HOUSE BILL No. 4597


     April 9, 1997, Introduced by Reps. Jaye, Kukuk, Gernaat, Rhead, Walberg, Richner and Kaza and referred to the Committee on Commerce.


        A bill to amend 1943 PA 20, entitled

   "An act relative to the investment of surplus funds of political
   subdivisions of the state; and to validate certain investments,"

   by amending section 1 (MCL 129.91), as amended by 1988 PA 239.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 1.  (1) The legislative or governing body of a county,

 2    city, village, township, or special assessment district, or an

 3    agency, board, or commission of a county, city, village, or town-

 4    ship, by resolution  ,  may authorize its treasurer or other

 5    chief fiscal officer to invest surplus funds belonging to and

 6    under the control of the political subdivision, special assess-

 7    ment district, or agency, board, or commission of a county as

 8    follows:

 9         (a) In bonds, securities, and other obligations of the

10    United States, or an agency or instrumentality of the United



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 1    States in which the principal and interest is fully guaranteed by

 2    the United States.  This subdivision shall include securities

 3    issued or guaranteed by the government national mortgage

 4    association.

 5         (b) In certificates of deposit, savings accounts, deposit

 6    accounts, or depository receipts of a  bank which is a member of

 7     the federal deposit insurance corporation or a savings and loan

 8     association which is a member of the federal savings and loan

 9     insurance corporation or a credit union which is insured by the

10     national credit union administration  FINANCIAL INSTITUTION, but

11    only if the  bank, savings and loan association, or credit union 

12    FINANCIAL INSTITUTION complies with subsection (2).

13         (c) In commercial paper rated at the time of purchase within

14    the 3 highest classifications established by not less than 2

15    standard rating services and which matures not more than 270 days

16    after the date of purchase.  Not more than 50% of any fund may be

17    invested in commercial paper at any time.

18         (d) In United States government or federal agency obligation

19    repurchase agreements.

20         (e) In bankers' acceptances of United States banks.

21         (f) In mutual funds composed of investment vehicles which

22    are legal for direct investment by local units of government in

23     Michigan  THIS STATE.

24         (2) A county, city, village, township, or special assessment

25    district investing funds under subsection (1) shall not deposit

26    or invest the funds in a  bank, savings and loan association, or

27     credit union  FINANCIAL INSTITUTION which is not eligible to be a



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 1    depository of surplus funds belonging to the state under section

 2     5 or  6 of  Act No. 105 of the Public Acts of 1855, as amended,

 3     being sections 21.145 and 21.146 of the Michigan Compiled Laws 

 4    1855 PA 105, MCL 21.146.

 5         (3) ASSETS ACCEPTABLE FOR PLEDGING TO SECURE DEPOSITS OF

 6    FUNDS UNDER THIS ACT ARE CONSIDERED ACCEPTABLE TO THE STATE TREA-

 7    SURER UNDER SECTION 3 OF 1855 PA 105, MCL 21.143, TO SECURE

 8    DEPOSITS OF STATE SURPLUS FUNDS.

 9         (4) AS USED IN THIS SECTION, "FINANCIAL INSTITUTION" MEANS A

10    STATE OR NATIONALLY CHARTERED BANK, SAVINGS AND LOAN ASSOCIATION,

11    SAVINGS BANK, OR CREDIT UNION WHOSE DEPOSITS ARE INSURED BY AN

12    AGENCY OF THE UNITED STATES GOVERNMENT AND WHICH MAINTAINS A

13    PRINCIPAL OFFICE OR BRANCH OFFICE LOCATED IN MICHIGAN UNDER THE

14    AUTHORITY OF THE LAWS OF MICHIGAN OR OF THE UNITED STATES.





























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