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118A.04 INVESTMENTS. Subdivision 1.What may be invested.Any public funds, not presently needed for other purposes or restricted for other purposes, may be invested in the manner and subject to the conditions provided for in this section. Subd. 2.United States securities.Public funds may be invested in governmental bonds, notes, bills, mortgages(excludinghigh-riskmortgage-backedsecurities),andother securities,whicharedirectobligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress. Subd. 3.State and local securities.Funds may be invested in the following: (1)anysecuritywhichisageneralobligationofanystateorlocalgovernmentwithtaxingpowerswhich is rated "A" or better by a national bond rating service; (2) any security which is a revenue obligation of any state or local government which is rated "AA" or better by a national bond rating service; (3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the state of Minnesota and is rated "A" or better by a national bond rating agency; and (4) any security which is an obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to section 126C.55. Subd. 4.Commercial papers.Funds may be invested in commercial paper issued by United States corporations or their Canadian subsidiaries that is rated in the highest quality category by at least two nationally recognized rating agencies and matures in 270 days or less. Subd. 5.Time deposits.Funds may be invested in time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of United States banks. Subd. 6.High-risk mortgage-backed securities.For the purposes of this section and section 118A.05, "high-risk mortgage-backed securities" are: (1) interest-only or principal-only mortgage-backed securities; and (2) any mortgage derivative security that: (i) has an expected average life greater than ten years; (ii) has an expected average life that: (A) will extend by more than four years as the result of an immediate and sustained parallel shift in the yield curve of plus 300 basis points; or (B) will shorten by more than six years as the result of an immediate and sustained parallel shift in the yield curve of minus 300 basis points; or (iii) will have an estimated change in price of more than 17 percent as the result of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. Copyright © 2017 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. 118A.04MINNESOTA STATUTES 20171