Investing Bond Proceeds in Florida: Permitted Investments and Rules

Florida local governments invest bond proceeds under Fla. Stat. §218.415, which requires a written investment plan adopted by the governing body and sets the list of investments a policy may authorize.

The statute treats bond funds through its scope provision rather than a bond-specific list: §218.415(1) does not apply its investment policy to funds related to the issuance of debt where other existing policies or indentures are in effect for those funds, so the documents in effect for a covered fund supply the operative list.

The permitted investments by state hub sets Florida next to the other states, and this page works through the statute, the authorized list, the repo and procurement rules, and the state pool.

Which statute governs Florida bond-proceeds investments?

Fla. Stat. §218.415 governs investment of public funds by Florida local governments, and its opening rule is procedural: "Investment activity by a unit of local government must be consistent with a written investment plan adopted by the governing body."

Section 218.415(2) states the objectives in order, safety of capital, liquidity and investment income, with the statute directing the highest priority to safety of principal and liquidity.

For decisions made in 2023 and later years, §218.415(24) requires investment decisions to be based solely on "pecuniary factors."

Section 218.415(21) voids special acts and charters that conflict with it.

The scope provision speaks directly to bond issuers: §218.415(1) provides that the investment policy "shall not apply to pension funds, including those funds in chapters 175 and 185, or funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds."

The carve-out applies only where another policy or indenture in effect covers the funds, so a bond fund covered by neither document falls back inside the statute.

Which documents govern a given fund, and which list controls, is a legal determination for the issuer's bond counsel.

What is on Florida's permitted investment list?

With a written policy, the investments §218.415(16) authorizes include the Local Government Surplus Funds Trust Fund or an interlocal pool, SEC-registered money market funds "with the highest credit quality rating from a nationally recognized rating agency," direct U.S. Treasury obligations, federal agencies and instrumentalities, and registered funds limited to U.S. government obligations and repurchase agreements fully collateralized by them.

Paragraphs (16)(h)–(i) add other investments authorized by law or by ordinance (counties and municipalities) or by resolution (school and special districts).

Without a written policy, §218.415(17) limits the alternatives to the state trust fund or an interlocal pool, money market funds carrying the highest rating, deposits at qualified public depositories and direct Treasury obligations.

Subsection (17) is that no-written-policy alternative, not a separate bond-proceeds rule; the debt carve-out sits in subsection (1).

For a fund inside the carve-out, the list that matters is the bond contract's, and the MSRB glossary defines permitted investments as "the instruments in which bond proceeds or other funds may be invested pursuant to the provisions of the bond contract."

How does Florida treat investment agreements, GICs and repurchase agreements?

Florida's §218.415(16) list does not name guaranteed investment contracts or direct repurchase agreements, so an agreement's availability for a bond fund turns on the carve-out and the fund's own documents.

Direct repos are not listed by name in subsection (16); they appear within the funds of paragraph (16)(g), which hold repurchase agreements fully collateralized by U.S. government obligations.

Where repo activity occurs, §218.415(11) requires the investment policy to "require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Master Repurchase Agreement."

For a fund governed by an indenture instead, the indenture's permitted investments section frames whether an investment agreement or a repurchase agreement is available, and bond counsel reads it against the statute.

What rating and collateral requirements apply in Florida?

Section 218.415(16) attaches a rating condition to money market funds, which must be SEC-registered funds "with the highest credit quality rating from a nationally recognized rating agency," and §218.415(10) and (11) add custody and Master Repurchase Agreement requirements.

Section 218.415(10) calls for third-party custody of investments.

Section 218.415(11) requires the investment policy to tie every approved institution and dealer transacting repos with the government to the Master Repurchase Agreement.

Within subsection (16), the registered funds line admits only funds limited to U.S. government obligations and repurchase agreements fully collateralized by them.

Where a bond fund follows an indenture, the rating and collateral terms for an investment agreement come from the bond documents and the bid specifications rather than from §218.415, and the repo collateral and GIC credit protection guides describe how those terms work.

Can Florida bond proceeds go into the state pool?

The statute lists the Local Government Surplus Funds Trust Fund or an interlocal pool among the authorized investments for governments with a written policy, and subsection (17) keeps them on the shorter list where there is no policy.

The MSRB glossary describes a local government investment pool as a pool established by a state or local governmental entity to invest the public funds of participating governmental units, with participants buying shares or units, often in a trust.

The pool operating under Chapter 218, Part IV, Florida Statutes, the Investment of Local Government Surplus Funds Act, is Florida PRIME, administered by the State Board of Administration, and the local government investment pool guide covers how pools take deposits and pay out.

Whether a particular bond fund may be placed in the pool depends on the fund's own documents, and mGIC's Florida PRIME guide covers the pool's terms, disclosures and yield publication.

The state pool versus GIC comparison takes up the pool-versus-bid question for a specific draw schedule.

What procurement rules apply to Florida investments?

Section 218.415(12) requires the investment policy to direct staff to competitively bid securities when feasible and appropriate and to select the bid deemed to best meet the investment objectives of §218.415(2), except as otherwise required by law.

That statutory standard is the bid that best meets the policy's objectives, which is not the same thing as the highest yield.

Section 218.415(13) requires written internal controls, which independent auditors review, and §218.415(14) requires local officials responsible for investment decisions, or the CFO, to complete 8 hours of continuing education each year in subjects related to investment practices and products.

Federal tax rules add a safe harbor alongside the state ones: under Treasury Regulation §1.148-5(d)(6)(iii), the purchase price of a guaranteed investment contract, or of an investment bought for a yield-restricted defeasance escrow, is treated as fair market value if all of its requirements are met, and paragraph (A) makes a bona fide solicitation one of them, with written bid specifications sent to potential providers on a timely basis, all material terms included, meaning any term that may directly or indirectly affect the yield or the cost of the investment, and only commercially reasonable terms, with electronic specifications permitted.

For yield-restricted defeasance escrows, the same regulation adds a timing condition: the hold-firm period must be no longer than reasonably required.

Refunding escrows add the roles GFOA describes: an escrow agent, typically a commercial bank, holds the investments; a verification agent, typically a CPA firm, confirms the escrow is sufficient and that the escrow yield does not exceed the permitted yield where yield is limited; and an escrow bidding agent solicits bids for open-market escrow securities, which GFOA notes a municipal advisor may be able to fill if one is engaged.

The bid specifications and Bidding Agent guides take that solicitation work apart.

What representative transactions has mGIC done in Florida?

mGIC's representative transactions include Miami Air Cargo at MIA, and its transactions span issuers in more than 40 states.

The firm's record spans more than $60 billion in bond proceeds invested and swap notional executed across more than 1,000 transactions, and the transaction names are published without deal terms.

mGIC is an independent, SEC-registered municipal advisor that sells no proprietary investment product and acts as no principal in the investments it evaluates, and its fee is paid by the winning provider rather than the issuer, at or below the safe-harbor maximum in the Treasury arbitrage regulations, with the fee disclosed.

The products it evaluates and bids are guaranteed investment contracts, full-flex repurchase agreements and structured Treasury portfolios, and its advisory work covers fund objectives, permitted investments, draw schedules, credit terms, market conditions and timing.

If you want an independent read on how a Florida fund's investments line up with its documents and the arbitrage rules, mGIC offers Florida reinvestment help through a free, no-obligation review.

Final determinations about what a Florida fund may hold, and how the federal tax rules treat its yield, belong to the issuer's bond counsel and tax counsel.

Last updated 2026-10-06.

This page is general educational information about municipal finance and federal and state rules as of the date shown. It is not legal, tax or investment advice, and it is not a recommendation about any particular investment. Product availability, legality and suitability depend on the issuer, jurisdiction, governing documents and transaction-specific facts. Final legal and tax determinations remain with the issuer's bond counsel, tax counsel and other advisors.