashed in or withdrawn, the certificate of deposit document(s) will be released from the fiscal agent in accordance with delivery instructions provided by the financial institution, but only after the state treasurer's office, state investment council or state investment officer takes physical receipt of all principal and interest due or owing to the state.

(9) The investment meets the asset allocation policy of these regulations;

(10) Granting the application is not in violation of applicable state law, these regulations, and/or other applicable regulations.

(1) When state funds are deposited under the severance tax permanent fund certificate of deposit program, the maturity is not to exceed eight years in a class A bank or savings and loan association, and shall not exceed four years in a class B bank or savings and loan association. The state investment officer has full discretion in setting maturities. Class C and D institutions are not qualified for additional deposits, above and beyond existing deposits, and may or may not have existing deposits reinvested, as determined by the state investment officer pursuant to the rules and regulations governing such situations.

(2) When deposits mature in class C and class D institutions, the reinvestment of a certificate of deposit is limited to the amount of the pre-existing deposit. In this event, the maturities shall not exceed one year in the case of a class C bank or savings and loan association. In the case of a class D bank or savings and loan association, the deposit may be reinvested for a period not to exceed one month at the discretion of the state investment officer, and then only if needed to preserve the corpus of the deposit, or, secondarily, to prevent premature failure of the institution.