HOUSE BILL No. 4600 April 9, 1997, Introduced by Reps. Richner, Kukuk, Gernaat, Rhead, Walberg, Kaza and Jaye and referred to the Committee on Commerce. A bill to amend 1976 PA 451, entitled "The revised school code," by amending sections 622, 1221, and 1223 (MCL 380.622, 380.1221, and 380.1223), sections 622 and 1223 as amended by 1986 PA 132 and section 1221 as amended by 1986 PA 416. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 622. (1) The intermediate school board shall select 2depositories for itsFINANCIAL INSTITUTIONS FOR THE DEPOSIT OF 3 school funds. It shall keep a set of coded accounts to be 4 approved by the state board and shall have its books audited at 5 least annually by a certified public accountant. General operat- 6 ing funds, building and site funds, cooperative education funds, 7 special education funds, vocational-technical education funds, 8 and debt retirement funds shall be maintained separately and 9 shall not be commingled, except that the board of an intermediate 01887'97 s * SAT 2 1 school district, by resolution, may authorize the treasurer to 2 combine money from more than 1 fund for the purpose of making an 3 investment authorized by subsection (2)(g). 4 (2) The treasurer of an intermediate school district, if 5 authorized by resolution of the intermediate school board, may 6 invest general operating funds, special education funds, area 7 vocational-technical education funds, building and site funds, 8 cooperative education funds, and debt retirement funds of the 9 district. Investments shall be madepursuant toUNDER subsec- 10 tion (4) and shall be restricted to the following: 11 (a) Bonds, bills, or notes of the United States or obliga- 12 tions of the state. 13 (b) Certificates of deposit issued by astate or national14bank, savings accounts of a state or federal savings and loan15association, or certificates of deposit or share certificates of16a state or federal credit union organized and authorized to oper-17ate in this stateFINANCIAL INSTITUTION. 18 (c) Commercial paper rated prime at the time of purchase and 19 maturing not more than 270 days after the date of purchase. 20 (d) Securities issued or guaranteed by agencies or instru- 21 mentalities of the United States government. 22 (e) United States government or federal agency obligation 23 repurchase agreements. 24 (f) Bankers' acceptances issued by a bank that is a member 25 of the federal deposit insurance corporation. 26 (g) Investment pools, as authorized by the surplus funds 27 investment pool act,Act No. 367 of the Public Acts of 1982,01887'97 s * 3 1being sections 129.111 to 129.118 of the Michigan Compiled Laws2 1982 PA 367, MCL 129.111 TO 129.118, composed entirely of instru- 3 ments that are legal for direct investment by an intermediate 4 school district. 5 (3) The earnings of an investment shall become a part of the 6 fund from which the investment was made. When money of more than 7 1 fund of a single intermediate school district or money of more 8 than 1 intermediate school district are combined for an invest- 9 ment pool authorized by subsection (2)(g), the money shall be 10 accounted for separately, and the earnings from the investment 11 shall be separately and individually computed, recorded, and 12 credited to the fund or district, as the case may be, for which 13 the investment was acquired. 14 (4) Notwithstanding subsection (2), additional funds of an 15 intermediate school district shall not be deposited or invested 16 in abank, savings and loan association, or credit union17 FINANCIAL INSTITUTION which is not eligible to be a depository of 18 surplus funds belonging to this state under section5 or6 of 19Act No. 105 of the Public Acts of 1855, being sections 21.14520and 21.146 of the Michigan Compiled Laws1855 PA 105, MCL 21 21.146. 22 (5) ASSETS ACCEPTABLE FOR PLEDGING TO SECURE DEPOSITS OF 23 FUNDS UNDER THIS ACT ARE CONSIDERED ACCEPTABLE TO THE STATE TREA- 24 SURER UNDER SECTION 3 OF 1855 PA 105, MCL 21.143, TO SECURE 25 DEPOSITS OF STATE SURPLUS FUNDS. 26 (6)(5)As used in this section, "deposit" includes 27 purchases of or investment in shares of a credit union. 01887'97 s * 4 1 (7) AS USED IN THIS SECTION, "FINANCIAL INSTITUTION" MEANS A 2 STATE OR NATIONALLY CHARTERED BANK, SAVINGS AND LOAN ASSOCIATION, 3 SAVINGS BANK, OR CREDIT UNION WHOSE DEPOSITS ARE INSURED BY AN 4 AGENCY OF THE UNITED STATES GOVERNMENT AND WHICH MAINTAINS A 5 PRINCIPAL OFFICE OR BRANCH OFFICE LOCATED IN MICHIGAN UNDER THE 6 AUTHORITY OF THE LAWS OF MICHIGAN OR OF THE UNITED STATES. 7 Sec. 1221. (1) The treasurer of a board of a school dis- 8 trict or board of directors of a public school academy shall 9 deposit the funds of the school district or public school academy 10 in abank, savings and loan association, or credit union having11its principal office in this stateFINANCIAL INSTITUTION or in a 12 joint investment authorized by section 1223. The deposit shall 13 be made in the name of the treasurer as an officer of the school 14 district or public school academy. The board or board of direc- 15 tors shall designatea depository or depositoriesTHE FINANCIAL 16 INSTITUTION OR INSTITUTIONS in which the funds of the school dis- 17 trict or public school academy shall be deposited. The treasurer 18 shall deposit funds of the school district or public school acad- 19 emy in 1 or more depositories in the proportion and manner deter- 20 mined by the board or board of directors. 21 (2) Notwithstanding subsection (1), additional funds of a 22 school district or public school academy shall not be deposited 23 or invested in abank, savings and loan association, or credit24unionFINANCIAL INSTITUTION that is not eligible to be a deposi- 25 tory of surplus funds belonging to this state under section526or6 ofAct No. 105 of the Public Acts of 1855, being sections01887'97 s * 5 121.145 and 21.146 of the Michigan Compiled Laws1855 PA 105, MCL 2 21.146. 3 (3) As used in this section, "deposit" includes purchases of 4 or investment in shares of a credit union. 5 (4) AS USED IN THIS SECTION, "FINANCIAL INSTITUTION" MEANS A 6 STATE OR NATIONALLY CHARTERED BANK, SAVINGS AND LOAN ASSOCIATION, 7 SAVINGS BANK, OR CREDIT UNION WHOSE DEPOSITS ARE INSURED BY AN 8 AGENCY OF THE UNITED STATES GOVERNMENT AND WHICH MAINTAINS A 9 PRINCIPAL OFFICE OR BRANCH OFFICE LOCATED IN MICHIGAN UNDER THE 10 AUTHORITY OF THE LAWS OF MICHIGAN OR OF THE UNITED STATES. 11 Sec. 1223. (1) If authorized by resolution of the board of 12 a school district, the treasurer may invest debt retirement 13 funds, building and site funds, building and site sinking funds, 14 or general funds of the district. The investment shall be made 15pursuant toUNDER subsection (7) and shall be restricted to the 16 following: 17 (a) Bonds, bills, or notes of the United States; obliga- 18 tions, the principal and interest of which are fully guaranteed 19 by the United States; or obligations of the state. In a primary 20 or fourth class school district, the bonds, bills, or notes shall 21 be payable, at the option of the holder, upon not more than 90 22 days' notice, or if not so payable, shall have maturity dates not 23 more than 5 years after the purchase dates. 24 (b) Certificates of deposit issued by astate or national25bank, savings accounts of a state or federal savings and loan26association, or certificates of depositFINANCIAL INSTITUTION or 27 share certificates of a state or federal credit unionorganized01887'97 s * 6 1and authorized to operate in this stateTHAT IS A FINANCIAL 2 INSTITUTION. 3 (c) Commercial paper rated prime at the time of purchase and 4 maturing not more than 270 days after the date of purchase. 5 (d) Securities issued or guaranteed by agencies or instru- 6 mentalities of the United States government. 7 (e) United States government or federal agency obligation 8 repurchase agreements. 9 (f) Bankers' acceptances issued by a bank that is a member 10 of the federal deposit insurance corporation. 11 (g) Mutual funds composed entirely of investment vehicles 12 that are legal for direct investment by a school district. 13 (h) Investment pools, as authorized by the surplus funds 14 investment pool act,Act No. 367 of the Public Acts of 1982,15being sections 129.111 to 129.118 of the Michigan Compiled Laws16 1982 PA 367, MCL 129.111 TO 129.118, composed entirely of instru- 17 ments that are legal for direct investment by a school district. 18 (2) An obligation purchased under this section, when 19 received by the treasurer, shall be deposited with thebank or20trust company, savings and loan association, or credit union21 FINANCIAL INSTITUTION having the deposit of the money of the par- 22 ticular fund from which the obligation was purchased. 23 (3) Money in the several funds of a school district shall 24 not be commingled for the purpose of making an investment autho- 25 rized by this section except that: 01887'97 s * 7 1 (a) The board of a school district may establish and 2 maintain 1 common debt retirement fund for issues of bonds of 3 similar character. 4 (b) The board of a school district, by resolution, may 5 authorize the treasurer to combine money from more than 1 fund 6 for the purpose of making an investment authorized by subsection 7 (1)(h). 8 (4) Earnings of an investment shall become a part of the 9 fund for which the investment was made. When money of more than 10 1 fund of a single district or money of more than 1 district are 11 combined for an investment pool authorized by subsection (1)(h), 12 the money shall be accounted for separately, and the earnings 13 from the investment shall be separately and individually comput- 14 ed, recorded, and credited to the fund or district, as the case 15 may be, for which the investment was acquired. 16 (5) The treasurer of a school district, if authorized by 17 resolution of the board, may deposit upon approval of the employ- 18 ee, funds accumulated under a deferred compensation program in a 19 federally insured financial institution authorized by law to do 20 business in this state. If authorized by a resolution of the 21 board, the treasurer of a school district, with the prior consent 22 of the employee, may use funds accumulated under a deferred com- 23 pensation plan to purchase from a life insurance company autho- 24 rized to do business in this state an annuity contract or life 25 insurance policy in the manner and for the purposes described in 26 section 457 of the internal revenue code. 01887'97 s * 8 1 (6) Security in the form of collateral, surety bond, or 2 another form may be taken for the deposits or investments of a 3 school district in abank, savings and loan association, or4credit unionFINANCIAL INSTITUTION. However, an investment 5pursuant toUNDER section 622(2)(e) or section 1223(1)(e) or in 6 an investment pool that includes instruments eligible for invest- 7 mentspursuant toUNDER sections 622(2)(e) and 1223(1)(e) shall 8 be secured by the transfer of title and custody of the obliga- 9 tions to which the repurchase agreements relate and an undivided 10 interest in those obligations must be pledged to the school dis- 11 trict for these agreements. 12 (7) Notwithstanding subsection (1), additional funds of a 13 school district shall not be deposited or invested in abank,14savings and loan association, or credit unionFINANCIAL 15 INSTITUTION which is not eligible to be a depository of surplus 16 funds belonging to this state under section5 or6 ofAct17No. 105 of the Public Acts of 1855, as amended, being sections1821.145 and 21.146 of the Michigan Compiled Laws1855 PA 105, MCL 19 21.146. 20 (8) As used in this section, "deposit" includes purchase of 21 or investment in shares of a credit union. 22 (9) AS USED IN THIS SECTION, "FINANCIAL INSTITUTION" MEANS A 23 STATE OR NATIONALLY CHARTERED BANK, SAVINGS AND LOAN ASSOCIATION, 24 SAVINGS BANK, OR CREDIT UNION WHOSE DEPOSITS ARE INSURED BY AN 25 AGENCY OF THE UNITED STATES GOVERNMENT AND WHICH MAINTAINS A 26 PRINCIPAL OFFICE OR BRANCH OFFICE LOCATED IN MICHIGAN UNDER THE 27 AUTHORITY OF THE LAWS OF MICHIGAN OR OF THE UNITED STATES. 01887'97 s *