Investing Bond Proceeds in Georgia: Permitted Investments and Rules

Georgia issuers may invest bond proceeds in the securities O.C.G.A. §36-82-7 lists, "and no others," or place them in the state's local government investment pool.

The statute directs that proceeds of bonds issued by a Georgia county, municipal corporation, school district, political subdivision, authority or other public body "be invested and reinvested by the governing authorities" in the listed securities.

This page is Georgia's entry in mGIC's permitted investments by state series, and the general framework behind state lists sits on the permitted investments page.

State law is one layer only: 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," so the bond contract carries a list of its own for each issue.

Where a revenue issue carries that contract as an indenture, the MSRB glossary defines an indenture as a contract between the issuer and a trustee for the benefit of the bondholders, and the MSRB notes that many governmental issues, especially general obligation bonds, may not use an indenture.

Which Georgia statute governs bond-proceeds investments?

O.C.G.A. §36-82-7 is Georgia's bond-proceeds investment statute, and its opening rule is a closed list: proceeds are to "be invested and reinvested by the governing authorities of the county, municipal corporation, school district, political subdivision, authority, or body in the following securities, and no others."

The text quoted on this page is the codified statute as it appears on the FindLaw mirror of the Georgia Code, current as of March 28, 2024, and confirming the current text before closing is a step for bond counsel.

Georgia's general statute for local funds, O.C.G.A. §36-83-4, sets a separate menu for money a local governing authority controls, and O.C.G.A. §36-83-8 creates the state's local government investment pool.

Which of those provisions reaches a particular fund is a legal determination for the issuer's bond counsel.

What is on Georgia's permitted investment list?

Section 36-82-7's list runs from government obligations through insured in-state certificates of deposit and narrowly defined pooled funds to a set of banking arrangements, with the state pool alongside.

Because the list ends "and no others," the statutory text, not market custom, decides whether an instrument has a home in Georgia, which is one of the readings bond counsel makes for each issue.

How does §36-82-7 treat investment agreements, GICs and repurchase agreements?

Paragraph (7) lists "interest-bearing time deposits, repurchase agreements, reverse repurchase agreements, rate guarantee agreements, or other similar banking arrangements," and it does not use the words "guaranteed investment contract."

Each arrangement must keep the money reachable on the project's schedule: the statute requires that it "shall permit the moneys so placed to be available for use at the time provided with respect to the investment or reinvestment of such moneys."

The counterparty must be a bank or trust company with at least $50 million in capital and surplus, a primary dealer with at least $50 million in capital that reports to, trades with and is recognized by the Federal Reserve Bank of New York, or a bank holding company subject to registration under the Bank Holding Company Act of 1956.

Insurance companies are not among the listed counterparties, and whether an insurer-written agreement has another statutory home is a question for bond counsel.

Withdrawal terms are where these arrangements are tested, and mGIC's full-flex repurchase agreement guide and the GIC versus repo comparison describe how the two structures handle draws.

What rating and collateral requirements does Georgia attach?

On the text this page quotes, Georgia places its credit conditions inside individual list items rather than in a single across-the-board rating rule for bond proceeds.

The agency line carries the rating condition, admitting agency and instrumentality obligations rated in "at least one of the three highest rating categories" with a national market.

The deposit line carries the collateral condition, counting certificates of deposit up to their insurance and requiring the excess to be secured by collateral the statute specifies.

The pooled-fund line limits those funds to the U.S. and agency categories and repurchase agreements on them, valued at a constant net asset value and bought through in-state banks with trust powers.

The banking-arrangement line carries the size conditions, the $50 million thresholds and, for a primary dealer, the requirement to report to, trade with and be recognized by the Federal Reserve Bank of New York, and for a holding company, registration under the Bank Holding Company Act of 1956.

State law is one layer: the bond contract's permitted-investments definition and the federal arbitrage rules also shape what a fund can hold, and bond counsel and tax counsel make those calls.

Can Georgia bond proceeds go into the state pool?

Yes: §36-82-7 lets bond proceeds be placed in the state's local government investment pool, which O.C.G.A. §36-83-8 creates.

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

Under §36-83-8, the State Depository Board sets the pool's policies, and the state treasurer administers the pool and invests under a prudent-person standard limited to the investments listed in §50-5A-7 and Chapter 17 of Title 50.

Eligibility is the part bond issuers read closely: a local government may remit funds only if they are "not required by law or by any covenant or agreement with bondholders or others to be segregated and invested in a different manner."

Participation starts with a resolution or ordinance naming the responsible officials plus a cash-flow statement, and each later deposit needs a statement of its intended duration.

Participants receive a monthly report, accumulated income is credited at least monthly, and the treasurer may set minimum amounts and minimum holding periods.

The statute creates the pool without a brand name, and the Office of the State Treasurer offers the pool as Georgia Fund 1 to counties, municipalities, public colleges and universities, boards of education, special districts, state agencies and other authorized entities.

mGIC's Georgia Fund 1 guide covers that pool's terms and disclosures, the local government investment pool guide explains how pools take deposits and pay out, and the pool versus GIC comparison takes up the pool-versus-bid question.

What procurement rules apply to Georgia bond-proceeds investments?

Georgia's statutes set what may be bought, and where the Treasury arbitrage rules apply, the safe harbor in Treasury Regulation §1.148-5(d)(6)(iii) treats the purchase price of a GIC, or of an investment bought for a yield-restricted defeasance escrow, as fair market value on the purchase date if all of its requirements are met.

The first of those requirements is a bona fide solicitation under §1.148-5(d)(6)(iii)(A): written bid specifications sent timely to potential providers, containing all material terms and only commercially reasonable terms, with electronic form permitted.

The regulation reads materiality broadly: "The bid specifications include all material terms of the bid. A term is material if it may directly or indirectly affect the yield or the cost of the investment."

For yield-restricted defeasance escrows, the same paragraph adds that the hold-firm period must be no longer than reasonably required.

Fees are a separate item the arbitrage rules address: IRS Publication 5005 notes that fees charged by the conduit issuer can raise the effective yield on a conduit loan, which is a purpose investment, and section 148 generally limits purpose-investment yield to the bond yield plus a spread.

On the state side, O.C.G.A. §36-83-4(b) lets a governing authority delegate investment authority to its treasurer or financial officer by resolution or ordinance, and §36-83-4(c) states the objective: "In selecting among avenues of investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity."

That objective sits in the general local-fund statute rather than in §36-82-7's bond-proceeds list.

Refundings add the specialist roles GFOA describes: an escrow agent, typically a commercial bank, holds the escrow investments; a verification agent, typically a CPA firm, confirms the escrow is sufficient and, where yield is limited, that the escrow yield does not exceed the permitted yield; and an escrow bidding agent solicits bids for open-market escrow securities.

GFOA notes that a municipal advisor, if engaged, may be able to act as the escrow bidding agent.

The mechanics sit on mGIC's bid specifications, fair-market-value safe harbor and Bidding Agent guides.

What representative transactions in Georgia can mGIC point to?

None of the representative transactions named on mGIC's site is a Georgia issue; the named deals sit in other states, among them Pocahontas Parkway in Virginia and the Grand River Dam Authority in Oklahoma.

The firm's record spans more than $60 billion in bond proceeds invested and swap notional executed across more than 1,000 transactions for issuers in more than 40 states, with transactions named 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.

For a Georgia issue, the work is the same as anywhere else: reviewing the fund's objectives, permitted investments and draw schedule; writing bid specifications and soliciting qualified providers as Bidding Agent; and coordinating documentation and settlement, ending with a compliance file.

If you want an independent read on how a Georgia construction fund, reserve fund or escrow is positioned, mGIC offers Georgia reinvestment help through a free, no-obligation review.

Final determinations about what a Georgia issue may invest in, and whether an agreement fits §36-82-7, 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.