Investing Bond Proceeds in Wisconsin: Permitted Investments and Rules

Wisconsin issuers find the answer to their investment options in Wis. Stat. § 66.0603, the local investment statute whose (1m)(a) list defines what counties, cities, villages, towns, school districts and other governing boards may invest in when funds are not immediately needed.

The list runs from time deposits in in-state institutions and federal or federal-instrumentality securities to Wisconsin local bonds, securities rated in the top two categories maturing or puttable within 7 years of acquisition, and no-load 1940-Act funds limited to federal obligations and fully collateralized repos.

Wisconsin is one of the state summaries in the permitted investments by state series, which maps the states it covers to the same question.

What the statute means for a particular issue's fund also depends on the bond documents, and the final read belongs to the issuer's bond counsel.

What statute governs bond-proceeds investments in Wisconsin?

The governing statute is Wis. Stat. § 66.0603, which authorizes local governing boards to invest funds not immediately needed in the categories listed in § 66.0603(1m)(a).

The statute reaches bond money by name in § 66.0603(1m)(e)4 and (f)4, which cover moneys "constituting proceeds of appropriation bonds or general obligation promissory notes described in subd. 2." that are "available for investment until they are spent," a carve-out discussed below.

The statute is one of two layers an issuer reads.

The MSRB glossary defines permitted investments as the instruments in which bond proceeds or other funds may be invested under the provisions of the bond contract, so the bond documents sit alongside the statute.

Many governmental issues, especially general obligation bonds, may not use an indenture, and where one exists the MSRB glossary defines 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.

How the statute and the bond contract combine for a given Wisconsin fund is a legal determination for bond counsel.

What is on Wisconsin's permitted investment list?

Section 66.0603(1m)(a) authorizes investments in the categories summarized here from the statute.

The rated-securities row carries its own statutory language, extending to any security that matures or is puttable "within not more than 7 years of the date on which it is acquired, if that security has a rating which is the highest or 2nd highest rating category."

Beyond the list, § 66.0603 adds three provisions that matter for issuers: the depository-agreement clause in (1m)(d), the state pool and delegation clauses in (1m)(c) and (2), and the prudent-investor carve-out in (1m)(e)4 and (f)4, each covered below.

The state list answers what instruments are available.

What those instruments may earn is a separate question under the federal arbitrage rules, which the yield restriction guide covers.

IRS Publication 5005 notes that conduit issuers generally must ensure that the yield on the conduit loan does not exceed the yield on the bonds by more than the permitted spread, to prevent the bonds from becoming arbitrage bonds, and it cautions that conduit issuer fees can raise the effective yield on a conduit loan, which is a purpose investment.

How that federal overlay applies to a conduit financing is a topic the conduit issuer guide takes up.

How does Wisconsin treat investment agreements and repurchase agreements?

The categories in § 66.0603(1m)(a) do not mention guaranteed investment contracts or investment agreements, and a related provision is the depository transaction in § 66.0603(1m)(d).

Under that subsection, a local government "may engage in financial transactions in which a public depository ... agrees to repay funds advanced to it by the local government plus interest," with the agreement secured by bonds or securities issued or guaranteed by the United States.

Whether that clause, or authority elsewhere in an issue's bond documents, reaches a guaranteed investment contract or a full-flex repurchase agreement for a given Wisconsin issue is a determination bond counsel makes.

One carve-out does open the broader prudent-investor standard for a narrow set of proceeds: § 66.0603(1m)(e)4 and (f)4 let counties of 750,000 or more and 1st class cities invest moneys "constituting proceeds of appropriation bonds or general obligation promissory notes" under § 881.01, the prudent-investor statute.

Those provisions cover only unfunded-prior-service-liability financings, so they do not reach ordinary capital bond proceeds and they do not reach other issuers.

What rating and collateral requirements attach?

The rating condition sits in the catch-all category: a security fits only when it matures or is puttable "within not more than 7 years of the date on which it is acquired, if that security has a rating which is the highest or 2nd highest rating category."

For the (1m)(d) depository agreements, the statutory credit condition is that the agreement is secured by bonds or securities issued or guaranteed by the United States.

Terms beyond that security requirement are matters for the agreement itself, which the repo collateral guide covers.

Can Wisconsin issuers invest bond proceeds in the state pool?

For surplus funds, yes: § 66.0603(1m)(c) and (2) let Wisconsin local governments invest in the state's local government pooled-investment fund under § 25.50.

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 local government investment pool guide explains how pools work, and the state pool or a bid investment comparison takes up the choice between them.

Pool yields and portfolio data change, so any current figures belong to the program's own disclosures, and whether a particular issue's proceeds may be placed in the pool is a bond counsel question.

The same subsections carry a delegation option: under § 66.0603(1m)(c) and (2), a local government may delegate its investment authority to a bank or trust company with trust powers.

The conditions travel with the delegation: "The governing board renews annually the investment agreement under which it delegates its investment authority, and reviews annually the performance of the institution."

What procurement rules apply to a Wisconsin bond-proceeds investment?

At the federal level, Treasury Regulation § 1.148-5(d)(6)(iii) sets a safe harbor under which 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 on the purchase date if all of its requirements are met, and a bona fide solicitation is one of them.

Under § 1.148-5(d)(6)(iii)(A)(1), (2) and (4), a bona fide solicitation carries written bid specifications sent to potential providers on a timely basis, includes all material terms and only commercially reasonable terms, and may be made in electronic form.

The rule defines material broadly: "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 rule adds a timing condition that the hold-firm period be no longer than reasonably required.

Because it is a safe harbor, missing a requirement means losing the presumption of fair market value, which does not by itself mean the price was not fair market value.

The bid specifications guide lists what a specification typically carries, and the fair market value safe harbor guide collects the safe harbor's full set of requirements.

Refunding work adds three roles GFOA describes around an escrow.

The escrow agent, typically a commercial bank, holds the escrow investments.

The verification agent, typically a CPA firm, confirms that the escrow is sufficient and, where yield is limited, that the escrow yield does not exceed the permitted yield.

An escrow bidding agent solicits bids for open-market escrow securities, and GFOA notes that a municipal advisor, if the issuer engages one, may be able to serve in that role, as the Bidding Agent guide describes on the reinvestment side.

How the federal conditions, the Wisconsin statute and an issue's bond documents fit together is a determination for bond counsel.

Which mGIC services and transactions reach Wisconsin issuers?

None of the representative transactions named in mGIC's record is identified as a Wisconsin deal, so this page describes no Wisconsin transaction.

mGIC is Municipal Government Investors Corp., an independent, SEC-registered municipal advisor founded in 2002 and based in Scottsdale, Arizona, whose named transactions run from Pocahontas Parkway in Virginia and the Grand River Dam Authority in Oklahoma to Birmingham Water Works, with the full list on its transactions page.

Behind the list is a record of 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.

It evaluates and bids guaranteed investment contracts, full-flex repurchase agreements and structured Treasury portfolios without selling any of them, and its fee is paid by the winning provider at or below the safe-harbor maximum in the Treasury arbitrage regulations and is disclosed.

For a Wisconsin issuer, the working session is a free, no-obligation Wisconsin reinvestment help review of a fund's objectives, permitted investments, projected draw schedule, credit parameters, market conditions and timing.

Final determinations about what Wisconsin law permits on a particular issue 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.