HOUSE BILL No. 5063


     September 23, 1997, Introduced by Reps. Profit, Birkholz and Raczkowski and referred to the Committee on Local Government.


        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 the title and sections 1 and 3 (MCL 129.91 and

   129.93), the title as amended by 1988 PA 285 and section 1 as

   amended by 1988 PA 239, and by adding sections 5 and 6; and to

   repeal acts and parts of acts.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1                                  TITLE

 2         An act relative to the investment of  surplus  funds of

 3     political subdivisions  PUBLIC CORPORATIONS of the state; and to

 4    validate certain investments.

 5         Sec. 1.  (1)  The legislative or  NOT MORE THAN 180 DAYS

 6    AFTER THE EFFECTIVE DATE OF THE AMENDATORY ACT THAT REPEALED

 7    SECTION 2, THE governing body,  of a county, city, village,



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 1    township, or special assessment district, or an agency, board, or

 2     commission of a county, city, village or township,  by resolu-

 3    tion,  may authorize its treasurer or other chief fiscal officer

 4     to invest surplus funds belonging to and under the control of the

 5     political subdivision, special assessment district, or agency,

 6     board, or commission of a county as follows  SHALL ADOPT AN

 7    INVESTMENT POLICY THAT AUTHORIZES ITS INVESTMENT OFFICER TO

 8    INVEST THE FUNDS OF THAT PUBLIC CORPORATION IN 1 OR MORE OF THE

 9    FOLLOWING:

10         (a)  In bonds  BONDS, securities, and other obligations of

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

12    States.  in which the principal and interest is fully guaranteed

13     by the United States.  This subdivision shall include securities

14     issued or guaranteed by the government national mortgage

15     association. 

16         (b)  In certificates  CERTIFICATES of deposit, savings

17    accounts, deposit accounts, or depository receipts of a bank

18     which  OR A SAVINGS AND LOAN ASSOCIATION THAT is a member of the

19    federal deposit insurance corporation,  or a savings and loan

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

21     insurance corporation  or a credit union  which  THAT is insured

22    by the national credit union administration, but only if the

23    bank, savings and loan association, or credit union complies with

24    subsection (2).

25         (c)  In commercial  COMMERCIAL paper rated at the time of

26    purchase within the  3  2 highest classifications established by

27    not less than 2 standard rating services and which matures not



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 1    more than 270 days after the date of purchase.  Not more than

 2     50% of any fund may be invested in commercial paper at any time. 

 3         (d)  In United States government or federal agency obliga-

 4     tion repurchase  REPURCHASE agreements CONSISTING OF INSTRUMENTS

 5    LISTED IN SUBDIVISION (A).

 6         (e)  In bankers'  BANKERS' acceptances of United States

 7    banks.

 8         (f)  In mutual  MUTUAL funds composed of investment vehicles

 9     which  THAT are legal for direct investment by  local units of

10     government in Michigan  A PUBLIC CORPORATION.

11         (G) OBLIGATIONS OF THIS STATE OR ANY OF ITS POLITICAL SUBDI-

12    VISIONS THAT AT THE TIME OF PURCHASE ARE RATED AS INVESTMENT

13    GRADE BY NOT LESS THAN 1 STANDARD RATING SERVICE.

14         (2) A  county, city, village, township, or special assess-

15     ment district investing  PUBLIC CORPORATION THAT INVESTS ITS

16    funds under subsection (1) shall not deposit or invest the funds

17    in a bank, savings and loan association, or credit union  which 

18    THAT is not eligible to be a depository of  surplus  funds

19    belonging to the state under  section 5 or 6 of Act No. 105 of

20     the Public Acts of 1855, as amended, being sections 21.145 and

21     21.146 of the Michigan Compiled Laws  A LAW OR RULE OF THIS STATE

22    OR THE UNITED STATES.

23         (3) AS USED IN THIS ACT:

24         (A) "GOVERNING BODY" MEANS THE LEGISLATIVE BODY, COUNCIL,

25    COMMISSION, BOARD, OR OTHER BODY HAVING LEGISLATIVE POWERS OF A

26    PUBLIC CORPORATION.





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 1         (B) "FUNDS" MEANS THE MONEY OF A PUBLIC CORPORATION, THE

 2    INVESTMENT OF WHICH IS NOT OTHERWISE SUBJECT TO A PUBLIC ACT OF

 3    THIS STATE OR BOND AUTHORIZING ORDINANCE OR RESOLUTION OF A

 4    PUBLIC CORPORATION THAT PERMITS INVESTMENT IN FEWER THAN ALL OF

 5    THE INVESTMENT OPTIONS LISTED IN SUBSECTION (1) OR IMPOSES 1 OR

 6    MORE CONDITIONS UPON AN INVESTMENT IN AN OPTION LISTED IN SUBSEC-

 7    TION (1).

 8         (C) "INVESTMENT OFFICER" MEANS THE TREASURER OF A PUBLIC

 9    CORPORATION OR OTHER PERSON OR PERSONS DESIGNATED BY THE STATUTE

10    OR CHARTER OR THE GOVERNING BODY OF A PUBLIC CORPORATION TO ACT

11    AS THE INVESTMENT OFFICER.

12         (D) "PUBLIC CORPORATION" MEANS A COUNTY, CITY, VILLAGE,

13    TOWNSHIP, PORT DISTRICT, OR METROPOLITAN DISTRICT OF THIS STATE,

14    OR ANOTHER AUTHORITY CREATED BY OR UNDER AN ACT OF THE LEGISLA-

15    TURE OF THIS STATE.

16         Sec. 3.  Investments  heretofore  made BEFORE THE EFFECTIVE

17    DATE OF THE AMENDATORY ACT THAT REPEALED SECTION 2 of the surplus

18    funds, sinking funds, or insurance funds of  any such  A politi-

19    cal  subdivisions of the  SUBDIVISION OF THIS state in bonds and

20    other obligations of the United States  ,  or  the several  ITS

21    instrumentalities  thereof  or certificates of deposit or deposi-

22    tory receipts of  any  A bank  which  THAT is a member of the

23    federal deposit insurance corporation  , in the manner  AS pro-

24    vided under  sections  SECTION 1 and FORMER SECTION 2 of this act

25    are hereby ratified and validated.

26         SEC. 5.  AN INVESTMENT POLICY ADOPTED UNDER SECTION 1 SHALL,

27    AT A MINIMUM, INCLUDE ALL OF THE FOLLOWING:



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 1         (A) A STATEMENT OF THE PURPOSE, SCOPE, AND OBJECTIVES OF THE

 2    POLICY, INCLUDING SAFETY, DIVERSIFICATION, LIQUIDITY, AND RETURN

 3    ON INVESTMENT.

 4         (B) A DELEGATION OF AUTHORITY TO MAKE INVESTMENTS.

 5         (C) A LIST OF AUTHORIZED INVESTMENT INSTRUMENTS.

 6         (D) A STATEMENT CONCERNING SAFEKEEPING, CUSTODY, AND

 7    PRUDENCE.

 8         SEC. 6.  (1) SUBJECT TO SUBSECTION (2), BEFORE EXECUTING AN

 9    ORDER TO PURCHASE OR TRADE THE FUNDS OF A PUBLIC CORPORATION, A

10    FINANCIAL INTERMEDIARY, BROKER, OR DEALER SHALL BE PROVIDED WITH

11    A COPY OF THE PUBLIC CORPORATION'S INVESTMENT POLICY AND SHALL DO

12    BOTH OF THE FOLLOWING:

13         (A) ACKNOWLEDGE RECEIPT OF THE INVESTMENT POLICY.

14         (B) AGREE TO COMPLY WITH THE TERMS OF THE INVESTMENT POLICY

15    REGARDING THE BUYING OR SELLING OF SECURITIES.

16         (2) A PUBLIC CORPORATION IS SUBJECT TO SUBSECTION (1) BEGIN-

17    NING ON THE DATE THAT THE INVESTMENT POLICY OF A PUBLIC CORPORA-

18    TION TAKES EFFECT OR 180 DAYS AFTER THE EFFECTIVE DATE OF THE

19    AMENDATORY ACT THAT REPEALED SECTION 2, WHICHEVER IS EARLIER.

20         (3) THE INVESTMENT OFFICER ANNUALLY SHALL PROVIDE A WRITTEN

21    REPORT TO THE GOVERNING BODY CONCERNING THE INVESTMENT OF THE

22    FUNDS.

23         Enacting section 1.  Sections 2 and 4 of 1943 PA 20, MCL

24    129.92 and 129.94, are repealed.









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