RCW 39.59.020(4) authorizes local governments to invest in “...any investments authorized by law for the treasurer of the state of Washington...” and the state treasurer is authorized by law to invest in commercial paper by RCW 43.84.080(7), but only to the extent consistent with the policy of the State Investment Board.

The policy guidelines, with respect to investment in commercial paper, for entities with funds under management of less than ten billion dollars, are as follows:

1. Commercial paper rated with the highest short-term credit rating of any two Nationally Recognized Statistical Ratings Organization (NRSRO’s), at the time of purchase.  If the commercial paper is rated by more than two NRSRO’s, it must have the highest rating from all of the organizations.
2. Commercial paper holdings may not have maturities exceeding 180 days.
3. Any commercial paper purchased with a maturity longer than 100 days must also have an underlying long term credit rating at the time of purchase in one of the two highest credit ratings of a NRSRO.
4. The percentage of commercial paper may not exceed 25% of the total assets of the portfolio.
5. The percentage of commercial paper that can be purchased by any single issuer is 5% of the total assets of the portfolio.
6. Commercial paper must be purchased in the secondary market and not directly from the issuers.
7. Portfolio managers will routinely monitor the ratings of the issuers of the commercial paper they are purchasing.  Appropriate personnel will be notified of any credit rating downgrades of issuers of any commercial paper in their portfolios.