Investing Bond Proceeds in Missouri: Permitted Investments and Rules

Our research found no single Missouri statute that lists permitted investments for bond proceeds: the starting points are issuer-specific, with RSMo 110.270 covering counties, RSMo 165.051 covering school districts and RSMo 95.530 covering cities not within a county.

This page is Missouri's entry in mGIC's guide to permitted investments by state, and it sits beside the general guide to permitted investments.

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 state statutes below and an issue's own bond documents both bear on what a Missouri fund may hold.

How the two fit for a particular issue is a determination for bond counsel.

Which statutes govern Missouri bond-proceeds investments?

Missouri law approaches bond-proceeds investments by issuer type, and the statutes this page summarizes are RSMo 110.270 for counties, RSMo 165.051 for school districts and RSMo 95.530 for cities not within a county.

RSMo 110.270 (L. 1994, effective August 28, 1994) reaches money a county does not need for current operations and directs it into obligations described in Article IV, Section 15 of the Missouri Constitution, bought outright or by repurchase agreement.

The statute refers to the obligations described in the constitutional section rather than listing instruments itself, so this page does not enumerate the constitutional list.

RSMo 165.051, as amended through 1999, lets school boards invest surplus funds, including debt service and capital projects funds, in secured deposits, Missouri or United States bonds, short-term United States obligations, or, in the statute's words, "any instrument permitted by law for the investment of state moneys".

RSMo 95.530 applies to cities not within a county and, as a practical matter, to the City of St. Louis, although the statute does not name it.

Which statute reaches a water district, an authority or a university is part of the same bond counsel question, since these three statutes name counties, school boards and cities not within a county.

What may each type of Missouri issuer invest in?

The three statutes carry different lists, and the table below summarizes each by issuer type.

The county purchase channel is specific: RSMo 110.270 has the constitutional-list obligations bought through federally insured institutions in the county, with institutions in an adjacent county available where in-county institutions cannot or will not provide them.

RSMo 95.530's grant runs through the treasurer, who is to "act as the sole investment authority on any investments of public funds held by the city or any instrumentality thereof, including funds derived from proceeds from the issuance of bonds".

What rules apply to GICs and repurchase agreements in Missouri?

The statutes this page summarizes do not name guaranteed investment contracts, and of the provisions summarized here only RSMo 110.270 expressly mentions repurchase agreements, letting counties buy constitutional-list obligations by repurchase agreement.

That silence is not a prohibition: bond-specific or issuer-specific statutes and the bond documents may provide for investment agreements, and the statutes summarized here simply do not reach the question.

For a specific issue the two authorities combine: 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.

Where an issue uses an indenture, the MSRB glossary describes it as the contract between the issuer and a trustee for the bondholders' benefit that sets out the parties' rights, duties and remedies and the exact nature of the security for the bonds.

The same glossary notes that many governmental issues, especially general obligation bonds, may not use an indenture, so an issuer without one carries its permitted list in its other bond documents, and mGIC's bond indenture guide covers these documents.

mGIC's guides to guaranteed investment contracts and full-flex repurchase agreements describe both structures where an issue's documents provide for them.

What rating and collateral requirements apply?

None of the provisions this page summarizes states a rating floor or a collateral percentage, although RSMo 165.051 names secured deposits and the lists that RSMo 110.270 and RSMo 165.051 incorporate by reference, which this page does not reproduce, may carry their own terms.

The one rating threshold among the provisions this page summarizes appears in RSMo 108.170, which turns on a political subdivision's AA+ or higher (unenhanced) rating for new GO bonds, and even that threshold governs how the subdivision sells those bonds rather than what it invests proceeds in.

Within whatever the governing statutes and bond documents require, rating and collateral terms for a GIC or a repo take their shape in the bid specifications and the resulting agreement, and mGIC's repo collateral guide walks through collateral levels, remargining and shortfall mechanics.

The federal bidding rules shape those specifications: Treasury Regulation 1.148-5(d)(6)(iii)(A) requires the specifications to include all material terms, and a term is material if it may directly or indirectly affect the yield or the cost of the investment.

Is there a Missouri state investment pool?

None of the statutes this page summarizes names or creates a state investment pool for Missouri local governments.

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

The nearest hook in these statutes is RSMo 165.051's authorization for school districts to buy "any instrument permitted by law for the investment of state moneys", which ties the school list to the instruments state law permits for state moneys, a list this page does not reproduce.

Whether a particular Missouri fund may hold a pool deposit therefore depends on the statutes and bond documents that govern that fund, a determination for bond counsel.

mGIC's LGIP guide and pool-versus-GIC comparison cover the vehicle and that choice in general terms, and pool rates and balances change, so this page states none of them.

How must Missouri issuers procure and bid bond-proceeds investments?

The one purchase condition among the Missouri provisions this page summarizes is RSMo 110.270's county channel, which runs county purchases through federally insured institutions in the county, or in an adjacent county where in-county institutions cannot or will not provide the obligations; the bidding rules that reach these purchases come from the federal arbitrage regulations.

Under Treasury Regulation 1.148-5(d)(6)(iii)(A)(1), (2) and (4), a bona fide solicitation requires written bid specifications sent to potential providers on time, containing all material terms and only commercially reasonable terms, and the specifications may be electronic.

For a yield-restricted defeasance escrow, the regulation adds that the hold-firm period must be no longer than reasonably required.

An issue's draw schedule, withdrawal terms, rating triggers and collateral terms are examples of the provisions bid specifications can carry, and mGIC's bid specifications and fair-market-value bidding rules guides cover the full requirements.

Fee and cost terms fall in that material category, since they bear on the cost of the investment.

For refunding escrows funded with open-market securities, GFOA describes an escrow bidding agent that solicits bids for the securities used in the escrow and notes that a municipal advisor, if engaged, may be able to act in that role.

GFOA's refunding roles also include an escrow agent, typically a commercial bank, that holds the escrow investments, and a verification agent, typically a CPA firm, that confirms the escrow is sufficient and, where yield is limited, that the escrow yield does not exceed the permitted yield.

An issuer that wants the solicitation run by a party that sells no product can engage an independent Bidding Agent, the role mGIC performs for bond-proceeds investments under its Bidding Agent services.

Separately, Missouri regulates the bond sale itself: RSMo 108.170 provides that new general obligation bonds of political subdivisions rated AA+ or higher (unenhanced) "shall be issued through a competitive process unless the political subdivision employs the services of a municipal advisor", in which case the subdivision may negotiate or bid, and bonds generally may not be sold below 95% of par.

That rule governs the sale of the bonds rather than the reinvestment of proceeds, and this page carries it as context only.

Which representative transactions has mGIC done in Missouri?

This page makes no Missouri deal claim: the representative transactions mGIC publishes by name, from Pocahontas Parkway in Virginia to the Grand River Dam Authority in Oklahoma and OSU Village F student housing, include none identified as a Missouri project.

What the firm reports beyond the names is its firm-level record: 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 a reinvestment focus dating to its 2002 founding.

mGIC is an independent, SEC-registered municipal advisor that sells no proprietary investment product and does not act as principal in the investments it evaluates.

The names are published without size, structure, provider, rate, bid count or result for any deal, and the transactions index carries the named set.

For Missouri reinvestment help, mGIC's reinvestment advisory reviews a fund's objectives, permitted investments, draw schedule, credit terms, market conditions and timing, and its Bidding Agent service solicits and compares provider bids, in a free, no-obligation review or conversation.

Final determinations about which Missouri statute and which bond-document provisions govern a particular fund 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.