Chapter 9. Investment of Bond Funds

Public agencies invest available funds, including bond proceeds and funds earmarked to pay debt service, to generate investment earnings. These earnings can increase the amount of funds available for project financing or can directly offset financing costs. Designing and implementing an investment strategy that maximizes earnings, while ensuring the safety and liquidity of invested funds and complying with federal tax law, is an important component of minimizing overall, or “net,” borrowing costs.

This chapter provides background on the authority to invest bond funds, legal and regulatory controls on investments, commonly used investment options, and the role of an investment oversight committee.