Sec. 3. (a) Sinking funds that are created with respect to bonds issued under this chapter to fund retirement liabilities shall be held as private funds held in trust by the board of trustees, and shall not be deemed to be property of the state.
(b) Sinking funds and debt service reserves may be invested in accordance with the provisions of IC 21-29. The principal of, accretions to, or earnings derived from sinking funds and debt service reserve funds may be used:
(1) to pay principal of and interest on bonds issued under this chapter to fund retirement liabilities; and
(2) to pay costs of administration of such sinking funds and debt service reserve funds.