# COMAR Title 25 — Office of the State Treasurer

## Subtitle 03 — Treasury Management

### Chapter 01 — Crediting of Income Earned on State Monies

**Authority:** State Finance and Procurement Article, §6-226, Annotated Code of Maryland

**Administrative History:** Effective date: September 10, 1984 (11:18 Md. R. 1585)

**Administrative History:** Regulation .01 amended effective September 9, 1985 (12:18 Md. R. 1767)

**Administrative History:** Regulation .02 adopted effective September 9, 1985 (12:18 Md. R. 1767)

**Administrative History:** Regulation .02 amended effective October 30, 1989 (16:21 Md. R. 2263)

**Administrative History:** Regulation .03 adopted effective February 27, 1995 (22:4 Md. R. 237)

#### Regulation .01 Crediting of Income Earned on Gifts.

*COMAR 25.03.01.01*

Unless a donor provides otherwise, the Treasurer shall credit to the donee unit of State government income resulting from the holding or investment of a gift to the unit.

#### Regulation .02 Crediting of Income Earned on Funds of Certain Educational Institutions.

*COMAR 25.03.01.02*

Interest or income from the investment by the State Treasurer of all funds of the University of Maryland System, Morgan State University, and St. Mary's College shall be credited to each institution and may not be credited to the General Fund of this State.

#### Regulation .03 Crediting of Income Earned on Federal Forfeiture Proceeds.

*COMAR 25.03.01.03*

Interest or income from the investment by the State Treasurer of all funds received under the national asset seizure program shall be credited to the appropriate police agency.

### Chapter 02 — Alternative Methods of Funds Transfer

**Authority:** State Finance and Procurement Article, §7-227.1; State Personnel and Pensions Article, §2-405; Annotated Code of Maryland

**Administrative History:** Effective date: October 30, 1989 (16:21 Md. R. 2263)

**Administrative History:** Regulations .02B amended and .03—.05 adopted as an emergency provision effective January 1, 2001 (28:4 Md. R. 415); amended permanently effective May 28, 2001 (28:10 Md. R. 950)

#### Regulation .01 General.

*COMAR 25.03.02.01*

A. Findings. Pursuant to the requirements of the State Finance and Procurement Article, §7-227.1, Annotated Code of Maryland, the Treasurer has determined that the following alternative methods of funds transfer are means generally recognized and accepted by the banking industry for disbursing funds:

  (1) The transfer of funds by use of the Automated Clearing House (ACH) payments system; and

  (2) The transfer of funds by the wire transfer payments system.

B. Authorizations. In accordance with the determination set forth in §A of this regulation, the Treasurer authorizes the use of the alternative methods of funds transfer as follows:

  (1) Use of either the ACH payments system or the wire transfer payments system to transfer funds generally between State accounts;

  (2) Use of the ACH payments system to make repetitive, routine payments as identified in Regulation .02 of this chapter; and

  (3) Use of the wire transfer payments system to make specific payments when payment is due on an absolute date and time or when time of payment is otherwise of the essence.

#### Regulation .02 Allowable Transfers and Disbursements.

*COMAR 25.03.02.02*

A. Transfers. Funds may be transferred between the various State bank accounts by means of an alternative method of funds transfer authorized by Regulation .01 of this chapter.

B. Disbursements. Upon warrant of the Comptroller, State funds may be disbursed by means of an alternative method of funds transfer authorized by Regulation .01 of this chapter for the payment of:

  (1) Principal, interest, or both, on State debt or the debt of a unit of State government;

  (2) Major routine State grants and shared-revenue disbursements to the political subdivisions of the State and to the units of those subdivisions;

  (3) State payroll-related disbursements, including, but not limited to:

    (a) Retirement, pension, and FICA contributions,

    (b) Taxes,

    (c) Insurance premiums,

    (d) Voluntary deductions, and

    (e) Net pay;

  (4) Disbursements to the federal government or to a state government;

  (5) Disbursements for the acquisition of investments by the Treasurer; and

  (6) Other disbursements that, in the judgment of the Comptroller and the Treasurer, or the authorized representative of either, are, in the interest of the State, best made by an alternative method of funds transfer.

#### Regulation .03 Payment of Net Pay.

*COMAR 25.03.02.03*

A. Scope. This regulation applies to an employee hired on or after January 1, 2001.

B. Except as provided in Regulation .05 of this chapter, the Central Payroll Bureau shall pay an employee's net pay by electronic funds transfer to the institution designated by the employee as provided in this regulation.

C. When an employee becomes eligible to receive net pay, the employing agency personnel director shall provide to the employee an electronic funds transfer authorization form. If an employee has not requested payment by check under Regulation .05 of this chapter, the employee shall complete the form and submit it to the Central Payroll Bureau.

D. The Central Payroll Bureau shall accept an electronic funds transfer authorization form filed by an employee if:

  (1) The employee has completed the form; and

  (2) The institution named by the employee on the form participates in the Automatic Clearing House Network.

E. An employee may change an institution designated on an electronic funds transfer authorization form by completing and filing a new form with the Central Payroll Bureau.

F. The last electronic funds transfer authorization form filed by an employee and accepted by the Central Payroll Bureau shall control the electronic funds transfer of the employee's net pay.

#### Regulation .04 Payment Procedure.

*COMAR 25.03.02.04*

A. The Central Payroll Bureau shall transmit an employee's biweekly net pay to the institution designated by the employee as set forth in Regulation .03B of this chapter.

B. The Central Payroll Bureau shall give an employee who receives net pay through electronic funds transfer a biweekly advice statement that reflects the following:

  (1) Total amount of biweekly pay;

  (2) Amounts deducted from the biweekly pay; and

  (3) The portion of the biweekly pay electronically transferred.

#### Regulation .05 Payment by Check.

*COMAR 25.03.02.05*

A. At the time of hiring, an employee shall be notified of the employee's right to request an exemption from receiving net pay by electronic funds transfer.

B. An employee may submit a written request to the State Treasurer for payment of the employee's biweekly net pay by check instead of by an electronic funds transfer. The request shall be granted by the State Treasurer.

### Chapter 03 — Local Government Investment Guidelines and Reporting Requirements

**Authority:** Local Government Article, Title 17, Subtitle 2; State Finance and Procurement Article, §6-222; Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.09 adopted as an emergency provision effective August 1, 1995 (22:17 Md. R. 1310); emergency status expired February 1, 1996

**Administrative History:** Regulations .01—.09 adopted effective February 26, 1996 (23:4 Md. R. 274)

**Administrative History:** Regulation .01 amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .01 amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .02B amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .02B amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .03A, B amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .03 amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .04A amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .04C repealed as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .04A, C amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .05A amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .05A amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .06A amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .06A amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .08A amended effective December 14, 1998 (25:25 Md. R. 1835)

**Administrative History:** Regulation .08 repealed effective February 19, 2001 (28:3 Md. R. 207)

**Administrative History:** Regulation .09 amended effective February 19, 2001 (28:3 Md. R. 207)

**Administrative History:** Regulation .09 amended as an emergency provision effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulation .09 amended effective April 28, 2025 (52:8 Md. R. 361)

#### Regulation .01 Purpose.

*COMAR 25.03.03.01*

This chapter requires local government units to adopt policies to be followed when investing public money and submitting the adopted policies to the State Treasurer for acceptance.

#### Regulation .02 Definitions.

*COMAR 25.03.03.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Accepted policy” means an adopted policy that has been accepted by the State Treasurer in accordance with Regulation .06 of this chapter.

  (2) “Adopted policy” means a local government investment policy which has been properly adopted by the local government unit in accordance with the requirements of local law, Regulation .05 of this chapter, and COMAR 24.03.04.

  (3) “Board of education” has the meaning stated in Education Article, §1-101(d), Annotated Code of Maryland.

  (4) “Board of library trustees” means those boards established pursuant to Education Article, Title 23, Subtitle 3, Annotated Code of Maryland.

  (5) “Community college” means a community college other than the Baltimore City Community College and a regional community college established under Education Article, Title 16, Subtitle 2, Annotated Code of Maryland.

  (6) “Financial officer” has the meaning stated in Local Government Article, §17-201, Annotated Code of Maryland.

  (7) “GFOA” means the Government Finance Officers Association of the United States and Canada.

  (8) “Governing body” has the meaning stated in Local Government Article, §1-101, Annotated Code of Maryland.

  (9) “Local government unit” means a county, a municipality, a community college, the Washington Suburban Sanitary Commission, a public corporation authorized to issue debt, and an authority of the State authorized to issue debt.

  (10) “Marked to market” means the price at which a security is trading.

  (11) “Money market mutual fund” means a mutual fund registered with the Securities and Exchange Commission under the Investment Company Act of 1940, 15 U.S.C. §80a-1 et seq., as amended, and operated in accordance with Rule 2A-7 promulgated under the Investment Company Act of 1940, 17 CFR §270.2A-7, as amended.

  (12) “Public money” has the meaning stated in COMAR 25.03.04.

  (13) “State Treasurer” means the Treasurer of Maryland.

#### Regulation .03 General Requirements for Adoption of Local Government Investment Policy.

*COMAR 25.03.03.03*

A. The governing body of each local government unit shall adopt by resolution a written investment policy that:

  (1) Complies with State and local law, including:

    (a) State Finance and Procurement Article, §6-222, Annotated Code of Maryland;

    (b) Local Government Article, §17-201 et seq., Annotated Code of Maryland; and

    (c) COMAR 25.03.04; and

  (2) Meets or exceeds standards published by nationally recognized financial management organizations recognized by the State Treasurer.

B. The State Treasurer recognizes the standards published by the following nationally recognized financial management organizations:

  (1) GFOA; and

  (2) Association of Public Treasurers of the United States and Canada.

C. The board of education and the board of library trustees of a county need not adopt a written investment policy but shall invest in compliance with the accepted policy of the county.

#### Regulation .04 State Law Requirements for Adoption of Local Government Investment Policy.

*COMAR 25.03.03.04*

A. At a minimum, each adopted policy shall:

  (1) Allow local government units to invest in only those types of securities authorized by:

    (a) State Finance and Procurement Article, §6-222(a), Annotated Code of Maryland;

    (b) Local Government Article, §17-201 et seq., Annotated Code of Maryland; and;

    (c) COMAR 25.03.04;

  (2) Require that investments made by local government units comply with the standards of COMAR 25.03.04;

  (3) Prohibit the borrowing of money for the sole purpose of investment; and

  (4) Require that the local government unit’s financial officer not invest public money of the local government unit in a manner inconsistent with its adopted policy.

B. A local government unit may include additional requirements in its adopted policy.

#### Regulation .05 Adoption of Local Government Investment Policy and Submission for Acceptance.

*COMAR 25.03.03.05*

A. The governing body of each local government unit shall adopt by resolution a written local government investment policy that:

  (1) Complies with the requirements of local and State law;

  (2) Satisfies the requirements of Regulations .03 and .04 of this chapter and COMAR 25.03.04; and

  (3) Meets the individual needs of the local government unit.

B. Within 30 days following adoption, the governing body of each local government unit shall send a certified copy of its adopted policy and its adopting resolution to the State Treasurer for acceptance.

#### Regulation .06 Check by State Treasurer of Local Government Investment Policy.

*COMAR 25.03.03.06*

A. Upon receipt, the State Treasurer shall have each adopted policy checked for compliance with this chapter and COMAR 25.03.04, and shall either:

  (1) Notify the governing body of the local government unit that its adopted policy has been accepted; or

  (2) Return the adopted policy to the governing body of the local government unit for revision and readoption.

B. An adopted policy returned by the State Treasurer shall be:

  (1) Revised promptly;

  (2) Readopted by the governing body of the local government unit in accordance with Regulation .05A of this chapter; and

  (3) Resubmitted to the State Treasurer in accordance with Regulation .05B of this chapter.

#### Regulation .07 Amendment of Accepted Policy.

*COMAR 25.03.03.07*

A. An accepted policy may be amended by submitting to the State Treasurer:

  (1) The proposed language of the amendment;

  (2) A certified copy of the adopting resolution of the local government unit; and

  (3) A certified copy of the revised local government investment policy which shall contain the amendment.

B. The State Treasurer shall consider each amendment in accordance with the provisions of Regulation .06 of this chapter.

#### Regulation .08 Repealed.

*COMAR 25.03.03.08*

#### Regulation .09 Enforcement.

*COMAR 25.03.03.09*

The State Treasurer shall notify a local government unit to seek compliance if the:

A. Local government unit has not sent the State Treasurer an adopted policy in accordance with Regulation .05B of this chapter;

B. State Treasurer determines that the adopted policy is not an accepted policy in accordance with Regulation .06A of this chapter.

C. State Treasurer determines that an accepted policy is no longer in compliance with the provisions of:

  (1) State Finance and Procurement Article, §6-222, Annotated Code of Maryland;

  (2) Local Government Article, §17-201 et seq., Annotated Code of Maryland; or

  (3) COMAR 25.03.04.

### Chapter 04 — Policy Regarding the Investment of Public Money by the State of Maryland

**Authority:** State Finance and Procurement Article, §6-222, Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.06 adopted as an emergency provision under new COMAR Chapter .04 Policy Regarding the Investment of Public Money effective April 25, 2024 (51:11 Md. R. 577); emergency status expired October 22, 2024

**Administrative History:** Regulations .01—.06 adopted under new COMAR Chapter .04 Policy Regarding the Investment of Public Money by the State of Maryland effective November 11, 2024 (51:22 Md. R. 964)

**Administrative History:** Regulation .01 amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .02B amended effective April 28, 2025 (52:8 Md. R. 361)

**Administrative History:** Regulation .03A amended effective April 28, 2025 (52:8 Md. R. 361)

#### Regulation .01 Purpose.

*COMAR 25.03.04.01*

The purpose of this Policy is to set requirements and thresholds for the investment of public money by the State and each local government unit to ensure that public money is invested in a manner that will:

A. Provide the highest investment return with the maximum security while meeting the anticipated daily cash flow requirements of the State and each local government unit; and

B. Conform to all State laws governing the investment of public money.

#### Regulation .02 Definitions.

*COMAR 25.03.04.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Investment officer” means:

    (a) With respect to the State, the State’s Chief Investment Officer and any other person authorized by the State Treasurer to invest unexpended or surplus money over which the State Treasurer has custody; and

    (b) With respect to a local government unit, the treasurer or other financial officer of a local government unit who is responsible for the investment of public money or the issuance and management of debt of the local government unit.

  (2) “Local government unit” means a county, a municipality, a community college, the Washington Suburban Sanitary Commission, a public corporation authorized to issue debt, and an authority of the State authorized to issue debt.

  (3) “Nationally recognized statistical rating organization” means a nationally recognized statistical rating organization as designated by either the United States Securities and Exchange Commission or the Treasurer.

  (4) Public Money.

    (a) With respect to the State, “public money” means unexpended or surplus money over which the State Treasurer has custody; and

    (b) With respect to a local government unit, “public money” has the meaning stated in Local Government Article, §17-201, Annotated Code of Maryland.

  (5) “State Treasurer” means the Treasurer of the State of Maryland.

  (6) “Supranational issuer” includes (without limitation):

    (a) The World Bank;

    (b) The International Finance Corporation;

    (c) The Inter–American Development Bank;

    (d) The African Development Bank; and

    (e) The Asian Development Bank.

#### Regulation .03 Requirements for Investment Officers.

*COMAR 25.03.04.03*

A. An investment officer shall employ the “prudent person” standard when making investments. Specifically, an investment officer shall:

  (1) Act with the care, skill, and diligence that a prudent investor acting in a like capacity and familiar with such matters would use considering the circumstances then prevailing;

  (2) Make investments in a manner designed to reasonably match anticipated cash flow needs so that sufficient funds are available to pay obligations upon proper presentation for payment;

  (3) Make investments so that a reasonable amount of cash or cash equivalents is available for unanticipated cash needs;

  (4) Consider the context of the assets available for investment as a whole and as part of an overall investment strategy that incorporates reasonably suitable risk and return objectives;

  (5) Have due regard for minimizing risk while maximizing return;

  (6) Use competitive purchasing practices except when impractical;

  (7) Make investments so that the securities and collateral may continue to be priced on a marked to market basis;

  (8) Act in a manner designed to diversify investments unless, under the circumstances, it is reasonably determined to be in the best interests of the State or local government not to do so;

  (9) Act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents;

  (10) Incur only costs that are appropriate and reasonable in amount; and

  (11) Act to avoid the enhancement of the personal financial position of the investment officer or any employee of the State Treasurer or local government unit who has responsibilities for such investments.

B. An investment officer shall comply with the requirements of this chapter and any additional requirements adopted by the State Treasurer in accordance with Regulation .05 of this chapter.

#### Regulation .04 Permitted Investments.

*COMAR 25.03.04.04*

A. Subject to the requirements in §B of this regulation, public money may be invested in the following types of securities:

  (1) An obligation for which the United States has pledged its faith and credit for the payment of the principal and interest;

  (2) An obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress;

  (3) An obligation issued and unconditionally guaranteed by a supranational issuer denominated in United States dollars and eligible to be sold in the United States;

  (4) A repurchase agreement collateralized in an amount not less than 102 percent of the principal amount by an obligation of the United States, its agencies, or instrumentalities, provided the collateral is held by a custodian other than the seller designated by the buyer;

  (5) Bankers’ acceptances guaranteed by a financial institution with a short–term debt rating in the highest letter and numerical rating by at least one nationally recognized statistical rating organization;

  (6) Commercial paper that has received the highest letter and numerical rating by at least two nationally recognized statistical rating organizations;

  (7) Money market mutual funds that:

    (a) Are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, 15 U.S.C. §80a–1 et seq., as amended;

    (b) Are operated in accordance with Rule 2A–7 of the Investment Company Act of 1940, 17 CFR §270.2A–7, as amended; and

    (c) Have received the highest possible rating from at least one nationally recognized statistical rating organization;

  (8) Any investment portfolio created under the Maryland Local Government Investment Pool defined under Local Government Article, §§17–301—17–309, Annotated Code of Maryland, that is administered by the Office of the State Treasurer;

  (9) Tradeable time deposits denominated in U.S. dollars and issued or endorsed by either:

    (a) A bank or a savings and loan association organized and supervised under federal law or the laws of any state and regulated by the Federal Reserve or a trust company which is a member of the Federal Reserve system; or

    (b) A bank organized and supervised under the laws of a foreign country that is rated AA/Aa/AA or higher by at least two nationally recognized statistical rating organizations;

  (10) Obligations of domestic corporations that are rated A-/A3/A- or higher by at least two nationally recognized statistical rating organizations;

  (11) Bonds, notes, or other obligations issued by or on behalf of any state or any agency, department, county, municipal or public corporation, special district, authority, or political subdivision thereof, or in any fund or trust that invests only in securities issued by these entities that are rated A-/A3/A- or higher by at least two nationally recognized statistical rating organizations;

  (12) Bonds, notes, or other obligations denominated in United States dollars, issued by and subject to the laws of a foreign country that is rated AA/Aa/AA or higher by at least two nationally recognized statistical rating organizations;

  (13) Mortgage-backed obligations:

    (a) Guaranteed by the United States or a federal agency or a federal instrumentality that were issued in accordance with an act of Congress; and

    (b) Having received the highest possible rating from at least two nationally recognized statistical rating organizations;

  (14) Asset-backed obligations having received the highest possible rating from at least two nationally recognized statistical rating organizations; and

  (15) Non-tradeable time deposits denominated in U.S. dollars and:

    (a) Issued or endorsed by either:

      (i) A bank or a savings and loan association organized and supervised under federal law or the laws of any state and regulated by the Federal Reserve or a trust company which is a member of the Federal Reserve system; or

      (ii) A bank organized and supervised under the laws of a foreign country that is rated AA/Aa/AA or higher by at least two nationally recognized statistical rating organizations; and

    (b) Having received:

      (i) For obligations with maturities of less than 1 year, at least two ratings of A-1/P1/F-1 or higher from at least two nationally recognized statistical rating organizations; and

      (ii) For obligations with maturities of greater than 1 year, at least two ratings of AA/Aa/AA or higher from at least two nationally recognized statistical rating organizations.

B. An investment officer may invest public money in a given type of security not more than the following percentage of the overall investment portfolio over which the investment officer manages:

  (1) For a security permitted by §A(1) of this regulation, 100 percent;

  (2) For a security permitted by §A(2) of this regulation, 100 percent;

  (3) For a security permitted by §A(3) of this regulation, 40 percent;

  (4) For a security permitted by §A(4) of this regulation, 75 percent;

  (5) For a security permitted by §A(5) of this regulation, 20 percent;

  (6) For a security permitted by §A(6) of this regulation, 35 percent;

  (7) For a security permitted by §A(7) of this regulation, 50 percent;

  (8) For a security permitted by §A(8) of this regulation, 100 percent;

  (9) For a security permitted by §A(9) of this regulation, 35 percent;

  (10) For a security permitted by §A(10) of this regulation, 25 percent;

  (11) For a security permitted by §A(11) of this regulation, 25 percent;

  (12) For a security permitted by §A(12) of this regulation, 20 percent;

  (13) For a security permitted by §A(13) of this regulation, 25 percent;

  (14) For a security permitted by §A(14) of this regulation, 25 percent; and

  (15) For a security permitted by §A(15) of this regulation, 35 percent.

#### Regulation .05 Additional Requirements.

*COMAR 25.03.04.05*

A. The State Treasurer may adopt additional requirements for the State investment portfolio and for the investment policies of local government units.

B. The State Treasurer shall post on the State Treasurer’s Office website any additional requirements implemented in accordance with this regulation.

#### Regulation .06 Exception for Emergencies and Catastrophic Events.

*COMAR 25.03.04.06*

The State Treasurer may make investment decisions inconsistent with this chapter if:

A. Either:

  (1) The Governor of the State of Maryland has declared a state of emergency in accordance with Public Safety Article, §14-107, Annotated Code of Maryland; or

  (2) A catastrophic event occurs that the State Treasurer determines could dramatically shift credit ratings on any of the assets in the portfolio; and

B. The State Treasurer determines the investment decisions are in the best interest of the State.