What Can Ohio Issuers Invest Bond Proceeds In? Permitted Investments and Rules

Under Ohio Revised Code §135.14, an Ohio subdivision may invest interim moneys in U.S. Treasury obligations, direct federal agency securities, interim deposits, no-load money market funds holding only those obligations and repurchase agreements on them, and STAR Ohio, the state pool under §135.45.

The conditions the same section attaches, a five-year maturity default, collateral and execution rules, and the written investment policy that opens the section's wider list, are where the practical reading happens.

Ohio's approach is one entry in this site's permitted investments by state set, and the instrument-level question across statutes is the permitted investments guide.

Which Ohio statute governs bond proceeds?

The governing text is Ohio Revised Code §135.14, which governs the interim moneys of Ohio subdivisions and enumerates what a subdivision's treasurer or governing board may invest them in, and the text recorded here is the section as effective October 3, 2023.

Scope comes before the list: §135.14 speaks to "interim moneys," and whether a particular issue's proceeds, or funds a trustee holds under an indenture, fall under §135.14 or under other Ohio authority was not verified for this page, so that reading belongs to the issuer's bond counsel.

The MSRB glossary defines permitted investments from the contract side, as "the instruments in which bond proceeds or other funds may be invested pursuant to the provisions of the bond contract," so a fund's own documents can sit on top of the statutory list.

Where the contract takes the form of an indenture, the same glossary describes it as a contract between the issuer and a trustee for the bondholders' benefit, and it notes that many governmental issues, especially general obligation bonds, may not use one.

What investments does Ohio's list include?

Ohio Revised Code §135.14(B) lets a subdivision treasurer or governing board invest interim moneys in U.S. Treasury obligations, direct federal agency securities, interim deposits, Ohio political-subdivision bonds, no-load money market funds, the state pool, and commercial paper and bankers' acceptances.

The money market fund line is a narrow one, and the section's own words describe "no-load money market mutual funds consisting exclusively of obligations described in division (B)(1) or (2) of this section and repurchase agreements secured by such obligations."

A fund holding anything outside those two obligation types and repurchase agreements on them is not the fund that division describes.

The term side comes from §135.14(D), under which investments made pursuant to the section "must mature within five years from the date of settlement, unless the investment is matched to a specific obligation or debt of the subdivision."

The section's own carve-outs from that default are the (B)(4) political-subdivision bonds and the (E) repurchase agreements.

For a fund with a stated term, the five-year default is the first line a proposal is read against, and the match-to-an-obligation exception is what a longer proposal turns on, a reading for bond counsel.

What are Ohio's rules for investment agreements and repurchase agreements?

Repurchase agreements get their own subsection at §135.14(E), permitting written agreements with eligible institutions or dealers, while none of the §135.14 divisions recorded for this page names a guaranteed investment contract, so where a negotiated multi-year agreement fits is a reading for bond counsel.

The statutory repo is short and overcollateralized: "A written repurchase agreement shall not exceed thirty days and the market value of securities subject to a written repurchase agreement must exceed the principal value of the written repurchase agreement by at least two per cent and be marked to market daily."

Repos executed with dealers settle delivery-versus-payment, and reverse repurchase agreements are prohibited.

Each transaction confirmation must give par value, type, rate, maturity and a CUSIP-style identifier, and securities acquired under a repurchase agreement go to a qualified trustee under §135.14(K).

The 30-day statutory repo is a different instrument from the multi-year full-flex repurchase agreements this site describes separately, and if bond proceeds sit under an authority other than §135.14, that authority is what would set the terms, and none was verified for this page.

Collateral and margin in a negotiated bond-proceeds repo generally are the repo collateral guide's subject.

What collateral and execution requirements apply?

The credit-side requirements the verified §135.14 text states are structural: repo collateral of at least two percent over principal marked to market daily, custody of repo securities with a qualified trustee, and execution through FINRA member firms or regulated banks on a delivery-versus-payment basis under §135.14(M).

The section also gates who advises: under §135.14(N), investment advisors must be licensed by the Ohio Division of Securities or registered with the SEC, with public-funds experience.

No rating percentage appears in the divisions recorded for this page; the instrument-level quality screen they state is the money market fund division's exclusivity requirement.

Where a fund's documents impose rating standards, they come from the bond contract, and reading them against a proposed investment is bond counsel's work.

Can Ohio issuers use STAR Ohio?

Yes: §135.14(B)(6) lists "the Ohio subdivision's fund as provided in section 135.45" among the eligible interim-money investments, and that fund is STAR Ohio, offered by the Ohio Treasurer of State under §135.45 with the Treasurer as administrator and investment advisor.

It fits the MSRB glossary's local government investment pool definition: a pool established by a state or local governmental entity or instrumentality to invest the public funds of participating governmental units, whose participants buy shares or units, often in a trust.

Its participants are the Ohio subdivisions defined in §135.45(G)(2)(a), which the August 31, 2026 booklet lists as counties, municipalities, school districts, townships and other districts, with libraries, port authorities, community hospitals, housing authorities and state higher-education institutions added in the booklet's own list.

The same booklet states that the portfolio is valued at amortized cost against a constant $1.00 net asset value target and records the "AAAm" principal stability rating S&P Global has assigned the pool.

The program permits multiple accounts "for segregation of specific funds" and publishes current yields, net of expenses, at tos.ohio.gov/star-ohio, so none is quoted here.

Whether a balance should stay in the pool for a project's life or be part of what gets bid is the pricing question the STAR Ohio guide owns, and the general pool-versus-bid comparison is the state pool or a GIC guide.

What procurement steps does Ohio add before money moves?

The gate is a written investment policy: under §135.14(O)(1), "no treasurer or governing board shall make an investment or deposit under this section, unless there is on file with the auditor of state a written investment policy approved by the treasurer or governing board."

The brokers, dealers and institutions doing investment business with the subdivision must sign that policy under §135.14(O)(2), and a subdivision with no filed policy is limited to interim deposits, no-load money market funds and STAR Ohio.

What a bond-proceeds policy should cover is the subject of the investment policy guide.

Federal tax law adds a layer of its own when proceeds buy a GIC: the purchase price is treated as fair market value if every condition of the safe harbor in Treasury Regulation §1.148-5(d)(6)(iii) is met, and under §1.148-5(d)(6)(iii)(A) its bona fide solicitation requires, among other conditions, written bid specifications sent to potential providers on a timely basis, specifications that include all material terms, any term that may directly or indirectly affect the yield or the cost of the investment, and only commercially reasonable terms, with electronic form permitted.

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

Refunding escrows bring their own role set, which GFOA describes as an escrow agent holding the investments, a verification agent confirming the escrow is sufficient and, where yield is limited, that escrow yield does not exceed the permitted yield, and an escrow bidding agent soliciting bids for open-market escrow securities, a role GFOA notes a municipal advisor may be able to fill.

The mechanics sit in the bid specifications and fair market value safe harbor guides, and the Bidding Agent guide describes the role end to end.

What representative transactions does mGIC name for Ohio?

None of the representative reinvestment transactions mGIC names is identified on this page as an Ohio transaction, and its record covers more than $60 billion in bond proceeds invested and swap notional executed in more than 1,000 transactions for issuers in more than 40 states.

The named transactions, by name only, are collected under mGIC transactions.

mGIC is an independent, SEC-registered municipal advisor and Bidding Agent that sells none of the products it evaluates and does not act as principal, 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 and disclosed.

For a read on how §135.14, a fund's bond documents and a draw schedule line up on a specific issue, mGIC offers Ohio reinvestment help through a free, no-obligation reinvestment review.

Which statute governs a particular fund, whether an instrument fits the statutory list and the bond contract, and how the arbitrage rules treat it are final determinations for 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.